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Emerson Reports Second Quarter 2022 Results; Updates 2022 Outlook

  • March Trailing Three-Month Underlying Orders up 13 percent
  • Net Sales were $4.8 billion, up 8 percent from the year prior; Underlying Sales were up 10 percent
  • GAAP EPS was $1.13, up 22 percent from the year prior; Adjusted EPS (as defined below) was $1.29, up 21 percent
  • Increased 2022 Full Year Outlook to reflect continued strong demand and execution
  • Announced decision to exit Russia business
  • Declared quarterly cash dividend of $0.515 per share of common stock payable June 10, 2022 to stockholders of record May 13, 2022

Emerson (NYSE: EMR) today reported results for its second fiscal quarter ended March 31, 2022 and updated its full year outlook for fiscal 2022.

March Trailing Three-Month Underlying Orders were up 13 percent, as demand continued to be strong across both platforms. Second quarter Net Sales were up 8 percent and Underlying Sales were up 10 percent. By geography, the Americas grew 14 percent, Europe grew 2 percent and Asia, Middle East & Africa grew 7 percent. China grew 11 percent.

Second quarter Pretax Margin of 16.9 percent was up 30 basis points. Adjusted EBITA Margin, which excludes restructuring, first year purchase accounting charges, transaction costs and intangibles amortization expense, was 20.2 percent, up 20 basis points.

Earnings Per Share were $1.13 for the quarter, up 22 percent. Adjusted Earnings Per Share, which excludes restructuring, first year purchase accounting charges, transaction and AspenTech pre-closing costs and intangibles amortization expense, were $1.29, up 21 percent. Earnings in the quarter benefited from leverage, continued savings from effective cost management and favorable mix despite the ongoing supply chain headwinds and inflationary pressures. Earnings included a tax benefit of 8 cents.

Operating Cash Flow was $442 million for the quarter, down 45 percent, and Free Cash Flow was $333 million, down 53 percent. Cash flow results reflected mainly higher inventory due to supply chain constraints.

“Emerson continues to execute through a dynamic and challenging environment. In the second quarter, we delivered solid margins and drove 10 percent underlying sales growth and over 20 percent adjusted EPS growth. Our performance was indicative of strong end market demand and successful navigation through supply chain constraints and inflationary pressures,” said Emerson President and Chief Executive Officer Lal Karsanbhai. “Despite ongoing uncertainty, our strong performance gives us confidence to increase our 2022 full year outlook.

“Today, Emerson is also announcing our decision to exit our Russia business and, as part of this exit, we are exploring strategic options to divest Metran, our Russia-based manufacturing subsidiary,” Karsanbhai continued. “We are committed to an orderly transfer of these assets and will support our employees through this process.”

Business Platform Results

Automation Solutions March trailing three-month underlying orders were up 17 percent driven by strong demand in all business groups and world areas. Backlog increased $400 million compared to the prior quarter to $6.4 billion.

Net sales increased 5 percent in the quarter, with underlying sales up 7 percent. The Americas were up 13 percent, Europe was down 3 percent and Asia, Middle East & Africa was up 6 percent. China was up 17 percent.

Segment EBIT margin increased 210 basis points to 18.9 percent and Adjusted Segment EBITA margin, which excludes restructuring and intangibles amortization expense, increased 170 basis points to 21.5 percent. Favorable profitability was driven by increased volume, leverage, continued cost management and mix despite increased costs due to inflationary pressures.

Commercial & Residential Solutions March trailing three-month underlying orders were up 7 percent driven by continued strength in both the residential and commercial businesses. Backlog increased $100 million compared to the prior quarter to $1.4 billion.

Net sales increased 13 percent in the quarter, with underlying sales up 14 percent. The Americas were up 15 percent, Europe was up 14 percent and Asia, Middle East & Africa was up 11 percent. China was down 6 percent.

Segment EBIT margin decreased 200 basis points to 19.7 percent and Adjusted Segment EBITA margin (as defined above) decreased 230 basis points to 20.5 percent. Profitability continues to be challenged by inflationary costs but was up sequentially as price less net material inflation continues to improve.

