Emerson Electric — Feb 5, 2025 release

Emerson Reports First Quarter 2025 Results; Updates 2025 Outlook ST. LOUIS (February 5, 2025) - Emerson (NYSE: EMR) today reported results 1 for its first quarter ended December 31, 2024 and updated its full year outlook for fiscal 2025. Emerson also declared a quarterly cash dividend of $0.5275 per share of common stock payable March 10, 2025 to stockholders of record on February 14, 2025. (dollars in millions, except per share) 2024 Q1 2025 Q1 Change Underlying Orders 2 1% Net Sales $4,117 $4,175 1% Underlying Sales 3 2% Pretax Earnings $175 $775 Margin 4.2% 18.6% 1440 bps Adjusted Segment EBITA 4 $1,014 $1,169 Margin 24.6% 28.0% 340 bps GAAP Earnings Per Share $0.29 $1.02 252% Adjusted Earnings Per Share 5 $1.22 $1.38 13% Operating Cash Flow $444 $777 75% Free Cash Flow $367 $694 89% Management Commentary “Emerson began the fiscal year on a strong note, exceeding first quarter expectations for incremental operating margins and earnings per share with strong cash flow generation,” said Emerson President and Chief Executive Officer Lal Karsanbhai. “Our record gross profit margin and adjusted segment EBITA margin reflect the strength of our transformed industrial technology portfolio and Emerson Management System, as well as the talent and dedication of our world-class team.” Karsanbhai continued, “We reiterate our guide for underlying sales, earnings per share and cash flow driven by resilient demand in process and hybrid markets, expected second half discrete recovery and our proven ability to execute. Our team remains energized, and we look forward to continuing the positive momentum across our business, including progressing in the final phase of our portfolio transformation.” 2025 Outlook The following tables summarize the fiscal year 2025 guidance framework and does not include any impact from the recently announced portfolio transactions 6 related to AspenTech and Safety & Productivity. The 2025 outlook assumes returning approximately $3.2 billion to shareholders through approximately $2.0 billion of share repurchases and approximately $1.2 billion of dividend payments. Guidance figures are approximate. 2025 Q2 2025 Net Sales Growth (0.5%) - 0.5% 1.5% - 3.5% Underlying Sales Growth 1% - 2% 3% - 5% Earnings Per Share $1.01 - $1.05 $4.42 - $4.62 Amortization of Intangibles ~$0.31 ~$1.21 Restructuring / Related Costs ~$0.04 ~$0.14 Acquisition / Divestiture Fees and Related Costs ~$0.02 ~$0.08 Adjusted Earnings Per Share $1.38 - $1.42 $5.85 - $6.05 Operating Cash Flow $3.6B - $3.7B Free Cash Flow $3.2B - $3.3B 1 Results are presented on a continuing operations basis. 2 Underlying orders do not include AspenTech. 3 Underlying sales excludes the impact of currency translation, and significant acquisitions and divestitures. 4 Adjusted segment EBITA represents segment earnings excluding 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, and discrete taxes. 6 Guidance includes Safety & Productivity and assumes AspenTech at our current ownership of ~57% outstanding shares. Page 2 Conference Call Today, beginning at 7:30 a.m. Central Time / 8:30 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 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) Page 3 Table 1 EMERSON AND SUBSIDIARIES CONSOLIDATED OPERATING RESULTS (AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED) Quarter Ended Dec 31 2023 2024 Net sales $ 4,117   $ 4,175   Cost and expenses      Cost of sales 2,201  1,940       SG&A expenses 1,277  1,224       Other deductions, net 451  228       Interest expense, net 44  8       Interest income from related party 1 (31) —  Earnings from continuing operations before income taxes 175  775  Income taxes 16  182  Earnings from continuing operations 159  593  Discontinued operations, net of tax (27) —  Net earnings 132  593  Less: Noncontrolling interests in subsidiaries (10) 8  Net earnings common stockholders $ 142  $ 585  Earnings common stockholders Earnings from continuing operations $ 169  $ 585  Discontinued operations (27) —  Net earnings common stockholders $ 142   $ 585   Diluted avg. shares outstanding 573.3  571.1  Diluted