Form 8-K EMERSON ELECTRIC CO For: Aug 09
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event
reported): August 9, 2022
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(Exact Name of Registrant as Specified in Charter)
| --------------------------------- (State or Other Jurisdiction of Incorporation) | ------------------- (Commission | --------------------------- (I.R.S. Employer Identification Number) | ||||||
| File Number) | ||||||||
| ------------------------------------------------ (Address of Principal Executive Offices) | ------------------ (Zip Code) | ||||||||||
Registrant’s telephone number, including area code:
(314 ) 553-2000
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| | ||||||||
| NYSE Chicago | ||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
Quarterly Results Press Release
On Tuesday, August 9, 2022, a press release was issued regarding the third quarter results of Emerson Electric Co. (the “Company”). A copy of this press release is furnished with this Current Report on Form 8-K as Exhibit 99.1.
References to underlying orders in the press release refer to the Company's trailing three-month average orders growth versus the prior year, excluding currency, acquisitions and divestitures.
Non-GAAP Financial Measures
The press release contains non-GAAP financial measures as such term is defined in Regulation G under the rules of the Securities and Exchange Commission. While the Company believes these non-GAAP financial measures are useful in evaluating the Company, this information should be considered as supplemental in nature and not as a substitute for or superior to the related financial information prepared in accordance with GAAP. Further, these non-GAAP financial measures may differ from similarly titled measures presented by other companies. The reasons management believes that these non-GAAP financial measures provide useful information are set forth in the Company’s most recent Form 10-K filed with the Securities and Exchange Commission and in the press release furnished with this Form 8-K.
Forward-Looking and Cautionary Statements
Statements in the 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 sale of its InSinkErator food waste disposal business, the financial impact of the AspenTech acquisition, the scope, duration and ultimate impacts of the COVID-19 pandemic and the Russia-Ukraine conflict, as well as the 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 expectations for its consolidated results, other than as noted herein.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
| 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. | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| EMERSON ELECTRIC CO. (Registrant) | |||||||||||
| Date: | August 9, 2022 | By: | /s/ John A. Sperino | ||||||||
John A. Sperino Vice President and Assistant Secretary | |||||||||||
Investor Contact: Colleen Mettler (314) 553-2197
Media Contact: Charlotte Boyd (952) 994-8607
Emerson Reports Third Quarter 2022 Results;
Updates 2022 Outlook
•June trailing three-month underlying orders1 up 10 percent
•Net sales were $5.0 billion, up 7 percent from the year prior; underlying sales2 were up
7 percent
7 percent
•GAAP EPS was $1.54, up 48 percent from the year prior; adjusted EPS3 was $1.38, up 16 percent, including an $0.08 net AspenTech impact
•Updated 2022 full year outlook and now includes impact of the AspenTech transaction
ST. LOUIS, Aug. 9, 2022 - Emerson (NYSE: EMR) today reported results for its third fiscal quarter ended June 30, 2022 and updated its full year outlook for fiscal 2022.
June trailing three-month underlying orders were up 10 percent. Third quarter net sales were up 7 percent and underlying sales were up 7 percent. By geography, the Americas were up 14 percent, Europe was flat and Asia, Middle East & Africa was down 1 percent. China was down 6 percent, primarily due to COVID-19 lockdowns.
Third quarter pretax margin of 23.9 percent was up 720 basis points. Adjusted EBITA margin4 was 22.8 percent, up 270 basis points.
Earnings per share were $1.54 for the quarter, up 48 percent. Adjusted earnings per share were $1.38, up 16 percent, which includes an $0.08 net AspenTech impact.
Operating cash flow was $740 million for the quarter, down 33 percent, and free cash flow was $630 million, down 36 percent. Cash flow results reflected higher working capital due to increased sales and continued supply chain constraints.
“Emerson delivered another strong quarter as we continue to see double-digit growth in underlying orders and strong demand for our technology, software and solutions,” said Emerson President and Chief Executive Officer Lal Karsanbhai. “Portfolio actions, including AspenTech which increased our adjusted earnings per share for the quarter by 8 cents, are delivering immediate value to customers and shareholders. The strength in demand and continued growth in backlog provides confidence to execute our plan despite COVID-19 lockdowns in China and continued global supply chain constraints, specifically with electronic components, which impacted our sales conversion this quarter.”
Page 2
“We have made significant progress on our portfolio journey this year,” Karsanbhai continued. “These actions, including yesterday's announced agreement to sell InSinkErator, represent Emerson's continued commitment to creating a higher growth, more diversified and cohesive portfolio.”
Portfolio Progress
Earlier this week, Emerson announced it has reached an agreement to sell the InSinkErator business to Whirlpool Corporation for $3.0 billion. More details on the transaction can be found in our Form 8-K filed Aug. 8, 2022.
On May 16, Emerson closed its transaction with AspenTech creating a global software leader positioned to advance customers’ sustainability and operational excellence goals, and a platform to deploy M&A capital. AspenTech’s July agreement to acquire end-to-end mining software provider, Micromine, is an example of this increased flexibility.
