Basis of Presentation and Accounting Policies

3 Months Ended

Dec. 31, 2025

Basis of Presentation and Accounting Policies

In the opinion of management of Rockwell Automation, Inc. (Rockwell Automation or the Company), the unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly the financial position, results of operations, and cash flows for the periods presented and, except as otherwise indicated, such adjustments consist only of those of a normal, recurring nature. These statements should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended September 30, 2025. The results of operations for the three months ended December 31, 2025, are not necessarily indicative of the results for the full year. All date references to years and quarters herein refer to our fiscal year and fiscal quarter, unless otherwise stated.

Certain prior-year amounts in the Consolidated Statement of Operations have been reclassified to Engineering and development to conform to the current-year presentation, which we believe enhances transparency and provides a clearer view of overall business performance. This revised presentation also aligns more closely with the reporting practices of our industry peers, facilitating improved comparability for stakeholders. These reclassifications had no impact on net income, earnings per share, cash flows, segment operating earnings, or the financial position of the Company. For the three months ended December 31, 2024, the reclassifications resulted in a decrease to Cost of sales in the amount of $156 million.

Assets and Related Liabilities Held for Sale

During the fourth quarter of fiscal 2025, as a result of the historical financial performance of the Sensia joint venture not achieving expectations, a strategic review by the partners resulted in a decision to pursue an orderly dissolution. The decision by the joint venture partners was a triggering event that resulted in goodwill and intangible assets pre-tax, non-cash impairment charges of $161 million and $63 million, respectively, during the quarter ended September 30, 2025.

The joint venture partners signed a separation agreement in December 2025, including a plan for distribution of joint venture assets and related terms and conditions. The transaction is expected to close on April 1, 2026. The disposal group met the criteria to be classified as held for sale under ASC 360-10-45 during the quarter ended December 31, 2025. The assets and liabilities of the disposal group have been separately presented on the Consolidated Balance Sheet as Current assets held for sale and Current liabilities related to assets held for sale. Based on the planned distribution of assets and terms and conditions of the separation agreement, the carrying value of the disposal group approximates fair value less cost to sell at December 31, 2025.

The following table summarizes the major classes of assets and liabilities classified as held for sale as of December 31, 2025:


	December 31, 2025
Cash and cash equivalents	$	39
Receivables	86
Inventories	57
Other current assets	6
Property, net	5
Operating lease right-of-use assets	9
Other intangible assets, net	56
Assets held for sale	258

Accounts payable	23
Compensation and benefits	5
Contract liabilities	18
Other current liabilities	9
Operating lease liabilities	7
Other liabilities	3
Liabilities related to assets held for sale	$	65

Receivables

We record an allowance for doubtful accounts based on customer-specific analysis and general matters such as current assessments of past due balances and economic conditions. Receivables are recorded net of an allowance for doubtful accounts of $20 million at December 31, 2025, and $21 million at September 30, 2025. The changes to our allowance for doubtful accounts during the three months ended December 31, 2025 and 2024, were not material and primarily consisted of current-period provisions, write-offs charged against the allowance, recoveries collected, and foreign currency translation.

Earnings Per Share

The following table reconciles basic and diluted earnings per share (EPS) amounts (in millions, except per share amounts):


	Three Months Ended December 31,
	2025		2024
Net income attributable to Rockwell Automation, Inc.	$	305	$	184
Less: Allocation to participating securities	(1)		(1)
Net income available to common shareowners	$	304	$	183
Basic weighted average outstanding shares	112.3		113.0
Effect of dilutive securities
Stock options	0.5		0.5
Performance shares	0.1		—
Diluted weighted average outstanding shares	112.9		113.5
Earnings per share:


Basic	$	2.71	$	1.62



Diluted	$	2.69	$	1.61

For the three months ended December 31, 2025 and 2024, there were 0.4 million and 0.7 million shares, respectively, related to share-based compensation awards that were excluded from the diluted EPS calculation because they were antidilutive.

Non-Cash Investing and Financing Activities

Capital expenditures of $21 million and $11 million were accrued within Accounts payable and Other current liabilities at December 31, 2025 and 2024, respectively. Outstanding common stock share repurchases of $2 million and $1 million that did not settle until the next quarter were accrued within Accounts payable at December 31, 2025 and 2024, respectively. These non-cash investing and financing activities have been excluded from cash used for capital expenditures and treasury stock purchases in the Consolidated Statement of Cash Flows.

In December 2025, we entered into a definitive agreement to purchase our manufacturing facility in Mequon, Wisconsin, for $63 million. The facility had previously been leased by us and accounted for as an operating lease. The transaction was accounted for as a lease modification with a purchase option that was reasonably certain to be exercised, resulting in a change in classification from an operating lease to a finance lease as of December 31, 2025. As a result of the modification, we recognized an increase of $53 million in Property, net, an increase of $62 million in Current portion of long‑term debt, and the derecognition of the related right‑of‑use asset, lease liability, and asset retirement obligation of $16 million, $23 million, and $2 million, respectively. The purchase closed in January 2026.

Supplier Financing Arrangements

The Company maintains agreements with third-party financial institutions that offer voluntary supply chain financing (SCF) programs to suppliers. The SCF programs enable suppliers, at their sole discretion, to sell their receivables to third-party financial institutions in order to receive payment on receivables earlier than the negotiated commercial terms between suppliers and the Company. Supplier sale of receivables to third-party financial institutions is on terms negotiated between the supplier and the respective third-party financial institution. The Company agrees on commercial terms for the goods and services procured from suppliers, including prices, quantities, and payment terms, regardless of whether the supplier elects to participate in the SCF programs. A supplier’s voluntary participation in the SCF programs has no bearing on the Company's payment terms and the Company has no economic interest in a supplier’s decision to participate in the SCF programs. The Company agrees to pay participating third-party financial institutions the stated amount of confirmed invoices from suppliers on the original maturity dates of the invoices.

Amounts outstanding related to SCF programs are included in Accounts payable in the Consolidated Balance Sheet and in changes in Accounts payable on the Consolidated Statement of Cash Flows. The impact of these programs is not material to the Company's overall liquidity.

The rollforward of our outstanding obligations under the SCF programs is as follows (in millions):


	December 31, 2025		December 31, 2024
Beginning balance	$	68	$	77
Invoices confirmed during the period	58		56
Payments made during the period	(64)		(65)
Ending balance	$	62	$	68

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, which requires expanded annual disclosures to the income tax rate reconciliation and the amount of income taxes paid. We will expand our disclosures in our 2026 Annual Report on Form 10-K when the standard becomes effective for us.

In November 2024, the FASB issued ASU 2024-03, which requires disclosure of certain expense amounts comprising Cost of sales and Selling, general and administrative expenses, as well as a qualitative description of the remaining expense amounts. In January 2025, the FASB issued ASU 2025-01, which clarified the effective date of this standard. We will expand our disclosures in our 2028 Annual Report on Form 10-K when the standard becomes effective for us.

In September 2025, the FASB issued ASU 2025-06, which modernizes the internal-use software guidance in Subtopic 350-40 by removing software development considerations, and clarifies the threshold applied to begin capitalizing costs. We are evaluating and quantifying the impact from this standard, which will be effective for us in fiscal 2029.

We do not expect any other recently issued accounting pronouncements to have a material impact on our Consolidated Financial Statements and related disclosures.