ST. LOUIS, May 3, 2023 /PRNewswire/ -- Emerson (NYSE: EMR) today reported results for its second quarter ended March 31, 2023 and updated its full year outlook for fiscal 2023, which are presented on a continuing operations basis. Emerson also declared a quarterly cash dividend of $0.52 per share of common stock payable June 9, 2023 to stockholders of record May 12, 2023.

Emerson logo (PRNewsfoto/Emerson)

(dollars in millions, except per share)

2022 Q2

2023 Q2

Change

Underlying Orders1



7 %

Net Sales

$3,291

$3,756

14 %

Underlying Sales2



14 %

Pretax Earnings

$509

$639


Margin

15.5 %

17.0 %

150 bps

Adjusted Segment EBITA3

$703

$924


Margin

21.4 %

24.6 %

320 bps

GAAP Earnings Per Share

$0.72

$0.92

28 %

Adjusted Earnings Per Share4

$0.87

$1.09

25 %

Operating Cash Flow

$379

$575

51 %

Free Cash Flow

$312

$513

64 %

Management Commentary

"Emerson's outstanding second quarter results were driven by strong end market demand and excellent operational execution from our global teams," said Emerson President and Chief Executive Officer Lal Karsanbhai. "Underlying sales growth, operational leverage and earnings exceeded our expectations, a testament to the strength of our people, technology, and the Emerson Management System."

"As we accelerate our growth as a leading automation company, we continue to execute on our strategic vision, including our recent definitive agreement to purchase NI, a leader in test and measurement automation," Karsanbhai continued. "NI's best-in-class technology and software will accelerate Emerson's progress toward a cohesive, higher growth and higher margin automation portfolio, diversifying Emerson into attractive discrete markets."

2023 Outlook

The following tables summarize the fiscal year 2023 guidance framework for continuing operations5. The 2023 outlook includes $2 billion returned to shareholders through share repurchases completed in the first quarter and approximately $1.2 billion of dividend payments. Guidance figures are approximate.


2023 Q3

2023

Net Sales Growth

10.5% - 12.5%

9% - 10.5%

Underlying Sales Growth

10% - 12%

8.5% - 10%

Earnings Per Share

$0.92 - $0.96

$3.58 - $3.68

Amortization of Intangibles

~$0.15

~$0.61

Restructuring / Related Costs

~$0.03

~$0.12

Russia Exit Costs

---

$0.08

AspenTech Micromine Purchase Price Hedge

---

~($0.02)

Acquisition / Divestiture Fees

~$0.03

~$0.06

NI Investment Gain

---

($0.05)

Interest on Note Receivable From Climate Technologies

~($0.02)

~($0.06)

Interest Income on Climate Technologies Undeployed Proceeds

~($0.04)

~($0.17)

Adjusted Earnings Per Share

$1.07 - $1.11

$4.15 - $4.25

Operating Cash Flow


~$2.5B

Free Cash Flow


~$2.2B

1 Underlying orders does not include AspenTech.

2 Underlying sales excludes the impact of currency translation, and acquisitions and divestitures including heritage AspenTech and Emerson's businesses contributed to AspenTech.

3 Adjusted segment EBITA represents segment earnings less restructuring and intangibles amortization expense.

4 Adjusted EPS excludes restructuring, NI investment gains, acquisition/divestiture costs, write-offs associated with Emerson's announced Russia exit, an AspenTech Micromine purchase price hedge and intangibles amortization expense.

5 The Company's 2023 continuing operations after the Climate Technologies divestiture (assumed to close May 31, 2023 for the purposes of guidance) will include interest income from the $2.25 billion note receivable from Climate Technologies and reflect the 45% common equity ownership in the income, or loss, of Climate Technologies. Emerson will not control Climate Technologies post-closing and is therefore unable to estimate the amount of its 45% share of Climate Technologies' post-close results and this has been excluded from guidance. The effect of Emerson's 45% share of Climate Technologies is expected to be immaterial to post-closing cash flows. On a discontinued operations GAAP basis, Emerson expects third quarter EPS of $14 - $16 and fiscal 2023 EPS of $18 - $20.