In the third quarter, Emerson also closed the divestiture of Therm-O-Disc and acquired Fluxa, a life sciences process knowledge management leader.
Business Platform Results
Automation Solutions5 June trailing three-month underlying orders were up 13 percent and backlog increased $100 million compared to the prior quarter to $6.2 billion despite $132 million of debooking in Russia.
Net sales were flat in the quarter, with underlying sales up 4 percent. The Americas were up 12 percent, Europe was down 2 percent and Asia, Middle East & Africa was down 3 percent. China was down 2 percent.
Segment EBIT margin increased 40 basis points to 18.5 percent and adjusted segment EBITA6 margin increased 70 basis points to 21.0 percent.
Commercial & Residential Solutions June trailing three-month underlying orders were up 5 percent and backlog decreased $100 million compared to the prior quarter to $1.3 billion and was flat excluding the impact of the Therm-O-Disc divestiture.
Net sales increased 8 percent in the quarter, with underlying sales up 13 percent. The Americas were up 16 percent, Europe was up 6 percent and Asia, Middle East & Africa was up 5 percent. China was down 18 percent.
Segment EBIT margin increased 10 basis points to 21.4 percent and adjusted segment EBITA margin decreased 50 basis points to 22.0 percent.
AspenTech7 net sales were $239 million for the quarter. Segment EBIT margin was 23.7 percent and adjusted segment EBITA margin was 53.8 percent.
Page 3
2022 Updated Outlook
Emerson updated its 2022 full year outlook to reflect the impacts of the AspenTech and Therm-O-Disc transactions, and write-offs associated with its announced Russia exit while considering continued macroeconomic and geopolitical uncertainty, supply chain constraints, exchange rate fluctuations and challenges related to COVID-19. Net sales guidance is reduced to 7 to 8 percent and underlying sales guidance is narrowed to 9 to 10 percent. Earnings per share guidance is increased to $5.25 to $5.35 and adjusted earnings per share guidance is increased to $5.05 to $5.15. Operating cash flow is now expected to be $3.0 billion due to higher working capital from increased sales and continued supply chain constraints. Capital spending was reduced to approximately $525 million and free cash flow is now expected to be $2.5 billion. Share repurchase is expected to be approximately $500 million.
The following tables summarize the updated fiscal year 2022 guidance framework. All figures are approximate.
| 2022 Guidance | |||||||||||
| Net Sales Growth | 7% - 8% | Operating Cash Flow | $3.0B | ||||||||
| Automation Solutions | 4% - 5% | Capital Spend | $525M | ||||||||
| Commercial & Residential Solutions | 9% - 10% | Free Cash Flow | $2.5B | ||||||||
| Dividend | $1.2B | ||||||||||
| Underlying Sales Growth | 9% - 10% | Share Repurchase | $500M | ||||||||
| Automation Solutions | 6% - 7% | ||||||||||
| Commercial & Residential Solutions | 13% - 14% | Tax Rate | 22% | ||||||||
| Restructuring Actions | $150M | ||||||||||
| GAAP EPS | $5.25 - $5.35 | ||||||||||
| Adjusted EPS | $5.05 - $5.15 | ||||||||||
Notes:
1 Trailing three-month underlying orders does not include heritage AspenTech, Therm-O-Disc (divested and previously reported in Commercial & Residential Solutions) or Emerson's contributed businesses to AspenTech (previously reported in Automation Solutions).
2 Underlying sales excludes the impact of acquisitions, divestitures, currency translation, heritage AspenTech, Therm-O-Disc and Emerson's contributed businesses to AspenTech.
3 Adjusted EPS excludes restructuring, first year purchase accounting charges, transaction and AspenTech pre-closing costs, a gain from the Therm-O-Disc divestiture, write-offs associated with Emerson's announced Russia exit and intangibles amortization expense.
4 Adjusted EBITA margin excludes restructuring, first year purchase accounting charges, transaction costs, a gain from the Therm-O-Disc divestiture, write-offs associated with Emerson's announced Russia exit and intangibles amortization expense.
5 Automation Solutions net sales, backlog, segment EBIT margin and adjusted segment EBITA margin does not include Emerson's contributed businesses to AspenTech, which have been reclassified to the AspenTech segment.
6 Adjusted segment EBITA margin excludes restructuring and intangible amortization expense.
7 The AspenTech segment includes the full quarter results for Emerson's businesses contributed to AspenTech and the heritage AspenTech business as of May 16, 2022.
Page 4
Upcoming Investor Events
Today, beginning at 8:00 a.m. Central Time / 9:00 a.m. Eastern Time, Emerson management will discuss the third quarter results during an investor conference call. Participants can access a live webcast available at www.emerson.com/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.
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 sale of its InSinkErator food waste disposal business, the financial impact of the AspenTech acquisition, the scope, duration and ultimate impacts of the COVID-19 pandemic and the Russia-Ukraine conflict, as well as economic and currency conditions, market demand, including related to the pandemic and oil and gas price declines and volatility, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, inflation, among others, as set forth in the Company's most recent Annual Report on Form 10-K and subsequent reports filed with the SEC. The outlook contained herein represents the Company's expectation for its consolidated results, other than as noted herein.
