ST.
LOUIS, Aug. 2, 2023 /PRNewswire/ -- Emerson
(NYSE: EMR) today reported results for its third quarter ended
June 30, 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
September 11, 2023 to stockholders of
record August 11, 2023.
(dollars in
millions, except per share)
|
2022
Q3
|
2023
Q3
|
Change
|
Underlying
Orders1
|
|
|
3 %
|
Net Sales
|
$3,465
|
$3,946
|
14 %
|
Underlying
Sales2
|
|
|
14 %
|
Pretax
Earnings
|
$378
|
$761
|
|
Margin
|
10.9 %
|
19.3 %
|
840
bps
|
Adjusted Segment
EBITA3
|
$806
|
$1,060
|
|
Margin
|
23.2 %
|
26.9 %
|
370
bps
|
GAAP Earnings Per
Share
|
$0.38
|
$1.03
|
171 %
|
Adjusted Earnings Per
Share4
|
$0.92
|
$1.29
|
40 %
|
Operating Cash
Flow
|
$479
|
$842
|
76 %
|
Free Cash
Flow
|
$420
|
$769
|
83 %
|
Management Commentary
"Emerson delivered another exceptional quarter of underlying
sales growth and solid financial and operational results, driven by
our highly differentiated portfolio of capabilities and offerings,"
said Emerson President and Chief
Executive Officer Lal Karsanbhai. "We continue to advance our
growth and profitability as a leading automation company,
underpinned by the Emerson Management System and the world-class
execution of our talented global team."
Karsanbhai continued, "Our performance over the last nine months
demonstrates the strength of our technology and the strategic
benefits of our exposure to attractive end-markets. As we close out
2023 and look ahead to 2024, Emerson is uniquely positioned, based
on the breadth and depth of our capabilities and long-standing
customer relationships, to capture our customers' investments in
energy security and affordability, sustainability and
decarbonization, digital transformation, and nearshoring. We look
forward to delivering continued shareholder value as we build on
our momentum across our business."
2023 Outlook
The following tables summarize the fiscal year 2023 guidance
framework for continuing operations which was increased from prior
guidance. 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
|
Net Sales
Growth
|
~10.5%
|
Underlying Sales
Growth
|
~10%
|
Earnings Per
Share
|
$3.54 -
$3.59
|
Amortization of
Intangibles
|
~$0.61
|
Restructuring /
Related Costs
|
~$0.16
|
Russia Exit
Costs
|
$0.08
|
AspenTech Micromine
Purchase Price Hedge
|
($0.02)
|
Acquisition /
Divestiture Fees
|
~$0.10
|
NI Investment
Gain
|
~($0.07)
|
Interest Income on
Undeployed Proceeds
|
~($0.19)
|
Copeland Equity
Loss
|
~$0.19
|
Adjusted Earnings Per
Share
|
$4.40 -
$4.45
|
Operating Cash
Flow
|
$2.5B -
$2.6B
|
Free Cash
Flow
|
$2.2B -
$2.3B
|
|
1 Underlying orders does not include
AspenTech.
|
2 Underlying
sales excludes the impact of currency translation, and acquisitions
and divestitures. Heritage AspenTech and Emerson's businesses
contributed to AspenTech will be included in underlying sales
beginning in 2023 Q4.
|
3 Adjusted segment EBITA represents
segment earnings less restructuring and intangibles amortization
expense.
|
4 Adjusted EPS excludes restructuring
and related costs, NI investment gains, acquisition/divestiture
costs, write-offs associated with Emerson's Russia exit, an
AspenTech Micromine purchase price hedge, the income/loss of
Emerson's 40% share of Copeland, interest income on undeployed
proceeds and intangibles amortization expense. Post-Copeland
transaction close, adjusted EPS now includes the interest on the
Copeland note receivable valued at $0.02 and approximately $0.06
for the third quarter and fiscal year 2023,
respectively.
|
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 Company's ability to successfully
complete on the terms and conditions contemplated, and the
financial impact of, 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.
