Rockwell Automation(ROK) - 2026 Q1 - Quarterly Report

Sales Performance - Total sales for the three months ended December 31, 2025, were $2,105 million, a 12% increase year over year from $1,881 million in the same period of 2024[120] - Organic sales increased by 10% year over year, with currency translation contributing an additional 2% to total sales growth[122] - The Intelligent Devices segment saw sales rise to $953 million, up from $806 million, reflecting a significant increase in operating earnings[120] - The Software & Control segment reported sales of $629 million, an increase from $529 million, with operating earnings also improving[120] - Lifecycle Services sales decreased slightly to $523 million from $546 million, but operating earnings increased to $74 million from $68 million[120] - North America accounted for $1,339 million in sales, a 16% increase year over year, while Latin America sales decreased by 6%[123] - Intelligent Devices sales rose 18% year over year in Q1 2026, with organic sales increasing by 16% and currency translation effects contributing an additional 2%[129] - Software & Control sales increased by 19% year over year in Q1 2026, with organic sales up 17% and currency translation effects also adding 2%[131] - Lifecycle Services sales decreased by 4% year over year in Q1 2026, with organic sales down 6% but currency translation effects contributing 2%[133] - The company reported total sales of $2,105 million for the three months ended December 31, 2025, reflecting an organic sales growth compared to $1,881 million in the same period of 2024[157] - North America sales were reported at $1,339 million for the three months ended December 31, 2025, up from $1,150 million in the prior year[157] Profitability - The net income attributable to Rockwell Automation for the quarter was $305 million, compared to $184 million in the prior year, resulting in a diluted EPS of $2.69[120] - The total segment operating margin improved to 20.7% from 17.1% year over year, indicating enhanced profitability across segments[120] - Income before income taxes increased to $342 million in Q1 2026, up from $213 million in Q1 2025, with a pre-tax margin of 16.2% compared to 11.3%[125] - Net income attributable to Rockwell Automation was $305 million or $2.69 per share in Q1 2026, compared to $184 million or $1.61 per share in Q1 2025, reflecting a 49% increase in adjusted EPS to $2.75[128] - Segment operating margin for Intelligent Devices increased to 17.3% in Q1 2026 from 14.9% in Q1 2025, driven by higher sales volume[130] - Segment operating margin for Software & Control rose to 31.2% in Q1 2026 from 25.1% in Q1 2025, also due to higher sales volume[132] Investments and Future Plans - The company plans to invest $2 billion over the next five years in plants, digital infrastructure, and talent to enhance growth and resilience[118] - A new greenfield manufacturing site is planned in Southeastern Wisconsin, which could become the largest manufacturing campus globally for the company[118] - The company expects future cash uses to include capital expenditures, working capital, dividends, stock repurchases, debt repayments, retirement plan contributions, and acquisitions[145] Cash Flow and Financial Position - Free cash flow was $170 million in Q1 2026, down from $293 million in Q1 2025, attributed to incentive compensation payouts and increases in working capital[141] - As of December 31, 2025, the company had approximately $1.5 billion in an unsecured revolving credit facility, which can be increased by up to $750 million with bank consent[147] - The company maintained compliance with all covenants under its credit facilities as of December 31, 2025[149] - The company has access to approximately $276 million in short-term unsecured credit facilities for non-U.S. subsidiaries as of December 31, 2025[149] Tax and Currency Management - The effective tax rate for Q1 2026 was 11.7%, down from 16.4% in Q1 2025, primarily due to higher discrete tax benefits[126] - The company expects approximately $9 million of pre-tax net unrealized losses on cash flow hedges to be reclassified into earnings over the next 12 months[153] - The company uses foreign currency forward exchange contracts to hedge against foreign currency risks associated with expected future cash flows[152] - The company’s credit ratings as of February 5, 2026, include a short-term rating of A-2 and a long-term rating of A from Standard & Poor's, both with a stable outlook[150] Share Repurchase - The company repurchased approximately 0.4 million shares for $154 million in Q1 2026, with $773 million remaining for future share repurchases under board authorization[144]