Conference Call

Today, beginning at 7:00 a.m. Central Time / 8:00 a.m. Eastern Time, Emerson management will discuss the second quarter results during an investor conference call. Participants can access a live webcast available at www.emerson.com/investors at the time of the call. A replay of the call will be available for 90 days. Conference call slides will be posted in advance of the call on the company website.

About Emerson

Emerson (NYSE: EMR) is a global technology and software company providing innovative solutions for the world's essential industries. Through its leading automation portfolio, including its majority stake in AspenTech, Emerson helps hybrid, process and discrete manufacturers optimize operations, protect personnel, reduce emissions and achieve their sustainability goals. For more information, visit Emerson.com.

Forward-Looking and Cautionary Statements

Statements in this press release that are not strictly historical may be "forward-looking" statements, which involve risks and uncertainties, and Emerson undertakes no obligation to update any such statements to reflect later developments. These risks and uncertainties include the Company's ability to successfully complete on the terms and conditions contemplated, and the financial impact of, the proposed Climate Technologies transaction and the proposed National Instruments transaction, the scope, duration and ultimate impacts of the COVID-19 pandemic and the Russia-Ukraine conflict, as well as economic and currency conditions, market demand, including related to the pandemic and oil and gas price declines and volatility, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, inflation, among others, as set forth in the Company's most recent Annual Report on Form 10-K and subsequent reports filed with the SEC. The outlook contained herein represents the Company's expectation for its consolidated results, other than as noted herein.

 






Table 1

EMERSON AND SUBSIDIARIES

CONSOLIDATED OPERATING RESULTS

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)








Quarter Ended March 31


Percent


2022


2023


Change







Net sales

$3,291


$3,756


14 %

     Cost of sales

1,815


1,955



     SG&A expenses

888


1,000



     Other deductions, net

28


109



     Interest expense, net

51


53



Earnings from continuing operations before income taxes

509


639


26 %

Income taxes

80


134



Earnings from continuing operations

429


505


18 %

Discontinued operations, net of tax

246


265



Net earnings

675


770



Less: Noncontrolling interests in subsidiaries

1


(22)



Net earnings common stockholders

$674


$792


18 %







Earnings common stockholders






Earnings from continuing operations

$428


$530


24 %

Discontinued operations

246


262



Net earnings common stockholders

$674


$792


18 %







Diluted avg. shares outstanding

596.5


573.6









Diluted earnings per share common stockholders






Earnings from continuing operations

$0.72


$0.92


28 %

Discontinued operations

0.41


0.46



Diluted earnings per common share

$1.13


$1.38


22 %














Quarter Ended March 31




2022


2023



Other deductions, net






     Amortization of intangibles

$57


$119



     Restructuring costs

9


19



     Other

(38)


(29)



          Total

$28


$109



 






Table 2

EMERSON AND SUBSIDIARIES

CONSOLIDATED OPERATING RESULTS

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)








Six Months Ended March 31


Percent


2022


2023


Change







Net sales

$6,447


$7,129


11 %

     Cost of sales

3,556


3,708



     SG&A expenses

1,737


2,030



 Gain on subordinated interest 

(453)




     Other deductions, net

66


229



     Interest expense, net

90


101



Earnings from continuing operations before income taxes

1,451


1,061


(27) %

Income taxes

276


232



Earnings from continuing operations

1,175


829


(29) %

Discontinued operations, net of tax

395


2,267



Net earnings

1,570


3,096



Less: Noncontrolling interests in subsidiaries


(27)



