Rockwell Automation ROK · USD

Business Segment InformationWe determine our operating segments based on the information used by our chief operating decision maker (CODM), our Chief Executive Officer, to allocate resources and assess performance. We organize our business into three operating segments: Intelligent Devices, Software & Control, and Lifecycle Services. This structure emphasizes our essential offerings, leverages our sharpened industry focus, and recognizes the growing importance of software in delivering value to our customers. The composition of our segments is as follows:Intelligent DevicesThe Intelligent Devices operating segment combines a comprehensive portfolio of smart products that create the foundation of an agile, resilient, and sustainable production system. This comprehensive portfolio includes:•Power Control - Low and medium voltage variable frequency drives as well as low and medium voltage motor control;•Motion Control - Servo drives, rotary servo motors, linear actuators, autonomous mobile robots, and independent cart technologies offering a comprehensive portfolio of servo control and production logistics technologies; •Safety, Sensing, & Industrial Components - Safety devices, sensing devices, motor control and circuit protection devices, operator devices, signaling devices, relays, and electrical control accessories; and•Micro Control & Distributed I/O - Micro programmable logic controllers and distributed input/output platforms.Software & ControlThe Software & Control operating segment contains a comprehensive portfolio of production automation and production operations platforms, including hardware and software. This integrated portfolio is merging information technology (IT) and operational technology (OT), bringing the benefits of the Connected Enterprise® to the production system. Our production automation portfolio is multi-discipline and scalable with the ability to handle applications in discrete, batch/hybrid and continuous process, drives control, motion and robotics control, and machine and process safety. Our products include programmable automation controllers, design, visualization and simulation software, human machine interface products, industrial computers, machine and process safety products, industrial networks, and security products. Our production operations portfolio helps industrial clients to plan, execute, manage, and optimize their production leveraging industrial data and software.

Revenue RecognitionNature of Products and ServicesSubstantially all of our revenue is from contracts with customers. We recognize revenue as promised products are transferred to, or services are performed for, customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those products and services. Our offerings consist of industrial automation and information products, solutions, and services.Our products include hardware, software, and configured-to-order products. Our solutions include custom-engineered systems and software. Our services include customer technical support and repair, asset management and optimization consulting, and training. Also included in our services is a portion of revenue related to spare parts that are managed within our services offering.Our operations are comprised of the Intelligent Devices segment, the Software & Control segment, and the Lifecycle Services segment. Revenue from the Intelligent Devices segment is predominantly comprised of product sales, which are recognized at a point in time. Revenue from the Software & Control segment is comprised of product sales, which are recognized at a point in time, and software products, which may be recognized over time if certain criteria are met. Revenue from the Lifecycle Services segment is predominantly comprised of solutions and services, which are primarily recognized over time. See Note 20 for more information.In most countries, we sell primarily through independent distributors in conjunction with our direct sales force. We sell large systems and service offerings principally through our direct sales force, though opportunities are sometimes identified through distributors.Performance ObligationsWe use executed sales agreements and purchase orders to determine the existence of a customer contract. For each customer contract, we determine if the products and services promised to the customer are distinct performance obligations. A product or service is distinct if both of the following criteria are met at contract inception: (i) the customer can benefit from the product or service on its own or together with other readily available resources, and (ii) our promise to transfer the product or perform the service is separately identifiable from other promises in the contract.

Commitments and Contingent LiabilitiesEnvironmental MattersFederal, state, and local requirements relating to the discharge of substances into the environment, the disposal of hazardous wastes, and other activities affecting the environment have and will continue to have an effect on our manufacturing operations. Thus far, compliance with environmental requirements and resolution of environmental claims have been accomplished without material effect on our business, financial condition, or results of operations.We have been designated as a potentially responsible party at 14 Superfund sites, excluding sites as to which our records disclose no involvement or as to which our potential liability has been finally determined and assumed by third parties. In addition, various other lawsuits, claims, and proceedings have been asserted against us seeking remediation of alleged environmental impairments, principally at previously owned properties.Based on our assessment, we believe that our expenditures for environmental capital investment and remediation necessary to comply with present regulations governing environmental protection and other expenditures for the resolution of environmental claims will not have a material effect on our business, financial condition, or results of operations. We cannot assess the possible effect of compliance with future requirements. Environmental remediation cost liabilities, net of related expected recoveries, were $49 million and $48 million as of September 30, 2025 and 2024, respectively.Conditional Asset Retirement ObligationsWe accrue for costs related to a legal obligation associated with the retirement of a tangible long-lived asset that results from the acquisition, construction, development, or the normal operation of the long-lived asset. The obligation to perform the asset retirement activity is not conditional even though the timing or method may be conditional. Identified conditional asset retirement obligations include asbestos abatement and remediation of soil contamination beneath current and previously divested facilities and lease restoration costs. We estimate conditional asset retirement obligations using site-specific knowledge and historical industry expertise. There have been no significant changes in liabilities incurred, liabilities settled, accretion expense, or revisions in estimated cash flows for the years ended September 30, 2025, 2024, and 2023.

