Rockwell Automation Q4 2025 Earnings Call Transcript

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Provided by Quartr
November 6, 2025

Key Takeaways

  • Positive Sentiment: Rockwell finished FY25 with Q4 organic sales up 13%, double-digit sales and operating earnings growth, adjusted Q4 EPS of $3.34, full‑year adjusted EPS of $10.53, record free cash flow conversion of 114% and structural productivity savings exceeding $325 million.
  • Positive Sentiment: Software & control momentum drove Q4 (organic +30%), Logix unit volumes reached pre‑COVID levels in H2, Plex/Fix won large global deals, and the ClearPath AMR acquisition grew double digits and is expected to be profitable in FY26.
  • Neutral Sentiment: Rockwell and SLB will orderly dissolve the Sensia JV; Rockwell will assume 100% of the process automation business, which will reduce reported revenue by roughly $250 million annually but simplify go‑to‑market and improve operating margin by about 50 bps (the transaction included a non‑cash Sensia impairment taken in Q4).
  • Negative Sentiment: Q4 included one‑time accounting moves: a legacy asbestos defense accrual of $136 million pre‑tax (~$0.91/share) and related definition changes to adjusted EPS (the company excluded legacy asbestos/environmental charges, which raised FY25 adjusted EPS by $1.03).
  • Positive Sentiment: FY26 guidance: reported sales growth of 3–7% (organic 2–6%), ARR growth high single digits, segment margin expansion >100 bps, midpoint adjusted EPS of $11.70, ~100% free cash flow conversion, and targeted CapEx ~3% of sales, with ~2% price contribution (1% underlying + 1% tariff).
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Earnings Conference Call
Rockwell Automation Q4 2025
00:00 / 00:00

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Operator

Thank you for holding and welcome to Rockwell Automation's quarterly conference call. I need to remind everyone that today's conference call is being recorded. Later in the call, we will open up the lines for questions. If you have a question at that time, please press star one. At this time, I would like to turn the call over to Aijana Zellner, Head of Investor Relations and Market Strategy. Ms. Zellner, please go ahead.

Aijana Zellner
Aijana Zellner
Head of Investor Relations at Rockwell Automation

Thank you, Joanne. Good morning, and thank you for joining us for Rockwell Automation's fourth quarter fiscal 2025 earnings release conference call. With me today is Blake Moret, our Chairman and CEO, and Christian Rothe, our CFO. Our results were released earlier this morning, and the press release and charts have been posted to our website. Both the press release and charts include, and our call today will reference, non-GAAP measures. Both the press release and charts include reconciliations of these non-GAAP measures. A webcast of this call will be available on our website for replay for the next 30 days. For your convenience, a transcript of our prepared remarks will also be available on our website at the conclusion of today's call.

Aijana Zellner
Aijana Zellner
Head of Investor Relations at Rockwell Automation

Before we get started, I need to remind you that our comments will include statements related to the expected future results of our company and are therefore forward-looking statements. Our actual results may differ materially from our projections due to a wide range of risks and uncertainties that are described in our earnings release and detailed in all our SEC filings. With that, I'll hand it over to Blake.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Thanks, Aijana, and good morning, everyone. I'll make a couple of initial comments before we turn to our fourth quarter results. When we introduced guidance for fiscal year 2025 last November, amid a mixed set of headwinds and tailwinds for growth, much of the discussion centered on additional detail around the cost reduction and margin expansion actions we initiated in 2024. With the top-line guidance range that included limited growth, we knew it would be a challenge to both absorb higher costs and expand margins. With the very busy 12 months of fiscal year 25 in the books, I'm proud of the team's execution as we have returned to top-line growth and continued to reduce costs. Rockwell is well positioned for sustained market-beating growth and profitability as we build on this success for fiscal 2026 and beyond.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

We close the year with another strong quarter of outperformance versus our expectations, including double-digit year-over-year growth in both sales and operating earnings. Our differentiated portfolio, price discipline, and continued focus on productivity all contributed to this great finish to the year. Free cash flow was also very good in the quarter and for the year. As we will discuss, we're taking further steps to streamline the organization and increase efficiency in the service of customer value and expanded margins. Uncertainty remains, but it's clear that countries around the world are more aware than ever of the strategic importance of investing in advanced manufacturing capabilities and capacity. Nowhere is this more apparent than in the U.S., our home market. Let's now turn to our fourth quarter results on slide three. Both reported and organic Q4 sales were up double digits versus prior year.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

While we did have favorable comps from a year-over-year standpoint, Q4 sales grew high single digits sequentially, which was better than we expected. Organic year-over-year sales growth of 13% was led by continued strength in our product businesses. Similar to the last two quarters, CapEx activity in longer cycle businesses remained muted, with customers holding off on larger investments. On our last earnings call, we flagged the potential for Q4 pull-ins into Q3. Based on our analysis of daily orders and sales trends, inventory levels in our channel, and machine builder surveys, pull-in orders were less than expected in Q3 and not evident in Q4. Annual recurring revenue was up 8% in the quarter. While some customers continued to delay discretionary services spending, we did have a number of large software and services wins around the world in Q4.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

One notable win was with Stanley Electric, a Japanese tier-one automotive supplier who will deploy our cloud-native Plex platform across 25 global sites. We also secured a key cybersecurity win in life sciences, with GSK selecting our Verve platform as their new standard for asset vulnerability management to be deployed across 33 sites over the next five years. In our intelligent devices segment, organic sales were up 14% versus prior year and up low double digits sequentially. Strong sequential growth in the quarter was driven by our power control business, where a combination of our existing business and our CUBIC acquisition is helping us win competitive projects around the world. A good example of this was our win with Ferry Systems, a Spanish system integrator who will be providing our flexible and compact motor control system for Africa's largest desalination plant.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