Net earnings common stockholders

$1,570


$3,123


99 %







Earnings common stockholders






Earnings from continuing operations

$1,174


$859


(27) %

Discontinued operations

396


2,264



Net earnings common stockholders

$1,570


$3,123


99 %







Diluted avg. shares outstanding

597.3


580.1









Diluted earnings per share common share






Earnings from continuing operations

$1.96


$1.48


(24) %

Discontinued operations

0.67


3.90



Diluted earnings per common share

$2.63


$5.38


105 %














Six Months Ended March 31




2022


2023



Other deductions, net






     Amortization of intangibles

$114


$237



     Restructuring costs

15


29



     Other

(63)


(37)



          Total

$66


$229









 




Table 3

EMERSON AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN MILLIONS, UNAUDITED)






Quarter Ended March 31


2022


2023

Assets




     Cash and equivalents

$6,929


$2,046

     Receivables, net

2,081


2,330

     Inventories

1,819


2,034

     Other current assets

1,079


1,228

     Current assets held-for-sale

1,631


1,347

          Total current assets

13,539


8,985

     Property, plant & equipment, net

2,350


2,263

     Goodwill

6,906


14,097

     Other intangible assets

2,533


6,299

     Other

1,809


2,265

     Noncurrent assets held-for-sale

2,360


2,238

          Total assets

$29,497


$36,147





Liabilities and equity




     Short-term borrowings and current




        maturities of long-term debt

$2,762


$1,959

     Accounts payable

1,176


1,207

     Accrued expenses

2,759


3,245

     Current liabilities held-for-sale

1,375


1,138

          Total current liabilities

8,072


7,549

     Long-term debt

8,203


8,174

     Other liabilities

2,400


2,928

     Noncurrent liabilities held-for-sale

208


149

Equity




     Common stockholders' equity

10,575


11,360

     Noncontrolling interests in subsidiaries

39


5,987

     Total equity

10,614


17,347

          Total liabilities and equity

$29,497


$36,147

 





Table 4

EMERSON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN MILLIONS, UNAUDITED)







Six Months Ended March 31



2022


2023

Operating activities





Net earnings


$1,570


$3,096

Earnings from discontinued operations, net of tax


(395)


(2,267)

Adjustments to reconcile net earnings to net cash provided by operating activities:





        Depreciation and amortization


349


523

        Stock compensation


77


142

        Changes in operating working capital


(298)


(390)

        Gain on subordinated interest


(453)


        Other, net


(94)


(227)

            Cash from continuing operations


756


877

            Cash from discontinued operations


209


(391)

            Cash provided by operating activities


965


486






Investing activities





Capital expenditures


(140)


(121)

Purchases of businesses, net of cash and equivalents acquired


(35)


Proceeds from subordinated interest


438


15

Other, net


(16)


(76)

    Cash from continuing operations


247


(182)

    Cash from discontinued operations


(88)


2,916

    Cash provided by investing activities


159


2,734






Financing activities





Net increase (decrease) in short-term borrowings


871


(31)

Proceeds from long-term debt


2,975


Payments of long-term debt


(504)


(742)

Dividends paid


(613)


(603)

Purchases of common stock


(285)


(2,000)

Other, net


15


(55)

    Cash provided by (used in) financing activities


3,499


(3,036)






Effect of exchange rate changes on cash and equivalents


(48)


58

Increase in cash and equivalents


4,575


242

Beginning cash and equivalents


2,354


1,804

Ending cash and equivalents


$6,929


$2,046






 




Table 5

EMERSON AND SUBSIDIARIES

SEGMENT SALES AND EARNINGS

(AMOUNTS IN MILLIONS, UNAUDITED)


The following tables show results for the Company's segments on an adjusted segment EBITA basis and are intended to
supplement the Company's results of operations, including its segment earnings which are defined as earnings before
interest and taxes. The Company defines adjusted segment and total segment EBITA as segment earnings excluding
intangibles amortization expense, and restructuring and related expense. Adjusted segment and total segment EBITA, and
adjusted segment and total segment EBITA margin are measures used by management and may be useful for investors
to evaluate the Company's segments' operational performance.



