What Management Said
Read the full Q2 2026 transcript ↗Our actual results may differ materially due to a wide range of risks and uncertainties described in our earnings release and SEC filings. Rockwell delivered especially strong operating performance this quarter, with sales, margins, and EPS all coming in above our expectations. Double-digit year-over-year growth in orders, sales, and earnings reflects our strong market position led by North America and the team's continued focus and execution in a dynamic global environment. We saw an improvement in customer demand across a broader range of industries in Q2, such as e-commerce, warehouse automation, data center, semiconductor, and energy.
Persistent trade volatility and geopolitical uncertainty continued to delay large capital investments in other industries, including automotive and consumer packaged goods. We're doing a good job of managing cost increases in areas affected by tariffs, demand for memory, and fuel. Q2 sales were above our expectations, with organic sales growing 9% year-over-year. Reported sales were up 12%, with favorable currency contributing 3 points of growth.
Intelligent Devices organic sales were up 9% versus prior year, with strong growth in our motion, I/O, and safety and sensing businesses. In our Software & Control segment, organic sales were up 17% year-over-year and well above our expectations, driven by continued double-digit sales growth of Logix, especially in North America. Our Logix growth was broad-based in the quarter, and we saw a particularly strong performance with our data center customers, where we continue to see increasing demand for our industrial-grade controllers. Christian and I will cover the expected impact on full year fiscal 2026 financials later on the call.
What went well
- Rockwell delivered especially strong operating performance in Q2 fiscal 2026, with sales, margins, and EPS all coming in above expectations and double-digit year-over-year growth in orders, sales, and earnings.
- Organic sales grew 9% year-over-year (reported sales up 12% including 3 points of favorable currency), led by North America where organic sales rose 10%.
- Software & Control organic sales were up 17% with Logix growing over 20%, and the data center business saw sales more than double year-over-year.
- Enterprise operating margin reached 22.5% and adjusted EPS of $3.30 was up more than 30% year-over-year, driven by higher volume, positive price cost, favorable mix, and productivity.
- Gross margins expanded 160 basis points to more than 50%, and free cash flow of $275 million was $104 million above the prior year.
- The company raised both its full-year revenue guidance (to 5%-9%) and adjusted EPS guidance (to $12.50-$13.10), and now expects full-year incremental margins above 50%.
What went wrong
- Lifecycle Services organic sales were down 1% versus prior year, with customers deferring larger projects and prioritizing smaller productivity and modernization investments, and recurring services growth slowed as customers temporarily delayed and reprioritized spend.
- Persistent trade volatility and geopolitical uncertainty continued to delay large capital investments in automotive and consumer packaged goods.
- Management expects inflationary costs to step up in the second half across memory, transportation, components, and general supplier inflation, with memory alone now representing a double-digit million-dollar headwind, leading to expected sequential margin pressure in the back half.
- The conflict in the Middle East paused some near-term customer activity, mainly in Lifecycle Services.
