Rockwell Automation Forecasts 6%-9% FY27 Organic Growth as Q4 Margin Expands

Rockwell Automation (ROK) forecast fiscal 2027 organic sales growth of 6% to 9% after ending fiscal 2026 with higher fourth-quarter sales, a wider enterprise operating margin and double-digit adjusted earnings growth. The automation company expects adjusted EPS of $14.50 to $15.50 in the new fiscal year, representing growth of about 12% at the midpoint.

For the quarter ended September 30, 2026, sales rose 1% year over year to $2.33 billion, while organic sales increased 3%. Both growth rates were reduced by about four percentage points by an $85 million customer tariff refund program. Organic annual recurring revenue increased 5%.

Enterprise operating margin, a non-GAAP measure, expanded 320 basis points to 24.5%. Adjusted EPS rose 16% to $3.88, while GAAP diluted EPS was $3.11 and pretax margin was 18.6%. Free cash flow increased to $602 million from $405 million a year earlier.

The quarter included several items associated with IEEPA tariff refunds. In addition to the $85 million reduction in sales for estimated customer refunds, Rockwell recorded a $103 million benefit to cost of sales for refunds received from the U.S. government and $8 million of related nonrecurring charges. The net year-over-year benefit was about 130 basis points to enterprise operating margin and $0.11 to adjusted EPS. Cash received from tariff refunds and related interest income added $108 million to quarterly free cash flow.

Software & Control leads segment growth

Software & Control delivered the strongest fourth-quarter performance, with sales rising 15% on both a reported and organic basis to $754 million. Its segment operating margin increased 280 basis points to 34.0%, driven by higher sales.

Intelligent Devices sales advanced 5% to $1.14 billion, with organic growth also at 5%. Segment margin rose 180 basis points to 21.6%, reflecting higher volume, favorable currency, positive price-cost performance and favorable mix, partly offset by higher compensation expense.

Lifecycle Services sales declined 9% on a reported basis to $519 million, reflecting an 11% divestiture impact, while organic sales increased 2%. Its operating margin fell 110 basis points to 16.4% because of higher compensation and unfavorable project mix, partly offset by higher volume and a margin benefit from the dissolution of the Sensia joint venture. The segment’s book-to-bill ratio was 0.97, indicating a modest decline in backlog.

Organic sales in discrete industries rose about 20% during the quarter. Semiconductor sales increased about 50%, automotive grew about 15%, and e-commerce and warehouse automation posted high-single-digit growth. Hybrid industries grew at a mid-single-digit rate, while process industries increased at a low-single-digit pace. Energy rose by high single digits, but mining and chemicals each declined about 10%.

North America remained the largest and strongest region, with fourth-quarter organic growth of 9%. Organic sales increased 10% in Asia Pacific and 7% in EMEA, while Latin America declined 10%.

Fiscal 2026 sales approach $9 billion

For the full fiscal year, Rockwell’s sales increased 8% to $8.99 billion, with organic growth also at 8%. Currency contributed two percentage points, divestitures reduced growth by two points, and the customer tariff refund program reduced both reported and organic growth by about one point.

Full-year enterprise operating margin expanded 330 basis points to 22.2%, including a roughly 30-basis-point net benefit from tariff-related items. Adjusted EPS increased 27% to $13.42, including a $0.11 net tariff-related benefit, while GAAP diluted EPS was $12.54. Free cash flow rose to $1.70 billion from $1.36 billion, equal to about 113% of adjusted income. Tariff refunds and related interest income added approximately six percentage points to that conversion rate.

Adjusted return on invested capital increased to 20.4% from 14.6%.

Fiscal 2027 outlook

Rockwell expects fiscal 2027 reported sales growth of 4.5% to 7.5%, with sales of about $9.5 billion at the midpoint. The organic growth forecast of 6% to 9% and the reported growth range each include an approximately one-percentage-point benefit related to the fiscal 2026 customer tariff refund program. The company expects divestitures, principally Sensia, to reduce reported growth by about 1.5 percentage points.

Management forecasts an enterprise operating margin of about 23.0%, compared with 22.2% in fiscal 2026. Organic annual recurring revenue is expected to grow about 7%, while free cash flow conversion is projected at approximately 100%.

At the guidance midpoint, Rockwell assumes high-single-digit organic growth in discrete industries and mid-single-digit growth in both hybrid and process markets. Semiconductor and data center sales are expected to rise by the mid-teens, while automotive is projected to grow by the mid-single digits and e-commerce and warehouse automation by about 10%.

The outlook remains subject to risks and uncertainties that could cause actual results to differ from the company’s projections. Comparisons will also be affected by the fiscal 2026 tariff refund program and the Sensia divestiture, while Lifecycle Services enters the year with a book-to-bill ratio below one and recently faced pressure from compensation costs and project mix.