ROCKWELL AUTOMATION INC
For the period ended Dec 31, 2024. Filed Feb 10, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed Feb 10, 2025
ROK$375.86-1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001024478-24-000088
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-02-10.
0001024478-25-000010
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 133 previous paragraphs and 123 current paragraphs.
82 unchanged; 29 reworded; 12 added; 22 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 13 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
•our profitability and market competitiveness may be adversely impacted by changes in trade policies, including tariffs or other factors;
Current report
•add 1% average annual growth from acquisitions; and
Current report
We expect gradual sequential improvement in our sales and margins through 2025 as we continue to deliver on our cost reduction and margin expansion initiatives introduced in 2024. We expect approximately $250 million of year-over-year benefits from cost reduction and margin expansion actions in 2025 including continuing benefits from restructuring actions we initiated last year and benefits from reduced costs of direct and indirect purchases, increased manufacturing efficiency, and price actions.
Current report
We continue to evaluate the potential impact of announced changes and further potential changes in trade policies and tariffs with the objective of maintaining profitability under a variety of scenarios. In 2024 our direct imports into the United States from third parties and our own manufacturing facilities in Mexico, Canada, and China were approximately $350 million, $100 million, and $100 million, respectively. We have increased, and will further increase, prices in response to enacted tariffs to maintain profitability. Alternative sources of materials and manufacturing locations will be used to also mitigate the impact. We are not expecting tariffs to have a material impact on profitability for the full year.
Current report
Corporate and other expenses were $38 million in the three months ended December 31, 2024, compared to $40 million in the three months ended December 31, 2023.
Current report
Income before income taxes was $213 million in the three months ended December 31, 2024, compared to $260 million in the three months ended December 31, 2023. The decrease in the three months ended December 31, 2024, was primarily due to lower segment operating earnings.
Current report
Total segment operating earnings decreased 9.8 percent year over year in the three months ended December 31, 2024, primarily due to lower sales volume partially offset by the benefits from cost reduction and margin expansion actions.
Current report
In October 2021, the Organization for Economic Cooperation and Development (OECD) and G20 Finance Ministers reached an agreement, known as Base Erosion and Profit Shifting (BEPS) Pillar Two, that, among other things, ensures that income earned in each jurisdiction that qualifying multinational enterprises operate in is subject to a minimum corporate income tax rate of at least 15%. Discussions related to the formal implementation and enactment of this agreement, including within the tax law of each member jurisdiction including the United States, are ongoing. Certain countries have enacted the Pillar Two framework, including Singapore, which is expected to result in the greatest impact to the Company. Enactment of this regulation in its current form would generally apply to the Company beginning in fiscal year 2026, resulting in an increase in our effective tax rate as well as in the amount of global corporate income tax paid.
Current report
Intelligent Devices sales decreased 13 percent year over year in the three months ended December 31, 2024. Organic sales decreased 12 percent year over year, and the effects of currency translation decreased sales by less than 1 percentage point year over year in the three months ended December 31, 2024. For the three months ended December 31, 2024, reported and organic sales decreased in all regions except Latin America.
Current report
Lifecycle Services sales increased 5 percent year over year in the three months ended December 31, 2024. Organic sales increased 5 percent, and the effects of currency translation decreased sales by less than 1 percentage point year over year in the three months ended December 31, 2024. For the three months ended December 31, 2024, reported and organic sales increased in all regions.
Current report
Lifecycle Services segment operating earnings increased 24 percent year over year in the three months ended December 31, 2024. Segment operating margin increased to 12.5 percent in the three months ended December 31, 2024, from 10.6 percent in the same period a year ago, primarily due to the benefits from cost reduction and margin expansion actions and higher sales volume.
Current report
Cash provided by operating activities was $364 million for the three months ended December 31, 2024, compared to $33 million for the three months ended December 31, 2023. Free cash flow was $293 million for the three months ended December 31, 2024, compared to a net outflow of $35 million for the three months ended December 31, 2023. The year over year increases in cash provided by operating activities and free cash flow were primarily due no payout of incentive compensation in the first quarter of fiscal 2025 related to fiscal 2024 performance.
Removed paragraphs (22)
Previous report
•add an average of 1% growth from acquisitions over time; and
Previous report
Our supply chain has largely recovered to pre-pandemic lead times and service levels to our customers. We continue to closely manage our end-to-end supply chain, from sourcing to production to customer delivery, with a continued focus on building resilience across the end-to-end supply chain.
Previous report
Corporate and other expenses were $28.6 million and $96.8 million in the three and nine months ended June 30, 2024, respectively, compared to $32.3 million and $88.8 million in the three and nine months ended June 30, 2023, respectively. The increase in expense in the nine months ended June 30, 2024, includes the year over year impact of costs associated with the acquisition of Clearpath.
Previous report
Restructuring Charges
Previous report
Restructuring charges were $69.8 million in the three and nine months ended June 30, 2024, which relate to actions in conjunction with an enterprise-wide comprehensive program to optimize cost structure and expand margins. See Note 14 in the Consolidated Financial Statements for more information on our restructuring charges.
