Rockwell Automation (ROK) Q4 2024 earnings summary

Executive summary

• Q4 sales declined 21% year-over-year, with organic sales also down 21%; North America showed sequential growth while Asia saw the largest decline.

• Adjusted EPS for Q4 was $2.47, down 32% year-over-year, including a $22M earn-out benefit and restructuring charges; full-year adjusted EPS was $9.71, down 20%.

• Total annual recurring revenue (ARR) grew 16% year-over-year and now represents over 10% of total revenue.

• Cost reduction actions accelerated, achieving $110M in savings in H2 2024, with global headcount down over 12% since Q2.

• Free cash flow conversion for FY24 was 60%, in line with forecasts.

Financial highlights

• Q4 sales were $2,036M, down 21% year-over-year; segment operating margin at 20.1% vs. 22.3% prior year.

• Full-year reported sales declined 9% to $8,264M; organic sales down 10%.

• Full-year segment margin was 19.3%, down 200 bps; adjusted EPS down 20%.

• Free cash flow for FY24 was $639M, down 47% year-over-year.

• Adjusted effective tax rate for Q4 was 14.9%, below prior year and expectations.

Outlook and guidance

• FY25 reported and organic sales growth projected between (4)% and 2%; ARR expected to grow ~10%.

• Segment margin expected just under 19%; adjusted EPS guidance $8.60–$9.80, midpoint $9.20.

• Free cash flow conversion expected to return to ~100% in FY25.

• Q1 FY25 sales expected down sequentially from Q4, with gradual improvement anticipated through the year.