(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
|
|
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
|
|
|
|
|
|
|
|
Net
sales
|
$3,465
|
|
$3,946
|
|
$9,912
|
|
$11,075
|
Cost of sales
|
1,879
|
|
1,952
|
|
5,435
|
|
5,660
|
SG&A expenses
|
894
|
|
1,042
|
|
2,631
|
|
3,072
|
Gain on subordinated
interest
|
—
|
|
—
|
|
(453)
|
|
—
|
Other deductions,
net
|
264
|
|
191
|
|
330
|
|
420
|
Interest expense,
net
|
50
|
|
10
|
|
140
|
|
111
|
Interest income from related
party1
|
—
|
|
(10)
|
|
—
|
|
(10)
|
Earnings from
continuing operations before income taxes
|
378
|
|
761
|
|
1,829
|
|
1,822
|
Income taxes
|
123
|
|
158
|
|
399
|
|
390
|
Earnings from
continuing operations
|
255
|
|
603
|
|
1,430
|
|
1,432
|
Discontinued
operations, net of tax
|
697
|
|
8,763
|
|
1,092
|
|
11,030
|
Net
earnings
|
952
|
|
9,366
|
|
2,522
|
|
12,462
|
Less: Noncontrolling
interests in subsidiaries
|
31
|
|
14
|
|
31
|
|
(13)
|
Net earnings common
stockholders
|
$921
|
|
$9,352
|
|
$2,491
|
|
$12,475
|
|
|
|
|
|
|
|
|
Earnings common
stockholders
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
$226
|
|
$592
|
|
$1,400
|
|
$1,451
|
Discontinued
operations
|
695
|
|
8,760
|
|
1,091
|
|
11,024
|
Net earnings common
stockholders
|
$921
|
|
$9,352
|
|
$2,491
|
|
$12,475
|
|
|
|
|
|
|
|
|
Diluted avg. shares
outstanding
|
596.2
|
|
574.0
|
|
596.9
|
|
578.1
|
|
|
|
|
|
|
|
|
Diluted earnings per
share common stockholders
|
|
|
|
|
|
|
|
Earnings from
continuing operations
|
$0.38
|
|
$1.03
|
|
$2.34
|
|
$2.51
|
Discontinued
operations
|
1.16
|
|
15.25
|
|
1.83
|
|
19.05
|
Diluted earnings per
common share
|
$1.54
|
|
$16.28
|
|
$4.17
|
|
$21.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
June 30
|
|
Nine Months
Ended
June 30
|
|
|
|
2022
|
|
2023
|
|
2022
|
|
2023
|
Other deductions,
net
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
$93
|
|
$120
|
|
$207
|
|
$357
|
Restructuring
costs
|
29
|
|
12
|
|
44
|
|
41
|
Other
|
142
|
|
59
|
|
79
|
|
22
|
Total
|
$264
|
|
$191
|
|
$330
|
|
$420
|
1 Represents
interest on the Copeland note receivable.
|
|
|
|
|
|
|
|
|
|
|
Table
2
|
EMERSON AND
SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
(DOLLARS IN MILLIONS,
UNAUDITED)
|
|
|
|
|
|
Quarter Ended June
30
|
|
2022
|
|
2023
|
Assets
|
|
|
|
Cash and
equivalents
|
$2,529
|
|
$9,957
|
Receivables, net
|
2,135
|
|
2,491
|
Inventories
|
1,830
|
|
2,085
|
Other current
assets
|
1,357
|
|
1,227
|
Current assets
held-for-sale
|
1,524
|
|
—
|
Total current assets
|
9,375
|
|
15,760
|
Property, plant &
equipment, net
|
2,276
|
|
2,268
|
Goodwill
|
14,028
|
|
14,131
|
Other intangible
assets
|
6,772
|
|
6,147
|
Copeland note receivable and
equity investment
|
—
|
|
3,359
|
Other
|
2,353
|
|
2,508
|
Noncurrent assets
held-for-sale
|
2,238
|
|
—
|
Total assets
|
$37,042
|
|
$44,173
|
|
|
|
|
Liabilities and
equity
|
|
|
|
Short-term borrowings and
current
|
|
|
|
maturities
of long-term debt
|
$3,227
|
|
$667
|
Accounts payable
|
1,228
|
|
1,218
|
Accrued expenses
|
3,013
|
|
4,729
|
Current liabilities
held-for-sale
|
1,344
|
|
—
|
Total current liabilities
|
8,812
|
|
6,614
|
Long-term debt
|
8,367
|
|
7,642
|
Other liabilities
|
3,385
|
|
3,504
|
Noncurrent liabilities
held-for-sale
|
191
|
|
—
|
Equity
|
|
|
|
Common stockholders'
equity
|
10,315
|
|
20,464
|
Noncontrolling interests in
subsidiaries
|
5,972
|
|
5,949
|
Total equity
|
16,287
|
|
26,413
|
Total liabilities and equity
|
$37,042
|
|
$44,173
|
|
|
|
|
Table
3
|
EMERSON AND
SUBSIDIARIES
|
CONSOLIDATED STATEMENTS
OF CASH FLOWS
|
(DOLLARS IN MILLIONS,
UNAUDITED)
|
|
|
|
|
|
|
Nine Months Ended June
30
|
|
|
2022
|
|
2023
|
Operating
activities
|
|
|
|
|
Net
earnings
|
|
$2,522
|
|
$12,462
|
Earnings from
discontinued operations, net of tax
|
|