2022 Updated Outlook

Emerson updated its 2022 full year outlook to reflect overall strong business performance while considering continued macroeconomic and geopolitical uncertainty, supply chain constraints and challenges related to COVID-19. Net and Underlying Sales guidance is increased by 2 percent to 8 to 10 percent and 9 to 11 percent, respectively. Earnings Per Share guidance of $4.77 to $4.92 is increased to reflect the operational impact of increased sales guidance. Adjusted Earnings Per Share are increased to $4.95 to $5.10. Operating Cash Flow is now expected to be $3.6 billion due to increased inventory resulting from supply chain constraints. Capital spending was reduced to approximately $600 million and Free Cash Flow is now expected to be $3.0 billion. Free cash flow conversion is expected to be approximately 100 percent for 2022.

The following tables summarize the updated fiscal year 2022 and third quarter 2022 guidance framework. Our guidance does not include the operational impact of the transaction with AspenTech, which is expected to close in the second calendar quarter of 2022, but has been updated to include estimated transaction fees and interest expense on $3.0 billion of debt already issued to fund the transaction. Our guidance also excludes the effect of the Therm-O-Disc sale, expected to close in the second calendar quarter of 2022. It includes the estimated operational impact of exiting our Russia business, but excludes any potential charges or other costs associated with the exit.

 

2022 Guidance

Net Sales Growth

8% - 10%

Operating Cash Flow

$3.6B

Automation Solutions

6% - 8%

Capital Spend

$600M

Commercial & Residential Solutions

11% - 13%

Free Cash Flow

$3.0B

 

 

Dividend

$1.2B

Underlying Sales Growth

9% - 11%

Share Repurchase

$250M - $500M

Automation Solutions

7% - 9%

 

 

Commercial & Residential Solutions

12% - 14%

Tax Rate

22%

 

 

Restructuring Actions

$150M

GAAP EPS

$4.77 - $4.92

 

 

Adjusted EPS

$4.95 - $5.10

 

 

2022 Q3 Guidance

Net Sales Growth

7% - 9%

Automation Solutions

4% - 6%

Commercial & Residential Solutions

11% - 13%

 

 

Underlying Sales Growth

9% - 11%

Automation Solutions

7% - 9%

Commercial & Residential Solutions

13% - 15%

 

 

GAAP EPS

$1.00 - $1.05

Adjusted EPS

$1.25 - $1.30

Note 1: All figures are approximate

Upcoming Investor Events

Today, beginning at 8:00 a.m. Central Time / 9:00 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/financial 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.

Emerson also announces it will host an in-person investor conference on Nov. 29, 2022 in New York City. Event details will be distributed closer to this date.

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 AspenTech 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, excluding the expected AspenTech and Therm-O-Disc transactions, and the impact related to exiting our Russia business, 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

 

2021

 

2022

 

Change

 

 

 

 

 

 

Net sales

$4,431

 

 

$4,791

 

 

8%

Cost of sales

2,569

 

 

2,839

 

 

 

SG&A expenses

1,054

 

 

1,049

 

 

 

Other deductions, net

33

 

 

40

 

 

 

Interest expense, net

38

 

 

52

 

 

 

Earnings before income taxes

737

 

 

811

 

 

10%

Income taxes

169

 

 

136

 

 

 

Net earnings

568

 

 

675

 

 

 

Less: Noncontrolling interests in subsidiaries

7

 

 

1

 

 

 

Net earnings common stockholders

$561

 

 

$674

 

 

20%

 

 

 

 

 

 

Diluted avg. shares outstanding

602.8

 

 

596.5

 

 

 

 

 

 

 

 

 

Diluted earnings per share common share

$0.93

 

 

$1.13

 

 

22%

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended March 31

 

 

 

2021

 

2022

 

 

Other deductions, net

 

 

 

 

 

Amortization of intangibles

$74

 

 

$62

 

 

 

Restructuring costs

17

 

 

10

 

 

 

Other

(58

)

 

(32

)

 

 

Total

$33

 

 

$40

 

 

 

 

 