Previous report
Income before income taxes was $255.0 million and $825.0 million in the three and nine months ended June 30, 2024, respectively, compared to $471.8 million and $1,291.1 million in the three and nine months ended June 30, 2023, respectively. The decrease in the three months ended June 30, 2024, was primarily due to the mark-to-market gains recognized in the third quarter of the prior year related to our previous investment in PTC, restructuring charges recognized in the third quarter of 2024, and lower segment operating earnings. The decrease in the nine months ended June 30, 2024, was primarily due to the mark-to-market gains recognized in the first three quarters of the prior year related to our previous investment in PTC and lower segment operating earnings.
Previous report
Total segment operating earnings decreased 9.8 percent in the three months ended June 30, 2024, primarily due to lower sales volume and unfavorable mix, partially offset by the positive impact of price realization exceeding input costs, lower incentive compensation, and the benefits from cost reduction actions. Total segment operating earnings decreased 12.7 percent in the nine months ended June 30, 2024, primarily due to lower sales volume and unfavorable mix, partially offset by lower incentive compensation and the positive impact of price realization exceeding input costs.
Previous report
Net income attributable to Rockwell Automation was $713.4 million or $6.19 per share in the nine months ended June 30, 2024, compared to $1,084.5 million or $9.34 per share in the nine months ended June 30, 2023. The decreases in Net income attributable to Rockwell Automation and diluted EPS were primarily due to lower pre-tax margin. Pre-tax margin was 13.2 percent in the nine months ended June 30, 2024, compared to 19.9 percent in the same period last year. The decrease in pre-tax margin was primarily due to mark-to-market gains recognized in the prior year related to our previous investment in PTC and lower sales volume. Adjusted EPS was $7.25 in the nine months ended June 30, 2024, down 14.5 percent compared to $8.48 in the nine months ended June 30, 2023, primarily due to lower segment operating margin. Total segment operating margin in the nine months ended June 30, 2024, was 19.0 percent compared to 20.9 percent in the same period a year ago, primarily due to lower sales volume and unfavorable mix, partially offset by lower incentive compensation and the positive impact of price realization exceeding input costs.
Previous report
Intelligent Devices sales decreased 1.1 percent and 2.4 percent year over year in the three and nine months ended June 30, 2024, respectively. Organic sales decreased 1.2 percent and 4.4 percent year over year in the three and nine months ended June 30, 2024, respectively. Currency translation decreased sales by 0.6 percentage points year over year in the three months ended June 30, 2024, and increased sales by 0.2 percentage points year over year, in the nine months ended June 30, 2024. Acquisitions increased sales by 0.7 percentage points and 1.8 percentage points year over year in the three and nine months ended June 30, 2024, respectively. For the three and nine months ended June 30, 2024, reported and organic sales increased in North America and Latin America, but decreased in Europe, Middle East, and Africa and Asia Pacific.
Previous report
Intelligent Devices segment operating earnings decreased 12.9 percent year over year in the nine months ended June 30, 2024. Segment operating margin decreased to 17.7 percent in the nine months ended June 30, 2024, from 19.8 percent in the same period a year ago, primarily due to lower sales volume and supply chain utilization, partially offset by lower incentive compensation.
Previous report
Software & Control segment operating earnings decreased 38.4 percent year over year in the nine months ended June 30, 2024. Segment operating margin decreased to 24.8 percent in the nine months ended June 30, 2024, from 32.8 percent in the same period a year ago, primarily due to lower sales volume, partially offset by lower incentive compensation and the positive impact of price realization exceeding input costs.
Previous report
Lifecycle Services sales increased 11.8 percent and 12.1 percent year over year in the three and nine months ended June 30, 2024, respectively. Organic sales increased 11.3 percent and 10.7 percent year over year in the three and nine months ended June 30, 2024, respectively. Currency translation decreased sales by 0.8 percentage points year over year in the three months ended June 30, 2024, and did not impact sales year over year in the nine months ended June 30, 2024. Acquisitions increased sales by 1.3 percentage points and 1.4 percentage points year over year in the three and nine months ended June 30, 2024, respectively. For the three months ended June 30, 2024, reported and organic sales increased in all regions, except for Europe, Middle East, and Africa. For the nine months ended June 30, 2024, reported and organic sales increased in all regions.
Previous report
Lifecycle Services segment operating earnings increased 132 percent year over year in the three months ended June 30, 2024. Segment operating margin increased to 19.3 percent in the three months ended June 30, 2024, from 9.3 percent in the same period a year ago, primarily due to lower incentive compensation, higher sales volume, strong project execution, and ongoing savings from the prior year structural actions.
Previous report
Lifecycle Services segment operating earnings increased 162 percent year over year in the nine months ended June 30, 2024. Segment operating margin increased to 15.6 percent in the nine months ended June 30, 2024, from 6.7 percent in the same period a year ago, primarily due to lower incentive compensation, higher sales volume, higher margins in Sensia, and ongoing savings from the prior year structural actions.
