Emerson Reports Third Quarter 2024 Results; Updates 2024 Outlook

Rhea-AI Summary

Emerson (NYSE: EMR) reported strong Q3 2024 results, with net sales up 11% to $4,380 million and underlying sales growth of 3%. The company's adjusted earnings per share increased 11% to $1.43, while operating cash flow rose 27% to $1,067 million. Emerson updated its fiscal 2024 outlook, projecting net sales growth of ~15% and adjusted EPS of $5.45 - $5.50.

The company also announced progress on its portfolio simplification, including a definitive agreement to exit the Copeland business. Emerson completed the sale of the Copeland Note Receivable for $1.9 billion and expects to close the sale of its 40% equity stake for $1.5 billion by August end. The total after-tax proceeds of $2.9 billion will be used to pay down debt.

Positive

• Net sales increased 11% to $4,380 million in Q3 2024
• Adjusted earnings per share grew 11% to $1.43
• Operating cash flow improved 27% to $1,067 million
• Free cash flow increased 27% to $975 million
• Adjusted segment EBITA margin expanded 20 bps to 27.1%
• Expected net sales growth of ~15% for fiscal 2024
• Projected adjusted EPS of $5.45 - $5.50 for fiscal 2024
• Anticipated $2.9 billion after-tax proceeds from Copeland transactions to reduce debt

Negative

• GAAP earnings per share decreased 46% to $0.60
• Pretax earnings margin contracted 1040 bps to 10.4%
• $0.38 per share loss on Copeland Note Receivable

Financial Analyst

Emerson's Q3 2024 results show solid performance with $4.38 billion in net sales, an 11% increase year-over-year. The company's adjusted EPS grew 11% to $1.43, beating expectations. Notably, free cash flow surged 27% to $975 million, demonstrating strong operational efficiency.

The updated 2024 outlook is positive, with expected net sales growth of ~15% and underlying sales growth of ~6%. The adjusted EPS guidance of $5.45 to $5.50 indicates confidence in continued profitability. The planned $2.9 billion debt reduction from the Copeland transaction proceeds should strengthen Emerson's balance sheet, potentially improving its financial flexibility for future growth initiatives.

Market Research Analyst

Emerson's Q3 results reflect robust demand in process and hybrid markets, driven by a constructive capital expenditure cycle. The 3% growth in underlying orders suggests sustained market momentum. The company's focus on automation, following the Copeland business exit, aligns with industry trends towards increased efficiency and digitalization.

The margin improvement to 27.1% in Adjusted Segment EBITA demonstrates Emerson's ability to leverage its technology and management system effectively. This positions the company well in the competitive automation landscape. Investors should monitor how Emerson's portfolio simplification strategy impacts its market position and growth trajectory in the automation sector.

Legal Expert

The Copeland transaction update provides important information for investors. Emerson has completed the sale of the Copeland Note Receivable, receiving $1.9 billion in pretax cash proceeds. The upcoming sale of the 40% equity stake to Blackstone-managed funds for $1.5 billion is a significant move, expected to close by August-end.

These transactions demonstrate Emerson's strategic realignment and commitment to focusing on its automation portfolio. The planned use of proceeds to reduce debt obligations is a prudent financial decision. Investors should note that while these transactions result in a net pretax gain, they also involve complex accounting treatments, including reporting Copeland's financial results as discontinued operations. This change in reporting structure may affect year-over-year comparisons going forward.

ST. LOUIS, Aug. 7, 2024 /PRNewswire/ -- Emerson (NYSE: EMR) today reported results¹ for its third quarter ended June 30, 2024 and updated its full year outlook for fiscal 2024. Emerson also declared a quarterly cash dividend of $0.525 per share of common stock payable September 10, 2024 to stockholders of record on August 16, 2024.

