Rockwell Automation (NYSE:ROK) reported third-quarter fiscal 2026 results that exceeded its expectations, supported by double-digit organic sales growth, stronger earnings and broad demand in several automation markets. The company also raised its full-year sales and adjusted earnings outlook.
Chairman and CEO Blake Moret said reported sales increased 8% from a year earlier, while organic sales rose 10%. The dissolution of Sensia reduced sales by 3%, while currency added roughly one percentage point of growth. Adjusted earnings per share were $3.49, up more than 20% year over year, and enterprise operating margin reached 22.3%.
Demand Led by Semiconductor, Data Centers and Warehouse Automation
Rockwell said products outperformed its longer-cycle solutions businesses during the quarter, as smaller modernization projects supported growth across most industries. The company continues to see strong demand in semiconductor, data center, e-commerce and warehouse automation, while it has yet to see a broader recovery in capital spending across food and beverage and parts of process industries.
Intelligent Devices organic sales increased 10%, with growth across all product lines. Moret said newer products, including PointMax I/O, PowerFlex drives and FLEXLINE motor control centers, have seen strong adoption in e-commerce, warehouse automation and process applications.
Software & Control organic sales rose 18%, driven by another quarter of double-digit growth in Logix. Lifecycle Services organic sales declined 2%, generally in line with management’s expectations, as the segment remained constrained by the absence of a broader capital-spending recovery in food and beverage and certain process markets.
Organic annual recurring revenue increased 6%, below Rockwell’s expectations. High-single-digit software growth was partly offset by slower recurring Lifecycle Services growth. Moret pointed to an expanded cybersecurity engagement with Unilever as an example of an ARR win, combining Rockwell’s threat detection and secure remote-access software with managed cybersecurity services.
- Discrete sales grew by the high teens year over year.
- E-commerce and warehouse automation sales increased 30%.
- Automotive sales rose by the low double digits.
- Life sciences sales increased 10%.
- Process sales increased by the high single digits, led by energy, metals and chemicals.
- North America grew 12% and was Rockwell’s strongest region in the quarter.
Moret said data-center investment continued to create demand for power, cooling, automation and control systems. Rockwell participates in the market through power distribution, controls for chiller manufacturers and Logix controllers used in central utility plants, energy monitoring and backup-generator controls.
He added that excluding data-center-related activity, Rockwell’s organic sales growth would still have been 8% during the quarter.
Margins Expanded Despite Inflation Pressure
CFO Christian Rothe said enterprise operating margin expanded 280 basis points year over year, driven by higher sales volume and favorable mix, partly offset by negative price-cost dynamics. The Sensia dissolution contributed about 40 basis points to enterprise operating margin.
Gross margin increased 70 basis points to 49.5%, aided by volume, mix and the Sensia dissolution. Selling, general and administrative expense rose less than 1%, while engineering and development spending increased 5% and represented about 8% of sales.
Segment margins were mixed. Intelligent Devices margin rose 120 basis points to 20%, while Software & Control margin expanded 320 basis points to 34.8%. Lifecycle Services margin increased 180 basis points to 15.1%, helped by project execution, productivity and the Sensia dissolution, though lower sales volume was a partial offset.
Free cash flow was $654 million in the third quarter, $165 million above the prior-year period, primarily reflecting higher pre-tax income and working-capital management.
Rothe said inflation remains an increasing headwind, particularly for memory and other inputs affected by data-center demand. Rockwell’s supply-chain focus is first on maintaining component availability and product shipments, followed by managing costs through pricing, productivity and supplier negotiations.
The company implemented an inflation-related price increase late in the third quarter that it expects to be realized in the fourth quarter. For fiscal 2026, Rockwell continues to expect about 250 basis points of price realization, including roughly 100 basis points related to tariffs and 150 basis points from underlying pricing. Management expects tariffs to be earnings-neutral for the year, with pricing offsetting related costs.
Full-Year Outlook Raised
Rockwell increased its fiscal 2026 outlook for reported and organic sales growth to a range of 7.5% to 9.5%, up 150 basis points from its prior forecast. The midpoint of 8.5% assumes modest sequential growth in the fourth quarter, including a typical seasonal pickup in longer-cycle businesses within Lifecycle Services and Intelligent Devices.
The company raised its adjusted EPS outlook to a range of $13.00 to $13.30, with a midpoint of $13.15, up $0.35 from the midpoint of its previous guidance. The midpoint represents approximately 25% growth from fiscal 2025.
Rockwell maintained its expectation for enterprise operating margin of 21.5%, up 260 basis points year over year, and free-cash-flow conversion of 100%. It expects organic ARR to grow at a mid-single-digit rate.
For the fourth quarter, management expects reported sales to rise by the low single digits sequentially, with enterprise operating margin roughly flat versus the third quarter. Rothe attributed the expected margin profile to higher inflation and an unfavorable seasonal mix, as configure-to-order and solutions sales reach their typical fourth-quarter peak.
Looking beyond the current fiscal year, Moret said Rockwell sees continued opportunities in data centers, automotive, life sciences, production logistics, energy and manufacturing automation. He said larger capital projects remain delayed by customer caution, funding constraints, tariff uncertainty and contractual considerations, but modernization spending has remained resilient.
“We like our position in the market,” Moret said, pointing to continued product introductions, productivity initiatives and Rockwell’s ability to support manufacturers seeking to expand automation.
About Rockwell Automation (NYSE:ROK)
Rockwell Automation is a global industrial automation and digital transformation company headquartered in Milwaukee, Wisconsin. The firm designs, manufactures and supports control systems, industrial control hardware and software, and related services that help manufacturers and industrial operators automate processes, improve productivity and enable data-driven decision making. Rockwell traces its heritage to the Allen-Bradley and Rockwell automation businesses and positions itself as a provider of integrated automation solutions across discrete and process industries.
The company’s product portfolio includes programmable logic controllers (PLCs), human-machine interfaces (HMIs), variable frequency drives, sensors, safety components and other industrial control hardware, often marketed under the Allen-Bradley brand.
