Rockwell Automation(ROK) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the company's unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements This section presents the unaudited consolidated financial statements, including the balance sheet, statements of operations, comprehensive income, cash flows, and shareowners' equity, along with detailed notes and the independent auditor's review report Consolidated Balance Sheet This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time Consolidated Balance Sheet (in millions) | Metric | June 30, 2025 (Millions) | September 30, 2024 (Millions) | | :------------------------------------- | :------------------------- | :---------------------------- | | Total Assets | $11,193 | $11,232 | | Total Liabilities | $7,565 | $7,557 | | Total Shareowners' Equity | $3,628 | $3,675 | | Cash and cash equivalents | $495 | $471 | | Current portion of long-term debt | $2 | $307 | | Retained earnings | $5,284 | $9,635 | Consolidated Statement of Operations This statement details the company's revenues, expenses, and net income over specific reporting periods Consolidated Statement of Operations (in millions) | Metric | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Nine Months Ended June 30, 2025 (Millions) | Nine Months Ended June 30, 2024 (Millions) | | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Sales | $2,144 | $2,051 | $6,026 | $6,229 | | Gross profit | $876 | $795 | $2,408 | $2,423 | | Income before income taxes | $342 | $255 | $854 | $825 | | Net income attributable to Rockwell Automation, Inc. | $295 | $232 | $731 | $713 | | Diluted EPS | $2.60 | $2.02 | $6.43 | $6.19 | Consolidated Statement of Comprehensive Income This statement presents net income and other comprehensive income components, reflecting changes in equity not from transactions with owners Consolidated Statement of Comprehensive Income (in millions) | Metric | Three Months Ended June 30, 2025 (Millions) | Three Months Ended June 30, 2024 (Millions) | Nine Months Ended June 30, 2025 (Millions) | Nine Months Ended June 30, 2024 (Millions) | | :------------------------------------------------ | :---------------------------------------- | :---------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net income | $293 | $231 | $719 | $709 | | Other comprehensive income (loss) | $97 | $(31) | $35 | $(3) | | Comprehensive income attributable to Rockwell Automation, Inc. | $391 | $201 | $766 | $710 | - Currency translation adjustments significantly impacted other comprehensive income, moving from a $(31) million loss in Q3 2024 to a $106 million gain in Q3 2025[15] Consolidated Statement of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities Consolidated Statement of Cash Flows (in millions) | Activity | Nine Months Ended June 30, 2025 (Millions) | Nine Months Ended June 30, 2024 (Millions) | | :-------------------------- | :--------------------------------------- | :--------------------------------------- | | Cash provided by operating activities | $1,090 | $432 | | Cash used for investing activities | $(165) | $(920) | | Cash used for financing activities | $(904) | $(187) | | Increase (decrease) in cash and cash equivalents | $24 | $(673) | - Cash provided by operating activities increased by 152.3% year-over-year for the nine months ended June 30, 2025[18] - Cash used for investing activities significantly decreased from $(920) million in 2024 to $(165) million in 2025, primarily due to lower acquisition spending[18] Consolidated Statement of Shareowners' Equity This statement outlines changes in the company's equity accounts, including net income, dividends, and share repurchases Consolidated Statement of Shareowners' Equity (in millions) | Metric | June 30, 2025 (Millions) | June 30, 2024 (Millions) | | :------------------------------------ | :----------------------- | :----------------------- | | Total shareowners' equity | $3,628 | $3,504 | | Net income attributable to Rockwell Automation, Inc. (3 months) | $295 | $232 | | Cash dividends declared (3 months) | $(296) | $(285) | | Share repurchases (9 months) | $(353) | $(481) | | Cash dividends declared (9 months) | $(593) | $(572) | - The company retired 40 million shares of common stock from treasury during the nine months ended June 30, 2025[24] Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements 1. Basis of Presentation and Accounting Policies This note outlines the basis for the unaudited financial statements, key accounting policies, and discusses recently issued accounting pronouncements - Allowance for doubtful accounts was $25 million at June 30, 2025, up from $22 million at September 30, 2024[28] Basic and Diluted EPS | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic EPS | $2.61 | $2.03 | $6.45 | $6.22 | | Diluted EPS | $2.60 | $2.02 | $6.43 | $6.19 | - Right-of-use assets obtained from operating leases decreased significantly to $39 million for the nine months ended June 30, 2025, from $119 million in the prior year[32] - Accounts payable included $67 million related to supplier financing arrangements at June 30, 2025, a decrease from $77 million at September 30, 2024[33] - New FASB ASUs (2023-07, 2023-09, 2024-03, 2025-01) will require expanded disclosures for segment information, income tax rate reconciliation, and expense components in future annual reports[34][35][36] 2. Revenue Recognition This note details the company's revenue recognition