ROCKWELL AUTOMATION INC

Previous 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:

Current wording

In the second 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 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.

Current wording

The table below depicts trends in these indicators since the quarter ended September 2023. These figures are as of May 7, 2025, and are subject to revision by the issuing organizations. The IP index improved in the second quarter of fiscal 2025 to the highest level in the last ten quarters. Manufacturing PMI results improved early in the second quarter of fiscal 2025 with two readings above 50; however, results at the end of the quarter fell back below 50.

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 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.

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 second quarter, which is consistent with the prior five 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 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.

Current wording

In the second 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 outside the U.S. was mostly positive in the second quarter of fiscal 2025. Manufacturing PMI readings outside the U.S were mixed with readings in Asia Pacific generally better than readings in Europe, Canada, and Mexico.

Previous wording

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 wording

We expect 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 over $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.

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, 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.

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, and interest expense, net, 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 Months Ended December 31, 2024, Compared to Three Months Ended December 31, 2023

Current wording

Three and Six Months Ended March 31, 2025, Compared to Three and Six Months Ended March 31, 2024

Previous 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.

Current wording

Sales decreased 6 percent and 7 percent year over year in the three and six months ended March 31, 2025, respectively. Organic sales decreased 4 percent and 6 percent year over year in the three and six months ended March 31, 2025, respectively. Currency translation decreased sales by 2 percent and 1 percent in the three and six months ended March 31, 2025, respectively. Pricing increased total company sales by approximately 3 percentage points and 2 percentage points year over year in the three and six months ended March 31, 2025, respectively, realized primarily in the Intelligent Devices and Software & Control segments. Volume decreased total company sales by approximately 8 percentage points year over year in the three months ended March 31, 2025, driven by the Software & Control and Intelligent Devices segments, partially offset by the Lifecycle Services segment. Volume decreased total company sales by approximately 8 percentage points year over year in the six months ended March 31, 2025, driven by the Intelligent Devices segment.

Previous 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):

Current wording

The tables 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

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 wording

Corporate and other expenses were $33 million and $71 million in the three and six months ended March 31, 2025, respectively, compared to $28 million and $68 million in the three and six months ended March 31, 2024, respectively.

Previous wording

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 wording

Income before income taxes was $299 million and $512 million in the three and six months ended March 31, 2025, respectively, compared to $310 million and $570 million in the three and six months ended March 31, 2024, respectively. The decrease in the six months ended March 31, 2025, was primarily due to lower segment operating earnings.

Previous 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.

Current wording

The effective tax rate for the three months ended March 31, 2025, was 17.1 percent, compared to 14.5 percent for the three months ended March 31, 2024. Our adjusted effective tax rate for the three months ended March 31, 2025, was 17.7 percent, compared to 14.8 percent for the three months ended March 31, 2024. The increase in both the effective tax rate and the adjusted effective tax rate was primarily due to lower discrete benefits in the current year.

Previous 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.

Current wording

Net income attributable to Rockwell Automation was $436 million or $3.83 per share in the six months ended March 31, 2025, compared to $481 million or $4.17 per share in the six months ended March 31, 2024. The decreases in Net income attributable to Rockwell Automation and diluted EPS were primarily due to lower sales volume. Adjusted EPS was $4.29 in the six months ended March 31, 2025, down 6 percent compared to $4.54 in the six months ended March 31, 2024, primarily due to lower sales volume.

Previous wording

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 wording

Intelligent Devices sales decreased 8 percent and 10 percent year over year in the three and six months ended March 31, 2025, respectively. Organic sales decreased 6 percent and 9 percent year over year in the three and six months ended March 31, 2025, respectively. The effects of currency translation decreased sales by 2 percentage points and 1 percentage point year over year in the three and six months ended March 31, 2025, respectively. For the three and six months ended March 31, 2025, reported and organic sales decreased in all regions.

Previous 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.

Current wording

Software & Control sales decreased less than one percent and 6 percent year over year in the three and six months ended March 31, 2025, respectively. Organic sales increased 2 percent year over year in the three months ended March 31, 2025. Organic sales decreased 5 percent year over year in the six months ended March 31, 2025. The effects of currency translation decreased sales by 2 percentage points and 1 percentage point year over year in the three and six months ended March 31, 2025, respectively. For the three and six months ended March 31, 2025, reported and organic sales decreased in all regions except for North America.

Previous 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.

Current wording

Software & Control segment operating earnings increased 2 percent year over year in the six months ended March 31, 2025. Segment operating margin increased to 28 percent in the six months ended March 31, 2025, from 25 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, partially offset by lower sales volume.

Previous 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.

Current wording

Lifecycle Services segment operating earnings decreased 20 percent year over year in the three months ended March 31, 2025. Segment operating margin decreased to 15 percent in the three months ended March 31, 2025, from 17 percent in the same period a year ago, primarily due to higher compensation and lower sales volume, partially offset by the benefits from cost reduction and margin expansion actions and strong project execution.

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, 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.

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, and change in fair value of investments, 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

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.

Current wording

Cash provided by operating activities was $563 million for the six months ended March 31, 2025, compared to $153 million for the six months ended March 31, 2024. Free cash flow was $464 million for the six months ended March 31, 2025, compared to $34 million for the six months ended March 31, 2024. The year over year increases in cash 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.

Previous 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.

Current wording

Our Short-term debt as of March 31, 2025, included commercial paper borrowings of $996 million, with a weighted average interest rate of 4.57 percent, and a weighted average maturity period of 31 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 March 31, 2025, and September 30, 2024, included in Short-term debt was $70 million borrowed against the line of credit with an interest rate of 5.32 percent and 6.17 percent, respectively. Also included in Short-term debt as of March 31, 2025, and September 30, 2024, was $42 million of interest-bearing loans from SLB to Sensia. In April 2025, the loans were extended to October 15, 2026, and $14 million of new interest-bearing loans from SLB to Sensia were entered into and are due July 2025.

Previous 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.

Current wording

We repurchased approximately 0.8 million shares of our common stock under our share repurchase program in the first six months of 2025. The total cost of these shares was $228 million, of which $3 million was recorded in Accounts payable at March 31, 2025, related to shares that did not settle until April 2025. At September 30, 2024, there were no significant outstanding common stock share repurchases recorded in Accounts payable. We repurchased approximately 1.1 million shares of our common stock under our share repurchase program in the first six months of 2024. The total cost of these shares was $315 million, of which $2 million was recorded in Accounts payable at March 31, 2024, related to shares that did not settle until April 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 March 31, 2025, we had approximately $1,119 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

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.

Current wording

Separate short-term unsecured credit facilities of approximately $246 million at March 31, 2025, 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 March 31, 2025, and September 30, 2024, were not significant. We were in compliance with all covenants under our credit facilities at March 31, 2025, and September 30, 2024. There are no significant commitment fees or compensating balance requirements under our credit facilities.

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 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.

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 six months ended March 31, 2025, 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. 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.

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. During both the three and six months ended March 31, 2025, we reclassified $7 million in pre-tax net losses related to cash flow hedges reclassified from Accumulated other comprehensive loss into the Consolidated Statement of Operations. During the three and six months ended March 31, 2024, we reclassified $5 million and $13 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 March 31, 2025, we expect that approximately $6 million of pre-tax net unrealized gains on cash flow hedges will be reclassified into earnings during the next 12 months.