(1,092)
|
|
(11,030)
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and amortization
|
|
571
|
|
780
|
Stock
compensation
|
|
91
|
|
198
|
Changes in
operating working capital
|
|
(361)
|
|
(369)
|
Gain on
subordinated interest
|
|
(453)
|
|
—
|
Other,
net
|
|
(43)
|
|
(322)
|
Cash from continuing operations
|
|
1,235
|
|
1,719
|
Cash from discontinued operations
|
|
470
|
|
(439)
|
Cash provided by operating activities
|
|
1,705
|
|
1,280
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Capital
expenditures
|
|
(199)
|
|
(194)
|
Purchases of
businesses, net of cash and equivalents acquired
|
|
(5,615)
|
|
—
|
Proceeds from
subordinated interest
|
|
438
|
|
15
|
Proceeds from related
party note receivable
|
|
—
|
|
918
|
Other, net
|
|
(38)
|
|
(124)
|
Cash from continuing operations
|
|
(5,414)
|
|
615
|
Cash from discontinued operations
|
|
439
|
|
12,485
|
Cash provided by (used in) investing activities
|
|
(4,975)
|
|
13,100
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Net increase
(decrease) in short-term borrowings
|
|
1,633
|
|
(1,476)
|
Proceeds from
short-term borrowings greater than three months
|
|
1,162
|
|
395
|
Payments of short-term
borrowings greater than three months
|
|
(445)
|
|
(400)
|
Proceeds from
long-term debt
|
|
2,975
|
|
—
|
Payments of long-term
debt
|
|
(512)
|
|
(744)
|
Dividends
paid
|
|
(918)
|
|
(900)
|
Purchases of common
stock
|
|
(418)
|
|
(2,000)
|
AspenTech purchases of
common stock
|
|
—
|
|
(100)
|
Payment of related
party note payable
|
|
—
|
|
(918)
|
Other, net
|
|
80
|
|
(159)
|
Cash provided by (used in) financing activities
|
|
3,557
|
|
(6,302)
|
|
|
|
|
|
Effect of exchange rate
changes on cash and equivalents
|
|
(112)
|
|
75
|
Increase in cash and
equivalents
|
|
175
|
|
8,153
|
Beginning cash and
equivalents
|
|
2,354
|
|
1,804
|
Ending cash and
equivalents
|
|
$2,529
|
|
$9,957
|
|
|
|
|
|
Table
4
|
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 June
30
|
|
|
2022
|
|
2023
|
|
Reported
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
Final
Control
|
$905
|
|
$1,035
|
|
14 %
|
|
16 %
|
|
Measurement &
Analytical
|
788
|
|
913
|
|
16 %
|
|
20 %
|
|
Discrete
Automation
|
633
|
|
668
|
|
6 %
|
|
6 %
|
|
Safety &
Productivity
|
360
|
|
363
|
|
1 %
|
|
— %
|
|
Intelligent
Devices
|
$2,686
|
|
$2,979
|
|
11 %
|
|
13 %
|
|
|
|
|
|
|
|
|
|
|
Control Systems &
Software
|
568
|
|
663
|
|
17 %
|
|
19 %
|
|
AspenTech
|
239
|
|
320
|
|
34 %
|
|
— %
|
|
Software and
Control
|
$807
|
|
$983
|
|
22 %
|
|
19 %
|
|
|
|
|
|
|
|
|
|
|
Eliminations
|
(28)
|
|
(16)
|
|
|
|
|
|
Total
|
$3,465
|
|
$3,946
|
|
14 %
|
|
14 %
|
|
Sales Growth by
Geography
|
|
|
|
|
|
|
|
|
Quarter Ended
June 30
|
|
|
|
|
Americas
|
11 %
|
|
|
|
|
|
|
Europe
|
13 %
|
|
|
|
|
|
|
Asia, Middle East &
Africa
|
20 %
|
|
|
|
|
|
|
Table
4 cont.
|
|
|
Nine Months Ended June
30
|
|
2022
|
|
2023
|
|
Reported
|
|
Underlying
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
Final
Control
|
$2,606
|
|
$2,889
|
|
11 %
|
|
15 %
|
Measurement &
Analytical
|
2,294
|
|
2,550
|
|
11 %
|
|
16 %
|
Discrete
Automation
|
1,894
|
|
1,969
|
|
4 %
|
|
7 %
|
Safety &
Productivity
|
1,066
|
|
1,034
|
|
(3) %
|
|
(2) %
|
Intelligent
Devices
|
$7,860
|
|
$8,442
|
|
7 %
|
|
11 %
|
|
|
|
|
|
|
|
|
Control Systems &
Software
|
1,711
|
|
1,892
|
|
11 %
|
|
15 %
|
AspenTech
|
405
|
|
793
|
|
96 %
|
|
— %
|
Software and
Control
|
$2,116
|
|
$2,685
|
|
27 %
|
|
15 %
|
|
|
|
|
|
|
|
|
Eliminations
|
(64)
|
|
(52)
|
|
|
|
|
Total
|
$9,912
|
|
$11,075
|
|
12 %
|
|
12 %
|
Sales Growth by
Geography
|
|
|
|
|
|
|
|
|
Nine Months
Ended June 30
|
|
|
|
|
Americas
|
13 %
|
|
|
|
|
|
|
Europe
|
10 %
|
|
|
|
|
|
|
Asia, Middle East &
Africa
|
11 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table
4 cont.
