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What changed in Rockwell Automation's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Rockwell Automation's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+193 added−196 removedSource: 10-K (2024-11-12) vs 10-K (2023-11-08)

Top changes in Rockwell Automation's 2024 10-K

193 paragraphs added · 196 removed · 155 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeSee Note 19 in the Consolidated Financial Statements for additional information on our operating segments. Geographic Information We do business in more than 100 countries around the world. The largest sales outside the United States on a country of destination basis are in China, Canada, Italy, Mexico, the United Kingdom, and Germany. See Item 1A.
Biggest changeGeographic Information We do business in more than 100 countries around the world. The largest sales outside the United States on a country of destination basis are in Canada, China, Mexico, Italy, and the United Kingdom. See Item 1A. Risk Factors for a discussion of risks associated with our global operations.
Information included in this Annual Report on Form 10-K refers to our continuing businesses unless otherwise indicated. Whenever an Item of this Annual Report on Form 10-K refers to information in our Proxy Statement for our Annual Meeting of Shareowners to be held on February 6, 2024 (the Proxy Statement), or to information under specific captions in Item 7.
Information included in this Annual Report on Form 10-K refers to our continuing businesses unless otherwise indicated. Whenever an Item of this Annual Report on Form 10-K refers to information in our Proxy Statement for our Annual Meeting of Shareowners to be held on February 4, 2025 (the Proxy Statement), or to information under specific captions in Item 7.
Risk Factors for a discussion of risks associated with our global operations. Competition Our competitors range from large, diversified corporations that may also have business interests outside of industrial automation to smaller companies that offer a limited portfolio of industrial automation products, solutions, and services.
Competition Our competitors range from large, diversified corporations that may also have business interests outside of industrial automation to smaller companies that offer a limited portfolio of industrial automation products, solutions, and services.
In addition, we own other important trademarks that we use, such as “ControlLogix ® ” and “CompactLogix ® ” for our control systems, “PowerFlex ® ” for our AC drives, and “Rockwell Software ® ”, “FactoryTalk ® ”, “Plex Systems ® ”, and “Fiix ® ” for our software and cloud offerings.
In addition, we own other important trademarks that we use, such as “ControlLogix ® ” and “CompactLogix ® ” for our control systems, “PowerFlex ® ” for our AC drives, “FactoryTalk ® ”, “Plex Systems ® ”, and “Fiix ® ” for our software and cloud offerings, “Clearpath ® ” and “Otto ® ” for our mobile robots, and “Verve ® ” for our asset inventory system and vulnerability management solution.
Major markets served by all segments consist of discrete end markets (e.g., Automotive including Electric Vehicle and Battery, Semiconductor, and e-Commerce & Warehouse Automation), hybrid end markets (e.g., Food & Beverage, Life Sciences, and Tire), and process end markets (e.g., Oil & Gas, Mining, and Chemicals).
Major markets served by all segments consist of discrete end markets (e.g., Automotive including Electric Vehicle and Battery, Semiconductor, and e-Commerce & Warehouse Automation), hybrid end markets (e.g., Food & Beverage, Life Sciences, and Tire), and process end markets (e.g., Energy, Mining, and Chemicals). See Note 20 in the Consolidated Financial Statements for additional information on our operating segments.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur information security efforts, under the leadership of our Chief Information Security Officer and Chief Product Security Officer, with the support of the entire management team, include major programs designed to address security governance and risk, product security, identification and protection of critical assets, insider risk, third-party risk, security awareness, and cyber defense operations.
Biggest changeOur information security efforts include programs designed to address security governance, compliance, risk management, secure development and engineering, data protection, insider risk, third-party risk, security awareness, access management, incident response, and security operations in support of enterprise security and product security. We believe these measures reduce, but cannot eliminate, the risk of a cybersecurity incident internally or externally.
Even if we successfully identify and complete such transactions, we may not achieve the expected benefits of such transactions and we may not be able to successfully address risks and uncertainties inherent in such transactions, including: • difficulties in integrating the purchased or new operations, technologies, products or services, retaining customers, and achieving the expected benefits of the transaction, such as sales increases, access to technologies, cost savings, and increases in geographic or product presence, in the desired time frames; • loss of key employees or difficulties integrating personnel; • legal and compliance issues; • unknown or undisclosed and unmitigated cyber risks to purchased systems, products, and services; • difficulties implementing and maintaining consistent standards, financial systems, internal and other controls, procedures, policies, and information systems; • difficulties maintaining relationships with our joint venture and other strategic partners (including as a result of such joint venture and other strategic partners having differing business objectives) and managing disputes with such joint venture and other strategic partners that may arise in connection with our relationships with them; and • difficulties in yielding the desired strategic or financial benefit from venture capital investments, including as a result of being a minority investor or macroeconomic conditions.
Even if we successfully identify and complete such transactions, we may not achieve the expected benefits of such transactions and we may not be able to successfully address risks and uncertainties inherent in such transactions, including: • difficulties in integrating the purchased or new operations, technologies, products or services, retaining customers, and achieving the expected benefits of the transaction, such as sales increases, access to technologies, cost savings, and increases in geographic or product presence, in the desired time frames; • loss of key employees or difficulties integrating personnel; • legal and compliance issues; • unknown or undisclosed and unmitigated cybersecurity risks to purchased systems, products, and services; • difficulties implementing and maintaining consistent standards, financial systems, internal and other controls, procedures, policies, and information systems; • difficulties maintaining relationships with our joint venture and other strategic partners (including as a result of such joint venture and other strategic partners having differing business objectives) and managing disputes with such joint venture and other strategic partners that may arise in connection with our relationships with them; and • difficulties in yielding the desired strategic or financial benefit from venture capital investments, including as a result of being a minority investor or macroeconomic conditions.
Our vendors, partners, employees, and customers have access to, and share, information across multiple locations via various digital technologies. In addition, we rely on partners and vendors, including cloud providers, for a wide range of products and outsourced activities as part of our internal IT infrastructure and our commercial offerings. Secure connectivity is important to these ongoing operations.
Our vendors, partners, employees, and customers have access to, and share, information across multiple locations via various digital technologies. In addition, we rely on partners and vendors, including cloud providers, for a wide range of products and outsourced activities as part of our internal IT infrastructure and our commercial product offerings. Secure connectivity is important to these ongoing operations.
Item 1A. Risk Factors In the ordinary course of our business, we face various strategic, operating, compliance, and financial risks. These risks could have an impact on our business, financial condition, operating results, and cash flows. Our most significant risks are set forth below and elsewhere in this Annual Report on Form 10-K.
Item 1A. Risk Factors In the ordinary course of our business, we face various strategic, operating, compliance, cybersecurity, and financial risks. These risks could have an impact on our business, financial condition, operating results, and cash flows. Our most significant risks are set forth below and elsewhere in this Annual Report on Form 10-K.
Natural disasters (including but not limited to those as a result of climate change), pandemics, acts or threats of war or terrorism, international conflicts, power outages, fires, explosions, equipment failures, sabotage, political instability, and the actions taken by governments could cause damage to or disrupt our business operations, our suppliers or our customers, and could create economic instability.
Natural disasters (including but not limited to those as a result of climate change), pandemics, acts or threats of war or terrorism, international conflicts, power outages, fires, explosions, equipment failures, sabotage, political instability, and the actions taken by governments could cause damage to or disrupt our business operations, our distribution network, our suppliers or our customers, and could create economic instability.
The expenses we record for our pension and other postretirement benefit plans depend on factors such as changes in market interest rates, the value of plan assets, mortality assumptions, and healthcare trend rates. Significant unfavorable changes in these factors would increase our expenses and funding requirements.
The expenses we record for our pension and other postretirement benefit plans depend on factors such as changes in market interest rates, the value and investment performance of plan assets, mortality assumptions, and healthcare trend rates. Significant unfavorable changes in these factors would increase our expenses and funding requirements.
In some instances, the divested business has assumed the liabilities; however, it is possible that we might be responsible for satisfying those liabilities if the divested business is unable to do so. 10 Table of Contents Item 1B. Unresolved Staff Comments None.
In some instances, the divested business has assumed the liabilities; however, it is possible that we might be responsible for satisfying those liabilities if the divested business is unable to do so. 11 Table of Contents Item 1B. Unresolved Staff Comments None.
We have been named as a potentially responsible party at cleanup sites and may be so named in the future, and the costs associated with these current and future sites may be significant. We have, from time to time, divested certain of our businesses.
We have been named as a potentially responsible party at cleanup sites and may be so named in the future, and the costs associated with these current and future sites may be significant. We have, from time to time, divested certain businesses.
Our global operations are subject to numerous financial, legal, and operating risks, such as political and economic instability; prevalence of corruption in certain countries; enforcement of contract and intellectual property rights; and compliance with existing and future laws, regulations, and policies, including those related to exports, imports, tariffs, embargoes and other trade restrictions (including sanctions placed on Russia), investments, taxation, product content and performance, employment, and repatriation of earnings.
Our global operations are subject to numerous financial, legal, and operating risks, such as political and economic instability; prevalence of corruption in certain countries; enforcement of contract and intellectual property rights; and compliance with existing and future laws, regulations, and policies, including those related to exports, imports, tariffs, embargoes and other trade restrictions, investments, taxation, product content and performance, employment, and repatriation of earnings.
There are inherent risks in our solutions and services businesses. Risks inherent in the sale of solutions and services include assuming greater responsibility for successfully delivering projects that meet a particular customer specification, including defining and controlling contract scope, efficiently executing projects, and managing the performance and quality of our subcontractors and suppliers.
Risks inherent in the sale of solutions and services include assuming greater responsibility for successfully delivering projects that meet a particular customer specification, including defining and controlling contract scope, efficiently executing projects, and managing the performance and quality of our subcontractors and suppliers.
In October 2021, the Organization for Economic Cooperation and Development (OECD) and G20 Finance Ministers reached an agreement, known as Base Erosion and Profit Shifting (BEPS) Pillar Two, that, among other things, ensures that income earned in each jurisdiction that a multinational enterprise operates in is subject to a minimum corporate income tax rate of at least 15%.
In October 2021, the Organization for Economic Cooperation and Development (OECD) and G20 Finance Ministers reached an agreement, known as Base Erosion and Profit Shifting (BEPS) Pillar Two, that, among other things, ensures that income earned in each jurisdiction that qualifying multinational enterprises operate in is subject to a minimum corporate income tax rate of at least 15%.
Strategic transactions and technology investments could result in debt, dilution, liabilities, increased interest expense, restructuring charges, and impairment and amortization expenses related to goodwill and identifiable intangible assets. Legal, Tax, and Regulatory Risks New legislative and regulatory actions could adversely affect our business.
Strategic transactions and technology investments could result in debt, dilution, liabilities, increased interest expense, restructuring charges, and impairment and amortization expenses related to goodwill and identifiable intangible assets. 9 Table of Contents Legal, Tax, and Regulatory Risks New legislative and regulatory actions could adversely affect our business.
Past global cyber-attacks have also been perpetuated by compromising software updates in widely used software products, increasing the risk that vulnerabilities or malicious content could be inserted into our products. In some cases, malware attacks were spread throughout the supply chain, moving from one company to the next via authorized network connections.
Past global cyber-attacks have also been perpetuated by compromising software updates in widely used software products, posing the risk that vulnerabilities or malicious content could be inserted into our products. In some cases, it is possible that malware attacks could spread throughout the supply chain, moving from one company to the next via authorized network connections.
The uncertainties of litigation (including asbestos claims) and the uncertainties related to the collection of insurance proceeds make it difficult to predict the ultimate resolution of these lawsuits.
The uncertainties of litigation 10 Table of Contents (including asbestos claims) and the uncertainties related to the collection of insurance proceeds make it difficult to predict the ultimate resolution of these lawsuits.
