Rockwell Automation Raises Adjusted EPS Guidance, Delivers Robust Cash Flow and Margin Expansion in FY2025

Adjusted Earnings Growth and Margin Expansion Define the Year

Rockwell Automation (NYSE: ROK) finished fiscal 2025 with clear operational momentum. Adjusted EPS for the full year climbed to $10.53, up 7% from the prior year, outpacing the 1% growth in reported and organic sales. Notably, the fourth quarter saw a 32% jump in adjusted EPS year-over-year to $3.34, highlighting strong performance even amid accounting adjustments and one-time charges.

The company's total segment operating margin increased to 20.4% in 2025 (from 19.3% in 2024), reflecting higher sales driven by price realization and productivity improvements. Segment operating earnings also advanced 7% to $1.70 billion for the year.

Cash Generation and Operational Streamlining Accelerate

One of the standout achievements for Rockwell Automation in 2025 was its substantial growth in cash generation. Free cash flow more than doubled to $1.36 billion, representing 113% growth over the prior year, and free cash flow conversion hit 114%. Operating cash flow climbed to $1.54 billion, aided by disciplined cost controls and efficiency initiatives.

At the same time, Rockwell took strategic steps to streamline financial reporting and its operating model, notably updating adjusted earnings definitions to exclude legacy asbestos and environmental charges—allowing for clearer insight into the company’s core performance.

Business Segments Show Mixed but Improving Results

Segment performance painted a nuanced picture, with 'Software & Control' emerging as the main driver of margin expansion. In Q4, this segment delivered sales growth of 31% and improved its operating margin from 22.4% to 31.2% on strong demand and price realization. For the year, operating earnings for 'Software & Control' rose 34%.

'Intelligent Devices' posted stable annual sales but improved Q4 performance with a 15% increase in reported sales, driven by a favorable product mix. 'Lifecycle Services' faced modest annual declines but expanded margins in Q4 thanks to productivity improvements.

Outlook for FY2026: Earnings and Margin Gains Expected

Looking ahead, Rockwell’s fiscal 2026 guidance points to continued gains: organic sales growth of 2–6%, adjusted EPS of $11.20–$12.20, and operating margin expansion, all while targeting further cash generation. These forecasts exclude the expected dissolution of the Sensia joint venture, with Rockwell assuming full control of its contributed process automation business.

Annual Recurring Revenue (ARR) continued to expand at 8%, reflecting steady momentum in subscription and service-oriented revenue streams—an important pillar for the company’s future cash flow and margin consistency.

Balance Sheet Remains Solid Amid Ongoing Buybacks

Rockwell ended the fiscal year with $468 million in cash and cash equivalents, and further reduced its short-term debt. The company repurchased 1.5 million shares in 2025, deploying $419 million toward shareholder returns, with nearly $1 billion still authorized for future buybacks.

Takeaway: Resilient Performance Sets Up Further Expansion

Rockwell’s disciplined approach—prioritizing margin growth, recurring revenues, and cash generation—sets a constructive tone for 2026, despite macroeconomic uncertainty. Adjusted performance metrics offer investors a clearer window into core profitability, and new guidance underscores confidence in further operational gains. Watch for execution on margin initiatives, performance of the ‘Software & Control’ segment, and cash deployment as key drivers into the next fiscal year.

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