Emerson Reports First Quarter 2024 Results; Updates 2024 Outlook
- None.
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Insights
Emerson's Q1 report highlights a substantial 22% increase in net sales and a 56% rise in adjusted earnings per share, signaling robust financial health and operational efficiency. This performance, particularly in Test & Measurement, suggests effective integration of acquisitions and strong market demand. The 47% growth in operating cash flow and 51% increase in free cash flow are indicative of a solid liquidity position, enabling strategic maneuvers such as share repurchases and dividend payments. The updated FY2024 guidance, with net sales growth projected between 14.5% and 17.0% and adjusted EPS of $5.30 - $5.45, reflects management's confidence in sustained growth and operational leverage.
However, the significant drop in GAAP earnings per share (55%) may raise concerns about non-operational factors affecting profitability. Investors should scrutinize the reasons behind this discrepancy, such as restructuring costs or acquisition-related expenses, which are excluded from adjusted EPS. The emphasis on returning approximately $1.7 billion to shareholders through repurchases and dividends is a strong signal of shareholder value prioritization, yet it also warrants a closer look at the company's capital allocation strategy to ensure long-term growth and competitiveness.
Emerson's performance must be contextualized within the broader industrial automation and commercial & residential solutions sectors. The reported increase in underlying orders and sales suggests Emerson is capitalizing on the current demand for industrial automation solutions, which has been driven by trends such as increased focus on efficiency and the adoption of Industry 4.0 technologies. Emerson's strategic moves, such as the accelerated synergy plan in Test & Measurement, indicate an aggressive pursuit of market leadership in this segment.
Investors should consider the potential impact of global economic conditions, including currency fluctuations and trade dynamics, on Emerson's international operations. The reported figures exclude significant currency translation effects, which could either pose a risk or offer a benefit depending on future market conditions. Additionally, the company's focus on value creation through strategic acquisitions and divestitures should be monitored for its effectiveness in driving long-term competitive advantage and market share growth.
Emerson's update on fiscal year 2024 guidance, with a focus on operating cash flow and free cash flow, is a positive indicator of the company's economic fortitude. The projected figures suggest that Emerson is expecting to maintain or improve its efficiency in converting revenue into cash, an essential aspect for funding operations and future investments without excessive reliance on external financing.
However, the macroeconomic environment, including inflationary pressures and potential interest rate changes, could influence Emerson's cost structures and capital expenditure plans. The company's ability to maintain margins in such an environment, as indicated by an anticipated increase in adjusted segment EBITA margins, will be critical for investor confidence. The planned return of capital to shareholders, while beneficial in the short term, must be balanced against the need for reinvestment in innovation and expansion to secure long-term economic resilience.
(dollars in millions, except per share) | 2023 Q1 | 2024 Q1 | Change |
Underlying Orders2 | 4 % | ||
Net Sales | 22 % | ||
Underlying Sales3 | 10 % | ||
Pretax Earnings | |||
Margin | 12.5 % | 3.4 % | (910) bps |
Adjusted Segment EBITA4 | |||
Margin | 22.7 % | 24.6 % | 190 bps |
GAAP Earnings Per Share | (55) % | ||
Adjusted Earnings Per Share5 | 56 % | ||
Operating Cash Flow | 47 % | ||
Free Cash Flow | 51 % |
Management Commentary
"Emerson's first quarter results exceeded expectations in key financial metrics including underlying sales, operating leverage and adjusted earnings per share," said Emerson President and Chief Executive Officer Lal Karsanbhai. "Our strong start to the year, continued focus on execution, and resilient process and hybrid demand provide the confidence to update our 2024 outlook."
Karsanbhai continued, "NI, now referred to as Test & Measurement, started the year strong delivering robust sales and margins. We have increased and accelerated our synergy plan in Test & Measurement and remain focused on creating value."
