ST.
LOUIS, May 3, 2023 /PRNewswire/ -- Emerson (NYSE:
EMR) today reported results for its second quarter ended
March 31, 2023 and updated its full year outlook for fiscal
2023, which are presented on a continuing operations basis. Emerson
also declared a quarterly cash dividend of $0.52 per share of common stock payable
June 9, 2023 to stockholders of
record May 12, 2023.
(dollars in
millions, except per share)
|
2022
Q2
|
2023
Q2
|
Change
|
Underlying
Orders1
|
|
|
7 %
|
Net Sales
|
$3,291
|
$3,756
|
14 %
|
Underlying
Sales2
|
|
|
14 %
|
Pretax
Earnings
|
$509
|
$639
|
|
Margin
|
15.5 %
|
17.0 %
|
150
bps
|
Adjusted Segment
EBITA3
|
$703
|
$924
|
|
Margin
|
21.4 %
|
24.6 %
|
320
bps
|
GAAP Earnings Per
Share
|
$0.72
|
$0.92
|
28 %
|
Adjusted Earnings Per
Share4
|
$0.87
|
$1.09
|
25 %
|
Operating Cash
Flow
|
$379
|
$575
|
51 %
|
Free Cash
Flow
|
$312
|
$513
|
64 %
|
Management Commentary
"Emerson's outstanding second quarter results were driven by
strong end market demand and excellent operational execution from
our global teams," said Emerson
President and Chief Executive Officer Lal Karsanbhai.
"Underlying sales growth, operational leverage and earnings
exceeded our expectations, a testament to the strength of our
people, technology, and the Emerson Management System."
"As we accelerate our growth as a leading automation company, we
continue to execute on our strategic vision, including our recent
definitive agreement to purchase NI, a leader in test and
measurement automation," Karsanbhai continued. "NI's best-in-class
technology and software will accelerate Emerson's progress toward a
cohesive, higher growth and higher margin automation portfolio,
diversifying Emerson into attractive discrete markets."
2023 Outlook
The following tables summarize the fiscal year 2023 guidance
framework for continuing operations5. The 2023 outlook
includes $2 billion returned to
shareholders through share repurchases completed in the first
quarter and approximately $1.2
billion of dividend payments. Guidance figures are
approximate.
|
2023
Q3
|
2023
|
Net Sales
Growth
|
10.5% -
12.5%
|
9% - 10.5%
|
Underlying Sales
Growth
|
10% - 12%
|
8.5% - 10%
|
Earnings Per
Share
|
$0.92 -
$0.96
|
$3.58 -
$3.68
|
Amortization of
Intangibles
|
~$0.15
|
~$0.61
|
Restructuring /
Related Costs
|
~$0.03
|
~$0.12
|
Russia Exit
Costs
|
---
|
$0.08
|
AspenTech Micromine
Purchase Price Hedge
|
---
|
~($0.02)
|
Acquisition /
Divestiture Fees
|
~$0.03
|
~$0.06
|
NI Investment
Gain
|
---
|
($0.05)
|
Interest on Note
Receivable From Climate Technologies
|
~($0.02)
|
~($0.06)
|
Interest Income on
Climate Technologies Undeployed Proceeds
|
~($0.04)
|
~($0.17)
|
Adjusted Earnings Per
Share
|
$1.07 -
$1.11
|
$4.15 -
$4.25
|
Operating Cash
Flow
|
|
~$2.5B
|
Free Cash
Flow
|
|
~$2.2B
|
1 Underlying orders does not include
AspenTech.
|
2 Underlying
sales excludes the impact of currency translation, and acquisitions
and divestitures including heritage AspenTech and Emerson's
businesses contributed to AspenTech.
|
3 Adjusted segment EBITA represents
segment earnings less restructuring and intangibles amortization
expense.
|
4 Adjusted EPS excludes
restructuring, NI investment gains, acquisition/divestiture costs,
write-offs associated with Emerson's announced Russia exit, an
AspenTech Micromine purchase price hedge and intangibles
amortization expense.
|
5 The
Company's 2023 continuing operations after the Climate Technologies
divestiture (assumed to close May 31, 2023 for the purposes of
guidance) will include interest income from the $2.25 billion note
receivable from Climate Technologies and reflect the 45% common
equity ownership in the income, or loss, of Climate Technologies.
Emerson will not control Climate Technologies post-closing and is
therefore unable to estimate the amount of its 45% share of Climate
Technologies' post-close results and this has been excluded from
guidance. The effect of Emerson's 45% share of Climate Technologies
is expected to be immaterial to post-closing cash flows. On a
discontinued operations GAAP basis, Emerson expects third quarter
EPS of $14 - $16 and fiscal 2023 EPS of $18 - $20.
|
Conference Call
Today, beginning at 7:00 a.m. Central
Time / 8:00 a.m. Eastern Time,
Emerson management will discuss the second 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 Company's ability to successfully
complete on the terms and conditions contemplated, and the
financial impact of, the proposed Climate Technologies transaction
and the proposed National Instruments transaction, the scope,
duration and ultimate impacts of the COVID-19 pandemic and the
Russia-Ukraine conflict, as well as economic and
currency conditions, market demand, including related to the
pandemic and oil and gas price declines and volatility, 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.
