Emerson Reports Fourth Quarter and Full Year 2024 Results; Provides Initial 2025 Outlook
ST. LOUIS, Nov. 5, 2024 /PRNewswire/ -- Emerson (NYSE: EMR) today reported results1 for its fourth quarter and fiscal year ended September 30, 2024. Emerson also declared a quarterly cash dividend increase to $0.5275 per share of common stock payable December 10, 2024 to stockholders of record November 15, 2024.
(dollars in millions, except per share) | 2023 Q4 | 2024 Q4 | Change | 2023 | 2024 | Change | ||
Underlying Orders2 | 2 % | 2 % | ||||||
Net Sales | $4,090 | $4,619 | 13 % | $15,165 | $17,492 | 15 % | ||
Underlying Sales3 | 4 % | 6 % | ||||||
Pretax Earnings | $1,020 | $679 | $2,903 | $2,020 | ||||
Margin | 24.9 % | 14.7 % | (1020) bps | 19.1 % | 11.5 % | (760) bps | ||
Adjusted Segment EBITA4 | $1,045 | $1,210 | $3,794 | $4,552 | ||||
Margin | 25.5 % | 26.2 % | 70 bps | 25.0 % | 26.0 % | 100 bps | ||
GAAP Earnings Per Share | $1.36 | $0.97 | (29) % | $3.96 | $2.82 | (29) % | ||
Adjusted Earnings Per Share5 | $1.29 | $1.48 | 15 % | $4.44 | $5.49 | 24 % | ||
Operating Cash Flow | $991 | $1,073 | 8 % | $2,710 | $3,317 | 22 % | ||
Free Cash Flow | $822 | $905 | 10 % | $2,347 | $2,898 | 23 % |
Management Commentary
"Emerson completed an outstanding fiscal 2024, with strong underlying sales growth, operating leverage, adjusted earnings per share and cash generation. I want to thank our employees around the world for their commitment and passion which were integral to delivering these results," said Emerson President and Chief Executive Officer Lal Karsanbhai. "We have done an exceptional job integrating Test & Measurement with $100 million of synergies realized in the first year, and we remain resolute in our focus on executing at a world-class level, guided by our Emerson Management System. Emerson's leading technology, alignment with secular trends and customer focus provide confidence for continued momentum in fiscal 2025."
Karsanbhai continued, "We have made significant progress on our value-creation roadmap over the past three years, and the strategic actions announced today mark the final phase of our portfolio transformation to an industrial technology leader delivering advanced automation solutions. The actions we are taking, combined with our solid fiscal 2024 financial results, demonstrate the benefits and potential of Emerson's higher growth and higher margin portfolio. We are energized to complete our transformation and continue creating value for shareholders over the near- and long-term."
2025 Outlook
The following tables summarize the fiscal year 2025 guidance framework and does not include any impact from the proposed portfolio transactions announced today. The 2025 outlook assumes approximately $1.2 billion of dividend payments. Guidance figures are approximate.
2025 Q1 | 2025 | |
Net Sales Growth | 2.5% - 3.5% | 3.5% - 5.5% |
Underlying Sales Growth | 2% - 3% | 3% - 5% |
Earnings Per Share | $0.89 - $0.94 | $4.42 - $4.62 |
Amortization of Intangibles | ~$0.31 | ~$1.23 |
Restructuring / Related Costs | ~$0.04 | ~$0.16 |
Acquisition / Divestiture Fees and Related Costs | ~$0.01 | ~$0.04 |
Adjusted Earnings Per Share | $1.25 - $1.30 | $5.85 - $6.05 |
Operating Cash Flow | $3.6B - $3.7B | |
Free Cash Flow | $3.2B - $3.3B | |
Share Repurchase | ~$1.0B | ~$2.0B |
1 Results are presented on a continuing operations basis. |
2 Underlying orders do not include AspenTech. |
3 Underlying sales exclude 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, discrete taxes, an AspenTech Micromine purchase price hedge and write-offs associated with Emerson's Russia exit. |
Conference Call
Today, beginning at 7:00 a.m. Central Time / 8:00 a.m. Eastern Time, Emerson management will discuss the fourth quarter and fiscal year 2024 results, as well as the strategic actions announced in a separate press release this morning, 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.
