Missouri | 1-278 | 43-0259330 | ||||||
--------------------------------- (State or Other Jurisdiction of Incorporation) |
------------------- (Commission |
--------------------------- (I.R.S. Employer Identification Number) |
||||||
File Number) |
8000 West Florissant Avenue | |||||||||||
St. Louis, | Missouri | 63136 | |||||||||
------------------------------------------------ (Address of Principal Executive Offices) |
------------------ (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common Stock of $0.50 par value per share | EMR | New York Stock Exchange | ||||||
NYSE Chicago | ||||||||
0.375% Notes due 2024 | EMR 24 | New York Stock Exchange | ||||||
1.250% Notes due 2025 | EMR 25A | New York Stock Exchange | ||||||
2.000% Notes due 2029 | EMR 29 | New York Stock Exchange |
Exhibit Number | Description of Exhibits | |||||||
99.1 | ||||||||
104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
EMERSON ELECTRIC CO. (Registrant) |
|||||||||||
Date: | August 2, 2023 | By: | /s/ John A. Sperino | ||||||||
John A. Sperino
Vice President and
Assistant Secretary
|
(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% |
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 |
Investors: | Media: | ||||
Colleen Mettler | Joseph Sala / Tanner Kaufman / Greg Klassen | ||||
(314) 553-2197 | Joele Frank, Wilkinson Brimmer Katcher | ||||
(212) 355-4449 |
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) |
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) |
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) |
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) |
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. |