Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rockwell Automation Inc (ROK, Financial) reported a solid sequential improvement in customer demand across many parts of its business, with a healthy intake of orders and a book-to-bill ratio in line with historical norms.
- The company's Intelligent Devices segment saw double-digit sequential growth across all key product lines, driven by strong performance in the Power Control business.
- Software & Control organic sales were up 2% year-over-year, with increased adoption of the FactoryTalk Design Studio, featuring a GenAI Copilot.
- Rockwell Automation Inc (ROK) achieved a segment margin of 20.4% and adjusted EPS of $2.45, both above expectations, driven by cost reduction and margin expansion actions.
- The company is increasing its full-year segment margin target to 20% and expects adjusted EPS to be about $9.70 at the midpoint, reflecting strong execution and demand.
Negative Points
- Reported sales were down 6% year-over-year, with organic sales down 4% due to difficult year-over-year comparisons.
- Lifecycle Services organic sales decreased 6% year-over-year, impacted by trade and policy uncertainty affecting large CapEx projects.
- The company's energy business underperformed expectations due to customers exercising capital discipline and project delays.
- Unfavorable currency reduced sales by about 2 percentage points, impacting overall financial performance.
- Despite strong execution, there remains uncertainty in the second half regarding pricing to offset new tariffs and the timing of CapEx investments by customers.
Q & A Highlights
Q: Can you elaborate on the strong growth in e-commerce and warehouse automation, and does this include data centers?
A: Yes, the growth in that vertical is driven by multiple factors, including warehouse automation for consumer-facing industries and e-commerce players building new fulfillment centers. Data centers are also part of this growth, particularly through our cubic power distribution equipment. - Blake Moret, CEO
Q: Lifecycle Services has been a consistent source of upside. What caused the recent slowdown in growth?
A: The slowdown is primarily due to delays in CapEx-intensive projects within the process verticals, affected by lower commodity prices and pauses in digital services spending. However, our competitiveness remains strong, and some delayed projects have already come in. - Blake Moret, CEO
Q: How are customers balancing reshoring acceleration with macroeconomic concerns?
A: Customers remain optimistic about US manufacturing, but delays are due to concerns about cost certainty, interest rates, and demand from end markets. However, we see positive trends in e-commerce, warehouse automation, and life sciences, which are expected to continue. - Blake Moret, CEO
Q: Can you provide more detail on the tariff impact and how Rockwell is positioned compared to competitors?
A: Our exposure includes imports from Mexico, Canada, and China, with most being USMCA compliant. Our US manufacturing footprint is significant, and the redundancy established during the supply chain crisis is beneficial. We are positioned to offset tariff costs through pricing and supply chain actions. - Christian Rothe, CFO
Q: What is the outlook for operating leverage and margin expansion as revenue recovers?
A: We aim for 35% incrementals, with opportunities for margin expansion as volumes recover. We continue to manage costs prudently, prioritizing new product innovation and customer-facing resources while maintaining a lean headcount. - Christian Rothe, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