 

 

 

Table 2

EMERSON AND SUBSIDIARIES

CONSOLIDATED OPERATING RESULTS

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)

 

 

 

 

 

 

 

Six Months Ended March 31

 

Percent

 

2021

2022

 

Change

 

 

 

 

 

 

Net sales

$8,592

 

 

$9,264

 

 

8%

Cost of sales

5,007

 

 

5,490

 

 

 

SG&A expenses

2,052

 

 

2,060

 

 

 

Gain on subordinated interest

 

 

(453

)

 

 

Other deductions, net

155

 

 

91

 

 

 

Interest expense, net

78

 

 

90

 

 

 

Earnings before income taxes

1,300

 

 

1,986

 

 

53%

Income taxes

280

 

 

416

 

 

 

Net earnings

1,020

 

 

1,570

 

 

 

Less: Noncontrolling interests in subsidiaries

14

 

 

 

 

 

Net earnings common stockholders

$1,006

 

 

$1,570

 

 

56%

 

 

 

 

 

 

Diluted avg. shares outstanding

602.3

 

 

597.3

 

 

 

 

 

 

 

 

 

Diluted earnings per share common share

$1.67

 

 

$2.63

 

 

57%

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended March 31

 

 

 

2021

2022

 

 

Other deductions, net

 

 

 

 

 

Amortization of intangibles

$152

 

 

$125

 

 

 

Restructuring costs

83

 

 

19

 

 

 

Other

(80

)

 

(53

)

 

 

Total

$155

 

 

$91

 

 

 

 

 

 

 

Table 3

EMERSON AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

 

 

 

 

 

Quarter Ended March 31

 

2021

 

2022

Assets

 

 

 

 

 

Cash and equivalents

$2,342

 

 

$6,929

 

Receivables, net

2,754

 

 

2,958

 

Inventories

2,016

 

 

2,399

 

Other current assets

849

 

 

1,253

 

Total current assets

7,961

 

 

13,539

 

Property, plant & equipment, net

3,663

 

 

3,567

 

Goodwill

7,787

 

 

7,631

 

Other intangible assets

3,095

 

 

2,699

 

Other

1,294

 

 

2,061

 

Total assets

$23,800

 

 

$29,497

 

 

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

Short-term borrowings and current

 

 

 

 

 

maturities of long-term debt

$1,456

 

 

$2,762

 

Accounts payable

1,797

 

 

2,049

 

Accrued expenses

3,041

 

 

3,261

 

Total current liabilities

6,294

 

 

8,072

 

Long-term debt

5,823

 

 

8,203

 

Other liabilities

2,503

 

 

2,608

 

Total equity

9,180

 

 

10,614

 

Total liabilities and equity

$23,800

 

 

$29,497

 
 

 

 

 

 

Table 4

EMERSON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

 

 

 

 

 

Six Months Ended March 31

 

 

2021

 

2022

Operating activities

 

 

 

 

Net earnings

 

$1,020

 

 

$1,570

 

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

 

 

 

 

Depreciation and amortization

 

483

 

 

452

 

Stock compensation

 

125

 

 

91

 

Pension expense

 

16

 

 

2

 

Changes in operating working capital

 

66

 

 

(588

)

Gain on subordinated interest

 

 

 

(453

)

Other, net

 

(95

)

 

(109

)

Cash provided by operating activities

 

1,615

 

 

965

 

 

 

 

 

 

Investing activities

 

 

 

 

Capital expenditures

 

(222

)

 

(225

)

Purchases of businesses, net of cash and equivalents acquired

 

(1,611

)

 

(37

)

Proceeds from subordinated interest

 

 

 

438

 

Other, net

 

61

 

 

(17

)

Cash provided by (used in) investing activities

 

(1,772

)

 

159

 

 

 

 

 

 

Financing activities

 

 

 

 

Net increase in short-term borrowings

 

60

 

 

871

 

Proceeds from short-term borrowings greater than three months

 

 

 

1,040

 

Proceeds from long-term debt

 

 

 

2,975

 

Payments of long-term debt

 

(301

)

 