(tables attached)
Page 5
| Table 1 | |||||||||||||||||
| EMERSON AND SUBSIDIARIES | |||||||||||||||||
| CONSOLIDATED OPERATING RESULTS | |||||||||||||||||
| (AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED) | |||||||||||||||||
| Quarter Ended June 30 | Percent | ||||||||||||||||
| 2021 | 2022 | Change | |||||||||||||||
| Net sales | $4,697 | $5,005 | 7% | ||||||||||||||
| Cost of sales | 2,715 | 2,908 | |||||||||||||||
| SG&A expenses | 1,073 | 1,052 | |||||||||||||||
| Gain on sale of business | — | (483) | |||||||||||||||
| Other deductions, net | 88 | 283 | |||||||||||||||
| Interest expense, net | 37 | 50 | |||||||||||||||
| Earnings before income taxes | 784 | 1,195 | 52% | ||||||||||||||
| Income taxes | 151 | 243 | |||||||||||||||
| Net earnings | 633 | 952 | |||||||||||||||
| Less: Noncontrolling interests in subsidiaries | 6 | 31 | |||||||||||||||
| Net earnings common stockholders | $627 | $921 | 47% | ||||||||||||||
| Diluted avg. shares outstanding | 602.1 | 596.2 | |||||||||||||||
| Diluted earnings per share common share | $1.04 | $1.54 | 48% | ||||||||||||||
| Quarter Ended June 30 | |||||||||||||||||
| 2021 | 2022 | ||||||||||||||||
| Other deductions, net | |||||||||||||||||
| Amortization of intangibles | $71 | $98 | |||||||||||||||
| Restructuring costs | 28 | 31 | |||||||||||||||
| Other | (11) | 154 | |||||||||||||||
| Total | $88 | $283 | |||||||||||||||
Page 6
| Table 2 | |||||||||||||||||
| EMERSON AND SUBSIDIARIES | |||||||||||||||||
| CONSOLIDATED OPERATING RESULTS | |||||||||||||||||
| (AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED) | |||||||||||||||||
| Nine Months Ended June 30 | Percent | ||||||||||||||||
| 2021 | 2022 | Change | |||||||||||||||
| Net sales | $13,289 | $14,269 | 7% | ||||||||||||||
| Cost of sales | 7,722 | 8,398 | |||||||||||||||
| SG&A expenses | 3,125 | 3,112 | |||||||||||||||
| Gain on subordinated interest | — | (453) | |||||||||||||||
| Gain on sale of business | — | (483) | |||||||||||||||
| Other deductions, net | 243 | 374 | |||||||||||||||
| Interest expense, net | 115 | 140 | |||||||||||||||
| Earnings before income taxes | 2,084 | 3,181 | 53% | ||||||||||||||
| Income taxes | 431 | 659 | |||||||||||||||
| Net earnings | 1,653 | 2,522 | |||||||||||||||
| Less: Noncontrolling interests in subsidiaries | 20 | 31 | |||||||||||||||
| Net earnings common stockholders | $1,633 | $2,491 | 53% | ||||||||||||||
| Diluted avg. shares outstanding | 602.3 | 596.9 | |||||||||||||||
| Diluted earnings per share common share | $2.71 | $4.17 | 54% | ||||||||||||||
| Nine Months Ended June 30 | |||||||||||||||||
| 2021 | 2022 | ||||||||||||||||
| Other deductions, net | |||||||||||||||||
| Amortization of intangibles | $223 | $223 | |||||||||||||||
| Restructuring costs | 111 | 50 | |||||||||||||||
| Other | (91) | 101 | |||||||||||||||
| Total | $243 | $374 | |||||||||||||||
Page 7
| Table 3 | |||||||||||
| EMERSON AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| (DOLLARS IN MILLIONS, UNAUDITED) | |||||||||||
| Quarter Ended June 30 | |||||||||||
| 2021 | 2022 | ||||||||||
| Assets | |||||||||||
| Cash and equivalents | $2,860 | $2,529 | |||||||||
| Receivables, net | 2,754 | 2,957 | |||||||||
| Inventories | 2,114 | 2,319 | |||||||||
| Other current assets | 1,038 | 1,570 | |||||||||
| Total current assets | 8,766 | 9,375 | |||||||||
| Property, plant & equipment, net | 3,664 | 3,359 | |||||||||
| Goodwill | 7,777 | 14,748 | |||||||||
| Other intangible assets | 2,993 | 6,930 | |||||||||
| Other | 1,284 | 2,630 | |||||||||
| Total assets | $24,484 | $37,042 | |||||||||
| Liabilities and equity | |||||||||||
| Short-term borrowings and current | |||||||||||
| maturities of long-term debt | $1,478 | $3,227 | |||||||||
| Accounts payable | 1,966 | 2,040 | |||||||||
| Accrued expenses | 3,226 | 3,545 | |||||||||
| Total current liabilities | 6,670 | 8,812 | |||||||||
| Long-term debt | 5,835 | 8,367 | |||||||||