I'll share some additional power control wins later on the call. We also had a good quarter in our Clearpath business with double-digit year-over-year growth in our OTTO Autonomous Mobile Robot business. I'm pleased with how this acquisition continues to add new ways to win and expand our customer base. Our AMR business grew double digits in fiscal 2025, and we are optimistic about fiscal 2026 as we plan for Clearpath to turn profitable in the year. Software and control organic sales in the quarter grew 30% year-over-year, led by continued momentum in our Logix business, both versus prior year and sequentially. On the software front, Plex and FiiX continue to add new logos as we augment our existing sales force with new go-to-market partners. One of our Plex software wins in Q4 was with THG, a U.K.-based global e-commerce leader in beauty and nutrition.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

This customer chose our cloud-native MES and quality management solution to eliminate manual processes and drive further operational efficiency. Organic sales and lifecycle services were down 4% versus prior year, slightly below our expectations. Book-to-bill in this segment was 0.9, consistent with our historical Q4 seasonality. We have continued to see project delays across both our core business and Sensia as customers wait for more clarity and stability around the impact of trade and policy on their operations. Regarding our Sensia joint venture with SLB, following a strategic review, both parent companies have decided to pursue an orderly dissolution. Rockwell will assume 100% ownership of the process automation business that we initially contributed to the joint venture. SLB will again fully own the parts that they contributed. After the expected close of the transaction in the first half of this year, fiscal 2026.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Rockwell will realize lower revenue but higher operating margin going forward due to the deconsolidation. Rockwell's resulting sales into the Oil and Gas vertical will be about 10%, with a simplified go-to-market motion. That go-to-market approach continues to include SLB as an important partner with deeper relationships than the two companies had six years ago. I want to be clear that Sensia did not meet our long-term expectations. That is why SLB and Rockwell have jointly agreed to make this change. However, the changes we are making demonstrate our continued commitment to the Oil and Gas market. We are well positioned to grow in this space. Our portfolio has expanded since the JV was launched, with new Process I/O and process safety capabilities for Logix, an industry-leading portfolio of cloud-native software applications, and deeper domain expertise.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Importantly, we have taken this step in order to grow in this vertical with improved profitability going forward. Christian will add more detail on the financial impact in the quarter and the benefits going forward later on the call. Turning back to our fourth quarter, Rockwell's overall segment margin of 22.5% and adjusted EPS of $3.34 were well above our expectations, driven by higher volume and strong productivity. We ended this fiscal year with over $325 million of structural productivity savings, exceeding our original target of $250 million. Similar to last quarter, tariffs did not have a meaningful impact on our results in Q4. Christian will talk more about tariffs and the expected fiscal 2026 impact in a few moments. Moving to slide four to review key highlights of our Q4 industry performance.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Sales in discrete were up 20% year-over-year, with strong growth in e-commerce and warehouse automation and good performance in automotive. Automotive sales exceeded our expectations in the quarter, with low double-digit growth versus prior year. The industry continues to shift from an EV focus to a mix of traditional ICE, hybrid, and electric vehicle offerings. Rockwell has good technical solutions and expertise for all of these types of vehicles. E-commerce and warehouse automation delivered another stand-out quarter, with sales growing over 70% year-over-year. This quarter, Rockwell secured a significant European win with another global logistics and parcel handling company. The customer selected our FactoryTalk Optix platform and digital services to digitize and expand operations across 28 sorting facilities. While our data center business is still relatively small, we continue to see strong double-digit growth with multiple wins across the globe.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

This quarter, Rockwell won a project with Alternative Heat Limited to supply modular cooling panels for large data centers in Europe. The rise of AI data centers is driving demand for faster deployment, advanced cooling solutions, and secure industrial-grade control platforms. Our Logix control platform and modular power distribution technology are well positioned to meet these needs. We'll share more about our differentiation and growth in the data center space at our investor day later this month. Turning to our hybrid industries, we saw double-digit growth across food and beverage, home and personal care, and life sciences. In food and beverage, our customers are prioritizing productivity and operational efficiency in existing facilities. The industry is going through a period of consolidation, restructuring, and evolving consumer preferences.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

While this dynamic might delay some of the larger CapEx investments near term, we continue to build a strong pipeline of new capacity projects, both globally and in the U.S. In the quarter, Electrolit Manufacturing selected Rockwell as a key automation and digital partner for their state-of-the-art beverage blending and bottling facility in Waco, Texas. This is Electrolit's first greenfield in the U.S. Sales growth in our life sciences vertical was also strong in Q4 and exceeded our expectations. We continue to see growth in our software and cybersecurity services across the product lifecycle. We're also seeing increased automation adoption in the medical device segment. One of the important wins here this quarter was with Haumiller, where our independent cart technology is helping accelerate and optimize production of a high-speed auto injector line for the obesity drug market. Moving to process.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Sales in this segment grew 10% with year-over-year growth across all industries. Similar to last quarter, process customers are focusing on driving efficiency and profitability in their existing facilities as they continue to grapple with weaker demand and low commodity prices. Rockwell's technology is well suited for both greenfield and brownfield investments, as demonstrated by several large wins in the quarter in energy, mining, and metals. A good example of this was our win with Vale Base Metals, where our arc-resistant power control systems are modernizing their Sudbury mill to significantly enhance safety and operational efficiency. This win positions Rockwell as a key automation partner in one of Canada's most critical mining operations. Turning to slide five in our Q4 organic regional sales, North America had a strong finish to the year and was once again our best-performing region in the quarter.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