(504

)

Dividends paid

 

(606

)

 

(613

)

Purchases of common stock

 

(78

)

 

(285

)

Other, net

 

83

 

 

15

 

Cash provided by (used in) financing activities

 

(842

)

 

3,499

 

 

 

 

 

 

Effect of exchange rate changes on cash and equivalents

 

26

 

 

(48

)

Increase (Decrease) in cash and equivalents

 

(973

)

 

4,575

 

Beginning cash and equivalents

 

3,315

 

 

2,354

 

Ending cash and equivalents

 

$2,342

 

 

$6,929

 

 

 

 

 

 

 

 

Table 5

EMERSON AND SUBSIDIARIES

SEGMENT SALES AND EARNINGS

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

 

 

 

Quarter Ended March 31

 

2021

 

2022

Sales

 

 

 

Measurement & Analytical Instrumentation

$732

 

 

$767

 

Valves, Actuators & Regulators

836

 

 

883

 

Industrial Solutions

555

 

 

602

 

Systems & Software

670

 

 

685

 

Automation Solutions

2,793

 

 

2,937

 

 

 

 

 

Climate Technologies

1,160

 

 

1,341

 

Tools & Home Products

485

 

 

516

 

Commercial & Residential Solutions

1,645

 

 

1,857

 

 

 

 

 

Eliminations

(7

)

 

(3

)

Net sales

$4,431

 

 

$4,791

 

 

 

 

 

Earnings

 

 

 

Automation Solutions

$471

 

 

$556

 

 

 

 

 

Climate Technologies

245

 

 

262

 

Tools & Home Products

112

 

 

103

 

Commercial & Residential Solutions

357

 

 

365

 

 

 

 

 

Stock compensation

(61

)

 

(50

)

Unallocated pension and postretirement costs

23

 

 

25

 

Corporate and other

(15

)

 

(33

)

Interest expense, net

(38

)

 

(52

)

Earnings before income taxes

$737

 

 

$811

 

 

 

 

 

Restructuring costs

 

 

 

Automation Solutions

$12

 

 

$8

 

 

 

 

 

Climate Technologies

3

 

 

1

 

Tools & Home Products

1

 

 

1

 

Commercial & Residential Solutions

4

 

 

2

 

 

 

 

 

Corporate

1

 

 

 

Total

$17

 

 

$10

 

The table above does not include $4 and $5 of costs related to restructuring actions that were reported in cost of sales and selling, general and administrative expenses for the three months ended March 31, 2021 and 2022, respectively.

 

 

 

 

Depreciation and Amortization

 

 

 

Automation Solutions

$156

 

 

$147

 

 

 

 

 

Climate Technologies

47

 

 

46

 

Tools & Home Products

20

 

 

19

 

Commercial & Residential Solutions

67

 

 

65

 

 

 

 

 

Corporate and other

16

 

 

9

 

Total

$239

 

 

$221

 

 

 

 

 

Table 6

EMERSON AND SUBSIDIARIES

SEGMENT SALES AND EARNINGS

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

 

 

 

Six Months Ended March 31

 

2021

2022

Sales

 

 

 

Measurement & Analytical Instrumentation

$1,430

 

 

$1,502

 

Valves, Actuators & Regulators

1,642

 

 

1,699

 

Industrial Solutions

1,063

 

 

1,168

 

Systems & Software

1,350

 

 

1,373

 

Automation Solutions

5,485

 

 

5,742

 

 

 

 

 

Climate Technologies

2,191

 

 

2,504

 

Tools & Home Products

930

 

 

1,024

 

Commercial & Residential Solutions

3,121

 

 

3,528

 

 

 

 

 

Eliminations

(14

)

 

(6

)

Net sales

$8,592

 

 

$9,264

 

 

 

 

 

Earnings

 

 

 

Automation Solutions

$832

 

 

$1,082

 

 

 

 

 

Climate Technologies

457

 

 

454

 

Tools & Home Products

210

 

 

210

 

Commercial & Residential Solutions

667

 

 

664

 

 

 

 

 

Stock compensation

(125

)

