Rockwell Automation Reports Second Quarter 2025 Results

• Reported sales down (6)%; organic sales down (4)% with currency decreasing sales (2)% year over year
• Total company Book-to-bill was ~1.0, consistent with the normal historical range
• Total ARR up 8% year over year
• Diluted EPS of $2.22 and adjusted EPS $2.45; down (4)% and (2)% year over year, respectively
• Updates fiscal 2025 reported sales growth guidance range to (4.5)% to 1.5% due to ~(0.5)% FX impact to sales; reaffirms organic sales growth guidance range of (4)% to 2%
• Updates fiscal 2025 diluted EPS guidance range to $8.23 - $9.23; updates adjusted EPS guidance range to $9.20 - $10.20

MILWAUKEE: Rockwell Automation, Inc. (NYSE: ROK) today reported second quarter fiscal 2025 results.

"Rockwell delivered another quarter of strong operating performance with sales, margins, and EPS all above our expectations. We saw a healthy intake of orders across most of our lines of business, with total company book-to-bill in-line with our historical average of about 1.0. We also continue to add resiliency to our operations as we navigate a highly dynamic environment. I’m proud of how our employees and partners are working together to position Rockwell as the automation leader of choice for our customers in the U.S. and around the world," said Blake Moret, Chairman and CEO.

Fiscal Q2 2025 Financial Results

Fiscal 2025 second quarter reported sales were $2,001 million, down (6)% from $2,126 million in the second quarter of fiscal 2024. Organic sales decreased (4)% and currency translation decreased sales by (2)%.

Income before income taxes was $299 million in the second quarter of fiscal 2025 compared to $310 million in the same period last year. Pre-tax margin was 14.9% in the second quarter of fiscal 2025 compared to 14.6% in the same period last year. Total segment operating earnings were $408 million in the second quarter of fiscal 2025, up 1% from $404 million in the same period of fiscal 2024. Total segment operating margin was 20.4% compared to 19.0% a year ago. The increase in segment operating margin was primarily due to the benefits from cost reduction and margin expansion actions and positive price/cost, partially offset by higher compensation and lower sales volume.

Fiscal 2025 second quarter Net income attributable to Rockwell Automation was $252 million or $2.22 per share, compared to $266 million or $2.31 per share in the second quarter of fiscal 2024. Fiscal 2025 second quarter adjusted EPS was $2.45, down (2)% compared to $2.50 in the second quarter of fiscal 2024.

Cash flow generated by operating activities in the second quarter of fiscal 2025 was $199 million, compared to $120 million in the second quarter of fiscal 2024. Free cash flow in the second quarter of fiscal 2025 was $171 million, compared to $69 million in the same period last year. Increases in cash flow provided by operating activities and free cash flow were primarily due to lower tax payments, partially offset by higher working capital.

Fiscal Year 2025 Outlook

The table below provides updated guidance for fiscal 2025. Due to the dynamic nature of the tariff environment, the Company has not adjusted its full-year guidance for organic sales, which could increase as a result of tariff-based price realization. Rockwell intends to offset existing and any additional tariff cost through a combination of pricing and supply chain actions, which is incorporated in the EPS guidance.

"We are raising fiscal year 2025 margin and EPS targets based on strong execution, with clear focus defined by the Rockwell Operating Model. Structural productivity is helping us expand our margins and invest for the future, even against the backdrop of current uncertainty. Given our significant homefield advantage, Rockwell is uniquely positioned to deliver value from increased manufacturing and digital transformation investments in the U.S.,” Moret continued.

Following is a discussion of second quarter results for our business segments.

Intelligent Devices

Intelligent Devices second quarter fiscal 2025 sales were $896 million, a decrease of (8)% compared to $974 million in the same period last year. Organic sales decreased (6)% and currency translation decreased sales by (2)%. Segment operating earnings were $159 million compared to $161 million in the same period last year. Segment operating margin increased to 17.7% from 16.5% a year ago. The increase from prior year was driven by the benefits from cost reduction and margin expansion actions, positive price/cost, and favorable mix, partially offset by higher compensation and lower sales volume.

Software & Control

Software & Control second quarter fiscal 2025 sales were $568 million, a decrease of less than 1% compared to $569 million in the same period last year. Organic sales increased 2% and currency translation decreased sales by (2)%. Segment operating earnings were $171 million compared to $146 million in the same period last year. Segment operating margin increased to 30.1% from 25.7% a year ago. The increase from prior year was driven by the benefits from cost reduction and margin expansion actions and positive price/cost, partially offset by higher compensation.

Lifecycle Services

Lifecycle Services second quarter fiscal 2025 sales were $537 million, a decrease of (8)% compared to $583 million in the same period last year. Organic sales decreased (6)% and currency translation decreased sales by (2)%. Segment operating earnings were $78 million compared to $97 million in the same period last year. Segment operating margin was 14.5% compared to 16.6% a year ago driven by higher compensation and lower sales volume, partially offset by the benefits from cost reduction and margin expansion actions and strong project execution.

Supplemental Information

ARR - Total ARR grew 8% compared to the end of the second quarter of fiscal 2024.

Corporate and other - Fiscal 2025 second quarter Corporate and other expense was $33 million compared to $28 million in the second quarter of fiscal 2024.

Purchase accounting depreciation and amortization - Fiscal 2025 second quarter Purchase accounting depreciation and amortization expense was $36 million, down $1 million from the second quarter of fiscal 2024.

Tax - On a GAAP basis, the effective tax rate in the second quarter of fiscal 2025 was 17.1% compared to 14.5% in the second quarter of fiscal 2024. The adjusted effective tax rate for the second quarter of fiscal 2025 was 17.7% compared to 14.8% in the prior year. These increases were primarily due to lower discrete benefits recognized in the current year partially offset by a favorable geographic mix of pre-tax income.