| Other liabilities | 2,640 | 3,576 | |||||||||
| Equity | |||||||||||
| Common stockholders' equity | 9,291 | 10,315 | |||||||||
| Noncontrolling interests in subsidiaries | 48 | 5,972 | |||||||||
| Total equity | 9,339 | 16,287 | |||||||||
| Total liabilities and equity | $24,484 | $37,042 | |||||||||
Page 8
| Table 4 | ||||||||||||||
| EMERSON AND SUBSIDIARIES | ||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
| (DOLLARS IN MILLIONS, UNAUDITED) | ||||||||||||||
| Nine Months Ended June 30 | ||||||||||||||
| 2021 | 2022 | |||||||||||||
| Operating activities | ||||||||||||||
| Net earnings | $1,653 | $2,522 | ||||||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization | 720 | 722 | ||||||||||||
| Stock compensation | 191 | 107 | ||||||||||||
| Pension expense | 23 | 2 | ||||||||||||
| Changes in operating working capital | 246 | (706) | ||||||||||||
| Gain on subordinated interest | — | (453) | ||||||||||||
| Gain on sale of business | — | (428) | ||||||||||||
| Other, net | (113) | (61) | ||||||||||||
| Cash provided by operating activities | 2,720 | 1,705 | ||||||||||||
| Investing activities | ||||||||||||||
| Capital expenditures | (350) | (335) | ||||||||||||
| Purchases of businesses, net of cash and equivalents acquired | (1,611) | (5,615) | ||||||||||||
| Divestitures of businesses | — | 578 | ||||||||||||
| Proceeds from subordinated interest | — | 438 | ||||||||||||
| Other, net | 53 | (41) | ||||||||||||
| Cash provided by (used in) investing activities | (1,908) | (4,975) | ||||||||||||
| Financing activities | ||||||||||||||
| Net increase in short-term borrowings | 31 | 1,633 | ||||||||||||
| Proceeds from short-term borrowings greater than three months | 71 | 1,162 | ||||||||||||
| Payments of short-term borrowings greater than three months | — | (445) | ||||||||||||
| Proceeds from long-term debt | — | 2,975 | ||||||||||||
| Payments of long-term debt | (305) | (512) | ||||||||||||
| Dividends paid | (909) | (918) | ||||||||||||
| Purchases of common stock | (268) | (418) | ||||||||||||
| Other, net | 89 | 80 | ||||||||||||
| Cash provided by (used in) financing activities | (1,291) | 3,557 | ||||||||||||
| Effect of exchange rate changes on cash and equivalents | 24 | (112) | ||||||||||||
| Increase (Decrease) in cash and equivalents | (455) | 175 | ||||||||||||
| Beginning cash and equivalents | 3,315 | 2,354 | ||||||||||||
| Ending cash and equivalents | $2,860 | $2,529 | ||||||||||||
Page 9
| Table 5 | |||||||||||
| EMERSON AND SUBSIDIARIES | |||||||||||
| SEGMENT SALES AND EARNINGS | |||||||||||
| (DOLLARS IN MILLIONS, UNAUDITED) | |||||||||||
| Quarter Ended June 30 | |||||||||||
| 2021 | 2022 | ||||||||||
| Sales | |||||||||||
| Measurement & Analytical Instrumentation | $781 | $785 | |||||||||
| Valves, Actuators & Regulators | 880 | 905 | |||||||||
| Industrial Solutions | 593 | 575 | |||||||||
| Systems & Software | 611 | 607 | |||||||||
| Automation Solutions | 2,865 | 2,872 | |||||||||
| AspenTech | 82 | 239 | |||||||||
| Climate Technologies | 1,268 | 1,380 | |||||||||
| Tools & Home Products | 489 | 522 | |||||||||
| Commercial & Residential Solutions | 1,757 | 1,902 | |||||||||
| Eliminations | (7) | (8) | |||||||||
| Net sales | $4,697 | $5,005 | |||||||||
| Earnings | |||||||||||
| Automation Solutions | $519 | $530 | |||||||||
| AspenTech | 2 | 57 | |||||||||
| Climate Technologies | 274 | 300 | |||||||||
| Tools & Home Products | 101 | 107 | |||||||||
| Commercial & Residential Solutions | 375 | 407 | |||||||||
| Stock compensation | (66) | (16) | |||||||||
| Unallocated pension and postretirement costs | 24 | 25 | |||||||||
| Corporate and other | (33) | (241) | |||||||||
| Gain on sale of business | — | 483 | |||||||||
| Interest expense, net | (37) | (50) | |||||||||
| Earnings before income taxes | $784 | $1,195 | |||||||||
Page 10
| Table 5 (cont.) | |||||||||||
| EMERSON AND SUBSIDIARIES | |||||||||||
| SEGMENT SALES AND EARNINGS | |||||||||||
