EMERSON ELECTRIC CO

Previous wording

For the first quarter of fiscal 2025, net sales were $4.2 billion, up 1 percent compared with the prior year. Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, were up 2 percent. Foreign currency translation had a 1 percent unfavorable impact.

Current wording

For the second quarter of fiscal 2025, net sales were $4.4 billion, up 1 percent compared with the prior year. Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, were up 2 percent. Foreign currency translation had a 1 percent unfavorable impact.

Previous wording

Following is an analysis of the Company’s operating results for the first quarter ended December 31, 2024 compared with the first quarter ended December 31, 2023.

Current wording

Following is an analysis of the Company’s operating results for the second quarter ended March 31, 2025, compared with the second quarter ended March 31, 2024.

Previous wording

Net sales for the first quarter of fiscal 2025 were $4.2 billion, up 1 percent compared with 2024. Intelligent Devices sales were up 1 percent, while Software and Control sales were up 3 percent. Underlying sales were up 2 percent on 0.5 percent higher volume and 1.5 percent higher price. Foreign currency translation had a 1 percent unfavorable impact. Underlying sales were up 1 percent in the U.S. and up 3 percent internationally. The Americas was up 3 percent, Europe was down 2 percent, and Asia, Middle East & Africa was up 4 percent (China down 5 percent).

Current wording

Net sales for the second quarter of fiscal 2025 were $4.4 billion, up 1 percent compared with 2024. Software and Control sales were up 7 percent, while Intelligent Devices sales were down 1 percent. Underlying sales were up 2 percent on 0.5 percent higher volume and 1.5 percent higher price. Foreign currency translation had a 1 percent unfavorable impact. Underlying sales were up 2 percent in the U.S. and up 2 percent internationally. The Americas was up 3 percent, Europe was down 1 percent, and Asia, Middle East & Africa was up 3 percent (China down 8 percent).

Previous wording

Selling, general and administrative (SG&A) expenses of $1,224 decreased $53 and SG&A as apercent of sales decreased 1.7 percentage points to 29.3 percent compared with the prior year, reflecting savings from cost reduction actions and the impact of Test & Measurement acquisition-related costs incurred in the prior year.

Current wording

Selling, general and administrative (SG&A) expenses of $1,283 decreased $13 and SG&A as apercent of sales decreased 0.7 percentage points to 28.9 percent compared with the prior year, reflecting savings from cost reduction actions.

Previous wording

Earnings from continuing operations attributable to common stockholders were $585, up 247 percent, and diluted earnings per share from continuing operations were $1.02, up 252 percent compared with $0.29 in the prior year. Adjusted diluted earnings per share from continuing operations were $1.38 compared with $1.22 in the prior year, reflecting strong operating results. See the analysis above ofadjusted earnings per share for further details.

Current wording

Earnings from continuing operations attributable to common stockholders were $485, down 11 percent, and diluted earnings per share from continuing operations were $0.86, down 9 percent compared with $0.95 in the prior year. Adjusted diluted earnings per share from continuing operations were $1.48 compared with $1.36 in the prior year, reflecting strong operating results. See the analysis above ofadjusted earnings per share for further details.

Previous wording

Loss from discontinued operations was $(27) ($(0.04) per share) in the prior year. See Note 5.

Current wording

Loss from discontinued operations was $46 ($(0.08) per share) in the prior year. See Note 5.

Previous wording

Net earnings common stockholders in the first quarter of fiscal 2025 were $585 compared with $142 in the prior year, and earnings per share were $1.02 compared with $0.25 in the prior year.

Current wording

Net earnings common stockholders in the second quarter of fiscal 2025 were $485 compared with $501 in the prior year, and earnings per share were $0.86 compared with $0.87 in the prior year.

Previous wording

The table below, which shows results from continuing operations on an adjusted EBITA basis, is intended to supplement the Company's discussion of its results of operations herein. The Company defines adjusted EBITA as earnings from continuing operations excluding interest expense, net, income taxes, intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction-related costs, gains or losses on the Copeland equity method investment, and certain gains, losses or impairments. Adjusted EBITA and adjusted EBITA margin are measures used by management and may be useful for investors to evaluate the Company's operational performance.

Current wording

The table below, which shows results from continuing operations on an adjusted EBITA basis, is intended to supplement the Company's discussion of its results of operations herein. The Company defines adjusted EBITA as earnings from continuing operations excluding interest expense, net, income taxes, intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction-related costs, and certain gains, losses or impairments. Adjusted EBITA and adjusted EBITA margin are measures used by management and may be useful for investors to evaluate the Company's operational performance.

