MILWAUKEE--(BUSINESS WIRE)--Rockwell Automation, Inc. (NYSE: ROK) today reported first quarter fiscal 2025 results.
"Q1 margins and EPS came in well above our expectations this quarter, reflecting some early benefits of Rockwell’s renewed focus on operational excellence and cost discipline. We continue to deliver on our cost reduction and margin expansion projects we outlined last year. From a demand perspective, we are encouraged by better-than-expected order performance in the quarter with sequential growth across all regions and business segments. While there is still some macroeconomic and policy uncertainty weighing on customers’ capex plans, Rockwell won multi-million dollar strategic orders across key industries, especially in the U.S., our home market," said Blake Moret, Chairman and CEO.
Fiscal Q1 2025 Financial Results
Fiscal 2025 first quarter reported sales were $1,881 million, down (8.4)% from $2,052 million in the first quarter of fiscal 2024. Organic sales decreased (7.6)% and currency translation decreased sales by (0.9) pts.
Fiscal 2025 first quarter Net income attributable to Rockwell Automation was $184 million or $1.61 per share, compared to $215 million or $1.86 per share in the first quarter of fiscal 2024. The decreases in Net income attributable to Rockwell Automation and diluted EPS were primarily due to lower sales volume. Fiscal 2025 first quarter adjusted EPS was $1.83, down (10)% compared to $2.04 in the first quarter of fiscal 2024 primarily due to lower sales volume.
Pre-tax margin was 11.3% in the first quarter of fiscal 2025 compared to 12.7% in the same period last year. The decrease in pre-tax margin was primarily due to lower sales volume partially offset by the benefits from cost reduction and margin expansion actions.
Total segment operating earnings were $321 million in the first quarter of fiscal 2025, down (10)% from $356 million in the same period of fiscal 2024. Total segment operating margin was 17.1% compared to 17.3% a year ago. The decrease in segment operating margin was primarily due to lower sales volume partially offset by the benefits from cost reduction and margin expansion actions.
Cash flow generated by operating activities in the first quarter of fiscal 2025 was $364 million, compared to $33 million in the first quarter of fiscal 2024. Free cash flow in the first quarter of fiscal 2025 was $293 million, compared to an outflow of $35 million in the same period last year. Increases in cash flow provided by operating activities and free cash flow were primarily due to no payout of incentive compensation in the first quarter of fiscal 2025 related to fiscal 2024 performance.
Fiscal Year 2025 Outlook
The table below provides updated guidance for sales growth and earnings per share for fiscal 2025.
| Updated Guidance | Prior Guidance | |
| Reported sales midpoint | ~$8.1B | ~$8.2B |
| Organic sales growth (1) | (4)% - 2% | (4)% - 2% |
| Inorganic sales growth | ~ 0% | ~ 0% |
| Currency translation | ~ (1.5)% | ~ 0% |
| Reported sales growth | (5.5)% - 0.5% | (4)% - 2% |
| Diluted EPS | $7.65 - $8.85 | $7.65 - $8.85 |
| Adjusted EPS (1) | $8.60 - $9.80 | $8.60- $9.80 |
"We continue to expect gradual sequential improvement in our sales and margins as we move through this fiscal year, including potential impacts from tariffs. I’m pleased with the progress our teams are making toward our long-term productivity and margin expansion targets, and I’m confident we are making the right investments to drive sustained growth and profitability. Nobody is better positioned than Rockwell to help American manufacturers create the future of industrial operations,” Moret continued.
Following is a discussion of first quarter results for our business segments.
Intelligent Devices
Intelligent Devices first quarter fiscal 2025 sales were $806 million, a decrease of (13)% compared to $927 million in the same period last year. Organic sales decreased (12)% and currency translation decreased sales by less than (1) pt. Segment operating earnings were $120 million compared to $150 million in the same period last year. Segment operating margin decreased to 14.9% from 16.2% a year ago. The decrease from prior year was driven by lower sales volume, partially offset by the benefits from cost reduction and margin expansion actions.
Software & Control
Software & Control first quarter fiscal 2025 sales were $529 million, a decrease of (12)% compared to $604 million in the same period last year. Organic sales decreased (12)% and currency translation decreased sales by less than (1) pt. Segment operating earnings were $133 million compared to $151 million in the same period last year. Segment operating margin increased to 25.1% from 25.0% a year ago. The benefits from cost reduction and margin expansion actions, and positive price/cost in the quarter were mostly offset by lower sales volume.
Lifecycle Services
Lifecycle Services first quarter fiscal 2025 sales were $546 million, an increase of 5% compared to $521 million in the same period last year. Organic sales increased 5% and currency translation decreased sales by less than (1) pt. Segment operating earnings were $68 million compared to $55 million in the same period last year. Segment operating margin was 12.5% compared to 10.6% a year ago driven by the benefits from cost reduction and margin expansion actions and higher sales volume.
Supplemental Information
ARR - Total ARR grew 11% compared to the end of the first quarter of fiscal 2024.
Corporate and other - Fiscal 2025 first quarter Corporate and other expense was $38 million compared to $40 million in the first quarter of fiscal 2024.
Purchase accounting depreciation and amortization - Fiscal 2025 first quarter Purchase accounting depreciation and amortization expense was $35 million, down $1 million from the first quarter of fiscal 2024.