|
|
|
|
|
Table
1
|
EMERSON AND
SUBSIDIARIES
|
CONSOLIDATED OPERATING
RESULTS
|
(AMOUNTS IN MILLIONS
EXCEPT PER SHARE, UNAUDITED)
|
|
|
|
|
|
|
|
Quarter Ended March
31
|
|
Percent
|
|
2022
|
|
2023
|
|
Change
|
|
|
|
|
|
|
Net
sales
|
$3,291
|
|
$3,756
|
|
14 %
|
Cost of sales
|
1,815
|
|
1,955
|
|
|
SG&A expenses
|
888
|
|
1,000
|
|
|
Other deductions,
net
|
28
|
|
109
|
|
|
Interest expense,
net
|
51
|
|
53
|
|
|
Earnings from
continuing operations before income taxes
|
509
|
|
639
|
|
26 %
|
Income taxes
|
80
|
|
134
|
|
|
Earnings from
continuing operations
|
429
|
|
505
|
|
18 %
|
Discontinued
operations, net of tax
|
246
|
|
265
|
|
|
Net
earnings
|
675
|
|
770
|
|
|
Less: Noncontrolling
interests in subsidiaries
|
1
|
|
(22)
|
|
|
Net earnings common
stockholders
|
$674
|
|
$792
|
|
18 %
|
|
|
|
|
|
|
Earnings common
stockholders
|
|
|
|
|
|
Earnings from
continuing operations
|
$428
|
|
$530
|
|
24 %
|
Discontinued
operations
|
246
|
|
262
|
|
|
Net earnings common
stockholders
|
$674
|
|
$792
|
|
18 %
|
|
|
|
|
|
|
Diluted avg. shares
outstanding
|
596.5
|
|
573.6
|
|
|
|
|
|
|
|
|
Diluted earnings per
share common stockholders
|
|
|
|
|
|
Earnings from
continuing operations
|
$0.72
|
|
$0.92
|
|
28 %
|
Discontinued
operations
|
0.41
|
|
0.46
|
|
|
Diluted earnings per
common share
|
$1.13
|
|
$1.38
|
|
22 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March
31
|
|
|
|
2022
|
|
2023
|
|
|
Other deductions,
net
|
|
|
|
|
|
Amortization of
intangibles
|
$57
|
|
$119
|
|
|
Restructuring
costs
|
9
|
|
19
|
|
|
Other
|
(38)
|
|
(29)
|
|
|
Total
|
$28
|
|
$109
|
|
|
|
|
|
|
|
Table
2
|
EMERSON AND
SUBSIDIARIES
|
CONSOLIDATED OPERATING
RESULTS
|
(AMOUNTS IN MILLIONS
EXCEPT PER SHARE, UNAUDITED)
|
|
|
|
|
|
|
|
Six Months Ended March
31
|
|
Percent
|
|
2022
|
|
2023
|
|
Change
|
|
|
|
|
|
|
Net
sales
|
$6,447
|
|
$7,129
|
|
11 %
|
Cost of sales
|
3,556
|
|
3,708
|
|
|
SG&A expenses
|
1,737
|
|
2,030
|
|
|
Gain on
subordinated interest
|
(453)
|
|
—
|
|
|
Other deductions,
net
|
66
|
|
229
|
|
|
Interest expense,
net
|
90
|
|
101
|
|
|
Earnings from
continuing operations before income taxes
|
1,451
|
|
1,061
|
|
(27) %
|
Income taxes
|
276
|
|
232
|
|
|
Earnings from
continuing operations
|
1,175
|
|
829
|
|
(29) %
|
Discontinued
operations, net of tax
|
395
|
|
2,267
|
|
|
Net
earnings
|
1,570
|
|
3,096
|
|
|
Less: Noncontrolling
interests in subsidiaries
|
—
|
|
(27)
|
|
|
Net earnings common
stockholders
|
$1,570
|
|
$3,123
|
|
99 %
|
|
|
|
|
|
|
Earnings common
stockholders
|
|
|
|
|
|
Earnings from
continuing operations
|
$1,174
|
|
$859
|
|
(27) %
|
Discontinued
operations
|
396
|
|
2,264
|
|
|
Net earnings common
stockholders
|
$1,570
|
|
$3,123
|
|
99 %
|
|
|
|
|
|
|
Diluted avg. shares
outstanding
|
597.3
|
|
580.1
|
|
|
|
|
|
|
|
|
Diluted earnings per
share common share
|
|
|
|
|
|
Earnings from
continuing operations
|
$1.96
|
|
$1.48
|
|
(24) %
|
Discontinued
operations
|
0.67
|
|
3.90
|
|
|
Diluted earnings per
common share
|
$2.63
|
|
$5.38
|
|
105 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended March
31
|
|
|
|
2022
|
|
2023
|
|
|
Other deductions,
net
|
|
|
|
|
|
Amortization of
intangibles
|
$114
|
|
$237
|
|
|
Restructuring
costs
|
15
|
|
29
|
|
|
Other
|
(63)
|
|
(37)
|
|
|
Total
|
$66
|
|
$229
|
|
|
|
|
|
|
|
|
|
|
|
Table
3
|
EMERSON AND
SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
(DOLLARS IN MILLIONS,
UNAUDITED)
|
|
|
|
|
|
Quarter Ended March
31
|
|
2022
|
|
2023
|
Assets
|
|
|
|
Cash and