Previous report
(1)Amounts in the three and nine months ended June 30, 2023, primarily relate to the change in fair value of our previous investment in PTC.
Previous report
(2)Restructuring charges include $64.7 million for severance benefits and $5.1 million for strategic advisory services related to the enterprise-wide severance actions.
Previous report
Cash provided by operating activities was $431.5 million for the nine months ended June 30, 2024, compared to $535.1 million for the nine months ended June 30, 2023. Free cash flow was $271.7 million for the nine months ended June 30, 2024, compared to $437.8 million for the nine months ended June 30, 2023. The year over year decreases in cash provided by operating activities and free cash flow were primarily due to lower pre-tax income, higher incentive compensation payments related to fiscal 2023 performance, and higher tax payments in the first nine months of 2024 compared to the first nine months of 2023, partially offset by decreases in working capital. Free cash flow for the nine months ended June 30, 2024, also includes $62.5 million of higher capital expenditures. Taxes paid in the nine months ended June 30, 2024, include $58.4 million of U.S. transition tax under the Tax Act and $67.4 million for capital gains from the sale of PTC shares.
Previous report
In July 2024, Standard & Poor’s downgraded our short-term rating from A-1 to A-2 and our long-term rating from A to A- and also changed our outlook from negative to stable.
Previous report
Acquisitions - Clearpath Intangible Assets Valuation
Previous report
We account for business acquisitions by allocating the purchase price to tangible and intangible assets acquired and liabilities assumed at their fair values; the excess of the purchase price over the allocated amount is recorded as goodwill. We engaged an independent third-party valuation specialist to assist with the fair value allocation of the intangible assets assumed through the acquisition of Clearpath. The intangible assets were valued using income approaches, specifically the relief from royalty method and multi-period excess earnings method. This required the use of several assumptions and estimates including forecasted revenue growth rates, margin, and cash flows attributable to existing customers, obsolescence factor, royalty rate, contributory asset charges, customer attrition rate, and discount rates. Although we believe the assumptions and estimates made were reasonable and appropriate, these estimates require judgment and are based in part on historical experience and information obtained from Clearpath management.
Previous report
The key assumption requiring the use of judgement in the valuation of the $269.9 million technology asset was the obsolescence factor. The obsolescence factor of 12 years was calculated based on the depletion of existing technology using a variety of factors including research and development spend toward new product development and scheduled patent expiration. A two-year change in this assumption would result in a change of approximately $82 million in intangible assets. The key assumption requiring the use of judgement in the valuation of the $41.6 million trademark intangible asset was the weighted average royalty rate of 2.05 percent. This rate was based on royalty market data. A 100 basis point change in the royalty rate would result in a change of $20 million in intangible assets.
Previous report
More information regarding these business acquisitions is contained in Note 5 in the Consolidated Financial Statements.
Reworded paragraphs (29)
Previous wording
•the severity and duration of disruptions to our business due to pandemics, natural disasters (including those as a result of climate change), acts of war, strikes, terrorism, social unrest or other causes, liquidity and financial markets, demand for our hardware and software products, solutions, and services, our supply chain, our work force, our liquidity and the value of the assets we own;
Current wording
•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;
Previous wording
•the successful execution of our cost productivity initiatives;
Current wording
•the successful execution of our cost productivity and margin expansion initiatives;
Previous wording
These forward-looking statements reflect our beliefs as of the date of filing this report. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. See Item 1A. Risk Factors, of our Annual Report on Form 10-K for the year ended September 30, 2023, for more information.
Current wording
These forward-looking statements reflect our beliefs as of the date of filing this report. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. See Item 1A. Risk Factors, of our Annual Report on Form 10-K for the year ended September 30, 2024, and Item 1A. Risk Factors, of this Quarterly Report on Form 10-Q for more information.
Previous wording
Our strategy is to expand human possibility. Our vision is to create the future of industrial operations. As the world’s largest company dedicated to industrial automation and digital transformation, our strategy is to bring the Connected Enterprise® to life. We understand and simplify our customers’ complex production challenges and deliver the most valued solutions that combine technology and industry expertise. As a result, we make our customers more resilient, agile, and sustainable, creating more ways to win. We deliver value by helping our customers optimize production, build resilience, empower people, become more sustainable, and accelerate transformation.
Current wording
As the world’s largest company dedicated to industrial automation and digital transformation, our strategy is to bring the Connected Enterprise® to life. We understand and simplify our customers’ complex production challenges and deliver the most valued solutions that combine technology and industry expertise. As a result, we make our customers more resilient, agile, and sustainable, creating more ways to win. We deliver value by helping our customers optimize production, build resilience, empower people, become more sustainable, and accelerate transformation.
