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ROCKWELL AUTOMATION, INC (ROK)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 delivered strong operational results: revenue $2.316B (+14% YoY), total segment operating margin 22.5% (+240 bps YoY), and Adjusted EPS $3.34 (+32% YoY), driven by Software & Control (+31% YoY sales) and pricing/productivity; GAAP EPS fell to $1.23 due to non-cash Sensia impairment and legacy asbestos accounting changes .
  • Clear beats vs Wall Street: revenue and Adjusted EPS both exceeded consensus; EBITDA also came in above expectations (see Estimates Context) as pricing (+4 pts in Q4) and productivity offset tariff costs and compensation .
  • Guidance initiated for FY2026: reported sales growth 3–7%, Adjusted EPS $11.20–$12.20, segment margin ~21.5%, Adjusted ETR ~20%; ARR expected to grow high single digits. Management flagged seasonally soft Q1 FY2026 and gradual sequential improvement thereafter .
  • Strategic actions: dissolution of Sensia JV (reduces revenue but lifts margins ~50 bps annually), updated Adjusted EPS definition to exclude legacy asbestos/environmental costs, and new E&D reporting to enhance visibility; plus dividend increased to $1.38 per share .
  • Near-term catalysts: Automation Fair/Investor Day spotlighting edge-based generative AI with NVIDIA Nemotron and AMR scaling; tariff EPS neutrality, and potential release of delayed CapEx projects could drive upside vs mid-point guide .

What Went Well and What Went Wrong

What Went Well

  • Software & Control outperformed: Q4 sales +31% YoY to $657M; segment margin 31.2% (+880 bps YoY), driven by Logix momentum and price realization .
  • Pricing/productivity: ~4 pts of organic growth from price in Q4; structural productivity savings exceeded target to $325M FY2025, underpinning margin expansion and EPS beat .
  • Robust discrete and e-commerce/warehouse: discrete +20% YoY; e-commerce/warehouse +70% YoY with major European logistics win; growing data center pipeline tied to AI demand .

Management Quotes:

  • “We close the year with another strong quarter... segment margin of 22.5% and adjusted EPS of $3.34 were well above our expectations” — Blake Moret .
  • “We ended this fiscal year with over $325 million of structural productivity savings, exceeding our original target” — Blake Moret .

What Went Wrong

  • GAAP EPS pressured by non-cash and policy changes: $110M Sensia impairment and $136M asbestos accounting accrual drove GAAP diluted EPS down to $1.23; effective tax rate spiked to 52.4% on GAAP basis .
  • Lifecycle Services softness: Q4 sales -3% YoY; book-to-bill 0.9 on seasonality and project delays as customers seek tariff/macro clarity .
  • CapEx delays persisted across core and Sensia businesses, with longer-cycle configured-to-order and services seeing deferrals .

Financial Results

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Billions)$2.001 $2.144 $2.316
Diluted EPS ($)$2.22 $2.60 $1.23
Adjusted EPS ($)$2.45 $2.82 $3.34
Gross Margin % (recast)48.6% 48.8% 48.4%
Total Segment Operating Margin %20.4% 21.2% 22.5%
Revenue Consensus Mean ($USD Billions)*$1.972$2.068$2.206
Primary EPS Consensus Mean ($)*$2.116$2.669$2.939
EBITDA Consensus Mean ($USD Millions)*$380$457$492

Notes: Consensus and EBITDA figures marked with * are from S&P Global.

Segment breakdown (sales and margin):

SegmentQ3 2025 Sales ($MM)Q3 2025 Margin %Q4 2025 Sales ($MM)Q4 2025 Margin %
Intelligent Devices$968 18.8% $1,086 19.8%
Software & Control$629 31.6% $657 31.2%
Lifecycle Services$547 13.3% $573 17.5%
Total$2,144 21.2% $2,316 22.5%

KPIs:

KPIQ2 2025Q3 2025Q4 2025
ARR YoY Growth %8% 7% 8%
Cash from Operations ($MM)$199 $527 $454
Free Cash Flow ($MM)$171 $489 $405
Company Book-to-Bill~1.0 ~1.0 Lifecycle Services 0.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Reported Sales GrowthFY2026N/A3%–7% New
Organic Sales GrowthFY2026N/A2%–6% New
Diluted EPS ($)FY2026N/A$10.40–$11.40 New
Adjusted EPS ($)FY2026N/A$11.20–$12.20 New
Segment Operating Margin (%)FY2026N/A~21.5% New
Adjusted Effective Tax Rate (%)FY2026N/A~20% New
ARR GrowthFY2026N/AHigh single digits New
Dividend per Share ($)Quarterly$1.31 $1.38 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 FY2025)Current Period (Q4 FY2025)Trend
AI/technology initiativesFactoryTalk Design Studio GenAI Copilot adoption; SaaS ARR +10% (Q2) . Continued strong Logix and software wins (Q3) .Edge-based generative AI via NVIDIA Nemotron Nano for FactoryTalk workflows; AMR production ramp in Milwaukee .Accelerating AI at the edge; expanding AMR capacity.
Supply chain/tariffsTariff EPS impact minimal; pricing and sourcing offsets; ~1 pt tariff price in Q2 .Tariffs EPS-neutral; slight margin dilution; guide includes 1% underlying price + 1% tariff price .Managed neutrality; price realization supporting margins.
Product performanceLogix recovery; controllers up sequentially (Q2) ; Logix +30% YoY in Q3 .Logix momentum; unit volumes at/near pre-COVID in 2H; new L9 processor orders strong .Strengthening volumes with new product cycle.
Regional trendsNorth America best-performing region (Q2 & Q3) .North America strongest again; expected to lead FY2026 .Consistent NA leadership.
Regulatory/legalUpdated Adjusted EPS definition (exclude legacy asbestos); tariff policy uncertainty (Q2) .Asbestos accounting change accrual ($136M) and exclusion in non-GAAP; GAAP tax rate elevated on Sensia taxes/valuation .One-time adjustments; cleaner non-GAAP going forward.
R&D execution/E&D lineCompany R&D ~6% of revenue (Q2) .E&D separated from COGS (recast) to enhance visibility; historical periods recast .Improved disclosure; gross margin optics align to peers.
CapEx/project cycleDelays in auto/process; book-to-bill ~1 (Q2/Q3) .Lifecycle Services B2B 0.9; continued delays but expected gradual improvement through FY2026 .Gradual recovery expected; guide cautious.

Management Commentary

  • “We entered fiscal 2025 with a clear view of the challenges ahead, and we delivered... strong cash flow, and continued margin expansion” — Blake Moret (press release/8-K) .
  • “We’re introducing a new engineering and development expense line... increases gross margin by about 8 percentage points, with no impact to total P&L” — Christian Rothe .
  • “We recorded an impairment in our Sensia business... annualized impact ~ $250M revenue reduction and ~50 bps margin benefit” — Christian Rothe .
  • “We ended this fiscal year with over $325 million of structural productivity savings” — Blake Moret .

Q&A Highlights

  • Sensia dissolution: JV complexity and scope vs returns; simplification improves profitability, with Rockwell focusing on process automation and maintaining SLB partnership .
  • Tariffs: EPS neutral via tariff-based pricing and resiliency; slight margin dilution, balanced approach with ~1% underlying and ~1% tariff pricing embedded in guide .
  • Incremental margin framework: Long-term ~35%; FY2026 expected >40% given productivity and normalized comp, but not changing long-term target .
  • Book-to-bill/order trends: Product orders/shipments aligned ~1.0; Lifecycle Services seasonal dip (0.9); continued project delays but gradual improvement expected .
  • Logix trajectory: Unit volumes touched pre-COVID in 2H; new L9 processor launched early with strong orders; steady growth expected .

Estimates Context

MetricQ2 2025Q3 2025Q4 2025
Revenue Consensus Mean ($B)*1.9722.0682.206
Revenue Actual ($B)2.001 2.144 2.316
Primary EPS Consensus Mean ($)*2.1162.6692.939
Adjusted EPS Actual ($)2.45 2.82 3.34
EBITDA Consensus Mean ($MM)*380457492
EBITDA Actual ($MM)*422459531
  • Q4: revenue and Adjusted EPS beat consensus; EBITDA above consensus — driven by price realization (~4 pts), software strength, and productivity; tariffs EPS-neutral .
  • Q3: revenue and Adjusted EPS beat; Q2: Adjusted EPS beat with revenue slightly above consensus .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat: Q4 Adjusted EPS ($3.34) and revenue ($2.316B) both beat on pricing/productivity and software strength; GAAP EPS noise from one-time charges should fade as non-GAAP excludes legacy items .
  • Mix and margin tailwinds: Software & Control margin >31% and Sensia dissolution adds ~50 bps annually — supporting continued margin expansion vs FY2025 levels .
  • FY2026 setup: Guide implies cautious start (seasonal Q1 softness), gradual sequential improvement, ARR HSD, segment margin ~21.5%, and Adjusted EPS midpoint $11.70; upside if CapEx releases accelerate .
  • Pricing/tariffs: EPS neutrality maintained; watch gross margin dilution vs price realization; management targeting ~1% underlying and ~1% tariff price in FY2026 .
  • Structural productivity: $325M savings achieved; operating model aims to sustain >40% incrementals in FY2026; comp normalized, providing cleaner flow-through .
  • Strategic focus areas: Edge AI (NVIDIA Nemotron), AMR capacity in Milwaukee, SecureOT cybersecurity suite — potential ARR and high-margin growth drivers over 12–24 months .
  • Trading implications: Near-term re-rating potential on Investor Day tech narratives and tariff clarity; monitor Lifecycle project release and data center/logistics wins for topline upside vs mid-point guide .