Long-term and Short-term DebtLong-term debt consists of (in millions): September 30, 202520242.875% notes, payable in March 2025$— $302 6.70% debentures, payable in January 2028250 250 3.50% notes, payable in March 2029425 425 1.75% notes, payable in August 2031450 450 6.25% debentures, payable in December 2037250 250 4.20% notes, payable in March 2049575 575 2.80% notes, payable in August 2061450 450 5.20% debentures, payable in January 2098200 200 Sensia loans from SLB, payable in October 202642 — Unamortized discount, capitalized lease obligations and other(26)(34)Total debt2,616 2,868 Less: Current portion(2)(307)Long-term debt$2,614 $2,561 Our long-term debt and notes payable maturities in the next five years include a $250 million debt issuance that matures in fiscal year 2028, and a $425 million note that matures in fiscal year 2029. Our Short-term debt as of September 30, 2025 and 2024, includes commercial paper borrowings of $522 million and $657 million, with a weighted average interest rate of 4.24 percent and 5.14 percent, and a weighted average maturity period of 16 days and 24 days, respectively. In December 2022, Sensia entered into an unsecured $75 million line of credit. As of September 30, 2025 and 2024, included in Short-term debt was $70 million borrowed against the line of credit with an interest rate of 5.18 percent and 6.17 percent, respectively. Also included in Short-term debt as of September 30, 2025, and September 30, 2024, was $14 million and $42 million, respectively, of interest-bearing loans from Schlumberger (SLB) to Sensia. In April 2025, $14 million of new interest-bearing loans from SLB to Sensia were entered into, and in October 2025, these loans were extended to January 15, 2026. The loans outstanding as of September 30, 2024, were extended to October 15, 2026, and are included in Long-term debt as of September 30, 2025.In May 2025, we entered into a $500 million senior unsecured 364-day term loan credit agreement and were advanced the full loan amount. In August and September 2025, we repaid the loan amount. The credit agreement remains available until May 2026. This agreement was in addition to our existing $1.5 billion unsecured revolving credit facility expiring in June 2027, which remains outstanding and undrawn as of September 30, 2025. Both the credit facility and credit agreement use the secured overnight funding rate (SOFR) as the primary basis for determining interest payments.

Income TaxesSelected income tax data (in millions):202520242023Components of Income before income taxes United States$280 $389 $794 Non-United States637 711 814 Total$917 $1,100 $1,608 Components of Income tax provision Current United States$97 $78 $221 Non-United States169 128 160 State and local16 14 49 Total current282 220 430 Deferred United States(87)(42)(85)Non-United States(11)(12)6 State and local(16)(14)(21)Total deferred(114)(68)(100)Income tax provision$168 $152 $330 Total income taxes paid$356 $479 $345 On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant tax related provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017 (Tax Act), modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The OBBBA has multiple effective dates with the earliest provisions taking effect in fiscal 2025 and others beginning in fiscal 2026 and beyond. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. We have reflected the impact in our deferred balances for the year ended September 30, 2025, and will monitor future effects as new guidance emerges.Our final payment of $97 million related to the U.S. transition tax under the Tax Act will be paid in the second quarter of 2026 and is classified in Other current liabilities in the Consolidated Balance Sheet as of September 30, 2025. This amount was classified in Other liabilities in the Consolidated Balance Sheet as of September 30, 2024. Furthermore, taxes paid as a result of the transition tax was $78 million during the year ended September 30, 2025, $58 million during the year ended September 30, 2024, and $31 million during the year ended September 30, 2023, as included in total income taxes paid.Effective Tax Rate ReconciliationThe reconciliation between the U.S. federal statutory rate and our effective tax rate was:202520242023Statutory tax rate21.0 %21.0 %21.0 %State and local income taxes(0.1)0.2 1.5 Non-United States taxes(3.8)(4.2)(4.7)Repatriation of foreign earnings1.0 0.9 0.9 Foreign-derived intangible income(1.5)(0.7)(0.6)Settlements with taxing authorities and tax refund claims0.6 (1.2)0.3 Change in valuation allowance (1)3.6 0.5 4.1 Share-based compensation(1.1)(0.2)(0.