We expect North America to continue to be our strongest region in fiscal 2026. Last quarter, we announced a $2 billion investment over the next five years to modernize infrastructure, grow talent, and enhance digital capabilities. These initiatives are now underway and will unlock future growth and margin expansion with the U.S. as the primary beneficiary. We'll share more in the months ahead. Let's move to slide six for key highlights of full year fiscal 2025. Our reported and organic sales were up about 1% versus prior year. Total ARR grew 8% with solid performance in our software as a service business. We ended the year with a segment margin of 20.4% and adjusted EPS of $10.53. The improvement of over 100 basis points in year-over-year segment margin was driven by our cost reduction and margin expansion actions and strong price discipline.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Free cash flow conversion of 114% exceeded our expectations for the year. I'm proud of our execution to get back above 100% free cash flow conversion, which remains an important part of our financial framework. Let's now move to slide seven to review our fiscal 2026 outlook. As we look to fiscal 2026, we are confident in our ability to gain share and expand margins. We are less certain about the overall macro and geopolitical environment, as well as the timing of the CapEx investment recovery in our key verticals. Increased stability in trade policy will help unlock additional capital spending. We expect our reported sales growth for the year to be in the 3%-7% range. The midpoint of our guide assumes a sequential sales decline in Q1, which is typical, followed by gradual sequential improvement in the subsequent quarters.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Christian will provide more detail on this and the expected impact from price and tariffs in his section. Annual recurring revenue is slated to grow high single digits next year. We expect our segment margin to expand by over 100 basis points, and our adjusted EPS is projected to be $11.70 at the midpoint. We expect free cash flow conversion of 100% in fiscal year 2026. Before I turn it over to Christian, I want to reiterate how proud I am of the execution of the team in the quarter and throughout the year. To be sure, there remain plenty of opportunities for continued improvement, and we are taking action to further our progress throughout the coming year and beyond.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

As we'll discuss in less than two weeks at Investor Day, keys to execution include strengthening a high-performance culture, accelerating top-line growth, expanding margin, and continuing our progress in operational excellence. These are the elements of the Rockwell operating model. With that, I'll turn it over to Christian.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Thank you, Blake. Good morning, everyone. Before I get into our strong fourth quarter results, I want to spend a few minutes highlighting some of our one-time items unique to Q4 so you understand how they flow through the P&L and where adjustments were made. At a high level, all these changes are outlined on slide eight. For additional financial details, please also refer to slides 21 and 22. First, starting in Q4, we're introducing a new engineering and development expense line in our statement of operations.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

This aligns with the SEC's expanded segment disclosure rules and enhances visibility into key metrics that inform management decisions, particularly total innovation spend. Engineering and development includes what you typically think of as R&D, which has been about 6% of sales historically, and our sustaining engineering spend, which maintains existing technology and has been about 2% of sales. Reclassifying these costs from cost of sales to operating expenses increases gross margin by about 8 percentage points, with no impact to the total P&L. This change is applied consistently across historical periods, as shown in the Q4 earnings slide deck appendix, page 21. Importantly, this move improves visibility into Rockwell Automation's total development spend, aligns our reporting with industrial and tech peers, and provides a more meaningful view of gross margin performance.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Second, we're making a change to how we treat certain costs related to our legacy asbestos exposure, which is unrelated to our ongoing operations. Historically, we expense the defense costs for these claims as they were incurred. In Q4, we changed our accounting policy to a full horizon accrual for defense costs, consistent with how we account for indemnity. All told, inclusive of the indemnity and the defense cost accrual update, the result was a one-time pre-tax charge of $136 million, or $0.91 per share, in the fourth quarter. This is the accrual portion of the changes. Because these costs are not tied to current operations, we are also updating our definition of adjusted income and adjusted EPS to exclude legacy asbestos and environmental charges. In Q4, this change excluded $141 million in pre-tax charges, or $0.94 per share, from adjusted earnings.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

That includes the $136 million accrual, as well as $5 million of normal asbestos and environmental spend we incurred in the fourth quarter. The EPS impact is $0.91 from the accrual and $0.03 from the normal spend, both now excluded. For full year fiscal 2025, the definition change increased adjusted EPS by $1.03, with $0.91 from the Q4 accrual update and $0.12 from excluding legacy asbestos and environmental costs that we incurred for the full year. Without the definition change to adjusted EPS and excluding other one-time items in the quarter, Q4 adjusted earnings would have grown 34% compared to the 32% under the new definition. For the full year, EPS growth was unchanged under the new definition. When compared to our previous guide, the Q4 change, excluding one-times, was a net benefit of $0.03. For the full year, the net benefit was $0.12.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Moving to the third item on the slide, we recorded an impairment in our Sensia business following the decision to dissolve the JV, which Blake discussed. The net result is a non-cash impairment charge of $110 million, or $0.97 per share, net of tax and the NCI adjustment. For reference, the approximate annualized impact from the planned dissolution will be a $250 million revenue reduction and virtually no impact on operating earnings. The approximate margin benefit to Rockwell on an annualized basis will be an increase of about 50 basis points. Finally, in Q4, we made a voluntary $70 million contribution to our U.S. pension plan. As Blake mentioned earlier, we delivered 114% free cash flow conversion for the year, inclusive of that contribution.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Excluding the contribution, our conversion was 119%, with free cash flow reaching a record $1.4 billion and reflective of strong operational execution and solid performance across the P&L. All financials reported in our earnings release, conference call presentation, and in our 10-K, which will be filed next week, reflect these changes. Turning to our financial results, let's go on to slide nine, fourth quarter key financial information. Fourth quarter reported sales were up 14% versus prior year, exceeding our expectations and closing 2025 on a strong note. About one point of growth came from currency. About four points of our organic growth came from price, with about one point of that coming from tariff-based pricing. Price cost was favorable in the quarter. Company gross margins under our new reporting methodology expanded 290 basis points year-over-year, and segment operating margin increased 240 basis points.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