earnings per share common stockholders Earnings from continuing operations $ 0.29  $ 1.02  Discontinued operations (0.04) —  Diluted earnings per common share $ 0.25   $ 1.02   Quarter Ended Dec 31 2023 2024 Other deductions, net Amortization of intangibles $ 274  $ 229  Restructuring costs 83  11  Other 94  (12) Total $ 451   $ 228   1 Represents interest on the Copeland note receivable Page 4 Table 2 EMERSON AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (DOLLARS IN MILLIONS, UNAUDITED) Sept 30, 2024 Dec 31, 2024 Assets      Cash and equivalents $ 3,588  $ 2,834       Receivables, net 2,927  2,694       Inventories 2,180  2,200       Other current assets 1,497  1,466  Total current assets 10,192  9,194       Property, plant & equipment, net 2,807  2,743       Goodwill 18,067  17,906       Other Intangibles 10,436  10,025       Other 2,744  2,742  Total assets $ 44,246   $ 42,610   Liabilities and equity      Short-term borrowings and current maturities of long-term debt $ 532  $ 1,066       Accounts payable 1,335  1,260       Accrued expenses 3,875  3,632  Total current liabilities 5,742  5,958       Long-term debt 7,155  6,557       Other liabilities 3,840  3,716  Equity      Common stockholders' equity 21,636  20,490       Noncontrolling interests in subsidiaries 5,873  5,889  Total equity 27,509  26,379  Total liabilities and equity $ 44,246   $ 42,610   Page 5 Table 3 EMERSON AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN MILLIONS, UNAUDITED) Three Months Ended Dec 31   2023 2024 Operating activities     Net earnings $ 132  $ 593  Earnings from discontinued operations, net of tax 27  —  Adjustments to reconcile net earnings to net cash provided by operating activities:         Depreciation and amortization 422  383          Stock compensation 74  68          Amortization of acquisition-related inventory step-up 231  —          Changes in operating working capital (238) (154)         Other, net (204) (113)             Cash from continuing operations 444  777              Cash from discontinued operations (29) —              Cash provided by operating activities 415  777  Investing activities Capital expenditures (77) (83) Purchases of businesses, net of cash and equivalents acquired (8,339) (37) Other, net (37) (22)     Cash from continuing operations (8,453) (142)     Cash from discontinued operations 1  —      Cash used in investing activities (8,452) (142) Financing activities Net increase in short-term borrowings 2,647  2  Payments of long-term debt —  (2) Dividends paid (300) (301) Purchases of common stock (175) (899) AspenTech purchases of common stock (72) —  Other, net (45) (91)     Cash provided by (used in) financing activities 2,055  (1,291) Effect of exchange rate changes on cash and equivalents 7  (98) Decrease in cash and equivalents (5,975) (754) Beginning cash and equivalents 8,051  3,588  Ending cash and equivalents $ 2,076   $ 2,834   Page 6 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 2023 2024 Reported Underlying Sales Final Control $ 940  $ 976  4  % 5  % Measurement & Analytical 947  975  3  % 4  % Discrete Automation 613  580  (5) % (4) % Safety & Productivity 322  312  (3) % (3) % Intelligent Devices $ 2,822   $ 2,843   1   % 2   % Control Systems & Software 675  690  2  % 3  % Test & Measurement 382  359  (6) % (5) % AspenTech 257  303  18  % 18  % Software and Control $ 1,314   $ 1,352   3   % 4   % Eliminations (19) (20) Total $ 4,117   $ 4,175   1   % 2   % Sales Growth by Geography Quarter Ended Dec 31 Americas 3  % Europe (2) % Asia, Middle East & Africa 4  % Page 7 Table 4 cont. Quarter Ended Dec 31 Quarter Ended Dec 31 2023 2024 As Reported (GAAP) Adjusted EBITA (Non-GAAP) As Reported (GAAP) Adjusted EBITA (Non-GAAP) Earnings Final Control $ 194 $ 223 $ 236 $ 260  Margins 20.6  % 23.6  % 24.2  % 26.6  % Measurement & Analytical 235  258  285  296   Margins 24.9  % 27.3  % 29.2  % 30.4  % Discrete Automation 97  116  98  112   Margins 15.8  % 18.9  % 16.9  % 19.3  % Safety & Productivity 68  74  67  73   Margins 21.1  % 23.1  % 21.6  % 23.8  % Intelligent Devices $ 594 $ 671 $ 686 $ 741  Margins 21.0   % 23.8   % 24.1   % 