Previous wording

Following is an analysis of operating results for the Company’s business segments for the first quarter ended December 31, 2024, compared with the first quarter ended December 31, 2023. The Company defines segment earnings as earnings before interest and taxes. See Note 14 for a discussion of the Company's business segments.

Current wording

Following is an analysis of operating results for the Company’s business segments for the second quarter ended March 31, 2025, compared with the second quarter ended March 31, 2024. The Company defines segment earnings as earnings before interest and taxes. See Note 15 for a discussion of the Company's business segments.

Previous wording

Software and Control sales were $1,352 in the first quarter of 2025, an increase of $38, or 3 percent compared to the prior year, reflecting strong growth in AspenTech. Underlying sales were up 4 percent on 2 percent higher volume and 2 percent higher price. Underlying sales increased 5 percent in the Americas and were up 5 percent in Asia, Middle East & Africa (China down 11 percent), while Europe decreased 1 percent. Control Systems & Software sales increased $15, or 2 percent, and underlying sales increased 3 percent reflecting strong demand in process end markets in Europe and Asia, Middle East & Africa, while power end markets were strong in Asia, Middle East & Africa. Test & Measurement sales decreased $23, or 6 percent in the first quarter, reflecting weakness in Europe, partially offset by strong growth in the Americas. AspenTech sales increased $46, or 18 percent, reflecting strong license revenue due to the timing of renewals and new contracts signed during the quarter. Earnings for Software and Control increased $159, up 434 percent, and margin increased 11.6 percentage points, reflecting leverage on higher AspenTech sales, higher price, savings from cost reduction actions, andlower restructuring and related costs and intangibles amortization compared to the prior year. Adjusted EBITA margin increased 5.5 percentage points.

Current wording

Software and Control sales were $1,421 in the second quarter of 2025, an increase of $89, or 7 percent compared to the prior year, reflecting strong growth in Control Systems & Software. Underlying sales increased 7 percent on 5 percent higher volume and 2 percent higher price. Underlying sales increased 8 percent in the Americas, 4 percent in Europe and 10 percent in Asia, Middle East & Africa (China down 7 percent). Control Systems & Software sales increased $97, or 10 percent, reflecting robust growth at AspenTech and moderate demand in process end markets in Europe and Asia, Middle East & Africa. Test & Measurement sales decreased $8 or 2 percent, reflecting softness in the Americas and Europe, partially offset by strong growth in Asia, Middle East & Africa. Earnings for Software and Control increased $151, up 240 percent, and margin increased 10.4 percentage points, reflecting strong leverage on higher Control Systems & Software sales, higher price, savings from cost reduction actions (primarily at Test & Measurement), and lower intangibles amortization compared to the prior year. Adjusted EBITA margin increased 5.6 percentage points.

Previous wording

Cost of sales for the first quarter of fiscal 2025 were $1,940, a decrease of $261 compared with 2024 and gross margin of 53.5 percent increased 7.0 percentage points, as the prior year reflected the impact from acquisition-related inventory step-up amortization of $231, which negatively impacted margins in the prior year by 5.6 percentage points. Favorable price less net material inflation also contributed to the increase in gross margin.

Current wording

Cost of sales for 2025 were $4,002, a decrease of $291 compared with 2024, and gross margin of 53.5 percent increased 4.0 percentage points, as the prior year reflected the impact from acquisition-related inventory step-up amortization of $231, which negatively impacted margins in the prior year by 2.7 percent. Favorable price less net material inflation also contributed to the increase in gross margin.

Previous wording

Other deductions, net were $228 for the first quarter of fiscal 2025, a decrease of $223 compared with the prior year, reflecting higher restructuring and acquisition/divestiture costs in the prior year, as well as backlog amortization related to the Test & Measurement acquisition of $34. See Note 7.

Current wording

Other deductions, net were $646 in 2025, a decrease of $135 compared with the prior year, reflecting lower restructuring expense of $81 and lower intangibles amortization expense of $90 (including $68 of backlog amortization related to the Test & Measurement acquisition in the prior year), partially offset by higher acquisition/divestiture fees and related costs. The prior year also includeda divestiture loss of$39. See Note 7.

Previous wording

Pretax earnings from continuing operations of $775 increased $600, up 343 percent compared with the prior year. Earnings increased$92 in Intelligent Devices and increased $159 in Software and Control, see the Business Segments discussion that follows and Note 14.

Current wording

Pretax earnings from continuing operations of $1,404 increased $518 compared with prior year. Earnings increased $86 in Intelligent Devices and $309 in Software and Control, see the Business Segments discussion that follows and Note 15.

Previous wording

Income taxes were $182 in the first quarter of fiscal 2025 and $16 in 2024, resulting in effective tax rates of 24 percent and 9 percent, respectively. The prior year rate included a $57 ($0.10 per share) benefit related to discrete tax items and the impact of inventory step-up amortization, which in total had a 12 percentage point impact on the rate.

