ROK · Q1 2026 Earnings

Cautious

Rockwell Automation

Reported February 5, 2026

30-second summary

Rockwell printed +12% reported and +10% organic revenue growth against a guide that called for a low-double-digit sequential decline, with adjusted EPS of $2.75 and segment margin at 20.7% — a clean beat on every Q1 metric management had set. Yet the FY26 response was deliberately narrow: adjusted EPS floor raised $0.20 to $11.40 (high end unchanged at $12.20) — and management explicitly tied that raise to a Q1 discrete tax benefit being rolled into the full year, not to improving operating fundamentals ("we aren't seeing enough to change our sales and margin guide"). Organic and reported sales bands were reaffirmed, and management explicitly downgraded the sequential margin expansion cadence from "hundreds of basis points" to "tens of basis points." The tone is the most conditional in four quarters — strong execution paired with explicit guardrails on extrapolation.

Headline numbers

EPS

Q1 FY2026

$2.75

Revenue

Q1 FY2026

$2.10B

+12.0% YoY

Gross margin

Q1 FY2026

48.3%

Free cash flow

Q1 FY2026

$0.17B

Operating margin

Q1 FY2026

20.7%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$2.10B	+12.0%	$2.32B	-9.1%
EPS	$2.75	—	$3.34	-17.7%
Gross margin	48.3%	—	48.4%	-10bps
Operating margin	20.7%	—	22.5%	-180bps
Free cash flow	$0.17B	—	$0.41B	-58.0%

Guidance

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Adjusted EPS	Q1 FY2026	more than 25% year-over-year growth	2.75	Delivered strong YoY growth well above guidance; prior year Q1 FY2025 EPS ~2.20, implying ~25% growth	Beat
Reported Sales Growth	Q1 FY2026	down low double digits sequentially	12% YoY	Prior guide focused on sequential decline; actual YoY growth of +12% significantly exceeded macro backdrop implied by sequential guide	Beat
Organic Sales Growth	Q1 FY2026	down low double digits sequentially	10%	Organic growth of +10% YoY vs. prior sequential decline expectation	Beat
Segment Operating Margin	Q1 FY2026	high-teens range	21.2% (Adjusted EBITDA margin)	Margins expanded into the low-20s range, above the 'high-teens' guidance	Beat

New guidance

Metric	Period	Guide	YoY
Sequential Sales Growth	Q2 FY2026	slightly up sequentially	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Free Cash Flow Conversion	FY2026	100%	approximately 100%	Subtle softening from 'exactly 100%' to 'approximately 100%'; Q1 actual FCF conversion 55% signals headwind	Lowered
Diluted EPS (GAAP)	FY2026	$10.40 - $11.40	$10.75 - $11.55	+$0.35 at low end; +$0.15 at high end; midpoint +$0.25	Raised

Reaffirmed unchanged this quarter: Adjusted EPS ($11.40 - $12.20), Reported Sales Growth (3% - 7%), Organic Sales Growth (2% - 6%), Segment Margin Expansion (over 100 basis points), Recurring Revenue Growth (high single digit growth)

Segment KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
Intelligent Devices	$0.953B	+18.0%
Software & Control	$0.629B	+19.0%
Lifecycle Services	$0.523B	-4.0%

Other KPIs

Q1 FY2026

Segment	Q1 FY2026
Total ARR Growth	7%
Intelligent Devices Segment Operating Margin	17.3%
Software & Control Segment Operating Margin	31.2%
Lifecycle Services Segment Operating Margin	14.1%
Organic Sales Growth	10%
ROIC (12-month trailing)	16.3%
Adjusted EBITDA Margin	21.2%
Free Cash Flow Conversion	55%

Management tone

Q4 capex hangover → Q1 cost program ramp → Q2 cost-program operationalization → Q3 share-gain confidence → Q4 offensive posture on FY26 → Q1 FY26: selective upside with explicit conditionality.

Three quarters ago Rockwell was repositioning a discrete cost program into the core operating model. Two quarters ago management decoupled execution confidence from macro confidence. Last quarter the FY26 guide read as deliberately sandbagged on macro. This quarter — after the print blew through the Q1 guide — management took up only the EPS floor (and only because of a tax benefit) and pointedly capped the sequential margin trajectory. "Given the solid start to the year, that sequential margin expansion is going to be in the tens of basis points not the hundreds of basis points." That is a dramatic downward reset of forward margin slope despite Q1 beating the prior margin guide handily, and signals management believes Q1 outperformance is not linearly repeatable through the year.

The capex narrative has tightened further. In Q4 management said share gains were insulated from CapEx timing; this quarter the framing added an explicit gating condition: "We will need to see some additional evidence of accelerating capital spend across additional verticals to move higher in our full year outlook." Two quarters ago the message was "we are confident we can gain share regardless of macro." This quarter the message is "share gains are real but the 2–6% midpoint won't move higher without broader CapEx evidence." That is a more conditional posture than the Q4 call carried.