Quarter Ended March 31



2022


2023


Reported


Underlying











Sales









Final Control

$884


$992


12 %


16 %


Measurement & Analytical

769


888


15 %


20 %


Discrete Automation

644


683


6 %


9 %


Safety & Productivity

355


361


2 %


3 %


Intelligent Devices

$2,652


$2,924


10 %


14 %











Control Systems & Software

573


623


9 %


13 %


AspenTech

84


230


172 %


— %


Software and Control

$657


$853


30 %


13 %











Eliminations

(18)


(21)






Total

$3,291


$3,756


14 %


14 %


 

Sales Growth by Geography









Quarter Ended

March 31





Americas

15 %







Europe

14 %







Asia, Middle East & Africa

11 %























 


Six Months Ended March 31


2022



2023



Reported



Underlying












Sales











Final Control

$1,701



$1,854



9 %



14 %

Measurement & Analytical

1,506



1,637



9 %



15 %

Discrete Automation

1,261



1,301



3 %



8 %

Safety & Productivity

706



671



(5) %



(3) %

Intelligent Devices

$5,174



$5,463



6 %



10 %












Control Systems & Software                                        

1,143



1,229



8 %



13 %

AspenTech

166



473



184 %



— %

Software and Control

$1,309



$1,702



30 %



13 %












Eliminations

(36)



(36)







Total

$6,447



$7,129



11 %



11 %

 

Sales Growth by Geography









Six Months
Ended March 31





Americas

14 %







Europe

9 %







Asia, Middle East & Africa

6 %















 


Quarter Ended March 31


Quarter Ended March 31


2022


2023


As Reported
(GAAP)


Adjusted EBITA
(Non-GAAP)


As Reported
(GAAP)


Adjusted EBITA
(Non-GAAP)

Earnings








Final Control

$152


$184


$215


$246

 Margins

17.2 %


20.8 %


21.6 %


24.7 %

Measurement & Analytical

176


184


229


234

 Margins

23.0 %


24.0 %


25.8 %


26.5 %

Discrete Automation

130


138


133


147

 Margins

20.3 %


21.6 %


19.5 %


21.5 %

Safety & Productivity

65


72


83


92

 Margins

18.1 %


20.0 %


22.9 %


25.2 %

Intelligent Devices

$523


$578


$660


$719

 Margins

19.7 %


21.8 %


22.6 %


24.6 %









Control Systems & Software

101


106


127


137

 Margins

17.7 %


18.7 %


20.4 %


22.1 %

AspenTech

(4)


19


(54)


68

 Margins

(5.0) %


21.5 %


(23.4) %


29.5 %

Software and Control

$97


$125


$73


$205

 Margins

14.7 %


19.1 %


8.6 %


24.1 %









Corporate items and interest expense, net:








Stock compensation

(43)


(43)


(40)


(40)

Unallocated pension and postretirement costs

25


25


46


46

Corporate and other

(42)


(33)


(47)


(55)

Interest expense, net

(51)




(53)











Pretax Earnings / Adjusted EBITA

$509


$652


$639


$875

 Margins

15.5 %


19.8 %


17.0 %


23.3 %









Supplemental Total Segment Earnings:








Adjusted Total Segment EBITA



$703




$924

 Margins



21.4 %




24.6 %









 


Quarter Ended March 31


Quarter Ended March 31


2022


2023


Amortization of

Intangibles1


Restructuring

and

Related Costs2


Amortization of

Intangibles1


Restructuring

and

Related Costs2

Final Control

$24


$8


$22


$9

Measurement & Analytical

5


3


5


Discrete Automation

7


1


7


7

Safety & Productivity

7



7


2

Intelligent Devices

$43


$12


$41


$18









Control Systems & Software

5



5


5

AspenTech

23



122


Software and Control

$28


$0


$127


$5









Corporate


2



3

Total

$71


$14


$168


$26









1 Amortization of intangibles includes $14 and $49 reported in cost of sales for the three months ended March 31, 2022 and 2023, respectively.

