Rockwell Automation Inc.
11/12/2026 | Press release | Distributed by Public on 11/12/2026 10:36
Annual Report for Fiscal Year Ending September 30, 2026 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Non-GAAP Measures
The following discussion includes organic sales, Enterprise operating profit, Enterprise operating margin, Adjusted Income, Adjusted EPS, Adjusted Effective Tax Rate, and free cash flow, which are non-GAAP measures. See Supplemental Sales Information for a reconciliation of reported sales to organic sales and a discussion of why we believe this non-GAAP measure is useful to investors. See Summary of Results of Operations for a reconciliation of Income before income taxes and pre-tax margin to Enterprise operating profit and Enterprise operating margin and a discussion of why we believe these non-GAAP measures are useful to investors. See Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation for a reconciliation of Net income attributable to Rockwell Automation, diluted EPS, and effective tax rate to Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate, respectively, and a discussion of why we believe these non-GAAP measures are useful to investors. See Financial Condition for a reconciliation of Cash provided by operating activities to free cash flow and a discussion of why we believe this non-GAAP measure is useful to investors.
Overview
Rockwell Automation, Inc. is the world's largest company dedicated to industrial automation and digital transformation. Overall demand for our hardware and software products, solutions, and services is driven by:
•investments in manufacturing, including new facilities or production lines, upgrades, modifications and expansions of existing facilities or production lines;
•investments in basic materials production capacity, which may be related to commodity pricing levels;
•our customers' needs for faster time to market, agility to address evolving consumer preferences, operational productivity, asset management and reliability, and business resilience, including security and enterprise risk management;
•our customers' needs to continuously improve quality, safety, and sustainability;
•industry factors that include our customers' new product introductions, demand for our customers' products or services, and the regulatory and competitive environments in which our customers operate;
•levels of global industrial production and capacity utilization;
•regional factors that include local political, social, regulatory, and economic circumstances; and
•the spending patterns of our customers due to their annual budgeting processes and their working schedules.
Long-term Strategy
As the world's largest company dedicated to industrial automation and digital transformation, our strategy is to bring the Connected Enterprise® to life. We understand and simplify our customers' complex production challenges and deliver the most valued solutions that combine technology and industry expertise. As a result, we make our customers more resilient, agile, and sustainable, creating more ways to win. We deliver value by helping our customers optimize production, build resilience, empower people, become more sustainable, and accelerate transformation.
Rockwell Automation stands at the intersection of the technological and societal trends that are shaping the future of industrial operations. We see converging megatrends including digitization and AI, energy transition and sustainability, shifting demographics, and an increased need for resiliency.
Our long-term profitable growth framework, supported by the Rockwell operating model, outlines how we will deliver accelerated growth while we continue to transform our company to meet stakeholder expectations over the longer term:
•achieve faster secular growth in traditional markets due to customer needs for resiliency (including cybersecurity), agility, sustainability, and mitigating impacts of labor shortages;
•grow share and create new ways to win through technology differentiation, industry focus, go to market acceleration, expanded offerings and new markets;
•add 1% average annual growth from annual recurring revenue;
•add 1% average annual growth from acquisitions; and
•deliver profitable growth within a disciplined financial framework.
Sustainability
Our 2025 Sustainability Report highlights our sustainability strategy and outcomes. Our sustainability priorities are focused on three outcomes:
•Sustainable Customers - enable our customers to achieve their own sustainability goals, making a positive impact on the world;
•Sustainable Company - create innovative, sustainable products and solutions and foster a culture that empowers employees to operate safely, sustainably, and responsibly; and
•Sustainable Communities - support the communities in which we live and work, having an impact that extends beyond our own organization.
We will meet our customers where they are on their sustainability journey. Whether they are just starting or leading the way, we help them translate insights into impacts across energy, water, and waste. Our technologies provide data transparency across value chains and enable our partners to scale innovative and often industry-first sustainable solutions.
•Energy - contemporary industrial energy management software solutions that put energy data in context to production data, to reduce energy use across the value chain.
•Water - smart water solutions leverage modern software and analytics to improve operations visibility, system reliability, and worker productivity while supporting security needs and meeting regulatory obligations.
•Waste - enabling the circular economy for managing automation assets. Focus on developing solutions to automate industry-specific processes.
Differentiation through Technology Innovation and Domain Expertise
We have an industry leading portfolio of hardware, software, and services to give customers the flexibility to choose on-premises, edge, and cloud-native solutions.
Our integrated control and information architecture, with Logix at its core, is an important differentiator. We are the only automation provider that can support many production disciplines, including discrete, process, batch, safety, security, motion, robotics, and power control, in a single hardware and software environment, helping customers increase the speed of deployment and reduce their total cost of ownership.
Our open architecture and strong partner ecosystem allow customers to work with best-in-class partners across the technology stack and leverage existing infrastructure with new solutions.
Complementing our strong technology differentiation is our own domain expertise. Domain expertise refers to the industry and application knowledge required to deliver solutions and services that support customers through the entire lifecycle of their automation investment. The combination of industry-specific domain expertise of our people with our innovative technologies enables us to help our customers automate and transform their manufacturing processes and solve their business challenges. Our digital services business has a deep understanding of customers' biggest digital transformation challenges and opportunities for further productivity and growth.
Market Access and Expansion
Over the past decade, our investments in technology and globalization have enabled us to expand our addressed market to approximately $120 billion. With our focus on innovation and growth, we expect to continue to expand our addressed market over our long-term planning horizon. All of our markets are expected to grow over our long-term planning horizon. Our domestic market projections reflect the opportunity to localize our customers' supply chain and production operations. Our international market projections reflect higher levels of infrastructure investment and the growing middle-class population. We believe that increased demand for consumer products in our addressed markets will lead to manufacturing investment and provide us with additional growth opportunities in the future.
We have developed a powerful partner ecosystem that acts as an amplifier to our internal capabilities and enables us to serve our customers' evolving needs around the world.
In most countries, our direct sales force works with Original Equipment Manufacturers (OEMs) or machine builders, system integrators, technology partners, and end users in conjunction with independent distributors. Approximately 70 percent of our global sales are transacted through independent distributors. Sales to our three largest distributors were approximately 30 percent of our total sales in 2026.
Machine builders continue to represent an important growth opportunity. To remain competitive, machine builders need to find the optimal balance of machine cost and performance while reducing their time to market. Our scalable technology, leading design productivity tools, and recent acquisitions support machine builders in addressing these business needs.
Acquisitions and Investments
Our acquisition and investment strategy focuses on hardware and software products, solutions, and services that will be catalytic to the organic growth of our core offerings.
Our key priorities for inorganic investments include:
•industrial AI applications;
•market access in Europe and Asia; and
•product portfolio expansion.
In addition, we make venture investments that enable access to leading-edge and complementary technologies aligned with our strategic priorities, accelerate internal development efforts, reduce time to market, and provide insights into disruptive technologies.
We believe these acquisitions and venture investments will help our served market and deliver value to our customers. See Note 4 in the Consolidated Financial Statements for additional information on our recent acquisitions.
Attracting, Developing, and Retaining Highly Qualified Employees
Our talent management practices are focused on ensuring we can attract, develop, and retain the talent we need to deliver our business strategy. We work to deliver a cohesive and consistent experience throughout the employee lifecycle that aligns with our four culture principles:
•Strengthen our commitment to integrity, diversity and inclusion;
•Be willing to compare ourselves to the best alternatives;
•Increase the speed of decision making;
•Have a steady stream of fresh ideas.