(dollars in millions, except per share)		2023 Q3	2024 Q3	Change
Underlying Orders2				3 %
Net Sales		$3,946	$4,380	11 %
Underlying Sales3				3 %
Pretax Earnings		$822	$455
Margin		20.8 %	10.4 %	(1040) bps
Adjusted Segment EBITA4		$1,060	$1,189
Margin		26.9 %	27.1 %	20 bps
GAAP Earnings Per Share		$1.12	$0.60	(46) %
Adjusted Earnings Per Share5		$1.29	$1.43	11 %
Operating Cash Flow		$842	$1,067	27 %
Free Cash Flow		$769	$975	27 %

Management Commentary

"Emerson delivered another strong quarter, with solid underlying orders growth and with profitability and cash flow both exceeding expectations," said Emerson President and Chief Executive Officer Lal Karsanbhai. "Demand in process and hybrid markets, led by a constructive capex cycle, continues to meet expectations. Our operating leverage performance demonstrates the benefits of our highly differentiated technology and world-class Emerson Management System, giving us the confidence to execute on our plan for 2024."

Karsanbhai continued, "In the quarter, we also took another important step to simplify our portfolio and enhance our focus as a global leader in automation with the definitive agreement to completely exit the Copeland business. Emerson is creating value for our shareholders as we execute with our higher growth and higher margin automation portfolio."

2024 Outlook

The following tables summarize the fiscal year 2024 guidance framework for continuing operations⁶. The 2024 outlook assumes approximately $300 million returned to shareholders through share repurchases and approximately $1.2 billion of dividend payments. Guidance figures are approximate.

		2024
Net Sales Growth		~15%
Underlying Sales Growth		~6%
Earnings Per Share		$2.82 - $2.87
Amortization of Intangibles		~$1.42
Restructuring and Related Costs		~$0.34
Loss on Copeland Note Receivable		$0.38
Amortization of Acquisition-related Inventory Step-up		$0.38
Acquisition / Divestiture Fees and Related Costs		~$0.24
Divestiture Loss / (Gain), net		($0.03)
Discrete Tax Benefits		($0.10)
Adjusted Earnings Per Share		$5.45 - $5.50
Operating Cash Flow		~$3.2B
Free Cash Flow		~$2.8B

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 amortization of acquisition-related inventory step-up, acquisition/divestiture gains, losses, fees and related costs, discrete tax benefits, an AspenTech Micromine purchase price hedge and write-offs associated with Emerson's Russia exit.

6 With the June 6, 2024 definitive agreement to completely exit its remaining interests in the Copeland joint venture, Emerson will report financial results for the Copeland equity ownership as discontinued operations for all periods presented, beginning in Q3 2024. The earnings from discontinued operations for 2024 are expected to be $0.55 to $0.60 per share, including the after-tax gain on the equity stake in Copeland. The Copeland Note Receivable interest income through June 6, 2024 remains in continuing operations. The pretax loss on the sale of the note receivable, $279M ($217M after-tax), is also reported in continuing operations but excluded from adjusted earnings per share, ($0.38).

Copeland Transaction Update

As of August 2, 2024, Emerson has completed the previously announced sale of the Copeland Note Receivable to Copeland with pretax cash proceeds of $1.9 billion. The sale of the 40% equity stake to private equity funds managed by Blackstone, with pretax cash proceeds of $1.5 billion, is expected to close by the end of August. Emerson intends to use the approximately $2.9 billion after-tax cash proceeds from both transactions to pay down its existing debt obligations. Both transactions are expected to result in a net pretax gain of approximately $0.2 billion.

Conference Call

Today, beginning at 8:00 a.m. Central Time / 9:00 a.m. Eastern Time, Emerson management will discuss the third 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 Russia-Ukraine and other global conflicts, as well as economic and currency conditions, market demand, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, inflation, among others, as set forth in the Company's most recent Annual Report on Form 10-K and subsequent reports filed with the SEC. The outlook contained herein represents the Company's expectation for its consolidated results, other than as noted herein.