2 Restructuring and related costs includes $5 and $7 reported in cost of sales for the three months ended March 31, 2022 and 2023, respectively.

 






Quarter Ended March 31


2022


2023





Depreciation and Amortization




Final Control

$50


$45

Measurement & Analytical

30


28

Discrete Automation

22


22

Safety & Productivity

14


15

Intelligent Devices

116


110





Control Systems & Software

22


24

AspenTech

24


123

Software and Control

46


147





     Corporate

9


6

          Total

$171


$263

 

Table 6

EMERSON AND SUBSIDIARIES

ADJUSTED CORPORATE AND OTHER SUPPLEMENTAL

(AMOUNTS IN MILLIONS, UNAUDITED)


The following table shows the Company's corporate and other expenses on an adjusted basis. The Company's definition of adjusted corporate and other excludes corporate restructuring and related costs, first year purchase accounting related items and transaction fees, and certain gains, losses or impairments. This metric is useful for reconciling from total adjusted segment EBITA to the Company's consolidated adjusted EBITA.







Quarter Ended March 31

Corporate and Other





2022


2023

 Corporate and other (GAAP)





$(42)


$(47)

 Corporate restructuring and related costs





2


3

 National Instruments investment gain






(35)

 Acquisition / divestiture costs





7


10

 Russia business exit






 AspenTech Micromine purchase price hedge






14









 Adjusted corporate and other (Non-GAAP)





$(33)


$(55)

 

   

Table 7

EMERSON AND SUBSIDIARIES

ADJUSTED EBITA & EPS SUPPLEMENTAL

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)


The following tables, which show results on an adjusted EBITA basis and diluted earnings per share on an adjusted basis, are intended to supplement the Company's discussion of its results of operations herein. The Company defines adjusted EBITA as earnings excluding interest expense, net, income taxes, intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction fees, and certain gains, losses or impairments. Adjusted earnings per share excludes intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction fees, interest on note receivable and interest on undeployed assets, and certain gains, losses or impairments. Adjusted EBITA, adjusted EBITA margin, and adjusted earnings per share are measures used by management and may be useful for investors to evaluate the Company's operational performance.



Quarter Ended March 31





2022


2023











Pretax earnings

$509


$639




Percent of sales

15.5 %


17.0 %




Interest expense, net

51


53




Amortization of intangibles

71


168




Restructuring and related costs

14


26




National Instruments investment gain


(35)




Acquisition/divestiture costs

7


10




Russia business exit





AspenTech Micromine purchase price hedge


14




Adjusted EBITA

$652


$875




Percent of sales

19.8 %


23.3 %












Quarter Ended March 31





2022


2023











GAAP earnings from continuing operations per share

$0.72


$0.92











Amortization of intangibles

0.09


0.16




Restructuring and related costs

0.02


0.04




National Instruments investment gain


(0.05)




Acquisition/divestiture costs

0.04


0.01




Russia business exit





AspenTech Micromine purchase price hedge


0.01











Adjusted earnings from continuing operations per share

$0.87


$1.09











Less: AspenTech contribution to adjusted earnings per share



(0.04)











Adjusted earnings per share excluding AspenTech contribution



$1.05




 

Quarter Ended March 31, 2023


Pretax
Earnings


Income
Taxes


Earnings from
Cont.
Ops.


Non-Controlling
Interests

3

Net
Earnings
Common
Stockholders


Diluted
Earnings
Per
Share

As reported (GAAP)

$639


$134


$505


$(25)


$530


$0.92

Amortization of intangibles

168

1

38


130


42


88


0.16

Restructuring and related costs

26

2

6


20



20


0.04

National Instruments investment gain

(35)


(8)


(27)



(27)


(0.05)

Acquisition/divestiture costs

10


3


7



7


0.01

AspenTech Micromine purchase price hedge

14


3


11


5


6


0.01

Adjusted (Non-GAAP)

$822


$176


$646


$22


$624


$1.09

Interest expense

53











Adjusted EBITA (Non-GAAP)

$875























1 Amortization of intangibles includes $49 reported in cost of sales.

2 Restructuring and related costs includes $7 reported in cost of sales and SG&A.

3 Represents the 45 percent non-controlling interest in AspenTech applied to AspenTech's share of each adjustment presented herein and eliminated from Emerson's consolidated results.

