Loading...
01/11 03:34
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial metrics, including a 10% sales growth in the process segment and a 7% increase in adjusted EPS. The Q&A session reveals cautious optimism, with management addressing concerns like Sensia's dissolution and margin expansion. The commitment to market expansion and improved margins, along with a high free cash flow conversion, supports a positive outlook. Although management avoided setting new margin targets, the overall sentiment is positive, suggesting a likely stock price increase of 2% to 8%.
Q4 Sales Both reported and organic Q4 sales were up double digits versus prior year. Organic year-over-year sales growth of 13% was led by continued strength in our product businesses. Sequentially, Q4 sales grew high single digits, which was better than expected. Favorable comps from a year-over-year standpoint contributed to this growth.
Annual Recurring Revenue (ARR) ARR was up 8% in the quarter. Growth was driven by large software and services wins globally, despite some customers delaying discretionary services spending.
Intelligent Devices Segment Sales Organic sales were up 14% year-over-year and low double digits sequentially. Growth was driven by the power control business and the CUBIC acquisition, which helped win competitive projects globally.
Software & Control Segment Sales Organic sales grew 30% year-over-year, driven by momentum in the Logix business and new software wins like Plex and Fiix. Sequential growth was also strong.
Lifecycle Services Segment Sales Organic sales were down 4% year-over-year, slightly below expectations. Project delays across core business and Sensia contributed to the decline.
Segment Margin Overall segment margin was 22.5%, driven by higher volume and strong productivity. Adjusted EPS of $3.34 was well above expectations.
Free Cash Flow Free cash flow conversion was 114% for the year, exceeding expectations. This was attributed to strong operational execution and solid performance across the P&L.
Discrete Industry Sales Sales in Discrete were up 20% year-over-year, with strong growth in e-commerce and warehouse automation (over 70% growth year-over-year) and good performance in automotive (low double-digit growth).
Hybrid Industries Sales Double-digit growth was observed across food and beverage, home and personal care, and life sciences. Growth was driven by productivity and operational efficiency in existing facilities.
Process Segment Sales Sales grew 10% year-over-year, with growth across all industries. Customers focused on driving efficiency and profitability in existing facilities.
Full Year Fiscal 2025 Sales Reported and organic sales were up about 1% versus prior year. Total ARR grew 8%. Segment margin was 20.4%, and adjusted EPS was $10.53, up 7% year-over-year. Free cash flow conversion was 114%, exceeding expectations.
Plex platform deployment: Stanley Electric, a Japanese Tier 1 automotive supplier, will deploy the cloud-native Plex platform across 25 global sites.
Verve platform adoption: GSK selected the Verve platform for asset vulnerability management across 33 sites over the next 5 years.
Clearpath business growth: Double-digit year-over-year growth in OTTO autonomous mobile robot business, with plans for profitability in fiscal '26.
Plex software win: THG, a U.K.-based global e-commerce leader, chose the cloud-native MES and quality management solution to eliminate manual processes and drive operational efficiency.
E-commerce and warehouse automation: Sales grew over 70% year-over-year, with a significant European win involving FactoryTalk Optix platform and digital services for 28 sorting facilities.
Data center growth: Strong double-digit growth driven by AI data centers, with wins like Alternative Heat Ltd. for modular cooling panels in Europe.
Food and beverage expansion: Electrolit Manufacturing selected Rockwell for automation and digital solutions in a new U.S. beverage blending and bottling facility.
Mining modernization: Vale Base Metals modernized their Sudbury mill with Rockwell's arc-resistant power control systems, enhancing safety and efficiency.
Cost reduction and margin expansion: Achieved $325 million in structural productivity savings, exceeding the $250 million target.
Segment margin improvement: Overall segment margin reached 22.5%, driven by higher volume and strong productivity.
Lifecycle Services challenges: Sales declined 4% year-over-year due to project delays and trade policy uncertainties.
Sensia joint venture dissolution: Rockwell will assume 100% ownership of its contributed process automation business, leading to lower revenue but higher operating margins.
North America investment: Announced a $2 billion investment over 5 years to modernize infrastructure, grow talent, and enhance digital capabilities.
Cost Absorption and Margin Expansion: The company faces challenges in absorbing higher costs while expanding margins, especially with limited growth in top-line guidance.