Our programs and processes are designed to enable and inspire great employees to do their best work and to make Rockwell Automation a place where the best want to be.
There are several ways in which we attract, develop, and retain highly qualified employees, including:
•We make the safety and health of our employees a top priority. We strive for zero workplace injuries and illnesses and operate in a manner that recognizes safety as fundamental to Rockwell Automation being a great place to work. In fiscal 2026, we achieved 0.21 recordable cases per 100 employees.
•We capture and act upon employee feedback through our annual employee engagement survey. It measures several employee experience indicators and drivers and provides an overall employee engagement index (EEI) with external benchmark comparison. The latest survey, conducted in March 2026, showed a resilient EEI of 75, and a global inclusion index score of 77, and our intent to stay index was 74, with all three scores at or above our industry benchmarks.
•We invest in growth and development of our employees. As the pace of change increases, it is important we provide re-skilling and upskilling opportunities for our technical talent, along with soft skills and leadership development for all. We offer a portfolio of all employee, managerial, and leader training that spans on-demand, virtual, and live instructor-led formats. Our programs focus on basic as well as transformational skills. Furthermore, our culture is the foundation for everything we do, and it is built on integrity and a shared commitment to innovation and growth. As such, we take great care in ensuring our employees understand our culture and how to activate it through dedicated workshops during our new employee onboarding. In fiscal 2026, the majority of our employees completed one or more of our training programs representing approximately one million learning hours.
•We offer employee assistance and work life benefits to all global employees. Our comprehensive benefits include healthcare benefits, disability and life insurance benefits, paid time off, and leave programs. Rockwell offers plans and resources to help employees meet future savings goals through defined benefit and retirement savings plans. We believe that face to face interaction is critical for our culture, innovation, people development, and engagement, and that flexible, virtual work arrangements help employees be more productive and engaged. We have strong participation in our Hybrid Workplace Program, which combines the values of both physical workspaces and virtual work options, both of which are important for attracting, retaining, and developing employees and facilitating innovation, engagement, and productivity. We offer flextime, remote work, and part-time arrangements whenever business conditions permit.
We monitor employee retention and attrition rates by several factors. For non-manufacturing roles, we experienced lower attrition rates in fiscal 2026 as compared to fiscal 2025. For manufacturing roles, we experienced a significant reduction in attrition rates in fiscal 2026 as compared to fiscal 2025. We believe these rates are favorable to market trends experienced broadly across labor markets in fiscal 2026. We use attrition rate information to identify and address unfavorable trends to mitigate risk to our business. See Item 1A. Risk Factors for a discussion of risks relating to our inability to attract, develop, and retain highly qualified employees.
At September 30, 2026, our employees, including those employed by consolidated subsidiaries, by region were approximately:
| North America | 9,000 | ||||
| Europe, Middle East and Africa | 6,000 | ||||
| Asia Pacific | 7,000 | ||||
| Latin America | 5,000 | ||||
| Total employees | 27,000 | ||||
U.S. Economic Trends
In 2026, 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:
•The Industrial Production (IP) Index, published by the Federal Reserve, which measures the real output of manufacturing, mining, and electric and gas utilities. The Manufacturing IP Index shown in the chart below is expressed as a percentage of real output in a base year, currently 2017.
•The Manufacturing Purchasing Managers' Index (PMI), published by the Institute for Supply Management (ISM), which indicates the current and near-term state of manufacturing activity in the U.S. According to the ISM, a PMI measure above 50 indicates that the U.S. manufacturing economy is generally expanding while a measure below 50 indicates that it is generally contracting.
The table below depicts the trends in these indicators from fiscal 2024 to 2026. These figures are as of November 12, 2026, and are subject to revision by the issuing organizations. Through September, the IP index did not significantly change from the third quarter of fiscal 2026. Manufacturing PMI results increased during the fourth quarter of fiscal 2026, reaching the highest level in over four years.
| Manufacturing IP Index | PMI | |||||||||||||
| Fiscal 2026 quarter ended: | ||||||||||||||
| September 2026 | 98.4 | 54.5 | ||||||||||||
| June 2026 | 98.3 | 53.3 | ||||||||||||
| March 2026 | 97.4 | 52.7 | ||||||||||||
| December 2025 | 96.2 | 47.9 | ||||||||||||
| Fiscal 2025 quarter ended: | ||||||||||||||
| September 2025 | 97.3 | 48.9 | ||||||||||||
| June 2025 | 96.9 | 49.0 | ||||||||||||
| March 2025 | 96.8 | 48.9 | ||||||||||||
| December 2024 | 95.5 | 49.2 | ||||||||||||
| Fiscal 2024 quarter ended: | ||||||||||||||
| September 2024 | 95.6 | 47.5 | ||||||||||||
| June 2024 | 96.4 | 48.5 | ||||||||||||
| March 2024 | 96.6 | 50.3 | ||||||||||||
| December 2023 | 96.7 | 47.1 | ||||||||||||
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. The Producer Price Index increased to 6.3 percent as of September 2026, the largest 12-month increase since December 2022.
Non-U.S. Economic Trends
In 2026, 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 fourth quarter of fiscal 2026. Manufacturing PMI readings outside the U.S were mostly positive as well, with many countries across all regions reporting above 50 in September.
Outlook
We expect continued pressures related to inflation, geopolitical tensions, and the availability of certain materials and components, driven in part by strong market demand for data centers. Inflationary pressures and geopolitical volatility could adversely impact our costs, particularly with respect to electronic components, commodities, energy, and freight. In addition, strong market demand, including for data centers, could contribute to shortages of certain materials and components, which could constrain our ability to manufacture products and adversely affect product availability. We continue to manage these risks through pricing and supply chain resiliency actions.
We continue to manage the impact of tariffs through pricing and other supply chain actions, including the use of alternative sources of materials and redundant manufacturing locations. Supply chain resiliency actions taken in recent years enable us to manufacture certain high-value product lines in multiple geographic locations. We continue to expect these actions to mostly offset tariff-related costs, although the dynamic tariff environment could affect our ability to fully recover these costs.
In February 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were not authorized. During the fourth quarter of fiscal 2026, we filed refund claims for the majority of our IEEPA tariffs paid which were subsequently approved and paid by U.S. Customs and Border Protection (CBP). We recognize a refund when realizable in accordance with ASC 450, Contingencies. In September 2026, we approved and communicated a refund program for customers who paid price increases on purchases of products that were impacted by IEEPA tariffs. The customer tariff refund program will be completed in 2027.
In 2026, we announced plans to build a new greenfield manufacturing site in New Berlin, Wisconsin. The facility is expected to be the Company's largest manufacturing campus globally, with a significant footprint and the flexibility to scale operations. Additionally, in January we completed the purchase of our Mequon, Wisconsin facility, which we had previously leased and continue to use for engineering and development and manufacturing. These projects are aligned with the previously announced $2 billion investment in plants, digital infrastructure, and talent to grow share, build resilience, and expand margins.