| (DOLLARS IN MILLIONS, UNAUDITED) | |||||||||||
| Quarter Ended June 30 | |||||||||||
| 2021 | 2022 | ||||||||||
| Restructuring costs | |||||||||||
| Automation Solutions | $20 | $20 | |||||||||
| AspenTech | (2) | 1 | |||||||||
| Climate Technologies | 4 | 2 | |||||||||
| Tools & Home Products | 2 | (1) | |||||||||
| Commercial & Residential Solutions | 6 | 1 | |||||||||
| Corporate | 4 | 9 | |||||||||
| Total | $28 | $31 | |||||||||
The table above does not include $4 and $12 of costs related to restructuring actions that were reported in cost of sales and selling, general and administrative expenses for the three months ended June 30, 2021 and 2022, respectively. | |||||||||||
| Depreciation and Amortization | |||||||||||
| Automation Solutions | $128 | $127 | |||||||||
| AspenTech | 24 | 73 | |||||||||
| Climate Technologies | 48 | 43 | |||||||||
| Tools & Home Products | 20 | 19 | |||||||||
| Commercial & Residential Solutions | 68 | 62 | |||||||||
| Corporate and other | 17 | 8 | |||||||||
| Total | $237 | $270 | |||||||||
Page 11
| Table 6 | |||||||||||
| EMERSON AND SUBSIDIARIES | |||||||||||
| SEGMENT SALES AND EARNINGS | |||||||||||
| (DOLLARS IN MILLIONS, UNAUDITED) | |||||||||||
| Nine Months Ended June 30 | |||||||||||
| 2021 | 2022 | ||||||||||
| Sales | |||||||||||
| Measurement & Analytical Instrumentation | $2,211 | $2,287 | |||||||||
| Valves, Actuators & Regulators | 2,522 | 2,604 | |||||||||
| Industrial Solutions | 1,656 | 1,743 | |||||||||
| Systems & Software | 1,804 | 1,817 | |||||||||
| Automation Solutions | 8,193 | 8,451 | |||||||||
| AspenTech | 239 | 405 | |||||||||
| Climate Technologies | 3,459 | 3,884 | |||||||||
| Tools & Home Products | 1,419 | 1,546 | |||||||||
| Commercial & Residential Solutions | 4,878 | 5,430 | |||||||||
| Eliminations | (21) | (17) | |||||||||
| Net sales | $13,289 | $14,269 | |||||||||
| Earnings | |||||||||||
| Automation Solutions | $1,354 | $1,618 | |||||||||
| AspenTech | (1) | 51 | |||||||||
| Climate Technologies | 731 | 754 | |||||||||
| Tools & Home Products | 311 | 317 | |||||||||
| Commercial & Residential Solutions | 1,042 | 1,071 | |||||||||
| Stock compensation | (191) | (107) | |||||||||
| Unallocated pension and postretirement costs | 71 | 76 | |||||||||
| Corporate and other | (76) | (324) | |||||||||
| Gain on subordinated interest | — | 453 | |||||||||
| Gain on sale of business | — | 483 | |||||||||
| Interest expense, net | (115) | (140) | |||||||||
| Earnings before income taxes | $2,084 | $3,181 | |||||||||
Page 12
| Table 6 (cont.) | |||||||||||
| EMERSON AND SUBSIDIARIES | |||||||||||
| SEGMENT SALES AND EARNINGS | |||||||||||
| (DOLLARS IN MILLIONS, UNAUDITED) | |||||||||||
| Nine Months Ended June 30 | |||||||||||
| 2021 | 2022 | ||||||||||
| Restructuring costs | |||||||||||
| Automation Solutions | $92 | $33 | |||||||||
| AspenTech | 2 | 1 | |||||||||
| Climate Technologies | 8 | 5 | |||||||||
| Tools & Home Products | 4 | 1 | |||||||||
| Commercial & Residential Solutions | 12 | 6 | |||||||||
| Corporate | 5 | 10 | |||||||||
| Total | $111 | $50 | |||||||||
The table above does not include $11 and $26 of costs related to restructuring actions that were reported in cost of sales and selling, general and administrative expenses for the nine months ended June 30, 2021 and 2022, respectively. | |||||||||||
| Depreciation and Amortization | |||||||||||
| Automation Solutions | $393 | $383 | |||||||||
| AspenTech | 71 | 119 | |||||||||
| Climate Technologies | 144 | 136 | |||||||||
| Tools & Home Products | 59 | 58 | |||||||||
| Commercial & Residential Solutions | 203 | 194 | |||||||||
| Corporate and other | 53 | 26 | |||||||||
| Total | $720 | $722 | |||||||||
Page 13
| 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 June 30 | |||||||||||
| 2021 | 2022 | ||||||||||
| Pretax earnings | $784 | $1,195 | |||||||||
| Percent of sales | 16.7 | % | 23.9 | % | |||||||
| Interest expense, net | 37 | 50 | |||||||||
