Summary
Emerson Electric Co.'s 2022 10-K filing reveals a strategic transformation focused on portfolio optimization and an increased emphasis on its core automation and software businesses. The company reported significant net sales growth of 8% to $19.6 billion, driven by a combination of volume and pricing increases, despite ongoing supply chain challenges and geopolitical headwinds. Net earnings saw a substantial 40% increase to $3.2 billion, or $5.41 per diluted share, bolstered by strong operational performance and favorable divestiture gains. Key strategic moves during the fiscal year included the combination of its industrial software businesses with Aspen Technology, Inc., and the announcement of a majority stake sale in its Climate Technologies business to Blackstone. These actions signify Emerson's intent to streamline its portfolio towards higher-growth, more cohesive industrial technology offerings, particularly in intelligent devices and software. The company generated robust operating cash flow of $2.9 billion, though this was down 18% due to increased working capital needs, and maintained a strong financial position with substantial equity and available credit facilities.
Financial Highlights
57 data points| Revenue | $13.80B |
| Cost of Revenue | $7.50B |
| Gross Profit | $6.31B |
| R&D Expenses | $385.00M |
| SG&A Expenses | $3.61B |
| Operating Income | $1.89B |
| Net Income | $3.23B |
| EPS (Basic) | $5.44 |
| EPS (Diluted) | $5.41 |
| Shares Outstanding (Basic) | 592.90M |
| Shares Outstanding (Diluted) | 596.30M |
Key Highlights
- 1Net sales increased by 8% to $19.6 billion in fiscal year 2022, driven by a 9% increase in underlying sales (6.5% to 8.5% projected for FY23).
- 2Net earnings attributable to common stockholders rose by 40% to $3.2 billion, with diluted EPS increasing by 42% to $5.41 ($5.25 adjusted EPS).
- 3Significant portfolio restructuring occurred, including the strategic combination with Aspen Technology, Inc. (creating a new industrial software leader) and the announced sale of a majority stake in the Climate Technologies business for $14.0 billion.
- 4Automation Solutions segment remains the largest contributor, with sales up 4% to $11.8 billion and a strong operating margin of 20.0%.
- 5Operating cash flow was $2.9 billion, down 18% from the prior year, primarily due to higher working capital requirements amidst supply chain constraints.
- 6The company has set an ambitious environmental sustainability target of achieving net zero greenhouse gas emissions across its value chain by 2045.
- 7Backlog increased to $8.1 billion as of September 30, 2022, up from $6.5 billion in the prior year, indicating strong future demand.