Summary of Results of Operations
The following table reflects our sales and operating results (in millions, except per share amounts and percentages):
| Year Ended September 30, | ||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||
| Sales | ||||||||||||||||||||
| Intelligent Devices (a) | $ | 4,185 | $ | 3,756 | $ | 3,804 | ||||||||||||||
| Software & Control (b) | 2,818 | 2,383 | 2,187 | |||||||||||||||||
| Lifecycle Services (c) | 2,071 | 2,203 | 2,273 | |||||||||||||||||
|
Other unallocated items (1)
|
(85) | - | - | |||||||||||||||||
| Total sales (d) | $ | 8,989 | $ | 8,342 | $ | 8,264 | ||||||||||||||
|
Segment operating earnings (2)
|
||||||||||||||||||||
| Intelligent Devices (e) | $ | 839 | $ | 676 | $ | 700 | ||||||||||||||
| Software & Control (f) | 952 | 708 | 530 | |||||||||||||||||
| Lifecycle Services (g) | 312 | 319 | 365 | |||||||||||||||||
|
Corporate and other (3)
|
(116) | (125) | (114) | |||||||||||||||||
|
Other unallocated items (1)
|
10 | - | - | |||||||||||||||||
|
Enterprise operating profit (4) (h)
|
1,997 | 1,578 | 1,481 | |||||||||||||||||
| Non-operating pension and postretirement benefit credit (cost) | 2 | (1) | 20 | |||||||||||||||||
|
Amortization of acquisition-related intangible assets (5)
|
(120) | (141) | (144) | |||||||||||||||||
| Impairment of intangible assets | - | (224) | - | |||||||||||||||||
|
Net legacy asbestos and environmental charges (3)
|
2 | (154) | (21) | |||||||||||||||||
| Gain or loss on fair value of investments | (7) | (3) | - | |||||||||||||||||
| Restructuring charges | (25) | 5 | (97) | |||||||||||||||||
| Charitable contributions | (50) | - | - | |||||||||||||||||
| Gain on dissolution of Sensia, net of transaction costs | 4 | - | - | |||||||||||||||||
| Interest expense, net | (118) | (143) | (139) | |||||||||||||||||
| Income before income taxes (i) | 1,685 | 917 | 1,100 | |||||||||||||||||
| Income tax provision | (278) | (168) | (152) | |||||||||||||||||
| Net income | 1,407 | 749 | 948 | |||||||||||||||||
| Net loss attributable to noncontrolling interests | (2) | (120) | (5) | |||||||||||||||||
| Net income attributable to Rockwell Automation | $ | 1,409 | $ | 869 | $ | 953 | ||||||||||||||
| Diluted EPS | $ | 12.54 | $ | 7.67 | $ | 8.28 | ||||||||||||||
|
Adjusted EPS (6)
|
$ | 13.42 | $ | 10.53 | $ | 9.85 | ||||||||||||||
| Diluted weighted average outstanding shares | 112.0 | 113.1 | 114.5 | |||||||||||||||||
| Pre-tax margin (i/d) | 18.7 | % | 11.0 | % | 13.3 | % | ||||||||||||||
| Intelligent Devices segment operating margin (e/a) | 20.0 | % | 18.0 | % | 18.4 | % | ||||||||||||||
| Software & Control segment operating margin (f/b) | 33.8 | % | 29.7 | % | 24.2 | % | ||||||||||||||
| Lifecycle Services segment operating margin (g/c) | 15.1 | % | 14.5 | % | 16.1 | % | ||||||||||||||
|
Enterprise operating margin (4) (h/d)
|
22.2 | % | 18.9 | % | 17.9 | % | ||||||||||||||
(1) Includes an $85 million reduction of sales for the customer tariff refund program, a $103 million reduction of cost of sales for IEEPA tariff refunds received, and $8 million of related non-recurring charges. Refer to Note 1 in the Consolidated Financial Statements for additional details on IEEPA tariffs.
(2) Refer to Note 20 in the Consolidated Financial Statements for the definition of segment operating earnings.
(3) Legacy asbestos and environmental charges were previously included in Corporate and other. 2024 has been recast to conform to current year presentation.
(4) Enterprise operating profit and Enterprise operating margin are non-GAAP financial measures. We exclude from income before income taxes and pre-tax margin, non-operating pension and postretirement benefit credit (cost), amortization of acquisition-related intangible assets, impairment of intangible assets, net legacy asbestos and environmental charges, gain or loss on fair value of investments, restructuring charges aligned with enterprise-wide strategic initiatives, charitable contributions, gain on dissolution of Sensia, net of transaction costs, and interest expense, net because we do not consider these items to be directly related to the operating performance of our enterprise. We believe Enterprise operating profit and Enterprise operating margin are useful to investors as measures of operating performance. We use these measures to monitor and evaluate the profitability of our operating enterprise. Our measures of Enterprise operating profit and Enterprise operating margin may be different from measures used by other companies.
(5) Amortization of acquisition-related intangibles excludes amortization of internally developed and capitalized intangible software products. See the Supplemental Segment Information section for our presentation and reconciliation by segment.
(6) Adjusted EPS is a non-GAAP earnings measure. See Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation for more information on this non-GAAP measure.
2026 Compared to 2025
Sales
On April 1, the Company completed the dissolution of the Sensia joint venture, which included divestiture of certain businesses to the joint venture partner. Prior period reported sales have been adjusted to calculate organic sales. Reported and organic sales in fiscal 2026 increased 8 percent compared to 2025. Divestitures decreased sales by 2 percent and currency translation increased sales by 2 percent. Reported and Organic Sales were reduced by 1 percent as a result of the customer tariff refund program. Volume increased total company sales by approximately 6 percentage points year over year driven by the Software & Control and Intelligent Devices segments. Pricing increased total company sales by approximately 3 percentage points year over year, realized in the Intelligent Devices and Software & Control segments.
The table below presents our sales for the year ended September 30, 2026, attributed to the geographic regions based upon country of destination, and the percentage change from the same period in 2025 (in millions, except percentages).
| Change vs. |
Change in Organic
Sales (1) vs.
|
|||||||||||||||||||
|
Year Ended September 30, 2026 |
Year Ended September 30, 2025 |
Year Ended September 30, 2025 |
||||||||||||||||||
| North America | $ | 5,801 | 10 | % | 11 | % | ||||||||||||||
| Europe, Middle East and Africa | 1,603 | 8 | % | 7 | % | |||||||||||||||
| Asia Pacific | 1,108 | 8 | % | 8 | % | |||||||||||||||
| Latin America | 562 | - | % | (7) | % | |||||||||||||||
|
Other unallocated items (2)
|
(85) | (1) | % | (1) | % | |||||||||||||||
| Total Company Sales | $ | 8,989 | 8 | % | 8 | % | ||||||||||||||
(1) Organic sales and organic sales growth exclude the effect of acquisitions, changes in currency exchange rates, and divestitures. See Supplemental Sales Information for information on these non-GAAP measures.
(2) Represents estimated refunds to customers under the customer tariff refund program.
Corporate and Other
Corporate and other expenses were $116 million in fiscal 2026 compared to $125 million in fiscal 2025.
Amortization of acquisition-related intangible assets
Amortization of acquisition-related intangible assets was $120 million in fiscal 2026 compared to $141 million in fiscal 2025. The decrease was primarily due to the dissolution of the Sensia joint venture.
Restructuring Charges
Restructuring charges were $25 million in fiscal 2026. During 2025, we reversed $5 million of restructuring accruals. See Note 18 in the Consolidated Financial Statements for more information on our restructuring charges.
Charitable Contribution
In the fourth quarter of fiscal 2026 we made a $50 million contribution to the Rockwell Automation Charitable Corporation. The contribution optimizes tax benefits and provides funding for philanthropic priorities.