Previous wording
•accelerate growth in annual recurring revenue;
Current wording
•continue double-digit growth in annual recurring revenue;
Previous wording
In the third quarter of 2024, sales in the U.S. accounted for over half of our total sales. The various indicators we use to gauge the direction and momentum of our served U.S. markets include:
Current wording
In the first quarter of 2025, sales in the U.S. accounted for over half of our total sales. The various indicators we use to gauge the direction and momentum of our served U.S. markets include:
Previous wording
The table below depicts trends in these indicators since the quarter ended September 2022. These figures are as of August 7, 2024, and are subject to revision by the issuing organizations. The Manufacturing IP index increased in the third quarter of 2024 versus the second quarter of 2024 with output increasing sequentially in each month of the third quarter. Manufacturing PMI results decreased to below 50 in the third quarter of 2024 with each of the monthly results below 50 during the quarter.
Current wording
The table below depicts trends in these indicators since the quarter ended September 2023. These figures are as of February 10, 2025, and are subject to revision by the issuing organizations. The IP index has not significantly changed over the last six quarters. Manufacturing PMI results improved in the first quarter of 2025 but still remained below 50. December’s results indicated contraction for the ninth consecutive month and the twenty-fifth time in the last twenty-six months.
Previous wording
Inflation in the U.S. has also had an impact on our input costs and pricing. The Producer Price Index (PPI), published by the Bureau of Labor Statistics, measures the average change over time in the selling prices received by domestic producers for their output. PPI growth has remained in the low single digits during the third quarter, consistent with the first and second quarter of 2024 and most of 2023. Producer prices continue to remain elevated.
Current wording
Inflation in the U.S. has also had an impact on our input costs and pricing. The Producer Price Index (PPI), published by the Bureau of Labor Statistics, measures the average change over time in the selling prices received by domestic producers for their output. PPI growth has remained in the low single digits during the first quarter, which is consistent with the prior four quarters. Producer prices continue to remain elevated, however, year over year increases remain decelerated from the surges in 2023 and 2022.
Previous wording
In the third quarter of 2024, sales to customers outside the U.S. accounted for less than half of our total sales. These customers include both indigenous companies and multinational companies with a global presence. In addition to the global factors previously mentioned in the Overview section, international demand, particularly in emerging markets, has historically been driven by the strength of the industrial economy in each region, investments in infrastructure, and expanding consumer markets. We use changes in key countries' gross domestic product (GDP), IP, and PMI as indicators of the growth opportunities in each region where we do business. Industrial output was higher outside the U.S. in the third quarter of 2024 versus the second quarter of 2024. Manufacturing PMI readings outside the U.S. were mixed with results reported above and below 50 as well as some readings improving and others softening.
Current wording
In the first quarter of 2025, sales to customers outside the U.S. accounted for less than half of our total sales. These customers include both indigenous companies and multinational companies with a global presence. In addition to the global factors previously mentioned in the Overview section, international demand, particularly in emerging markets, has historically been driven by the strength of the industrial economy in each region, investments in infrastructure, and expanding consumer markets. We use changes in key countries' gross domestic product (GDP), IP, and PMI as indicators of the growth opportunities in each region where we do business. Industrial output was mostly higher outside the U.S. in the first quarter of fiscal 2025 versus the fourth quarter of 2024. Manufacturing PMI readings outside the U.S in the largest countries where we do business had results reported below 50.
Previous wording
(2)Total segment operating earnings and total segment operating margin are non-GAAP financial measures. We exclude purchase accounting depreciation and amortization, corporate and other, non-operating pension and postretirement benefit credit (cost), change in fair value of investments, restructuring charges aligned with enterprise-wide strategic initiatives, interest expense, net, and income tax provision because we do not consider these items to be directly related to the operating performance of our segments. We believe total segment operating earnings and total segment operating margin are useful to investors as measures of operating performance. We use these measures to monitor and evaluate the profitability of our operating segments. Our measures of total segment operating earnings and total segment operating margin may be different from measures used by other companies.
Current wording
(2)Total segment operating earnings and total segment operating margin are non-GAAP financial measures. We exclude purchase accounting depreciation and amortization, corporate and other, non-operating pension and postretirement benefit credit, change in fair value of investments, interest expense, net, and income tax provision because we do not consider these items to be directly related to the operating performance of our segments. We believe total segment operating earnings and total segment operating margin are useful to investors as measures of operating performance. We use these measures to monitor and evaluate the profitability of our operating segments. Our measures of total segment operating earnings and total segment operating margin may be different from measures used by other companies.
Previous wording
Three and Nine Months Ended June 30, 2024, Compared to Three and Nine Months Ended June 30, 2023
Current wording
Three Months Ended December 31, 2024, Compared to Three Months Ended December 31, 2023
Previous wording
Sales decreased 8.4 percent and 4.1 percent year over year in the three and nine months ended June 30, 2024, respectively. Organic sales decreased 8.4 percent and 5.4 percent year over year in the three and nine months ended June 30, 2024, respectively. Currency translation decreased sales by 0.6 percentage points and increased sales by 0.2 percentage points year over year in the three and nine months ended June 30, 2024, respectively. Acquisitions increased sales by 0.6 percentage points and 1.1 percentage points year over year in the three and nine months ended June 30, 2024, respectively. Pricing increased total company sales by approximately 3.5 percentage points and 2.5 percentage points year over year in the three and nine months ended June 30, 2024, respectively, realized in the Intelligent Devices and Software & Control segments. Volume decreased total company sales by approximately 12.0 percentage points and 8.0 percentage points year over year in the three and nine months ended June 30, 2024, respectively, driven by the Software & Control and Intelligent Devices segments, partially offset by the Lifecycle Services segment.