 

Table 8

EMERSON AND SUBSIDIARIES

ASPENTECH CONTRIBUTION TO EMERSON RESULTS SUPPLEMENTAL

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)


The following tables reconcile the financial results of AspenTech reported to its shareholders with the amounts included in Emerson's consolidated financial results. Emerson owns 55 percent of AspenTech, a separately traded public company (NASDAQ: AZPN), and consolidates AspenTech in its financial results. The 45 percent non-controlling interest in AspenTech is removed from Emerson's net earnings common stockholders through the non-controlling interest line item. AspenTech is also one of Emerson's segments and its GAAP segment earnings is reconciled below to its consolidated impact to clarify that certain items are reported outside of its segment earnings within Emerson corporate, including interest income, stock compensation and the Micromine purchase price hedge. 


Quarter Ended March 31, 2023


Pretax
Earnings


Income
Taxes
(Benefit)


Earnings from
Cont.
Ops.


Non-Controlling
Interests

5

Net
Earnings
Common
Stockholders


Diluted
Earnings
Per
Share

Standalone reporting (GAAP)

$(82)

1

$(24)


$(58)







 Interim tax reporting/Other

1


2

2

(1)







Reported in Emerson consolidation (GAAP)

(81)


(22)


(59)


(26)


(33)


$(0.06)













Adjustments:












Amortization of intangibles

122

3

28


94


42


52


0.09

AspenTech Micromine purchase price hedge

14

4

3


11


5


6


0.01

Adjusted
(Non-GAAP)

$55


$9


$46


$21


$25


$0.04

 Interest income

(10)

4










 Stock compensation

23

4










Adjusted Segment EBITA (Non-GAAP)

$68























Reconciliation to Segment EBIT













Pre-tax earnings

$(81)











Interest income

(10)

4










Stock compensation

23

4










Micromine purchase price hedge

14

4










Segment EBIT (GAAP)

$(54)











Amortization of intangibles

122

3










Adjusted Segment EBITA (Non-GAAP)

$68























1 Amount reflects AspenTech's pretax earnings for the three months ended March 31, 2023, reported in its standalone quarterly report on Form 10-Q.

2 GAAP income taxes reported by AspenTech differ from the amount reflected in Emerson's consolidated financial statements due to the application of the ASC 740 interim tax rules at the AspenTech entity level in their stand-alone publicly reported financial statements as compared to the amount computed at the Emerson consolidated level.

3 Amortization of intangibles includes $48 reported in cost of sales.

4 Reported in Emerson corporate line items.

5 Represents the 45 percent non-controlling interest in AspenTech applied to each adjustment presented herein and eliminated from Emerson's consolidated results.

 

 

Reconciliations of Non-GAAP Financial Measures & Other

Table 9












Reconciliations of Non-GAAP measures with the most directly comparable GAAP measure (dollars in millions, except per share amounts). See tables 5 through 8 for additional non-GAAP reconciliations.

