Contacts
Investors: | Media: |
Colleen Mettler | Joseph Sala / Greg Klassen / Connor Murphy |
(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 September 30, | Year Ended September 30, | ||||||
2023 | 2024 | 2023 | 2024 | ||||
Net sales | $ 4,090 | $ 4,619 | $ 15,165 | $ 17,492 | |||
Costs and expenses: | |||||||
Cost of sales | 2,078 | 2,248 | 7,738 | 8,607 | |||
SG&A expenses | 1,114 | 1,315 | 4,186 | 5,142 | |||
Gain on subordinated interest | (161) | — | (161) | (79) | |||
Loss on Copeland note receivable | — | — | — | 279 | |||
Other deductions, net | 147 | 359 | 506 | 1,434 | |||
Interest expense (income), net | (77) | 18 | 34 | 175 | |||
Interest income from related party1 | (31) | — | (41) | (86) | |||
Earnings from continuing operations before income taxes | 1,020 | 679 | 2,903 | 2,020 | |||
Income taxes | 242 | 149 | 642 | 415 | |||
Earnings from continuing operations | 778 | 530 | 2,261 | 1,605 | |||
Discontinued operations, net of tax | (40) | 438 | 10,939 | 350 | |||
Net earnings | 738 | 968 | 13,200 | 1,955 | |||
Less: Noncontrolling interests in subsidiaries | (6) | (28) | (19) | (13) | |||
Net earnings common stockholders | $ 744 | $ 996 | $ 13,219 | $ 1,968 | |||
Earnings common stockholders | |||||||
Earnings from continuing operations | $ 784 | $ 558 | $ 2,286 | $ 1,618 | |||
Discontinued operations | (40) | 438 | 10,933 | 350 | |||
Net earnings common stockholders | $ 744 | $ 996 | $ 13,219 | $ 1,968 | |||
Diluted avg. shares outstanding | 574.7 | 573.9 | 577.3 | 574.0 | |||
Diluted earnings per share common stockholders | |||||||
Earnings from continuing operations | $ 1.36 | $ 0.97 | $ 3.96 | $ 2.82 | |||
Discontinued operations | (0.07) | 0.76 | 18.92 | 0.61 | |||
Diluted earnings per common share | $ 1.29 | $ 1.73 | $ 22.88 | $ 3.43 | |||
Quarter Ended September 30, | Year Ended September 30, | ||||||
2023 | 2024 | 2023 | 2024 | ||||
Other deductions, net | |||||||
Amortization of intangibles | $ 125 | $ 266 | $ 482 | $ 1,077 | |||
Restructuring costs | 31 | 58 | 72 | 228 | |||
Other | (9) | 35 | (48) | 129 | |||
Total | $ 147 | $ 359 | $ 506 | $ 1,434 | |||
1 Represents interest on the Copeland note receivable. | |||||||
Table 2 | |||
EMERSON AND SUBSIDIARIES | |||
CONSOLIDATED BALANCE SHEETS | |||
(DOLLARS IN MILLIONS, UNAUDITED) | |||
Year Ended Sept 30 | |||
2023 | 2024 | ||
Assets | |||
Cash and equivalents | $ 8,051 | $ 3,588 | |
Receivables, net | 2,518 | 2,927 | |
Inventories | 2,006 | 2,180 | |
Other current assets | 1,244 | 1,497 | |
Total current assets | 13,819 | 10,192 | |
Property, plant & equipment, net | 2,363 | 2,807 | |
Goodwill | 14,480 | 18,067 | |
Other intangible assets | 6,263 | 10,436 | |
Copeland note receivable and equity investment held-for-sale | 3,255 | — | |
Other | 2,566 | 2,744 | |
Total assets | $ 42,746 | $ 44,246 | |
Liabilities and equity | |||
Short-term borrowings and current | |||
maturities of long-term debt | $ 547 | $ 532 | |
Accounts payable | 1,275 | 1,335 | |
Accrued expenses | 3,210 | 3,875 | |
Total current liabilities | 5,032 | 5,742 | |
Long-term debt | 7,610 | 7,155 | |
Other liabilities | 3,506 | 3,840 | |
Equity | |||
Common stockholders' equity | 20,689 | 21,636 | |
Noncontrolling interests in subsidiaries | 5,909 | 5,873 | |
Total equity | 26,598 | 27,509 | |
Total liabilities and equity | $ 42,746 | $ 44,246 | |
Table 3 | ||||
EMERSON AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(DOLLARS IN MILLIONS, UNAUDITED) | ||||
Year Ended Sept 30 | ||||
2023 | 2024 | |||
Operating activities | ||||
Net earnings | $ 13,200 | $ 1,955 | ||
Earnings from discontinued operations, net of tax | (10,939) | (350) | ||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||
Depreciation and amortization | 1,051 | 1,689 | ||
Stock compensation | 250 | 260 | ||
Amortization of acquisition-related inventory step-up | — | 231 | ||
Pension expense | (71) | (79) | ||
Pension funding | (43) | (38) | ||
Changes in operating working capital | (148) | (151) | ||
Gain on subordinated interest | (161) | (79) | ||
Loss on Copeland note receivable | — | 279 | ||
Other, net | (429) | (400) | ||
Cash from continuing operations | 2,710 | 3,317 | ||
Cash from discontinued operations | (2,073) | 15 | ||
Cash provided by operating activities | 637 | 3,332 | ||
Investing activities | ||||
Capital expenditures | (363) | (419) | ||
Purchases of businesses, net of cash and equivalents acquired | (705) | (8,342) | ||
Proceeds from subordinated interest | 176 | 79 | ||
Proceeds from related party note receivable | 918 | — | ||
Other, net | (141) | (114) | ||
Cash from continuing operations | (115) | (8,796) | ||
Cash from discontinued operations | 12,530 | 3,436 | ||
Cash provided by (used in) investing activities | 12,415 | (5,360) | ||
Financing activities | ||||
Net increase (decrease) in short-term borrowings | (1,578) | (15) | ||
Proceeds from short-term borrowings greater than three months | 395 | 322 | ||
Payments of short-term borrowings greater than three months | (400) | (327) | ||
Payments of long-term debt | (741) | (547) | ||
Dividends paid | (1,198) | (1,201) | ||
Purchases of common stock | (2,000) | (435) | ||
AspenTech purchases of common stock | (214) | (208) | ||
Payment of related party note payable | (918) | — | ||
Other, net | (169) | (44) | ||
Cash provided by (used in) financing activities | (6,823) | (2,455) | ||
Effect of exchange rate changes on cash and equivalents | 18 | 20 | ||
Increase (Decrease) in cash and equivalents | 6,247 | (4,463) | ||
Beginning cash and equivalents | 1,804 | 8,051 | ||
Ending cash and equivalents | $ 8,051 | $ 3,588 | ||
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 Sept 30 | ||||||||
2023 | 2024 | Reported | Underlying | |||||
Sales | ||||||||
Final Control | $ 1,081 | $ 1,167 | 8 % | 7 % | ||||
Measurement & Analytical | 1,045 | 1,119 | 7 % | 7 % | ||||
Discrete Automation | 666 | 643 | (3) % | (4) % | ||||
Safety & Productivity | 354 | 352 | (1) % | (1) % | ||||
Intelligent Devices | $ 3,146 | $ 3,281 | 4 % | 4 % | ||||
Control Systems & Software | 714 | 780 | 9 % | 9 % | ||||
Test & Measurement | — | 360 | ||||||
AspenTech | 249 | 215 | (13) % | (13) % | ||||
Software and Control | $ 963 | $ 1,355 | 41 % | 3 % | ||||
Eliminations | (19) | (17) | ||||||
Total | $ 4,090 | $ 4,619 | 13 % | 4 % | ||||
Sales Growth by Geography | |||||||
Quarter Ended Sept 30 | |||||||
Americas | 4 % | ||||||
Europe | — % | ||||||
Asia, Middle East & Africa | 6 % | ||||||
Table 4 cont.