Income before Income Taxes
Income before income taxes increased to $1,685 million in 2026 from $917 million in 2025. Pre-tax margin was 18.7 percent in 2026 compared to 11.0 percent in 2025. The increases were primarily due to the prior year non-cash impairment charge related to the Sensia joint venture, and an accounting change and accrual increase for legacy asbestos liabilities, higher sales volume, price realization, favorable mix, productivity, and the net impact of IEEPA tariff refund related items, partially offset by higher compensation, a charitable contribution, and restructuring charges. Enterprise operating profit increased to $1,997 million from $1,578 million in 2025. Enterprise operating margin was 22.2 percent in 2026 compared to 18.9 percent in 2025. The increases were primarily due to higher sales volume, price realization, favorable mix, productivity, and the net impact of IEEPA tariff refund related items, partially offset by higher compensation.
Income Taxes
The effective tax rate in fiscal 2026 was 16.5 percent compared to 18.3 percent in fiscal 2025. The decrease in the effective tax rate is due to the absence of certain Sensia-related tax impacts from 2025 and higher discrete tax benefits in 2026, including a benefit related to the dissolution of the Sensia joint venture, partially offset by Base Erosion and Profit Shifting (BEPS) Pillar Two minimum taxes. The Adjusted Effective Tax Rate in fiscal 2026 was 19.6 percent compared to 17.1 percent in fiscal 2025. The increase in the Adjusted Effective Tax Rate was primarily due to the application of BEPS Pillar Two minimum taxes, partially offset by higher discrete tax benefits.
See Note 16 in the Consolidated Financial Statements for a complete reconciliation of the United States statutory tax rate to the effective tax rate and additional information on tax events in 2026 and 2025 affecting each year's respective tax rates.
Diluted EPS and Adjusted EPS
Fiscal 2026 Net income attributable to Rockwell Automation was $1,409 million or $12.54 per share, compared to $869 million or $7.67 per share in fiscal 2025. The increases in Net income attributable to Rockwell Automation and diluted EPS were primarily due to higher pre-tax income. Adjusted EPS was $13.42 in fiscal 2026, up 27 percent compared to $10.53 in fiscal 2025, primarily due to higher Enterprise operating profit.
Intelligent Devices
Sales
Intelligent Devices reported sales increased 11 percent in 2026 compared to 2025. Organic sales increased 10 percent and currency translation increased sales by 1 percent. All regions experienced reported and organic sales increases except for Latin America.
Segment Operating Margin
Intelligent Devices segment operating earnings increased 24 percent year over year. Segment operating margin increased to 20.0 percent in 2026 from 18.0 percent in 2025, primarily due to higher sales volume, productivity, and favorable mix, partially offset by higher compensation.
Software & Control
Sales
Software & Control reported sales increased 18 percent in 2026 compared to 2025. Organic sales increased 17 percent and currency translation increased sales by 1 percent. All regions experienced reported and organic sales increases except Latin America where organic sales were flat.
Segment Operating Margin
Software & Control segment operating earnings increased 34 percent year over year. Segment operating margin increased to 33.8 percent in 2026 from 29.7 percent in 2025, primarily due to higher sales volume, partially offset by higher compensation.
Lifecycle Services
Sales
Lifecycle Services reported sales decreased 6 percent in 2026 compared to 2025. Organic sales decreased sales by 2 percent. Divestitures decreased sales by 6 percent and currency translation increased sales by 2 percent. All regions experienced reported and organic sales decreases except for Asia Pacific where reported and organic sales increased.
Segment Operating Margin
Lifecycle Services segment operating earnings decreased 2 percent year over year. Segment operating margin increased to 15.1 percent in 2026 from 14.5 percent in 2025, primarily due to strong project execution and the margin benefit from the Sensia joint venture dissolution, partially offset by higher compensation.
2025 Compared to 2024
For a discussion of the Company's fiscal 2025 results compared to fiscal 2024, see Item 7. MD&A of the Company's Annual Report on Form 10-K for the year ended September 30, 2025, filed on November 12, 2025.
Supplemental Segment Information
Amortization of acquisition-related intangible assets, impairment of intangible assets, non-operating pension and postretirement benefit (credit) cost, and restructuring charges are not allocated to our operating segments because these costs are excluded from our measurement of each segment's operating performance for internal purposes. If we were to allocate these costs, we would attribute them to each of our segments as follows (in millions):
| Year Ended September 30, | ||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||
| Non-operating pension and postretirement benefit credit | ||||||||||||||||||||
| Intelligent Devices | $ | (2) | $ | (2) | $ | (7) | ||||||||||||||
| Software & Control | (2) | (1) | (7) | |||||||||||||||||
| Lifecycle Services | (4) | (2) | (10) | |||||||||||||||||
|
Amortization of acquisition-related intangible assets (1)
|
||||||||||||||||||||
| Intelligent Devices | $ | 42 | $ | 37 | $ | 38 | ||||||||||||||
| Software & Control | 66 | 66 | 68 | |||||||||||||||||
| Lifecycle Services | 12 | 38 | 38 | |||||||||||||||||
| Impairment of intangible assets | ||||||||||||||||||||
| Intelligent Devices | $ | - | $ | - | $ | - | ||||||||||||||
| Software & Control | - | - | - | |||||||||||||||||
| Lifecycle Services | - | (224) | - | |||||||||||||||||
| Restructuring charges | ||||||||||||||||||||
| Intelligent Devices | $ | 9 | $ | (2) | $ | 44 | ||||||||||||||
| Software & Control | 8 | (2) | 33 | |||||||||||||||||
| Lifecycle Services | 8 | (1) | 20 | |||||||||||||||||
(1) Amortization of acquisition-related intangible assets does not include amortization for intangibles internally developed, which is included in segment operating earnings. For the years ended September 30, 2026, 2025, and 2024, the amortization expense for internally developed intangible amortization was $11 million, $11 million, and $11 million, respectively.
Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation
Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate are non-GAAP earnings measures that exclude non-operating pension and postretirement benefit (credit) cost, amortization of acquisition-related intangible assets, impairment of intangible assets, net legacy asbestos and environmental charges, gain or loss on fair value of investments, restructuring charges aligned with enterprise-wide strategic initiatives, gain on dissolution of Sensia, net of transaction costs, and charitable contributions, including their respective tax effects and discrete tax items. See Note 14 in the Consolidated Financial Statements for more information on our net periodic pension and postretirement benefit cost (credit).
The Company adjusts its non-GAAP results to exclude Amortization of acquisition-related intangible assets as such amounts are significantly impacted by the timing and/or size of acquisitions. Management believes that the adjustment of Amortization of acquisition-related intangible assets supplements the GAAP information with a measure that can be used to assess the comparability of operating performance between periods and as compared to industry peers. Although the Company excludes Amortization of acquisition-related intangible assets from its non-GAAP expenses, management believes that it is important for investors to understand that such intangible assets were recorded as part of an acquisition and contribute to revenue generation.
In fiscal 2026, we updated the definition of our non-GAAP earnings measures to exclude both charitable contributions and the gain on the dissolution of the Sensia joint venture, net of transaction costs, and certain related tax impacts. We believe this change to our definition provides investors with a more useful presentation of our operating performance as these items and their related tax impacts are not reflective of our ongoing operations. We did not revise prior years because there were no similar amounts.