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 June 30,				Nine Months Ended June 30,
	2023		2024		2023		2024
Net sales	$   3,946		$   4,380		$ 11,075		$ 12,873
Cost of sales	1,952		2,066		5,660		6,359
SG&A expenses	1,042		1,254		3,072		3,827
Gain on subordinated interest	—		—		—		(79)
Loss on Copeland note receivable	—		279		—		279
Other deductions, net	130		294		359		1,075
Interest expense, net	10		56		111		157
Interest income from related party1	(10)		(24)		(10)		(86)
Earnings from continuing operations before income taxes	822		455		1,883		1,341
Income taxes	168		88		400		266
Earnings from continuing operations	654		367		1,483		1,075
Discontinued operations, net of tax	8,712		(15)		10,979		(88)
Net earnings	9,366		352		12,462		987
Less: Noncontrolling interests in subsidiaries	14		23		(13)		15
Net earnings common stockholders	$   9,352		$      329		$ 12,475		$      972
Earnings common stockholders
Earnings from continuing operations	$      643		$      344		$   1,502		$   1,060
Discontinued operations	8,709		(15)		10,973		(88)
Net earnings common stockholders	$   9,352		$      329		$ 12,475		$      972
Diluted avg. shares outstanding	574.0		574.8		578.1		574.1
Diluted earnings per share common stockholders
Earnings from continuing operations	$1.12		$0.60		$2.60		$1.84
Discontinued operations	15.16		(0.03)		18.96		(0.15)
Diluted earnings per common share	$16.28		$0.57		$21.56		$1.69
	Quarter Ended June 30,				Nine Months Ended June 30,
	2023		2024		2023		2024
Other deductions, net
Amortization of intangibles	$120		$264		$357		$811
Restructuring costs	12		57		41		170
Other	(2)		(27)		(39)		94
Total	$130		$294		$359		$1,075

1 Represents interest on the Copeland note receivable through June 6, 2024.

 

			Table 2
EMERSON AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS, UNAUDITED)
	Sept 30, 2023		June 30, 2024
Assets
Cash and equivalents	$             8,051		$             2,298
Receivables, net	2,518		2,761
Inventories	2,006		2,303
Other current assets	1,244		1,458
Total current assets	13,819		8,820
Property, plant & equipment, net	2,363		2,688
Goodwill	14,480		17,936
Other intangible assets	6,263		10,627
Copeland note receivable and equity investment held-for-sale	3,255		2,908
Other	2,566		2,606
Total assets	$           42,746		$           45,585
Liabilities and equity
Short-term borrowings and current maturities of long-term debt	$               547		$             2,991
Accounts payable	1,275		1,251
Accrued expenses	3,210		3,350
Total current liabilities	5,032		7,592
Long-term debt	7,610		7,111
Other liabilities	3,506		4,194
Equity
Common stockholders' equity	20,689		20,799
Noncontrolling interests in subsidiaries	5,909		5,889
Total equity	26,598		26,688
Total liabilities and equity	$           42,746		$           45,585

 

				Table 3
EMERSON AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS, UNAUDITED)
	Nine Months Ended June 30,
		2023		2024
Operating activities
Net earnings		$          12,462		$              987
Earnings from discontinued operations, net of tax		(10,979)		88
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		780		1,263
Stock compensation		198		203
Amortization of acquisition-related inventory step-up		—		231
Gain on subordinated interest		—		(79)
Loss on Copeland note receivable		—		279
Changes in operating working capital		(359)		(176)
Other, net		(383)		(552)
Cash from continuing operations		1,719		2,244
Cash from discontinued operations		(439)		4
Cash provided by operating activities		1,280		2,248
Investing activities
Capital expenditures		(194)		(251)
Purchases of businesses, net of cash and equivalents acquired		—		(8,342)
Proceeds from subordinated interest		15		79
Proceeds from related party note receivable		918		—
Other, net		(124)		(86)
Cash from continuing operations		615		(8,600)
Cash from discontinued operations		12,485		36
Cash provided by (used in) investing activities		13,100		(8,564)
Financing activities
Net increase (decrease) in short-term borrowings		(1,476)		2,229
Proceeds from short-term borrowings greater than three months		395		322
Payments of short-term borrowings greater than three months		(400)		(100)
Payments of long-term debt		(744)		(547)
Dividends paid		(900)		(901)
Purchases of common stock		(2,000)		(175)
AspenTech purchases of common stock		(100)		(188)
Payment of related party note payable		(918)		—
Other, net		(159)		(57)
Cash provided by (used in) financing activities		(6,302)		583
Effect of exchange rate changes on cash and equivalents		75		(20)
Increase (decrease) in cash and equivalents		8,153		(5,753)
Beginning cash and equivalents		1,804		8,051
Ending cash and equivalents		$            9,957		$           2,298