policies, disaggregates revenue by segment and region, and provides information on contract liabilities - As of June 30, 2025, the company expects to recognize approximately $1,405 million of revenue from unfulfilled performance obligations, with $830 million anticipated within the next 12 months[43] Revenue Disaggregation by Segment and Region (Three Months Ended June 30) | Segment/Region | 2025 (Millions) | 2024 (Millions) | | :------------- | :-------------- | :-------------- | | Intelligent Devices | $968 | $957 | | Software & Control | $629 | $513 | | Lifecycle Services | $547 | $581 | | North America | $1,354 | $1,268 | | Europe, Middle East, and Africa | $392 | $356 | | Asia Pacific | $266 | $260 | | Latin America | $132 | $167 | | Total Company Sales | $2,144 | $2,051 | Revenue Disaggregation by Segment and Region (Nine Months Ended June 30) | Segment/Region | 2025 (Millions) | 2024 (Millions) | | :------------- | :-------------- | :-------------- | | Intelligent Devices | $2,670 | $2,858 | | Software & Control | $1,726 | $1,686 | | Lifecycle Services | $1,630 | $1,685 | | North America | $3,792 | $3,809 | | Europe, Middle East, and Africa | $1,082 | $1,143 | | Asia Pacific | $744 | $806 | | Latin America | $408 | $471 | | Total Company Sales | $6,026 | $6,229 | - Contract liabilities increased to $720 million at June 30, 2025, from $669 million at June 30, 2024[49] - Revenue recognized from beginning-of-period contract liabilities for the nine months ended June 30, 2025, was $538 million, compared to $487 million in the prior year[50] 3. Share-Based Compensation This note reports the pre-tax share-based compensation expense and provides a breakdown of shares granted for various award types Pre-tax share-based compensation expense (Millions) | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 9 Months Ended June 30, 2025 (Millions) | 9 Months Ended June 30, 2024 (Millions) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Pre-tax share-based compensation expense | $21 | $24 | $65 | $75 | Share-Based Compensation Grants (Nine Months Ended June 30) | Type | 2025 Grants (Thousands) | 2025 Wtd. Avg. Fair Value | 2024 Grants (Thousands) | 2024 Wtd. Avg. Fair Value | | :--------------------- | :---------------------- | :------------------------ | :---------------------- | :------------------------ | | Stock options | 190 | $93 | 217 | $86 | | Performance shares | 58 | $388 | 79 | $295 | | Restricted stock units | 92 | $294 | 251 | $277 | | Unrestricted stock | 6 | $297 | 6 | $278 | 4. Inventories This note provides a detailed breakdown of the company's inventory components, including finished goods, work in process, and raw materials Inventories (in millions) | Component | June 30, 2025 | September 30, 2024 | | :---------------- | :------------ | :----------------- | | Finished goods | $484 | $475 | | Work in process | $335 | $344 | | Raw materials | $434 | $474 | | Total Inventories | $1,253 | $1,293 | 5. Acquisitions This note details recent acquisitions, including purchase price allocations, goodwill, intangible assets, and contingent consideration - In October 2023, Rockwell Automation acquired Clearpath Robotics for a total purchase consideration of $609 million (net of cash acquired), assigning $283 million to goodwill and $313 million to intangible assets[54][56] - Contingent consideration for Clearpath Robotics, initially valued at $43 million, was reduced to $0 by June 30, 2025, due to earnout achievement for the first period and forfeiture for the second[57][58] - In November 2023, the company acquired Verve Industrial Protection for $183 million (net of cash acquired), allocating $133 million to goodwill (expected to be tax deductible) and $47 million to intangible assets[61] - Total sales from the 2024 acquisitions were $13 million for the three months and $60 million for the nine months ended June 30, 2024, with net losses of $43 million for the nine months[63] 6. Goodwill and Other Intangible Assets This note provides an overview of changes in goodwill by segment and a detailed breakdown of other intangible assets and their amortization - Total goodwill increased slightly to $4,002 million at June 30, 2025, from $3,993 million at September 30, 2024[64] - The annual impairment evaluation for goodwill and indefinite life intangible assets as of the beginning of fiscal 2025 concluded no impairment[64] Other Intangible Assets, Net (in millions) | Asset Type | June 30, 2025 | September 30, 2024 | | :------------------------------------ | :------------ | :----------------- | | Software products | $28 | $29 | | Customer relationships | $401 | $432 | | Technology | $415 | $472 | | Trademarks | $78 | $88 | | Allen-Bradley trademark (indefinite life) | $44 | $44 | | Total Other Intangible Assets, Net | $966 | $1,066 | - Estimated total amortization expense for amortized intangible assets is projected to be $152 million in 2025, $150 million in 2026, and $141 million in 2027[66] 7. Short-Term and Long-Term Debt This note provides details on the company's short-term and long-term debt, including commercial paper, credit lines, and a new term loan - Short-term debt at June 30, 2025, included $260 million in commercial paper borrowings with a weighted average interest rate of 4.51% and an 11-day average maturity[69] - In May 2025, the company entered into a new $500 million senior unsecured 364-day term loan credit agreement, with an