Expenses related to enforcing our intellectual property rights could be significant. Increasing employee benefit costs and funding requirements could have a negative effect on our operating results and financial condition. One important aspect of attracting and retaining qualified personnel is continuing to offer competitive employee retirement and health care benefits.
Increasing employee benefit costs and funding requirements could have a negative effect on our operating results and financial condition. One important aspect of attracting and retaining qualified personnel is continuing to offer competitive employee retirement and health care benefits.
Our systems could be compromised by malware (including ransomware), cyber-attacks, and other events, ranging from widespread, non-targeted, global cyber threats to targeted advanced persistent threats. Given that our hardware and software products, solutions, and services are used in critical infrastructure, these threats could indicate increased risk for our products, services, solutions, manufacturing, and IT infrastructure.
Our systems could be compromised by malware (including ransomware), cyber-attacks, and other events, ranging from widespread, non-targeted, global cyber threats to targeted advanced persistent threats. Given our commercial product offerings can be used in critical infrastructure and critical manufacturing, these threats could indicate increased risk for our commercial product offerings, manufacturing, and IT infrastructure.
We do business in more than 100 countries around the world. In addition, our manufacturing operations, suppliers, and employees are located in many places around the world. Less than half of our total sales in 2023 were to customers outside the U.S. The future success of our business depends on growth in our sales in all global markets.
We do business in more than 100 countries around the world. In addition, our manufacturing operations, suppliers, and employees are located in many places around the world. The future success of our business depends on growth in our sales in all global markets.
As our product lead times are stabilizing, orders may decline as our distributor partners and customers work to lower their working capital by reducing inventory levels. Demand for our hardware and software products, solutions, and services is sensitive to changes in levels of production and the financial performance of major industries that we serve.
As our distributor partners and customers work to manage working capital and inventory levels, we may experience volatility in orders. Demand for our hardware and software products, solutions, and services is sensitive to changes in levels of production and the financial performance of major industries that we serve.
In addition, we own the rights to many patents, trademarks, brand names, and trade names that are important to our business. The inability to enforce our intellectual property rights (including as a result of counterfeit products and sales made by unauthorized resellers) may have an adverse effect on our results of operations.
In addition, we own the rights to many patents, trademarks, brand names, and trade names that are important to our business. The inability to secure or enforce our intellectual property rights may have an adverse effect on our results of operations.
Disruptions to our existing distribution channel or the failure of distributors to maintain and develop the appropriate capabilities to sell our hardware and software products, solutions, and services could adversely affect our sales. A disruption could result from the sale of a distributor to a competitor, financial instability of a distributor, or other events.
Disruptions to our existing distribution channel or the failure of distributors to maintain and develop the appropriate capabilities to sell our hardware and software products, solutions, and services could adversely affect our sales.
Despite the implementation of security measures, our systems are vulnerable to unauthorized access by nation states, hackers, cyber-criminals, malicious insiders, and other actors who may engage in fraud, theft of confidential or proprietary information, or sabotage.
We rely heavily on technology in our commercial product offerings for use in our customers’ manufacturing environment, and in our enterprise infrastructure. Despite the implementation of security measures, our systems are vulnerable to unauthorized access by nation states, hackers, cyber-criminals, malicious insiders, and other actors who may engage in fraud, theft of confidential or proprietary information, or sabotage.
These requirements could increase our costs and could potentially have an adverse effect on our ability to do business in certain jurisdictions.
These requirements could increase our costs and could potentially have an adverse effect on our ability to do business in certain jurisdictions. Changes in these requirements could impact demand for our hardware and software products, solutions, and services.
In addition, we continue to drive productivity to reduce our cost structure. If we fail to achieve our objectives, to keep pace with technological changes, or to provide high quality hardware and software products, solutions, and services, we may lose business or experience price erosion and correspondingly lower sales and margins.
If we fail to achieve our objectives, to keep pace with technological changes including the development of artificial intelligence and machine learning, or to provide high quality hardware and software products, solutions, and services, we may lose business or experience price erosion and correspondingly lower sales and margins.
We believe these measures reduce, but cannot eliminate, the risk of a cybersecurity incident. Any significant security incidents could have an adverse impact on sales, harm our reputation, and cause us to incur legal liability and increased costs to address such events and related security concerns.
Any significant security incidents could have an adverse impact on sales, harm our reputation, and cause us to incur legal liability and increased costs to address such events and related security concerns.
Expenses and funding requirements related to employer-funded healthcare benefits depend on laws and regulations, which could change, as well as healthcare cost inflation.
Expenses and funding requirements related to employer-funded healthcare benefits depend on laws and regulations, which could change, as well as healthcare cost inflation. An inability to control costs and funding requirements related to employee and retiree benefits could negatively impact our operating results and financial condition.
Intellectual property infringement claims of others and the inability to protect our intellectual property rights could harm our business and our customers. Others may assert intellectual property infringement claims against us or our customers.
A disruption could result from the sale of a distributor to a competitor, financial instability of a distributor, or other events. 8 Table of Contents Intellectual property infringement claims of others and the inability to protect our intellectual property rights could harm our business and our customers. Others may assert intellectual property infringement claims against us or our customers.
Like other global companies, we have experienced cyber threats and incidents, although none have been material or had a material adverse effect on our business or financial condition.
The current cyber threat environment indicates increased risk for all companies, including those in industrial automation and information technology. Like other global companies, we have experienced cyber threats and incidents, although none have been material or had a material adverse effect on our business or financial condition.
As part of our strategy, we pursue strategic transactions, including acquisitions, joint ventures, investments, and other business opportunities and purchases of technology from third parties.
Strategic Transactions and Investments Risks Failure to identify, manage, complete, and integrate strategic transactions may adversely affect our business or we may not achieve the expected benefits of these transactions. As part of our strategy, we pursue strategic transactions, including acquisitions, joint ventures, investments, and other business opportunities and purchases of technology from third parties.
Our hardware and software products, solutions, and services are used by our direct and indirect customers in applications that may be subject to information theft, tampering, sabotage, or cyber-attacks. Careless or malicious actors could cause a customer’s process to be disrupted or could cause equipment to operate in an improper manner that could result in harm to people or property.
Product and Services Security Our hardware and software products, services and solutions are used by our direct and indirect customers in applications that may be subject to information theft, tampering, sabotage, or cyber-attacks.
While we continue to improve the security attributes of our hardware and software products, solutions, and services, we can reduce risk, not eliminate it. To a significant extent, the security of our customers’ systems depends on how those systems are designed, installed, protected, configured, updated, and monitored, and much of this is typically outside our control.
To a significant extent, the security of our customers’ systems depends on how those systems are designed, installed, protected, configured, updated, and monitored, and much of this is typically outside our control. In addition, both software and hardware supply chains can introduce security vulnerabilities into many technologies across the industry.
In addition, cyber security threats may pose a significant risk to our third-party partners and could have a material adverse impact on their businesses, operations, products, and services that we use in our day-to-day operations. 7 Table of Contents The current cyber threat environment indicates increased risk for all companies, including those in industrial automation and information technology.
In addition, cybersecurity threats may pose a significant risk to our third-party partners and could have a material adverse impact on their businesses, operations, products, and services that we use in our day-to-day operations. 7 Table of Contents An inability to successfully execute cost productivity and margin expansion initiatives.
Developing new hardware and software products and service offerings requires high levels of innovation, and the development process is often lengthy and costly. If we are not able to anticipate, identify, develop, and market products that respond to changes in customer preferences and emerging technological and broader industry trends, demand for our products could decline.
If we are not able to anticipate, identify, develop, and market products that respond to changes in customer preferences and emerging technological and broader industry trends, including the development of artificial intelligence and machine learning, demand for our products could decline. There are inherent risks in our solutions and services businesses.
We have been named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos that was used in certain of our products many years ago. Our products may also be used in hazardous industrial activities, which could result in product liability claims.
We have been named as a defendant in lawsuits alleging personal injury as a result of exposure to asbestos that was used in certain of our products many years ago. We estimate the future asbestos litigation-related costs that we expect to incur over the next several years.
Failure to comply with ESG reporting requirements, including inaccurate or incomplete disclosures, may lead to regulatory penalties, litigation, and reputational damage.
The growing focus on environmental, social, and governance (ESG) factors by investors and other stakeholders and evolving compliance requirements by regulators may impact our business. Failure to comply with ESG reporting requirements, including inaccurate or incomplete disclosures, may lead to regulatory penalties, litigation, and reputational damage.
Compliance with privacy and cybersecurity regulations could increase our operating costs as part of our efforts to protect and safeguard our sensitive data, personal information, and IT infrastructure. Failure to maintain information privacy could result in legal liability or reputational harm. Claims from taxing authorities could have an adverse effect on our income tax expense and financial condition.
Changes in these requirements could impact demand for our hardware and software products, solutions, and services. Failure to maintain information privacy and security could result in legal liability or reputational harm. Claims from taxing authorities could have an adverse effect on our income tax expense and financial condition.
Discussions related to the formal implementation of this agreement, including within the tax law of each member jurisdiction including the United States, are ongoing. Enactment of this regulation in its current form would increase the amount of global corporate income tax paid by the Company.
Discussions related to the formal implementation and enactment of this agreement, including within the tax law of each member jurisdiction including the United States, are ongoing. Certain countries have enacted the Pillar Two framework, including Singapore, which is expected to result in the greatest impact to the Company.
Even where substitute sources of supply are available, qualifying alternative suppliers and establishing reliable supplies could cost more or result in delays and a loss of sales. 6 Table of Contents Our business success depends on attracting, developing, and retaining highly qualified employees. Our success depends on the efforts and abilities of our leadership team and employees across the Company.
Even where substitute sources of supply are available, qualifying alternative suppliers and establishing reliable supplies could cost more or result in delays and a loss of sales. 6 Table of Contents Failures or security breaches of our commercial product offerings (which includes hardware, software, services, and solutions), manufacturing environment, supply chain, or information and operational technology systems could have an adverse effect on our business.
In addition, both software and hardware supply chains introduce security vulnerabilities into many products across the industry. Our business uses technology resources on a dispersed, global basis for a wide variety of functions including development, engineering, manufacturing, sales, accounting, and human resources.
While we continue to improve the security attributes of our commercial product offerings, we can reduce risk, but not eliminate it. Enterprise Security Our business uses technology resources across a dispersed, global basis for a variety of functions including development, engineering, manufacturing, sales, accounting and financial reporting, and human resources.
Removed
Failures or security breaches of our products, connected services, manufacturing environment, supply chain, or information and operational technology systems could have an adverse effect on our business. We rely heavily on technology in our hardware and software products, solutions, and services for our customers’ manufacturing environment, and in our enterprise infrastructure.
Added
Careless or malicious actors could cause a customer’s process to be disrupted or could cause equipment to operate in an improper manner, resulting in harm to people or property.
Removed
An inability to control costs and funding requirements related to employee and retiree benefits could negatively impact our operating results and financial condition. 8 Table of Contents Strategic Transactions and Investments Risks Failure to identify, manage, complete, and integrate strategic transactions may adversely affect our business or we may not achieve the expected benefits of these transactions.
Added
We have designed a Secure Development Lifecycle Program that incorporates appropriate security activities into the necessary development and support practices for our commercial product offerings. The Secure Development Lifecycle Program is audited annually by third-party firms. Our Third-Party Risk Program manages risk posed by our suppliers used in the development of our commercial product offerings.
Removed
Changes in these requirements could impact demand for our hardware and software products, solutions, and services. 9 Table of Contents The growing focus on environmental, social, and governance (ESG) factors by investors and other stakeholders and evolving compliance requirements by regulators may impact our business.