Q2 FY23

Underlying Sales Change




Final

Control

Measurement
& Analytical

Discrete

Automation

Safety &

Productivity

Intelligent

Devices


Reported (GAAP)


12 %

15 %

6 %

2 %

10 %


(Favorable) / Unfavorable FX


3 %

3 %

3 %

1 %

3 %


(Acquisitions)


— %

— %

— %

— %

— %


Divestitures


1 %

2 %

— %

— %

1 %


Underlying (Non-GAAP)


16 %

20 %

9 %

3 %

14 %












Q2 FY23 Underlying Sales Change


Control

Systems &

Software

AspenTech

Software
and Control


Emerson


Reported (GAAP)


9 %

172 %

30 %


14 %


(Favorable) / Unfavorable FX


3 %

— %

3 %


3 %


(Acquisitions)


— %

(172) %

(21) %


(4) %


Divestitures


1 %


1 %


1 %


Underlying (Non-GAAP)


13 %

— %

13 %


14 %












Six Months Ended March 31, 2023

Underlying Sales Change


Final

Control

Measurement
& Analytical

Discrete

Automation

Safety &

Productivity

Intelligent

Devices


Reported (GAAP)


9 %

9 %

3 %

(5) %

6 %


(Favorable) / Unfavorable FX


4 %

4 %

5 %

2 %

4 %


(Acquisitions)


— %

— %

— %

— %

— %


Divestitures


1 %

2 %

— %

— %

— %


Underlying (Non-GAAP)


14 %

15 %

8 %

(3) %

10 %












Six Months Ended March 31, 2023

Underlying Sales Change


Control

Systems &

Software

AspenTech

Software
and Control


Emerson


Reported (GAAP)


8 %

184 %

30 %


11 %


(Favorable) / Unfavorable FX


4 %

— %

4 %


4 %


(Acquisitions)


— %

(184) %

(22) %


(5) %


Divestitures


1 %

— %

1 %


1 %


Underlying (Non-GAAP)


13 %

— %

13 %


11 %












2023E April Guidance Underlying Sales Change


Q3 FY23E

FY23E





Reported (GAAP)


10.5 - 12.5%

9% - 10.5%





(Favorable) / Unfavorable FX


~ 0.5%

~ 1.5%





(Acquisitions)


~ (1.5)%

~ (2.5)%





Divestitures


~ 0.5%

~ 0.5%





Underlying (Non-GAAP)


10% - 12%

8.5% - 10%



































Final Control Adjusted EBITA




Q2 2022

Q2 2023

Q2 2022

Q2 2023



Business Segment EBIT / EBIT margin (GAAP)


$152

$215

17.2 %

21.6 %



Amortization of intangibles and restructuring and related costs


32

31

3.6 %

3.1 %



Adjusted Business Segment EBITA / EBITA margin (Non-GAAP)


$184

$246

20.8 %

24.7 %













Measurement & Analytical Adjusted EBITA




Q2 2022

Q2 2023

Q2 2022

Q2 2023



Business Segment EBIT / EBIT margin (GAAP)


$176

$229

23.0 %

25.8 %



Amortization of intangibles and restructuring and related costs


8

5

1.0 %

0.7 %



Adjusted Business Segment EBITA / EBITA margin (Non-GAAP)


$184

$234

24.0 %

26.5 %













Discrete Automation Adjusted EBITA




Q2 2022

Q2 2023

Q2 2022

Q2 2023



Business Segment EBIT / EBIT margin (GAAP)


$130

$133

20.3 %

19.5 %



Amortization of intangibles and restructuring and related costs


8

14

1.3 %

2.0 %



Adjusted Business Segment EBITA / EBITA margin (Non-GAAP)


$138

$147

21.6 %

21.5 %













Safety & Productivity Adjusted EBITA




Q2 2022

Q2 2023

Q2 2022

Q2 2023



Business Segment EBIT / EBIT margin (GAAP)


$65

$83

18.1 %

22.9 %



Amortization of intangibles and restructuring and related costs


7

9

1.9 %

2.3 %



Adjusted Business Segment EBITA / EBITA margin (Non-GAAP)


$72

$92

20.0 %

25.2 %













Intelligent Devices Adjusted EBITA




Q2 2022

Q2 2023

Q2 2022

Q2 2023



Business Segment EBIT / EBIT margin (GAAP)


$523

$660

19.7 %

22.6 %



Amortization of intangibles and restructuring and related costs


55

59

2.1 %

2.0 %



Adjusted Business Segment EBITA / EBITA margin (Non-GAAP)


