Our actual results may differ materially due to a wide range of risks and uncertainties described in our earnings release and SEC filings. We entered fiscal 2026 with a focus on delivering solid top-line performance while continuing to increase productivity and expand margins. This quarter reflects additional progress on these fundamental objectives, with sales, margin, and earnings all exceeding our expectations. Demand across our core offerings and verticals remained healthy in the first quarter, and our teams executed well.
We had double-digit sales growth and sustained momentum in our key product and software businesses. The strong growth of orders related specifically to projects adding new U.S. production capacity gives us confidence that the combination of our traditional sources of value with digital services, edge computing, and cloud-native software is differentiated. Our Q1 sales came in slightly better than expected, with double-digit year-over-year growth in both reported and organic sales.
While large CapEx investments are still on hold for many customers, demand for our product portfolio remains strong, particularly in Logix and motion. Annual recurring revenue grew 7% in the quarter and was in line with our expectations, with strong performance in our recurring software across automotive, life sciences, and energy verticals. Another standout win in our recurring services was with Hindalco Industries, a global leader in aluminum and copper production. Intelligent Devices delivered another solid quarter, with organic sales up 16% year-over-year and in line with our expectations.
| Metric | Period | Current guidance |
|---|---|---|
| Organic sales growth | FY2026 | 2%-6% (Maintained) |
| Adjusted EPS (midpoint) | FY2026 | $11.80 (Raised lower end to $11.40, midpoint up $0.10) |
| Segment margin expansion | FY2026 | over 100 bps (Maintained) |
| Adjusted effective tax rate | FY2026 | about 19.5% (Lowered) |
| Recurring revenue growth | FY2026 | high single-digit (On track) |
| Incremental margins | FY2026 | about 40% (Maintained (inclusive of tariff-based pricing)) |
| Free cash flow conversion | FY2026 | approximately 100% (Maintained) |
| Adjusted EPS | Q2 2026 | about $2.85 (low single-digit sequential growth) (New) |
| CapEx | FY2026 | about 3% of sales (Reaffirmed) |
| Metric | YoY | Note |
|---|---|---|
| Software and Control (organic) | +17% | Strong Logix momentum with North American sales up over 25%, plus broad-based strength across ASEM, software, and networks. |
| Intelligent Devices (organic) | +16% | Broad-based growth, with especially strong performance in drives and motion. |
| Lifecycle Services (organic) | -6% | Customers continued to delay and narrow the scope of larger projects pending clarity on trade policy; book-to-bill was 1.16. |
| E-commerce and warehouse automation | +60%+ | Driven by labor shortages, network modernization needs, and increasing focus on sustainability and cybersecurity, led by North America. |
| Process industries | +10% | Strong growth in chemicals, water, and energy, with PlantPAx share gains and resilient specialty chemical exposure. |
| Hybrid | High single digits | Double-digit growth in food and beverage and home and personal care, driven by brownfield modernizations and productivity. |
| Automotive | Mid-single digits | Brand owners and tier ones advancing MES, digital twin, and AI-enabled modernization despite subdued CapEx. |
| Life sciences | Low single-digit decline | Several project delays in North America, though full-year growth still expected. |
| Reported sales | +12% | About 2 points from currency and 3 points of organic price (half underlying realization, half tariff-based pricing). |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Macro caution and waiting for orders to confirm sentiment | Stabilized at low level | Sentiment similar to slightly up, but prudent until broad-based order release | Steady |
| Logix strength and L9 controller adoption | — | North American Logix up 25%+, L9 off to a great start, units expected at or above pre-pandemic for the year | Rising |
| AI and software-defined automation (Copilot, Emulate3D, LogixAI, Plex) | — | Growing adoption with wins like Thermo Fisher AI troubleshooting agent; focus on application-specific value | Rising |
| Data centers and microgrid power demand | — | Strong double-digit growth; AI-driven power constraints accelerating hyperscaler and colo adoption of gas-powered microgrids | Rising |
| Productivity and margin expansion initiatives | Cost reduction and margin expansion program | Now embedded within core; productivity was second-largest driver of Q1 core performance | Steady |
| New U.S. production capacity build-out | Double-digit 2026 order expectations at Investor Day | Very good year-over-year growth in new capacity, evenly split across business units | Rising |
| Sensia joint venture dissolution | — | On track for April 1 close, returning process automation business to full Rockwell control | Steady |
| Tariffs and trade volatility | — | Neutral on Q1 earnings but 30 bps drag on segment margins; still suppressing some capital spending | Steady |