Added
Financial results depend on the successful execution of our business operating plans, including current and future cost productivity and margin expansion initiatives. We continuously pursue alignment of costs with business and economic conditions.
Added
Productivity projects include savings in the areas of product cost, indirect cost, administrative costs, purchased services, logistics, manufacturing workflows, make or buy decisions in manufacturing, product portfolio and price optimization. Our ongoing productivity initiatives target both cost reduction and improved asset utilization. Charges for workforce reduction and facility rationalization may be required in order to efficiently execute our productivity programs.
Added
There is a risk that these initiatives will not result in the projected savings that we anticipate and could negatively impact our business and financial results. Our business success depends on attracting, developing, and retaining highly qualified employees. Our success depends on the efforts and abilities of our leadership team and employees across the Company.
Added
Developing new hardware and software products and service offerings requires high levels of innovation, and the development process is often lengthy and costly.
Added
Unauthorized resellers and counterfeiters of Company-branded products of inferior quality or that may otherwise be materially different from genuine goods sold by the Company and its authorized distributors may harm the goodwill and reputation of the Company and could adversely affect our results of operations.
Added
Enactment of this regulation in its current form would generally apply to the Company beginning in fiscal year 2026, resulting in an increase in our effective tax rate as well as in the amount of global corporate income tax paid.
Added
Compliance with privacy and cybersecurity laws and regulations (including the emerging European Union Cyber Resiliency Act) could increase our operating costs in managing product compliance and as part of our efforts to protect and safeguard our sensitive data, personal information, and IT infrastructure. These requirements could potentially have an adverse effect on our ability to do business in certain jurisdictions.
Added
This process is not exact because it relies on a variety of assumptions and specific factors that could potentially change over time and therefore increase or decrease our future projected asbestos liabilities. Our products may also be used in hazardous industrial activities, which could result in product liability claims.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAt September 30, 2023, the Company had approximately 50 manufacturing and distribution locations worldwide, disbursed evenly across our regions. There are no major encumbrances (other than financing arrangements, which in the aggregate are not significant) on any of our properties or equipment. Our properties and equipment are in good operating condition and are adequate for our present needs.
Biggest changeThere are no major encumbrances (other than financing arrangements, which in the aggregate are not significant) on any of our properties or equipment. Our properties and equipment are in good operating condition and are adequate for our present needs. We do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities.
Removed
We do not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities.
Added
At September 30, 2024, the Company had two principal distribution locations, one in the U.S. and one in the Netherlands, and approximately ten principal manufacturing facilities worldwide, with the most significant of these located in the U.S., Mexico, Canada, and Singapore. We also have sales and administrative office space at over 200 locations in over 50 countries.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe cumulative total returns on Rockwell Automation common stock and each index as of September 30, 2018 through 2023 plotted in the above graph are as follows: 2018 2019 2020 2021 2022 2023 Rockwell Automation (1) $ 100.00 $ 89.94 $ 122.91 $ 166.43 $ 123.89 $ 167.41 S&P 500 Index 100.00 104.25 120.02 156.01 131.85 160.31 S&P Selected GICS groups 100.00 107.60 148.77 189.73 159.25 207.01 Cash dividends per common share 3.51 3.88 4.08 4.28 4.48 4.72 (1) Includes the reinvestment of all dividends in our common stock. 14 Table of Contents Item 6.
Biggest changeThe cumulative total returns on Rockwell Automation common stock and each index as of September 30, 2019 through 2024 plotted in the above graph are as follows: 2019 2020 2021 2022 2023 2024 Rockwell Automation (1) $ 100.00 $ 136.66 $ 185.04 $ 137.74 $ 186.12 $ 178.10 S&P 500 Index 100.00 115.13 149.66 126.48 153.79 209.67 S&P Selected GICS groups 100.00 138.10 176.23 149.59 194.96 261.50 Cash dividends per common share 3.88 4.08 4.28 4.48 4.72 5.00 (1) Includes the reinvestment of all dividends in our common stock. 16 Table of Contents Item 6. [Reserved] Not required.
Our repurchase program allows us to repurchase shares at management’s discretion or at our broker’s discretion pursuant to a share repurchase plan subject to price and volume parameters. 13 Table of Contents Performance Graph The following information is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing.
Our repurchase program allows us to repurchase shares at management’s discretion or at our broker’s discretion pursuant to a share repurchase plan subject to price and volume parameters. 15 Table of Contents Performance Graph The following information is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing.
Company Purchases The table below sets forth information with respect to purchases made by or on behalf of us of shares of our common stock during the three months ended September 30, 2023: Period Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approx.
Company Purchases The table below sets forth information with respect to purchases made by or on behalf of us of shares of our common stock during the three months ended September 30, 2024: Period Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approx.
The following line graph compares the cumulative total shareowner return on our common stock against the cumulative total return of the S&P Composite-500 Stock Index (S&P 500 Index) and the S&P 500 Selected GICS groups (Capital Goods, Software & Services, and Technology Hardware & Equipment) for the period of five fiscal years from October 1, 2018, to September 30, 2023, assuming in each case a fixed investment of $100 at the respective closing prices on September 30, 2018, and reinvestment of all dividends.
The following line graph compares the cumulative total shareowner return on our common stock against the cumulative total return of the S&P Composite-500 Stock Index (S&P 500 Index) and the S&P 500 Selected GICS groups (Capital Goods, Software & Services, and Technology Hardware & Equipment) for the period of five fiscal years from October 1, 2019, to September 30, 2024, assuming in each case a fixed investment of $100 at the respective closing prices on September 30, 2019, and reinvestment of all dividends.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our common stock, $1 par value, is listed on the New York Stock Exchange and trades under the symbol “ROK”. On October 31, 2023, there were 11,960 shareowners of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock, $1 par value, is listed on the New York Stock Exchange and trades under the symbol “ROK”. On October 31, 2024, there were 11,332 shareowners of record of our common stock.
(2) Average price paid per share includes brokerage commissions. (3) On May 2, 2022, the Board of Directors authorized us to expend an additional $1.0 billion to repurchase shares of our common stock.
(2) Average price paid per share includes brokerage commissions. (3) On both May 2, 2022 and September 11, 2024, the Board of Directors authorized us to expend an additional $1.0 billion to repurchase shares of our common stock.
Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3) July 1 – 31, 2023 56,822 $ 336.07 56,822 $ 975,955,429 August 1 – 31, 2023 82,698 298.05 82,698 951,307,019 September 1 – 30, 2023 37,732 291.47 37,732 940,309,320 Total 177,252 $ 308.84 177,252 (1) All of the shares purchased during the quarter ended September 30, 2023, were acquired pursuant to the repurchase program described in (3) below.
Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (3) July 1 – 31, 2024 32,230 $ 272.95 32,230 $ 455,330,732 August 1 – 31, 2024 384,201 263.40 384,201 354,133,262 September 1 – 30, 2024 30,547 261.80 30,547 1,346,135,915 Total 446,978 $ 263.98 446,978 (1) All of the shares purchased during the quarter ended September 30, 2024, were acquired pursuant to the repurchase program described in (3) below.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeFinancial Statements and Supplementary Data 37 CONSOLIDATED BALANCE SHEET 37 CONSOLIDATED STATEMENT OF OPERATIONS 38 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 39 CONSOLIDATED STATEMENT OF CASH FLOWS 40 CONSOLIDATED STATEMENT OF SHAREOWNERS’ EQUITY 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 42
Biggest changeFinancial Statements and Supplementary Data 41 CONSOLIDATED BALANCE SHEET 41 CONSOLIDATED STATEMENT OF OPERATIONS 42 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 43 CONSOLIDATED STATEMENT OF CASH FLOWS 44 CONSOLIDATED STATEMENT OF SHAREOWNERS’ EQUITY 45 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 46
Item 6. Reserved 15 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 15 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 36 Item 8.
Item 6. [Reserved] 17 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 40 Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe believe these and other actions we are taking are enabling us to normalize our product lead times and reduce our backlog. 21 Table of Contents Summary of Results of Operations The following table reflects our sales and operating results (in millions, except per share amounts and percentages): Year Ended September 30, 2023 2022 2021 Sales Intelligent Devices (a) $ 4,098.2 $ 3,544.6 $ 3,311.9 Software & Control (b) 2,886.0 2,312.9 1,947.0 Lifecycle Services (c) 2,073.8 1,902.9 1,738.5 Total sales (d) $ 9,058.0 $ 7,760.4 $ 6,997.4 Segment operating earnings (1) Intelligent Devices (e) $ 828.2 $ 717.6 $ 702.1 Software & Control (f) 953.2 666.7 531.0 Lifecycle Services (g) 148.4 158.3 158.2 Total segment operating earnings (2) (h) 1,929.8 1,542.6 1,391.3 Purchase accounting depreciation and amortization, and impairment (264.4) (103.9) (55.1) Corporate and other (127.9) (104.7) (120.6) Non-operating pension and postretirement benefit cost (82.7) (4.7) (63.8) Change in fair value of investments 279.3 (136.9) 397.4 Legal settlement — — 70.0 Interest expense, net (125.6) (118.8) (93.0) Income before income taxes (i) 1,608.5 1,073.6 1,526.2 Income tax provision (330.5) (154.5) (181.9) Net income 1,278.0 919.1 1,344.3 Net loss attributable to noncontrolling interests (109.4) (13.1) (13.8) Net income attributable to Rockwell Automation $ 1,387.4 $ 932.2 $ 1,358.1 Diluted EPS $ 11.95 $ 7.97 $ 11.58 Adjusted EPS (3) $ 12.12 $ 9.49 $ 9.43 Diluted weighted average outstanding shares 115.6 116.7 117.1 Pre-tax margin (i/d) 17.8 % 13.8 % 21.8 % Intelligent Devices segment operating margin (e/a) 20.2 % 20.2 % 21.2 % Software & Control segment operating margin (f/b) 33.0 % 28.8 % 27.3 % Lifecycle Services segment operating margin (g/c) 7.2 % 8.3 % 9.1 % Total segment operating margin (2) (h/d) 21.3 % 19.9 % 19.9 % (1) See Note 19 in the Consolidated Financial Statements for the definition of segment operating earnings.
Biggest changeManufacturing PMI readings outside the U.S were also mixed with results reported above and below 50 and readings improving in some countries during the quarter and softening in others. 22 Table of Contents Backlog Our total order backlog consists of (in millions): September 30, 2024 2023 Intelligent Devices $ 736.8 $ 1,464.1 Software & Control 652.8 897.5 Lifecycle Services 1,701.0 1,747.3 Total Company $ 3,090.6 $ 4,108.9 See Note 2 in the Consolidated Financial Statements for additional information on the nature of our products and services and revenue recognition. 23 Table of Contents Summary of Results of Operations The following table reflects our sales and operating results (in millions, except per share amounts and percentages): Year Ended September 30, 2024 2023 2022 Sales Intelligent Devices (a) $ 3,804.1 $ 4,098.2 $ 3,544.6 Software & Control (b) 2,187.4 2,886.0 2,312.9 Lifecycle Services (c) 2,272.7 2,073.8 1,902.9 Total sales (d) $ 8,264.2 $ 9,058.0 $ 7,760.4 Segment operating earnings (1) Intelligent Devices (e) $ 700.0 $ 828.2 $ 717.6 Software & Control (f) 529.7 953.2 666.7 Lifecycle Services (g) 365.6 148.4 158.3 Total segment operating earnings (2) (h) 1,595.3 1,929.8 1,542.6 Purchase accounting depreciation and amortization, and impairment (143.9) (264.4) (103.9) Corporate and other (135.8) (127.9) (104.7) Non-operating pension and postretirement benefit credit (cost) 19.8 (82.7) (4.7) Change in fair value of investments 0.1 279.3 (136.9) Restructuring charges (97.4) — — Interest expense, net (139.0) (125.6) (118.8) Income before income taxes (i) 1,099.1 1,608.5 1,073.6 Income tax provision (151.8) (330.5) (154.5) Net income 947.3 1,278.0 919.1 Net loss attributable to noncontrolling interests (5.2) (109.4) (13.1) Net income attributable to Rockwell Automation $ 952.5 $ 1,387.4 $ 932.2 Diluted EPS $ 8.28 $ 11.95 $ 7.97 Adjusted EPS (3) $ 9.71 $ 12.12 $ 9.49 Diluted weighted average outstanding shares 114.5 115.6 116.7 Pre-tax margin (i/d) 13.3 % 17.8 % 13.8 % Intelligent Devices segment operating margin (e/a) 18.4 % 20.2 % 20.2 % Software & Control segment operating margin (f/b) 24.2 % 33.0 % 28.8 % Lifecycle Services segment operating margin (g/c) 16.1 % 7.2 % 8.3 % Total segment operating margin (2) (h/d) 19.3 % 21.3 % 19.9 % (1) See Note 20 in the Consolidated Financial Statements for the definition of segment operating earnings.
