10-KPeriod: FY2021

EMERSON ELECTRIC CO Annual Report, Year Ended Sep 30, 2021

Filed November 15, 2021For Securities:EMR

Summary

Emerson Electric Co. reported a strong fiscal year 2021 with net sales of $18.2 billion, a 9% increase over the prior year. This recovery brought sales back to pre-COVID-19 levels, driven by a 5% increase in underlying sales, a 3% boost from foreign currency translation, and a 1% contribution from the OSI acquisition. Net earnings common stockholders rose 17% to $2.3 billion, with diluted earnings per share increasing 18% to $3.82. The company generated robust operating cash flow of $3.6 billion, a 16% increase, demonstrating strong cash-generating capabilities. Key strategic initiatives included the announced agreement to combine two software businesses with Aspen Technology, Inc., positioning Emerson to own 55% of the new entity. The company continues to focus on innovation, sustainability, and operational efficiency, as evidenced by its "Greening Of, Greening By, Greening With" framework and a commitment to reducing greenhouse gas emissions. Despite ongoing supply chain challenges and material price volatility, Emerson successfully navigated these headwinds, ending the year with a solid financial position and a backlog of $6.5 billion, with 85% expected to be recognized within 12 months.

Financial Highlights

57 data points
Beta

Revenue

$12.93B

58.5% Gross Margin

Net Income

$2.30B

17.8% Net Margin

EPS (Diluted)

$3.82

Total Assets

$24.71B

Cash & Equivalents

$2.35B

Free Cash Flow

$3.17B

Financial Statements
Beta
Revenue$12.93B
Cost of Revenue$7.20B
Gross Profit$7.56B
R&D Expenses$347.00M
SG&A Expenses$3.49B
Operating Income$1.41B
Interest Expense$147.00M
Net Income$2.30B
EPS (Basic)$3.85
EPS (Diluted)$3.82
Shares Outstanding (Basic)598.10M
Shares Outstanding (Diluted)601.80M

Key Highlights

  • 1Net sales increased by 9% to $18.2 billion in fiscal year 2021, recovering to 2019 levels.
  • 2Underlying sales grew by 5%, indicating core business strength, further supported by a 3% favorable foreign currency impact.
  • 3Net earnings for common stockholders rose 17% to $2.3 billion, with diluted EPS up 18% to $3.82.
  • 4Operating cash flow increased 16% to $3.6 billion, highlighting strong cash generation.
  • 5Announced agreement to combine industrial software businesses with Aspen Technology, Inc., in a transaction expected to result in Emerson owning 55% of the new entity.
  • 6Order backlog grew to $6.5 billion, with 85% expected to be recognized in revenue over the next 12 months.
  • 7Company continues to emphasize sustainability initiatives, including a commitment to reduce greenhouse gas emissions.

Frequently Asked Questions

Emerson's strategy involves a combination of organic growth through innovation and product development, alongside strategic acquisitions and divestitures. The company focuses on providing solutions that enhance efficiency, sustainability, and safety for its industrial, commercial, and residential customers. The announced combination with Aspen Technology, Inc. is a key element of its strategy to build scale and capabilities in the industrial software sector.

Emerson navigated supply chain disruptions and experienced higher freight costs. Market price volatility for certain materials, particularly steel, negatively impacted profitability. Despite these challenges, the company generally secured necessary raw materials and components in sufficient quantities.

Emerson expects fiscal year 2022 to be characterized by strong underlying demand, with projected consolidated net sales growth of 5% to 7% and underlying sales growth of 6% to 8%. Earnings per share are anticipated to be between $4.79 and $4.94, with adjusted EPS projected between $4.82 and $4.97. The company anticipates operational challenges in the first half of the year but expects price-cost dynamics to become a tailwind in the second half. The outlook does not include the impact of the AspenTech transaction, which is expected to close in the second calendar quarter of 2022.

Emerson is committed to driving innovation for a healthier, safer, smarter, and more sustainable world. Its environmental sustainability strategy is structured around "Greening Of, Greening By, Greening With." This includes improving internal operational sustainability (e.g., reducing GHG emissions and energy consumption), enabling customer sustainability efforts through its technologies and solutions, and fostering stakeholder collaboration. The company has a commitment to reduce GHG emissions by 20% by 2028, normalized to sales, from a 2018 baseline.