equivalents
|
$6,929
|
|
$2,046
|
Receivables, net
|
2,081
|
|
2,330
|
Inventories
|
1,819
|
|
2,034
|
Other current
assets
|
1,079
|
|
1,228
|
Current assets
held-for-sale
|
1,631
|
|
1,347
|
Total current assets
|
13,539
|
|
8,985
|
Property, plant &
equipment, net
|
2,350
|
|
2,263
|
Goodwill
|
6,906
|
|
14,097
|
Other intangible
assets
|
2,533
|
|
6,299
|
Other
|
1,809
|
|
2,265
|
Noncurrent assets
held-for-sale
|
2,360
|
|
2,238
|
Total assets
|
$29,497
|
|
$36,147
|
|
|
|
|
Liabilities and
equity
|
|
|
|
Short-term borrowings and
current
|
|
|
|
maturities
of long-term debt
|
$2,762
|
|
$1,959
|
Accounts payable
|
1,176
|
|
1,207
|
Accrued expenses
|
2,759
|
|
3,245
|
Current liabilities
held-for-sale
|
1,375
|
|
1,138
|
Total current liabilities
|
8,072
|
|
7,549
|
Long-term debt
|
8,203
|
|
8,174
|
Other liabilities
|
2,400
|
|
2,928
|
Noncurrent liabilities
held-for-sale
|
208
|
|
149
|
Equity
|
|
|
|
Common stockholders'
equity
|
10,575
|
|
11,360
|
Noncontrolling interests in
subsidiaries
|
39
|
|
5,987
|
Total equity
|
10,614
|
|
17,347
|
Total liabilities and equity
|
$29,497
|
|
$36,147
|
|
|
|
|
Table
4
|
EMERSON AND
SUBSIDIARIES
|
CONSOLIDATED STATEMENTS
OF CASH FLOWS
|
(DOLLARS IN MILLIONS,
UNAUDITED)
|
|
|
|
|
|
|
Six Months Ended March
31
|
|
|
2022
|
|
2023
|
Operating
activities
|
|
|
|
|
Net
earnings
|
|
$1,570
|
|
$3,096
|
Earnings from
discontinued operations, net of tax
|
|
(395)
|
|
(2,267)
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and amortization
|
|
349
|
|
523
|
Stock
compensation
|
|
77
|
|
142
|
Changes in
operating working capital
|
|
(298)
|
|
(390)
|
Gain on
subordinated interest
|
|
(453)
|
|
—
|
Other,
net
|
|
(94)
|
|
(227)
|
Cash from continuing operations
|
|
756
|
|
877
|
Cash from discontinued operations
|
|
209
|
|
(391)
|
Cash provided by operating activities
|
|
965
|
|
486
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Capital
expenditures
|
|
(140)
|
|
(121)
|
Purchases of
businesses, net of cash and equivalents acquired
|
|
(35)
|
|
—
|
Proceeds from
subordinated interest
|
|
438
|
|
15
|
Other, net
|
|
(16)
|
|
(76)
|
Cash from continuing operations
|
|
247
|
|
(182)
|
Cash from discontinued operations
|
|
(88)
|
|
2,916
|
Cash provided by investing activities
|
|
159
|
|
2,734
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Net increase
(decrease) in short-term borrowings
|
|
871
|
|
(31)
|
Proceeds from
long-term debt
|
|
2,975
|
|
—
|
Payments of long-term
debt
|
|
(504)
|
|
(742)
|
Dividends
paid
|
|
(613)
|
|
(603)
|
Purchases of common
stock
|
|
(285)
|
|
(2,000)
|
Other, net
|
|
15
|
|
(55)
|
Cash provided by (used in) financing activities
|
|
3,499
|
|
(3,036)
|
|
|
|
|
|
Effect of exchange rate
changes on cash and equivalents
|
|
(48)
|
|
58
|
Increase in cash and
equivalents
|
|
4,575
|
|
242
|
Beginning cash and
equivalents
|
|
2,354
|
|
1,804
|
Ending cash and
equivalents
|
|
$6,929
|
|
$2,046
|
|
|
|
|
|
|
|
|
Table
5
|
EMERSON AND
SUBSIDIARIES
|
SEGMENT SALES AND
EARNINGS
|
(AMOUNTS 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 March
31
|
|
|
2022
|
|
2023
|
|
Reported
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
Final
Control
|
$884
|
|
$992
|
|
12 %
|
|
16 %
|
|
Measurement &
Analytical
|
769
|
|
888
|
|
15 %
|
|
20 %
|
|
Discrete
Automation
|
644
|
|
683
|
|
6 %
|
|
9 %
|
|
Safety &
Productivity
|
355
|
|
361
|
|
2 %
|
|
3 %
|
|
Intelligent
Devices
|
$2,652
|
|
$2,924
|
|
10 %
|
|
14 %
|
|
|
|
|
|
|
|
|
|
|
Control Systems &
Software
|
573