The IP Index is expressed as a percentage of real output in a base year, currently 2017. • The Manufacturing Purchasing Managers’ Index (PMI), published by the Institute for Supply Management (ISM), which indicates the current and near-term state of manufacturing activity in the U.S.
The Manufacturing IP Index is expressed as a percentage of real output in a base year, currently 2017. • The Manufacturing Purchasing Managers’ Index (PMI), published by the Institute for Supply Management (ISM), which indicates the current and near-term state of manufacturing activity in the U.S.
We also use these contracts to hedge portions of our net investments in certain non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar.
We also may use these contracts to hedge portions of our net investments in certain non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar.
We used the Producer Price Index (PPI), published by the Bureau of Labor Statistics, which measures the average change over time in the selling prices received by domestic producers for their output. After observing double-digit PPI growth through most of 2022, we have now observed PPI growth in the low single digits for the last three quarters.
We used the Producer Price Index (PPI), published by the Bureau of Labor Statistics, which measures the average change over time in the selling prices received by domestic producers for their output. After observing double-digit PPI growth through most of 2022, we have now observed PPI growth in the low single digits for the last four quarters.
We strive for zero workplace injuries and illnesses and operate in a manner that recognizes safety as fundamental to Rockwell Automation being a great place to work. In fiscal 2023, we achieved 0.27 recordable cases per 100 employees. • We capture and act upon employee feedback through our annual employee engagement survey.
We strive for zero workplace injuries and illnesses and operate in a manner that recognizes safety as fundamental to Rockwell Automation being a great place to work. In fiscal 2024, we achieved 0.27 recordable cases per 100 employees. • We capture and act upon employee feedback through our annual employee engagement survey.
Contributions to our pension plans beyond 2024 will depend on future investment performance of our pension plan assets, changes in discount rate assumptions, and governmental regulations in effect at the time. Amounts subsequent to 2024 are excluded from the summary above, as we are unable to make a reasonably reliable estimate of these amounts.
Contributions to our pension plans beyond 2025 will depend on future investment performance of our pension plan assets, changes in discount rate assumptions, and governmental regulations in effect at the time. Amounts subsequent to 2025 are excluded from the summary above, as we are unable to make a reasonably reliable estimate of these amounts.
More information regarding goodwill impairment testing is contained in Note 1 and Note 3 in the Consolidated Financial Statements. 33 Table of Contents Retirement Benefits - Pension Pension costs and obligations are actuarially determined and are influenced by assumptions used to estimate these amounts, including the discount rate.
More information regarding goodwill impairment testing is contained in Note 1 and Note 3 in the Consolidated Financial Statements. 37 Table of Contents Retirement Benefits - Pension Pension costs and obligations are actuarially determined and are influenced by assumptions used to estimate these amounts, including the discount rate.
It measures several engagement indicators and drivers and provides an overall employee engagement index (EEI) with external benchmark comparison. The latest survey, conducted in February 2023, showed an EEI of 76, which was eight points higher than the industry norm of 68 for this index.
It measures several engagement indicators and drivers and provides an overall employee engagement index (EEI) with external benchmark comparison. The latest survey, conducted in February 2024, showed an EEI of 76, which was eight points higher than the industry norm of 68 for this index.
Supplemental Segment Information Purchase accounting depreciation and amortization, and impairment and non-operating pension and postretirement benefit cost (credit) are not allocated to our operating segments because these costs are excluded from our measurement of each segment’s operating performance for internal purposes.
Supplemental Segment Information Purchase accounting depreciation and amortization, and impairment, non-operating pension and postretirement benefit (credit) cost, and restructuring charges are not allocated to our operating segments because these costs are excluded from our measurement of each segment’s operating performance for internal purposes.
At September 30, 2022, there were $1.6 million of outstanding common stock share repurchases recorded in Accounts payable that did not settle until 2023. Our decision to repurchase shares in 2024 will depend on business conditions, free cash flow generation, other cash requirements, and stock price.
At September 30, 2023, there were $1.1 million of outstanding common stock share repurchases recorded in Accounts payable that did not settle until 2024. Our decision to repurchase shares in 2025 will depend on business conditions, free cash flow generation, other cash requirements, and stock price.
Also, industry-specific and economic factors that increase the discount rate or decrease the market multiple can decrease the fair value of the Sensia reporting unit, which may result in an additional future impairment.
Also, industry-specific and economic factors that increase the discount rate or decrease the market multiple can decrease the fair value of the Sensia reporting unit, which may result in an impairment.
We were in compliance with all covenants under our credit facilities at September 30, 2023 and 2022. There are no significant commitment fees or compensating balance requirements under our credit facilities.
We were in compliance with all covenants under our credit facilities at September 30, 2024 and 2023. There are no significant commitment fees or compensating balance requirements under our credit facilities.
Our digital services business has a deep understanding of customers’ biggest digital transformation challenges and opportunities for further productivity and growth. Market Access and Expansion Over the past decade, our investments in technology and globalization have enabled us to expand our addressed market to over $120 billion.
Our digital services business has a deep understanding of customers’ biggest digital transformation challenges and opportunities for further productivity and growth. Market Access and Expansion Over the past decade, our investments in technology and globalization have enabled us to expand our addressed market to approximately $130 billion.
In such event, the cost of borrowings under our unsecured committed credit facility could be higher than the cost of commercial paper borrowings. 30 Table of Contents We regularly monitor the third-party depository institutions that hold our cash and cash equivalents and short-term investments.
In such event, the cost of borrowings under our unsecured committed credit facility could be higher than the cost of commercial paper borrowings. We regularly monitor the third-party depository institutions that hold our cash and cash equivalents and short-term investments.
(4) Under the Tax Cuts and Jobs Act of 2017 (the Tax Act), the Company may elect to pay the transition tax interest-free over eight years, with 8% due in each of the first five years, 15% in year six, 20% in year seven, and 25% in year eight.
(4) Under the Tax Act, the Company may elect to pay the transition tax interest-free over eight years, with 8% due in each of the first five years, 15% in year six, 20% in year seven, and 25% in year eight.
Producer prices remain elevated, however, year over year increases continued to decelerate following last years' surge in prices. Non-U.S. Economic Trends In 2023, sales to customers outside the U.S. accounted for less than half of our total sales. These customers include both indigenous companies and multinational companies with a global presence.
Producer prices remain elevated, however, year over year increases continued to decelerate following the last two years' surges in prices. Non-U.S. Economic Trends In 2024, sales to customers outside the U.S. accounted for less than half of our total sales. These customers include both indigenous companies and multinational companies with a global presence.
Our long-term profitable growth framework outlines how we will deliver accelerated growth while we continue to transform our company to meet stakeholder expectations over the longer term: • achieve faster secular growth in traditional markets due to customer needs for resiliency (including cybersecurity), agility, sustainability, and mitigating impacts of labor shortages; • grow share and create new ways to win through technology differentiation, industry focus, go to market acceleration, expanded offerings and new markets; • accelerate growth in annual recurring revenue; • add 1% growth from acquisitions annually; and • deliver profitable growth within a disciplined financial framework. 15 Table of Contents Sustainability Our 2022 Sustainability Report highlights our sustainability strategy and outcomes.
Our long-term profitable growth framework outlines how we will deliver accelerated growth while we continue to transform our company to meet stakeholder expectations over the longer term: • achieve faster secular growth in traditional markets due to customer needs for resiliency (including cybersecurity), agility, sustainability, and mitigating impacts of labor shortages; • grow share and create new ways to win through technology differentiation, industry focus, go to market acceleration, expanded offerings and new markets; • continue double-digit growth in annual recurring revenue; • add 1% average annual growth from acquisitions; and • deliver profitable growth within a disciplined financial framework. 17 Table of Contents Sustainability Our 2023 Sustainability Report highlights our sustainability strategy and outcomes.
We expect future uses of cash to include working capital requirements, capital expenditures, acquisitions of businesses and other inorganic investments, dividends to shareowners, repurchases of common stock, additional contributions to our retirement plans and repayments of debt. We expect capital expenditures in 2024 to be approximately $220 million.
We expect future uses of cash to include working capital requirements, capital expenditures, dividends to shareowners, repurchases of common stock, repayments of debt, additional contributions to our retirement plans, and acquisitions of businesses and other inorganic investments. We expect capital expenditures in 2025 to be approximately $250 million.
During the second quarter of fiscal 2023, we performed our annual quantitative impairment test for our Sensia reporting unit.
During the second quarter of fiscal 2024, we performed our annual quantitative impairment test for our Sensia reporting unit.
If such factors impact our ability to achieve forecasted revenue growth rates and margins, the fair value of the reporting unit could decrease, which may result in an additional impairment of the remaining goodwill balance.
If such factors impact our ability to achieve forecasted revenue growth rates and margins, the fair value of the reporting unit could decrease, which may result in an impairment.
Our global inclusion index score was 81, six points higher than the industry norm of 75. • We invest in growth and development of our employees. As the pace of change increases, it is important we provide re-skilling and upskilling opportunities for our technical talent, along with soft skills and leadership development for all.
Our global inclusion index score was 79, five points higher than the industry norm of 74. • We invest in growth and development of our employees. As the pace of change increases, it is important we provide re-skilling and upskilling opportunities for our technical talent, along with soft skills and leadership development for all.
According to the ISM, a PMI measure above 50 indicates that the U.S. manufacturing economy is generally expanding while a measure below 50 indicates that it is generally contracting. The table below depicts the trends in these indicators from fiscal 2021 to 2023. These figures are as of November 8, 2023, and are subject to revision by the issuing organizations.
According to the ISM, a PMI measure above 50 indicates that the U.S. manufacturing economy is generally expanding while a measure below 50 indicates that it is generally contracting. The table below depicts the trends in these indicators from fiscal 2022 to 2024. These figures are as of November 12, 2024, and are subject to revision by the issuing organizations.
In fiscal 2023, the majority of our employees completed one or more of our training programs representing over 650,000 learning hours. • We offer employee assistance and work life benefits to all global employees. Our comprehensive benefits include healthcare benefits, disability and life insurance benefits, paid time off, and leave programs.
In fiscal 2024, the majority of our employees completed one or more of our training programs representing over 1.1 million learning hours. • We offer employee assistance and work life benefits to all global employees. Our comprehensive benefits include healthcare benefits, disability and life insurance benefits, paid time off, and leave programs.
Approximately all of our 2023 global pension expense and 70 percent of our global projected benefit obligation relate to our U.S. pension plan. The discount rate used to determine our 2023 U.S. pension expense was 5.65 percent, compared to 3.86 percent for 2022. For 2024, our U.S. discount rate will increase to 6.10 percent from 5.65 percent in 2023.