 

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 June 30,
	2023		2024		Reported		Underlying
Sales
Final Control	$           1,035		$           1,046		1 %		2 %
Measurement & Analytical	913		982		8 %		9 %
Discrete Automation	668		618		(8) %		(6) %
Safety & Productivity	363		351		(3) %		(3) %
Intelligent Devices	$           2,979		$           2,997		1 %		2 %
Control Systems & Software	663		700		6 %		7 %
Test & Measurement	—		355
AspenTech	320		343		7 %		7 %
Software and Control	$              983		$           1,398		42 %		7 %
Eliminations	(16)		(15)
Total	$           3,946		$           4,380		11 %		3 %
Sales Growth by Geography
	Quarter Ended June 30,
Americas	3 %
Europe	4 %
Asia, Middle East & Africa	2 %

 

			Table 4 cont.
	Nine Months Ended June 30,
	2023		2024		Reported		Underlying
Sales
Final Control	$           2,889		$           3,037		5 %		6 %
Measurement & Analytical	2,550		2,942		15 %		17 %
Discrete Automation	1,969		1,863		(5) %		(5) %
Safety & Productivity	1,034		1,038		— %		— %
Intelligent Devices	$           8,442		$           8,880		5 %		6 %
Control Systems & Software	1,892		2,062		9 %		10 %
Test & Measurement	—		1,104
AspenTech	793		878		11 %		11 %
Software and Control	$           2,685		$           4,044		51 %		10 %
Eliminations	(52)		(51)
Total	$         11,075		$         12,873		16 %		7 %
Sales Growth by Geography
	Nine Months Ended June 30,
Americas	5 %
Europe	9 %
Asia, Middle East & Africa	9 %

 

			Table 4 cont.
	Quarter Ended June 30,				Quarter Ended June 30,
	2023				2024
	As Reported (GAAP)		Adjusted EBITA (Non-GAAP)		As Reported (GAAP)		Adjusted EBITA (Non-GAAP)
Earnings
Final Control	$          245		$          266		$          253		$          279
Margins	23.7 %		25.7 %		24.2 %		26.8 %
Measurement & Analytical	257		263		252		266
Margins	28.1 %		28.7 %		25.6 %		27.0 %
Discrete Automation	124		144		109		134
Margins	18.5 %		21.4 %		17.6 %		21.5 %
Safety & Productivity	82		88		79		86
Margins	22.7 %		24.3 %		22.5 %		24.7 %
Intelligent Devices	$          708		$          761		$          693		$          765
Margins	23.7 %		25.5 %		23.1 %		25.5 %
Control Systems & Software	144		151		168		178
Margins	21.8 %		22.8 %		23.9 %		25.2 %
Test & Measurement	—		—		(88)		76
Margins					(24.7) %		21.4 %
AspenTech	27		148		49		170
Margins	8.2 %		46.1 %		14.5 %		50.0 %
Software and Control	$          171		$          299		$          129		$          424
Margins	17.4 %		30.4 %		9.2 %		30.3 %
Corporate items and interest expense, net:
Stock compensation	(56)		(56)		(56)		(47)
Unallocated pension and postretirement costs	42		42		38		38
Corporate and other	(43)		(19)		(38)		(24)
Gain on subordinated interest	—		—		—		—
Loss on Copeland note receivable	—		—		(279)		—
Interest expense, net	(10)		—		(56)		—
Interest income from related party1	10		—		24		—
Pretax Earnings / Adjusted EBITA	$          822		$        1,027		$          455		$        1,156
Margins	20.8 %		26.0 %		10.4 %		26.4 %
Supplemental Total Segment Earnings:
Adjusted Total Segment EBITA			$        1,060				$        1,189
Margins			26.9 %				27.1 %