|
|
623
|
|
9 %
|
|
13 %
|
|
AspenTech
|
84
|
|
230
|
|
172 %
|
|
— %
|
|
Software and
Control
|
$657
|
|
$853
|
|
30 %
|
|
13 %
|
|
|
|
|
|
|
|
|
|
|
Eliminations
|
(18)
|
|
(21)
|
|
|
|
|
|
Total
|
$3,291
|
|
$3,756
|
|
14 %
|
|
14 %
|
|
Sales Growth by
Geography
|
|
|
|
|
|
|
|
|
Quarter
Ended
March 31
|
|
|
|
|
Americas
|
15 %
|
|
|
|
|
|
|
Europe
|
14 %
|
|
|
|
|
|
|
Asia, Middle East &
Africa
|
11 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended March
31
|
|
2022
|
|
|
2023
|
|
|
Reported
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
Final
Control
|
$1,701
|
|
|
$1,854
|
|
|
9 %
|
|
|
14 %
|
Measurement &
Analytical
|
1,506
|
|
|
1,637
|
|
|
9 %
|
|
|
15 %
|
Discrete
Automation
|
1,261
|
|
|
1,301
|
|
|
3 %
|
|
|
8 %
|
Safety &
Productivity
|
706
|
|
|
671
|
|
|
(5) %
|
|
|
(3) %
|
Intelligent
Devices
|
$5,174
|
|
|
$5,463
|
|
|
6 %
|
|
|
10 %
|
|
|
|
|
|
|
|
|
|
|
|
Control Systems &
Software
|
1,143
|
|
|
1,229
|
|
|
8 %
|
|
|
13 %
|
AspenTech
|
166
|
|
|
473
|
|
|
184 %
|
|
|
— %
|
Software and
Control
|
$1,309
|
|
|
$1,702
|
|
|
30 %
|
|
|
13 %
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations
|
(36)
|
|
|
(36)
|
|
|
|
|
|
|
Total
|
$6,447
|
|
|
$7,129
|
|
|
11 %
|
|
|
11 %
|
Sales Growth by
Geography
|
|
|
|
|
|
|
|
|
Six Months
Ended March 31
|
|
|
|
|
Americas
|
14 %
|
|
|
|
|
|
|
Europe
|
9 %
|
|
|
|
|
|
|
Asia, Middle East &
Africa
|
6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March
31
|
|
Quarter Ended March
31
|
|
2022
|
|
2023
|
|
As Reported
(GAAP)
|
|
Adjusted EBITA
(Non-GAAP)
|
|
As Reported
(GAAP)
|
|
Adjusted EBITA
(Non-GAAP)
|
Earnings
|
|
|
|
|
|
|
|
Final
Control
|
$152
|
|
$184
|
|
$215
|
|
$246
|
Margins
|
17.2 %
|
|
20.8 %
|
|
21.6 %
|
|
24.7 %
|
Measurement &
Analytical
|
176
|
|
184
|
|
229
|
|
234
|
Margins
|
23.0 %
|
|
24.0 %
|
|
25.8 %
|
|
26.5 %
|
Discrete
Automation
|
130
|
|
138
|
|
133
|
|
147
|
Margins
|
20.3 %
|
|
21.6 %
|
|
19.5 %
|
|
21.5 %
|
Safety &
Productivity
|
65
|
|
72
|
|
83
|
|
92
|
Margins
|
18.1 %
|
|
20.0 %
|
|
22.9 %
|
|
25.2 %
|
Intelligent
Devices
|
$523
|
|
$578
|
|
$660
|
|
$719
|
Margins
|
19.7 %
|
|
21.8 %
|
|
22.6 %
|
|
24.6 %
|
|
|
|
|
|
|
|
|
Control Systems &
Software
|
101
|
|
106
|
|
127
|
|
137
|
Margins
|
17.7 %
|
|
18.7 %
|
|
20.4 %
|
|
22.1 %
|
AspenTech
|
(4)
|
|
19
|
|
(54)
|
|
68
|
Margins
|
(5.0) %
|
|
21.5 %
|
|
(23.4) %
|
|
29.5 %
|
Software and
Control
|
$97
|
|
$125
|
|
$73
|
|
$205
|
Margins
|
14.7 %
|
|
19.1 %
|
|
8.6 %
|
|
24.1 %
|
|
|
|
|
|
|
|
|
Corporate items and
interest expense, net:
|
|
|
|
|
|
|
|
Stock
compensation
|
(43)
|
|
(43)
|
|
(40)
|
|
(40)
|
Unallocated pension and
postretirement costs
|
25
|
|
25
|
|
46
|
|
46
|
Corporate and
other
|
(42)
|
|
(33)
|
|
(47)
|
|
(55)
|
Interest expense,
net
|
(51)
|
|
|
|
(53)
|
|
|
|
|
|
|
|
|
|
|
Pretax Earnings /
Adjusted EBITA
|
$509
|
|
$652
|
|
$639
|
|
$875
|
Margins
|
15.5 %
|
|
19.8 %
|
|
17.0 %
|
|
23.3 %
|
|
|
|
|
|
|
|
|
Supplemental Total
Segment Earnings:
|
|
|
|
|
|
|
|
Adjusted Total
Segment EBITA
|
|
|
$703
|
|
|
|
$924
|
Margins
|
|
|
21.4 %
|
|
|
|
24.6 %
|
|
|
|
|
|
|
|
|
|
Quarter Ended March
31
|
|
Quarter Ended March
31
|
|
2022
|
|
2023
|
|
Amortization
of
Intangibles1
|
|
Restructuring
and
Related
Costs2
|
|
Amortization
of
Intangibles1
|
|
Restructuring
and
Related
Costs2
|
Final
Control
|
$24
|
|
$8
|
|
$22
|
|
$9
|
Measurement &
Analytical
|
5
|
|
3
|
|
5
|
|
—
|
Discrete
Automation
|
7
|
|
1
|
|
7
|
|
7
|
Safety &
Productivity
|
7
|
|
—
|
|
7
|