Share-Based CompensationDuring 2025, 2024, and 2023, we recognized $85 million, $100 million, and $88 million of pre-tax share-based compensation expense, respectively. The total income tax benefit related to share-based compensation expense was $13 million, $16 million, and $15 million during 2025, 2024, and 2023, respectively. As of September 30, 2025, total unrecognized compensation cost related to share-based compensation awards, net of estimated forfeitures, was $76 million, which we expect to recognize over a weighted average period of approximately 1.6 years.During 2020, we adopted, and our shareowners approved, our 2020 Long-Term Incentives Plan (2020 Plan), which replaced our 2012 Long-Term Incentives Plan, as amended (2012 Plan), and our 2003 Directors Stock Plan, as amended (Directors Plan). Our 2020 Plan authorizes us to deliver up to 13.0 million shares of our common stock upon exercise of stock options, upon grant, or in payment of stock appreciation rights, performance shares, performance units, restricted stock units, or restricted stock. Shares relating to awards under our 2012 Plan that terminate by expiration, forfeiture, cancellation, or otherwise without the issuance or delivery of shares or that are settled in cash in lieu of shares will be available for further awards under the 2020 Plan. Approximately 6.2 million shares under our 2020 Plan remain available for future grant or payment at September 30, 2025. We use treasury stock to deliver shares of our common stock under these plans. Our 2020 Plan does not permit share-based compensation awards to be granted after February 4, 2030.Stock OptionsWe have granted non-qualified and incentive stock options to purchase our common stock under various incentive plans at prices equal to the fair market value of the stock on the grant dates. The exercise price for stock options granted under the plans may be paid in cash, already-owned shares of common stock, or a combination of cash and such shares. Stock options expire ten years after the grant date and vest ratably over three years.The per share weighted average fair value of stock options granted during the years ended September 30, 2025, 2024, and 2023, was $93.48, $85.63, and $77.62, respectively. The total intrinsic value of stock options exercised was $75 million, $27 million, and $70 million during 2025, 2024, and 2023, respectively.

LeasesWe have operating leases primarily for real estate, vehicles, and equipment. We have finance leases primarily for equipment. Our leases have remaining lease terms from less than one year to approximately 15 years.The components of lease expense were (in millions):202520242023Operating lease expense (1)$115 $110 $100 Variable lease expense (2)21 20 19 Finance lease expenseAmortization of right-of-use assets6 8 5 Interest on lease liabilities— — 1 Total lease expense$142 $138 $125 (1) Operating lease expense includes short-term lease expense, which was not material.(2) Variable lease expense includes sublease income, which was not material.Supplemental balance sheet information related to leases consists of:20252024Weighted average remaining lease termOperating leases6.0 years6.4 yearsFinance leases3.5 years3.7 yearsWeighted average discount rateOperating leases3.81 %3.72 %Finance leases3.73 %2.77 %Undiscounted maturities of lease liabilities as of September 30, 2025, were (in millions):Finance LeasesOperating Leases2026$2 $110 20272 94 20282 74 2029— 53 2030— 40 Thereafter— 102 Total undiscounted lease payments$6 $473 Less: Imputed interest— (50)Total lease liabilities$6 $423 As of September 30, 2025, we have additional operating leases for facilities that have not yet commenced with undiscounted lease obligations of approximately $2 million. These leases will commence in fiscal 2026.

Acquisitions2024 AcquisitionsIn October 2023, we acquired Clearpath Robotics, Inc., including its industrial division OTTO Motors (Clearpath), a company that specializes in autonomous robotics for industrial applications, headquartered in Ontario, Canada. We recorded assets acquired and liabilities assumed in connection with this acquisition based on their estimated fair values as of the acquisition date of October 2, 2023. The aggregate purchase price allocation is as follows (in millions):Purchase Price AllocationReceivables$8 Inventory22 Goodwill 283 Intangible assets313 All other assets11 Total assets acquired637 Less: Deferred tax liability(9)Less: Liabilities assumed(19)Net assets acquired$609 Purchase ConsiderationCash consideration, net of cash acquired$566 Contingent consideration43 Total purchase consideration, net of cash acquired$609 Intangible assets identified include $270 million of technology, $41 million of trademarks, and $2 million of customer relationships. We assigned the full amount of goodwill and all other assets acquired to our Intelligent Devices segment. The goodwill recorded represents intangible assets that do not qualify for separate recognition. This goodwill arises because the purchase price for Clearpath reflects a number of factors including the future earnings and cash flow potential for the business and resulting synergies from the business portfolio and industry expertise. We do not expect the goodwill to be deductible for tax purposes. The intangible assets were valued using an income approach, specifically the relief from royalty method and multi-period excess earnings method. The relief from royalty method calculates value based on hypothetical payments that would be saved by owning an asset rather than licensing it. The multi-period excess earnings method is the isolation of cash flows from a single intangible asset and measures fair value by discounting them to present value. These values are considered level 3 measurements under the U.S. GAAP fair value hierarchy. Refer to Note 1 for further information regarding levels in the fair value hierarchy. The key assumption requiring the use of judgement in the valuation of the technology asset was the obsolescence factor, where we estimated a phase out over 12 years; other assumptions included forecasted revenue growth rates and margin and the discount rate.