|
|
|
Quarter Ended June
30
|
|
Quarter Ended June
30
|
|
2022
|
|
2023
|
|
As
Reported
(GAAP)
|
|
Adjusted
EBITA
(Non-
GAAP)
|
|
As
Reported
(GAAP)
|
|
Adjusted
EBITA
(Non-
GAAP)
|
Earnings
|
|
|
|
|
|
|
|
Final
Control
|
$150
|
|
$191
|
|
$245
|
|
$266
|
Margins
|
16.6 %
|
|
21.2 %
|
|
23.7 %
|
|
25.7 %
|
Measurement &
Analytical
|
189
|
|
197
|
|
257
|
|
263
|
Margins
|
23.9 %
|
|
25.1 %
|
|
28.1 %
|
|
28.7 %
|
Discrete
Automation
|
115
|
|
124
|
|
124
|
|
144
|
Margins
|
18.2 %
|
|
19.6 %
|
|
18.5 %
|
|
21.4 %
|
Safety &
Productivity
|
69
|
|
75
|
|
82
|
|
88
|
Margins
|
19.3 %
|
|
20.6 %
|
|
22.7 %
|
|
24.3 %
|
Intelligent
Devices
|
$523
|
|
$587
|
|
$708
|
|
$761
|
Margins
|
19.5 %
|
|
21.9 %
|
|
23.7 %
|
|
25.5 %
|
|
|
|
|
|
|
|
|
Control Systems &
Software
|
77
|
|
90
|
|
144
|
|
151
|
Margins
|
13.5 %
|
|
15.7 %
|
|
21.8 %
|
|
22.8 %
|
AspenTech
|
57
|
|
129
|
|
27
|
|
148
|
Margins
|
23.7 %
|
|
53.8 %
|
|
8.2 %
|
|
46.1 %
|
Software and
Control
|
$134
|
|
$219
|
|
$171
|
|
$299
|
Margins
|
16.5 %
|
|
27.0 %
|
|
17.4 %
|
|
30.4 %
|
|
|
|
|
|
|
|
|
Corporate items and
interest expense, net:
|
|
|
|
|
|
|
|
Stock
compensation
|
(15)
|
|
(15)
|
|
(56)
|
|
(56)
|
Unallocated pension and
postretirement costs
|
25
|
|
25
|
|
42
|
|
42
|
Corporate and
other
|
(239)
|
|
(15)
|
|
(43)
|
|
(19)
|
Copeland equity method
investment loss
|
—
|
|
—
|
|
(61)
|
|
—
|
Interest expense,
net
|
(50)
|
|
—
|
|
(10)
|
|
—
|
Interest income from
related party1
|
—
|
|
—
|
|
10
|
|
—
|
|
|
|
|
|
|
|
|
Pretax Earnings /
Adjusted EBITA
|
$378
|
|
$801
|
|
$761
|
|
$1,027
|
Margins
|
10.9 %
|
|
23.1 %
|
|
19.3 %
|
|
26.0 %
|
|
|
|
|
|
|
|
|
Supplemental Total
Segment Earnings:
|
|
|
|
|
|
|
|
Adjusted Total
Segment EBITA
|
|
|
$806
|
|
|
|
$1,060
|
Margins
|
|
|
23.2 %
|
|
|
|
26.9 %
|
|
|
|
|
|
|
|
|
1 Represents
interest on the Copeland note receivable.
|
Table
4 cont.
|
|
|
Quarter Ended June
30
|
|
Quarter Ended June
30
|
|
2022
|
|
2023
|
|
Amortization
of
Intangibles1
|
|
Restructuring
and
Related
Costs2
|
|
Amortization
of
Intangibles1
|
|
Restructuring
and
Related
Costs2
|
Final
Control
|
$23
|
|
$18
|
|
$22
|
|
$(1)
|
Measurement &
Analytical
|
4
|
|
4
|
|
5
|
|
1
|
Discrete
Automation
|
8
|
|
1
|
|
8
|
|
12
|
Safety &
Productivity
|
7
|
|
(1)
|
|
7
|
|
(1)
|
Intelligent
Devices
|
$42
|
|
$22
|
|
$42
|
|
$11
|
|
|
|
|
|
|
|
|
Control Systems &
Software
|
6
|
|
7
|
|
6
|
|
1
|
AspenTech
|
71
|
|
1
|
|
121
|
|
—
|
Software and
Control
|
$77
|
|
$8
|
|
$127
|
|
$1
|
|
|
|
|
|
|
|
|
Corporate
|
—
|
|
10
|
|
—
|
|
1
|
Total
|
$119
|
|
$40
|
|
$169
|
|
$13
|
|
|
|
|
|
|
|
|
1
Amortization of intangibles includes $31 and $49 reported in cost
of sales for the three months ended June 30, 2022 and 2023,
respectively.