Approximately all of our 2024 global pension expense and 70 percent of our global projected benefit obligation relate to our U.S. pension plan. The discount rate used to determine our 2024 U.S. pension expense was 6.10 percent, compared to 5.65 percent for 2023. For 2025, our U.S. discount rate will decrease to 5.10 percent from 6.10 percent in 2024.
We monitor employee retention and attrition rates by demographic factors including by gender, ethnicity, generation, years of service, career role, region, business, and function. We generally experienced lower attrition rates in fiscal 2023 as compared to fiscal 2022. We believe the decrease is consistent with market trends experienced broadly across labor markets in fiscal 2023.
We monitor employee retention and attrition rates by demographic factors including by gender, ethnicity, generation, years of service, career role, region, business, and function. We generally experienced flat attrition rates in fiscal 2024 as compared to fiscal 2023. We believe this is consistent with market trends experienced broadly across labor markets in fiscal 2024.
At September 30, 2023, we had approximately $940.3 million remaining for share repurchases under our existing board authorizations. See Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities , for additional information regarding share repurchases.
At September 30, 2024, we had approximately $1,346.1 million remaining for share repurchases under our existing board authorizations. See Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities , for additional information regarding share repurchases.
As a result of that quantitative test, we concluded that the second quarter Goodwill balance within the Sensia reporting unit of $317.5 million was not impaired, as the fair value of the Sensia reporting unit was determined to exceed its carrying value by approximately 10 percent.
As a result of that quantitative test, we concluded that the second quarter Goodwill balance within the Sensia reporting unit of $160.7 million was not impaired, as the fair value of the Sensia reporting unit was determined to exceed its carrying value by approximately 25 percent.
The following chart illustrates the estimated change in projected benefit obligation and annual net periodic benefit cost assuming a change of 25 basis points in the discount rate for our U.S. pension plans (in millions): Pension Benefits Change in Projected Benefit Obligation Change in Net Periodic Benefit Cost (1) Discount rate $ 52.4 $ 0.2 (1) Change includes both operating and non-operating pension costs.
The following chart illustrates the estimated change in projected benefit obligation and annual net periodic benefit cost assuming a change of 25 basis points in the discount rate for our U.S. pension plans (in millions): Pension Benefits Change in Projected Benefit Obligation Change in Net Periodic Benefit Cost (1) Discount rate $ 64.9 $ 6.9 (1) Change includes both operating and non-operating pension costs.
The following is a summary of our credit ratings as of September 30, 2023: Credit Rating Agency Short Term Rating Long Term Rating Outlook Standard & Poor’s A-1 A Negative Moody’s P-2 A3 Stable Fitch Ratings F1 A Stable Our ability to access the commercial paper market, and the related costs of these borrowings, is affected by the strength of our credit ratings and market conditions.
The following is a summary of our credit ratings as of November 12, 2024: Credit Rating Agency Short Term Rating Long Term Rating Outlook Standard & Poor’s A-2 A- Stable Moody’s P-2 A3 Stable Fitch Ratings F1 A Stable Our ability to access the commercial paper market, and the related costs of these borrowings, is affected by the strength of our credit ratings and market conditions.
If we were to allocate these costs, we would attribute them to each of our segments as follows (in millions): Year Ended September 30, 2023 2022 2021 Purchase accounting depreciation and amortization, and impairment Intelligent Devices $ 4.7 $ 2.5 $ 2.7 Software & Control 68.5 69.0 19.2 Lifecycle Services 190.2 31.4 32.1 Non-operating pension and postretirement benefit cost (credit) Intelligent Devices $ 21.2 $ (3.5) $ 14.1 Software & Control 21.2 (3.5) 14.1 Lifecycle Services 28.3 (4.8) 18.8 25 Table of Contents Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate are non-GAAP earnings measures that exclude non-operating pension and postretirement benefit cost, purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation, change in fair value of investments, and Net loss attributable to noncontrolling interests, including their respective tax effects.
If we were to allocate these costs, we would attribute them to each of our segments as follows (in millions): Year Ended September 30, 2024 2023 2022 Purchase accounting depreciation and amortization, and impairment Intelligent Devices $ 37.9 $ 4.7 $ 2.5 Software & Control 67.4 68.5 69.0 Lifecycle Services 37.6 190.2 31.4 Non-operating pension and postretirement benefit (credit) cost Intelligent Devices $ (7.2) $ 21.2 $ (3.5) Software & Control (7.2) 21.2 (3.5) Lifecycle Services (9.5) 28.3 (4.8) Restructuring Charges Intelligent Devices $ 44.4 $ — $ — Software & Control 32.6 — — Lifecycle Services 19.4 — — 28 Table of Contents Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate are non-GAAP earnings measures that exclude non-operating pension and postretirement benefit (credit) cost, purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation, change in fair value of investments, restructuring charges aligned with enterprise-wide strategic initiatives, and Net loss attributable to noncontrolling interests, including their respective tax effects.
At September 30, 2023, our employees, including those employed by consolidated subsidiaries, by region were approximately: North America 10,000 Europe, Middle East and Africa 5,500 Asia Pacific 7,500 Latin America 6,000 Total employees 29,000 Our employees had the following global gender demographics based on voluntary disclosure: September 30, 2023 Women Men Undisclosed All employees 33% 67% —% Individual Contributors 34% 66% —% People Managers 27% 73% —% Technical Talent 19% 81% —% Manufacturing Associates 46% 53% 1% 18 Table of Contents Our U.S. employees had the following race and ethnicity demographics based on voluntary disclosure: September 30, 2023 Black / African American Asian Hispanic / Latinx White Multiracial, Native American and Pacific Islander Undisclosed All U.S.
At September 30, 2024, our employees, including those employed by consolidated subsidiaries, by region were approximately: North America 9,500 Europe, Middle East and Africa 5,500 Asia Pacific 7,000 Latin America 5,000 Total employees 27,000 Our employees had the following global gender demographics based on voluntary disclosure: September 30, 2024 Women Men Undisclosed All employees 32% 68% —% Individual Contributors 33% 67% —% People Managers 27% 73% —% Technical Talent 19% 81% —% Manufacturing Associates 45% 55% —% 20 Table of Contents Our U.S. employees had the following race and ethnicity demographics based on voluntary disclosure: September 30, 2024 Black / African American Asian Hispanic / Latinx White Multiracial, Native American and Pacific Islander Undisclosed All U.S.
IP Index PMI Fiscal 2023 quarter ended: September 2023 99.6 49.0 June 2023 99.6 46.0 March 2023 99.5 46.3 December 2022 99.6 48.4 Fiscal 2022 quarter ended: September 2022 102.4 50.9 June 2022 101.9 53.0 March 2022 101.1 57.1 December 2021 100.1 58.8 Fiscal 2021 quarter ended: September 2021 98.8 60.5 June 2021 97.9 60.9 March 2021 96.7 63.7 December 2020 96.1 60.5 Inflation in the U.S. has also had an impact on our input costs and pricing.
Manufacturing IP Index PMI Fiscal 2024 quarter ended: September 2024 99.1 47.2 June 2024 99.5 48.5 March 2024 99.5 50.3 December 2023 99.2 47.1 Fiscal 2023 quarter ended: September 2023 99.6 49.0 June 2023 99.2 46.0 March 2023 99.2 46.3 December 2022 98.1 48.4 Fiscal 2022 quarter ended: September 2022 100.6 50.9 June 2022 100.0 53.0 March 2022 100.6 57.1 December 2021 100.1 58.8 Inflation in the U.S. has also had an impact on our input costs and pricing.
The IP Index remains constant in the fourth quarter of fiscal 2023 versus the third quarter of fiscal 2023. Manufacturing PMI results continued to be soft in the fourth quarter of 2023. The Manufacturing PMI reading in the month of September was the highest of the quarter, however it still remains below 50.
The IP Index declined in the fourth quarter of fiscal 2024 versus the third quarter of fiscal 2024. Manufacturing PMI results continued to soften in the fourth quarter of 2024. The Manufacturing PMI reading in the month of September was the highest of the quarter, however it still remains below 50.
Cash dividends declared to shareowners were $544.0 million in 2023 ($4.72 per common share), $520.8 million in 2022 ($4.48 per common share), and $497.5 million in 2021 ($4.28 per common share).
Cash dividends declared to shareowners were $572.8 million in 2024 ($5.00 per common share), $544.0 million in 2023 ($4.72 per common share), and $520.8 million in 2022 ($4.48 per common share).
We did not borrow against this credit facility or the former credit facility during the periods ended September 30, 2023 and 2022. Borrowings under our new $1.5 billion credit facility bear interest based on short-term money market rates in effect during the period the borrowings are outstanding.
We did not borrow against this credit facility during the periods ended September 30, 2024, or September 30, 2023. Borrowings under this credit facility bear interest based on short-term money market rates in effect during the period the borrowings are outstanding.
Our quarterly dividend rate as of September 30, 2023, is $1.18 per common share ($4.72 per common share annually), which is determined at the sole discretion of our Board of Directors. Supplemental Sales Information We translate sales of subsidiaries operating outside of the United States using exchange rates effective during the respective period.
Our quarterly dividend rate as of September 30, 2024, is $1.25 per common share ($5.00 per common share annually), which is determined at the sole discretion of our Board of Directors. 34 Table of Contents Supplemental Sales Information We translate sales of subsidiaries operating outside of the United States using exchange rates effective during the respective period.
Changes in any of the assumptions and the amortization of differences between the assumptions and actual experience will affect the amount of pension expense in future periods. Our global pension expense in 2023 was $122.0 million compared to $74.4 million in 2022.
Changes in any of the assumptions and the amortization of differences between the assumptions and actual experience will affect the amount of pension expense in future periods. Our global pension expense in 2024 was $13.2 million compared to $122.0 million in 2023; global pension expense in 2023 included $123.4 million of settlement charges.
Separate short-term unsecured credit facilities of approximately $225.8 million at September 30, 2023, were available to non-U.S. subsidiaries, of which approximately $32.0 million was committed under letters of credit. Borrowings under our non-U.S. credit facilities at September 30, 2023 and 2022, were not significant.
Separate short-term unsecured credit facilities of approximately $248.5 million at September 30, 2024, were available to non-U.S. subsidiaries, of which approximately $34.6 million was committed under letters of credit. Borrowings under our non-U.S. credit facilities at September 30, 2024 and 2023, were not significant.
(3) Adjusted EPS is a non-GAAP earnings measure. See Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation for more information on this non-GAAP measure. 22 Table of Contents 2023 Compared to 2022 Sales Sales in fiscal 2023 increased 16.7 percent compared to 2022. Organic sales increased 16.9 percent. Currency translation decreased sales by 1.4 percentage points.
(3) Adjusted EPS is a non-GAAP earnings measure. See Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate Reconciliation for more information on this non-GAAP measure. 24 Table of Contents 2024 Compared to 2023 Sales Sales in fiscal 2024 decreased 9 percent compared to 2023. Organic sales decreased 10 percent. Acquisitions increased sales by 1 percentage point.
This required the use of several assumptions and estimates including the customer attrition rate, forecasted cash flows attributable to existing customers, and the discount rate for the customer relationship intangible asset and the royalty rate, forecasted revenue growth rates, and the discount rate for the technology intangible asset.
This required the use of several assumptions and estimates including forecasted revenue growth rates, margin, and cash flows attributable to existing customers, obsolescence factor, royalty rate, contributory asset charges, customer attrition rate, and discount rates.
We exclude purchase accounting depreciation and amortization, impairment, corporate and other, non-operating pension and postretirement benefit cost, change in fair value of investments, the $70 million legal settlement in fiscal 2021, interest expense, net, and income tax provision because we do not consider these items to be directly related to the operating performance of our segments.