We believe that Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate provide useful information to our investors about our operating performance and allow management and investors to compare our operating performance period over period. Adjusted EPS is also used as a financial measure of performance for our annual incentive compensation. Our measures of Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate may be different from measures used by other companies. These non-GAAP measures should not be considered a substitute for Net income attributable to Rockwell Automation, diluted EPS, and effective tax rate.
The following are reconciliations of Net income attributable to Rockwell Automation, diluted EPS, and effective tax rate to Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate, respectively (in millions, except per share amounts and percentages):
| Year Ended September 30, | ||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||
| Net income attributable to Rockwell Automation | $ | 1,409 | $ | 869 | $ | 953 | ||||||||||||||
| Non-operating pension and postretirement benefit (credit) cost | (2) | 1 | (20) | |||||||||||||||||
| Tax effect of non-operating pension and postretirement benefit (credit) cost | - | (1) | 4 | |||||||||||||||||
| Amortization of acquisition-related intangible assets attributable to Rockwell Automation | 119 | 130 | 133 | |||||||||||||||||
| Tax effect of amortization of acquisition-related intangible assets attributable to Rockwell Automation | (29) | (29) | (25) | |||||||||||||||||
| Impairment of intangible assets attributable to Rockwell Automation | - | 119 | - | |||||||||||||||||
| Tax effect of impairment of intangible assets attributable to Rockwell Automation | - | (9) | - | |||||||||||||||||
| Net legacy asbestos and environmental charges | (2) | 154 | 21 | |||||||||||||||||
| Tax effect of net legacy asbestos and environmental charges | - | (37) | (5) | |||||||||||||||||
| Gain or loss on fair value of investments | 7 | 3 | - | |||||||||||||||||
| Tax effect of gain or loss on fair value of investments | (2) | (1) | - | |||||||||||||||||
| Restructuring charges | 25 | (5) | 97 | |||||||||||||||||
| Tax effect of restructuring charges | (7) | 1 | (25) | |||||||||||||||||
| Charitable contributions | 50 | - | - | |||||||||||||||||
| Tax effect of charitable contributions | (12) | - | - | |||||||||||||||||
| Gain on dissolution of Sensia, net of transaction costs, attributable to Rockwell Automation | (5) | - | - | |||||||||||||||||
| Tax and tax items associated with gain on dissolution of Sensia, net of transaction costs, attributable to Rockwell Automation | (44) | - | - | |||||||||||||||||
| Adjusted Income | $ | 1,507 | $ | 1,195 | $ | 1,133 | ||||||||||||||
| Diluted EPS | $ | 12.54 | $ | 7.67 | $ | 8.28 | ||||||||||||||
| Non-operating pension and postretirement benefit (credit) cost | (0.02) | 0.01 | (0.17) | |||||||||||||||||
| Tax effect of non-operating pension and postretirement benefit (credit) cost | - | (0.01) | 0.03 | |||||||||||||||||
| Amortization of acquisition-related intangible assets attributable to Rockwell Automation | 1.06 | 1.15 | 1.16 | |||||||||||||||||
| Tax effect of amortization of acquisition-related intangible assets attributable to Rockwell Automation | (0.26) | (0.26) | (0.22) | |||||||||||||||||
| Impairment of intangible assets attributable to Rockwell Automation | - | 1.05 | - | |||||||||||||||||
| Tax effect of impairment of intangible assets attributable to Rockwell Automation | - | (0.08) | - | |||||||||||||||||
| Net legacy asbestos and environmental charges | (0.02) | 1.36 | 0.18 | |||||||||||||||||
| Tax effect of net legacy asbestos and environmental charges | - | (0.33) | (0.04) | |||||||||||||||||
| Gain or loss on fair value of investments | 0.06 | 0.02 | - | |||||||||||||||||
| Tax effect of gain or loss on fair value of investments | (0.02) | (0.01) | (0.01) | |||||||||||||||||
| Restructuring charges | 0.23 | (0.05) | 0.85 | |||||||||||||||||
| Tax effect of restructuring charges | (0.06) | 0.01 | (0.21) | |||||||||||||||||
| Charitable contributions | 0.45 | - | - | |||||||||||||||||
| Tax effect of charitable contributions | (0.11) | - | - | |||||||||||||||||
| Gain on dissolution of Sensia, net of transaction costs, attributable to Rockwell Automation | (0.04) | - | - | |||||||||||||||||
| Tax and tax items associated with gain on dissolution of Sensia, net of transaction costs, attributable to Rockwell Automation | (0.39) | - | - | |||||||||||||||||
| Adjusted EPS | $ | 13.42 | $ | 10.53 | $ | 9.85 | ||||||||||||||
| Year Ended September 30, | ||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||
| Effective tax rate | 16.5 | % | 18.3 | % | 13.8 | % | ||||||||||||||
| Tax effect of non-operating pension and postretirement benefit (credit) cost | - | % | 0.1 | % | (0.1) | % | ||||||||||||||
| Tax effect of amortization of acquisition-related intangible assets attributable to Rockwell Automation | 0.5 | % | 0.6 | % | 0.4 | % | ||||||||||||||
| Tax effect of impairment of intangible assets attributable to Rockwell Automation | - | % | (3.1) | % | - | % | ||||||||||||||
| Tax effect of net legacy asbestos and environmental charges | - | % | 1.1 | % | 0.2 | % | ||||||||||||||
| Tax effect of gain or loss on fair value of investments | 0.1 | % | 0.1 | % | 0.1 | % | ||||||||||||||
| Tax effect of restructuring charges | 0.2 | % | - | % | 0.9 | % | ||||||||||||||
| Tax effect of charitable contributions | 0.2 | % | - | % | - | % | ||||||||||||||
| Tax and tax items associated with gain on dissolution of Sensia, net of transaction costs, attributable to Rockwell Automation | 2.1 | % | - | % | - | % | ||||||||||||||
| Adjusted Effective Tax Rate | 19.6 | % | 17.1 | % | 15.3 | % | ||||||||||||||
Financial Condition
The following is a summary of our cash flows from operating, investing, and financing activities, as reflected in the Consolidated Statement of Cash Flows (in millions):
| Year Ended September 30, | ||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||
| Cash provided by (used for) | ||||||||||||||||||||
| Operating activities | $ | 1,958 | $ | 1,544 | $ | 864 | ||||||||||||||
| Investing activities | (301) | (216) | (982) | |||||||||||||||||
| Financing activities | (1,694) | (1,335) | (503) | |||||||||||||||||
| Effect of exchange rate changes on cash | 2 | 4 | 12 | |||||||||||||||||
| Increase (decrease) in cash, cash equivalents, and restricted cash | $ | (35) | $ | (3) | $ | (609) | ||||||||||||||
The following table summarizes free cash flow, which is a non-GAAP financial measure (in millions):
| Year Ended September 30, | ||||||||||||||||||||
| 2026 | 2025 | 2024 | ||||||||||||||||||
| Cash provided by operating activities | $ | 1,958 | $ | 1,544 | $ | 864 | ||||||||||||||
| Capital expenditures | (257) | (186) | (225) | |||||||||||||||||
| Free cash flow | $ | 1,701 | $ | 1,358 | $ | 639 | ||||||||||||||
Our definition of free cash flow takes into consideration capital investments required to maintain the operations of our businesses and execute our strategy. Cash provided by operating activities adds back non-cash depreciation expense to earnings but does not reflect a charge for necessary capital expenditures. In our opinion, free cash flow provides useful information to investors regarding our ability to generate cash from business operations that is available for acquisitions and other investments, service of debt principal, dividends, and share repurchases. We use free cash flow, as defined, as one measure to monitor and evaluate our performance, including as a financial measure for our annual incentive compensation. Our definition of free cash flow may be different from definitions used by other companies.