Current wording
Sales decreased 8.4 percent year over year in the three months ended December 31, 2024. Organic sales decreased 7.6 percent year over year in the three months ended December 31, 2024. Currency translation decreased sales by 0.9 percent in the three months ended December 31, 2024. Acquisitions increased sales by 0.1 percent in the three months ended December 31, 2024. Pricing increased total company sales by approximately 1.0 percentage point year over year in the three months ended December 31, 2024, realized primarily in the Software & Control segment. Volume decreased total company sales by approximately 8.5 percentage points year over year in the three months ended December 31, 2024, driven by the Software & Control and Intelligent Devices segments, partially offset by the Lifecycle Services segment.
Previous wording
The tables below present our sales, attributed to the geographic regions based upon country of destination, and the percentage change from the same period a year ago (in millions, except percentages):
Current wording
The table below presents our sales, attributed to the geographic regions based upon country of destination, and the percentage change from the same period a year ago (in millions, except percentages):
Previous wording
The effective tax rates for the three and nine months ended June 30, 2024, were 9.4 percent and 14.0 percent, respectively, compared to 15.5 percent and 16.9 percent for the three and nine months ended June 30, 2023, respectively. Our adjusted effective tax rates for the three and nine months ended June 30, 2024, were 13.3 percent and 15.1 percent, respectively, compared to 14.1 percent and 16.2 percent for the three and nine months ended June 30, 2023, respectively. The decrease in both the effective tax rates and the adjusted effective tax rates was primarily due to higher discrete tax benefits in the current year.
Current wording
The effective tax rate for the three months ended December 31, 2024, was 16.4 percent, compared to 18.1 percent for the three months ended December 31, 2023. Our adjusted effective tax rate for the three months ended December 31, 2024, was 17.5 percent, compared to 17.9 percent for the three months ended December 31, 2023. The decrease in both the effective tax rate and the adjusted effective tax rate was primarily due to favorable geographic mix of pre-tax income and higher discrete benefits recognized in the current year.
Previous wording
2024 third quarter Net income attributable to Rockwell Automation was $232.0 million or $2.02 per share, compared to $400.2 million or $3.45 per share in the third quarter of 2023. The decreases in Net income attributable to Rockwell Automation and diluted EPS were primarily due to lower sales volume and lower pre-tax margin. Pre-tax margin was 12.4 percent in the third quarter of 2024 compared to 21.1 percent in the same period last year. The decrease in pre-tax margin was primarily due to lower sales volume, mark-to-market gains recognized in the prior year related to our previous investment in PTC, and restructuring charges recognized in the third quarter of 2024, partially offset by lower incentive compensation. 2024 third quarter adjusted EPS was $2.71, down 10.0 percent compared to $3.01 in the third quarter of 2023, primarily due to lower sales volume and lower segment operating margin. Total segment operating margin in the third quarter of 2024 was 20.8 percent compared to 21.1 percent a year ago, primarily due to lower sales volume and unfavorable mix, partially offset by the positive impact of price realization exceeding input costs, lower incentive compensation, and the benefits from cost reduction actions.
Current wording
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 2024. The decreases in Net income attributable to Rockwell Automation and diluted EPS were primarily due to lower sales volume. 2025 first quarter adjusted EPS was $1.83, down 10 percent compared to $2.04 in the first quarter of 2024, primarily due to lower sales volume.
Previous wording
Intelligent Devices segment operating earnings increased 18.6 percent year over year in the three months ended June 30, 2024. Segment operating margin increased to 20.2 percent in the three months ended June 30, 2024, from 16.8 percent in the same period a year ago, primarily due to the positive impact of price realization exceeding input costs, lower incentive compensation, and the benefits from cost reduction actions, partially offset by lower sales volume.
Current wording
Intelligent Devices segment operating earnings decreased 20 percent year over year in the three months ended December 31, 2024. Segment operating margin decreased to 14.9 percent in the three months ended December 31, 2024, from 16.2 percent in the same period a year ago, primarily due to lower sales volume, partially offset by the benefits from cost reduction and margin expansion actions.
Previous wording
Software & Control sales decreased 31.8 percent and 18.4 percent year over year in the three and nine months ended June 30, 2024, respectively. Organic sales decreased 31.3 percent and 18.6 percent year over year in the three and nine months ended June 30, 2024, respectively. Currency translation decreased sales by 0.5 percentage points year over year in the three months ended June 30, 2024, and increased sales by 0.2 percentage points year over year in the nine months ended June 30, 2024. For the three and nine months ended June 30, 2024, reported and organic sales decreased in all regions, except for Latin America.