| Restructuring and related costs | 32 | 34 | |||||||||
| Amortization of intangibles | 79 | 124 | |||||||||
| Gain on sale of business | — | (483) | |||||||||
| Russia business exit | — | 162 | |||||||||
| Acquisition/divestiture costs | — | 61 | |||||||||
| OSI first year acquisition accounting charges | 10 | — | |||||||||
| Adjusted EBITA | $942 | $1,143 | |||||||||
| Percent of sales | 20.1 | % | 22.8 | % | |||||||
| Quarter Ended June 30 | |||||||||||
| 2021 | 2022 | ||||||||||
| GAAP earnings per share | $1.04 | $1.54 | |||||||||
| Restructuring and related costs | 0.04 | 0.05 | |||||||||
| Amortization of intangibles | 0.10 | 0.13 | |||||||||
| Gain on sale of business | — | (0.72) | |||||||||
| Russia business exit | — | 0.29 | |||||||||
| Acquisition/divestiture costs and interest on AspenTech debt | — | 0.09 | |||||||||
| OSI first year acquisition accounting charges | 0.01 | — | |||||||||
| Adjusted earnings per share | $1.19 | $1.38 | |||||||||
Page 14
| Table 8 | |||||||||||
| EMERSON AND SUBSIDIARIES | |||||||||||
| ADJUSTED EBITA & EPS SUPPLEMENTAL | |||||||||||
| (AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED) | |||||||||||
| Nine Months Ended June 30 | |||||||||||
| 2021 | 2022 | ||||||||||
| Pretax earnings | $2,084 | $3,181 | |||||||||
| Percent of sales | 15.7 | % | 22.3 | % | |||||||
| Interest expense, net | 115 | 140 | |||||||||
| Restructuring and related costs | 122 | 67 | |||||||||
| Amortization of intangibles | 242 | 277 | |||||||||
| Gain on subordinated interest | — | (453) | |||||||||
| Gain on sale of business | — | (483) | |||||||||
| Russia business exit | — | 162 | |||||||||
| Acquisition/divestiture costs | — | 97 | |||||||||
| Gain on acquisition of full ownership of equity investment | (17) | — | |||||||||
| OSI first year acquisition accounting charges and fees | 41 | — | |||||||||
| Adjusted EBITA | $2,587 | $2,988 | |||||||||
| Percent of sales | 19.5 | % | 20.9 | % | |||||||
| Nine Months Ended June 30 | |||||||||||
| 2021 | 2022 | ||||||||||
| GAAP earnings per share | $2.71 | $4.17 | |||||||||
| Restructuring and related costs | 0.16 | 0.09 | |||||||||
| Amortization of intangibles | 0.30 | 0.33 | |||||||||
| Gain on subordinated interest | — | (0.60) | |||||||||
| Gain on sale of business | — | (0.72) | |||||||||
| Russia business exit | — | 0.29 | |||||||||
| Acquisition/divestiture costs and interest on AspenTech debt | — | 0.16 | |||||||||
| Gain on acquisition of full ownership of equity investment | (0.03) | — | |||||||||
| OSI first year acquisition accounting charges and fees | 0.05 | — | |||||||||
| Adjusted earnings per share | $3.19 | $3.72 | |||||||||
Page 15
| Table 9 | |||||||||||
| EMERSON AND SUBSIDIARIES | |||||||||||
| SEGMENT EBITA | |||||||||||
| (DOLLARS IN MILLIONS, UNAUDITED) | |||||||||||
| Quarter Ended June 30 | |||||||||||
| 2021 | 2022 | ||||||||||
| Automation Solutions | |||||||||||
| Automation Solutions EBIT | $519 | $530 | |||||||||
| Percent of sales | 18.1 | % | 18.5 | % | |||||||
| Restructuring and related costs | 20 | 31 | |||||||||
| Amortization of intangibles | 44 | 41 | |||||||||
| Automation Solutions EBITA | $583 | $602 | |||||||||
| Percent of sales | 20.3 | % | 21.0 | % | |||||||
| AspenTech | |||||||||||
| AspenTech EBIT | $2 | $57 | |||||||||
| Percent of sales | 2.2 | % | 23.7 | % | |||||||
| Restructuring and related costs | (2) | 1 | |||||||||
| Amortization of intangibles | 22 | 71 | |||||||||
| AspenTech EBITA | $22 | $129 | |||||||||
| Percent of sales | 26.7 | % | 53.8 | % | |||||||
| Commercial & Residential Solutions | |||||||||||
| Commercial & Residential Solutions EBIT | $375 | $407 | |||||||||
| Percent of sales | 21.3 | % | 21.4 | % | |||||||
| Restructuring and related costs | 7 | 1 | |||||||||
| Amortization of intangibles | 13 | 12 | |||||||||
| Commercial & Residential Solutions EBITA | $395 | $420 | |||||||||
| Percent of sales | 22.5 | % | 22.0 | % | |||||||