 

(91

)

Unallocated pension and postretirement costs

47

 

 

51

 

Corporate and other

(43

)

 

(83

)

Gain on subordinated interest

 

 

453

 

Interest expense, net

(78

)

 

(90

)

Earnings before income taxes

$1,300

 

 

$1,986

 

 

 

 

 

Restructuring costs

 

 

 

Automation Solutions

$76

 

 

$13

 

 

 

 

 

Climate Technologies

4

 

 

3

 

Tools & Home Products

2

 

 

2

 

Commercial & Residential Solutions

6

 

 

5

 

 

 

 

 

Corporate

1

 

 

1

 

Total

$83

 

 

$19

 

The table above does not include $7 and $14 of costs related to restructuring actions that were reported in cost of sales and selling, general and administrative expenses for the six months ended March 31, 2021 and 2022, respectively.

 

 

 

 

Depreciation and Amortization

$312

 

 

$302

 

Automation Solutions

 

 

 

 

 

 

 

Climate Technologies

96

 

 

93

 

Tools & Home Products

39

 

 

39

 

Commercial & Residential Solutions

135

 

 

132

 

 

 

 

 

Corporate and other

36

 

 

18

 

Total

$483

 

 

$452

 

 

 

 

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, 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

 

2021

 

2022

 

 

 

 

Pretax earnings

$737

 

 

$811

 

Percent of sales

16.6

%

 

16.9

%

Interest expense, net

38

 

 

52

 

Restructuring and related costs

21

 

 

15

 

Amortization of intangibles

82

 

 

76

 

Acquisition/divestiture costs

 

 

13

 

OSI first year acquisition accounting charges

10

 

 

 

Adjusted EBITA

$888

 

 

$967

 

Percent of sales

20.0

%

 

20.2

%

 

 

 

 

 

Quarter Ended March 31

 

2021

 

2022

 

 

 

 

GAAP earnings per share

$0.93

 

 

$1.13

 

 

 

 

 

Restructuring and related costs

0.03

 

 

0.02

 

Amortization of intangibles

0.10

 

 

0.10

 

Acquisition/divestiture costs and interest on AspenTech debt

 

 

0.04

 

OSI first year acquisition accounting charges

0.01

 

 

 

 

 

 

 

Adjusted earnings per share

$1.07

 

 

$1.29

 

 

 

 

 

Table 8

EMERSON AND SUBSIDIARIES

ADJUSTED EBITA & EPS SUPPLEMENTAL

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)

 

Six Months Ended March 31

 

2021

 

2022

 

 

 

 

Pretax earnings

$1,300

 

 

$1,986

 

Percent of sales

15.1

%

 

21.4

%

Interest expense, net

78

 

 

90

 

Restructuring and related costs

90

 

 

33

 

Amortization of intangibles

163

 

 

153

 

Gain on subordinated interest

 

 

(453

)

Acquisition/divestiture costs

 

 

36

 

Gain on acquisition of full ownership of equity investment

(17

)

 

 

OSI first year acquisition accounting charges and fees

31

 

 

 

Adjusted EBITA

$1,645

 

 

$1,845

 

Percent of sales

19.2

%

 

19.9

%

 

 

 

 

 

Six Months Ended March 31

 

2021

 

2022

 

 

 

 

GAAP earnings per share

$1.67

 

 

$2.63

 

 

 

 

 

Restructuring and related costs

0.12

 

 

0.04

 

Amortization of intangibles

0.20

 

 

0.20

 

Gain on subordinated interest

 

 

(0.60

)

Acquisition/divestiture costs and interest on AspenTech debt

 

 

0.07

 

Gain on acquisition of full ownership of equity investment

(0.03

)

 

 

OSI first year acquisition accounting charges and fees

0.04

 

 

 

 

 

 

 

Adjusted earnings per share

$2.00

 

 

$2.34

 

 

 

 

 

 

 

 

Table 9

EMERSON AND SUBSIDIARIES

SEGMENT EBITA

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

 

 

 

Quarter Ended March 31

 

2021

 

2022

Automation Solutions

 

 