interest rate of 5.45% as of June 30, 2025[70] - The existing $1.5 billion unsecured revolving credit facility, expiring in June 2027, remained undrawn[70] Long-term Debt (in millions) | Type | June 30, 2025 (Carrying Value) | June 30, 2025 (Fair Value) | September 30, 2024 (Carrying Value) | September 30, 2024 (Fair Value) | | :------------------------ | :----------------------------- | :------------------------- | :--------------------------------- | :------------------------------- | | Current portion of long-term debt | $2 | $2 | $307 | $305 | | Long-term debt | $2,617 | $2,286 | $2,561 | $2,334 | 8. Other Current Liabilities This note provides a detailed breakdown of the components comprising other current liabilities at the end of the reporting periods Other Current Liabilities (in millions) | Component | June 30, 2025 | September 30, 2024 | | :------------------------------------ | :------------ | :----------------- | | Unrealized losses on foreign exchange contracts | $26 | $29 | | Product warranty obligations | $24 | $24 | | Taxes other than income taxes | $43 | $53 | | Accrued interest | $39 | $18 | | Dividends payable | $151 | $3 | | Income taxes payable | $161 | $139 | | Operating lease liabilities | $92 | $90 | | Other | $108 | $120 | | Total Other Current Liabilities | $644 | $476 | 9. Investments This note describes the company's investments, primarily equity securities, and explains the fair value hierarchy used for financial instruments - Long-term investments totaled $181 million at June 30, 2025, an increase from $169 million at September 30, 2024[74] - Equity securities (other) are accounted for using the measurement alternative, with cumulative upward adjustments from observed price changes of $23 million at both June 30, 2025, and September 30, 2024[74] - Cumulative downward adjustments from observed price changes and impairments for equity securities were $11 million at June 30, 2025, compared to $7 million at September 30, 2024[74] - The fair value hierarchy classifies inputs into Level 1 (quoted active markets), Level 2 (quoted similar assets/liabilities or observable inputs), and Level 3 (unobservable inputs)[76] 10. Retirement Benefits This note details the components of net periodic pension and other postretirement benefit costs, including service cost and expected return on plan assets Net Periodic Pension Benefit Cost (in millions) | Component | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 9 Months Ended Jun 30, 2025 | 9 Months Ended Jun 30, 2024 | | :---------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Service cost | $10 | $8 | $31 | $27 | | Interest cost | $34 | $37 | $102 | $110 | | Expected return on plan assets | $(42) | $(42) | $(125) | $(127) | | Amortization of net actuarial loss | $7 | $0 | $20 | $0 | | Net periodic pension benefit cost | $9 | $3 | $28 | $10 | Net Periodic Postretirement Benefit Cost (in millions) | Component | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 9 Months Ended Jun 30, 2025 | 9 Months Ended Jun 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Service cost | $0 | $1 | $0 | $1 | | Interest cost | $1 | $1 | $1 | $2 | | Amortization of net actuarial loss | $0 | $0 | $2 | $1 | | Net periodic postretirement benefit cost | $1 | $2 | $3 | $4 | 11. Other Income This note itemizes the various components contributing to the company's other income, including interest, royalty, and legacy liability adjustments Other Income Components (in millions) | Component | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 9 Months Ended Jun 30, 2025 | 9 Months Ended Jun 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Interest income | $4 | $3 | $10 | $12 | | Royalty income | $3 | $3 | $9 | $9 | | Legacy product liability and environmental charges | $(4) | $(3) | $(13) | $(11) | | Non-operating pension and postretirement benefit credit | $0 | $4 | $0 | $14 | | Fair value adjustments for earnout payments | $0 | $0 | $(5) | $(7) | | Other | $2 | $0 | $10 | $14 | | Total Other Income | $5 | $7 | $11 | $31 | 12. Accumulated Other Comprehensive Loss This note details the changes in accumulated other comprehensive loss by component, including pension adjustments and currency translation - The company retired 40 million shares of common stock from treasury during the nine months ended June 30, 2025[80] Accumulated Other Comprehensive Loss (in millions) | Component | June 30, 2025 | September 30, 2024 | | :------------------------------------ | :------------ | :----------------- | | Pension and other postretirement benefit plan adjustments, net of tax | $(414) | $(431) | | Accumulated currency translation adjustments, net of tax | $(277) | $(296) | | Net unrealized losses on cash flow hedges, net of tax | $(46) | $(45) | | Total accumulated other comprehensive loss, net of tax | $(737) | $(772) | - Other comprehensive income (loss) for the three months ended June 30, 2025, was $96 million, a significant improvement from a $(31) million loss in the prior year[82] - Total reclassifications out of Accumulated other comprehensive loss into Net income attributable to Rockwell Automation, Inc. for the nine months ended June 30, 2025, resulted in a $13 million gain[84] 13. Commitments and Contingent Liabilities This note discusses various lawsuits, claims, and proceedings, and the company's assessment of their potential financial impact - The company is a defendant in asbestos lawsuits