Share repurchases - During the second quarter of fiscal 2025, the Company repurchased approximately 0.5 million shares of its common stock at a cost of $129 million. At March 31, 2025, approximately $1.1 billion remained available under our existing share repurchase authorizations.

Return on Invested Capital (ROIC) - ROIC was 14.2% for the twelve months ended March 31, 2025, compared to 18.0% for the twelve months ended March 31, 2024. The decrease is primarily driven by lower pre-tax net income, partially offset by a lower effective tax rate.

Definitions

Non-GAAP Measures - Organic sales, total segment operating earnings, total segment operating margin, adjusted income, adjusted EPS, adjusted effective tax rate, free cash flow, free cash flow conversion, and ROIC are non-GAAP measures that are reconciled to GAAP measures in the attachments to this release.

Total ARR - Annual recurring revenue (ARR) is a key metric that enables measurement of progress in growing our recurring revenue business. It represents the annual contract value of all active recurring revenue contracts at any point in time. Recurring revenue is defined as a revenue stream that is contractual, typically for a period of 12 months or more, and has a high probability of renewal. The probability of renewal is based on historical renewal experience of the individual revenue streams, or management's best estimates if historical renewal experience is not available. Total ARR growth is calculated as the dollar change in ARR, adjusted to exclude the effects of currency, divided by ARR as of the prior period. The effects of currency translation are excluded by calculating Total ARR on a constant currency basis. Total ARR includes acquisitions even if there was no comparable ARR in the prior period. We believe that Total ARR provides useful information to investors because it reflects our recurring revenue performance period over period including the effect of acquisitions. Our measure of ARR may be different from measures used by other companies. Because ARR is based on annual contract value, it does not represent revenue recognized during a particular reporting period or revenue to be recognized in future reporting periods and is not intended to be a substitute for revenue, contract liabilities, or backlog.

Book-to-bill - Book-to-bill is a key performance metric that provides an indication of the level of demand. It is calculated as orders divided by sales for a specified period. A book-to-bill greater than 1.0 indicates that orders exceeded sales and a growing backlog while a book-to-bill less than 1.0 indicates that sales exceeded orders and a declining backlog. We believe that book-to-bill provides useful information to investors about demand, and in our Lifecycle Services segment, about the strength of our backlog. Our measure of book-to-bill may be different from measures used by other companies.

Conference Call

A conference call to discuss the quarterly results will be held at 8:30 a.m. Eastern Time on May 7, 2025. The call will be an audio webcast and accessible on the Rockwell Automation website (www.rockwellautomation.com/en-us/investors.html). Presentation materials will also be available on the website prior to the call.

Interested parties can access the conference call by using the following numbers: (888) 330-2022 in U.S.; (365) 977-0051 in Canada; +1 (646) 960-0690 for other countries. Use the following passcode: 5499533. Please call in 10 minutes prior to the start of the call.

Both the presentation materials and a replay of the call will be available on the Investor Relations section of the Rockwell Automation website through June 7, 2025.

This news release contains statements (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as “believe”, “estimate”, “project”, “plan”, “expect”, “anticipate”, “will”, “intend”, and other similar expressions may identify forward-looking statements. Actual results may differ materially from those projected as a result of certain risks and uncertainties, many of which are beyond our control, including but not limited to:

• macroeconomic factors, including inflation, global and regional business conditions (including adverse impacts in certain markets, such as Oil & Gas), commodity prices, currency exchange rates, the cyclical nature of our customers’ capital spending, and sovereign debt concerns;
• laws, regulations, and governmental policies affecting our activities in the countries where we do business, including those related to tariffs, taxation, trade controls, cybersecurity, and climate change;
• our profitability and market competitiveness may be adversely impacted by changes in trade policies, including tariffs or other factors;
• the severity and duration of disruptions to our business due to natural disasters (including those as a result of climate change), pandemics, acts of war, strikes, terrorism, social unrest, or other causes;
• the availability and price of components and materials;
• the availability, effectiveness, and security of our information technology systems;
• our ability to manage and mitigate the risk related to security vulnerabilities and breaches of our hardware and software products, solutions, and services;
• the successful execution of our cost productivity and margin expansion initiatives;
• our ability to attract, develop, and retain qualified employees;
• the successful integration and management of strategic transactions and achievement of the expected benefits of these transactions;
• the successful development of advanced technologies and demand for and market acceptance of new and existing hardware and software products;
• our ability to manage and mitigate the risks associated with our solutions and services businesses;
• competitive hardware and software products, solutions, and services, pricing pressures, and our ability to provide high quality products, solutions, and services;
• the availability and cost of capital;
• disruptions to our distribution channels or the failure of distributors to develop and maintain capabilities to sell our products;
• intellectual property infringement claims by others and the ability to protect our intellectual property;
• the uncertainty of claims by taxing authorities in the various jurisdictions where we do business;
• the uncertainties of litigation, including liabilities related to the safety and security of the hardware and software products, solutions, and services we sell;
• our ability to manage costs related to employee retirement and health care benefits; and
• other risks and uncertainties, including but not limited to those detailed from time to time in our Securities and Exchange Commission (SEC) filings.

Rockwell Automation, Inc. (NYSE: ROK), is a global leader in industrial automation and digital transformation. We connect the imaginations of people with the potential of technology to expand what is humanly possible, making the world more productive and more sustainable. Headquartered in Milwaukee, Wisconsin, Rockwell Automation employs approximately 27,000 problem solvers dedicated to our customers in more than 100 countries as of fiscal year end 2024. To learn more about how we are bringing The Connected Enterprise(R) to life across industrial enterprises, visit www.rockwellautomation.com.