|
2
|
Intelligent
Devices
|
$43
|
|
$12
|
|
$41
|
|
$18
|
|
|
|
|
|
|
|
|
Control Systems &
Software
|
5
|
|
—
|
|
5
|
|
5
|
AspenTech
|
23
|
|
—
|
|
122
|
|
—
|
Software and
Control
|
$28
|
|
$0
|
|
$127
|
|
$5
|
|
|
|
|
|
|
|
|
Corporate
|
—
|
|
2
|
|
—
|
|
3
|
Total
|
$71
|
|
$14
|
|
$168
|
|
$26
|
|
|
|
|
|
|
|
|
1
Amortization of intangibles includes $14 and $49 reported in cost
of sales for the three months ended March 31, 2022 and 2023,
respectively.
|
2
Restructuring and related costs includes $5 and $7 reported in cost
of sales for the three months ended March 31, 2022 and 2023,
respectively.
|
|
|
|
|
|
Quarter Ended March
31
|
|
2022
|
|
2023
|
|
|
|
|
Depreciation and
Amortization
|
|
|
|
Final
Control
|
$50
|
|
$45
|
Measurement &
Analytical
|
30
|
|
28
|
Discrete
Automation
|
22
|
|
22
|
Safety &
Productivity
|
14
|
|
15
|
Intelligent
Devices
|
116
|
|
110
|
|
|
|
|
Control Systems &
Software
|
22
|
|
24
|
AspenTech
|
24
|
|
123
|
Software and
Control
|
46
|
|
147
|
|
|
|
|
Corporate
|
9
|
|
6
|
Total
|
$171
|
|
$263
|
Table
6
|
EMERSON AND
SUBSIDIARIES
|
ADJUSTED CORPORATE AND
OTHER SUPPLEMENTAL
|
(AMOUNTS IN MILLIONS,
UNAUDITED)
|
|
The following table
shows the Company's corporate and other expenses on an adjusted
basis. 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 March
31
|
Corporate and
Other
|
|
|
|
|
2022
|
|
2023
|
Corporate and
other (GAAP)
|
|
|
|
|
$(42)
|
|
$(47)
|
Corporate
restructuring and related costs
|
|
|
|
|
2
|
|
3
|
National
Instruments investment gain
|
|
|
|
|
—
|
|
(35)
|
Acquisition /
divestiture costs
|
|
|
|
|
7
|
|
10
|
Russia business
exit
|
|
|
|
|
—
|
|
—
|
AspenTech
Micromine purchase price hedge
|
|
|
|
|
—
|
|
14
|
|
|
|
|
|
|
|
|
Adjusted
corporate and other (Non-GAAP)
|
|
|
|
|
$(33)
|
|
$(55)
|
Table 7
|
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 fees, interest on note receivable and
interest on undeployed assets, 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 March
31
|
|
|
|
|
2022
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
Pretax earnings
|
$509
|
|
$639
|
|
|
|
Percent of sales
|
15.5 %
|
|
17.0 %
|
|
|
|
Interest expense,
net
|
51
|
|
53
|
|
|
|
Amortization of
intangibles
|
71
|
|
168
|
|
|
|
Restructuring and
related costs
|
14
|
|
26
|
|
|
|
National Instruments
investment gain
|
—
|
|
(35)
|
|
|
|
Acquisition/divestiture costs
|
7
|
|
10
|
|
|
|
Russia business
exit
|
—
|
|
—
|
|
|
|
AspenTech Micromine
purchase price hedge
|
—
|
|
14
|
|
|
|
Adjusted EBITA
|
$652
|
|
$875
|
|
|
|
Percent of sales
|
19.8 %
|
|
23.3 %
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March
31
|
|
|
|
|
2022
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
GAAP earnings from continuing operations per
share
|
$0.72
|
|
$0.92
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
0.09
|
|
0.16
|
|
|
|
Restructuring and
related costs
|
0.02
|
|
0.04
|
|
|
|
National Instruments
investment gain
|
—
|
|
(0.05)
|
|
|
|
Acquisition/divestiture costs
|
0.04
|
|
0.01
|
|
|
|
Russia business
exit
|
—
|
|
—
|
|
|
|
AspenTech Micromine
purchase price hedge
|
—
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings from continuing operations per
share
|
$0.87
|
|
$1.09
|
|
|
|
|
|
|
|
|
|
|
Less: AspenTech
contribution to adjusted earnings per share
|
|
|
(0.04)
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per share excluding AspenTech
contribution
|
|
|
$1.05
|
|
|
|
Quarter Ended March
31, 2023
|
|
Pretax
Earnings
|
|
Income
Taxes
|
|
Earnings
from
Cont.