Page 16
| Table 10 | |||||||||||
| EMERSON AND SUBSIDIARIES | |||||||||||
| SEGMENT EBITA | |||||||||||
| (DOLLARS IN MILLIONS, UNAUDITED) | |||||||||||
| Nine Months Ended June 30 | |||||||||||
| 2021 | 2022 | ||||||||||
| Automation Solutions | |||||||||||
| Automation Solutions EBIT | $1,354 | $1,618 | |||||||||
| Percent of sales | 16.5 | % | 19.1 | % | |||||||
| Restructuring and related costs | 94 | 54 | |||||||||
| Amortization of intangibles | 136 | 125 | |||||||||
| Automation Solutions EBITA | $1,584 | $1,797 | |||||||||
| Percent of sales | 19.3 | % | 21.3 | % | |||||||
| AspenTech | |||||||||||
| AspenTech EBIT | $(1) | $51 | |||||||||
| Percent of sales | (0.6) | % | 12.5 | % | |||||||
| Restructuring and related costs | 2 | 1 | |||||||||
| Amortization of intangibles | 67 | 116 | |||||||||
| AspenTech EBITA | $68 | $168 | |||||||||
| Percent of sales | 28.0 | % | 41.2 | % | |||||||
| Commercial & Residential Solutions | |||||||||||
| Commercial & Residential Solutions EBIT | $1,042 | $1,071 | |||||||||
| Percent of sales | 21.4 | % | 19.7 | % | |||||||
| Restructuring and related costs | 15 | 8 | |||||||||
| Amortization of intangibles | 39 | 36 | |||||||||
| Commercial & Residential Solutions EBITA | $1,096 | $1,115 | |||||||||
| Percent of sales | 22.5 | % | 20.5 | % | |||||||
Page 17
| 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. | ||||||||||||||||||||||||||||||||||||||
| Q3 2022 Underlying Sales Change | Auto Solns | Comm & Res Solns | Emerson | |||||||||||||||||||||||||||||||||||
| Reported (GAAP) | — | % | 8 | % | 7 | % | ||||||||||||||||||||||||||||||||
| (Favorable) / Unfavorable FX | 4 | % | 2 | % | 3 | % | ||||||||||||||||||||||||||||||||
| Acquisitions | — | % | — | % | (4)% | |||||||||||||||||||||||||||||||||
| Divestitures | — | % | 3 | % | 1 | % | ||||||||||||||||||||||||||||||||
| Underlying* | 4 | % | 13 | % | 7 | % | ||||||||||||||||||||||||||||||||
| FY 2022E Underlying Sales Change | Auto Solns | Comm & Res Solns | Emerson | |||||||||||||||||||||||||||||||||||
| Reported (GAAP) | 4% - 5% | 9% - 10% | 7% - 8% | |||||||||||||||||||||||||||||||||||
| (Favorable) / Unfavorable FX | 2 | % | 1 | % | 2% - 3% | |||||||||||||||||||||||||||||||||
| Acquisitions | — | % | — | % | (1)% - (2)% | |||||||||||||||||||||||||||||||||
| Divestitures | — | % | 3 | % | ~ 1% | |||||||||||||||||||||||||||||||||
| Underlying* | 6% - 7% | 13% - 14% | 9% - 10% | |||||||||||||||||||||||||||||||||||
| Q3 Earnings Per Share | Q3 FY21 | Q3 FY22 | Change | |||||||||||||||||||||||||||||||||||
| Earnings per share (GAAP) | $ | 1.04 | $ | 1.54 | 48 | % | ||||||||||||||||||||||||||||||||
| Restructuring and related costs | 0.04 | 0.05 | 1 | % | ||||||||||||||||||||||||||||||||||
| Amortization of intangibles | 0.10 | 0.13 | 3 | % | ||||||||||||||||||||||||||||||||||
| Gain on sale of business | — | (0.72) | (74) | % | ||||||||||||||||||||||||||||||||||
| Russia business exit | — | 0.29 | 30 | % | ||||||||||||||||||||||||||||||||||
| Acquisition/divestiture costs and pre-acquisition interest on AspenTech debt | — | 0.09 | 9 | % | ||||||||||||||||||||||||||||||||||
| OSI purchase accounting items | 0.01 | — | (1) | % | ||||||||||||||||||||||||||||||||||
| Adjusted earnings per share* | $ | 1.19 | $ | 1.38 | 16 | % | ||||||||||||||||||||||||||||||||
| Earnings Per Share | FY22E | Q4 FY22E | ||||||||||||||||||||||||||||||||||||
| Earnings per share (GAAP) | $5.25 - $5.35 | $1.00 - $1.05 | ||||||||||||||||||||||||||||||||||||
| Restructuring and related costs | 0.20 | 0.05 | ||||||||||||||||||||||||||||||||||||
| Amortization of intangibles | 0.47 | 0.10 | ||||||||||||||||||||||||||||||||||||
| Gain on subordinated interest | (0.60) | — | ||||||||||||||||||||||||||||||||||||
| Gain on sale of business | (0.72) | |||||||||||||||||||||||||||||||||||||
| Russia business exit | 0.29 | |||||||||||||||||||||||||||||||||||||