While tariffs had a neutral impact on EPS, they did cause a slight margin dilution in the quarter. Adjusted EPS of $3.34 was above our expectations, primarily due to outperformance on revenue, better segment mix, and favorable price. The adjusted effective tax rate for the fourth quarter was about 18%, up from about 15% last year, driven by higher discrete benefits in the prior year. For the full year fiscal 2025, our adjusted ETR was 17%. Free cash flow in Q4 was $405 million and was $38 million higher than the prior year. Slide 10 provides the sales and margin performance overview of our three operating segments. Intelligent devices' margin of 19.8% decreased 90 basis points year-over-year due to a tough comparison with last year's Clearpath earnout reversal and higher compensation this year, resulting in the incrementals in the teens.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Excluding the earnout reversal, incrementals would have been about 30%. Software and control margin of 31.2% was up 880 basis points versus prior year, driven by outstanding 30% organic sales growth and good price realization. The segment saw year-over-year incrementals in the high 50s. Lifecycle services margin of 17.5% was up 30 basis points year-over-year. A mid-single digit organic sales decline and higher comp would normally have driven segment margin lower year-over-year. However, the team continued to deliver strong project execution and higher productivity. Overall, for Rockwell, the incremental margin on the year-over-year sales growth was about 40% in Q4. I want to take out a moment to point out the sequential movement we saw in each of our segments. Intelligent devices had sequential incrementals in the high 20s on low double-digit sales growth, reflecting seasonal shipments of configured order, which created a sequential negative mix.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Software and control sequential incrementals were in the low 20s, with modest sequential sales growth after a very strong Q3. Lifecycle services saw similar sequential dollar growth in both sales and segment earnings, yielding 100% conversion on strong project execution. Overall, for Rockwell, the incremental margin on the sequential sales growth was in the high 30s. Let's move to the next slide, 11, for the adjusted EPS walk from Q4 fiscal 2024 to Q4 fiscal 2025. Year-over-year, core performance had a $1.45 impact in Q4. Software and control was the primary driver of both sales and earnings growth in the quarter. The largest driver in our core was volume, followed by structural productivity and price. Compensation had a $0.45 impact in Q4, compared to our prior expectation of about $0.30 of impact, driven by our outperformance in the quarter.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Full-year compensation expense, which includes merit and bonus, ended the year at $255 million. As I mentioned earlier, we are lapping the prior-year benefit from a Clearpath earnout reversal this quarter. With some other one-time items, this resulted in a $0.15 headwind. Slide 12 provides full year 2025 key financial information. Reported and organic sales increased 1% to $8.3 billion, 200 basis points better than our original guidance midpoint for the year. Currency was neutral. Full-year segment margin of 20.4% increased 110 basis points from last year and was 140 basis points better than our original guide. The increase was due to our margin expansion and cost reduction actions, price, and favorable mix. This was partially offset by higher compensation and unfavorable net currency. Adjusted EPS of $10.53 was up 7% and well over $1 better than the midpoint of our initial guide for the year.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

For the year, we deployed about $1 billion of capital towards dividends and share repurchases, while we continued to pause on our inorganic investments. Our capital structure and liquidity remained strong. Moving on to the next slide, 13, to discuss our guidance for the full year. Our organic sales growth guidance is 2%-6%, or 4% at the midpoint. We expect about 100 basis points of currency benefit, so our reported revenue growth is expected to be 5% at the midpoint. Our guidance does not include the anticipated impact from the Sensia dissolution. Once the JV is dissolved, we'll update our FY 2026 guide for the remainder of the year. As we mentioned, this will reduce reported revenue and increase margin percentage, but have no significant impact on EPS. Our segment operating margin guidance is 21.5%, more than 100 basis points higher than year-over-year.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Our adjusted EPS guidance is a range of $11.20-$12.20, or $11.70 at the midpoint. We expect a couple of points of price for fiscal 2026. 1% on underlying price and 1% from tariff price. From this growth, we expect our FY 2026 incremental margin to exceed 40%, inclusive of tariff-based pricing. Looking ahead to 2026 capital expenditures, we plan to increase investments in plant and digital infrastructure, with targeted CapEx spending of about 3% of sales. In terms of the calendarization, as Blake mentioned, we expect a sequential decline in Q1, followed by a gradual sequential improvement in subsequent quarters. This is true for both sales and margins as we progress through the year. Now, let me share some additional color on our first quarter.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

In Q1, we expect overall company sales to be down low double digits sequentially, given normal seasonality and the continued uncertainty and slower CapEx activity. With that said, we do expect good year-over-year growth in both sales and margins, with total company segment margins in the high teens range. This translates to more than 25% year-over-year growth for adjusted EPS. From a business segment standpoint, intelligent devices sales in Q1 are expected to be down low double digits sequentially due to ongoing softness in our configured order shipments. As a result, we expect intelligent devices segment margins to be in the mid to high teens. Software and control margin is expected to be in the high 20s in the first quarter on sequential sales declines in the high single digits.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Lifecycle services sales are expected to be down high single digits sequentially, driven by a combination of both normal seasonality and continued CapEx project delays. We expect segment margin for lifecycle services in the low double digits. For the full year, we expect segment sales and margin as follows. Intelligent devices reported sales growth is expected to be in the mid to high single digits. We expect margins in the high teens to low 20s, or 150-200 basis points higher year-over-year, driven by continued progress on productivity. Software and control reported sales growth is expected to be mid-single digits. We expect margins in the low 30s, up slightly year-over-year, and driven by better volume and price. Lifecycle services reported sales growth is expected to be flattish. We expect margins in the low teens, lower than last year.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Let's turn to slide 14 for our adjusted EPS walk for the full year. Our core is expected to be $1.40 for the year. Included in our core is productivity, which is the term we are using for operationalizing our ongoing focus on cost reduction and margin expansion. FX is expected to be a $0.20 tailwind. We expect our adjusted effective tax rate this year to be 20%, reflecting the implementation of BEPS Pillar 2. The resulting EPS headwind from tax is $0.40. A few additional comments on fiscal 2026 guidance for your models. Corporate and other expense is expected to be around $100 million. Since we are no longer including legacy asbestos and environmental costs and other income, corporate and other expense is about $18 million lower than it otherwise would have been for the year.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Net interest expense for fiscal 2026 is expected to be about $120 million. We're assuming average diluted shares outstanding of about 112.7 million shares, and we are targeting approximately $500 million worth of share repurchases during the year. I'd like to thank the global Rockwell team for the outstanding execution that allowed us to exceed our cost reduction and margin expansion targets and company guidance for fiscal 2025. This organization is ready to build on this momentum and deliver another strong year. With that, I'll turn it back to Blake for some closing remarks before we start Q&A.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Thanks, Christian. This year's Automation Fair and Investor Day at McCormick Place in Chicago is the best venue to see what's special about Rockwell. We're looking forward to showcasing the best solutions and partner network in the business.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Including software-defined automation and AI-enabled technology from sensor to software, integrated intelligent devices, robotics, and digital services. You will hear from customers about our differentiated value and from management as we review progress on our goals, details of our internal investments, and inorganic priorities. I'm looking forward to seeing you there. Aijana will now begin the Q&A session.