|
2
Restructuring and related costs includes $11 and $1 reported in
cost of sales and selling, general and administrative expenses for
the three months ended June 30, 2022 and 2023,
respectively.
|
|
Quarter Ended June
30
|
|
2022
|
|
2023
|
|
|
|
|
Depreciation and
Amortization
|
|
|
|
Final
Control
|
$53
|
|
$39
|
Measurement &
Analytical
|
27
|
|
26
|
Discrete
Automation
|
22
|
|
20
|
Safety &
Productivity
|
15
|
|
15
|
Intelligent
Devices
|
117
|
|
100
|
|
|
|
|
Control Systems &
Software
|
24
|
|
22
|
AspenTech
|
72
|
|
123
|
Software and
Control
|
96
|
|
145
|
|
|
|
|
Corporate
|
9
|
|
12
|
Total
|
$222
|
|
$257
|
Table
5
|
|
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 June
30
|
Corporate and
Other
|
|
|
|
|
2022
|
|
2023
|
Corporate and
other (GAAP)
|
|
|
|
|
$(239)
|
|
$(43)
|
Corporate
restructuring and related costs
|
|
|
|
|
1
|
|
1
|
National
Instruments investment gain
|
|
|
|
|
—
|
|
(12)
|
Acquisition /
divestiture costs
|
|
|
|
|
61
|
|
38
|
Russia business
exit
|
|
|
|
|
162
|
1
|
—
|
AspenTech
Micromine purchase price hedge
|
|
|
|
|
—
|
|
(3)
|
|
|
|
|
|
|
|
|
Adjusted
corporate and other (Non-GAAP)
|
|
|
|
|
$(15)
|
|
$(19)
|
|
|
|
|
|
|
|
|
1 The Russia
business exit charge includes $9 of 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, 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 fees, interest income on undeployed proceeds, 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 June
30
|
|
2022
|
|
2023
|
|
|
|
|
Pretax
earnings
|
$378
|
|
$761
|
Percent of
sales
|
10.9 %
|
|
19.3 %
|
Interest expense,
net
|
50
|
|
10
|
Interest income from
related party1
|
—
|
|
(10)
|
Amortization of
intangibles
|
119
|
|
169
|
Restructuring and
related costs
|
31
|
|
13
|
Acquisition/divestiture costs
|
61
|
|
38
|
National Instruments
investment gain
|
—
|
|
(12)
|
Copeland equity method
investment loss
|
—
|
|
61
|
Russia business
exit
|
162
|
|
—
|
AspenTech Micromine
purchase price hedge
|
—
|
|
(3)
|
Adjusted
EBITA
|
$801
|
|
$1,027
|
Percent of
sales
|
23.1 %
|
|
26.0 %
|
|
|
|
|
|
Quarter Ended June
30
|
|
2022
|
|
2023
|
|
|
|
|
GAAP earnings from
continuing operations per share
|
$0.38
|
|
$1.03
|
|
|
|
|
Amortization of
intangibles
|
0.12
|
|
0.15
|
Restructuring and
related costs
|
0.04
|
|
0.02
|
Acquisition/divestiture costs and pre-acquisition
interest on AspenTech debt
|
0.09
|
|
0.07
|
National Instruments
investment gain
|
—
|
|
(0.02)
|
Interest income on
undeployed proceeds from Copeland transaction
|
—
|
|
(0.05)
|
Copeland equity method
investment loss
|
—
|
|
0.09
|
Russia business
exit
|
0.29
|
|
—
|
|
|
|
|
Adjusted earnings
from continuing operations per share
|
$0.92
|
|
$1.29
|
|
|
|
|
Less: AspenTech
contribution to adjusted earnings per share
|
|
|
(0.11)
|
|
|
|
|
Adjusted earnings
per share excluding AspenTech contribution
|
|
|
$1.18
|
|
|
|
|
1 Represents
interest on the Copeland note receivable
|
Table
6 cont.
|
|
Quarter Ended June 30,
2023
|
|
Pretax
Earnings
|
|
Income
Taxes
|
|
Earnings
from
Cont.