2024 Outlook
The following tables summarize the fiscal year 2024 guidance framework. The 2024 outlook assumes approximately
2024 Q2 | 2024 | |
Net Sales Growth | ||
Underlying Sales Growth | ||
Earnings Per Share | ||
Amortization of Intangibles | ||
Restructuring and Related Costs | ||
Loss on Copeland Equity Method Investment | ||
Amortization of Acquisition-related Inventory Step-up | --- | |
Acquisition / Divestiture Fees and Related Costs | ||
Discrete Tax Benefits | --- | ( |
Adjusted Earnings Per Share | ||
Operating Cash Flow | ||
Free Cash Flow |
1 | Results are presented on a continuing operations basis. |
2 | Underlying orders does not include AspenTech. |
3 | Underlying sales excludes the impact of currency translation, and significant acquisitions and divestitures. |
4 | Adjusted segment EBITA represents segment earnings less restructuring and intangibles amortization expense. |
5 | Adjusted EPS excludes intangibles amortization expense, restructuring and related costs, the income/loss of Emerson's |
Conference Call
Today, beginning at 8:00 a.m. Central Time / 9:00 a.m. Eastern Time, Emerson management will discuss the first quarter results during an investor conference call. Participants can access a live webcast available at www.emerson.com/investors at the time of the call. A replay of the call will be available for 90 days. Conference call slides will be posted in advance of the call on the company website.
About Emerson
Emerson (NYSE: EMR) is a global technology and software company providing innovative solutions for the world's essential industries. Through its leading automation portfolio, including its majority stake in AspenTech, Emerson helps hybrid, process and discrete manufacturers optimize operations, protect personnel, reduce emissions and achieve their sustainability goals. For more information, visit Emerson.com.
Forward-Looking and Cautionary Statements
Statements in this press release that are not strictly historical may be "forward-looking" statements, which involve risks and uncertainties, and Emerson undertakes no obligation to update any such statements to reflect later developments. These risks and uncertainties include the scope, duration and ultimate impacts of the
Emerson uses our Investor Relations website, www.Emerson.com/investors, as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts and social media. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.
Investors: | Media: |
Colleen Mettler | Joseph Sala / Greg Klassen |
(314) 553-2197 | Joele Frank, Wilkinson Brimmer Katcher |
(212) 355-4449 |
(tables attached)
Table 1 | |||
EMERSON AND SUBSIDIARIES | |||
CONSOLIDATED OPERATING RESULTS | |||
(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED) | |||
Quarter Ended Dec 31 | |||
2022 | 2023 | ||
Net sales | $ 3,373 | $ 4,117 | |
Cost and expenses | |||
Cost of sales | 1,753 | 2,201 | |
SG&A expenses | 1,030 | 1,277 | |
Other deductions, net | 120 | 487 | |
Interest expense, net | 48 | 44 | |
Interest income from related party1 | — | (31) | |
Earnings from continuing operations before income taxes | 422 | 139 | |
Income taxes | 98 | 7 | |
Earnings from continuing operations | 324 | 132 | |
Discontinued operations, net of tax | 2,002 | — | |
Net earnings | 2,326 | 132 | |
Less: Noncontrolling interests in subsidiaries | (5) | (10) | |
Net earnings common stockholders | $ 2,331 | $ 142 | |
Earnings common stockholders | |||
Earnings from continuing operations | $ 329 | $ 142 | |
Discontinued operations | 2,002 | — | |
Net earnings common stockholders | $ 2,331 | $ 142 | |
Diluted avg. shares outstanding | 586.7 | 573.3 | |
Diluted earnings per share common stockholders | |||
Earnings from continuing operations | $ 0.56 | $ 0.25 | |
Discontinued operations | 3.41 | — | |
Diluted earnings per common share | $ 3.97 | $ 0.25 | |
Quarter Ended Dec 31 | |||
2022 | 2023 | ||
Other deductions, net | |||
Amortization of intangibles | $ 118 | $ 274 | |
Restructuring costs | 10 | 83 | |
Other | (8) | 130 | |
Total | $ 120 | $ 487 | |
1 Represents interest on the Copeland note receivable | |||
Table 2 | |||