26.1   % Control Systems & Software 149  155  193  200   Margins 22.1  % 23.1  % 27.9  % 28.8  % Test & Measurement (78) 101  (13) 91   Margins (20.4) % 26.5  % (3.6) % 25.5  % AspenTech (35) 87  15  137   Margins (13.7) % 33.6  % 4.8  % 45.1  % Software and Control $ 36 $ 343 $ 195 $ 428  Margins 2.8   % 26.1   % 14.4   % 31.6   % Corporate items and interest expense, net : Stock compensation (74) (44) (68) (66) Unallocated pension and postretirement costs 31  31  27  27  Corporate and other (399) (38) (57) (34) Interest expense, net (44) —  (8) —  Interest income from related party 1 31  —  —  —  Pretax Earnings / Adjusted EBITA $ 175 $ 963 $ 775 $ 1,096  Margins 4.2   % 23.4   % 18.6   % 26.3   % Supplemental Total Segment Earnings: Adjusted Total Segment EBITA $ 1,014 $ 1,169  Margins 24.6   % 28.0   % 1 Represents interest on the Copeland note receivable. Page 8 Table 4 cont. Quarter Ended Dec 31 Quarter Ended Dec 31 2023 2024 Amortization of Intangibles 1 Restructuring and Related Costs 2 Amortization of Intangibles 1 Restructuring and Related Costs 2 Final Control $ 22  $ 7  $ 22  $ 2  Measurement & Analytical 20  3  10  1  Discrete Automation 9  10  8  6  Safety & Productivity 6  —  6  —  Intelligent Devices $ 57   $ 20   $ 46   $ 9   Control Systems & Software 5  1  5  2  Test & Measurement 139  40  105  (1) AspenTech 122  —  122  —  Software and Control $ 266   $ 41   $ 232   $ 1   Corporate —  26  3 —  3  Total $ 323   $ 87   $ 278   $ 13   1 Amortization of intangibles includes $49 and $49 reported in cost of sales for the three months ended December 31, 2023 and 2024, respectively. 2 Restructuring and related costs includes $4 reported in cost of sales for the three months ended December 31, 2023. The three months ended December 31, 2024 includes $2 reported in selling, general and administrative expenses. 3 Corporate restructuring of $26 for the three months ended December 31, 2023 is comprised entirely of integration-related stock compensation expense attributable to NI. Quarter Ended Dec 31 Depreciation and Amortization 2023 2024 Final Control $ 40  $ 40  Measurement & Analytical 40  31  Discrete Automation 22  21  Safety & Productivity 14  15  Intelligent Devices 116   107   Control Systems & Software 21  23  Test & Measurement 151  118  AspenTech 123  124  Software and Control 295   265   Corporate 11  11  Total $ 422   $ 383   Page 9 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 2023 2024  Stock compensation (GAAP) $ (74) $ (68)     Integration-related stock compensation expense 1 30 2  Adjusted stock compensation (non-GAAP) $ (44) $ (66) Quarter Ended Dec 31 2023 2024  Corporate and other (GAAP) $ (399) $ (57)  Corporate restructuring and related costs —  3   Acquisition / divestiture costs 130  20   Amortization of acquisition-related inventory step-up 231  —   Adjusted corporate and other (non-GAAP) $ (38) $ (34) 1 Integration-related stock compensation expense relates to NI and includes $26 and $— reported as restructuring costs for the three months ended December 31, 2023 and 2024, respectively Page 10 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 Dec 31 2023 2024 Pretax earnings $ 175 $ 775 Percent of sales 4.2  % 18.6  % Interest expense, net 44 8 Interest income from related party 1 (31) — Amortization of intangibles 323 278 Restructuring and related costs 87 13 Acquisition/divestiture fees and related costs 134 22 Amortization of acquisition-related inventory step-up 231 — Adjusted EBITA $ 963 $ 1,096 Percent of sales 23.4  % 26.3  % Quarter Ended Dec 31 2023 2024 GAAP earnings from continuing operations per share $ 0.29 $ 1.02 Amortization of intangibles 0.36 0.31 Restructuring and related costs 0.12 0.02 Acquisition/divestiture fees and related costs 0.17 0.03 Amortization of acquisition-related inventory step-up 0.38 — Discrete taxes (0.10) — Adjusted earnings from continuing operations per share $ 1.22 $ 1.38 1 Represents interest on the Copeland note receivable Page 11 Table 6 cont. Quarter Ended December 31, 2024 Pretax Earnings Income Taxes Earnings from Cont. Ops. Non-Controlling Interests 3 Net Earnings Common Stockholders Diluted Earnings Per Share As reported (GAAP) $ 775   $ 182   $ 593   $ 8   $ 585   $ 1.02   Amortization of intangibles 278  1 62 216 41 175 0.31  Restructuring and related costs 13  2 — 13 —  13 0.02  Acquisition/divestiture fees and related costs 22  5 17 —  17 0.03  Adjusted (non-GAAP) $ 1,088   $ 249   $ 839   $ 49   $ 790   $ 1.38   Interest expense, net 8  Adjusted EBITA (non-GAAP) $ 1,096   1 Amortization of intangibles includes $49 reported in cost of sales. 