Aijana Zellner
Aijana Zellner
Head of Investor Relations at Rockwell Automation

Thanks, Blake. We would like to get to as many of you as possible, so please limit yourself to one question and a quick follow-up. Joanne, let's take our first question.

Operator

Thank you. Just as a reminder to ask a question, please press star followed by the number one on your telephone keypad. Our first question comes from Scott Davis from Melius Research. Please go ahead. Your line is open.

Scott Davis
Scott Davis
Senior Equity Research Analyst at Melius Research

Hey, good morning, Blake and Christian. Morning. Aijana. Lots of questions. I'm sure you're going to get lots of questions on the guide, but I just would want to start with Sensia. Just what's the postmortem, Blake? It just doesn't feel like that ever really got traction the way you guys expected it to, even though I think there was a fair amount of support for it at the highest levels in both companies. What was kind of the postmortem of why it didn't work out?

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Yeah. Scott, I think for starters, standing up a new entity a few months before COVID kind of descended on the world had a particular impact in energy markets for that period of time. That created a challenging starting point. I think from an operations standpoint, the scope that Sensia had laid out was broad, which added cost. While we worked it into a position of operational profitability.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

We jointly decided that it wasn't going to meet our long-term goals to justify the continued, let's say, complexity of a JV. Returning the originally contributed businesses added simplification. I would also say that we're different companies than we were in 2019. We've added considerable technology capabilities, both in terms of the control architecture as well as software and digital twins, simulation, which is useful in a lot of these applications. We felt it was the right time to simplify. Obviously, the increased profitability reflected on the overall company as attractive as well.

Scott Davis
Scott Davis
Senior Equity Research Analyst at Melius Research

It just sounds like just since there's not a lot of earnings impact of the adjustment that it wasn't a very profitable JV overall. Is getting process up to discrete margins something that is more a function of volumes, or is there a cost or product issue or scale? I mean. Just a little color there, and then I'll pass it on.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Yeah, sure. First of all, just due to the nature of process applications typically requiring more engineering content, order-specific engineering content, you have more people involved. That is going to put some suppression on margins as opposed to just providing raw product into an application. That being said, the work that Lifecycle Services has done over the last couple of years to really dramatically increase their margins reflects the proof that those margins can be improved even in a people-intensive business. Obviously, the further incorporation of artificial intelligence and the software-defined automation that we've been talking about helps as well as you make greater use of libraries and reduced integration costs through digital twins.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

I think the work that we're doing on the products, the work we're doing in Lifecycle Services specifically, the Rigor with which they select projects to pursue, which was part of the reason for the good performance in Q4, all of those things that bode well for us to be able to continue to grow in process, specifically in energy and Oil and Gas, more profitably going forward.

Scott Davis
Scott Davis
Senior Equity Research Analyst at Melius Research

Okay. Helpful. I'll see you guys in Chicago.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Yes.

Scott Davis
Scott Davis
Senior Equity Research Analyst at Melius Research

Best of luck.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

We'll be there.

Operator

Our next question comes from Andrew Obin from Bank of America. Please go ahead. Your line is open.

Andrew Obin
Andrew Obin
Managing Director of Equity Research at Bank of America

Hey, yes. Good morning.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Morning.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Morning.

Andrew Obin
Andrew Obin
Managing Director of Equity Research at Bank of America

Impressive growth numbers in software and control. Could you give us a sense? And I know you don't give an exact number. But can you give us a sense where the Logix volumes are. Relative to where we were pre-COVID?

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Sure. So Andrew, in the back half of the year, we touched pre-COVID unit volumes for Logix. For the full year, fiscal 2025, we were still below pre-COVID. There is room to run just with the math of that, as obviously the market is expanding. Of course, we benefited from good price over that period of time. In fiscal 2026, we do expect Logix unit volumes to get back to those pre-COVID levels and then obviously continue on from there with market growth as well as market share.

Andrew Obin
Andrew Obin
Managing Director of Equity Research at Bank of America

Excellent. I may be wrong on the timing, but I believe in 2026, you are going to start rolling out new Logix products. I am sure you will talk about it at the analyst day. Does that impact sort of margin patterns, seasonality in the year? I think there is a big product upgrade ahead of you over the next couple of years. Thank you.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Yeah. Andrew, you are right. Actually, we've already started. We released the new Logix L9 processor ahead of schedule. We're already taking orders for it. It provides higher performance than any other Logix processor that we've had. That's just one example. Process I/O is off to a good start where we've released a new family of Process I/O. What we've been talking about a lot is software-defined automation, which includes Logix and software forum. You'll be able to see that in a couple of weeks when you're in Chicago. There is a lot of vitality in that business with more to come. In terms of the impact, we don't typically see a big swell of orders when we release a new product. It's more of a contribution to the steady sequential growth of the product family. I will tell you that orders are off to an impressive start for those new products.

Andrew Obin
Andrew Obin
Managing Director of Equity Research at Bank of America

Thanks so much.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Thanks, Andrew.

Operator

Our next question comes from Andy Koplowitz from Citigroup. Please go ahead. Your line is open.

Andrew Kaplowitz
Andrew Kaplowitz
Managing Director of Equity Research at Citigroup

Hey, good morning, everyone.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Hey, Andy.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Good morning.