EMERSON AND SUBSIDIARIES | |||
CONSOLIDATED BALANCE SHEETS | |||
(DOLLARS IN MILLIONS, UNAUDITED) | |||
Sept 30, 2023 | Dec 31, 2023 | ||
Assets | |||
Cash and equivalents | $ 8,051 | $ 2,076 | |
Receivables, net | 2,518 | 2,759 | |
Inventories | 2,006 | 2,432 | |
Other current assets | 1,244 | 1,399 | |
Total current assets | 13,819 | 8,666 | |
Property, plant & equipment, net | 2,363 | 2,701 | |
Goodwill | 14,480 | 17,983 | |
Other intangible assets | 6,263 | 11,270 | |
Copeland note receivable and equity investment | 3,255 | 3,253 | |
Other | 2,566 | 2,640 | |
Total assets | $ 42,746 | $ 46,513 | |
Liabilities and equity | |||
Short-term borrowings and current maturities of long-term debt | $ 547 | $ 3,227 | |
Accounts payable | 1,275 | 1,234 | |
Accrued expenses | 3,210 | 3,304 | |
Total current liabilities | 5,032 | 7,765 | |
Long-term debt | 7,610 | 7,632 | |
Other liabilities | 3,506 | 4,561 | |
Equity | |||
Common stockholders' equity | 20,689 | 20,674 | |
Noncontrolling interests in subsidiaries | 5,909 | 5,881 | |
Total equity | 26,598 | 26,555 | |
Total liabilities and equity | $ 42,746 | $ 46,513 | |
Table 3 | ||||
EMERSON AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(DOLLARS IN MILLIONS, UNAUDITED) | ||||
Three Months Ended Dec 31 | ||||
2022 | 2023 | |||
Operating activities | ||||
Net earnings | $ 2,326 | $ 132 | ||
Earnings from discontinued operations, net of tax | (2,002) | — | ||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||
Depreciation and amortization | 260 | 422 | ||
Stock compensation | 102 | 74 | ||
Amortization of acquisition-related inventory step-up | — | 231 | ||
Changes in operating working capital | (289) | (247) | ||
Other, net | (95) | (168) | ||
Cash from continuing operations | 302 | 444 | ||
Cash from discontinued operations | 116 | (29) | ||
Cash provided by operating activities | 418 | 415 | ||
Investing activities | ||||
Capital expenditures | (59) | (77) | ||
Purchases of businesses, net of cash and equivalents acquired | — | (8,339) | ||
Proceeds from subordinated interest | 15 | — | ||
Other, net | (23) | (37) | ||
Cash from continuing operations | (67) | (8,453) | ||
Cash from discontinued operations | 2,953 | 1 | ||
Cash provided by (used in) investing activities | 2,886 | (8,452) | ||
Financing activities | ||||
Net increase (decrease) in short-term borrowings | (539) | 2,647 | ||
Payments of long-term debt | (9) | — | ||
Dividends paid | (306) | (300) | ||
Purchases of common stock | (2,000) | (175) | ||
AspenTech purchases of common stock | — | (72) | ||
Other, net | (41) | (45) | ||
Cash provided by (used in) financing activities | (2,895) | 2,055 | ||
Effect of exchange rate changes on cash and equivalents | 58 | 7 | ||
Increase (decrease) in cash and equivalents | 467 | (5,975) | ||
Beginning cash and equivalents | 1,804 | 8,051 | ||
Ending cash and equivalents | $ 2,271 | $ 2,076 | ||
Table 4 | |||
EMERSON AND SUBSIDIARIES | |||
SEGMENT SALES AND EARNINGS | |||
(DOLLARS IN MILLIONS, UNAUDITED) | |||
The following tables show results for the Company's segments on an adjusted segment EBITA basis and are intended to supplement the Company's results of operations, including its segment earnings which are defined as earnings before interest and taxes. The Company defines adjusted segment and total segment EBITA as segment earnings excluding intangibles amortization expense, and restructuring and related expense. Adjusted segment and total segment EBITA, and adjusted segment and total segment EBITA margin are measures used by management and may be useful for investors to evaluate the Company's segments' operational performance. | |||
Quarter Ended Dec 31 | ||||||||
2022 | 2023 | Reported | Underlying | |||||
Sales | ||||||||
Final Control | $ 862 | $ 940 | 9 % | 9 % | ||||
Measurement & Analytical | 749 | 947 | 26 % | 28 % | ||||
Discrete Automation | 618 | 613 | (1) % | (2) % | ||||
Safety & Productivity | 310 | 322 | 4 % | 3 % | ||||
Intelligent Devices | $ 2,539 | $ 2,822 | 11 % | 11 % | ||||
Control Systems & Software | 606 | 675 | 11 % | 11 % | ||||
Test & Measurement | — | 382 | — % | — % | ||||