1 Represents interest on the Copeland note receivable through June 6, 2024.

 

			Table 4 cont.
	Quarter Ended June 30,				Quarter Ended June 30,
	2023				2024
	Amortization of Intangibles1		Restructuring and Related Costs2		Amortization of Intangibles1		Restructuring and Related Costs2
Final Control	$                   22		$                    (1)		$                   21		$                     5
Measurement & Analytical	5		1		11		3
Discrete Automation	8		12		9		16
Safety & Productivity	7		(1)		6		1
Intelligent Devices	$                   42		$                   11		$                   47		$                   25
Control Systems & Software	6		1		6		4
Test & Measurement	—		—		139		25
AspenTech	121		—		121		—
Software and Control	$                 127		$                     1		$                 266		$                   29
Corporate	—		1		—		6	3
Total	$                 169		$                   13		$                 313		$                   60

1 Amortization of intangibles includes $49 and $49 reported in cost of sales for the three months ended June 30, 2023 and 2024, respectively.

2 Restructuring and related costs includes $1 and $3 reported in cost of sales and selling, general and administrative expenses for the three months ended June 30, 2023 and 2024, respectively.

3 Corporate restructuring of $6 for the three months ended June 30, 2024 includes $5 related to integration-related stock compensation expense attributable to NI.

 

	Quarter Ended June 30,
Depreciation and Amortization	2023		2024
Final Control	$                39		$                41
Measurement & Analytical	26		32
Discrete Automation	20		22
Safety & Productivity	15		14
Intelligent Devices	100		109
Control Systems & Software	22		26
Test & Measurement	—		150
AspenTech	123		122
Software and Control	145		298
Corporate	12		10
Total	$              257		$              417

 

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 June 30,
					2023		2024
Stock compensation (GAAP)					$                  (56)		$                  (56)
Integration-related stock compensation expense					—		9	1
Adjusted stock compensation (non-GAAP)					$                  (56)		$                  (47)
					Quarter Ended June 30,
					2023		2024
Corporate and other (GAAP)					$                  (43)		$                  (38)
Corporate restructuring and related costs					1		1
Acquisition / divestiture costs					38		13
National Instruments investment gain					(12)		—
AspenTech Micromine purchase price hedge					(3)		—
Adjusted corporate and other (non-GAAP)					$                  (19)		$                  (24)

1 Integration-related stock compensation expense relates to NI and includes $5 reported as restructuring costs.

 

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, 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, 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 June 30,
	2023		2024
Pretax earnings	$             822		$             455
Percent of sales	20.8 %		10.4 %
Interest expense, net	10		56
Interest income from related party1	(10)		(24)
Amortization of intangibles	169		313
Restructuring and related costs	13		60
Acquisition/divestiture fees and related costs	38		17
National Instruments investment gain	(12)		—
AspenTech Micromine purchase price hedge	(3)		—
Loss on Copeland note receivable	—		279
Adjusted EBITA	$          1,027		$          1,156
Percent of sales	26.0 %		26.4 %
	Quarter Ended June 30,
	2023		2024
GAAP earnings from continuing operations per share	$            1.12		$            0.60
Amortization of intangibles	0.15		0.35
Restructuring and related costs	0.02		0.08
Acquisition/divestiture fees and related costs	0.07		0.02
National Instruments investment gain	(0.02)		—
Interest income on undeployed proceeds from Copeland transaction	(0.05)		—
Loss on Copeland note receivable	—		0.38
Adjusted earnings from continuing operations per share	$            1.29		$            1.43
Less: AspenTech contribution to adjusted earnings per share	(0.11)		(0.14)
Adjusted earnings per share excluding AspenTech contribution	$            1.18		$            1.29