Tax - On a GAAP basis, the effective tax rate in the first quarter of fiscal 2025 was 16.4% compared to 18.1% in the first quarter of fiscal 2024. The adjusted effective tax rate for the first quarter of fiscal 2025 was 17.5% compared to 17.9% in the prior year. These decreases were primarily due to a favorable geographic mix of pre-tax income and higher discrete benefits recognized in the current year.
Share repurchases - During the first quarter of fiscal 2025, the Company repurchased approximately 0.4 million shares of its common stock at a cost of $99 million. At December 31, 2024, approximately $1.2 billion remained available under our existing share repurchase authorizations.
Return on Invested Capital (ROIC) - ROIC was 14.5% for the twelve months ended December 31, 2024, compared to 18.5% for the twelve months ended December 31, 2023. The decrease is primarily driven by lower pre-tax net income.
Definitions
Non-GAAP Measures - Organic sales, total segment operating earnings, total segment operating margin, adjusted income, adjusted EPS, adjusted effective tax rate, free cash flow, free cash flow conversion, and ROIC are non-GAAP measures that are reconciled to GAAP measures in the attachments to this release.
Total ARR - Annual recurring revenue (ARR) is a key metric that enables measurement of progress in growing our recurring revenue business. It represents the annual contract value of all active recurring revenue contracts at any point in time. Recurring revenue is defined as a revenue stream that is contractual, typically for a period of 12 months or more, and has a high probability of renewal. The probability of renewal is based on historical renewal experience of the individual revenue streams, or management's best estimates if historical renewal experience is not available. Total ARR growth is calculated as the dollar change in ARR, adjusted to exclude the effects of currency, divided by ARR as of the prior period. The effects of currency translation are excluded by calculating Total ARR on a constant currency basis. Total ARR includes acquisitions even if there was no comparable ARR in the prior period. We believe that Total ARR provides useful information to investors because it reflects our recurring revenue performance period over period including the effect of acquisitions. Our measure of ARR may be different from measures used by other companies. Because ARR is based on annual contract value, it does not represent revenue recognized during a particular reporting period or revenue to be recognized in future reporting periods and is not intended to be a substitute for revenue, contract liabilities, or backlog.
Conference Call
A conference call to discuss the quarterly results will be held at 8:30 a.m. Eastern Time on February 10, 2025. The call will be an audio webcast and accessible on the Rockwell Automation website (www.rockwellautomation.com/en-us/investors.html). Presentation materials will also be available on the website prior to the call.
Interested parties can access the conference call by using the following numbers: (888) 330-2022 in U.S.; (365) 977-0051 in Canada; +1 (646) 960-0690 for other countries. Use the following passcode: 5499533. Please call in 10 minutes prior to the start of the call.
Both the presentation materials and a replay of the call will be available on the Investor Relations section of the Rockwell Automation website through March 10, 2025.
This news release contains statements (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “project,” “plan,” “expect,” “anticipate,” “will,” “intend,” and other similar expressions may identify forward-looking statements. Actual results may differ materially from those projected as a result of certain risks and uncertainties, many of which are beyond our control, including but not limited to:
- macroeconomic factors, including inflation, global and regional business conditions (including adverse impacts in certain markets, such as Oil & Gas), commodity prices, currency exchange rates, the cyclical nature of our customers’ capital spending, and sovereign debt concerns;
- laws, regulations, and governmental policies affecting our activities in the countries where we do business, including those related to tariffs, taxation, trade controls, cybersecurity, and climate change;
- our profitability and market competitiveness may be adversely impacted by changes in trade policies, including tariffs or other factors;
- the severity and duration of disruptions to our business due to natural disasters (including those as a result of climate change), pandemics, acts of war, strikes, terrorism, social unrest, or other causes;
- the availability and price of components and materials;
- the availability, effectiveness, and security of our information technology systems;
- our ability to manage and mitigate the risk related to security vulnerabilities and breaches of our hardware and software products, solutions, and services;
- the successful execution of our cost productivity and margin expansion initiatives;
- our ability to attract, develop, and retain qualified employees;
- the successful integration and management of strategic transactions and achievement of the expected benefits of these transactions;
- the successful development of advanced technologies and demand for and market acceptance of new and existing hardware and software products;
- our ability to manage and mitigate the risks associated with our solutions and services businesses;
- competitive hardware and software products, solutions, and services, pricing pressures, and our ability to provide high quality products, solutions, and services;
- the availability and cost of capital;
- disruptions to our distribution channels or the failure of distributors to develop and maintain capabilities to sell our products;
- intellectual property infringement claims by others and the ability to protect our intellectual property;
- the uncertainty of claims by taxing authorities in the various jurisdictions where we do business;
- the uncertainties of litigation, including liabilities related to the safety and security of the hardware and software products, solutions, and services we sell;
- our ability to manage costs related to employee retirement and health care benefits; and
- other risks and uncertainties, including but not limited to those detailed from time to time in our Securities and Exchange Commission (SEC) filings.
Rockwell Automation, Inc. (NYSE: ROK), is a global leader in industrial automation and digital transformation. We connect the imaginations of people with the potential of technology to expand what is humanly possible, making the world more productive and more sustainable. Headquartered in Milwaukee, Wisconsin, Rockwell Automation employs approximately 27,000 problem solvers dedicated to our customers in more than 100 countries as of fiscal year end 2024. To learn more about how we are bringing The Connected Enterprise® to life across industrial enterprises, visit www.rockwellautomation.com.