Andrew Kaplowitz
Andrew Kaplowitz
Managing Director of Equity Research at Citigroup

Blake, Christian, I think you said previously that book-to-bill is now running close to one time. I assume that was the case in Q4. Would you expect that to continue to be the case moving forward? I know today you said bigger CapEx projects are still getting delayed. Are you any more confident that you'll see some of these larger orders move forward in 2026? Can you sustain a book-to-bill around one time without a big improvement in these projects?

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Sure. In general, the product business orders and shipments are really right on top of each other, and we continue to expect that. The orders that distributors are seeing are translating into orders on us at normal rates. Deliveries are fine. We do not expect that to change in the year. We will continue to provide the book-to-bill and Lifecycle Services where you do have some offset due to the longer lead times in projects in that business. In terms of CapEx in the year, it does continue. We do continue to see projects being delayed. As we have characterized it before, we see typically those projects that are customers subject to a higher level of approval, delegation of authority requirement in their organization.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

There are projects coming through. We certainly talked about a few of those a few minutes ago. We expect gradual sequential improvement through the year. The guide does not contemplate some big improvement in the capital environment. That would be a factor that would push us more to the higher end of the guide if we did see a release of capital at a greater rate through the year.

Andrew Kaplowitz
Andrew Kaplowitz
Managing Director of Equity Research at Citigroup

Helpful, Blake. Just looking at your segment margin forecast, as you said, you're forecasting over 40% incremental margin, which could arguably be described as 2026 could arguably be described as a more normal year for Rockwell where you're layering in restructuring savings as productivity. I think incentive comp is more normalized as well versus FY 2025. I think, Christian, you mentioned you're still absorbing some tariff headwinds. Does that mean that that's the kind of incremental margin we can count on from Rockwell moving forward? Maybe just a little bit more on the puts and takes would be helpful.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Sure. Andy, Christian will have some more to say on this. At a high level, while we are proud of good incremental conversion expected in the year due to all the factors that you said, including normalized run rate for compensation, continuing aggressive productivity, and so on, we're not ready to change our guidance for incremental for a long-term framework.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Yeah. Just to build off of that, the long-term framework has us at a 35% incremental number. Again, that's kind of through the cycle, mid-cycle to mid-cycle. You're going to see some variability from quarter to quarter, obviously, and also from year to year periodically. As we're looking at the momentum we're taking into fiscal 2026, that 40% felt like an appropriate number. It's not a heroic change from the 35, but we are seeing just a little bit better opportunity in this coming year.

Andrew Kaplowitz
Andrew Kaplowitz
Managing Director of Equity Research at Citigroup

Thanks, guys.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

See you soon.

Andrew Kaplowitz
Andrew Kaplowitz
Managing Director of Equity Research at Citigroup

See you soon.

Operator

Our next question comes from Julian Mitchell from Barclays. Please go ahead. Your line is open.

Julian Mitchell
Julian Mitchell
Industrials Equity Research Analyst at Barclays

Hi. Good morning.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Morning.

Julian Mitchell
Julian Mitchell
Industrials Equity Research Analyst at Barclays

Good morning. Wanted to start on the top-line guidance. You are just finishing the year with very strong growth. You are guiding for sort of mid-single digits at the midpoint for the year ahead. Starting off, I suppose, with high single-digit year-on-year in the first quarter. Just wanted to try and understand when we are thinking about that revenue guide for the balance of the year, was it constructed with a view around sort of normal seasonality or just very tough comps in the second half? Anything happening to price year-on-year as we move through fiscal 2026?

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Yeah. A couple of comments. Again, I think Christian will have more detail. As we look across the end markets, in general, we're looking at mid-single-digit growth for discrete and hybrid, low single-digit growth for process. We had some outliers there: semiconductor, flattish, and discrete. Warehouse, e-commerce up around 10%. In hybrid, good results expected from the heart of the business: food and beverage, life sciences, and so on. CapEx continues to be suppressed in terms of spending, and that influences the low single-digit expectation in process.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Yeah, as we kind of shape that year out, Julian, you're right. We implied in that guide and the way we think about the first quarter and the way we shape the first quarter, yeah, we're looking at high single-digit growth year-over-year in the first quarter. The comps get more difficult as the year goes on. We are looking for sequential revenue improvement from Q1 to Q2 and then on through the remainder of the year. If you're looking at year-over-year growth rates during the course of the year, then yes, those are going to be at a declining level, again, more due to the difficult comps.

Julian Mitchell
Julian Mitchell
Industrials Equity Research Analyst at Barclays

Just on that pricing, I think it was four points in the fourth quarter. Does that sort of assume to be de minimis tailwind exiting this new fiscal year?

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Yeah. The way we talked about pricing for fiscal 2026 is that we're looking at one point of underlying price and one point of tariff-based price is what's included in our guide. As you're aware, price is not something that you can just universally make changes around. There are market dynamics, there are competitive dynamics. Part of what we're working on is we want to make sure we have a balanced approach. Tariff-based pricing is, of course, absolutely critical for us to ensure that that EPS neutrality is kept intact.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

At the same time, we also want to make sure we get underlying price. Tariffs have helped us on price realization broadly. You saw that kind of throughout fiscal 2025, which is a great thing. As we turn the corner and we go into fiscal 2026, again, we want that balanced approach. Ensuring that we can get that tariff-based price is absolutely critical. When we think about the 1% underlying price, again, we feel really good about our ability to realize that. Hopefully, we can continue to try to execute even at a higher clip.

Julian Mitchell
Julian Mitchell
Industrials Equity Research Analyst at Barclays

Thanks. And then just a quick follow-up on margins. You had 110 basis points of margin expansion. The year just finished off volumes that were down slightly in the year, and a big comp headwind. The year ahead, volumes are up, low single digit in the guide, no big comp headwind, and the same margin expansion. Is your point there that you're just using that sort of placeholder for now of 40%, that there isn't some big hike in specific investment spend or something like that?

