Rockwell Automation, Inc. 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 |
|
(1) Organic sales growth and Adjusted EPS are non-GAAP measures. See Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation for more information on these non-GAAP measures. |
"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.
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.