Current wording

Income taxes were $382 in the first six months of fiscal 2025 and $178 in 2024, resulting in effective tax rates of 27 percent and 20 percent, respectively. The current year rate was negatively impacted by $49 ($0.09 per share) of discrete tax items related to the AspenTech transaction. In addition, the fees incurred by AspenTech were not fully deductible. Overall, these items increasedthe current year rate by approximately 5 percentage points. The prior year rate included a $57 ($0.10 per share) benefit related to discrete tax items, partially offset by unfavorable impacts from inventory step-up amortization and the loss on divestiture noted above. In total, the net impact of these items benefited the rate by approximately 1 percentage point.

Previous wording

Intelligent Devices sales were $2.8 billion in the first quarterof 2025, an increase of $21, or 1 percent. Underlying sales increased 2 percent on 1 percent higher price and 1 percent higher volume. Unde rlying sales increased 2 percent in the Americas, Europe decreased 3 percent and Asia, Middle East & Africa was up 3 percent (China down 2 percent). Final Control sales increased$36, or 4 percent, reflecting strength in power end markets. Sales for Measurement & Analytical increased$28, or 3 percent, reflecting robust growth in Middle East & Africa and moderate growth in the Americas and Europe. Discrete Automation sales decreased $33, or 5 percent, reflecting softness in all geographies. Safety & Productivity sales decreased $10, or 3 percent, reflecting softness in the Americas and Europe. Earnings for Intelligent Devices were$686, an increase of$92, or 16 percent, and margin increased 3.1 percentage points to 24.1 percent, reflecting strong operational performance, favorable price less net material inflation and favorable foreign currency transactions of $32 due to gains in the first quarter of 2025 compared to losses in the prior year. Adjusted EBITA margin was 26.1 percent, an increase of 2.3 percentage points.

Current wording

Intelligent Devices sales were $5.9 billion in the first six months of 2025, flat compared to the prior year. Underlying sales increased 1 percent as higher price was partially offset by slightly lower volume. Underlying sales increased 2 percent in the Americas, Europe decreased 4 percent, and Asia, Middle East & Africa was up 1 percent (China down 5 percent). Final Control sales increased $58, or 3 percent, reflecting strength in power end markets. Sales for Measurement & Analytical increased $17, or 1 percent, reflecting growth in Asia, Middle East & Africa partially offset by softness in Europe. Discrete Automation sales decreased $50, or 4 percent, reflecting softness in Asia, Middle East & Africa and Europe, partially offset by slight growth in the Americas. Safety & Productivity sales decreased $36, or 5 percent, reflecting softness in all geographies. Earnings for Intelligent Devices were $1,412, an increase of $86, or 6 percent, and margin increased 1.5 percentage points to 24.0 percent, reflecting favorable price less net material inflation and favorable foreign currency transactions of $19. Adjusted EBITA margin was 25.9 percent, an increase of 1.2 percentage points.

Previous wording

Key elements of the Company's financial condition for the three months ended December 31, 2024 as compared to the year ended September 30, 2024 and the three months ended December 31, 2023 follow.

Current wording

Key elements of the Company's financial condition as of and forthe six months ended March 31, 2025 as compared to the year ended September 30, 2024 and the six months ended March 31, 2024 follow.

Previous wording

Operating working capital increased slightly compared to September 30, 2024. The current ratio decreased compared to September 30, 2024, reflecting thedecrease in cash driven by share repurchases. The interest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of 10.0X for the 12 months ended December 31, 2024 compares to 10.5X for the 12 months ended December 31, 2023.

Current wording

The interest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of 9.8X for the 12 months ended March 31, 2025 compares to 10.2X for the 12 months ended March 31, 2024.

Previous wording

Operating cash flow from continuing operations for the first three months of fiscal 2025 was $777, an increase of $333 compared with $444 in the prior year, reflecting higher earnings and favorable receivables performance. Acquisition-related costs and integration activities negatively impacted operating cash flow in the prior year by approximately $100. Free cash flow from continuing operations of $694 in the first three months of fiscal 2025 (operating cash flow of $777 less capital expenditures of $83) increased $327 compared to free cash flow of $367 in 2024 (operating cash flow of $444 less capital expenditures of $77), reflecting theincrease in operating cash flow. Cash used in investing activities from continuing operations was $142, and cash used in financing activities from continuing operations was $1,291, reflecting share repurchases of $899 and dividends.