Current wording
Software & Control sales decreased 12 percent year over year in the three months ended December 31, 2024. Organic sales decreased 12 percent year over year, and the effects of currency translation decreased sales by less than 1 percentage point year over year in the three months ended December 31, 2024. For the three months ended December 31, 2024, reported sales decreased in all regions. Organic sales decreased in all regions except Latin America in the three months ended December 31, 2024.
Previous wording
Software & Control segment operating earnings decreased 53.9 percent year over year in the three months ended June 30, 2024. Segment operating margin decreased to 23.6 percent in the three months ended June 30, 2024, from 34.8 percent in the same period a year ago, primarily due to lower sales volume, partially offset by the positive impact of price realization exceeding input costs, lower incentive compensation, and the benefits from cost reduction actions.
Current wording
Software & Control segment operating earnings decreased 12 percent year over year in the three months ended December 31, 2024. Segment operating margin increased to 25.1 percent in the three months ended December 31, 2024, from 25.0 percent in the same period a year ago, primarily due to the benefits from cost reduction and margin expansion actions and the positive impact of price realization exceeding input costs, mostly offset by lower sales volume.
Previous wording
Purchase accounting depreciation and amortization, non-operating pension and postretirement benefit (credit) cost, and restructuring charges are not allocated to our operating segments because these costs are excluded from our measurement of each segment's operating performance for internal purposes. If we were to allocate these costs, we would attribute them to each of our segments as follows (in millions):
Current wording
Purchase accounting depreciation and amortization and non-operating pension and postretirement benefit credit are not allocated to our operating segments because these costs are excluded from our measurement of each segment's operating performance for internal purposes. If we were to allocate these costs, we would attribute them to each of our segments as follows (in millions):
Previous wording
Adjusted income, adjusted EPS, and adjusted effective tax rate are non-GAAP earnings measures that exclude non-operating pension and postretirement benefit (credit) cost, purchase accounting depreciation and amortization attributable to Rockwell Automation, change in fair value of investments, restructuring charges aligned with enterprise-wide strategic initiatives, and Net loss attributable to noncontrolling interests, including their respective tax effects. Non-operating pension and postretirement benefit (credit) cost is defined as all components of our net periodic pension and postretirement benefit cost except for service cost. See Note 10 in the Consolidated Financial Statements for more information on our net periodic pension and postretirement benefit cost. In 2024, we updated the definition of our non-GAAP earnings measures to exclude significant restructuring charges aligned with enterprise-wide strategic initiatives. In the three and nine months ended June 30, 2024, we recognized these restructuring charges in conjunction with an enterprise-wide comprehensive program to optimize cost structure and expand margins. We believe the change to our definition provides a more useful presentation of our operating performance to investors as these restructuring charges are significant and enterprise-wide severance actions and not reflective of our ongoing operations. We did not revise prior years because there were no similar restructuring actions with significant costs. See Note 14 in the Consolidated Financial Statements for more information on our restructuring charges.
Current wording
Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate are non-GAAP earnings measures that exclude non-operating pension and postretirement benefit credit, purchase accounting depreciation and amortization attributable to Rockwell Automation, change in fair value of investments, and Net loss attributable to noncontrolling interests, including their respective tax effects. Non-operating pension and postretirement benefit credit is defined as all components of our net periodic pension and postretirement benefit cost except for service cost. See Note 10 in the Consolidated Financial Statements for more information on our net periodic pension and postretirement benefit cost.
Previous wording
Our Short-term debt as of June 30, 2024, includes commercial paper borrowings of $704.0 million with a weighted average interest rate of 5.38 percent, and a weighted average maturity period of 22 days. We had no commercial paper borrowings as of September 30, 2023. In December 2022, Sensia entered into an unsecured $75.0 million line of credit. As of June 30, 2024, and September 30, 2023, included in Short-term debt was $70.0 million borrowed against the line of credit with an interest rate of 6.17 percent and 6.29 percent, respectively. Also included in Short-term debt as of June 30, 2024, and September 30, 2023, was $23.5 million of interest-bearing loans from Schlumberger (SLB) to Sensia, extended to April 2025. In April 2024, $18.8 million of new interest-bearing loans from SLB to Sensia were entered into and are due August 2024.
Current wording
Our Short-term debt as of December 31, 2024, included commercial paper borrowings of $629 million, with a weighted average interest rate of 4.67 percent, and a weighted average maturity period of 33 days. Our Short-term debt as of September 30, 2024, included commercial paper borrowings of $657 million, with a weighted average interest rate of 5.14 percent, and a weighted average maturity period of 24 days. In December 2022, Sensia entered into an unsecured $75 million line of credit. As of December 31, 2024, and September 30, 2024, included in Short-term debt was $70 million borrowed against the line of credit with an interest rate of 5.34 percent and 6.17 percent, respectively. Also included in Short-term debt as of December 31, 2024, and September 30, 2024, was $42 million of interest-bearing loans from Schlumberger (SLB) to Sensia, due April 2025. Discussions with our joint venture partner are ongoing regarding the capital structure and financing of Sensia.