| |||||||
Year Ended Sept 30 | |||||||
2023 | 2024 | Reported | Underlying | ||||
Sales | |||||||
Final Control | $ 3,970 | $ 4,204 | 6 % | 6 % | |||
Measurement & Analytical | 3,595 | 4,061 | 13 % | 14 % | |||
Discrete Automation | 2,635 | 2,506 | (5) % | (5) % | |||
Safety & Productivity | 1,388 | 1,390 | — % | — % | |||
Intelligent Devices | $ 11,588 | $ 12,161 | 5 % | 5 % | |||
Control Systems & Software | 2,606 | 2,842 | 9 % | 10 % | |||
Test & Measurement | — | 1,464 | |||||
AspenTech | 1,042 | 1,093 | 5 % | 5 % | |||
Software and Control | $ 3,648 | $ 5,399 | 48 % | 8 % | |||
Eliminations | (71) | (68) | |||||
Total | $ 15,165 | $ 17,492 | 15 % | 6 % | |||
Sales Growth by Geography | |||||||
Year Ended Sept 30 | |||||||
Americas | 4 % | ||||||
Europe | 7 % | ||||||
Asia, Middle East & Africa | 8 % | ||||||
Table 4 cont.
| |||||||
Quarter Ended Sept 30 | Quarter Ended Sept 30 | ||||||
2023 | 2024 | ||||||
As Reported (GAAP) | Adjusted EBITA (Non- GAAP) | As Reported (GAAP) | Adjusted EBITA (Non- GAAP) | ||||
Earnings | |||||||
Final Control | $ 247 | $ 285 | $ 271 | $ 305 | |||
Margins | 22.9 % | 26.4 % | 23.2 % | 26.1 % | |||
Measurement & Analytical | 275 | 298 | 295 | 326 | |||
Margins | 26.3 % | 28.4 % | 26.4 % | 29.2 % | |||
Discrete Automation | 131 | 145 | 144 | 154 | |||
Margins | 19.7 % | 21.8 % | 22.3 % | 23.9 % | |||
Safety & Productivity | 78 | 83 | 78 | 90 | |||
Margins | 21.9 % | 23.5 % | 22.2 % | 25.4 % | |||
Intelligent Devices | $ 731 | $ 811 | $ 788 | $ 875 | |||
Margins | 23.2 % | 25.8 % | 24.0 % | 26.6 % | |||
Control Systems & Software | 151 | 158 | 177 | 188 | |||
Margins | 21.1 % | 22.2 % | 22.7 % | 24.3 % | |||
Test & Measurement | — | — | (45) | 96 | |||
Margins | (12.4) % | 26.7 % | |||||
AspenTech | (47) | 76 | (79) | 51 | |||
Margins | (18.7) % | 30.2 % | (36.7) % | 23.2 % | |||
Software and Control | $ 104 | $ 234 | $ 53 | $ 335 | |||
Margins | 10.8 % | 24.3 % | 3.9 % | 24.7 % | |||
Corporate items and interest expense, net: | |||||||
Stock compensation | $ (52) | $ (52) | $ (57) | $ (52) | |||
Unallocated pension and postretirement costs | 38 | 38 | 37 | 37 | |||
Corporate and other | (70) | (41) | (124) | (60) | |||
Gain on subordinated interest | 161 | — | — | — | |||
Interest (expense) income, net | 77 | — | (18) | — | |||
Interest income from related party1 | 31 | — | — | — | |||
Pretax Earnings / Adjusted EBITA | $ 1,020 | $ 990 | $ 679 | $ 1,135 | |||
Margins | 24.9 % | 24.2 % | 14.7 % | 24.6 % | |||
Supplemental Total Segment Earnings: | |||||||
Adjusted Total Segment EBITA | $ 1,045 | $ 1,210 | |||||
Margins | 25.5 % | 26.2 % | |||||
1 Represents interest on the Copeland note receivable. | |||||||
Year Ended Sept 30 | Year Ended Sept 30 | ||||||
2023 | 2024 | ||||||
As Reported (GAAP) | Adjusted EBITA (Non- GAAP) | As Reported (GAAP) | Adjusted EBITA (Non- GAAP) | ||||
Earnings | |||||||
Final Control | $ 865 | $ 981 | $ 977 | $ 1,081 | |||
Margins | 21.8 % | 24.7 % | 23.2 % | 25.7 % | |||
Measurement & Analytical | 936 | 976 | 1,056 | 1,137 | |||
Margins | 26.0 % | 27.1 % | 26.0 % | 28.0 % | |||
Discrete Automation | 509 | 565 | 466 | 535 | |||
Margins | 19.3 % | 21.4 % | 18.6 % | 21.3 % | |||
Safety & Productivity | 306 | 332 | 308 | 341 | |||
Margins | 22.0 % | 23.9 % | 22.2 % | 24.5 % | |||
Intelligent Devices | $ 2,616 | $ 2,854 | $ 2,807 | $ 3,094 | |||
Margins | 22.6 % | 24.6 % | 23.1 % | 25.4 % | |||
Control Systems & Software | 529 | 560 | 645 | 686 | |||
Margins | 20.3 % | 21.5 % | 22.7 % | 24.1 % | |||
Test & Measurement | — | — | (290) | 351 | |||
Margins | (19.8) % | 24.0 % | |||||
AspenTech | (107) | 380 | (73) | 421 | |||
Margins | (10.3) % | 36.4 % | (6.7) % | 38.5 % | |||
Software and Control | $ 422 | $ 940 | $ 282 | $ 1,458 | |||