Ops.
|
|
Non-Controlling
Interests
|
3
|
Net
Earnings
Common
Stockholders
|
|
Diluted
Earnings
Per
Share
|
As reported (GAAP)
|
$639
|
|
$134
|
|
$505
|
|
$(25)
|
|
$530
|
|
$0.92
|
Amortization of
intangibles
|
168
|
1
|
38
|
|
130
|
|
42
|
|
88
|
|
0.16
|
Restructuring and
related costs
|
26
|
2
|
6
|
|
20
|
|
—
|
|
20
|
|
0.04
|
National Instruments
investment gain
|
(35)
|
|
(8)
|
|
(27)
|
|
—
|
|
(27)
|
|
(0.05)
|
Acquisition/divestiture
costs
|
10
|
|
3
|
|
7
|
|
—
|
|
7
|
|
0.01
|
AspenTech Micromine
purchase price hedge
|
14
|
|
3
|
|
11
|
|
5
|
|
6
|
|
0.01
|
Adjusted (Non-GAAP)
|
$822
|
|
$176
|
|
$646
|
|
$22
|
|
$624
|
|
$1.09
|
Interest
expense
|
53
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITA (Non-GAAP)
|
$875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Amortization of intangibles includes
$49 reported in cost of sales.
|
2 Restructuring and related costs
includes $7 reported in cost of sales and SG&A.
|
3 Represents the 45 percent
non-controlling interest in AspenTech applied to AspenTech's share
of each adjustment presented herein and eliminated from Emerson's
consolidated results.
|
Table
8
|
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 owns 55 percent of AspenTech, a
separately traded public company (NASDAQ: AZPN), and consolidates
AspenTech in its financial results. The 45 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, stock
compensation and the Micromine purchase price
hedge.
|
|
Quarter Ended March 31,
2023
|
|
Pretax
Earnings
|
|
Income
Taxes
(Benefit)
|
|
Earnings
from
Cont.
Ops.
|
|
Non-Controlling
Interests
|
5
|
Net
Earnings
Common
Stockholders
|
|
Diluted
Earnings
Per
Share
|
Standalone reporting
(GAAP)
|
$(82)
|
1
|
$(24)
|
|
$(58)
|
|
|
|
|
|
|
Interim tax
reporting/Other
|
1
|
|
2
|
2
|
(1)
|
|
|
|
|
|
|
Reported in Emerson
consolidation (GAAP)
|
(81)
|
|
(22)
|
|
(59)
|
|
(26)
|
|
(33)
|
|
$(0.06)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
122
|
3
|
28
|
|
94
|
|
42
|
|
52
|
|
0.09
|
AspenTech Micromine
purchase price hedge
|
14
|
4
|
3
|
|
11
|
|
5
|
|
6
|
|
0.01
|
Adjusted
(Non-GAAP)
|
$55
|
|
$9
|
|
$46
|
|
$21
|
|
$25
|
|
$0.04
|
Interest
income
|
(10)
|
4
|
|
|
|
|
|
|
|
|
|
Stock
compensation
|
23
|
4
|
|
|
|
|
|
|
|
|
|
Adjusted Segment
EBITA (Non-GAAP)
|
$68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to
Segment EBIT
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
earnings
|
$(81)
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
(10)
|
4
|
|
|
|
|
|
|
|
|
|
Stock
compensation
|
23
|
4
|
|
|
|
|
|
|
|
|
|
Micromine purchase
price hedge
|
14
|
4
|
|
|
|
|
|
|
|
|
|
Segment EBIT
(GAAP)
|
$(54)
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
122
|
3
|
|
|
|
|
|
|
|
|
|
Adjusted Segment
EBITA (Non-GAAP)
|
$68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Amount
reflects AspenTech's pretax earnings for the three months ended
March 31, 2023, reported in its standalone quarterly report on Form
10-Q.
|
2 GAAP
income taxes reported by AspenTech differ from the amount reflected
in Emerson's consolidated financial statements due to the
application of the ASC 740 interim tax rules at the AspenTech
entity level in their stand-alone publicly reported financial
statements as compared to the amount computed at the Emerson
consolidated level.
|
3
Amortization of intangibles includes $48 reported in cost of
sales.
|
4 Reported
in Emerson corporate line items.