We exclude purchase accounting depreciation and amortization, impairment, corporate and other, non-operating pension and postretirement benefit credit (cost), change in fair value of investments, restructuring charges aligned with enterprise-wide strategic initiatives, interest expense, net, and income tax provision because we do not consider these items to be directly related to the operating performance of our segments.
Cash provided by operating activities was $1,374.6 million for the year ended September 30, 2023, compared to $823.1 million for the year ended September 30, 2022. Free cash flow was $1,214.1 million for the year ended September 30, 2023, compared to $682.0 million for the year ended September 30, 2022.
Cash provided by operating activities was $863.8 million for the year ended September 30, 2024, compared to $1,374.6 million for the year ended September 30, 2023. Free cash flow was $639.1 million for the year ended September 30, 2024, compared to $1,214.1 million for the year ended September 30, 2023.
In 2022, we repurchased approximately 1.3 million shares of our common stock under our share repurchase program at a total cost of $301.1 million and an average cost of $223.05 per share. At September 30, 2023, there were $1.1 million of outstanding common stock share repurchases recorded in Accounts payable that did not settle until 2024.
In 2023, we repurchased approximately 1.2 million shares of our common stock under our share repurchase program at a total cost of $311.0 million and an average cost of $265.48 per share. At September 30, 2024, there were $0.4 million of outstanding common stock share repurchases recorded in Accounts payable that do not settle until 2025.
The revenue growth rate assumption reflects above market growth over the next five years before moderating back to a growth rate approximating longer term average inflationary rates. The forecasted near-term growth rate projections take into account recent revenue performance and the orders backlog.
The revenue growth rate assumption reflects above market growth over the next five years before moderating back to a growth rate approximating longer term average inflationary rates. The forecasted near-term growth rate projections take into account recent revenue performance and the orders backlog. Margin assumptions reflect volume and mix, productivity to offset cost inflation, and price used to fund investments.
Margin assumptions reflect volume and mix, productivity to offset cost inflation, and price used to fund investments . The assumptions and estimates made are based on a number of factors, including historical experience, reference to external product available market and industry growth publications, analysis of peer group projections, and information obtained from the new management team, including backlog.
The assumptions and estimates made are based on a number of factors, including historical experience, reference to external product available market and industry growth publications, analysis of peer group projections, and information obtained from the management team, including backlog.
The following are reconciliations of Net income attributable to Rockwell Automation, diluted EPS, and effective tax rate to Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate, respectively (in millions, except per share amounts and percentages): Year Ended September 30, 2023 2022 2021 Net income attributable to Rockwell Automation $ 1,387.4 $ 932.2 $ 1,358.1 Non-operating pension and postretirement benefit cost 82.7 4.7 63.8 Tax effect of non-operating pension and postretirement benefit cost (20.6) (1.9) (16.0) Purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation (1) 178.3 91.9 43.2 Tax effect of purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation (1) (9.4) (22.3) (10.5) Change in fair value of investments (2) (279.3) 136.9 (397.4) Tax effect of change in fair value of investments (2) 67.6 (30.8) 64.7 Adjusted Income $ 1,406.7 $ 1,110.7 $ 1,105.9 Diluted EPS $ 11.95 $ 7.97 $ 11.58 Non-operating pension and postretirement benefit cost 0.72 0.04 0.55 Tax effect of non-operating pension and postretirement benefit cost (0.18) (0.02) (0.14) Purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation 1.54 0.78 0.37 Tax effect of purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation (0.08) (0.19) (0.09) Change in fair value of investments (2) (2.42) 1.17 (3.39) Tax effect of change in fair value of investments (2) 0.59 (0.26) 0.55 Adjusted EPS $ 12.12 $ 9.49 $ 9.43 Effective tax rate 20.5 % 14.4 % 11.9 % Tax effect of non-operating pension and postretirement benefit cost 0.3 % 0.1 % 0.5 % Tax effect of purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation (3.7) % 0.6 % 0.4 % Tax effect of change in fair value of investments (2) (0.7) % 0.9 % (1.2) % Adjusted Effective Tax Rate 16.4 % 16.0 % 11.6 % (1) Includes $97.3 million net expense from $157.5 million goodwill impairment charge included in Income before income taxes, $33.1 tax effect from goodwill impairment and related valuation allowances recorded in Income tax provision, and ($93.3) million Net loss attributable to noncontrolling interests.
These non-GAAP measures should not be considered a substitute for Net income attributable to Rockwell Automation, diluted EPS, and effective tax rate. 29 Table of Contents The following are reconciliations of Net income attributable to Rockwell Automation, diluted EPS, and effective tax rate to Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate, respectively (in millions, except per share amounts and percentages): Year Ended September 30, 2024 2023 2022 Net income attributable to Rockwell Automation $ 952.5 $ 1,387.4 $ 932.2 Non-operating pension and postretirement benefit (credit) cost (19.8) 82.7 4.7 Tax effect of non-operating pension and postretirement benefit (credit) cost 4.0 (20.6) (1.9) Purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation (1) 132.8 178.3 91.9 Tax effect of purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation (1) (24.6) (9.4) (22.3) Change in fair value of investments (2) (0.1) (279.3) 136.9 Tax effect of change in fair value of investments (2) (0.7) 67.6 (30.8) Restructuring charges (3) 97.4 — — Tax effect of restructuring charges (3) (24.3) — — Adjusted Income $ 1,117.2 $ 1,406.7 $ 1,110.7 Diluted EPS $ 8.28 $ 11.95 $ 7.97 Non-operating pension and postretirement benefit (credit) cost (0.17) 0.72 0.04 Tax effect of non-operating pension and postretirement benefit (credit) cost 0.03 (0.18) (0.02) Purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation 1.16 1.54 0.78 Tax effect of purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation (0.22) (0.08) (0.19) Change in fair value of investments (2) — (2.42) 1.17 Tax effect of change in fair value of investments (2) (0.01) 0.59 (0.26) Restructuring charges 0.85 — — Tax effect of restructuring charges (0.21) — — Adjusted EPS $ 9.71 $ 12.12 $ 9.49 Effective tax rate 13.8 % 20.5 % 14.4 % Tax effect of non-operating pension and postretirement benefit (credit) cost (0.1) % 0.3 % 0.1 % Tax effect of purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation 0.4 % (3.7) % 0.6 % Tax effect of change in fair value of investments (2) 0.1 % (0.7) % 0.9 % Tax effect of restructuring charges 0.9 % — % — % Adjusted Effective Tax Rate 15.1 % 16.4 % 16.0 % (1) 2023 includes $97.3 million net expense from $157.5 million goodwill impairment charge included in Income before income taxes, $33.1 tax effect from goodwill impairment and related valuation allowances recorded in Income tax provision, and ($93.3) million Net loss attributable to noncontrolling interests.
Income Taxes The effective tax rate in 2023 was 20.5 percent compared to 14.4 percent in 2022. The increase in the effective tax rate was primarily due to a valuation allowance established on certain deferred tax assets of our Sensia joint venture and tax effects of the related goodwill impairment, totaling $33.1 million.
The decrease in the effective tax rate was primarily due to a valuation allowance established in 2023 on certain deferred tax assets of our Sensia joint venture and tax effects of the related goodwill impairment totaling $33.1 million, and higher discrete tax benefits in 2024 compared to 2023.
Organic ARR growth is also used as a financial measure of performance for our annual incentive compensation. Because ARR is based on annual contract value, it does not represent revenue recognized during a particular reporting period or revenue to be recognized in future reporting periods and is not intended to be a substitute for revenue, contract liabilities, or backlog.
Our measure of ARR may be different from measures used by other companies. Because ARR is based on annual contract value, it does not represent revenue recognized during a particular reporting period or revenue to be recognized in future reporting periods and is not intended to be a substitute for revenue, contract liabilities, or backlog.
We use changes in key countries' gross domestic product (GDP), IP, and PMI as indicators of the growth opportunities in each region where we do business.
We use changes in key countries' gross domestic product (GDP), IP, and PMI as indicators of the growth opportunities in each region where we do business. Industrial output outside the U.S. was mixed in the fourth quarter of fiscal 2024.
We believe that face to face interaction is critical for our culture, innovation, people development, and engagement, and that flexible, virtual work arrangements help employees be more productive and engaged.
Rockwell offers plans and resources to help employees meet future savings goals through defined benefit and retirement savings plans. We believe that face to face interaction is critical for our culture, innovation, people development, and engagement, and that flexible, virtual work arrangements help employees be more productive and engaged.
We attribute sales to the geographic regions based on the country of destination. 31 Table of Contents The following is a reconciliation of reported sales to organic sales by geographic region (in millions): Year Ended September 30, 2023 Year Ended September 30, 2022 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales North America $ 5,224.0 $ 15.6 $ (23.9) $ 5,232.3 $ 4,722.0 Europe, Middle East and Africa 1,870.6 57.5 (26.3) 1,839.4 1,437.6 Asia Pacific 1,358.0 18.2 (80.5) 1,420.3 1,088.0 Latin America 605.4 0.1 22.8 582.5 512.8 Total Company Sales $ 9,058.0 $ 91.4 $ (107.9) $ 9,074.5 $ 7,760.4 Year Ended September 30, 2022 Year Ended September 30, 2021 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales North America $ 4,722.0 $ 152.0 $ (6.5) $ 4,576.5 $ 4,132.8 Europe, Middle East and Africa 1,437.6 6.8 (140.5) 1,571.3 1,405.7 Asia Pacific 1,088.0 0.4 (34.4) 1,122.0 1,012.2 Latin America 512.8 2.3 (6.6) 517.1 446.7 Total Company Sales $ 7,760.4 $ 161.5 $ (188.0) $ 7,786.9 $ 6,997.4 The following is a reconciliation of reported sales to organic sales by operating segment (in millions): Year Ended September 30, 2023 Year Ended September 30, 2022 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales Intelligent Devices $ 4,098.2 $ 80.6 $ (46.4) $ 4,064.0 $ 3,544.6 Software & Control 2,886.0 — (30.7) 2,916.7 2,312.9 Lifecycle Services 2,073.8 10.8 (30.8) 2,093.8 1,902.9 Total Company Sales $ 9,058.0 $ 91.4 $ (107.9) $ 9,074.5 $ 7,760.4 Year Ended September 30, 2022 Year Ended September 30, 2021 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales Intelligent Devices $ 3,544.6 $ — $ (89.8) $ 3,634.4 $ 3,311.9 Software & Control 2,312.9 150.6 (52.7) 2,215.0 1,947.0 Lifecycle Services 1,902.9 10.9 (45.5) 1,937.5 1,738.5 Total Company Sales $ 7,760.4 $ 161.5 $ (188.0) $ 7,786.9 $ 6,997.4 32 Table of Contents Critical Accounting Estimates We believe the following accounting estimates are the most critical to the understanding of our financial statements as they could have the most significant effect on our reported results and require subjective or complex judgments by management.