Cash provided by operating activities was $1,958 million for the year ended September 30, 2026, compared to $1,544 million for the year ended September 30, 2025. Free cash flow was $1,701 million for the year ended September 30, 2026, compared to $1,358 million for the year ended September 30, 2025. The year-over-year increases in cash provided by operating activities and free cash flow were primarily due to higher pre-tax income and $108 million of tariff refunds and related interest income.
Our Short-term debt as of September 30, 2026 and 2025, included commercial paper borrowings of $707 million and $522 million, with a weighted average interest rate of 4.06 percent and 4.24 percent, and a weighted average maturity period of 19 days and 16 days, respectively.
In December 2022, Sensia entered into an unsecured $75 million line of credit. As of September 30, 2025, included in Short-term debt was $70 million borrowed against the line of credit with an interest rate of 5.18 percent. Also included in debt as of September 30, 2025, were the following interest-bearing loans from SLB to Sensia: $14 million in Short-term debt, and $42 million in Long-term debt. In December 2025, the credit line matured and was closed. The outstanding debt was settled with loans from the joint venture partners. Upon dissolution of the Sensia joint venture, interest-bearing loans from SLB to Sensia were assumed by SLB. Refer to Note 1 in the Consolidated Financial Statements for additional details on the dissolution.
We repurchased approximately 3.1 million shares of our common stock under our share repurchase program in 2026 at a total cost of $1,254 million and an average cost of $401.04 per share. In 2025, we repurchased approximately 1.5 million shares of our common stock under our share repurchase program at a total cost of $419 million and an average cost of $279.43 per share. At September 30, 2026, there were no outstanding common stock share repurchases recorded in Accounts payable. At September 30, 2025, there were $1 million of outstanding common stock share repurchases recorded in Accounts payable that did not settle until 2026. Our decision to repurchase shares in 2027 will depend on business conditions, free cash flow generation, other cash requirements, and stock price. At September 30, 2026, we had approximately $673 million remaining for share repurchases under our existing board authorization. See Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, for additional information regarding share repurchases.
We expect future uses of cash to include capital expenditures, working capital requirements, dividends to shareowners, repurchases of common stock, repayment of debt, acquisitions of businesses and other inorganic investments, and additional contributions to our retirement plans. We expect capital expenditures in 2027 to be approximately $400 million. Significant long-term uses of cash include the following (in millions):
| Payments by Period | ||||||||||||||||||||||||||||||||||||||||||||
| Total | 2027 | 2028 | 2029 | 2030 | 2031 | Thereafter | ||||||||||||||||||||||||||||||||||||||
|
Long-term debt and interest (1)
|
$ | 4,609 | $ | 102 | $ | 344 | $ | 503 | $ | 71 | $ | 521 | $ | 3,068 | ||||||||||||||||||||||||||||||
| Minimum lease payments (Note 19) | 417 | 107 | 88 | 63 | 47 | 31 | 81 | |||||||||||||||||||||||||||||||||||||
|
Postretirement benefits (2)
|
38 | $ | 6 | 5 | 5 | 4 | 4 | 14 | ||||||||||||||||||||||||||||||||||||
|
Pension contributions (3)
|
35 | 35 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||
|
Net legacy asbestos liabilities (4)
|
145 | 13 | 11 | 10 | 8 | 7 | 96 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 5,244 | $ | 263 | $ | 448 | $ | 581 | $ | 130 | $ | 563 | $ | 3,259 | ||||||||||||||||||||||||||||||
(1) The amounts for Long-term debt assume that the respective debt instruments will be outstanding until their scheduled maturity dates and include interest but exclude unamortized discount. See Note 7 in the Consolidated Financial Statements for more information regarding our Long-term debt.
(2) Our postretirement benefit plans are unfunded and are subject to change. Amounts reported are estimates of future benefit payments, to the extent estimable.
(3) Amounts reported for pension contributions reflect current estimates. Contributions to our pension plans beyond 2027 will depend on future investment performance of our pension plan assets, changes in discount rate assumptions, and governmental regulations in effect at the time. Amounts subsequent to 2027 are excluded from the summary above, as we are unable to make a reasonably reliable estimate of these amounts. The minimum contribution for our U.S. pension plan as required by the Employee Retirement Income Security Act (ERISA) is currently zero. We may make additional contributions to this plan at the discretion of management.
(4) Amounts reflect current estimates of net annual payments to resolve claims and will vary based on settlement rates and values, changes in state and national laws, defense strategies, and insurance recoveries.
We expect to fund future uses of cash with a combination of existing cash balances, cash generated by operating activities, commercial paper borrowings, or new issuances of debt or other securities. In addition, we have access to unsecured credit facilities with various banks.
From time to time, we may access the capital markets to meet our liquidity needs, refinance existing indebtedness, fund acquisitions or for other general corporate purposes. We currently expect to access the debt capital markets, subject to market conditions and other factors.
At September 30, 2026, the majority of our Cash and cash equivalents were held by non-U.S. subsidiaries. We use a global cash pooling arrangement to efficiently manage liquidity among our entities. As a result of the broad changes to the U.S. international tax system under the Tax Cuts and Jobs Act of 2017, we account for taxes on earnings of substantially all our non-U.S. subsidiaries including both non-U.S. and U.S. taxes. We have concluded that earnings of a limited number of our non-U.S. subsidiaries are indefinitely reinvested.
In November 2025, we replaced our former $1.5 billion unsecured revolving credit facility with a new five-year $1.5 billion unsecured revolving credit facility, expiring in November 2030. This credit facility uses the secured overnight financing rate (SOFR) as the primary basis for determining interest payments. We can increase the aggregate amount of this credit facility by up to $750 million, subject to the consent of the banks in the credit facility. We did not borrow against this credit facility during the quarter ended September 30, 2026, or against our prior credit facility during the quarter ended September 30, 2025. The terms of this credit facility contain covenants under which we agree to maintain an EBITDA-to-interest ratio of at least 3.0 to 1.0. The EBITDA-to-interest ratio is defined in the credit facility as the ratio of consolidated EBITDA for the preceding four quarters to consolidated interest expense for the same period.
Among other uses, we can draw on our credit facility as a standby liquidity facility to repay our outstanding commercial paper as it matures. This access to funds to repay maturing commercial paper is an important factor in maintaining the short-term credit ratings set forth in the table below. Under our current policy with respect to these ratings, we expect to limit our other borrowings under our credit facility, if any, to amounts that would leave enough credit available under the facility so that we could borrow, if needed, to repay all of our then outstanding commercial paper as it matures.
Separate short-term unsecured credit facilities of approximately $274 million at September 30, 2026, 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 September 30, 2026 and 2025, were not significant. We were in compliance with all covenants under our credit facilities at September 30, 2026, and 2025. There are no significant commitment fees or compensating balance requirements under our credit facilities.