AspenTech | 243 | 257 | 6 % | 6 % | ||||
Software and Control | $ 849 | $ 1,314 | 55 % | 9 % | ||||
Eliminations | (15) | (19) | ||||||
Total | $ 3,373 | $ 4,117 | 22 % | 10 % | ||||
Sales Growth by Geography | ||||||
Quarter Ended | ||||||
8 % | ||||||
10 % | ||||||
15 % | ||||||
Table 4 cont. | |||||||
Quarter Ended Dec 31 | Quarter Ended Dec 31 | ||||||
2022 | 2023 | ||||||
As Reported | Adjusted EBITA | As Reported | Adjusted EBITA | ||||
Earnings | |||||||
Final Control | $ 158 | $ 184 | $ 194 | $ 223 | |||
Margins | 18.4 % | 21.4 % | 20.6 % | 23.6 % | |||
Measurement & Analytical | 175 | 181 | 235 | 258 | |||
Margins | 23.4 % | 24.1 % | 24.9 % | 27.3 % | |||
Discrete Automation | 121 | 129 | 97 | 116 | |||
Margins | 19.6 % | 21.0 % | 15.8 % | 18.9 % | |||
Safety & Productivity | 63 | 69 | 68 | 74 | |||
Margins | 20.4 % | 22.4 % | 21.1 % | 23.1 % | |||
Intelligent Devices | $ 517 | $ 563 | $ 594 | $ 671 | |||
Margins | 20.4 % | 22.2 % | 21.0 % | 23.8 % | |||
Control Systems & Software | 107 | 114 | 149 | 155 | |||
Margins | 17.6 % | 18.7 % | 22.1 % | 23.1 % | |||
Test & Measurement | — | — | (78) | 101 | |||
Margins | — % | — % | (20.4) % | 26.5 % | |||
AspenTech | (33) | 88 | (35) | 87 | |||
Margins | (13.6) % | 36.6 % | (13.7) % | 33.6 % | |||
Software and Control | $ 74 | $ 202 | $ 36 | $ 343 | |||
Margins | 8.7 % | 23.8 % | 2.8 % | 26.1 % | |||
Corporate items and interest expense, net: | |||||||
Stock compensation | (102) | (102) | (74) | (44) | |||
Unallocated pension and postretirement costs | 45 | 45 | 31 | 31 | |||
Corporate and other | (64) | (44) | (399) | (38) | |||
Loss on Copeland equity method investment | — | — | (36) | — | |||
Interest expense, net | (48) | — | (44) | — | |||
Interest income from related party1 | — | — | 31 | — | |||
Pretax Earnings / Adjusted EBITA | $ 422 | $ 664 | $ 139 | $ 963 | |||
Margins | 12.5 % | 19.7 % | 3.4 % | 23.4 % | |||
Supplemental Total Segment Earnings: | |||||||
Adjusted Total Segment EBITA | $ 765 | $ 1,014 | |||||
Margins | 22.7 % | 24.6 % | |||||
1 Represents interest on the Copeland note receivable. | |||||||
Table 4 cont. | ||||||||
Quarter Ended Dec 31 | Quarter Ended Dec 31 | |||||||
2022 | 2023 | |||||||
Amortization of Intangibles1 | Restructuring and Related Costs2 | Amortization of Intangibles1 | Restructuring and Related Costs2 | |||||
Final Control | $ 22 | $ 4 | $ 22 | $ 7 | ||||
Measurement & Analytical | 5 | 1 | 20 | 3 | ||||
Discrete Automation | 7 | 1 | 9 | 10 | ||||
Safety & Productivity | 6 | — | 6 | — | ||||
Intelligent Devices | $ 40 | $ 6 | $ 57 | $ 20 | ||||
Control Systems & Software | 6 | 1 | 5 | 1 | ||||
Test & Measurement | — | — | 139 | 40 | ||||
AspenTech | 121 | — | 122 | — | ||||
Software and Control | $ 127 | $ 1 | $ 266 | $ 41 | ||||
Corporate | — | 8 | — | 26 | 3 | |||
Total | $ 167 | $ 15 | $ 323 | $ 87 | ||||
1 Amortization of intangibles includes | ||||||||
2 Restructuring and related costs includes | ||||||||
3 Corporate restructuring of | ||||||||
Quarter Ended Dec 31 | |||
Depreciation and Amortization | 2022 | 2023 | |
Final Control | $ 45 | $ 40 | |
Measurement & Analytical | 30 | 40 | |
Discrete Automation | 21 | 22 | |
Safety & Productivity | 14 | 14 | |
Intelligent Devices | 110 | 116 | |
Control Systems & Software | 21 | 21 | |
Test & Measurement | — | 151 | |
AspenTech | 123 | 123 | |
Software and Control | 144 | 295 | |
Corporate | 6 | 11 | |
Total | $ 260 | $ 422 | |
Table 5 | ||||||||
EMERSON AND SUBSIDIARIES ADJUSTED CORPORATE AND OTHER SUPPLEMENTAL (DOLLARS IN MILLIONS, UNAUDITED) | ||||||||
The following table shows the Company's stock compensation and corporate and other expenses on an adjusted basis. The Company's definition of adjusted stock compensation excludes integration-related stock compensation expense. The Company's definition of adjusted corporate and other excludes corporate restructuring and related costs, first year purchase accounting related items and transaction fees, and certain gains, losses or impairments. This metric is useful for reconciling from total adjusted segment EBITA to the Company's consolidated adjusted EBITA.