The following is a reconciliation of reported sales to organic sales by geographic region (in millions): Year Ended September 30, 2024 Year Ended September 30, 2023 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales North America $ 5,052.8 $ 81.8 $ (3.4) $ 4,974.4 $ 5,224.0 Europe, Middle East and Africa 1,504.5 9.0 21.6 1,473.9 1,870.6 Asia Pacific 1,072.8 4.8 (18.2) 1,086.2 1,358.0 Latin America 634.1 0.4 4.5 629.2 605.4 Total Company Sales $ 8,264.2 $ 96.0 $ 4.5 $ 8,163.7 $ 9,058.0 Year Ended September 30, 2023 Year Ended September 30, 2022 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales North America $ 5,224.0 $ 15.6 $ (23.9) $ 5,232.3 $ 4,722.0 Europe, Middle East and Africa 1,870.6 57.5 (26.3) 1,839.4 1,437.6 Asia Pacific 1,358.0 18.2 (80.5) 1,420.3 1,088.0 Latin America 605.4 0.1 22.8 582.5 512.8 Total Company Sales $ 9,058.0 $ 91.4 $ (107.9) $ 9,074.5 $ 7,760.4 35 Table of Contents The following is a reconciliation of reported sales to organic sales by operating segment (in millions): Year Ended September 30, 2024 Year Ended September 30, 2023 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales Intelligent Devices $ 3,804.1 $ 68.5 $ 3.7 $ 3,731.9 $ 4,098.2 Software & Control 2,187.4 — 2.2 2,185.2 2,886.0 Lifecycle Services 2,272.7 27.5 (1.4) 2,246.6 2,073.8 Total Company Sales $ 8,264.2 $ 96.0 $ 4.5 $ 8,163.7 $ 9,058.0 Year Ended September 30, 2023 Year Ended September 30, 2022 Reported Sales Less: Effect of Acquisitions Effect of Changes in Currency Organic Sales Reported Sales Intelligent Devices $ 4,098.2 $ 80.6 $ (46.4) $ 4,064.0 $ 3,544.6 Software & Control 2,886.0 — (30.7) 2,916.7 2,312.9 Lifecycle Services 2,073.8 10.8 (30.8) 2,093.8 1,902.9 Total Company Sales $ 9,058.0 $ 91.4 $ (107.9) $ 9,074.5 $ 7,760.4 36 Table of Contents Critical Accounting Estimates We believe the following accounting estimates are the most critical to the understanding of our financial statements as they could have the most significant effect on our reported results and require subjective or complex judgments by management.
During fiscal 2022, we launched our Hybrid Workplace Program, which combines the values of both physical workspaces and virtual work options, both of which are important for attracting, retaining, and developing employees and facilitating innovation, engagement, and productivity.
During fiscal 2024, we updated our Hybrid Workplace Program, which combines the values of both physical workspaces and virtual work options, both of which are important for attracting, retaining, and developing employees and facilitating innovation, engagement, and productivity. We offer flextime, remote work, and part-time arrangements whenever business conditions permit.
We believe that Total ARR provides useful information to investors because it reflects our recurring revenue performance period over period including the effect of acquisitions. 27 Table of Contents Financial Condition The following is a summary of our cash flows from operating, investing, and financing activities, as reflected in the Consolidated Statement of Cash Flows (in millions): Year Ended September 30, 2023 2022 2021 Cash provided by (used for) Operating activities $ 1,374.6 $ 823.1 $ 1,261.0 Investing activities 854.3 (7.8) (2,626.6) Financing activities (1,675.6) (934.2) 1,297.8 Effect of exchange rate changes on cash 19.2 (52.6) 16.8 Increase (decrease) in cash, cash equivalents, and restricted cash $ 572.5 $ (171.5) $ (51.0) The following table summarizes free cash flow, which is a non-GAAP financial measure (in millions): Year Ended September 30, 2023 2022 2021 Cash provided by operating activities $ 1,374.6 $ 823.1 $ 1,261.0 Capital expenditures (160.5) (141.1) (120.3) Free cash flow $ 1,214.1 $ 682.0 $ 1,140.7 Our definition of free cash flow takes into consideration capital investments required to maintain the operations of our businesses and execute our strategy.
Organic ARR growth is also used as a financial measure of performance for our annual incentive compensation. 31 Table of Contents Financial Condition The following is a summary of our cash flows from operating, investing, and financing activities, as reflected in the Consolidated Statement of Cash Flows (in millions): Year Ended September 30, 2024 2023 2022 Cash provided by (used for) Operating activities $ 863.8 $ 1,374.6 $ 823.1 Investing activities (982.5) 854.3 (7.8) Financing activities (502.8) (1,675.6) (934.2) Effect of exchange rate changes on cash 12.1 19.2 (52.6) (Decrease) increase in cash, cash equivalents, and restricted cash $ (609.4) $ 572.5 $ (171.5) The following table summarizes free cash flow, which is a non-GAAP financial measure (in millions): Year Ended September 30, 2024 2023 2022 Cash provided by operating activities $ 863.8 $ 1,374.6 $ 823.1 Capital expenditures (224.7) (160.5) (141.1) Free cash flow $ 639.1 $ 1,214.1 $ 682.0 Our definition of free cash flow takes into consideration capital investments required to maintain the operations of our businesses and execute our strategy.
The table below presents our sales for the year ended September 30, 2023, attributed to the geographic regions based upon country of destination, and the percentage change from the same period in 2022 (in millions, except percentages). The results by region and segment were primarily impacted by the composition of backlog versus underlying demand. Change vs.
The table below presents our sales for the year ended September 30, 2024, attributed to the geographic regions based upon country of destination, and the percentage change from the same period in 2023 (in millions, except percentages). Change vs. Change in Organic Sales (1) vs.
Although we believe the assumptions and estimates made were reasonable and appropriate, these estimates require judgment and are based in part on historical experience and information obtained from Plex management. 34 Table of Contents The key assumption requiring the use of judgement in the valuation of the customer relationship intangible asset was the customer attrition rate of 5 percent.
Although we believe the assumptions and estimates made were reasonable and appropriate, these estimates require judgment and are based in part on historical experience and information obtained from Clearpath management. The key assumption requiring the use of judgement in the valuation of the $269.9 million technology asset was the obsolescence factor.
A two-year change in this assumption would result in a change of $52 million in intangible assets. More information regarding this business combination is contained in Note 4 in the Consolidated Financial Statements. Recent Accounting Pronouncements See Note 1 in the Consolidated Financial Statements regarding recent accounting pronouncements. 35 Table of Contents
More information regarding this business combination is contained in Note 4 in the Consolidated Financial Statements. Recent Accounting Pronouncements See Note 1 in the Consolidated Financial Statements regarding recent accounting pronouncements. 39 Table of Contents
Organic sales growth is calculated by comparing organic sales to reported sales in the prior year, excluding divestitures.
Organic sales growth is calculated by comparing organic sales to reported sales in the prior year, excluding divestitures. We attribute sales to the geographic regions based on the country of destination.
Year Ended September 30, 2023 Year Ended September 30, 2022 Year Ended September 30, 2022 North America $ 5,224.0 10.6 % 10.8 % Europe, Middle East and Africa 1,870.6 30.1 % 27.9 % Asia Pacific 1,358.0 24.8 % 30.5 % Latin America 605.4 18.1 % 13.6 % Total Company Sales $ 9,058.0 16.7 % 16.9 % (1) Organic sales and organic sales growth exclude the effect of acquisitions, changes in currency exchange rates, and divestitures.
Year Ended September 30, 2024 Year Ended September 30, 2023 Year Ended September 30, 2023 North America $ 5,052.8 (3) % (5) % Europe, Middle East and Africa 1,504.5 (20) % (21) % Asia Pacific 1,072.8 (21) % (20) % Latin America 634.1 5 % 4 % Total Company Sales $ 8,264.2 (9) % (10) % (1) Organic sales and organic sales growth exclude the effect of acquisitions, changes in currency exchange rates, and divestitures.
At September 30, 2023, approximately half of our Cash and cash equivalents were held by non-U.S. subsidiaries. As a result of the broad changes to the U.S. international tax system under the Tax Act, we account for taxes on earnings of substantially all of our non-U.S. subsidiaries including both non-U.S. and U.S. taxes.
As a result of the broad changes to the U.S. international tax system under the Tax Act, the Company accounts for taxes on earnings of substantially all of its non-U.S. subsidiaries including both non-U.S. and U.S. taxes.
Purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation includes an accounting charge related to goodwill impairment for our Sensia joint venture. The tax effect of the purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation includes the tax effects on the Sensia joint venture goodwill impairment and related Sensia tax asset valuation allowances.
The tax effect of the purchase accounting depreciation and amortization, and impairment attributable to Rockwell Automation includes the tax effects on the Sensia joint venture goodwill impairment and related Sensia tax asset valuation allowances. Non-operating pension and postretirement benefit (credit) cost is defined as all components of our net periodic pension and postretirement benefit cost except for service cost.
Acquisitions - Plex Intangible Assets Valuation We account for business acquisitions by allocating the purchase price to tangible and intangible assets acquired and liabilities assumed at their fair values; the excess of the purchase price over the allocated amount is recorded as goodwill.
More information regarding our revenue recognition and returns, rebates, and incentives policies are contained in Note 1 and Note 2 in the Consolidated Financial Statements. 38 Table of Contents Acquisitions - Clearpath Intangible Assets Valuation We account for business acquisitions by allocating the purchase price to tangible and intangible assets acquired and liabilities assumed at their fair values; the excess of the purchase price over the allocated amount is recorded as goodwill.
The effects of currency translation decreased sales by 1.6 percentage points and acquisitions increased sales by 0.6 percentage points. All regions experienced reported and organic sales increases. Segment Operating Margin Lifecycle Services segment operating earnings decreased 6.3 percent year over year.
Acquisitions increased sales by 2 percentage points. All regions experienced reported sales increases. All regions except Asia Pacific experienced organic sales increases. Segment Operating Margin Lifecycle Services segment operating earnings increased 146 percent year over year.
The emerging markets of Asia Pacific and Europe, Middle East, and Africa (EMEA) are projected to be the fastest growing over our long-term planning horizon, due to higher levels of infrastructure investment and the growing middle-class population. 16 Table of Contents We believe that increased demand for consumer products in these markets will lead to manufacturing investment and provide us with additional growth opportunities in the future.
Our international market projections reflect higher levels of infrastructure investment and the growing middle-class population. We believe that increased demand for consumer products in our addressed markets will lead to manufacturing investment and provide us with additional growth opportunities in the future.
Significant long-term uses of cash include the following (in millions): Payments by Period Total 2024 2025 2026 2027 2028 Thereafter Long-term debt and interest (1) $ 5,229.1 $ 110.9 $ 406.6 $ 102.3 $ 102.3 $ 343.9 $ 4,163.1 Minimum lease payments (Note 18) 409.6 100.5 86.3 64.4 49.1 35.4 73.9 Postretirement benefits (2) 46.4 7.3 6.8 6.2 5.6 5.0 15.5 Pension funding contribution (3) 26.6 26.6 — — — — — Transition tax (4) 233.7 58.4 77.9 97.4 — — — Capital gains tax on sale of PTC Shares 67.4 67.4 — — — — — Total $ 5,945.4 $ 303.7 $ 577.6 $ 270.3 $ 157.0 $ 384.3 $ 4,252.5 (1) The amounts for Long-term debt assume that the respective debt instruments will be outstanding until their scheduled maturity dates and include interest but exclude unamortized discount.
Significant long-term uses of cash include the following (in millions): Payments by Period Total 2025 2026 2027 2028 2029 Thereafter Long-term debt and interest (1) $ 5,119.4 $ 407.8 $ 102.3 $ 102.3 $ 343.9 $ 503.1 $ 3,660.0 Minimum lease payments (Note 19) 518.6 111.0 97.2 80.6 59.7 41.3 128.8 Postretirement benefits (2) 44.6 6.7 6.3 5.7 5.2 4.7 16.0 Pension funding contribution (3) 19.0 19.0 — — — — — Transition tax (4) 175.3 77.9 97.4 — — — — Total $ 5,876.9 $ 622.4 $ 303.2 $ 188.6 $ 408.8 $ 549.1 $ 3,804.8 (1) The amounts for Long-term debt assume that the respective debt instruments will be outstanding until their scheduled maturity dates and include interest but exclude unamortized discount.