CapEx Activity and Long-Cycle Businesses: CapEx activity and longer-cycle businesses remain muted, with customers holding off on larger investments, impacting growth.
Customer Discretionary Spending: Some customers are delaying discretionary services spending, which could affect revenue from software and services.
Sensia Joint Venture Dissolution: The dissolution of the Sensia joint venture will result in lower revenue, though with higher operating margins. This indicates a strategic risk in the oil and gas vertical.
Trade and Policy Uncertainty: Project delays are occurring as customers wait for more clarity and stability around the impact of trade and policy on their operations.
Weaker Demand in Process Industries: Process customers are focusing on efficiency in existing facilities due to weaker demand and low commodity prices, which could limit growth opportunities.
Macroeconomic and Geopolitical Uncertainty: The company is less certain about the overall macroeconomic and geopolitical environment, which could impact capital expenditure recovery and growth.
Regulatory and Tax Changes: The implementation of BEPS Pillar Two is expected to increase the effective tax rate, creating a financial headwind.
Lifecycle Services Segment Performance: Lifecycle Services experienced a 4% decline in organic sales, with project delays and seasonality affecting performance.
Configure-to-Order Shipments: Ongoing softness in configure-to-order shipments is expected to impact Intelligent Devices sales in the near term.
Fiscal 2026 Revenue Growth: Reported sales growth is expected to be in the 3% to 7% range, with a midpoint of 5%. Organic sales growth is projected at 2% to 6%, with 4% at the midpoint.
Segment Margin Expansion: Segment operating margin is expected to expand by over 100 basis points, reaching 21.5% for fiscal 2026.
Adjusted EPS: Adjusted EPS is projected to range from $11.20 to $12.20, with a midpoint of $11.70.
Annual Recurring Revenue (ARR): ARR is expected to grow high single digits in fiscal 2026.
Free Cash Flow Conversion: Free cash flow conversion is expected to be 100% in fiscal 2026.
Capital Expenditures: Targeted CapEx spending is projected to be about 3% of sales, focusing on plant and digital infrastructure investments.
Regional Performance: North America is expected to continue being the strongest-performing region in fiscal 2026.
Lifecycle Services Segment: Reported sales growth is expected to be flat, with margins in the low teens, lower than last year.
Intelligent Devices Segment: Reported sales growth is expected to be in the mid- to high single digits, with margins in the high teens to low 20s, representing a 150 to 200 basis point improvement year-over-year.
Software & Control Segment: Reported sales growth is expected to be mid-single digits, with margins in the low 30s, slightly up year-over-year.
Q1 Fiscal 2026 Outlook: Sequential sales decline in Q1 is expected, followed by gradual sequential improvement in subsequent quarters. Adjusted EPS growth for Q1 is projected to exceed 25% year-over-year.
Dividends: For the year, we deployed about $1 billion of capital towards dividends and share repurchases.
Share Repurchase: For the year, we deployed about $1 billion of capital towards dividends and share repurchases, while we continue to pause on our inorganic investments.
The earnings call highlights strong financial metrics, including a 10% sales growth in the process segment and a 7% increase in adjusted EPS. The Q&A session reveals cautious optimism, with management addressing concerns like Sensia's dissolution and margin expansion. The commitment to market expansion and improved margins, along with a high free cash flow conversion, supports a positive outlook. Although management avoided setting new margin targets, the overall sentiment is positive, suggesting a likely stock price increase of 2% to 8%.
The earnings call summary presents mixed signals: strong discrete and hybrid sales contrast with declining process industry sales. Margins in Intelligent Devices and Lifecycle Services are down, though Software & Control margins improved significantly. The Q&A reveals strategic investments for growth and margin expansion, but concerns about CapEx spending and delays in U.S. capacity projects persist. Overall, the mixed financial performance, combined with strategic initiatives and market uncertainties, suggests a neutral stock price movement in the short term.
The earnings call summary presents a mixed picture. Strong EPS and margin improvements are offset by project delays, competitive pressures, and currency impacts. The Q&A reveals no significant additional risks, but management's vague responses on future growth and margins add uncertainty. Despite a robust share buyback program, the overall sentiment remains neutral due to the lack of clear positive catalysts and ongoing economic uncertainties.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