Ops.
|
|
Non-Controlling
Interests3
|
|
Net
Earnings
Common
Stockholders
|
|
Diluted
Earnings
Per
Share
|
As reported
(GAAP)
|
$761
|
|
$158
|
|
$603
|
|
$11
|
|
$592
|
|
$1.03
|
Amortization of
intangibles
|
169
|
1
|
39
|
|
130
|
|
42
|
|
88
|
|
0.15
|
Restructuring and
related costs
|
13
|
2
|
3
|
|
10
|
|
—
|
|
10
|
|
0.02
|
Acquisition/divestiture
costs
|
38
|
|
2
|
|
36
|
|
—
|
|
36
|
|
0.07
|
National Instruments
investment gain
|
(12)
|
|
(3)
|
|
(9)
|
|
—
|
|
(9)
|
|
(0.02)
|
Interest income on
undeployed proceeds
|
(35)
|
|
(8)
|
|
(27)
|
|
—
|
|
(27)
|
|
(0.05)
|
Copeland equity method
investment loss
|
61
|
|
10
|
|
51
|
|
—
|
|
51
|
|
0.09
|
AspenTech Micromine
purchase price hedge
|
(3)
|
|
(1)
|
|
(2)
|
|
(1)
|
|
(1)
|
|
0.00
|
Adjusted
(Non-GAAP)
|
$992
|
|
$200
|
|
$792
|
|
$52
|
|
$740
|
|
$1.29
|
Interest expense, net
(excluding interest income on undeployed proceeds)
|
45
|
|
|
|
|
|
|
|
|
|
|
Interest income from
related party4
|
(10)
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITA
(Non-GAAP)
|
$1,027
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
Amortization of intangibles includes $49 reported in cost of
sales.
|
2
Restructuring and related costs includes $1 reported in cost of
sales.
|
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 56 percent of the common shares outstanding
of AspenTech, a separately traded public company
(NASDAQ: AZPN), and consolidates AspenTech in its
financial results. The 44 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 June 30,
2023
|
|
Pretax
Earnings
|
|
Income
Taxes
(Benefit)
|
|
Earnings
from
Cont.
Ops.
|
|
Non-Controlling
Interests5
|
|
Net
Earnings
Common
Stockholders
|
|
Diluted
Earnings
Per
Share
|
Standalone reporting
(GAAP)
|
$23
|
1
|
$(4)
|
|
$27
|
|
|
|
|
|
|
Interim tax
reporting/Other
|
(1)
|
|
2
|
2
|
(3)
|
|
|
|
|
|
|
Reported in Emerson
consolidation (GAAP)
|
22
|
|
(2)
|
|
24
|
|
10
|
|
14
|
|
$0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
121
|
3
|
26
|
|
95
|
|
42
|
|
53
|
|
0.09
|
AspenTech Micromine
purchase price hedge
|
(3)
|
4
|
(1)
|
|
(2)
|
|
(1)
|
|
(1)
|
|
0.00
|
Adjusted
(Non-GAAP)
|
$140
|
|
$23
|
|
$117
|
|
$51
|
|
$66
|
|
$0.11
|
Interest
income
|
(13)
|
4
|
|
|
|
|
|
|
|
|
|
Stock
compensation
|
21
|
4
|
|
|
|
|
|
|
|
|
|
Adjusted Segment
EBITA (Non-GAAP)
|
$148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Segment
EBIT
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax
earnings
|
$22
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
(13)
|
4
|
|
|
|
|
|
|
|
|
|
Stock
compensation
|
21
|
4
|
|
|
|
|
|
|
|
|
|
Micromine purchase
price hedge
|
(3)
|
4
|
|
|
|
|
|
|
|
|
|
Segment EBIT
(GAAP)
|
$27
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles
|
121
|
3
|
|
|
|
|
|
|
|
|
|
Adjusted Segment
EBITA (Non-GAAP)
|
$148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Amount
reflects AspenTech's pretax earnings for the three months ended
June 30, 2023 as reported in its quarterly earnings release
8-K.
|
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 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 $47 reported in cost of
sales.
|
4 Reported
in Emerson corporate line items.