- The adjusted effective tax rate of 20.6% was slightly higher than expected.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Reported/organic sales growth | FY2026 | 5%-9% (7% midpoint) (up 3 points at midpoint) |
| Reported sales | FY2026 | $8.9B (midpoint) (+$100M (+$200M organic, -$100M Sensia)) |
| Adjusted EPS | FY2026 | $12.50-$13.10 ($12.80 midpoint) (+$1.00 at midpoint) |
| Total price | FY2026 | 250 bps (150 underlying + 100 tariff) (+50 bps, all underlying) |
| Incremental margin | FY2026 | above 50% (raised above 50%) |
| Adjusted ETR | FY2026 | 19.5% (unchanged) |
| Adjusted EPS | Q3 FY2026 | up ~$0.05 sequentially; up mid-to-high teens YoY |
| Share repurchases | FY2026 | ~$850M |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Organic sales | +9% | broad-based demand improvement led by North America |
| Software & Control organic sales | +17% | continued double-digit Logix growth, especially North America and data center |
| Intelligent Devices organic sales | +9% | strong growth in motion, I/O, and safety and sensing businesses |
| Lifecycle Services organic sales | -1% | customers deferring larger projects, prioritizing smaller modernization scope |
| Data center sales | more than doubled | customers prioritizing speed to capacity, resilience, and energy optimization |
| Discrete industries sales | mid-teens | better-than-expected automotive, e-com/warehouse, and semiconductor |
| E-commerce and warehouse automation sales | +30%+ | customers prioritizing upgrades and retrofits over new greenfield builds |
| Adjusted EPS | +30%+ ($3.30) | higher volume, positive price cost, favorable mix, productivity |
| Enterprise operating margin | +350 bps (22.5%) | volume growth, positive price cost, favorable mix, partly offset by higher comp |
| Annual recurring revenue | +6%+ | high-single-digit software ARR growth, mid-single-digit recurring services |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Data center demand | low single digits of revenue, growing | sales more than doubled YoY, one of strongest end markets | Accelerating |
| Tariffs and price-cost | minimal net tariff impact, pricing to recover costs | managing tariff/memory/fuel cost increases; pricing to fully recover tariff costs | Intensifying cost pressure, managed to earnings neutrality |
| Large-project CapEx unlock | delays, customers prioritizing productivity/modernization | broadening unlock in semicon, energy, e-com/warehouse, data center; automotive and CPG still delayed | Improving but uneven |
| Productivity and incremental margins | ~40% incrementals guided for FY2026 | above 50% incrementals; productivity program expanding | Improving |
| Sensia JV | dissolution planned | dissolution complete (April 1); lowers reported revenue, raises Lifecycle/Rockwell margin, EPS neutral | Executed |
| Book-to-bill | around 1.0 historical corridor | slightly above historical average (Lifecycle 1.07); corridor 0.95-1.1 | Improving |
Q&A Summary
Scott Davis (Melius): Can you size the data center market given it is doubling?
Management said data center is still a modest low-single-digit share of base revenue and they update vertical percentages only annually, so they will reassess at year-end. The business comes from three areas: power distribution (CUBIC technology), replacing commercial controls with industrial Logix PLCs, and drives/HVAC for chillers.
Andy Kaplowitz (Citi): Are you seeing a real unlock in larger CapEx-intensive end markets, and could core incrementals run structurally higher than the long-term algorithm?
Blake said there is enough broadening of capital spending in e-commerce/warehouse, data center, semiconductor, and energy to note it, but not a wholesale unlock in automotive and CPG. Christian credited strong productivity and volume leverage for ~50% FY2026 incrementals but reaffirmed the 35% through-cycle flow-through target, to be revisited only under the broader growth algorithm.
Julian Mitchell (Barclays): Why does the second-half enterprise operating margin guide imply margins below the 22.5% just delivered?
Christian cited second-half inflationary pressures (memory, raw commodities, supplier inflation) plus additional spending, and noted Q2 was an exceptionally strong quarter where volume, disciplined spend, and price realization all converged; a typical fourth-quarter mix shift toward Lifecycle and engineered lineups is also detrimental sequentially.
Julian Mitchell (Barclays): Was there any surge in orders or pull-forward, and color on Logix?
Blake said they monitor distributor inventories and survey machine builders, and saw no pull-forwards or advanced orders in the quarter, viewing demand as natural. Logix grew over 20%, with continued strength and data center conversions.
Chris Snyder (Morgan Stanley): Confirm the book-to-bill and have customer conversations on reshoring shifted?
Blake confirmed the normal book-to-bill corridor of 0.95-1.1, with Q2 slightly above it and the first half within it; full year is expected within the corridor. Sentiment is positive with excitement about U.S. manufacturing, though uncertainty persists in CPG and automotive. Christian added that Q4 book-to-bill is commonly below 1 due to higher shipments.
Andrew Buscaglia (BNP Paribas): What drove the near-35% Software & Control margin and is it a high-water mark?
Blake attributed it to strong Logix trending above the 31%-34% midterm corridor, volume, productivity, and profitable Plex software, with software ARR up high single digits. Christian urged prudence given second-half inflation (memory) and returning engineering/development and project spend, noting Q2 spending discipline was unusually strong.
More on Rockwell Automation, Inc
Reported 2026-05-05 · figures from the Rockwell Automation, Inc Q2 2026 earnings call.
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