The following is a summary of our credit ratings as of November 12, 2026:
| Credit Rating Agency | Short Term Rating | Long Term Rating | Outlook | |||||||||||||||||
| Standard & Poor's | A-2 | A- | Stable | |||||||||||||||||
| Moody's | P-2 | A3 | Stable | |||||||||||||||||
| Fitch Ratings | F1 | A | Stable | |||||||||||||||||
Our ability to access the commercial paper market, and the related costs of these borrowings, is affected by the strength of our credit ratings and market conditions. We have not experienced any difficulty in accessing the commercial paper market. If our access to the commercial paper market is adversely affected due to a change in market conditions or otherwise, we would expect to rely on a combination of available cash and our unsecured committed credit facility to provide short-term funding. In such event, the cost of borrowings under our unsecured committed credit facility could be higher than the cost of commercial paper borrowings.
We regularly monitor the third-party depository institutions that hold our cash and cash equivalents and short-term investments. We diversify our cash and cash equivalents and short-term investments among counterparties to minimize exposure to any one of these entities.
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. In 2025 and 2026, we entered into cross-currency swaps that we designated as a partial hedge of our net investment in certain Euro, Swiss franc, and Chinese yuan functional currency denominated subsidiaries. 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 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.
Cash dividends declared to shareowners were $617 million in 2026 ($5.52 per common share), $593 million in 2025 ($5.24 per common share), and $573 million in 2024 ($5.00 per common share). Our quarterly dividend rate as of September 30, 2026, is $1.38 per common share ($5.52 per common share annually), which is determined at the sole discretion of our Board of Directors.
Supplemental Sales Information
We translate sales of subsidiaries operating outside of the United States using exchange rates effective during the respective period. Therefore, changes in currency exchange rates affect our reported sales. Sales by acquired businesses also affect our reported sales. We believe that organic sales, defined as sales excluding the effects of acquisitions and changes in currency exchange rates, which is a non-GAAP financial measure, provides useful information to investors because it reflects regional and operating segment performance from the activities of our businesses without the effect of acquisitions and changes in currency exchange rates. We use organic sales as one measure to monitor and evaluate our regional and operating segment performance. When we acquire businesses, we exclude sales in the current period for which there are no comparable sales in the prior period. We determine the effect of changes in currency exchange rates by translating the respective period's sales using the same currency exchange rates that were in effect during the prior year. When we divest a business, we exclude sales in the prior period for which there are no comparable sales in the current period. Organic sales growth is calculated by comparing organic sales to reported sales in the prior year, excluding divestitures. We attribute sales to the geographic regions based on the country of destination.
The following is a reconciliation of reported sales to organic sales by geographic region (in millions):
| Year Ended September 30, 2026 | Year Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Reported Sales |
Less: Effect of Acquisitions |
Effect of Changes in Currency |
Organic Sales |
Reported Sales | Divestitures | Sales Excluding Divestitures | |||||||||||||||||||||||||||||||||||
| North America | $ | 5,801 | $ | - | $ | 5 | $ | 5,796 | $ | 5,270 | $ | (66) | $ | 5,204 | |||||||||||||||||||||||||||
| Europe, Middle East and Africa | 1,603 | - | 73 | 1,530 | 1,488 | (54) | 1,434 | ||||||||||||||||||||||||||||||||||
| Asia Pacific | 1,108 | - | 10 | 1,098 | 1,024 | (5) | 1,019 | ||||||||||||||||||||||||||||||||||
| Latin America | 562 | - | 43 | 519 | 560 | (3) | 557 | ||||||||||||||||||||||||||||||||||
|
Other unallocated items (1)
|
(85) | - | - | (85) | - | - | - | ||||||||||||||||||||||||||||||||||
| Total Company Sales | $ | 8,989 | $ | - | $ | 131 | $ | 8,858 | $ | 8,342 | $ | (128) | $ | 8,214 | |||||||||||||||||||||||||||
| Year Ended September 30, 2025 | Year Ended September 30, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Reported Sales |
Less: Effect of Acquisitions |
Effect of Changes in Currency |
Organic Sales |
Reported Sales | Divestitures | Sales Excluding Divestitures | |||||||||||||||||||||||||||||||||||
| North America | $ | 5,270 | $ | 2 | $ | (12) | $ | 5,280 | $ | 5,053 | $ | - | $ | 5,053 | |||||||||||||||||||||||||||
| Europe, Middle East and Africa | 1,488 | - | 29 | 1,459 | 1,504 | - | 1,504 | ||||||||||||||||||||||||||||||||||
| Asia Pacific | 1,024 | - | (8) | 1,032 | 1,073 | - | 1,073 | ||||||||||||||||||||||||||||||||||
| Latin America | 560 | - | (38) | 598 | 634 | - | 634 | ||||||||||||||||||||||||||||||||||
| Other unallocated items | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Total Company Sales | $ | 8,342 | $ | 2 | $ | (29) | $ | 8,369 | $ | 8,264 | $ | - | $ | 8,264 | |||||||||||||||||||||||||||
The following is a reconciliation of reported sales to organic sales by operating segment (in millions):
| Year Ended September 30, 2026 | Year Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Reported Sales |
Less: Effect of Acquisitions |
Effect of Changes in Currency |
Organic Sales |
Reported Sales | Divestitures | Sales Excluding Divestitures | |||||||||||||||||||||||||||||||||||
| Intelligent Devices | $ | 4,185 | $ | - | $ | 61 | $ | 4,124 | $ | 3,756 | $ | - | $ | 3,756 | |||||||||||||||||||||||||||
| Software & Control | 2,818 | - | 37 | 2,781 | 2,383 | - | 2,383 | ||||||||||||||||||||||||||||||||||
| Lifecycle Services | 2,071 | - | 33 | 2,038 | 2,203 | (128) | 2,075 | ||||||||||||||||||||||||||||||||||
|
Other unallocated items (1)
|
(85) | - | - | (85) | - | - | - | ||||||||||||||||||||||||||||||||||
| Total Company Sales | $ | 8,989 | $ | - | $ | 131 | $ | 8,858 | $ | 8,342 | $ | (128) | $ | 8,214 | |||||||||||||||||||||||||||
(1) Represents estimated refunds to customers under the customer tariff refund program. Refer to Note 1 in the Consolidated Financial Statements for additional details on IEEPA tariffs.
| Year Ended September 30, 2025 | Year Ended September 30, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Reported Sales |
Less: Effect of Acquisitions |
Effect of Changes in Currency |
Organic Sales |
Reported Sales | Divestitures | Sales Excluding Divestitures | |||||||||||||||||||||||||||||||||||
| Intelligent Devices | $ | 3,756 | $ | - | $ | (16) | $ | 3,772 | $ | 3,804 | $ | - | $ | 3,804 | |||||||||||||||||||||||||||
| Software & Control | 2,383 | - | (9) | 2,392 | 2,187 | - | 2,187 | ||||||||||||||||||||||||||||||||||
| Lifecycle Services | 2,203 | 2 | (4) | 2,205 | 2,273 | - | 2,273 | ||||||||||||||||||||||||||||||||||
| Other unallocated items | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Total Company Sales | $ | 8,342 | $ | 2 | $ | (29) | $ | 8,369 | $ | 8,264 | $ | - | $ | 8,264 | |||||||||||||||||||||||||||
Critical Accounting Estimates
We believe the following accounting estimates are the most critical to the understanding of our financial statements as they could have the most significant effect on our reported results and require subjective or complex judgments by management. Accounting principles generally accepted in the United States require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. These estimates are based on our best judgment about current and future conditions, but actual results could differ from those estimates. Refer to Note 1 in the Consolidated Financial Statements for information regarding our significant accounting policies.