but believes it has meritorious defenses and substantial insurance coverage, expecting no material effect on its financial condition[87][88] - Liabilities related to divested businesses are not expected to have a material effect on the company's financial condition[89] - No material indemnification claims related to intellectual property were probable or reasonably possible as of June 30, 2025[90] 14. Restructuring Charges This note details the restructuring charges recorded as part of an enterprise-wide cost optimization program, outlining their nature and remaining accruals - In 2024, the company recorded $97 million in restructuring charges ($73 million net of tax, or $0.64 per diluted share) for cost optimization and margin expansion[91] - Restructuring charges for the three and nine months ended June 30, 2024, totaled $70 million, allocated to Cost of sales ($23 million) and Selling, general and administrative expenses ($47 million)[91] - Total expected cash expenditures for these actions are $97 million; $36 million was paid during the nine months ended June 30, 2025, leaving $34 million in remaining accruals[92] 15. Income Taxes This note discusses the company's effective tax rates, the impact of tax legislation, and details unrecognized tax benefits Effective Tax Rate | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Effective tax rate | 14.3% | 9.4% | 15.8% | 14.1% | - The effective tax rate was lower than the U.S. statutory rate of 21% primarily due to the geographical mix of pre-tax income and discrete tax benefits[95] - A final payment of $97 million related to the U.S. transition tax under the Tax Cuts and Jobs Act of 2017 is due in the second quarter of 2026[96] - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, and its impact on consolidated financial statements is currently being assessed[97] - Gross unrecognized tax benefits were $30 million at June 30, 2025, with a potential reduction of up to $25 million in the next 12 months[98][99] 16. Business Segment Information This note provides detailed sales and operating results for the Intelligent Devices, Software & Control, and Lifecycle Services segments Sales by Segment (in millions) | Segment | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 9 Months Ended Jun 30, 2025 | 9 Months Ended Jun 30, 2024 | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Intelligent Devices | $968 | $957 | $2,670 | $2,858 | | Software & Control | $629 | $513 | $1,726 | $1,686 | | Lifecycle Services | $547 | $581 | $1,630 | $1,685 | | Total | $2,144 | $2,051 | $6,026 | $6,229 | Segment Operating Earnings (in millions) | Segment | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 9 Months Ended Jun 30, 2025 | 9 Months Ended Jun 30, 2024 | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Intelligent Devices | $182 | $193 | $461 | $504 | | Software & Control | $199 | $121 | $503 | $418 | | Lifecycle Services | $73 | $112 | $219 | $264 | | Total Segment Operating Earnings | $454 | $426 | $1,183 | $1,186 | Segment Operating Margin | Segment | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 9 Months Ended Jun 30, 2025 | 9 Months Ended Jun 30, 2024 | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Intelligent Devices | 18.8% | 20.2% | 17.3% | 17.6% | | Software & Control | 31.6% | 23.6% | 29.1% | 24.8% | | Lifecycle Services | 13.3% | 19.3% | 13.4% | 15.7% | | Total Segment Operating Margin | 21.2% | 20.8% | 19.6% | 19.0% | Report of Independent Registered Public Accounting Firm This report provides the independent auditor's opinion on the fairness of the interim financial information presented - Deloitte & Touche LLP reviewed the interim financial information and found no material modifications needed for conformity with U.S. GAAP[105] - The consolidated balance sheet as of September 30, 2024, was also confirmed to be fairly stated in all material respects[106] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, condition, and results of operations, including an overview of economic trends, segment performance, and a reconciliation of non-GAAP measures Forward-Looking Statements This section cautions that the report contains forward-looking statements subject to risks and uncertainties, which the company does not commit to update - The report contains forward-looking statements, as defined by the Private Securities Litigation Reform Act of 1995, which are subject to various risks and uncertainties beyond the company's control[110] - The company does not undertake any obligation to update or revise these forward-looking statements[111] Non-GAAP Measures This section defines and explains the company's use of non-GAAP financial measures, providing reconciliations and their relevance to investors - The discussion includes non-GAAP measures such as organic sales, total segment operating earnings and margin, Adjusted Income, Adjusted EPS, Adjusted Effective Tax Rate, and free cash flow[113] - Reconciliations for these non-GAAP measures are provided in specific sections of the report, along with explanations of their usefulness to investors[113] Overview This section introduces Rockwell Automation as a leader in industrial automation and digital transformation, outlining its growth strategy and demand drivers - Rockwell Automation is the world's largest company dedicated to industrial automation and digital transformation[114] - Demand is driven by customer needs for operational