10-QPeriod: Q2 FY2024

EMERSON ELECTRIC CO Quarterly Report for Q2 Ended Mar 31, 2024

Filed May 8, 2024For Securities:EMR

Summary

Emerson Electric Co. (EMR) reported its financial results for the quarter and six months ended March 31, 2024. The company saw a significant increase in net sales, driven primarily by the acquisition of National Instruments (NI), contributing 10% to sales growth. While reported net earnings declined due to factors like the NI acquisition's purchase accounting adjustments and a prior year gain from discontinued operations, adjusted earnings per share from continuing operations showed strong growth, up 25% for the quarter and 39% for the six months. This highlights the underlying operational improvements and the positive impact of the NI integration. The company is actively managing its portfolio, evidenced by the recent acquisition of NI and strategic divestitures in prior periods. The integration of NI into the Software and Control segment is progressing, though it has led to increased amortization and restructuring costs impacting reported earnings. Emerson's outlook for the full fiscal year 2024 remains positive, with expectations for robust sales growth and adjusted earnings per share.

Financial Highlights

55 data points
Beta

Revenue

$4.38B

52.2% Gross Margin

Net Income

$501.00M

11.4% Net Margin

EPS (Diluted)

$0.87

Total Assets

$46.44B

Cash & Equivalents

$2.32B

Free Cash Flow

$661.00M

Financial Statements
Beta
Revenue$4.38B
Cost of Revenue$2.09B
Gross Profit$2.28B
SG&A Expenses$1.30B
Operating Income$547.00M
Net Income$501.00M
EPS (Basic)$0.88
EPS (Diluted)$0.87
Shares Outstanding (Basic)571.40M
Shares Outstanding (Diluted)574.10M

Key Highlights

  • 1Net sales for the three months ended March 31, 2024, increased by 17% to $4.4 billion, largely driven by the National Instruments (NI) acquisition which added 10% to growth.
  • 2Reported net earnings attributable to common stockholders decreased by 37% to $501 million for the quarter, impacted by a gain on discontinued operations in the prior year and increased amortization expenses from the NI acquisition.
  • 3Adjusted diluted earnings per share from continuing operations increased significantly by 25% to $1.36 for the quarter, demonstrating strong underlying operational performance.
  • 4The acquisition of National Instruments has led to a substantial increase in goodwill and intangible assets on the balance sheet.
  • 5Operating cash flow from continuing operations for the six months ended March 31, 2024, increased by $324 million to $1,201 million, showing healthy cash generation.
  • 6The company has updated its full-year fiscal 2024 outlook, expecting consolidated net sales to be up 15-16% and adjusted diluted earnings per share from continuing operations to be between $5.40 and $5.50.

Frequently Asked Questions

The primary driver of the sales increase was the acquisition of National Instruments (NI), which contributed approximately 10% to the 17% overall sales growth for the quarter. Underlying sales, excluding the impact of acquisitions and divestitures, also showed healthy growth of 8%.

The decrease in reported net earnings is mainly due to significant items. A large gain from discontinued operations in the prior year's comparable period distorts the year-over-year comparison. Additionally, the acquisition of National Instruments has led to increased expenses, including amortization of intangibles and restructuring costs, which negatively impact reported earnings.

Emerson has integrated NI into its Software and Control business group as the new Test & Measurement segment. While the acquisition is driving sales growth, the company is incurring integration-related costs, including amortization and restructuring expenses, which are noted in the 'Other Deductions, net' and 'Restructuring Costs' sections of the filing. The company is actively managing these costs while working to realize the full benefits of the integration.

Emerson projects full-year consolidated net sales from continuing operations to increase by 15% to 16%, with underlying sales expected to grow 5.5% to 6.5%. Adjusted diluted earnings per share from continuing operations are forecasted to be in the range of $5.40 to $5.50, indicating confidence in continued operational performance and profitability.