Margins | 11.6 % | 25.8 % | 5.2 % | 27.0 % | |||
Corporate items and interest expense, net: | |||||||
Stock compensation | (250) | (250) | (260) | (202) | |||
Unallocated pension and postretirement costs | 171 | 171 | 144 | 144 | |||
Corporate and other | (224) | (159) | (664) | (168) | |||
Gain on subordinated interest | 161 | — | 79 | — | |||
Loss on Copeland note receivable | — | — | (279) | — | |||
Interest (expense) income, net | (34) | — | (175) | — | |||
Interest income from related party1 | 41 | — | 86 | — | |||
Pretax Earnings / Adjusted EBITA | $ 2,903 | $ 3,556 | $ 2,020 | $ 4,326 | |||
Margins | 19.1 % | 23.4 % | 11.5 % | 24.7 % | |||
Supplemental Total Segment Earnings: | |||||||
Adjusted Total Segment EBITA | $ 3,794 | $ 4,552 | |||||
Margins | 25.0 % | 26.0 % | |||||
1 Represents interest on the Copeland note receivable. | |||||||
Table 4 cont.
| |||||||
Quarter Ended Sept 30 | Quarter Ended Sept 30 | ||||||
2023 | 2024 | ||||||
Amortization of Intangibles1 | Restructuring and Related Costs2 | Amortization of Intangibles1 | Restructuring and Related Costs2 | ||||
Final Control | $ 22 | $ 16 | $ 22 | $ 12 | |||
Measurement & Analytical | 12 | 11 | 12 | 19 | |||
Discrete Automation | 7 | 7 | 8 | 2 | |||
Safety & Productivity | 6 | (1) | 7 | 5 | |||
Intelligent Devices | $ 47 | $ 33 | $ 49 | $ 38 | |||
Control Systems & Software | 5 | 2 | 4 | 7 | |||
Test & Measurement | — | — | 141 | — | |||
AspenTech | 122 | 1 | 122 | 8 | |||
Software and Control | $ 127 | $ 3 | $ 267 | $ 15 | |||
Corporate | — | 2 | — | 11 | |||
Total | $ 174 | $ 38 | $ 316 | $ 64 | |||
1 Amortization of intangibles includes $49 and $49 reported in cost of sales for the three months ended September 30, 2023 and 2024, respectively. | |||||||
2 Restructuring and related costs includes $7 and $6 reported in cost of sales and selling, general and administrative expenses for the three months ended September 30, 2023 and 2024, respectively. |
Year Ended Sept 30 | Year Ended Sept 30 | ||||||
2023 | 2024 | ||||||
Amortization of Intangibles1 | Restructuring and Related Costs2 | Amortization of Intangibles1 | Restructuring and Related Costs2 | ||||
Final Control | $ 88 | $ 28 | $ 87 | $ 17 | |||
Measurement & Analytical | 27 | 13 | 55 | 26 | |||
Discrete Automation | 29 | 27 | 34 | 35 | |||
Safety & Productivity | 26 | — | 26 | 7 | |||
Intelligent Devices | $ 170 | $ 68 | $ 202 | $ 85 | |||
Control Systems & Software | 22 | 9 | 26 | 15 | |||
Test & Measurement | — | — | 560 | 81 | |||
AspenTech | 486 | 1 | 486 | 8 | |||
Software and Control | $ 508 | $ 10 | $ 1,072 | $ 104 | |||
Corporate | — | 14 | — | 55 | |||
Total | $ 678 | $ 92 | $ 1,274 | $ 244 | |||
1 Amortization of intangibles includes $196 and $196 reported in cost of sales for the twelve months ended September 30, 2023 and 2024, respectively. | |||||||
2 Restructuring and related costs includes $20 and $16 reported in cost of sales and selling, general and administrative expenses for the twelve months ended September 30, 2023 and 2024, respectively. |
Quarter Ended Sept 30 | |||
2023 | 2024 | ||
Depreciation and Amortization | |||
Final Control | $ 41 | $ 39 | |
Measurement & Analytical | 37 | 33 | |
Discrete Automation | 21 | 22 | |
Safety & Productivity | 13 | 15 | |
Intelligent Devices | 112 | 109 | |
Control Systems & Software | 23 | 26 | |
Test & Measurement | — | 153 | |
AspenTech | 123 | 124 | |
Software and Control | 146 | 303 | |
Corporate | 13 | 14 | |
Total | $ 271 | $ 426 | |
Year Ended Sept 30 | |||
2023 | 2024 | ||
Depreciation and Amortization | |||
Final Control | $ 170 | $ 159 | |
Measurement & Analytical | 121 | 138 | |
Discrete Automation | 84 | 87 | |
Safety & Productivity | 57 | 58 | |
Intelligent Devices | 432 | 442 | |