|
5 Represents
the 45 percent 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
9
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations of
Non-GAAP measures with the most directly comparable GAAP measure
(dollars in millions, except per share amounts). See tables 5
through 8 for additional non-GAAP reconciliations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
FY23
Underlying Sales
Change
|
|
|
|
Final
Control
|
Measurement
& Analytical
|
Discrete
Automation
|
Safety &
Productivity
|
Intelligent
Devices
|
|
Reported
(GAAP)
|
|
12 %
|
15 %
|
6 %
|
2 %
|
10 %
|
|
(Favorable) /
Unfavorable FX
|
|
3 %
|
3 %
|
3 %
|
1 %
|
3 %
|
|
(Acquisitions)
|
|
— %
|
— %
|
— %
|
— %
|
— %
|
|
Divestitures
|
|
1 %
|
2 %
|
— %
|
— %
|
1 %
|
|
Underlying
(Non-GAAP)
|
|
16 %
|
20 %
|
9 %
|
3 %
|
14 %
|
|
|
|
|
|
|
|
|
|
|
|
Q2 FY23 Underlying
Sales Change
|
|
Control
Systems
&
Software
|
AspenTech
|
Software
and Control
|
|
Emerson
|
|
Reported
(GAAP)
|
|
9 %
|
172 %
|
30 %
|
|
14 %
|
|
(Favorable) /
Unfavorable FX
|
|
3 %
|
— %
|
3 %
|
|
3 %
|
|
(Acquisitions)
|
|
— %
|
(172) %
|
(21) %
|
|
(4) %
|
|
Divestitures
|
|
1 %
|
|
1 %
|
|
1 %
|
|
Underlying
(Non-GAAP)
|
|
13 %
|
— %
|
13 %
|
|
14 %
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
March 31, 2023
Underlying Sales
Change
|
|
Final
Control
|
Measurement
& Analytical
|
Discrete
Automation
|
Safety &
Productivity
|
Intelligent
Devices
|
|
Reported
(GAAP)
|
|
9 %
|
9 %
|
3 %
|
(5) %
|
6 %
|
|
(Favorable) /
Unfavorable FX
|
|
4 %
|
4 %
|
5 %
|
2 %
|
4 %
|
|
(Acquisitions)
|
|
— %
|
— %
|
— %
|
— %
|
— %
|
|
Divestitures
|
|
1 %
|
2 %
|
— %
|
— %
|
— %
|
|
Underlying
(Non-GAAP)
|
|
14 %
|
15 %
|
8 %
|
(3) %
|
10 %
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
March 31, 2023
Underlying Sales
Change
|
|
Control
Systems
&
Software
|
AspenTech
|
Software
and Control
|
|
Emerson
|
|
Reported
(GAAP)
|
|
8 %
|
184 %
|
30 %
|
|
11 %
|
|
(Favorable) /
Unfavorable FX
|
|
4 %
|
— %
|
4 %
|
|
4 %
|
|
(Acquisitions)
|
|
— %
|
(184) %
|
(22) %
|
|
(5) %
|
|
Divestitures
|
|
1 %
|
— %
|
1 %
|
|
1 %
|
|
Underlying
(Non-GAAP)
|
|
13 %
|
— %
|
13 %
|
|
11 %
|
|
|
|
|
|
|
|
|
|
|
|
2023E April Guidance
Underlying Sales Change
|
|
Q3
FY23E
|
FY23E
|
|
|
|
|
Reported
(GAAP)
|
|
10.5 - 12.5%
|
9% - 10.5%
|
|
|
|
|
(Favorable) /
Unfavorable FX
|
|
~ 0.5%
|
~ 1.5%
|
|
|
|
|
(Acquisitions)
|
|
~ (1.5)%
|
~ (2.5)%
|
|
|
|
|
Divestitures
|
|
~ 0.5%
|
~ 0.5%
|
|
|
|
|
Underlying
(Non-GAAP)
|
|
10% - 12%
|
8.5% - 10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Final Control
Adjusted EBITA
|
|
|
|
Q2
2022
|
Q2
2023
|
Q2
2022
|
Q2
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$152
|
$215
|
17.2 %
|
21.6 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
32
|
31
|
3.6 %
|
3.1 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$184
|
$246
|
20.8 %
|
24.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Measurement &
Analytical Adjusted EBITA
|
|
|
|
Q2
2022
|
Q2
2023
|
Q2
2022
|
Q2
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$176
|
$229
|
23.0 %
|
25.8 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
8
|
5
|
1.0 %
|
0.7 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$184
|
$234
|
24.0 %
|
26.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Discrete Automation
Adjusted EBITA
|
|
|
|
Q2
2022
|
Q2
2023
|
Q2
2022
|
Q2
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$130
|
$133
|
20.3 %
|
19.5 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
8
|
14
|
1.3 %
|
2.0 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$138
|
$147
|
21.6 %
|
21.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Safety &
Productivity Adjusted EBITA
|
|
|
|
Q2
2022
|
Q2
2023
|
Q2
2022
|
Q2
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$65
|
$83
|
18.1 %
|
22.9 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
7
|
9
|
1.9 %
|
2.3 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$72
|
$92
|
20.0 %
|
25.2 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Intelligent Devices
