Key Takeaways:
Rockwell Automation reported fiscal third-quarter adjusted earnings of $3.49 per share, beating the $3.39 consensus by $0.10, as organic sales jumped 10 percent year over year.
"We delivered a strong quarter with double-digit year-over-year growth in sales and earnings exceeding our expectations," Chairman and CEO Blake Moret said on the earnings call.
Revenue of $2.31 billion topped the $2.26 billion average analyst estimate. Enterprise operating margin expanded 280 basis points to 22.3 percent, while gross margin rose 70 basis points to 49.5 percent. Free cash flow reached $654 million, up $165 million from a year earlier. The Sensia dissolution trimmed reported sales by 3 points, while currency added about 1 point and price contributed roughly 1 point to organic growth.
Software & Control led segment growth with organic sales up 18 percent and margin of 34.8 percent, up 320 basis points, on another quarter of double-digit Logix controller growth. Intelligent Devices grew 10 percent with margin of 20 percent, while Lifecycle Services fell 2 percent with book-to-bill of 0.97 as customers delayed capital deployment in food and beverage and parts of process industries.
The company raised its fiscal 2026 adjusted EPS guidance to $13.00-$13.30, with the $13.15 midpoint representing about 25 percent earnings growth and up $0.35 from the prior guide. Reported and organic sales growth is now expected at 7.5 percent to 9.5 percent, up 150 basis points from the previous midpoint. Enterprise operating margin is seen at about 21.5 percent, with free cash flow conversion of 100 percent.
Chief Financial Officer Christian Rothe flagged a flat fourth-quarter operating margin sequentially, as memory-driven inflation and an unfavorable mix from seasonal project sales offset higher volume. Software & Control margin is expected to fall to about 33 percent in Q4 on flat segment sales, with inflation hitting that business hardest. Price-cost turned negative in Q3 but is expected to turn positive in Q4 after a price increase implemented late in the quarter.
Data center demand remains a growth engine, with Moret citing participation in power distribution, chiller power controls, and Logix use in central utility plants. Excluding data center-related sales, organic growth would still have been 8 percent in the quarter. Discrete sales grew high teens, led by semiconductor, data center, and e-commerce and warehouse automation, while automotive rose low double digits and life sciences was up 10 percent.
The guidance raise signals management expects automation demand to broaden into fiscal 2027 across discrete, hybrid, and process markets. Investors will watch the Automation Fair in Boston in November for new product launches and updated segment margin outlooks.
This article is for informational purposes only and does not constitute investment advice.