|
5 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 FY23 Underlying
Sales Change
|
|
|
|
Final
Control
|
Measurement
& Analytical
|
Discrete
Automation
|
Safety &
Productivity
|
Intelligent
Devices
|
|
Reported
(GAAP)
|
|
14 %
|
16 %
|
6 %
|
1 %
|
11 %
|
|
(Favorable) /
Unfavorable FX
|
|
1 %
|
1 %
|
— %
|
(1) %
|
1 %
|
|
(Acquisitions)
|
|
— %
|
— %
|
— %
|
— %
|
— %
|
|
Divestitures
|
|
1 %
|
3 %
|
— %
|
— %
|
1 %
|
|
Underlying
(Non-GAAP)
|
|
16 %
|
20 %
|
6 %
|
— %
|
13 %
|
|
|
|
|
|
|
|
|
|
|
|
Q3 FY23 Underlying
Sales Change
|
|
Control
Systems
&
Software
|
AspenTech
|
Software
and
Control
|
|
Emerson
|
|
Reported
(GAAP)
|
|
17 %
|
34 %
|
22 %
|
|
14 %
|
|
(Favorable) /
Unfavorable FX
|
|
1 %
|
— %
|
— %
|
|
1 %
|
|
(Acquisitions)
|
|
— %
|
(34) %
|
(4) %
|
|
(2) %
|
|
Divestitures
|
|
1 %
|
|
1 %
|
|
1 %
|
|
Underlying
(Non-GAAP)
|
|
19 %
|
— %
|
19 %
|
|
14 %
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
June 30, 2023 Underlying Sales Change
|
|
Final
Control
|
Measurement
& Analytical
|
Discrete
Automation
|
Safety &
Productivity
|
Intelligent
Devices
|
|
Reported
(GAAP)
|
|
11 %
|
11 %
|
4 %
|
(3) %
|
7 %
|
|
(Favorable) /
Unfavorable FX
|
|
3 %
|
3 %
|
3 %
|
1 %
|
3 %
|
|
(Acquisitions)
|
|
— %
|
— %
|
— %
|
— %
|
— %
|
|
Divestitures
|
|
1 %
|
2 %
|
— %
|
— %
|
1 %
|
|
Underlying
(Non-GAAP)
|
|
15 %
|
16 %
|
7 %
|
(2) %
|
11 %
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
June 30, 2023 Underlying Sales Change
|
|
Control
Systems
&
Software
|
AspenTech
|
Software
and
Control
|
|
Emerson
|
|
Reported
(GAAP)
|
|
11 %
|
96 %
|
27 %
|
|
12 %
|
|
(Favorable) /
Unfavorable FX
|
|
3 %
|
— %
|
3 %
|
|
3 %
|
|
(Acquisitions)
|
|
— %
|
(96) %
|
(16) %
|
|
(4) %
|
|
Divestitures
|
|
1 %
|
— %
|
1 %
|
|
1 %
|
|
Underlying
(Non-GAAP)
|
|
15 %
|
— %
|
15 %
|
|
12 %
|
|
|
|
|
|
|
|
|
|
|
|
2023E August
Guidance Underlying Sales
|
|
FY23E
|
|
|
|
|
|
Reported
(GAAP)
|
|
~ 10.5%
|
|
|
|
|
|
(Favorable) /
Unfavorable FX
|
|
~ 1.5%
|
|
|
|
|
|
(Acquisitions)
|
|
~ (2.5)%
|
|
|
|
|
|
Divestitures
|
|
~ 0.5%
|
|
|
|
|
|
Underlying
(Non-GAAP)
|
|
~ 10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Final Control
Adjusted EBITA
|
|
|
|
Q3
2022
|
Q3
2023
|
Q3
2022
|
Q3
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$150
|
$245
|
16.6 %
|
23.7 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
41
|
21
|
4.6 %
|
2.0 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$191
|
$266
|
21.2 %
|
25.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Measurement &
Analytical Adjusted EBITA
|
|
|
|
Q3
2022
|
Q3
2023
|
Q3
2022
|
Q3
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$189
|
$257
|
23.9 %
|
28.1 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
8
|
6
|
1.2 %
|
0.6 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$197
|
$263
|
25.1 %
|
28.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Discrete Automation
Adjusted EBITA
|
|
|
|
Q3
2022
|
Q3
2023
|
Q3
2022
|
Q3
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$115
|
$124
|
18.2 %
|
18.5 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
9
|
20
|
1.4 %
|
2.9 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$124
|
$144
|
19.6 %
|
21.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Safety &
Productivity Adjusted EBITA
|
|
|
|
Q3
2022
|
Q3
2023
|
Q3
2022
|
Q3
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$69
|
$82
|
19.3 %
|
22.7 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
6
|
6
|
1.3 %
|
1.6 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$75
|
$88
|
20.6 %
|
24.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Intelligent Devices
Adjusted EBITA
|
|
|
|
Q3
2022
|
Q3
2023
|
Q3
2022
|
Q3
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$523
|
$708
|
19.5 %
|