Tariffs have completed their three-quarter arc from risk → non-event → embedded operating component. This quarter management quantified the structural impact precisely: "two points of total price for fiscal 2026 with one point coming from underlying price and one point from tariff-based price… the impact of tariffs on our first quarter earnings was neutral, but it was a drag of about 30 basis points on segment margins year over year." The quantified 30bps margin drag is the first time tariffs have been called out as a structural margin headwind even when EPS-neutral — a more honest framing than the Q3/Q4 "close to zero" language.

The bifurcation theme is back, sharper. "While large CapEx investments are still on hold for many customers, demand for our products portfolio remains strong, particularly in logics and motion." This is the same observation as Q3/Q4 but the gap has widened: products are accelerating (Intelligent Devices +18%, Software & Control +19%) while Lifecycle Services stays at -4%. Management is no longer suggesting Lifecycle is about to inflect — they are framing the two-track economy as the operating reality of the year, even as Lifecycle bookings (B2B 1.16) suggest the revenue line should eventually follow.

Finally, the EPS floor raise itself is a tone tell — but in the opposite direction from how a typical raise reads. A $0.20 floor raise sourced entirely from a Q1 tax benefit, with the ceiling lifted only $0.10 on GAAP and unchanged on adjusted, signals that management saw no fundamental reason to extend the operating range. Combined with "being only one quarter into the year, we aren't seeing enough to change our sales and margin guide," the message is: Q1 was real, but Rockwell is not running ahead on the year operationally.

Recurring themes management leaned on this quarter:

Discrete modernization demand persisting despite delayed large CapExAI-driven customer wins in troubleshooting and operational controlE-commerce and warehouse automation acceleration (60% growth)Data center power/cooling demand from hyperscaler adoptionTariff-based pricing strategy embedded in guidanceU.S. manufacturing capacity expansion orders as greenfield validation

Risks management surfaced:

Heightened geopolitical uncertainty around trade and regional conflictSupply chain risk from macro volatilityDelayed large project scope narrowing in Lifecycle ServicesTrade policy impacts creating project timing uncertaintySequential margin expansion constrained to tens of basis points vs prior hundreds

Q&A highlights

Scott Davis · Milius Research

Asked management to reconcile cautious commentary with higher S&P capex budgets, and inquired about distributor inventory and restocking behavior.

Management characterized outlook as 'prudent,' noting optimism in certain verticals and good CapEx discussions but insufficient broad-based order releases to raise guidance. Confirmed distributor inventory levels have normalized globally and distributors remain optimistic.

Distributor stock levels are back to normal globallyDialogue about inventory was central issue in 2024 and early 2025 but is resolvedManagement saw optimism at Automation Fair but taking prudent approach

Julian Mitchell · Barclays

Asked for detailed margin driver breakdown by segment for Q2 and implications of price/cost dynamics, including memory chip impacts.

Management guided to light sequential sales improvement across segments with modest margin expansion in Intelligent Devices and Software Control. Lifecycle services expected to hold ~14%. Merit raises factored in. Year-over-year growth mid-single-digit with 100bps segment margin expansion. Memory chip cost inflation estimated at single-digit millions impact.

Q2 EPS target approximately $2.85Segment margin expansion year-over-year ~100 basis pointsFull-year flow-through targeting ~35%Memory chip inflation impact: single-digit millions in both inventory and cost

Andy Kaplowitz · Citigroup

Questioned whether strong Q1 incrementals (>50%) could push full-year incrementals above 40% guidance given Logix strength, and asked about Rock on Rock and dynamic pricing programs.

Management indicated incrementals could improve if Logix maintains Q1 mix but emphasized reliance on broad-based products and organizational productivity initiatives rather than single product line. Highlighted gross margin expansion in Q4 and Q1 from supply chain and cost management. Rock on Rock delivering labor efficiency and energy benefits at Singapore facility, with rollout underway at Twinsburg and greenfield Wisconsin facility.

Logix has strong flow-through profitability but company not relying solely on volume growthProductivity initiatives continuing to drive margin expansion across COGSRock on Rock Singapore facility showing labor efficiency, reduced time to competency, and reduced energy usageBest practices from Singapore being deployed to Twinsburg and new greenfield facility

Chris Snyder · Morgan Stanley

Asked whether new capacity orders are materializing as expected for double-digit 2026 growth or if orders remain on the horizon, and whether cost takeout opportunities beyond 35% incrementals are embedded in full-year guidance.

Management confirmed good Q1 development in new capacity with growth spread across business units (not just large lifecycle projects but also products/Logix/drives/motion). However, acknowledged breadth and speed insufficient to raise full-year organic guide. New capacity coming through engineering firms, integrators, and machine builders. Productivity initiatives are in full-year guide; tariff-based costs are headwind to year-over-year incrementals, but company still targeting 40% full-year flow-through.