1 Represents interest on the Copeland note receivable through June 6, 2024.

 

Table 6 cont.
Quarter Ended June 30, 2024
	Pretax Earnings		Income Taxes		Earnings from Cont. Ops.		Non-Controlling Interests3		Net Earnings Common Stockholders		Diluted Earnings Per Share
As reported (GAAP)	$         455		$           88		$         367		$           23		$            344		$        0.60
Amortization of intangibles	313	1	74		239		40		199		0.35
Restructuring and related costs	60	2	14		46		—		46		0.08
Acquisition/divestiture fees and related costs	17		2		15		—		15		0.02
Loss on Copeland note receivable	279		62		217		—		217		0.38
Adjusted (non-GAAP)	$      1,124		$         240		$         884		$           63		$            821		$        1.43
Interest expense, net	56
Interest income from related party4	(24)
Adjusted EBITA (non-GAAP)	$      1,156

1 Amortization of intangibles includes $49 reported in cost of sales.
2 Restructuring and related costs includes $3 reported in cost of sales and selling, general and administrative expenses.
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 through June 6, 2024.

 

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 June 30, 2024
	Pretax Earnings		Income Taxes (Benefit)		Earnings from Cont. Ops.		Non-Controlling Interests4		Net Earnings Common Stockholders		Diluted Earnings Per Share
Standalone reporting (GAAP)	$           53	1	$             8		$           45
Other	(1)		(5)		4
Reported in Emerson consolidation (GAAP)	52		3		49		21		28		$        0.05
Adjustments:
Amortization of intangibles	121	2	27		94		40		54		0.09
Adjusted (Non-GAAP)	$         173		$           30		$         143		$           61		$             82		$        0.14
Interest income	(14)	3
Stock compensation	11	3
Adjusted segment EBITA (non-GAAP)	$         170
Reconciliation to Segment EBIT
Pre-tax earnings	$           52
Interest income	(14)	3
Stock compensation	11	3
Segment EBIT (GAAP)	$           49
Amortization of intangibles	121	2
Adjusted segment EBITA (non-GAAP)	$         170

1 Amount reflects AspenTech's pretax earnings for the three months ended June 30, 2024 as reported in its quarterly earnings release 8-K.
2 Amortization of intangibles includes $48 reported in cost of sales.
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 Q3 Underlying Sales Change	Reported	(Favorable) / Unfavorable FX	(Acquisitions) / Divestitures	Underlying
Final Control	1 %	1 %	— %	2 %
Measurement & Analytical	8 %	1 %	— %	9 %
Discrete Automation	(8) %	2 %	— %	(6) %
Safety & Productivity	(3) %	— %	— %	(3) %
Intelligent Devices	1 %	1 %	— %	2 %
Control Systems & Software	6 %	1 %	— %	7 %
Test & Measurement
AspenTech	7 %	— %	— %	7 %
Software and Control	42 %	1 %	(36) %	7 %
Emerson	11 %	1 %	(9) %	3 %
Nine Months Ended June 30, 2024 Underlying Sales Change	Reported	(Favorable) / Unfavorable FX	(Acquisitions) / Divestitures	Underlying
Final Control	5 %	1 %	— %	6 %
Measurement & Analytical	15 %	1 %	1 %	17 %
Discrete Automation	(5) %	— %	— %	(5) %
Safety & Productivity	— %	— %	— %	— %
Intelligent Devices	5 %	1 %	— %	6 %
Control Systems & Software	9 %	— %	1 %	10 %
Test & Measurement
AspenTech	11 %	— %	— %	11 %
Software and Control	51 %	— %	(41) %	10 %
Emerson	16 %	1 %	(10) %	7 %