23.7 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
64
|
53
|
2.4 %
|
1.8 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$587
|
$761
|
21.9 %
|
25.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Control Systems
& Software Adjusted EBITA
|
|
|
|
Q3
2022
|
Q3
2023
|
Q3
2022
|
Q3
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$77
|
$144
|
13.5 %
|
21.8 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
13
|
7
|
2.2 %
|
1.0 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$90
|
$151
|
15.7 %
|
22.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AspenTech Adjusted
EBITA
|
|
|
|
Q3
2022
|
Q3
2023
|
Q3
2022
|
Q3
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$57
|
$27
|
23.7 %
|
8.2 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
72
|
121
|
30.1 %
|
37.9 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$129
|
$148
|
53.8 %
|
46.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Software and Control
Adjusted EBITA
|
|
|
|
Q3
2022
|
Q3
2023
|
Q3
2022
|
Q3
2023
|
|
|
Business Segment EBIT /
EBIT margin (GAAP)
|
|
$134
|
$171
|
16.5 %
|
17.4 %
|
|
|
Amortization of
intangibles and restructuring and related costs
|
|
85
|
128
|
10.5 %
|
13.0 %
|
|
|
Adjusted Business
Segment EBITA / EBITA margin (Non-GAAP)
|
|
$219
|
$299
|
27.0 %
|
30.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Business
Segment Adjusted EBITA Margin
|
|
|
|
Q3
2022
|
Q3
2023
|
Q3
2022
|
Q3
2023
|
Change
|
|
Pretax earnings /
margin (GAAP)
|
|
$378
|
$761
|
10.9 %
|
19.3 %
|
840 bps
|
|
Corporate items and
interest expense, net
|
|
279
|
118
|
8.1 %
|
3.0 %
|
(510)bps
|
|
Total Business Segment
EBIT / margin
|
|
$657
|
$879
|
19.0 %
|
22.3 %
|
330 bps
|
|
Amortization of
intangibles and restructuring and related costs
|
$149
|
$181
|
4.2 %
|
4.6 %
|
40 bps
|
|
Adjusted Total Business
Segment EBITA / margin (Non-GAAP)
|
$806
|
$1,060
|
23.2 %
|
26.9 %
|
370 bps
|
|
|
|
|
|
|
|
|
|
|
|
Q3 Earnings Per
Share
|
|
|
|
Q3
FY22
|
Q3
FY23
|
Change
|
|
|
|
Earnings per share
(GAAP)
|
|
$
0.38
|
$
1.03
|
171 %
|
|
|
|
Amortization of
intangibles
|
|
0.12
|
0.15
|
|
|
|
|
Restructuring and
related costs
|
|
0.04
|
0.02
|
|
|
|
|
Acquisition/divestiture
costs
|
|
|
|
0.09
|
0.07
|
|
|
|
|
National Instruments
investment gain
|
|
—
|
(0.02)
|
|
|
|
|
Interest income on
undeployed proceeds
|
|
—
|
(0.05)
|
|
|
|
|
Copeland equity method
investment loss
|
|
—
|
0.09
|
|
|
|
|
Russia business
exit
|
|
0.29
|
—
|
|
|
|
|
Adjusted earnings per
share (Non-GAAP)
|
|
$
0.92
|
$
1.29
|
40 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023E August
Guidance Earnings Per Share
|
|
FY23E
|
|
|
|
|
|
Earnings per share
(GAAP)
|
|
$3.54 -
$3.59
|
|
|
|
|
|
Amortization of
intangibles
|
|
~ 0.61
|
|
|
|
|
|
Restructuring and
related costs
|
|
~ 0.16
|
|
|
|
|
|
Russia business
exit
|
|
0.08
|
|
|
|
|
|
AspenTech Micromine
purchase price hedge
|
|
(0.02)
|
|
|
|
|
|
Acquisition/divestiture
fees
|
|
~ 0.10
|
|
|
|
|
|
National Instruments
investment gain
|
|
~ (0.07)
|
|
|
|
|
|
Interest income on
undeployed proceeds
|
|
~ (0.19)
|
|
|
|
|
|
Copeland equity
loss
|
|
~ 0.19
|
|
|
|
|
|
Adjusted earnings per
share (Non-GAAP)
|
|
$4.40 -
$4.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flow
|
|
|
|
Q3
FY22
|
Q3
FY23
|
Change
|
|
FY23E
($ in
billions)
|
|
Operating cash flow
(GAAP)
|
|
|
|
$
479
|
$
842
|
76 %
|
|
$2.5 - $2.6
|
|
Capital
expenditures
|
|
|
|
(59)
|
(73)
|
7 %
|
|
~(0.3)
|
|
Free cash flow
(Non-GAAP)
|
|
|
|
$
420
|
$
769
|
83 %
|
|
$2.2 - $2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
Contacts
|
|
Investors
|
Media
|
Colleen Mettler
|
Joseph Sala / Tanner
Kaufman / Greg Klassen
|
(314)
553-2197
|
Joele Frank, Wilkinson
Brimmer Katcher
|
|
(212)
355-4449
|
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SOURCE Emerson