productivity, asset management, business resilience (including cybersecurity), agility, quality, safety, and sustainability[115] - The long-term profitable growth framework aims for accelerated growth through technology differentiation, industry focus, go-to-market acceleration, expanded offerings, new markets, double-digit annual recurring revenue growth, and 1% average annual growth from acquisitions[116] U.S. Economic Trends This section analyzes key U.S. economic indicators, including manufacturing activity and inflation, and their impact on the company's domestic sales - U.S. sales accounted for over half of total sales in the third quarter of fiscal 2025[117] U.S. Economic Indicators | Metric | June 2025 | March 2025 | December 2024 | September 2024 | | :-------------------- | :-------- | :--------- | :------------ | :------------- | | Manufacturing IP Index | 100.2 | 100.3 | 98.9 | 99.0 | | Manufacturing PMI | 49.0 | 49.0 | 49.2 | 47.5 | - Manufacturing PMI remained below 50 for each month in the third quarter of fiscal 2025, indicating contraction[118] - Producer Price Index (PPI) growth remained in the low single digits during the third quarter, decelerated from prior surges but still elevated[118] Non-U.S. Economic Trends This section examines international economic indicators, such as industrial production and manufacturing PMIs, and their influence on the company's global sales - Sales to customers outside the U.S. accounted for less than half of total sales in the third quarter of fiscal 2025[119] - Industrial production outside the U.S. was mostly positive in the third quarter of fiscal 2025[119] - Manufacturing PMI readings outside the U.S. were mixed, with Asia Pacific generally performing better than Europe, Canada, Mexico, and Brazil[119] Outlook This section provides the company's expectations for future financial performance, including anticipated cost reductions, margin expansion, and tariff impacts - The company expects over $250 million in year-over-year benefits from cost reduction and margin expansion actions in 2025[120] - These benefits include continuing impacts from prior restructuring, reduced direct and indirect purchase costs, increased manufacturing efficiency, and price actions[120] - Tariff costs are expected to be neutral to EPS in the current year due to mitigating actions such as pricing and alternative sourcing[121] Summary of Results of Operations This section presents a high-level overview of the company's sales, operating earnings, and net income for the reported periods Sales and Operating Results (in millions, except percentages) | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 9 Months Ended Jun 30, 2025 | 9 Months Ended Jun 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total sales | $2,144 | $2,051 | $6,026 | $6,229 | | Total segment operating earnings | $454 | $426 | $1,183 | $1,186 | | Income before income taxes | $342 | $255 | $854 | $825 | | Net income attributable to Rockwell Automation | $295 | $232 | $731 | $713 | | Diluted EPS | $2.60 | $2.02 | $6.43 | $6.19 | | Adjusted EPS | $2.82 | $2.71 | $7.11 | $7.25 | | Pre-tax margin | 16.0% | 12.4% | 14.2% | 13.2% | | Total segment operating margin | 21.2% | 20.8% | 19.6% | 19.0% | Three and Nine Months Ended June 30, 2025, Compared to Three and Nine Months Ended June 30, 2024 This section provides a detailed comparative analysis of the company's financial performance for the current and prior periods Sales This subsection analyzes changes in total and organic sales, highlighting the impact of pricing and currency fluctuations across regions - Total sales increased 5% year-over-year for the three months ended June 30, 2025, but decreased 3% for the nine months[124] - Organic sales increased 4% for the three months but decreased 2% for the nine months ended June 30, 2025[124] - Pricing positively impacted total company sales by approximately 3 percentage points for the three months and 2 percentage points for the nine months, primarily in Intelligent Devices and Software & Control[124] Organic Sales Growth by Region | Region | 3 Months Ended Jun 30, 2025 (YoY Change) | 9 Months Ended Jun 30, 2025 (YoY Change) | | :------------------------------ | :---------------------------------------- | :---------------------------------------- | | North America | +7% | 0% | | Europe, Middle East, and Africa | +5% | -6% | | Asia Pacific | +2% | -7% | | Latin America | -14% | -4% | | Total Company Sales | +4% | -2% | Corporate and Other This subsection details expenses not directly attributable to operating segments, including unallocated corporate costs Corporate and Other Expenses (in millions) | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 9 Months Ended June 30, 2025 (Millions) | 9 Months Ended June 30, 2024 (Millions) | | :---------------------- | :---------------------------------------- | :---------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Corporate and other expenses | $40 | $29 | $111 | $97 | Restructuring Charges This subsection explains the nature and impact of restructuring charges incurred as part of the company's cost optimization program Restructuring Charges (in millions) | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 9 Months Ended June 30, 2025 (Millions) | 9 Months Ended June 30, 2024 (Millions) | | :-------------------- | :---------------------------------------- | :---------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Restructuring