 

Underlying Growth Guidance	2024 Guidance
Reported (GAAP)	~15%
(Favorable) / Unfavorable FX	~0.5 pts
(Acquisitions) / Divestitures	~(9.5) pts
Underlying (non-GAAP)	~6%

 

2023 Q3 Adjusted Segment EBITA	EBIT	EBIT Margin	Amortization of Intangibles	Restructuring and Related Costs	Adjusted Segment EBITA	Adjusted Segment EBITA Margin
Final Control	$               245	23.7 %	$                 22	$                   (1)	$               266	25.7 %
Measurement & Analytical	257	28.1 %	5	1	263	28.7 %
Discrete Automation	124	18.5 %	8	12	144	21.4 %
Safety & Productivity	82	22.7 %	7	(1)	88	24.3 %
Intelligent Devices	$               708	23.7 %	$                 42	$                  11	$               761	25.5 %
Control Systems & Software	144	21.8 %	6	1	151	22.8 %
Test & Measurement	—	— %	—	—	—	— %
AspenTech	27	8.2 %	121	—	148	46.1 %
Software and Control	$               171	17.4 %	$               127	$                     1	$               299	30.4 %
2024 Q3 Adjusted Segment EBITA	EBIT	EBIT Margin	Amortization of  Intangibles	Restructuring and Related Costs	Adjusted Segment EBITA	Adjusted Segment EBITA Margin
Final Control	$               253	24.2 %	$                 21	$                     5	$               279	26.8 %
Measurement & Analytical	252	25.6 %	11	3	266	27.0 %
Discrete Automation	109	17.6 %	9	16	134	21.5 %
Safety & Productivity	79	22.5 %	6	1	86	24.7 %
Intelligent Devices	$               693	23.1 %	$                 47	$                  25	$               765	25.5 %
Control Systems & Software	168	23.9 %	6	4	178	25.2 %
Test & Measurement	(88)	(24.7) %	139	25	76	21.4 %
AspenTech	49	14.5 %	121	—	170	50.0 %
Software and Control	$               129	9.2 %	$               266	$                  29	$               424	30.3 %

 

Total Adjusted Segment EBITA		2023 Q3	2024 Q3
Pretax earnings (GAAP)		$                 822	$                 455
Margin		20.8 %	10.4 %
Corporate items and interest expense, net		57	367
Amortization of intangibles		169	313
Restructuring and related costs		12	54
Adjusted segment EBITA (non-GAAP)		$              1,060	$              1,189
Margin		26.9 %	27.1 %

 

Free Cash Flow		2023 Q3	2024 Q3		2024E ($ in billions)
Operating cash flow (GAAP)		$                 842	$              1,067		~$3.2
Capital expenditures		(73)	(92)		~(0.4)
Free cash flow (non-GAAP)		$                 769	$                 975		~$2.8

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

FAQ

What were Emerson's (EMR) Q3 2024 financial highlights?

Emerson's Q3 2024 net sales grew 11% to $4,380 million, with underlying sales up 3%. Adjusted EPS increased 11% to $1.43, and operating cash flow rose 27% to $1,067 million.

How has Emerson (EMR) updated its fiscal 2024 outlook?

Emerson updated its fiscal 2024 outlook, projecting net sales growth of ~15%, underlying sales growth of ~6%, and adjusted earnings per share of $5.45 - $5.50.

What progress has Emerson (EMR) made on its Copeland business exit?

Emerson completed the sale of the Copeland Note Receivable for $1.9 billion and expects to close the sale of its 40% equity stake for $1.5 billion by August end, with total after-tax proceeds of $2.9 billion to be used for debt reduction.

What is Emerson's (EMR) dividend payment for Q3 2024?

Emerson declared a quarterly cash dividend of $0.525 per share of common stock, payable on September 10, 2024, to stockholders of record on August 16, 2024.