Control Systems & Software | 90 | 101 | |
Test & Measurement | — | 607 | |
AspenTech | 492 | 493 | |
Software and Control | 582 | 1,201 | |
Corporate | 37 | 46 | |
Total | $ 1,051 | $ 1,689 | |
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 Sept 30, | ||||||||
2023 | 2024 | |||||||
Stock compensation (GAAP) | $ (52) | $ (57) | ||||||
Integration-related stock compensation expense | — | 5 | 1 | |||||
Adjusted stock compensation (non-GAAP) | $ (52) | $ (52) | ||||||
Quarter Ended Sept 30 | ||||||||
2023 | 2024 | |||||||
Corporate and other (GAAP) | $ (70) | $ (124) | ||||||
Corporate restructuring and related costs | 2 | 9 | ||||||
National Instruments investment gain | (9) | — | ||||||
Acquisition / divestiture costs | 36 | 46 | ||||||
Loss on divestiture of business | — | 9 | ||||||
Adjusted corporate and other (Non-GAAP) | $ (41) | $ (60) | ||||||
Year Ended Sept 30, | ||||||||
2023 | 2024 | |||||||
Stock compensation (GAAP) | $ (250) | $ (260) | ||||||
Integration-related stock compensation expense | — | 58 | 2 | |||||
Adjusted stock compensation (non-GAAP) | $ (250) | $ (202) | ||||||
Year Ended Sept 30 | ||||||||
2023 | 2024 | |||||||
Corporate and other (GAAP) | $ (224) | $ (664) | ||||||
Corporate restructuring and related costs | 14 | 12 | ||||||
National Instruments investment gain | (56) | — | ||||||
Loss on divestiture of businesses | — | 48 | ||||||
Acquisition / divestiture costs | 84 | 205 | ||||||
Russia business exit | 47 | — | ||||||
AspenTech Micromine purchase price hedge | (24) | — | ||||||
Amortization of acquisition-related inventory step-up | — | 231 | ||||||
Adjusted corporate and other (Non-GAAP) | $ (159) | $ (168) | ||||||
1 Integration-related stock compensation expense relates to NI and includes $2 reported as restructuring costs | |||||||
2 Integration-related stock compensation expense relates to NI and includes $43 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, 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 Sept 30 | |||
2023 | 2024 | ||
Pretax earnings | $ 1,020 | $ 679 | |
Percent of sales | 24.9 % | 14.7 % | |
Interest expense (income), net | (77) | 18 | |
Interest income from related party1 | (31) | — | |
Amortization of intangibles | 174 | 316 | |
Restructuring and related costs | 38 | 64 | |
Acquisition/divestiture fees and related costs | 36 | 49 | |
Gain on subordinated interest | (161) | — | |
National Instruments investment gain | (9) | — | |
Loss on divestiture of business | — | 9 | |
Adjusted EBITA | $ 990 | $ 1,135 | |
Percent of sales | 24.2 % | 24.6 % | |
Quarter Ended Sept 30 | |||
2023 | 2024 | ||
GAAP earnings from continuing operations per share | $ 1.36 | $ 0.97 | |
Amortization of intangibles | 0.16 | 0.35 | |
Restructuring and related costs | 0.07 | 0.08 | |
Acquisition/divestiture fees and related costs | 0.06 | 0.06 | |
Gain on subordinated interest | (0.21) | — | |
National Instruments investment gain | (0.01) | — | |
Loss on divestiture of business | — | 0.02 | |
Interest income on undeployed proceeds from Copeland transaction | (0.14) | — | |
Adjusted earnings from continuing operations per share | $ 1.29 | $ 1.48 | |
Less: AspenTech contribution to adjusted earnings per share | (0.06) | (0.04) | |
Adjusted earnings per share excluding AspenTech contribution | $ 1.23 | $ 1.44 | |
1 Represents interest on the Copeland note receivable | |||
Year Ended Sept 30 | |||
2023 | 2024 | ||
Pretax earnings | $ 2,903 | $ 2,020 | |
Percent of sales | 19.1 % | 11.5 % | |
Interest expense (income), net | 34 | 175 | |
Interest income from related party1 | (41) | (86) | |
Amortization of intangibles | 678 | 1,274 | |
Restructuring and related costs | 92 | 244 | |
Amortization of acquisition-related inventory step-up | — | 231 | |