$578

$719

21.8 %

24.6 %













Control Systems & Software Adjusted EBITA




Q2 2022

Q2 2023

Q2 2022

Q2 2023



Business Segment EBIT / EBIT margin (GAAP)


$101

$127

17.7 %

20.4 %



Amortization of intangibles and restructuring and related costs


5

10

1.0 %

1.7 %



Adjusted Business Segment EBITA / EBITA margin (Non-GAAP)


$106

$137

18.7 %

22.1 %











































AspenTech Adjusted EBITA




Q2 2022

Q2 2023

Q2 2022

Q2 2023



Business Segment EBIT / EBIT margin (GAAP)


$(4)

$(54)

(5.0) %

(23.4) %



Amortization of intangibles and restructuring and related costs


23

122

26.5 %

52.9 %



Adjusted Business Segment EBITA / EBITA margin (Non-GAAP)


$19

$68

21.5 %

29.5 %













Software and Control Adjusted EBITA




Q2 2022

Q2 2023

Q2 2022

Q2 2023



Business Segment EBIT / EBIT margin (GAAP)


$97

$73

14.7 %

8.6 %



Amortization of intangibles and restructuring and related costs


28

132

4.4 %

15.5 %



Adjusted Business Segment EBITA / EBITA margin (Non-GAAP)


$125

$205

19.1 %

24.1 %













Total Business Segment Adjusted EBITA Margin




Q2 2022

Q2 2023

Q2 2022

Q2 2023

Change


Pretax earnings / margin (GAAP)


$509

$639

15.5 %

17.0 %

150 bps


Corporate items and interest expense, net


111

94

3.4 %

2.5 %

(90)bps


Total Business Segment EBIT / margin


$620

$733

18.9 %

19.5 %

60 bps


Amortization of intangibles and restructuring and related costs

$83

$191

2.5 %

5.1 %

260 bps


Adjusted Total Business Segment EBITA / margin (Non-GAAP)

$703

$924

21.4 %

24.6 %

320 bps












Q2 Earnings Per Share




Q2 FY22

Q2 FY23

Change




Earnings per share (GAAP)


$           0.72

$            0.92

28 %




Amortization of intangibles


0.09

0.16

6 %




Restructuring and related costs


0.02

0.04

2 %




National Instrument investment gain


(0.05)

(7) %




Acquisition/divestiture costs




0.04

0.01

(5) %




AspenTech Micromine purchase price hedge


0.01

1 %




Adjusted earnings per share (Non-GAAP)


$           0.87

$            1.09

25 %














2023E April Guidance Earnings Per Share


Q3 FY23E

FY23E





Earnings per share (GAAP)


 $0.92 - $0.96

 $3.58 - $3.68





Amortization of intangibles


~ 0.15

 ~ 0.61





Restructuring and related costs


~ 0.03

~ 0.12





Russia business exit


~ 0.08





AspenTech Micromine purchase price hedge


(0.02)





Acquisition/divestiture fees


~ 0.03

~ 0.06





National Instrument investment gain


~ (0.05)





Interest on note receivable from Climate Technologies


~ (0.02)

 ~ (0.06)





Interest income on undeployed proceeds


~ (0.04)

~ (0.17)





Adjusted earnings per share (Non-GAAP)


$1.07 - $1.11

 $4.15 - $4.25















Cash Flow




Q2 FY22

Q2 FY23

Change


FY23E

($ in billions)


Operating cash flow (GAAP)




$            379

$             575

51 %


$         2.5


Capital expenditures




(67)

(62)

13 %


(0.3)


Free cash flow (Non-GAAP)




$            312

$             513

64 %


$         2.2






















Note 1: Underlying sales and orders exclude the impact of acquisitions, divestitures and currency translation.


Note 2: All fiscal year 2023E figures are approximate, except where range is given.


 

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SOURCE Emerson

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