Our key priorities for inorganic investments include: • annual recurring revenue; • market expansion in Europe and Asia; and • application-specific differentiated technology in focus industries. In addition, we make venture investments that enable access to leading-edge and complementary technologies aligned with our strategic priorities, accelerate internal development efforts, reduce time to market, and provide insights into disruptive technologies.
In addition, we make venture investments that enable access to leading-edge and complementary technologies aligned with our strategic priorities, accelerate internal development efforts, reduce time to market, and provide insights into disruptive technologies. We believe these acquisitions and venture investments will help our served market and deliver value to our customers.
Segment operating margin increased to 33.0 percent in 2023 from 28.8 percent in 2022, primarily due to higher sales, partially offset by higher investment spend and higher incentive compensation. Lifecycle Services Sales Lifecycle Services sales increased 9.0 percent in 2023 compared to 2022. Organic sales increased 10.0 percent.
Segment operating margin decreased to 24.2 percent in 2024 from 33.0 percent in 2023, primarily due to lower sales volume, partially offset by lower incentive compensation and the positive impact of price realization exceeding input costs. Lifecycle Services Sales Lifecycle Services sales increased 10 percent in 2024 compared to 2023. Organic sales increased 8 percent.
In December 2022, Sensia entered into an unsecured $75.0 million line of credit. As of September 30, 2023, included in Short-term debt was $70.0 million borrowed against the line of credit with an interest rate of 6.29 percent.
As of September 30, 2024 and 2023, included in Short-term debt was $70.0 million borrowed against the line of credit with an interest rate of 6.17 percent and 6.29 percent, respectively. Also included in Short-term debt as of September 30, 2024 and September 30, 2023 was $23.5 million of interest-bearing loans from Schlumberger (SLB) to Sensia, due April 2025.
We understand and simplify our customers’ complex production challenges and deliver the most valued solutions that combine technology and industry expertise. As a result, we make our customers more resilient, agile, and sustainable, creating more ways to win. We deliver value by helping our customers optimize production, build resilience, empower people, become more sustainable, and accelerate transformation.
As a result, we make our customers more resilient, agile, and sustainable, creating more ways to win. We deliver value by helping our customers optimize production, build resilience, empower people, become more sustainable, and accelerate transformation. Rockwell Automation stands at the intersection of the technological and societal trends that are shaping the future of industrial operations.
Rockwell Automation stands at the intersection of the technological and societal trends that are shaping the future of industrial operations. We see converging megatrends including digitization and artificial intelligence, energy transition and sustainability, shifting demographics, and an increased need for resiliency.
We see converging megatrends including digitization and artificial intelligence, energy transition and sustainability, shifting demographics, and an increased need for resiliency.
Our estimate is based primarily on historical experience. If the time period were to change by 10 percent, the effect would be an adjustment to the accrual of approximately $24.9 million. More information regarding our revenue recognition and returns, rebates, and incentives policies are contained in Note 1 and Note 2 in the Consolidated Financial Statements.
Our estimate is based primarily on historical experience. If the time period were to change by 10 percent, the effect would be an adjustment to the accrual of approximately $20.7 million.
Segment operating margin decreased to 7.2 percent in 2023 from 8.3 percent in 2022, as the benefit of higher sales was more than offset by higher incentive compensation costs and one-time expenses to expand future profitability. 24 Table of Contents 2022 Compared to 2021 For a discussion of the Company’s fiscal 2022 results compared to fiscal 2021, see the Company’s Annual Report on Form 10-K for the year ended September 30, 2022, filed on November 8, 2022.
Segment operating margin increased to 16.1 percent in 2024 from 7.2 percent in 2023, primarily due to lower incentive compensation, higher sales volume, strong project execution, higher margins in Sensia, and ongoing savings from the prior year structural actions. 27 Table of Contents 2023 Compared to 2022 For a discussion of the Company’s fiscal 2023 results compared to fiscal 2022, see the Company’s Annual Report on Form 10-K for the year ended September 30, 2023, filed on November 8, 2023.
Software & Control Sales Software & Control sales increased 24.8 percent in 2023 compared to 2022. Organic sales increased 26.1 percent. The effects of currency translation decreased sales by 1.3 percentage points. All regions experienced reported and organic sales increases. Segment Operating Margin Software & Control segment operating earnings increased 43.0 percent year over year.
Software & Control Sales Software & Control reported and organic sales decreased 24 percent in 2024 compared to 2023. All regions experienced reported and organic sales decreases. Segment Operating Margin Software & Control segment operating earnings decreased 44 percent year over year.
Total ARR growth is calculated as the dollar change in ARR, adjusted to exclude the effects of currency. The effects of currency translation are excluded by calculating Total ARR on a constant currency basis. Total ARR includes acquisitions even if there was no comparable ARR in the prior period.
The effects of currency translation are excluded by calculating Total ARR on a constant currency basis. Total ARR includes acquisitions even if there was no comparable ARR in the prior period. We believe that Total ARR provides useful information to investors because it reflects our recurring revenue performance period over period including the effect of acquisitions.
We believe that Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate provide useful information to our investors about our operating performance and allow management and investors to compare our operating performance period over period. Adjusted EPS is also used as a financial measure of performance for our annual incentive compensation.
See Note 14 in the Consolidated Financial Statements for more information on our net periodic pension and postretirement benefit cost. We believe that Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate provide useful information to our investors about our operating performance and allow management and investors to compare our operating performance period over period.
Sales to our two largest distributors in 2023, 2022, and 2021, which are attributable to all three segments, were approximately 20 percent of our total sales. OEMs represent an important growth opportunity. To remain competitive, OEMs need to find the optimal balance of machine cost and performance while reducing their time to market.
Approximately 65 percent of our global sales are transacted through independent distributors. Sales to our two largest distributors in 2024, 2023, and 2022, which are attributable to all three segments, were approximately 20 percent of our total sales. 18 Table of Contents Machine builders continue to represent an important growth opportunity.
Acquisitions increased sales by 1.2 percentage points. Total and organic annual recurring revenue at September 30, 2023, grew approximately 16 percent compared to September 30, 2022. See Annual Recurring Revenue (ARR) for information on this measure. Pricing increased total company sales by approximately 5.5 percentage points, realized in the Intelligent Devices and Software & Control segments.
Total annual recurring revenue at September 30, 2024, grew approximately 16 percent compared to September 30, 2023. Organic annual recurring revenue at September 30, 2024 grew approximately 14 percent compared to September 30, 2023. See Annual Recurring Revenue (ARR) for information on this measure.
Recurring revenue is defined as a revenue stream that is contractual, typically for a period of 12 months or more, and has a high probability of renewal. The probability of renewal is based on historical renewal experience of the individual revenue streams, or management's best estimates if historical renewal experience is not available.
It represents the annual contract value of all active recurring revenue contracts at any point in time. Recurring revenue is defined as a revenue stream that is contractual, typically for a period of 12 months or more, and has a high probability of renewal.
Our measures of Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate may be different from measures used by other companies. These non-GAAP measures should not be considered a substitute for Net income attributable to Rockwell Automation, diluted EPS, and effective tax rate.
Adjusted EPS is also used as a financial measure of performance for our annual incentive compensation. Our measures of Adjusted Income, Adjusted EPS, and Adjusted Effective Tax Rate may be different from measures used by other companies.
Long-term Strategy Our strategy is to expand human possibility. Our vision is to create the future of industrial operations. As the world’s largest company dedicated to industrial automation and digital transformation, our strategy is to bring the Connected Enterprise ® to life.
Long-term Strategy As the world’s largest company dedicated to industrial automation and digital transformation, our strategy is to bring the Connected Enterprise ® to life. We understand and simplify our customers’ complex production challenges and deliver the most valued solutions that combine technology and industry expertise.
We engaged an independent third-party valuation specialist to assist with the fair value allocation of the purchase price paid for the acquisition of Plex to intangible assets.
We engaged an independent third-party valuation specialist to assist with the fair value allocation of the intangible assets assumed through the acquisition of Clearpath. The intangible assets were valued using income approaches, specifically the relief from royalty method and multi-period excess earnings method.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of September 30, 2023, included in Short-term debt was $70.0 million borrowed against the line of credit with an interest rate of 6.29 percent. Also included in Short-term debt as of September 30, 2022 was commercial paper borrowings of $317.0 million with a weighted average interest rate of 3.03 percent and a weighted average maturity period of 22 days.
Biggest changeIn December 2022, Sensia entered into an unsecured $75.0 million line of credit. As of September 30, 2024 and 2023, included in Short-term debt was $70.0 million borrowed against the line of credit with an interest rate of 6.17 percent and 6.29 percent, respectively.
We currently have no plans to repurchase our outstanding fixed-rate instruments before their maturity and, therefore, fluctuations in market interest rates would not have an effect on our results of operations or shareowners’ equity. 36 Table of Contents
We currently have no plans to repurchase our outstanding fixed-rate instruments before their maturity and, therefore, fluctuations in market interest rates would not have an effect on our results of operations or shareowners’ equity. 40 Table of Contents
We recognize the ineffective portion of a derivative’s change in fair value in earnings immediately. There was no impact on earnings due to ineffective hedges in 2023, 2022, or 2021.
We recognize the ineffective portion of a derivative’s change in fair value in earnings immediately. There was no impact on earnings due to ineffective hedges in 2024, 2023, or 2022.
For such assets and liabilities without offsetting foreign currency forward exchange contracts, a 10 percent adverse change in the underlying foreign currency exchange rates would reduce our pre-tax income by approximately $73.9 million. We record all derivatives on the balance sheet at fair value regardless of the purpose for holding them.
For such assets and liabilities without offsetting foreign currency forward exchange contracts, a 10 percent adverse change in the underlying foreign currency exchange rates would reduce our pre-tax income by approximately $61.6 million. We record all derivatives on the balance sheet at fair value regardless of the purpose for holding them.
Contracts are usually denominated in currencies of major industrial countries. The fair value of our foreign currency forward exchange contracts is an asset of $49.2 million and a liability of $11.5 million at September 30, 2023. We enter into these contracts with major financial institutions that we believe to be creditworthy.
Contracts are usually denominated in currencies of major industrial countries. The fair value of our foreign currency forward exchange contracts is an asset of $17.1 million and a liability of $33.5 million at September 30, 2024. We enter into these contracts with major financial institutions that we believe to be creditworthy.
We had outstanding fixed rate long-term and current portion of long-term debt obligations with a carrying value of $2,871.5 million at September 30, 2023, and $3,476.9 million at September 30, 2022. The fair value of this debt was approximately $2,456.0 million at September 30, 2023, and $3,074.5 million at September 30, 2022.
We had outstanding fixed rate long-term and current portion of long-term debt obligations with a carrying value of $2,868.7 million at September 30, 2024, and $2,871.5 million at September 30, 2023. The fair value of this debt was approximately $2,638.5 million at September 30, 2024, and $2,451.2 million at September 30, 2023.
We are exposed to interest rate risk on certain of these debt obligations. Our Short-term debt as of September 30, 2023 and 2022, includes $23.5 million and $42.3 million, respectively, of interest-bearing loans from SLB to Sensia, due December 29, 2023. In December 2022, Sensia entered into an unsecured $75.0 million line of credit.
We are exposed to interest rate risk on certain of these debt obligations. Our Short-term debt as of September 30, 2024, includes commercial paper borrowings of $657.0 million with a weighted average interest rate of 5.14 percent and a weighted average maturity period of 24 days. We had no commercial paper borrowings as of September 30, 2023.
Added
Also included in Short-term debt as of September 30, 2024 and September 30, 2023 was $23.5 million of interest-bearing loans from SLB to Sensia, due April 2025. In April 2024, $18.8 million of new interest-bearing loans from SLB to Sensia were entered into and were due August 2024, extended to April 2025.

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