| ||||||||
Quarter Ended Dec 31 | ||||||||
2022 | 2023 | |||||||
Stock compensation (GAAP) | $ (102) | $ (74) | ||||||
Integration-related stock compensation expense | — | 30 | 1 | |||||
Adjusted stock compensation (non-GAAP) | $ (102) | $ (44) | ||||||
Quarter Ended Dec 31 | ||||||||
2022 | 2023 | |||||||
Corporate and other (GAAP) | $ (64) | $ (399) | ||||||
Corporate restructuring and related costs | 8 | — | ||||||
Acquisition / divestiture costs | — | 130 | ||||||
Amortization of acquisition-related inventory step-up | — | 231 | ||||||
Russia business exit | 47 | — | ||||||
AspenTech Micromine purchase price hedge | (35) | — | ||||||
Adjusted corporate and other (non-GAAP) | $ (44) | $ (38) | ||||||
1 Integration-related stock compensation expense relates to NI and includes | ||||||||
Table 6 | |||
EMERSON AND SUBSIDIARIES | |||
ADJUSTED EBITA & EPS SUPPLEMENTAL | |||
(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED) | |||
The following tables, which show results on an adjusted EBITA basis and diluted earnings per share on an adjusted basis, are intended to supplement the Company's discussion of its results of operations herein. The Company defines adjusted EBITA as earnings excluding interest expense, net, income taxes, intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction fees, gains or losses on the Copeland equity method investment, and certain gains, losses or impairments. Adjusted earnings per share excludes intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction-related costs, gains or losses on the Copeland equity method investment, and certain gains, losses or impairments. Adjusted EBITA, adjusted EBITA margin, and adjusted earnings per share are measures used by management and may be useful for investors to evaluate the Company's operational performance. | |||
Quarter Ended Dec 31 | |||
2022 | 2023 | ||
Pretax earnings | $ 422 | $ 139 | |
Percent of sales | 12.5 % | 3.4 % | |
Interest expense, net | 48 | 44 | |
Interest income from related party1 | — | (31) | |
Amortization of intangibles | 167 | 323 | |
Restructuring and related costs | 15 | 87 | |
Acquisition/divestiture fees and related costs | — | 134 | |
Amortization of acquisition-related inventory step-up | — | 231 | |
Loss on Copeland equity method investment | — | 36 | |
47 | — | ||
AspenTech Micromine purchase price hedge | (35) | — | |
Adjusted EBITA | $ 664 | $ 963 | |
Percent of sales | 19.7 % | 23.4 % | |
Quarter Ended Dec 31 | |||
2022 | 2023 | ||
GAAP earnings from continuing operations per share | $ 0.56 | $ 0.25 | |
Amortization of intangibles | 0.15 | 0.36 | |
Restructuring and related costs | 0.02 | 0.12 | |
Acquisition/divestiture fees and related costs | — | 0.17 | |
Amortization of acquisition-related inventory step-up | — | 0.38 | |
Loss on Copeland equity method investment | — | 0.04 | |
Discrete taxes | — | (0.10) | |
0.08 | — | ||
AspenTech Micromine purchase price hedge | (0.03) | — | |
Adjusted earnings from continuing operations per share | $ 0.78 | $ 1.22 | |
Less: AspenTech contribution to adjusted earnings per share | (0.07) | ||
Adjusted earnings per share excluding AspenTech contribution | $ 1.15 | ||
1 Represents interest on the Copeland note receivable | |||
Table 6 cont. | |||||||||||
Quarter Ended December 31, 2023 | |||||||||||
Pretax | Income | Earnings | Non-Controlling Interests3 | Net | Diluted | ||||||