charges | $0 | $70 | $0 | $70 | - Restructuring charges in 2024 were related to an enterprise-wide program to optimize cost structure and expand margins[127] Income before Income Taxes This subsection discusses the factors influencing the company's pre-tax income, including operating performance and non-operating items Income before Income Taxes (in millions) | Metric | 3 Months Ended June 30, 2025 (Millions) | 3 Months Ended June 30, 2024 (Millions) | 9 Months Ended June 30, 2025 (Millions) | 9 Months Ended June 30, 2024 (Millions) | | :------------------------- | :---------------------------------------- | :---------------------------------------- | :--------------------------------------- | :--------------------------------------- | | Income before income taxes | $342 | $255 | $854 | $825 | - The increase in income before income taxes for both periods was primarily due to restructuring charges taken in the prior year[128] Total Segment Operating Earnings This subsection analyzes the aggregate operating performance of the company's business segments, highlighting drivers of change - Total segment operating earnings increased 7% year-over-year for the three months ended June 30, 2025, driven by productivity, price realization, and favorable mix[129] - Total segment operating earnings decreased less than 1% year-over-year for the nine months ended June 30, 2025[129] Income Taxes This subsection examines the company's effective tax rates, the impact of tax legislation, and future tax rate expectations Effective and Adjusted Effective Tax Rates | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Effective tax rate | 14.3% | 9.4% | 15.8% | 14.1% | | Adjusted Effective Tax Rate | 15.2% | 13.3% | 16.6% | 15.1% | - The increase in both effective tax rate and Adjusted Effective Tax Rate was primarily due to lower discrete benefits in the current year[130] - The BEPS Pillar Two framework, enacted in certain countries, is expected to increase the company's effective tax rate by 2% to 3% starting in fiscal year 2026[131] - The company is currently assessing the impact of the One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, on its consolidated financial statements[132] Diluted EPS and Adjusted EPS This subsection presents the company's earnings per share metrics, both GAAP and non-GAAP, and their year-over-year changes Net Income and EPS (in millions, except EPS) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to Rockwell Automation (Millions) | $295 | $232 | $731 | $713 | | Diluted EPS | $2.60 | $2.02 | $6.43 | $6.19 | | Adjusted EPS | $2.82 | $2.71 | $7.11 | $7.25 | - Adjusted EPS for the three months ended June 30, 2025, increased 4% year-over-year to $2.82[133] - Adjusted EPS for the nine months ended June 30, 2025, decreased 2% year-over-year to $7.11[134] Intelligent Devices Segment Performance This subsection details the sales, operating earnings, and margin performance of the Intelligent Devices segment - Intelligent Devices reported and organic sales increased 1% year-over-year for the three months ended June 30, 2025, but decreased 7% and 6% respectively for the nine months[135] - Segment operating earnings decreased 6% for the three months and 9% for the nine months ended June 30, 2025[136][138] - Segment operating margin decreased to 18.8% for the three months (from 20.2%) and 17.3% for the nine months (from 17.6%), primarily due to higher compensation and unfavorable net currency, partially offset by productivity and price realization[136][138] Software & Control Segment Performance This subsection details the sales, operating earnings, and margin performance of the Software & Control segment - Software & Control sales increased 23% year-over-year for the three months and 2% for the nine months ended June 30, 2025; organic sales increased 22% and 3% respectively[139] - Segment operating earnings increased 64% for the three months and 20% for the nine months ended June 30, 2025[140][141] - Segment operating margin increased to 31.6% for the three months (from 23.6%) and 29.1% for the nine months (from 24.8%), driven by higher sales volume, price realization, and productivity[140][141] Lifecycle Services Segment Performance This subsection details the sales, operating earnings, and margin performance of the Lifecycle Services segment - Lifecycle Services reported and organic sales decreased 6% year-over-year for the three months and 3% for the nine months ended June 30, 2025[142] - Segment operating earnings decreased 35% for the three months and 17% for the nine months ended June 30, 2025[143] - Segment operating margin decreased to 13.3% for the three months (from 19.3%) and 13.4% for the nine months (from 15.7%), primarily due to higher compensation and lower sales volume[143] Supplemental Segment Information This section provides additional details on unallocated costs and other financial data related to the company's operating segments Unallocated Costs by Segment (in millions) | Cost Type | Segment | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 9 Months Ended Jun 30, 2025 | 9 Months Ended Jun 30, 2024 | | :------------------------------------------ | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Purchase accounting depreciation and amortization | Intelligent Devices | $9 | $9 | $28 | $29 | | | Software & Control | $16 | $17 | $49 | $51 | | | Lifecycle Services | $9 | $9 | $28 | $28 | | Non-operating pension and postretirement benefit credit | Intelligent Devices | $0 | $(2) | $0 | $(6) | | | Software & Control | $0 | $(1) | $0 | $(5) | | | Lifecycle Services | $0 | $(2) | $(1) | $(7) | | Restructuring charges | Intelligent Devices | $0 | $32 | $0 | $32 | | | Software & Control | $0 | $24 | $0 | $24 | | | Lifecycle Services | $0 | $13 | $0 | $13 | Adjusted Income, Adjusted EPS, and Adjusted Ef ective Tax Rate Reconciliation This section reconciles non-GAAP financial measures to their most directly comparable GAAP counterparts, explaining adjustments and their impact - Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate are non-GAAP measures that exclude non-operating pension and postretirement benefit credit, purchase accounting depreciation and amortization, change in fair value of investments, and restructuring charges[146] Adjusted Financial Metrics | Metric | 3 Months Ended Jun 30, 2025 | 3 Months Ended Jun 30, 2024 | 9 Months Ended Jun 30, 2025 | 9 Months Ended Jun 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Adjusted Income (Millions) | $320 | $311 | $808 | $835 | | Adjusted EPS | $2.82 | $2.71 | $7.11 | $7.25 | | Adjusted Effective Tax Rate | 15.2% | 13.3% | 16.6% | 15.1% | - Adjusted EPS is used as a financial measure of performance for annual incentive compensation[147] Financial Condition This section discusses the company's liquidity, capital resources, debt, and credit ratings, along with cash flow analysis Cash Flow Summary (Nine Months Ended June 30) | Activity | 2025 (Millions) | 2024 (Millions) | | :-------------------------- | :-------------- | :-------------- | | Cash provided by operating activities | $1,090 | $432 | | Capital expenditures | $(137) | $(160) | | Free cash flow | $953 | $272 | - The year-over-year increases in cash provided by operating activities and free cash flow were primarily due to higher pre-tax income, no incentive compensation payout in Q1 fiscal 2025, and lower tax payments[151] - Short-term debt at June 30, 2025, included $260 million in commercial paper borrowings with a weighted average interest rate of 4.51% and an 11-day average maturity[152] - The company repurchased approximately 1.3 million shares of common stock for $350 million in the first nine months of 2025, with $996 million remaining under existing board authorization at June 30, 2025[154] Credit Ratings (as of August 6, 2025) | Credit Rating Agency | Short-Term Rating | Long-Term Rating | Outlook | | :------------------- | :---------------- | :--------------- | :------ | | Standard & Poor's | A-2 | A- | Stable | | Moody's | P-2 | A3 | Stable | | Fitch Ratings | F1 | A | Stable | - Approximately $18 million of pre-tax net unrealized losses on cash flow hedges are expected to be reclassified into earnings during the next 12 months[163] Supplemental Sales Information This section provides a detailed reconciliation of reported sales to organic sales by geographic region and operating segment - Organic sales, a non-GAAP measure, exclude the effects of acquisitions and changes in currency exchange rates to reflect underlying business performance[166] Reconciliation of Reported Sales to Organic Sales by Geographic Region (3 Months Ended June 30, 2025) | Region | Reported Sales (Millions) | Less: Effect of Acquisitions (Millions) | Effect of Changes in Currency (Millions) | Organic Sales (Millions) | | :------------------------------ | :------------------------ | :------------------------------------ | :------------------------------------- | :----------------------- | | North America | $1,354 | $0 | $(1) | $1,355 | | Europe, Middle East, and Africa | $392 | $0 | $17 | $375 | | Asia Pacific | $266 | $0 | $1 | $265 | | Latin America | $132 | $0 | $(12) | $144 | | Total Company Sales | $2,144 | $0 | $5 | $2,139 | Reconciliation of Reported Sales to Organic Sales by Operating Segment (3 Months Ended June 30, 2025) | Segment | Reported Sales (Millions) | Less: Effect of Acquisitions (Millions) | Effect of Changes in Currency (Millions) | Organic Sales (Millions) | | :------------------ | :------------------------ | :------------------------------------ | :------------------------------------- | :----------------------- | | Intelligent Devices | $968 | $0 | $1 | $967 | | Software & Control | $629 | $0 | $2 | $627 | | Lifecycle Services | $547 | $0 | $2 | $545 | | Total Company Sales | $2,144 | $0 | $5 | $2,139 | Reconciliation of Reported Sales to Organic Sales by Geographic Region (9 Months Ended June 30, 2025) | Region | Reported Sales (Millions) | Less: Effect of Acquisitions (Millions) | Effect of Changes in Currency (Millions) | Organic Sales (Millions) | | :------------------------------ | :------------------------ | :------------------------------------ | :------------------------------------- | :----------------------- | | North America | $3,792 | $2 | $(11) | $3,801 | | Europe, Middle East, and Africa | $1,082 | $0 | $7 | $1,075 | | Asia Pacific | $744 | $0 | $(6) | $750 | | Latin America | $408 | $0 | $(42) | $450 | | Total Company Sales | $6,026 | $2 | $(52) | $6,076 | Reconciliation of Reported Sales to Organic Sales by Operating Segment (9 Months Ended June 30, 2025) | Segment | Reported Sales (Millions) | Less: Effect of Acquisitions (Millions) | Effect of Changes in Currency (Millions) | Organic Sales (Millions) | | :------------------ | :------------------------ | :------------------------------------ | :------------------------------------- | :----------------------- | | Intelligent Devices | $2,670 | $0 | $(27) | $2,697 | | Software & Control | $1,726 | $0 | $(14) | $1,740 | | Lifecycle Services | $1,630 | $2 | $(11) | $1,639 | | Total Company Sales | $6,026 | $2 | $(52) | $6,076 | Critical Accounting Estimates This section confirms no material changes to the company's critical accounting estimates since the last annual report - There has been no material change to the company's critical accounting estimates since the Annual Report on Form 10-K for the year ended September 30, 2024[169] Environmental Matters This section confirms no material changes to information regarding environmental matters since the last annual report - There has been no material change to information regarding environmental matters since the Annual Report on Form 10-K for the year ended September 30, 2024[170] Recent Accounting Pronouncements This section directs readers to the notes to financial statements for details on recent accounting pronouncements - Refer to Note 1 in the Consolidated Financial Statements for details on recent accounting pronouncements[171] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section refers to the annual report for market risk disclosures, confirming no material changes in foreign currency or interest rate risk - There has been no material change to the company's exposure to foreign currency risk and interest rate risk since the Annual Report on Form 10-K for the year ended September 30, 2024[172] Item 4. Controls and Procedures This section reports on the effectiveness of the company's disclosure controls and procedures and confirms no material changes to internal control over financial reporting during the quarter Disclosure Controls and Procedures This subsection confirms the effectiveness of the company's disclosure controls and procedures as assessed by management - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[173] Internal Control Over Financial Reporting This subsection confirms no material changes to the company's internal control over financial reporting during the quarter - There has been no material change in the company's internal control over financial reporting during the quarter ended June 30, 2025[174] PART II. OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales Item 1. Legal Proceedings This section refers to the annual report for legal proceedings, confirming no material changes as of the reporting date - There has been no material change to information regarding legal proceedings since the Annual Report on Form 10-K for the year ended September 30, 2024[176] Item 1A. Risk Factors This section refers to the annual report for risk factors, highlighting an update on potential impacts from changes in trade policies - No material change to risk factors since the Annual Report on Form 10-K for the year ended September 30, 2024, except for an update on trade policies[177] - Changes in trade policies, including tariffs or other factors, could adversely impact the company's cost structure, profitability, and supply chain[178] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchase activities and the remaining authorization for future repurchases Share Repurchases This subsection provides a breakdown of common stock repurchases, including shares purchased, average price, and remaining authorization Share Repurchases (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Maximum Approx. Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :---------------- | :------------------------------- | :--------------------------- | :--------------------------------------------------------------------------------------- | | April 1-30, 2025 | 288,616 | $235.46 | $1,050,658,228 | | May 1-31, 2025 | 125,313 | $283.68 | $1,015,109,769 | | June 1-30, 2025 | 60,000 | $323.20 | $995,717,902 | | Total | 473,929 | $259.32 | | - At June 30, 2025, approximately $996 million remained authorized for share repurchases under existing board authorizations[179] Item 5. Other Information This section discloses Rule 10b5-1 trading arrangements adopted by officers for stock option exercises and tax-related share sales - Several officers, including the President and CEO, adopted Rule 10b5-1 trading arrangements on May 30, 2025[180] - These arrangements cover the exercise of stock options and the sale of shares to cover taxes on upcoming restricted stock unit and performance share vests[180] - The aggregate number of shares to be sold to cover taxes on vests is indeterminable at this time[180] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including a term loan agreement, a letter from the independent registered public accounting firm, and certifications by the CEO and CFO - Exhibit 10.1 is the $500,000,000 364-Day Term Loan Agreement dated May 16, 2025[183] - Exhibit 15 is a letter from Deloitte & Touche LLP regarding Unaudited Financial Information[183] - Exhibits 31.1, 31.2, 32.1, and 32.2 are certifications of the periodic report by the Chief Executive Officer and Chief Financial Officer[183] Signatures This section confirms the official signing of the report on behalf of Rockwell Automation, Inc. by its principal financial and accounting officers - The report was signed on August 6, 2025, by Christian E. Rothe, Senior Vice President and Chief Financial Officer, and Terry L. Riesterer, Vice President and Controller[186]