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Yeah. There is no really big hike in investment spend, that's for sure. I don't know if I'd call it a placeholder necessarily. We had really good progress in fiscal 2025 on cost reduction and margin expansion. Blake highlighted it. That $325 million is a very significant number for this organization. We have additional opportunities as we go into fiscal 2026. We're going to talk about that a little bit more when we get into Investor Day as well. There is a portion of that that's definitely built into our guide. At the same time, we want to make sure that we are continuing to have great profitability growth, and that 40% number seems, again, seems like something we can go execute against.

Julian Mitchell
Julian Mitchell
Industrials Equity Research Analyst at Barclays

Great. Thank you.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Thank you.

Operator

Our next question comes from Chris Snyder from Morgan Stanley. Please go ahead. Your line is open.

Christopher Snyder
Christopher Snyder
Executive Director of Equity Research at Morgan Stanley

Thank you. It certainly seems like demand is getting better if we look at the order rates and the above $2 billion the last two, three quarters. Last year, they were below $2 billion. Do you think that this is cycle momentum? Do you think this is reshoring tailwind investment coming through? Do you think you guys are just gaining share versus the market? Because when we look broadly at the industrial economy or even your competitors in discrete, we're not really seeing this level of acceleration or momentum broadly. Thank you.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Sure. Chris, I think there's pieces of each of the factors that you mentioned. First of all, the U.S. is probably the healthiest market around the world, and that's home field for us with high share. So we're going to get a lot of that benefit from investment. We will talk more about this in a couple of weeks at investor day. We did see higher orders due to capacity expansion in the U.S. this year than last year, and we expect to see higher orders from that activity in fiscal year 2026.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

The demand, particularly for the product side of business, which is still more than half of our business, is good. Optimization of brownfields, adding software into facilities that have a base level of automation, and looking for more efficiency with information management software. We have a portfolio that's second to none. We do think that we're taking share there. I think it's all those pieces that put us in a favorable position.

Christopher Snyder
Christopher Snyder
Executive Director of Equity Research at Morgan Stanley

Thank you. I wanted to follow up around the medium-term margin target, which you guys have out there of 23.5%. You just did a 22.5%. I know Q4 is the seasonal peak, but the quarter did have headwinds from FX and tariffs. I imagine there's more cost-out opportunity next year, given that you guys exited pretty strong on that front. Another 50 basis points, I guess, of margin uplift from Sensia JV going away. It just feels like we're getting awfully close to that 23.5% target. I guess in that context, are you rethinking that? And do you think there's meaningful upside to that prior target? Thank you.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Chris and I are both smiling because it is something that we're proud of, is that progress. We are laser-focused on attaining the current targets that we've set out there. As we've talked about, we've got plans already underway to get us to and through that number. We're focused on hitting it first.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Yeah. It's absolutely—we want to continue to make progress against that. Blake's response in saying to and through, that is top of mind for us. We are really spending a lot of time and energy to make sure that we have a lot of runway to continue to go through that as we move forward. At the same time, we're not ready to put a new target in place. Let's go achieve this one first.

Christopher Snyder
Christopher Snyder
Executive Director of Equity Research at Morgan Stanley

Thank you. I appreciate that.

Operator

Our next question comes from Stephen Tusa from JPMorgan. Please go ahead. Your line is open.

Stephen Tusa
Stephen Tusa
Equity Research Analyst at JPMorgan

Hi. Good morning. Congrats on the execution.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Thanks, Stephen. Morning.

Stephen Tusa
Stephen Tusa
Equity Research Analyst at JPMorgan

Just on inflation, what level of inflation did you guys see in the quarter?

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Inflation was relatively modest. Keep in mind that we have a lot of cost reduction and margin expansion actions that are underway inside the organization. It is a good countermeasure that we have been taking all year long. We expect that to continue to be an opportunity for us to work to offset inflation as we go into 2026.

Stephen Tusa
Stephen Tusa
Equity Research Analyst at JPMorgan

Okay. And then the 1% tariff that you got, you said that was offset in the quarter, or that was—or you were ahead of the tariffs in the quarter?

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Yeah. On the EPS line, it was neutral for us in the quarter. That is the tariff-based price that we achieved. The tariff-based price that we achieved in the fourth quarter was simply to offset the tariff-based cost.

Stephen Tusa
Stephen Tusa
Equity Research Analyst at JPMorgan

Okay. That makes sense. Going forward for next year, do you still expect inflation to be kind of minimal and then maybe a little bit ahead on the tariff stuff?

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Yeah. We do expect inflation to be relatively minimal. We're not seeing anything out there that we're ready to call out. From the tariff-based price and cost perspective, again, our expectation is to keep that EPS neutral. It's a really important factor for us. That is, we are not using tariffs as an opportunity for us to expand margins. We're not using tariffs as an opportunity for us to grab some profit. We truly are, and importantly for our customers, we are using tariff-based pricing simply to offset the costs that we're incurring.

Stephen Tusa
Stephen Tusa
Equity Research Analyst at JPMorgan

Okay. One last quick one. Just you guys didn't mention orders this quarter. You said last quarter the book-to-bill was around one. I know there's some seasonality here. Where was the— Where did the book-to-bill land this quarter?

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Yeah. Book-to-bill still within that range of around one that we have been talking about with product orders right on top of shipments.

Stephen Tusa
Stephen Tusa
Equity Research Analyst at JPMorgan

Great. Thanks a lot.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Thanks, Stephen.

Operator

Our next question comes from Nigel Coe from Wolfe Research. Please go ahead. Your line is open.

Nigel Coe
Nigel Coe
Managing Director of Equity Research at Wolfe Research

Thanks. Good morning. Thanks for the question. Hey, Christian, I just want to have another crack at the incremental margin of 40%. I think comp came in at 260. This year, I think you've mentioned in the past that 225 is the right run rate. Just wondering if that's still the case. There should be some wraparound on cost from 2025 into 2026. We sized out at $50-$75 million, something like that. Again, is that the right math there?

