10-QPeriod: Q2 FY2023

EMERSON ELECTRIC CO Quarterly Report for Q2 Ended Mar 31, 2023

Filed May 3, 2023For Securities:EMR

Summary

Emerson Electric Co. (EMR) reported strong performance for the fiscal third quarter of 2023, with net sales from continuing operations increasing by 14% year-over-year to $3.8 billion. This growth was driven by robust underlying sales, up 14%, with contributions from both higher volume and increased pricing, despite a 3% unfavorable impact from foreign currency translation. The company saw broad-based sales growth across most of its business segments and all geographic regions. Profitability also improved, with earnings from continuing operations attributable to common stockholders rising 24% to $530 million, and diluted earnings per share from continuing operations increasing by 28% to $0.92. The significant increase in net earnings common stockholders to $792 million (up 18%) and diluted EPS to $1.38 (up 22%) was notably boosted by substantial gains from discontinued operations, primarily the divestiture of InSinkErator. The company also provided a positive full-year outlook, expecting consolidated net sales growth of 9-10.5% and adjusted earnings per share from continuing operations between $4.15 and $4.25.

Financial Highlights

55 data points
Beta

Revenue

$3.76B

47.9% Gross Margin

Net Income

$792.00M

21.1% Net Margin

EPS (Diluted)

$1.38

Total Assets

$36.15B

Cash & Equivalents

$2.05B

Free Cash Flow

$6.00M

Financial Statements
Beta
Revenue$3.76B
Cost of Revenue$1.96B
Gross Profit$1.80B
SG&A Expenses$1.00B
Operating Income$530.00M
Net Income$792.00M
EPS (Basic)$1.39
EPS (Diluted)$1.38
Shares Outstanding (Basic)570.90M
Shares Outstanding (Diluted)573.60M

Key Highlights

  • 1Net sales from continuing operations increased 14% year-over-year to $3.8 billion.
  • 2Underlying sales (excluding currency, M&A) grew 14%, indicating strong organic demand and effective pricing.
  • 3Earnings from continuing operations grew significantly, with EPS up 28% to $0.92.
  • 4Net earnings were boosted by substantial gains from discontinued operations, particularly the InSinkErator divestiture.
  • 5The company announced a significant pending acquisition of National Instruments (NI) for $8.2 billion, signaling continued strategic portfolio expansion.
  • 6Full-year guidance remains positive, with expectations for 9-10.5% consolidated net sales growth and adjusted EPS of $4.15-$4.25.
  • 7Gross margin improved by 3.1 percentage points to 47.9%, driven by favorable pricing and the AspenTech acquisition.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in underlying sales, which rose by 14%. This was a combination of 9% higher volume and 5% higher pricing. Growth was broad-based across most business segments and all geographic regions, indicating strong demand for Emerson's products and solutions.

The acquisition of AspenTech contributed 4% to sales growth. The divestiture of Metran (Russia) detracted 1% from sales. The most significant impact on net earnings came from discontinued operations, particularly the gain on the sale of InSinkErator, which substantially boosted net earnings and EPS. The company also announced the pending acquisition of National Instruments (NI), which is expected to close in fiscal year 2024.

Emerson expects full-year consolidated net sales from continuing operations to increase by 9% to 10.5%, with underlying sales growing 8.5% to 10%. Adjusted earnings per share from continuing operations are projected to be between $4.15 and $4.25. The company anticipates strong operating cash flow of approximately $2.5 billion and free cash flow from continuing operations of approximately $2.2 billion.

Gross margin improved significantly by 3.1 percentage points to 47.9%, driven by favorable pricing over net material inflation, the positive impact of the AspenTech acquisition, and a favorable mix. Selling, general, and administrative (SG&A) expenses as a percentage of sales slightly decreased to 26.7%, reflecting operating leverage. Earnings from continuing operations attributable to common stockholders increased by 24%, with diluted EPS from continuing operations up 28%.