| Acquisition/divestiture costs and pre-acquisition interest on AspenTech debt | 0.16 | 0.10 | ||||||||||||||||||||||||||||||||||||
| Adjusted earnings per share* | $5.05 - $5.15 | $1.25 - $1.30 | ||||||||||||||||||||||||||||||||||||
Page 18
| EBITA Margin | Q3 FY21 | Q3 FY22 | Change | |||||||||||||||||||||||||||||||||||
| Pretax margin (GAAP) | 16.7 | % | 23.9 | % | 720 bps | |||||||||||||||||||||||||||||||||
| Interest expense, net | 0.8 | % | 1.0 | % | 20 bps | |||||||||||||||||||||||||||||||||
| Restructuring and related costs | 0.7 | % | 0.7 | % | - bps | |||||||||||||||||||||||||||||||||
| Amortization of intangibles | 1.7 | % | 2.5 | % | 80 bps | |||||||||||||||||||||||||||||||||
| Gain on sale of business | — | % | (9.7) | % | (970) bps | |||||||||||||||||||||||||||||||||
| Russia business exit | — | % | 3.2 | % | 320 bps | |||||||||||||||||||||||||||||||||
| Acquisition/divestiture costs | — | % | 1.2 | % | 120 bps | |||||||||||||||||||||||||||||||||
| OSI purchase accounting items | 0.2 | % | — | % | (20) bps | |||||||||||||||||||||||||||||||||
| Adjusted EBITA margin* | 20.1 | % | 22.8 | % | 270 bps | |||||||||||||||||||||||||||||||||
| Automation Solutions Segment EBIT Margin | Q3 FY21 | Q3 FY22 | Change | |||||||||||||||||||||||||||||||||||
| Automation Solutions Segment EBIT margin (GAAP) | 18.1 | % | 18.5 | % | 40 bps | |||||||||||||||||||||||||||||||||
| Restructuring and related costs | 0.7 | % | 1.1 | % | 40 bps | |||||||||||||||||||||||||||||||||
| Amortization of intangibles impact | 1.5 | % | 1.4 | % | (10) bps | |||||||||||||||||||||||||||||||||
| Automation Solutions Adjusted Segment EBITA margin* | 20.3 | % | 21.0 | % | 70 bps | |||||||||||||||||||||||||||||||||
| Commercial & Residential Solutions EBIT Margin | Q3 FY21 | Q3 FY22 | Change | |||||||||||||||||||||||||||||||||||
| Commercial & Residential EBIT margin (GAAP) | 21.3 | % | 21.4 | % | 10 bps | |||||||||||||||||||||||||||||||||
| Restructuring and related costs | 0.4 | % | — | % | (40) bps | |||||||||||||||||||||||||||||||||
| Amortization of intangibles impact | 0.8 | % | 0.6 | % | (20) bps | |||||||||||||||||||||||||||||||||
| Commercial & Residential Adjusted EBITA margin* | 22.5 | % | 22.0 | % | (50) bps | |||||||||||||||||||||||||||||||||
| AspenTech EBIT Margin | Q3 FY21 | Q3 FY22 | Change | |||||||||||||||||||||||||||||||||||
| AspenTech EBIT margin (GAAP) | 2.2 | % | 23.7 | % | 2,150 bps | |||||||||||||||||||||||||||||||||
| Restructuring and related costs | (2.4) | % | 0.3 | % | 270 bps | |||||||||||||||||||||||||||||||||
| Amortization of intangibles impact | 26.9 | % | 29.8 | % | 290 bps | |||||||||||||||||||||||||||||||||
| AspenTech Adjusted EBITA margin* | 26.7 | % | 53.8 | % | 2,710 bps | |||||||||||||||||||||||||||||||||
| Q3 Cash Flow | Q3 FY21 | Q3 FY22 | Change | |||||||||||||||||||||||||||||||||||
| Operating cash flow (GAAP) | $ | 1,105 | $ | 740 | (33) | % | ||||||||||||||||||||||||||||||||
| Capital expenditures | (128) | (110) | (3) | % | ||||||||||||||||||||||||||||||||||
| Free cash flow* | $ | 977 | $ | 630 | (36) | % | ||||||||||||||||||||||||||||||||
| FY 2022E Cash Flow | FY 2022E | |||||||||||||||||||||||||||||||||||||
| Operating cash flow (GAAP) | ~ $3.0B | |||||||||||||||||||||||||||||||||||||
| Capital expenditures | $(525)M | |||||||||||||||||||||||||||||||||||||
| Free cash flow* | ~ $2.5B | |||||||||||||||||||||||||||||||||||||
| Commercial & Residential Solutions Backlog | March 31, 2022 | June 30, 2022 | Change | |||||||||||||||||||||||||||||||||||
| GAAP backlog | ~ $1.4B | ~ $1.3B | $ (0.1)B | |||||||||||||||||||||||||||||||||||
| Therm-O-Disc backlog | (0.1) B | $ | — | 0.1 B | ||||||||||||||||||||||||||||||||||
| Backlog excluding Therm-O-Disc* | ~ $1.3B | ~ $1.3B | $ | — | ||||||||||||||||||||||||||||||||||
| 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. | ||||||||||||||||||||||||||||||||||||||
| ### | ||||||||||||||||||||||||||||||||||||||
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