MW Rockwell Automation crushes profit estimates but says customers are still cautious

By Ciara Linnane

Uncertainty about tariffs and other policies has customers holding back on investment

Rockwell Automation Inc.'s stock soared 8% early Monday, after the industrial-automation company trounced profit estimates for its fiscal first quarter, reported sales that also beat earnings and backed its full-year guidance.

The numbers eased investor concerns after the company missed sales estimates in three of the last six quarters, including its most recent one. That was as a combination of high interest rates, and policy uncertainty around items such as taxes and tariffs, as well as weak consumer demand, had customers deferring investment decisions.

"While there is still some macroeconomic and policy uncertainty weighing on customers' capex plans, Rockwell won multimillion-dollar strategic orders across key industries, especially in the U.S., our home market," Chief Executive Blake Moret said in prepared remarks.

Milwaukee-based Rockwell $(ROK)$ had net income of $184 million, or $1.61 a share, for the quarter through Dec. 31, down from $215 million, or $1.86 a share, a year ago. Adjusted for one-time items, EPS came to $1.83, well ahead of the $1.58 FactSet consensus.

Sales fell 8.4% to $1.881 billion, just ahead of the $1.879 billion FactSet consensus.

New orders rose 10% from a year ago.

Pretax margin narrowed to 11.3% from 12.7% a year ago, mostly due to lower sales volume, which was partially offset by benefits from cost cuts and margin expansion actions.

The company lowered the midpoint of its full-year sales guidance to about $8.1 billion from about $8.2 billion previously, on expectations the strong dollar will weigh more heavily than previously expected.

Sales are now expected to be down 5.5% to up 0.5%, compared with prior guidance of down 4% to up 2%.

It backed its EPS guidance of $7.65 to $8.85 and adjusted EPS guidance of $8.60 to $9.80.

"We continue to expect gradual sequential improvement in our sales and margins as we move through this fiscal year, including potential impacts from tariffs," Moret said.

By segment, intelligent-devices sales fell 13% to $806 million, due to lower sales volume, while software-and-control sales were down 12% to $529 million. Lifecycle-services sales fell 5% to$546 million.

Reflecting the pressure on manufacturing, the Institute for Supply Management's manufacturing survey had been negative for more than two years, before rising to 50.9% in January from 49.2% at the end of 2024, in data released last week.

A reading below 50% signals contraction. The index had surged on optimism about Trump's vow to cut taxes and reduce regulations, but his recent tariff announcements and reversals raised concerns that U.S. manufacturers would face higher prices for raw materials they buy from other countries and that their own exports would suffer if other countries retaliate.

Trump said he would announce 25% tariffs against all steel and aluminum imports into the U.S. later Monday, and said Friday that reciprocal tariffs were forthcoming - potentially against imports from China, Japan, the European Union and Taiwan, as well as other countries that already impose tariffs against American goods.

"If they are charging us 130% and we're charging them nothing, it's not going to stay that way," Trump told reporters aboard Air Force One on Sunday.

Rockwell's stock is down 5.3% in the last 12 months, while the S&P 500 SPX has gained 19.9%.

-Ciara Linnane

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February 10, 2025 08:16 ET (13:16 GMT)

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