Previous wording
We repurchased approximately 1.7 million shares of our common stock under our share repurchase program in the first nine months of 2024. The total cost of these shares was $476.2 million, of which $0.6 million was recorded in Accounts payable at June 30, 2024, related to shares that did not settle until July 2024. At September 30, 2023, there were $1.1 million of outstanding common stock share repurchases recorded in Accounts payable. We repurchased approximately 1.0 million shares of our common stock under our share repurchase program in the first nine months of 2023. The total cost of these shares was $256.2 million, of which $0.8 million was recorded in Accounts payable at June 30, 2023, related to shares that did not settle until July 2023. Our decision to repurchase shares in the remainder of 2024 will depend on business conditions, free cash flow generation, other cash requirements, and stock price. On May 2, 2022, the Board of Directors authorized us to expend an additional $1.0 billion to repurchase shares of our common stock. At June 30, 2024, we had approximately $464.1 million remaining for share repurchases under our existing board authorization. See Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, for additional information regarding share repurchases.
Current wording
We repurchased approximately 0.4 million shares of our common stock under our share repurchase program in the first three months of 2025. The total cost of these shares was $99 million, of which $1 million was recorded in Accounts payable at December 31, 2024, related to shares that did not settle until January 2025. Excise tax of $1 million was paid during the three months ended December 31, 2024, related to our 2023 share repurchases. At September 30, 2024, there were no significant outstanding common stock share repurchases recorded in Accounts payable. We repurchased approximately 0.4 million shares of our common stock under our share repurchase program in the first three months of 2024. The total cost of these shares was $120 million, of which $1 million was recorded in Accounts payable at December 31, 2023, related to shares that did not settle until January 2024. Our decision to repurchase shares in the remainder of 2025 will depend on business conditions, free cash flow generation, other cash requirements, and stock price. On May 2, 2022, and September 11, 2024, the Board of Directors authorized us to expend an additional $1.0 billion to repurchase shares of our common stock. At December 31, 2024, we had approximately $1,247 million remaining for share repurchases under our existing board authorizations. See Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, for additional information regarding share repurchases.
Previous wording
We expect future uses of cash to include working capital requirements, capital expenditures, dividends to shareowners, repurchases of common stock, additional contributions to our retirement plans, repayments of debt, and acquisitions of businesses and other inorganic investments. We expect to fund future uses of cash with a combination of existing cash balances, cash generated by operating activities, commercial paper borrowings, or new issuances of debt or other securities. In addition, we have access to unsecured credit facilities with various banks.
Current wording
We expect future uses of cash to include working capital requirements, capital expenditures, dividends to shareowners, repurchases of common stock, repayments of debt, additional contributions to our retirement plans, and acquisitions of businesses and other inorganic investments. We expect to fund future uses of cash with a combination of existing cash balances, cash generated by operating activities, commercial paper borrowings, or new issuances of debt or other securities. In addition, we have access to unsecured credit facilities with various banks.
Previous wording
In June 2022, we replaced our former $1.25 billion unsecured revolving credit facility with a new five-year $1.5 billion unsecured revolving credit facility, expiring in June 2027. This credit facility uses the secured overnight funding rate (SOFR) as the primary basis for determining interest payments. We can increase the aggregate amount of this credit facility by up to $750.0 million, subject to the consent of the banks in the credit facility. We did not borrow against this credit facility during the periods ended June 30, 2024, or September 30, 2023. Borrowings under this credit facility bear interest based on short-term money market rates in effect during the period the borrowings are outstanding. The terms of this credit facility contain covenants under which we agree to maintain an EBITDA-to-interest ratio of at least 3.0 to 1.0. The EBITDA-to-interest ratio is defined in the credit facility as the ratio of consolidated EBITDA (as defined in the facility) for the preceding four quarters to consolidated interest expense for the same period.
Current wording
In June 2022, we replaced our former $1.25 billion unsecured revolving credit facility with a new five-year $1.5 billion unsecured revolving credit facility, expiring in June 2027. This credit facility uses the secured overnight funding rate (SOFR) as the primary basis for determining interest payments. We can increase the aggregate amount of this credit facility by up to $750 million, subject to the consent of the banks in the credit facility. We did not borrow against this credit facility during the periods ended December 31, 2024, or September 30, 2024. Borrowings under this credit facility bear interest based on short-term money market rates in effect during the period the borrowings are outstanding. The terms of this credit facility contain covenants under which we agree to maintain an EBITDA-to-interest ratio of at least 3.0 to 1.0. The EBITDA-to-interest ratio is defined in the credit facility as the ratio of consolidated EBITDA (as defined in the facility) for the preceding four quarters to consolidated interest expense for the same period.