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Yeah. On the incremental side and specifically around compensation, the number that I gave in my prepared comments was 255. You're right in that ballpark. The way to think about comp for us as we turn the page and look at 2026 is that generally things have normalized. You shouldn't expect us to actually see comp as a specific bar chart in our waterfalls as we talk through it. It's going to be part of our core, as is the productivity and the ongoing cost reduction and margin expansion. That part has generally normalized. We have really good motions in place to continue to work on margin expansion broadly using all the levers inside the organization, whether you are talking about price, cost reduction, and margin expansion again, or just continued leverage on the business. I feel very comfortable around trying to drive towards that 40%.

Nigel Coe
Nigel Coe
Managing Director of Equity Research at Wolfe Research

Is the math on the cost wraparounds in the right zone as well?

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

I think that is correct, but you are talking about—

Nigel Coe
Nigel Coe
Managing Director of Equity Research at Wolfe Research

Yeah. Okay. Yeah. I get it. I get it. Blake, maybe on some of the two of the end markets, auto growing low double digits and warehouse e-com up 70%. Is the warehouse really being driven by— You called out, I think, Clearpath up 25%. I am just wondering if that is the big driver of warehouse and if that continues into 2026. On auto, we are seeing a lot of brownfield expansion plans in the U.S. Just wondering if in your 2026 plan, whether you are expecting auto to be maintaining in the double-digit zone.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Yeah. We are expecting auto to be mid-single digits in fiscal year 2026. It has stabilized in a lot of ways. We are seeing some projects, as they are retooling to ICE and hybrid again. We are not placing a lot of bets on CapEx all springing back there. With respect to e-commerce and warehouse automation, it is really a shared contribution across the company in both traditional sources of value like Logix and variable speed drives and motion control, along with some of the newer things that do include the auto AMRs as well as software throughout that.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

It is an industry, and as we have talked about it, it is multifaceted. To be sure, there's some data center in there, but there's also parcel handling. There's CPG companies that have their own warehousing as well. We have great readiness to serve in that area, which many of these customers have identified as kind of a hidden opportunity for major productivity in their operations.

Nigel Coe
Nigel Coe
Managing Director of Equity Research at Wolfe Research

That's great. Thank you.

Blake Moret
Blake Moret
Chairman and CEO at Rockwell Automation

Yep.

Aijana Zellner
Aijana Zellner
Head of Investor Relations at Rockwell Automation

Joanne, we will take one more question.

Operator

Certainly, our last question will come from Jeff Sprague from Vertical Research. Please go ahead. Your line is open.

Jeffrey Sprague
Jeffrey Sprague
Founder and Managing Partner at Vertical Research

Thank you. Good morning, everyone. Hey, Christian, I just wanted to come back to sort of understanding sort of the Sensia accounting and sort of like in my simple mind, right, I think if you and Schlumberger are picking up your ball and going home, there shouldn't be a charge. I understand you build an organization, and therefore you need to take a charge around dismantling it. If you're dismantling overhead as you take it apart, why isn't there some earnings benefit going forward from the dissolution of those costs? Hopefully, that makes sense. That's what I'm a little confused by.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Yeah. It does make sense. There's a couple of factors that go with this. Obviously, when we established the joint venture, we did have to put it onto our balance sheet. That had a value to it. When we took the decision to dissolve it, there was an impairment that occurred. We had to recognize that, which was what we did in the fourth quarter. As we pull apart those pieces, there are parts that come back to Rockwell. There are parts that go to SLB.

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

There's a P&L that's attached to both of those, as well as assets that go with them and employees and whatnot. There's a bunch of mathematics that go with it. There are some other minor transactional costs that will occur as we get closer to the closing date. Generally, that's how it all pulls together. When we think about what the future state is going to be, again, as Blake mentioned, we do expect it to be somewhat beneficial to our overall company margins as well as that for the lifecycle services business.

Jeffrey Sprague
Jeffrey Sprague
Founder and Managing Partner at Vertical Research

Understood. Corporate looks low, even kind of making the adjustment for the asbestos-related accounting. Is this where some of the overhead and restructuring and kind of cost actions that you've talked about? Are really bearing fruit, or is there some kind of change in allocation between corp and the segments going on? Is that 100-ish a pretty good run rate going forward? Maybe it grows with inflation going forward, but is that a pretty good baseline?

Christian Rothe
Christian Rothe
SVP and CFO at Rockwell Automation

Yeah. The 100 is a pretty good baseline. The delta, you're right, there's a couple of deltas that are happening in there. One is the removal of the asbestos and environmental. The other part is, and the driver of that next step of the reduction is related to implementation costs on our cost reduction and margin expansion activities that we incurred in fiscal 2025. A lot of that's built into our base right now, and it's being driven more within the various aspects in the segments. So that's Where that's going, but it's also a lot of those costs, those execution costs are also going to be going away.

Jeffrey Sprague
Jeffrey Sprague
Founder and Managing Partner at Vertical Research

Great. Thank you. I'll leave it there. Appreciate it.

Operator

Great. That concludes today's conference call. Thank you for joining us today. At this time, you may disconnect. Thank you.

Executives
    • Christian Rothe
      Christian Rothe
      SVP and CFO
    • Aijana Zellner
      Aijana Zellner
      Head of Investor Relations
    • Blake Moret
      Blake Moret
      Chairman and CEO
Analysts
    • Stephen Tusa
      Equity Research Analyst at JPMorgan
    • Andrew Obin
      Managing Director of Equity Research at Bank of America
    • Christopher Snyder
      Executive Director of Equity Research at Morgan Stanley
    • Andrew Kaplowitz
      Managing Director of Equity Research at Citigroup
    • Nigel Coe
      Managing Director of Equity Research at Wolfe Research
    • Scott Davis
      Senior Equity Research Analyst at Melius Research
    • Jeffrey Sprague
      Founder and Managing Partner at Vertical Research
    • Julian Mitchell
      Industrials Equity Research Analyst at Barclays
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