Rockwell Automation Inc. (NYSE: ROK) reported a 12% increase in first-quarter revenue on Thursday, supported by robust demand in North America and significant growth in its software and discrete industrial segments. The industrial technology provider also raised the lower end of its full-year earnings guidance, citing a favorable tax rate and strong execution despite a more cautious performance in Latin America and specific sectors like semiconductors. Following the announcement, the company emphasized a trajectory of sequential improvement in both sales and earnings throughout the remainder of the fiscal year.
Quarterly Financial Performance and Key Metrics
For the first quarter of fiscal 2026, which ended December 31, 2025, Rockwell reported total sales of $2.11 billion, up from $1.88 billion in the prior year’s opening quarter. Organic sales, which exclude the impacts of currency and acquisitions, grew by 10%. Foreign currency translation contributed approximately 2 percentage points to the top-line growth.
Earnings performance exceeded internal expectations, with adjusted earnings per share (EPS) rising 49% to $2.75, compared to $1.85 in the same period last year. On a GAAP basis, diluted EPS was $2.69. The company’s segment operating margin expanded significantly by 360 basis points to 20.7%, driven largely by higher sales volumes.
First Quarter 2026 Financial Data:
Reported Sales: $2.11 billion (+12% YoY)
Organic Sales Growth: 10%
Adjusted EPS: $2.75 (+49% YoY)
Segment Operating Margin: 20.7%
Total Annual Recurring Revenue (ARR): Up 7% YoY
Free Cash Flow: $170 million
Segment and Regional Performance
The company’s growth was unevenly distributed across its business units and geographies. The Software & Control segment led organic growth with a 17% increase, followed by Intelligent Devices at 16%. Conversely, Lifecycle Services saw an organic sales decline of 6%, although its operating margin improved due to better project execution and productivity.
Regionally, North America remained the primary growth engine with a 16% organic sales increase, representing 63% of total reported sales. The Asia Pacific region also showed strength with 18% reported growth. However, Latin America faced headwinds, with organic sales contracting 12% during the quarter.
Strategic Outlook and Guidance Update
Rockwell updated its fiscal year 2026 adjusted EPS guidance to a range of $11.40 to $12.20, up from the previous range of $11.20 to $12.20. The midpoint of this new range represents a 12% year-over-year increase. The revision primarily reflects an updated full-year adjusted effective tax rate, now expected to be approximately 19.5%.
The company maintained its previous targets for:
Reported Sales Growth: 3% to 7%
Organic Sales Growth: 2% to 6%
Segment Operating Margin: Approximately 21.5%
Free Cash Flow Conversion: Approximately 100% of adjusted income
Management noted that these projections do not include potential impacts from the anticipated dissolution of the Sensia joint venture.
Industry Context and Executive Commentary
Executive leadership highlighted that both segment operating margins and adjusted EPS were above the company’s initial expectations for the quarter. Notably, the company reported that international trade tariffs did not have a meaningful impact on earnings during this period.
In terms of industry verticals, the e-commerce and warehouse automation sector saw a dramatic surge of approximately 60% in organic growth, while the chemicals industry grew by roughly 40%. These gains were partially offset by a mid-single-digit decline in the semiconductor sector and a low-single-digit drop in life sciences.
The company expects these mixed dynamics to stabilize, forecasting mid-single-digit organic growth for the automotive and food and beverage sectors throughout the remainder of the fiscal year. As global manufacturers continue to invest in digital transformation, Rockwell’s focus remains on expanding its recurring revenue streams, with Total ARR expected to grow at a high-single-digit rate for the full year.
Reasons to Pass on ROK
- Growth remains uneven across segments, with Lifecycle Services posting a 6% organic sales decline despite margin improvement, indicating pockets of demand weakness within the portfolio.
- Regional performance is mixed, as Latin America experienced a 12% contraction in organic sales, offsetting strength in North America and Asia Pacific.
- Exposure to cyclical end markets persists, with mid-single-digit declines reported in the semiconductor sector and low-single-digit weakness in life sciences.
- Full-year revenue guidance was unchanged, suggesting management does not expect the strong first-quarter performance to materially accelerate overall sales growth.
- Earnings guidance improvement is tax-driven, as the increase to the lower end of the EPS range primarily reflects a more favorable effective tax rate rather than higher operating assumptions.
- Organic sales growth expectations remain modest, with full-year guidance calling for 2% to 6% organic growth despite a strong start to the fiscal year.
- Uncertainty remains around the Sensia joint venture, as guidance does not incorporate potential impacts from its anticipated dissolution.
- Dependence on North America is high, with the region accounting for 63% of total sales, increasing sensitivity to any slowdown in the domestic industrial cycle.