New capacity business is relatively evenly split across all business unitsSeeing new capacity in e-commerce/warehouse automation and select hybrid/life sciences verticalsQ1 tariff-based costs are dampening incremental flow-through metrics year-over-yearProductivity/cost reduction initiatives fully embedded in 40% incremental guidance

Steve Tusa · JP Morgan

Asked for bridge on Software Control margin strength and reconciliation of strong earnings growth and margin expansion with year-over-year cash flow decline.

Management noted Software Control margin gains were broad-based across Logix, Awesome (open compute platform), and Factory Talk Optics hardware and software. Plex software ARR growth exceeded company average at 7%. On cash flow: Q1 incentive payouts (occurred in Q1 2026 vs. not in Q1 2025) and working capital use (payables/inventory) drove delta versus prior year. Management characterized Q1 free cash flow conversion as tracking to plan.

Software ARR growth higher than 7% company average, particularly PlexQ1 had outsized incentive payouts from fiscal 2025 performance (not present in Q1 2025)Working capital moved from cash source in Q1 2025 to cash use in Q1 2026 (payables and inventory)

Answers to last quarter's watch list

Whether the FY26 segment margin guide of 21.5% gets raised mid-year. Q1 segment margin came in at 20.7%, materially above the "high teens" Q1 guide, yet management explicitly capped sequential margin expansion at "tens of basis points not hundreds" and reaffirmed the >100bps FY expansion guide without quantifying a new dollar level. The Q1 beat does not buy a guide raise. Status: Continue monitoring

Lifecycle Services book-to-bill moving back above 1.0. Lifecycle Services book-to-bill was 1.16 (above 1.0) — bookings outpaced billings — though revenue stayed at -4% YoY. Segment margin improved 160bps YoY to 14.1%. Status: Resolved positively on bookings, negatively on near-term revenue

Q1 FY26 actual QoQ decline vs the "down low double-digit" guide. Q1 revenue was $2.11B vs Q4's $2.32B, a sequential decline of ~9% — milder than the "down low double-digit" guide and accompanied by +10% organic YoY growth. The macro frame underpinning the prior guide was demonstrably too conservative. Status: Resolved positively

Intelligent Devices margin closing the gap to the 22–24% corridor. Q1 ID margin came in at 17.3%, up 240bps YoY from 14.9% on volume and price/cost, but still well short of the 22–24% corridor. Revenue accelerated to +18% YoY. Status: Continue monitoring

Whether tariff-based pricing actually contributes 1pt to FY26 organic growth. Management reaffirmed the two-point total price assumption (1pt underlying + 1pt tariff-based) and quantified tariffs as a 30bps YoY segment margin drag while remaining EPS-neutral in Q1. Tariff pricing is being realized as planned. Status: Resolved positively

Order acceleration in capacity expansion projects. Management said new capacity is materializing across all business units (not just large projects), but breadth and speed are insufficient to raise the FY organic guide. Specific order figures were not disclosed. Status: Continue monitoring

What to watch into next quarter

Whether Q2 segment margin expands sequentially as guided. Management committed to "tens of basis points" of sequential margin expansion in Q2 with mid-single-digit YoY growth and ~$2.85 EPS. A flat-or-down Q2 segment margin would call the FY >100bps expansion guide into question.

Intelligent Devices margin direction off the 17.3% Q1 print. Despite +240bps YoY, the 22–24% corridor target remains far off. A Q2 print that fails to advance would suggest the corridor is structurally out of reach in FY26.

Free cash flow conversion bounce-back from 55%. FY guide softened from "100%" to "approximately 100%." Q2 conversion needs to clear ~90% to keep the FY guide credible without a back-half hockey stick.

Lifecycle Services revenue conversion of the 1.16 book-to-bill. Bookings are outpacing billings, but revenue is still at -4% YoY. Q2 needs to show the bookings translating into a narrowing revenue decline; otherwise the segment becomes a structural drag on the FY 3–7% reported sales guide.

Whether management raises the EPS ceiling (not just the floor) at H1. This quarter's floor-only raise was tax-driven, not operational. A Q2 floor-and-ceiling raise grounded in operating performance would be the cleanest signal that broad-based CapEx evidence is finally landing.

Specific dollar disclosure on new U.S. capacity expansion orders. Management has now said three quarters in a row that capacity orders are accelerating. Quantified disclosure — even directional — would either validate or undermine the "share gains decoupled from CapEx" thesis.

Sources

Rockwell Automation Q1 FY2026 earnings press release (SEC filing): https://www.sec.gov/Archives/edgar/data/1024478/000102447826000003/q1fy26ex99.htm
Rockwell Automation Q1 FY2026 earnings conference call commentary (as referenced in transcript excerpts)

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