Adjusted EBITA
|
|
|
|
Q2
2022
|
Q2
2023
|
Q2
2022
|
Q2
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$523
|
$660
|
19.7 %
|
22.6 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
55
|
59
|
2.1 %
|
2.0 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$578
|
$719
|
21.8 %
|
24.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Control Systems
& Software Adjusted EBITA
|
|
|
|
Q2
2022
|
Q2
2023
|
Q2
2022
|
Q2
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$101
|
$127
|
17.7 %
|
20.4 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
5
|
10
|
1.0 %
|
1.7 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$106
|
$137
|
18.7 %
|
22.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AspenTech Adjusted
EBITA
|
|
|
|
Q2
2022
|
Q2
2023
|
Q2
2022
|
Q2
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$(4)
|
$(54)
|
(5.0) %
|
(23.4) %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
23
|
122
|
26.5 %
|
52.9 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$19
|
$68
|
21.5 %
|
29.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Software and Control
Adjusted EBITA
|
|
|
|
Q2
2022
|
Q2
2023
|
Q2
2022
|
Q2
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$97
|
$73
|
14.7 %
|
8.6 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
28
|
132
|
4.4 %
|
15.5 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$125
|
$205
|
19.1 %
|
24.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Business
Segment Adjusted EBITA Margin
|
|
|
|
Q2
2022
|
Q2
2023
|
Q2
2022
|
Q2
2023
|
Change
|
|
Pretax earnings /
margin (GAAP)
|
|
$509
|
$639
|
15.5 %
|
17.0 %
|
150 bps
|
|
Corporate items and
interest expense, net
|
|
111
|
94
|
3.4 %
|
2.5 %
|
(90)bps
|
|
Total Business Segment
EBIT / margin
|
|
$620
|
$733
|
18.9 %
|
19.5 %
|
60 bps
|
|
Amortization of
intangibles and restructuring and related costs
|
$83
|
$191
|
2.5 %
|
5.1 %
|
260 bps
|
|
Adjusted Total Business
Segment EBITA / margin (Non-GAAP)
|
$703
|
$924
|
21.4 %
|
24.6 %
|
320 bps
|
|
|
|
|
|
|
|
|
|
|
|
Q2 Earnings Per
Share
|
|
|
|
Q2
FY22
|
Q2
FY23
|
Change
|
|
|
|
Earnings per share
(GAAP)
|
|
$
0.72
|
$
0.92
|
28 %
|
|
|
|
Amortization of
intangibles
|
|
0.09
|
0.16
|
6 %
|
|
|
|
Restructuring and
related costs
|
|
0.02
|
0.04
|
2 %
|
|
|
|
National Instrument
investment gain
|
|
—
|
(0.05)
|
(7) %
|
|
|
|
Acquisition/divestiture
costs
|
|
|
|
0.04
|
0.01
|
(5) %
|
|
|
|
AspenTech Micromine
purchase price hedge
|
|
—
|
0.01
|
1 %
|
|
|
|
Adjusted earnings per
share (Non-GAAP)
|
|
$
0.87
|
$
1.09
|
25 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023E April Guidance
Earnings Per Share
|
|
Q3
FY23E
|
FY23E
|
|
|
|
|
Earnings per share
(GAAP)
|
|
$0.92 -
$0.96
|
$3.58 -
$3.68
|
|
|
|
|
Amortization of
intangibles
|
|
~ 0.15
|
~ 0.61
|
|
|
|
|
Restructuring and
related costs
|
|
~ 0.03
|
~ 0.12
|
|
|
|
|
Russia business
exit
|
|
—
|
~ 0.08
|
|
|
|
|
AspenTech Micromine
purchase price hedge
|
|
—
|
(0.02)
|
|
|
|
|
Acquisition/divestiture
fees
|
|
~ 0.03
|
~ 0.06
|
|
|
|
|
National Instrument
investment gain
|
|
—
|
~ (0.05)
|
|
|
|
|
Interest on note
receivable from Climate Technologies
|
|
~ (0.02)
|
~
(0.06)
|
|
|
|
|
Interest income on
undeployed proceeds
|
|
~ (0.04)
|
~ (0.17)
|
|
|
|
|
Adjusted earnings per
share (Non-GAAP)
|
|
$1.07 -
$1.11
|
$4.15 -
$4.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flow
|
|
|
|
Q2
FY22
|
Q2
FY23
|
Change
|
|
FY23E
($ in
billions)
|
|
Operating cash flow
(GAAP)
|
|
|
|
$
379
|
$
575
|
51 %
|
|
$
2.5
|
|
Capital
expenditures
|
|
|
|
(67)
|
(62)
|
13 %
|
|
(0.3)
|
|
Free cash flow
(Non-GAAP)
|
|
|
|
$
312
|
$
513
|
64 %
|
|
$
2.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 1: Underlying
sales and orders exclude the impact of acquisitions, divestitures
and currency translation.
|
|
Note 2: All fiscal year
2023E figures are approximate, except where range is
given.
|
|
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SOURCE Emerson