Previous wording
Separate short-term unsecured credit facilities of approximately $226.0 million at June 30, 2024, were available to non-U.S. subsidiaries, of which, approximately $32.6 million was committed under letters of credit. Borrowings under our non-U.S. credit facilities at June 30, 2024, and September 30, 2023, were not significant. We were in compliance with all covenants under our credit facilities at June 30, 2024, and September 30, 2023. There are no significant commitment fees or compensating balance requirements under our credit facilities.
Current wording
Separate short-term unsecured credit facilities of approximately $245 million at December 31, 2024, were available to non-U.S. subsidiaries, of which, approximately $33 million was committed under letters of credit. Borrowings under our non-U.S. credit facilities at December 31, 2024, and September 30, 2024, were not significant. We were in compliance with all covenants under our credit facilities at December 31, 2024, and September 30, 2024. There are no significant commitment fees or compensating balance requirements under our credit facilities.
Previous wording
We regularly monitor the third-party depository institutions that hold our cash and cash equivalents and short-term investments. We diversify our cash and cash equivalents among counterparties to minimize exposure to any one of these entities.
Current wording
We regularly monitor the third-party depository institutions that hold our cash and cash equivalents and short-term investments. We diversify our cash and cash equivalents and short-term investments among counterparties to minimize exposure to any one of these entities.
Previous wording
We use foreign currency forward exchange contracts to manage certain foreign currency risks. We enter into these contracts to hedge our exposure to foreign currency exchange rate variability in the expected future cash flows associated with certain third-party and intercompany transactions denominated in foreign currencies forecasted to occur within the next two years. We also may use these contracts to hedge portions of our net investments in certain non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. There were no open net investment hedges for the nine months ended June 30, 2024, or September 30, 2023. In addition, we use foreign currency forward exchange contracts that are not designated as hedges to offset transaction gains or losses associated with some of our assets and liabilities resulting from intercompany loans or other transactions with third parties that are denominated in currencies other than our entities' functional currencies. Our foreign currency forward exchange contracts are usually denominated in currencies of major industrial countries. We diversify our foreign currency forward exchange contracts among counterparties to minimize exposure to any one of these entities.
Current wording
We use foreign currency forward exchange contracts to manage certain foreign currency risks. We enter into these contracts to hedge our exposure to foreign currency exchange rate variability in the expected future cash flows associated with certain third-party and intercompany transactions denominated in foreign currencies forecasted to occur within the next two years. We also may use these contracts to hedge portions of our net investments in certain non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. There were no open net investment hedges for the three months ended December 31, 2024, or September 30, 2024. In addition, we use foreign currency forward exchange contracts that are not designated as hedges to offset transaction gains or losses associated with some of our assets and liabilities resulting from intercompany loans or other transactions with third parties that are denominated in currencies other than our entities' functional currencies. Our foreign currency forward exchange contracts are usually denominated in currencies of major industrial countries. We diversify our foreign currency forward exchange contracts among counterparties to minimize exposure to any one of these entities.
Previous wording
Net gains and losses related to derivative forward exchange contracts designated as cash flow hedges offset the related gains and losses on the hedged items during the periods in which the hedged items are recognized in earnings. During the three and nine months ended June 30, 2024, we reclassified $4.4 million and $17.8 million, respectively, in pre-tax net gains related to cash flow hedges from Accumulated other comprehensive loss into the Consolidated Statement of Operations. During the three and nine months ended June 30, 2023, we reclassified $7.3 million and $27.7 million, respectively, in pre-tax net gains related to cash flow hedges from Accumulated other comprehensive loss into the Consolidated Statement of Operations. As of June 30, 2024, we expect that approximately $3.0 million of pre-tax net unrealized gains on cash flow hedges will be reclassified into earnings during the next 12 months.
Current wording
Net gains and losses related to derivative forward exchange contracts designated as cash flow hedges offset the related gains and losses on the hedged items during the periods in which the hedged items are recognized in earnings. Pre-tax net losses related to cash flow hedges reclassified from Accumulated other comprehensive loss into the Consolidated Statement of Operations were not significant during the three months ended December 31, 2024. During the three months ended December 31, 2023, we reclassified $8 million in pre-tax net gains related to cash flow hedges from Accumulated other comprehensive loss into the Consolidated Statement of Operations. As of December 31, 2024, we expect that approximately $8 million of pre-tax net unrealized gains on cash flow hedges will be reclassified into earnings during the next 12 months.
Previous wording
We have prepared the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and revenues and expenses during the periods reported. These estimates are based on our best judgment about current and future conditions, but actual results could differ from those estimates. Information with respect to accounting estimates that are the most critical to the understanding of our financial statements as they could have the most significant effect on our reported results and require subjective or complex judgments by management is contained in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended September 30, 2023. We believe that at June 30, 2024, there has been no material change to this information, except as noted below.
Current wording
We have prepared the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and revenues and expenses during the periods reported. These estimates are based on our best judgment about current and future conditions, but actual results could differ from those estimates. Information with respect to accounting estimates that are the most critical to the understanding of our financial statements as they could have the most significant effect on our reported results and require subjective or complex judgments by management is contained in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended September 30, 2024. We believe that at December 31, 2024, there has been no material change to this information.