Goodwill and Intangibles Valuation - Sensia Reporting Unit
We monitor adverse events, conditions or changes in circumstances that would indicate impairment of intangible assets that are subject to amortization. When such events, conditions or changes in circumstances occur, we assess the recoverability of the assets by comparing the undiscounted future cash flows attributable to the intangible assets to their carrying amount. If the undiscounted future cash flows are less than the carrying amount, an impairment charge based on the excess of the carrying amount over the fair value of the assets, is recorded.
As a result of the historical financial performance of the Sensia joint venture not achieving expectations, during the fourth quarter of fiscal 2025, a strategic review by the partners resulted in a decision to pursue an orderly dissolution. This decision to dissolve resulted in downward revisions to growth and profitability projections. The decision by the joint partners to pursue dissolution of the joint venture was a triggering event for impairment testing. For the Sensia reporting unit identifiable intangible assets subject to amortization within the Lifecycle Services operating segment, we believed these changes that occurred during the fourth quarter of 2025 would indicate a potential impairment. The estimated undiscounted future cash flows attributable to the reporting unit were less than the carrying value; therefore, we determined the fair value for Sensia identifiable intangible assets as of September 30, 2025. We engaged an independent third-party valuation specialist to assist with the fair value determination of the identifiable intangible assets, primarily customer relationships, using a multi-period excess earnings model. We compared the fair value of $58 million to the carrying value, which resulted in a pre-tax, non-cash intangible asset impairment charge of $63 million during the fourth quarter of fiscal 2025. Subsequent to the impairment, our consolidated intangible asset balance as of September 30, 2025, was $864 million, including $58 million of identifiable intangible assets within the Sensia reporting unit.
Following the intangible asset impairment analysis, we estimated the fair value of the Sensia reporting unit using an income approach derived from discounted cash flows. As of September 30, 2025, the carrying value of the Sensia reporting unit, after consideration of the fourth quarter intangible asset impairment, was determined to be in excess of the reporting unit's fair value, resulting in a $161 million pre-tax, non-cash goodwill impairment charge recorded in the Consolidated Statement of Operations. Subsequent to the impairment, our consolidated goodwill balance as of September 30, 2025, was $3,839 million and there was no remaining goodwill within the Sensia reporting unit.
Critical assumptions used in this approach included estimated future revenue growth rates and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margins, and a discount rate. Estimated future revenue and EBITDA margins are based on our best estimate about current and future conditions. The forecasted near-term growth rate projections take into account recent revenue performance. Margin assumptions reflect volume, mix, productivity and price estimates. These estimates and assumptions are based on a number of factors, including historical experience, reference to external product available market and industry growth publications, and analysis of peer group projections. We determined the discount rate using a weighted average cost of capital adjusted for risk factors.
The joint venture partners signed a separation agreement in December 2025, including a plan for distribution of joint venture assets and related terms and conditions. The disposal group met the criteria to be classified as held for sale under ASC 360-10-45 in the first quarter ended December 31, 2025. The Sensia joint venture had historically been included in the Lifecycle Services reportable segment. The transaction closed April 1, 2026. Following the dissolution, there are no remaining intangible assets related to Sensia.
More information regarding the Sensia dissolution and goodwill impairment testing is contained in Note 1 and Note 3 in the Consolidated Financial Statements.
Retirement Benefits - Pension
Pension costs and obligations are actuarially determined and are influenced by assumptions used to estimate these amounts, including the discount rate. Changes in any of the assumptions and the amortization of differences between the assumptions and actual experience will affect the amount of pension expense in future periods.
Our global pension expense was $32 million, $38 million and $13 million in 2026, 2025, and 2024, respectively. Approximately all of our 2026 global pension expense and 65 percent of our global projected benefit obligation relate to our U.S. pension plan. The discount rate used to determine our 2026 U.S. pension expense was 5.35 percent, compared to 5.10 percent for 2025.
For 2027, our U.S. discount rate will increase to 6.70 percent from 5.35 percent in 2026. The discount rate was set as of our September 30 measurement date and was determined by modeling a portfolio of bonds that match the expected cash flow of our benefit plans.
The changes in our discount rate have an inverse relationship with our net periodic benefit cost and projected benefit obligation. The following chart illustrates the estimated change in projected benefit obligation and annual net periodic benefit cost assuming a change of 25 basis points in the discount rate for our U.S. pension plans (in millions):
| Pension Benefits | ||||||||||||||
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Change in Projected Benefit Obligation |
Change in Net Periodic Benefit Cost (1)
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| Discount rate | $ | 38 | $ | - | ||||||||||
(1) Change includes both operating and non-operating pension costs.
More information regarding pension benefits is contained in Note 14 in the Consolidated Financial Statements.
Revenue Recognition - Customer Incentives
We offer various incentive programs that provide distributors and direct sale customers with cash rebates, account credits, or additional hardware and software products, solutions, and services based on meeting specified program criteria. Customer incentives are recognized as a reduction of sales if distributed in cash or customer account credits. We record accruals at the time of revenue recognition as a current liability within Customer returns, rebates, and incentives in our Consolidated Balance Sheet or, where a right of offset exists, as a reduction of Receivables. Customer incentives for additional hardware and software products, solutions, and services to be provided are considered distinct performance obligations. As such, we allocate revenue to them based on relative standalone selling price. Until the incentive is redeemed, the revenue is recorded as a contract liability.
Our primary incentive program provides distributors with cash rebates or account credits based on agreed amounts that vary depending on the customer to whom our distributor ultimately sells the product. A critical assumption used in estimating the accrual for this program is the time period from when revenue is recognized to when the rebate is processed. Our estimate is based primarily on historical experience. If the time period were to change by 10 percent, the effect would be an adjustment to the accrual of approximately $33 million.
More information regarding our revenue recognition and returns, rebates, and incentives policies are contained in Note 1 and Note 2 in the Consolidated Financial Statements.
Legacy Asbestos-related Matters
We (including our subsidiaries) have been named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos that was used in certain components of our products many years ago, including products from divested businesses for which we have agreed to defend and indemnify claims. Additionally, we have maintained insurance coverage that includes indemnity and defense costs, over and above self-insured retentions, for many of these claims. See Notes 1 and 17 in the Consolidated Financial Statements for more information.
We accrue for net legacy asbestos-related matters based upon an assessment of the ultimate liability for claims incurred, whether filed or not, including estimates of both future claim resolution costs and defense costs. We utilize historical claim and defense costs trends as well as a third-party actuarial valuation in determining estimated reserves and related insurance recoveries which we believe are probable and reasonably estimable through a 2060 terminal year. Accruals total $418 million at September 30, 2026, and are included in the Consolidated Balance Sheet in Other current liabilities and Other liabilities, with insurance recoveries related to these matters of $273 million million recorded in Receivables and Other assets.
The valuation of the accrual is based on several critical assumptions, including projections of future claims, dismissal rates, average settlement values, inflation rates, and the ratio of defense costs to indemnity payments. We typically rely on a five-year historical average for dismissal rates, settlement values, and defense-to-indemnity ratios, adjusted to exclude outlier data and informed by input from national counsel regarding the current docket and jurisdictional trends. Future claims estimates are developed using actuarial models grounded in widely accepted industry studies, and inflation assumptions are aligned with long-term, broadly recognized economic indicators. The aggregate impact of these assumptions reflects estimated payments for approximately 9,840 claims and projected dismissals of approximately 17,760 claims through the 2060 terminal year.
Recent Accounting Pronouncements
See Note 1 in the Consolidated Financial Statements regarding recent accounting pronouncements.
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