Acquisition/divestiture fees and related costs | 84 | 220 | |
Loss on divestiture of businesses | — | 48 | |
Loss on Copeland note receivable | — | 279 | |
Gain on subordinated interest | (161) | (79) | |
National Instruments investment gain | (56) | — | |
AspenTech Micromine purchase price hedge | (24) | — | |
Russia business exit charge | 47 | — | |
Adjusted EBITA | $ 3,556 | $ 4,326 | |
Percent of sales | 23.4 % | 24.7 % | |
Year Ended Sept 30 | |||
2023 | 2024 | ||
GAAP earnings from continuing operations per share | $ 3.96 | $ 2.82 | |
Amortization of intangibles | 0.62 | 1.43 | |
Restructuring and related costs | 0.14 | 0.33 | |
Amortization of acquisition-related inventory step-up | — | 0.38 | |
Acquisition/divestiture fees and related costs | 0.13 | 0.26 | |
Loss on divestiture of businesses | — | 0.09 | |
Loss on Copeland note receivable | — | 0.38 | |
Discrete taxes | — | (0.10) | |
Gain on subordinated interest | (0.21) | (0.10) | |
National Instruments investment gain | (0.07) | — | |
AspenTech Micromine purchase price hedge | (0.02) | — | |
Interest income on undeployed proceeds from Copeland transaction | (0.19) | — | |
Russia business exit charge | 0.08 | — | |
Adjusted earnings from continuing operations per share | $ 4.44 | $ 5.49 | |
Less: AspenTech contribution to adjusted earnings per share | (0.27) | (0.35) | |
Adjusted earnings per share excluding AspenTech contribution | $ 4.17 | $ 5.14 | |
1 Represents interest on the Copeland note receivable | |||
Table 6 cont. | |||||||||||
Quarter Ended September 30, 2024 | |||||||||||
Pretax | Income | Earnings from | Non- Controlling Interests3 | Net | Diluted | ||||||
As reported (GAAP) | $ 679 | $ 149 | $ 530 | $ (28) | $ 558 | $ 0.97 | |||||
Amortization of intangibles | 316 | 1 | 74 | 242 | 40 | 202 | 0.35 | ||||
Restructuring and related costs | 64 | 2 | 16 | 48 | 3 | 45 | 0.08 | ||||
Acquisition/divestiture and related costs | 49 | 15 | 34 | — | 34 | 0.06 | |||||
Loss on divestitures of businesses | 9 | — | 9 | — | 9 | 0.02 | |||||
Adjusted (Non-GAAP) | $ 1,117 | $ 254 | $ 863 | $ 15 | $ 848 | $ 1.48 | |||||
Interest expense, net | $ 18 | ||||||||||
Adjusted EBITA (Non-GAAP) | $ 1,135 | ||||||||||
1 Amortization of intangibles includes $49 reported in cost of sales. | |||||||||||
2 Restructuring and related costs includes $3 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. |
Year Ended September 30, 2024 | |||||||||||
Pretax | Income | Earnings from | Non- Controlling Interests3 | Net | Diluted | ||||||
As reported (GAAP) | $ 2,020 | $ 415 | $ 1,605 | $ (13) | $ 1,618 | $ 2.82 | |||||
Amortization of intangibles | 1,274 | 1 | 294 | 980 | 162 | 818 | 1.43 | ||||
Restructuring and related costs | 244 | 2 | 53 | 191 | 3 | 188 | 0.33 | ||||
Acquisition/divestiture and related costs | 220 | 59 | 161 | — | 161 | 0.26 | |||||
Gain on subordinated interest | (79) | (19) | (60) | — | (60) | (0.10) | |||||
Loss on Copeland note receivable | 279 | 62 | 217 | — | 217 | 0.38 | |||||
Loss on divestiture of businesses | 48 | (2) | 50 | — | 50 | 0.09 | |||||
Amortization of acquisition-related inventory step-up | 231 | 14 | 217 | — | 217 | 0.38 | |||||
Discrete taxes | — | 57 | (57) | — | (57) | (0.10) | |||||
Adjusted (Non-GAAP) | $ 4,237 | $ 933 | $ 3,304 | $ 152 | $ 3,152 | $ 5.49 | |||||
Interest expense, net | 175 | ||||||||||
Interest income from related party4 | (86) | ||||||||||
Adjusted EBITA (Non-GAAP) | $ 4,326 | ||||||||||
1 Amortization of intangibles includes $196 reported in cost of sales. | |||||||||||
2 Restructuring and related costs includes $9 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 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, stock compensation and the Micromine purchase price hedge.