Current wording

Operating cash flow from continuing operations for the first six months of fiscal 2025 was $1,603, an increase of $426 compared with $1,177 in the prior year, reflecting higher earnings. Free cash flow from continuing operations of $1,433 in the first six months of fiscal 2025 (operating cash flow of $1,603 less capital expenditures of $170) increased $415 compared to free cash flow of $1,018 in 2024 (operating cash flow of $1,177 less capital expenditures of $159), reflecting the increase in operating cash flow. Cash used in investing activities from continuing operations was $264. Cash used in financing activities from continuing operations was $2,382, reflecting the purchase of the remaining outstanding shares of common stock of AspenTech not already owned by the Companyfor approximately$7.2 billion, share purchases of $1.1 billion and dividends, partially offset by the increase in short and long-term debt discussed above.

Previous wording

Total cash provided by operating activities was $777 including the impact of discontinued operations, and increased $362 compared with $415 in the prior year.

Current wording

Total cash provided by operating activities was $1,018 including the impact of discontinued operations, and decreased $140 compared with $1,158 in the prior year. The decrease reflected higher operating cash flow from continuing operations, offset by$585 of income taxes paid in the second quarter related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland.

Previous wording

Emerson maintains a conservative financial structure to provide the strength and flexibility necessary to achieve our strategic objectives and has been successful in efficiently deploying cash where needed worldwide to fund operations, complete acquisitions and sustain long-term growth. Emerson is in a strong financial position, with total assets of $43 billion and common stockholders' equity of $20 billion, and has the resources available for reinvestment in existing businesses, strategic acquisitions and managing its capital structure on a short- and long-term basis.

Current wording

Emerson maintains a conservative financial structure to provide the strength and flexibility necessary to achieve our strategic objectives and has been successful in efficiently deploying cash where needed worldwide to fund operations, complete acquisitions and sustain long-term growth. Emerson is in a strong financial position, with total assets of $42 billion and common stockholders' equity of $19 billion, and has the resources available for reinvestment in existing businesses, strategic acquisitions and managing its capital structure on a short- and long-term basis.

Previous wording

For fiscal year 2025, consolidated net sales from continuing operations are expected to be up 1.5 to 3.5 percent, with underlying sales up 3 to 5 percent, excluding a 1.5 percent unfavorable impact from foreign currency translation. Earnings per share are expected to be $4.42 to $4.62, while adjusted earnings per share are expected to be $5.85 to $6.05 (see the following reconciliation).

Current wording

For fiscal year 2025, consolidated net sales from continuing operations are expected to be up approximately 4 percent, with underlying sales also up approximately 4 percent. Earnings per share are expected to be $4.05 to $4.20, while adjusted earnings per share are expected to be $5.90 to $6.05 (see the following reconciliation).

Previous wording

Opera ting cash flow is expected to be $3.6 to $3.7 billion and free cash flow, which excludes projected capital spending of approximately $0.4 billion, is expected to be $3.2 to $3.3 billion. The fiscal 2025 outlook assumes returning approximately $3.2 billion to shareholders through approximately $2.0 billion of share repurchases and approximately $1.2 billion of dividend payments.

Current wording

Operating cash flow is expected to be $3.5 to $3.6 billion and free cash flow, which excludes projected capital spending of approximately $0.4 billion, is expected to be $3.1 to $3.2 billion. The fiscal 2025 outlook assumes returning approximately $2.3 billion to shareholders through approximately $1.1 billion of share repurchases and approximately $1.2 billion of dividend payments.

Previous wording

Statements in this report 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 proposed acquisition by Emerson of the outstanding shares of common stock of AspenTech that Emerson does not already own, the scope, duration and ultimate impacts of the Russia-Ukraine and other global conflicts, as well as economic and currency conditions, market demand, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, and inflation, among others, which are set forth in the “Risk Factors” of Part I, Item 1A, and the "Safe Harbor Statement" of Part II, Item 7, to the Company's Annual Report on Form 10-K for the year ended September 30, 2024, "Risk Factors" of Part II - Other Information, Item 1A of the Company's Quarterly Report on Form 10-Q for the three-month period ended December 31, 2024 and in subsequent reports filed with the SEC, which are hereby incorporated by reference.

Current wording

Statements in this report 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 changes or increases in tariffs and the potential retaliatory measures against the United States, the scope, duration and ultimate impacts of the Russia-Ukraine and other global conflicts, as well as economic and currency conditions, market demand, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, and inflation, among others, which are set forth in the “Risk Factors” of Part I, Item 1A, and the "Safe Harbor Statement" of Part II, Item 7, to the Company's Annual Report on Form 10-K for the year ended September 30, 2024, "Risk Factors" of Part II - Other Information, Item 1A of the Company's Quarterly Report on Form 10-Q for the three-month period ended March 31, 2025 and in subsequent reports filed with the SEC, which are hereby incorporated by reference.