 

 

 

 

 

Automation Solutions EBIT

$471

 

 

$556

 

Percent of sales

16.8

%

 

18.9

%

Restructuring and related costs

14

 

 

11

 

Amortization of intangibles

69

 

 

64

 

Automation Solutions EBITA

$554

 

 

$631

 

Percent of sales

19.8

%

 

21.5

%

 

 

 

 

 

 

 

 

Commercial & Residential Solutions

 

 

 

 

 

 

 

Commercial & Residential Solutions EBIT

$357

 

 

$365

 

Percent of sales

21.7

%

 

19.7

%

Restructuring and related costs

5

 

 

3

 

Amortization of intangibles

13

 

 

12

 

Commercial & Residential Solutions EBITA

$375

 

 

$380

 

Percent of sales

22.8

%

 

20.5

%

 

 

 

 

Table 10

EMERSON AND SUBSIDIARIES

SEGMENT EBITA

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

 

 

 

Six Months Ended March 31

 

2021

 

2022

Automation Solutions

 

 

 

 

 

 

 

Automation Solutions EBIT

$832

 

 

$1,082

 

Percent of sales

15.2

%

 

18.8

%

Restructuring and related costs

78

 

 

23

 

Amortization of intangibles

137

 

 

129

 

Automation Solutions EBITA

$1,047

 

 

$1,234

 

Percent of sales

19.1

%

 

21.5

%

 

 

 

 

 

 

 

 

Commercial & Residential Solutions

 

 

 

 

 

 

 

Commercial & Residential Solutions EBIT

$667

 

 

$664

 

Percent of sales

21.4

%

 

18.8

%

Restructuring and related costs

8

 

 

7

 

Amortization of intangibles

26

 

 

24

 

Commercial & Residential Solutions EBITA

$701

 

 

$695

 

Percent of sales

22.4

%

 

19.7

%

 

Reconciliations of Non-GAAP Financial Measures & Other

 

Table 11

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliations of Non-GAAP measures (denoted by *) with the most directly comparable GAAP measure (dollars in millions, except per share amounts). See tables 7 through 10 for additional non-GAAP reconciliations.

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 2022 Underlying Sales Change

Auto Solns

 

Comm & Res Solns

 

Emerson

 

 

Reported (GAAP)

 

5

%

 

 

13

%

 

8

%

 

 

(Favorable) / Unfavorable FX

 

2

%

 

 

1

%

 

2

%

 

 

Acquisitions / Divestitures

 

%

 

 

%

 

%

 

 

Underlying*

 

7

%

 

 

14

%

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q3 2022E Underlying Sales Change

Auto Solns

 

Comm & Res Solns

 

Emerson

 

 

Reported (GAAP)

4% - 6

%

 

11% - 13

%

 

7% - 9

%

 

 

(Favorable) / Unfavorable FX

 

3

%

 

 

2

%

 

2

%

 

 

Acquisitions / Divestitures

 

%

 

 

%

 

%

 

 

Underlying*

7% - 9

%

 

13% - 15

%

 

9% - 11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FY 2022E Underlying Sales Change

Auto Solns

 

Comm & Res Solns

 

Emerson

 

 

Reported (GAAP)

 

6% - 8

%

 

11% - 13

%

 

8% - 10

%

 

 

(Favorable) / Unfavorable FX

 

1

%

 

 

1

%

 

1

%

 

 

Acquisitions / Divestitures

 

%

 

 

%

 

%

 

 

Underlying*

 

7% - 9

%

 

12% - 14

%

 

9% - 11

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q2 Earnings Per Share

Q2 FY21

 

Q2 FY22

 

Change

 

 

Earnings per share (GAAP)

$

0.93

 

 

$

1.13

 

 

22

%

 

 

Restructuring and related costs

 

0.03

 

 

 

0.02

 

 

(1

)%

 

 

Amortization of intangibles

 

0.10

 

 

 

0.10

 

 

(3

)%

 

 

Acquisition/divestiture costs and interest on AspenTech debt

 

 

 

 

0.04

 

 

4

%

 

 