|
Quarter Ended September 30, 2024 | |||||||||||
Pretax | Income | Earnings from | Non- Controlling Interests4 | Net | Diluted | ||||||
Standalone reporting (GAAP) | $ (77) | 1 | $ (17) | $ (60) | |||||||
Other | 1 | 6 | (5) | ||||||||
Reported in Emerson consolidation (GAAP) | (76) | (11) | (65) | (27) | (38) | $ (0.07) | |||||
Adjustments: | |||||||||||
Amortization of intangibles | 122 | 2 | 28 | 94 | 40 | 54 | 0.10 | ||||
Restructuring | 8 | 1 | 7 | 3 | 4 | 0.01 | |||||
Adjusted (Non-GAAP) | $ 54 | $ 18 | $ 36 | $ 16 | $ 20 | $ 0.04 | |||||
Interest income | (17) | 3 | |||||||||
Stock compensation | 14 | 3 | |||||||||
Adjusted Segment EBITA (Non-GAAP) | $ 51 | ||||||||||
Reconciliation to Segment EBIT | |||||||||||
Pre-tax earnings | $ (76) | ||||||||||
Interest income | (17) | 3 | |||||||||
Stock compensation | 14 | 3 | |||||||||
Segment EBIT (GAAP) | $ (79) | ||||||||||
Amortization of intangibles | 122 | 2 | |||||||||
Restructuring | 8 | ||||||||||
Adjusted Segment EBITA (Non-GAAP) | $ 51 | ||||||||||
1 Amount reflects AspenTech's pretax earnings for the three months ended September 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. | |||||||||||
Year Ended September 30, 2024 | |||||||||||
Pretax | Income | Earnings from | Non- Controlling Interests4 | Net | Diluted | ||||||
Standalone reporting (GAAP) | $ (69) | 1 | $ (33) | $ (36) | |||||||
Other | (2) | (1) | (1) | ||||||||
Reported in Emerson consolidation (GAAP) | (71) | (34) | (37) | (16) | (21) | $ (0.04) | |||||
Adjustments: | |||||||||||
Amortization of intangibles | 486 | 2 | 107 | 379 | 162 | 217 | 0.38 | ||||
Restructuring | 8 | 1 | 7 | 3 | 4 | 0.01 | |||||
Adjusted (Non-GAAP) | $ 423 | $ 74 | $ 349 | $ 149 | $ 200 | $ 0.35 | |||||
Interest income | (57) | 3 | |||||||||
Stock compensation | 55 | 3 | |||||||||
Adjusted Segment EBITA (Non-GAAP) | $ 421 | ||||||||||
Reconciliation to Segment EBIT | |||||||||||
Pre-tax earnings | $ (71) | ||||||||||
Interest income | (57) | 3 | |||||||||
Stock compensation | 55 | 3 | |||||||||
Segment EBIT (GAAP) | $ (73) | ||||||||||
Amortization of intangibles | 486 | 2 | |||||||||
Restructuring | 8 | ||||||||||
Adjusted Segment EBITA (Non-GAAP) | $ 421 | ||||||||||
1 Amount reflects AspenTech's pretax earnings for the twelve months ended September 30, 2024, derived from AspenTech's results for the year ended June 30, 2024 as reported in their Annual Report on Form 10-K, the results for the three months ended September 30, 2023 as reported in their Form 10-Q, and the results for the three months ended September 30, 2024 as reported in its quarterly earnings release 8-K. | |||||||||||
2 Amortization of intangibles includes $193 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. | |||||||
Q4 FY24 Underlying Sales Change | Reported | (Favorable) / Unfavorable FX | (Acquisitions) / Divestitures | Underlying |
Final Control | 8 % | (1) % | — % | 7 % |
Measurement & Analytical | 7 % | — % | — % | 7 % |
Discrete Automation | (3) % | (1) % | — % | (4) % |
Safety & Productivity | (1) % | — % | — % | (1) % |
Intelligent Devices | 4 % | — % | 4 % | |
Control Systems & Software | 9 % | — % | — % | 9 % |
Test & Measurement | ||||
AspenTech | (13) % | — % | — % | (13) % |
Software and Control | 41 % | — % | (38) % | 3 % |
Emerson | 13 % | — % | (9) % | 4 % |
Year Ended Sept 30, 2024 Underlying Sales Change | Reported | (Favorable) / Unfavorable FX | (Acquisitions) / Divestitures | Underlying |
Final Control | 6 % | — % | — % | 6 % |
Measurement & Analytical | 13 % | — % | 1 % | 14 % |
Discrete Automation | (5) % | — % | — % | (5) % |
Safety & Productivity | — % | — % | — % | — % |
Intelligent Devices | 5 % | — % | — % | 5 % |
Control Systems & Software | 9 % | — % | 1 % | 10 % |
Test & Measurement | ||||
AspenTech | 5 % | — % | — % | 5 % |
Software and Control | 48 % | — % | (40) % | 8 % |
Emerson | 15 % | — % | (9) % | 6 % |
Underlying Growth Guidance | 2025 Q1 Guidance | 2025 Guidance |
Reported (GAAP) | 2.5% - 3.5% | 3.5% - 5.5% |
(Favorable) / Unfavorable FX | ~(0.5) pts | ~(0.5) pts |
(Acquisitions) / Divestitures | - | - |
Underlying (non-GAAP) | 2% - 3% | 3% - 5% |