As reported (GAAP) | $ 139 | $ 7 | $ 132 | $ (10) | $ 142 | $ 0.25 | |||||
Amortization of intangibles | 323 | 1 | 74 | 249 | 41 | 208 | 0.36 | ||||
Restructuring and related costs | 87 | 2 | 18 | 69 | — | 69 | 0.12 | ||||
Acquisition/divestiture fees and related costs | 134 | 38 | 96 | — | 96 | 0.17 | |||||
Amortization of acquisition-related inventory step-up | 231 | 14 | 217 | — | 217 | 0.38 | |||||
Loss on Copeland equity method investment | 36 | 9 | 27 | — | 27 | 0.04 | |||||
Discrete taxes | — | 57 | (57) | — | (57) | (0.10) | |||||
Adjusted (non-GAAP) | $ 950 | $ 217 | $ 733 | $ 31 | $ 702 | $ 1.22 | |||||
Interest expense, net | 44 | ||||||||||
Interest income from related party4 | (31) | ||||||||||
Adjusted EBITA (non-GAAP) | $ 963 | ||||||||||
1 Amortization of intangibles includes | |||||||||||
2 Restructuring and related costs includes | |||||||||||
3 Represents the non-controlling interest in AspenTech applied to AspenTech's share of each adjustment presented herein and eliminated from Emerson's consolidated results. | |||||||||||
4 Represents interest on the Copeland note receivable. | |||||||||||
Table 7 |
EMERSON AND SUBSIDIARIES |
ASPENTECH CONTRIBUTION TO EMERSON RESULTS SUPPLEMENTAL |
(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED) |
The following tables reconcile the financial results of AspenTech reported to its shareholders with the amounts included in Emerson's consolidated financial results. Emerson currently owns approximately 57 percent of the common shares outstanding of AspenTech, a separately traded public company (NASDAQ: AZPN), and consolidates AspenTech in its financial results. The 43 percent non-controlling interest in AspenTech is removed from Emerson's net earnings common stockholders through the non-controlling interest line item. AspenTech is also one of Emerson's segments and its GAAP segment earnings is reconciled below to its consolidated impact to clarify that certain items are reported outside of its segment earnings within Emerson corporate, including interest income and stock compensation. |
Quarter Ended December 31, 2023 | |||||||||||
Pretax | Income | Earnings | Non-Controlling Interests4 | Net | Diluted | ||||||
Standalone reporting (GAAP) | $ (37) | 1 | $ (15) | $ (22) | |||||||
Other | (2) | — | (2) | ||||||||
Reported in Emerson consolidation (GAAP) | (39) | (15) | (24) | (10) | (14) | $ (0.02) | |||||
Adjustments: | |||||||||||
Amortization of intangibles | 122 | 2 | 27 | 95 | 41 | 54 | 0.09 | ||||
Adjusted (Non-GAAP) | $ 83 | $ 12 | $ 71 | $ 31 | $ 40 | $ 0.07 | |||||
Interest income | (12) | 3 | |||||||||
Stock compensation | 16 | 3 | |||||||||
Adjusted segment EBITA (non-GAAP) | $ 87 | ||||||||||
Reconciliation to Segment EBIT | |||||||||||
Pre-tax earnings | $ (39) | ||||||||||
Interest income | (12) | 3 | |||||||||
Stock compensation | 16 | 3 | |||||||||
Segment EBIT (GAAP) | $ (35) | ||||||||||
Amortization of intangibles | 122 | 2 | |||||||||
Adjusted segment EBITA (non-GAAP) | $ 87 | ||||||||||
1 Amount reflects AspenTech's pretax earnings for the three months ended December 31, 2023 as reported in its quarterly earnings release 8-K. | |||||||||||
2 Amortization of intangibles includes | |||||||||||
3 Reported in Emerson corporate line items. | |||||||||||
4 Represents the non-controlling interest in AspenTech applied to each adjustment presented herein and eliminated from Emerson's consolidated results. | |||||||||||