2 Restructuring and related costs includes $2 reported in 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. Page 12 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 resu lts. 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. Aspe nTech 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, 2024 Pretax Earnings Income Taxes (Benefit) Earnings from Cont. Ops. Non-Controlling Interests 4 Net Earnings Common Stockholders Diluted Earnings Per Share Standalone reporting (GAAP) $ 17   1 $ (3) $ 20    Other —  2 (2) Reported in Emerson consolidation (GAAP) 17 (1) 18 8   10 $ 0.02   Adjustments: Amortization of intangibles 122  2 26  96  41  55  0.09  Adjusted (Non-GAAP) $ 139   $ 25   $ 114   $ 49   $ 65   $ 0.11    Interest income (17) 3  Stock compensation 15  3 Adjusted segment EBITA (non-GAAP) $ 137   Reconciliation to Segment EBIT Pre-tax earnings $ 17   Interest income (17) 3 Stock compensation 15  3 Segment EBIT (GAAP) $ 15   Amortization of intangibles 122  2 Adjusted segment EBITA (non-GAAP) $ 137   1 Amount reflects AspenTech's pretax earnings for the three months ended December 31, 2024 as reported in its quarterly earnings release 8-K. 2 Amortization of intangibles includes $49 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. Page 13 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 ad ditional non-GAAP reconciliations. 2025 Q1 Underlying Sales Change Reported (Favorable) / Unfavorable FX (Acquisitions) / Divestitures Underlying Final Control 4  % 1  % —  % 5  % Measurement & Analytical 3  % 1  % —  % 4  % Discrete Automation (5) % 1  % —  % (4) % Safety & Productivity (3) % —  % —  % (3) % Intelligent Devices 1   % 1   % —   % 2   % Control Systems & Software 2  % 1  % —  % 3  % Test & Measurement (6) % 1  % —  % (5) % AspenTech 18  % —  % —  % 18  % Software and Control 3   % 1   % —   % 4   % Emerson 1   % 1   % —   % 2   % Underlying Growth Guidance 2025 Q2 Guidance 2025 Guidance Reported (GAAP) (0.5%) - 0.5% 1.5% - 3.5% (Favorable) / Unfavorable FX ~1.5 pts ~1.5 pts (Acquisitions) / Divestitures - - Underlying (non-GAAP) 1% - 2% 3% - 5% 2024 Q1 Adjusted Segment EBITA EBIT EBIT Margin Amortization of Intangibles Restructuring and Related Costs Adjusted Segment EBITA Adjusted Segment EBITA Margin 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   % 2025 Q1 Adjusted Segment EBITA EBIT EBIT Margin Amortization of Intangibles Restructuring and Related Costs Adjusted Segment EBITA Adjusted Segment EBITA Margin Final Control $ 236  24.2  % $ 22  $ 2  $ 260  26.6  % Measurement & Analytical 285  29.2  % 10  1  296  30.4  % Discrete Automation 98  16.9  % 8  6  112  19.3  % Safety & Productivity 67  21.6  % 6  —  73  23.8  % Intelligent Devices $ 686   24.1   % $ 46   $ 9   $ 741   26.1   % Control Systems & Software 193  27.9  % 5  2  200  28.8  % Test & Measurement (13) (3.6) % 105  (1) 91  25.5  % AspenTech 15  4.8  % 122  —  137  45.1  % Software and Control $ 195   14.4   % $ 232   $ 1   $ 428   31.6   % Page 14 Total Adjusted Segment EBITA 2024 Q1 2025 Q1 Pretax earnings (GAAP) $ 175 $ 775 Margin 4.2  % 18.6  % Corporate items and interest expense, net 455 106 Amortization of intangibles 323 278 Restructuring and related costs 61 10 Adjusted segment EBITA (non-GAAP) $ 1,014 $ 1,169 Margin 24.6  % 28.0  % Free Cash Flow 2024 Q1 2025 Q1 2025E ($ in billions) Operating cash flow (GAAP) $ 444  $ 777  $3.6 - $3.7 Capital expenditures (77) (83) ~(0.4) Free cash flow (non-GAAP) $ 367   $ 694   $3.2 - $3.3 Note 1: Underlying sales and orders exclude the impact of currency translation and significant acquisitions and divestitures. Note 2: All fiscal year 2025E figures are approximate, except where range is given.