Rockwell Automation Q4 Earnings Call Highlights

Key Points

• Rockwell delivered solid fiscal 2026 growth: Core sales rose 9%, adjusted EPS increased 27% to $13.42, and full-year operating margin expanded 330 basis points to 22.2%. Fourth-quarter adjusted EPS rose 16% to $3.88, including an $0.11-per-share benefit from tariff-related items.
• Fiscal 2027 guidance calls for continued growth: Rockwell forecast 6%–9% organic sales growth and adjusted EPS of $14.50–$15.50, with pricing and productivity expected to help offset inflation. The outlook includes a one-percentage-point benefit from prior-year tariff refund accruals.
• Demand in data centers, semiconductors and automotive supported fourth-quarter momentum: semiconductor sales rose almost 50%, and automotive sales increased 15%. Rockwell expects mid-teens growth in its combined semiconductor and data center vertical in fiscal 2027.

Rockwell Automation NYSE: ROK forecast fiscal 2027 organic sales growth of 6% to 9% and adjusted earnings of $14.50 to $15.50 per share, as the industrial automation company expects demand for data center, semiconductor and manufacturing technology to support another year of growth.

The outlook follows a fiscal 2026 in which core sales rose 9% and adjusted earnings per share increased 27% to $13.42. The company’s full-year enterprise operating margin expanded 330 basis points to 22.2%, reaching a long-term target set three years earlier, Chairman and CEO Blake Moret said on the earnings call.

For the fourth quarter, reported sales rose 1%, while organic sales increased 3%. Core sales, which exclude the effects of tariff refunds and the dissolution of the Sensia joint venture, grew 7%. Adjusted earnings rose 16% to $3.88 per share.

Tariff refunds boosted earnings

Fourth-quarter results included a net $0.11-per-share benefit from tariff refund-related items. CFO Christian Rothe said Rockwell received $103 million in refunds from the U.S. government for tariffs paid under the International Emergency Economic Powers Act, along with $5 million in related interest.

The company also initiated a customer refund program for earlier price increases intended to recover those tariff costs. Based on its estimated redemption rate, Rockwell recorded $85 million in customer refunds as a reduction to sales. The earnings impact also reflects a related $8 million nonrecurring charge and taxes, Rothe said.

Enterprise operating margin rose 320 basis points to 24.5% in the quarter. Rothe attributed 140 basis points of the increase to operating performance, 130 basis points to tariff refund items and about 50 basis points to the Sensia dissolution. Segment results did not reflect the tariff refunds.

Fourth-quarter free cash flow was $602 million, up $197 million from a year earlier. Full-year free cash flow conversion was 113%, including a six-percentage-point benefit from tariff refunds.

Data centers, semiconductors and autos drive growth

Sales to discrete industries rose 20% in the fourth quarter, led by semiconductor, data center and automotive demand. Semiconductor sales increased almost 50%, while automotive sales climbed 15% and reached their highest quarterly level in two years, Moret said.

Beginning in fiscal 2027, Rockwell plans to report semiconductor and data center sales as a combined vertical. The two markets together represent about 10% of revenue, and Moret said the company expects mid-teens growth in that category for the year.

Software & Control organic sales rose 15% in the fourth quarter, including 25% growth in Logix sales. Moret said he expects Logix growth to be roughly in line with the segment’s high-single-digit growth forecast for fiscal 2027. He attributed recent demand to underlying market activity and share gains rather than restocking or advance buying.

Intelligent Devices organic sales rose 5%, and its OTTO autonomous mobile robot business reached profitability in the quarter. Lifecycle Services organic sales increased 2%. Mining sales fell about 10% because of project timing and comparisons with the prior year, though Moret said the company expects the market to grow in fiscal 2027.

Outlook assumes pricing offsets inflation

At the midpoint of its fiscal 2027 forecast, Rockwell expects organic sales growth of 7.5%, reported sales growth of about 6%, an enterprise operating margin of 23% and adjusted earnings of $15 per share.

The organic growth outlook includes a one-percentage-point benefit from the prior-year customer tariff refund accrual. The Sensia dissolution is expected to reduce reported growth by about 1.5 percentage points and revenue by $100 million, split evenly between the first and second quarters.

Rothe said the company expects approximately 3 percentage points of underlying price realization in fiscal 2027, which, along with productivity improvements, should help offset inflation. Memory is a significant source of cost pressure, he said, while availability is tighter for some other electrical components, including printed circuit boards.

For the first quarter, Rockwell expects organic sales growth in the mid-single digits and adjusted earnings of about $3 per share. The company anticipates a seasonal sequential decline in sales and margins before gradual improvement during the rest of the year.

Rockwell also expects annual recurring revenue to grow 7% in fiscal 2027, up from 5% in fiscal 2026. Moret said project delays and smaller digital infrastructure rollouts had weighed on recurring revenue growth, but he expects improvement in both software and services.

The forecast does not depend on a broad release of customer capital spending, Moret said. Greater spending could push revenue toward the high end of the guidance range.

About Rockwell Automation (NYSE:ROK)

Rockwell Automation, Inc is an industrial automation and digital transformation company headquartered in Milwaukee, Wisconsin. Its roots date to 1903, when it was founded as the Compression Rheostat Company.

The company provides hardware, software and services that help manufacturers automate and manage industrial operations. Its offerings include control systems, sensors, motor-control products, industrial software and services for optimizing production and maintaining equipment. Its Allen-Bradley and FactoryTalk brands are among its best-known product lines.

Rockwell Automation serves customers across a range of industries and operates in markets around the world.

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