Reconciliations of Non-GAAP Financial Measures & Other | Table 8 | ||||||
Reconciliations of Non-GAAP measures with the most directly comparable GAAP measure (dollars in millions, except per share amounts). See tables 4 through 7 for additional non-GAAP reconciliations. | |||||||
2024 Q1 Underlying Sales Change | Reported | (Favorable) / | (Acquisitions) | Divestitures | Underlying |
Final Control | 9 % | (1) % | — % | 1 % | 9 % |
Measurement & Analytical | 26 % | — % | — % | 2 % | 28 % |
Discrete Automation | (1) % | (1) % | — % | — % | (2) % |
Safety & Productivity | 4 % | (1) % | — % | — % | 3 % |
Intelligent Devices | 11 % | (1) % | — % | 1 % | 11 % |
Control Systems & Software | 11 % | (1) % | — % | 1 % | 11 % |
Test & Measurement | — % | — % | — % | — % | — % |
AspenTech | 6 % | — % | — % | — % | 6 % |
Software and Control | 55 % | (1) % | (46) % | 1 % | 9 % |
Emerson | 22 % | (1) % | (12) % | 1 % | 10 % |
Underlying Growth Guidance | 2024 Q2 | 2024 Guidance |
Reported (GAAP) | ||
(Favorable) / Unfavorable FX | ~- pts | ~- pts |
(Acquisitions) | ~(9) pts | (10.0) - (10.5) pts |
Divestitures | ~- pts | ~- pts |
Underlying (non-GAAP) |
2023 Q1 Adjusted Segment EBITA | EBIT | EBIT Margin | Amortization of Intangibles | Restructuring | Adjusted | Adjusted |
Final Control | $ 158 | 18.4 % | $ 22 | $ 4 | $ 184 | 21.4 % |
Measurement & Analytical | 175 | 23.4 % | 5 | 1 | 181 | 24.1 % |
Discrete Automation | 121 | 19.6 % | 7 | 1 | 129 | 21.0 % |
Safety & Productivity | 63 | 20.4 % | 6 | — | 69 | 22.4 % |
Intelligent Devices | $ 517 | 20.4 % | $ 40 | $ 6 | $ 563 | 22.2 % |
Control Systems & Software | 107 | 17.6 % | 6 | 1 | 114 | 18.7 % |
Test & Measurement | — | — % | — | — | — | — % |
AspenTech | (33) | (13.6) % | 121 | — | 88 | 36.6 % |
Software and Control | $ 74 | 8.7 % | $ 127 | $ 1 | $ 202 | 23.8 % |
2024 Q1 Adjusted Segment EBITA | EBIT | EBIT Margin | Amortization | Restructuring | Adjusted | Adjusted |
Final Control | $ 194 | 20.6 % | $ 22 | $ 7 | $ 223 | 23.6 % |
Measurement & Analytical | 235 | 24.9 % | 20 | 3 | 258 | 27.3 % |
Discrete Automation | 97 | 15.8 % | 9 | 10 | 116 | 18.9 % |
Safety & Productivity | 68 | 21.1 % | 6 | — | 74 | 23.1 % |
Intelligent Devices | $ 594 | 21.0 % | $ 57 | $ 20 | $ 671 | 23.8 % |
Control Systems & Software | 149 | 22.1 % | 5 | 1 | 155 | 23.1 % |
Test & Measurement | (78) | (20.4) % | 139 | 40 | 101 | 26.5 % |
AspenTech | (35) | (13.7) % | 122 | — | 87 | 33.6 % |
Software and Control | $ 36 | 2.8 % | $ 266 | $ 41 | $ 343 | 26.1 % |
Total Adjusted Segment EBITA | 2023 Q1 | 2024 Q1 | |
Pretax earnings (GAAP) | $ 422 | $ 139 | |
Margin | 12.5 % | 3.4 % | |
Corporate items and interest expense, net | 169 | 491 | |
Amortization of intangibles | 167 | 323 | |
Restructuring and related costs | 7 | 61 | |
Adjusted segment EBITA (non-GAAP) | $ 765 | $ 1,014 | |
Margin | 22.7 % | 24.6 % |
Free Cash Flow | 2023 Q1 | 2024 Q1 | 2024E ($ in billions) | |||
Operating cash flow (GAAP) | $ 302 | $ 444 | ||||
Capital expenditures | (59) | (77) | ~(0.4) | |||
Free cash flow (non-GAAP) | $ 243 | $ 367 | ||||
Note 1: Underlying sales and orders exclude the impact of currency translation and significant acquisitions and divestitures. |
Note 2: All fiscal year 2024E figures are approximate, except where range is given. |
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SOURCE Emerson
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