OSI purchase accounting

 

0.01

 

 

 

 

 

(1

)%

 

 

Adjusted earnings per share*

$

1.07

 

 

$

1.29

 

 

21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share

Q3 FY22E

 

FY22E

 

 

 

 

Earnings per share (GAAP)

$1.00 - $1.05

 

 

$4.77 - $4.92

 

 

 

 

 

Restructuring and related costs

 

0.05

 

 

 

0.20

 

 

 

 

 

Amortization of intangibles

 

0.10

 

 

 

0.39

 

 

 

 

 

Gain on subordinated interest

 

 

 

 

(0.60

)

 

 

 

 

Acquisition/divestiture costs and interest on AspenTech debt

 

0.10

 

 

 

0.19

 

 

 

 

 

Adjusted earnings per share*

$1.25 - $1.30

 

 

$4.95 - $5.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT and EBITA Margin

Q2 FY21

 

Q2 FY22

 

Change

 

 

Pretax margin (GAAP)

 

16.6

%

 

 

16.9

%

 

30 bps

 

 

Interest expense, net

 

0.9

%

 

 

1.1

%

 

20 bps

 

 

Restructuring and related costs

 

0.5

%

 

 

0.3

%

 

(20) bps

 

 

Amortization of intangibles

 

1.8

%

 

 

1.6

%

 

(20) bps

 

 

Acquisition/divestiture costs and interest on AspenTech debt

 

%

 

 

0.3

%

 

30 bps

 

 

OSI purchase accounting items

 

0.2

%

 

 

%

 

(20) bps

 

 

Adjusted EBITA margin*

 

20.0

%

 

 

20.2

%

 

20 bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Automation Solutions Segment EBIT Margin

Q2 FY21

 

Q2 FY22

 

Change

 

 

Automation Solutions Segment EBIT margin (GAAP)

 

16.8

%

 

 

18.9

%

 

210 bps

 

 

Restructuring and related costs

 

0.5

%

 

 

0.4

%

 

(10) bps

 

 

Amortization of intangibles impact

 

2.5

%

 

 

2.2

%

 

(30) bps

 

 

Automation Solutions Adjusted Segment EBITA margin*

 

19.8

%

 

 

21.5

%

 

170 bps

 

 

 

 

 

 

 

 

 

 

Commercial & Residential EBIT Margin

Q2 FY21

 

Q2 FY22

 

Change

 

 

Commercial & Residential EBIT margin (GAAP)

 

21.7

%

 

 

19.7

%

 

(200) bps

 

 

Restructuring and related costs

 

0.3

%

 

 

0.2

%

 

(10) bps

 

 

Amortization of intangibles impact

 

0.8

%

 

 

0.6

%

 

(20) bps

 

 

Commercial & Residential Adjusted EBITA margin*

 

22.8

%

 

 

20.5

%

 

(230) bps

 

 

 

 

 

 

 

 

 

 

Q2 Cash Flow

Q2 FY21

 

Q2 FY22

 

Change

 

 

Operating cash flow (GAAP)

$

807

 

 

$

442

 

 

(45

)%

 

 

Capital expenditures

 

(100

)

 

 

(109

)

 

(8

)%

 

 

Free cash flow*

$

707

 

 

$

333

 

 

(53

)%

 

 

 

 

 

FY 2022E Cash Flow

FY 2022E

 

 

 

 

 

 

Operating cash flow (GAAP)

~ $3.6B

 

 

 

 

 

 

 

Capital expenditures

(600)M

 

 

 

 

 

 

 

Free cash flow*

~ $3.0B

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flow to Net Earnings Conversion

FY 2022E

 

 

 

 

 

 

Operating cash flow to net earnings (GAAP)

~ 120

%

 

 

 

 

 

 

Capital expenditures

 

(20

)%

 

 

 

 

 

 

Free cash flow to net earnings*

~ 100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Note 2: All fiscal year 2022E figures are approximate, except where range is given.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contacts

For Emerson

Investor Contact: Colleen Mettler (314) 553-2197

Media Contact: Charlotte Boyd (952) 994-8607

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