2023 Q4 Adjusted Segment EBITA | EBIT | EBIT Margin | Amortization of Intangibles | Restructuring and Related Costs | Adjusted Segment EBITA | Adjusted Segment EBITA Margin |
Final Control | $ 247 | 22.9 % | $ 22 | $ 16 | $ 285 | 26.4 % |
Measurement & Analytical | 275 | 26.3 % | 12 | 11 | 298 | 28.4 % |
Discrete Automation | 131 | 19.7 % | 7 | 7 | 145 | 21.8 % |
Safety & Productivity | 78 | 21.9 % | 6 | (1) | 83 | 23.5 % |
Intelligent Devices | $ 731 | 23.2 % | $ 47 | $ 33 | $ 811 | 25.8 % |
Control Systems & Software | 151 | 21.1 % | 5 | 2 | 158 | 22.2 % |
Test & Measurement | ||||||
AspenTech | (47) | (18.7) % | 122 | 1 | 76 | 30.2 % |
Software and Control | $ 104 | 10.8 % | $ 127 | $ 3 | $ 234 | 24.3 % |
2024 Q4 Adjusted Segment EBITA | EBIT | EBIT Margin | Amortization | Restructuring and Related Costs | Adjusted Segment EBITA | Adjusted Segment EBITA Margin |
Final Control | $ 271 | 23.2 % | $ 22 | $ 12 | $ 305 | 26.1 % |
Measurement & Analytical | 295 | 26.4 % | 12 | 19 | 326 | 29.2 % |
Discrete Automation | 144 | 22.3 % | 8 | 2 | 154 | 23.9 % |
Safety & Productivity | 78 | 22.2 % | 7 | 5 | 90 | 25.4 % |
Intelligent Devices | $ 788 | 24.0 % | $ 49 | $ 38 | $ 875 | 26.6 % |
Control Systems & Software | 177 | 22.7 % | 4 | 7 | 188 | 24.3 % |
Test & Measurement | (45) | (12.4) % | 141 | — | 96 | 26.7 % |
AspenTech | (79) | (36.7) % | 122 | 8 | 51 | 23.2 % |
Software and Control | $ 53 | 3.9 % | $ 267 | $ 15 | $ 335 | 24.7 % |
Total Adjusted Segment EBITA | 2023 Q4 | 2024 Q4 | |
Pretax earnings (GAAP) | $ 1,020 | $ 679 | |
Margin | 24.9 % | 14.7 % | |
Corporate items and interest expense, net | (185) | 162 | |
Amortization of intangibles | 174 | 316 | |
Restructuring and related costs | 36 | 53 | |
Adjusted segment EBITA (non-GAAP) | $ 1,045 | $ 1,210 | |
Margin | 25.5 % | 26.2 % |
2023 Adjusted Segment EBITA | EBIT | EBIT Margin | Amortization of Intangibles | Restructuring and Related Costs | Adjusted Segment EBITA | Adjusted Segment EBITA Margin |
Final Control | $ 865 | 21.8 % | $ 88 | $ 28 | $ 981 | 24.7 % |
Measurement & Analytical | 936 | 26.0 % | 27 | 13 | 976 | 27.1 % |
Discrete Automation | 509 | 19.3 % | 29 | 27 | 565 | 21.4 % |
Safety & Productivity | 306 | 22.0 % | 26 | — | 332 | 23.9 % |
Intelligent Devices | $ 2,616 | 22.6 % | $ 170 | $ 68 | $ 2,854 | 24.6 % |
Control Systems & Software | 529 | 20.3 % | 22 | 9 | 560 | 21.5 % |
Test & Measurement | ||||||
AspenTech | (107) | (10.3) % | 486 | 1 | 380 | 36.4 % |
Software and Control | $ 422 | 11.6 % | $ 508 | $ 10 | $ 940 | 25.8 % |
2024 Adjusted Segment EBITA | EBIT | EBIT Margin | Amortization | Restructuring and Related Costs | Adjusted Segment EBITA | Adjusted Segment EBITA Margin |
Final Control | $ 977 | 23.2 % | $ 87 | $ 17 | $ 1,081 | 25.7 % |
Measurement & Analytical | 1,056 | 26.0 % | 55 | 26 | 1,137 | 28.0 % |
Discrete Automation | 466 | 18.6 % | 34 | 35 | 535 | 21.3 % |
Safety & Productivity | 308 | 22.2 % | 26 | 7 | 341 | 24.5 % |
Intelligent Devices | $ 2,807 | 23.1 % | $ 202 | $ 85 | $ 3,094 | 25.4 % |
Control Systems & Software | 645 | 22.7 % | 26 | 15 | 686 | 24.1 % |
Test & Measurement | (290) | (19.8) % | 560 | 81 | 351 | 24.0 % |
AspenTech | (73) | (6.7) % | 486 | 8 | 421 | 38.5 % |
Software and Control | $ 282 | 5.2 % | $ 1,072 | $ 104 | $ 1,458 | 27.0 % |
Total Adjusted Segment EBITA | 2023 | 2024 | |
Pretax earnings (GAAP) | $ 2,903 | $ 2,020 | |
Margin | 19.1 % | 11.5 % | |
Corporate items and interest expense, net | 135 | 1,069 | |
Amortization of intangibles | 678 | 1,274 | |
Restructuring and related costs | 78 | 189 | |
Adjusted segment EBITA (non-GAAP) | $ 3,794 | $ 4,552 | |
Margin | 25.0 % | 26.0 % |
Free Cash Flow | 2023 Q4 | 2024 Q4 | ||||
Operating cash flow (GAAP) | $ 991 | $ 1,073 | ||||
Capital expenditures | (169) | (168) | ||||
Free cash flow (non-GAAP) | $ 822 | $ 905 |
Free Cash Flow | FY23 | FY24 | 2025E ($ in billions) | |||
Operating cash flow (GAAP) | $ 2,710 | $ 3,317 | $3.6 - $3.7 | |||
Capital expenditures | (363) | (419) | ~(0.4) | |||
Free cash flow (non-GAAP) | $ 2,347 | $ 2,898 | $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. |
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SOURCE Emerson
