EMERSON ELECTRIC CO
For the period ended Mar 31, 2026. Filed May 5, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 5, 2026
EMR$162.35-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-12-31; filed 2026-02-03.
0000032604-26-000007
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-05.
0000032604-26-000035
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 34 previous paragraphs and 56 current paragraphs.
14 unchanged; 18 reworded; 17 added; 2 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 9 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
Earnings attributable to common stockholders were $618, up 27 percent, and diluted earnings per share were $1.10, up 28 percent compared with $0.86 in the prior year, reflecting the impact of higher acquisition/divestiture fees and related costs in the prior year primarily related to the AspenTech transaction. Adjusted diluted earnings per share were $1.54, up 4 percent compared with $1.48 in the prior year, despite a negative impact related to the timing of software renewals of $(0.09).
Current report
In February 2026, the U.S. Supreme Court ruled that the International Emergency Power Act ("IEEPA"), which the U.S. administration had relied upon to impose certain tariffs, does not authorize the imposition of tariffs. Following this decision, the U.S. Court of International Trade directed U.S. Customs and Border Protection ("CBP") to implement a process for refunding IEEPA tariffs. On April 20, 2026, CBP launched an administrative portal through which eligible importers may submit claims for such refunds. The amount and timing of any tariff refunds Emerson may be eligible for remains uncertain and accordingly, the Company did not record a benefit related to potential refunds of IEEPA tariffs paid as of March 31, 2026.
Current report
Pretax earnings of $793 increased $164, up 26 percent compared with the prior year, reflecting the impact of the AspenTech acquisition-related costs in the prior year discussed above. Earnings increased $5 in Software & Systems, $8 in Intelligent Devices, and $4 in Safety and Productivity. See the Business Segments discussion that follows and Note 15.
Current report
Earnings attributable to common stockholders were $618, up 27 percent, and diluted earnings per share were $1.10, up 28 percent compared with $0.86 in the prior year. Adjusted diluted earnings per share were $1.54 compared with $1.48 in the prior year. See the analysis above ofadjusted earnings per share for further details.
Current report
Software & Systems sales were $1,503 in the second quarterof 2026, an increase of $52, or 4 percent. Underlying sales were up 1 percent on 3 percent higher price, while volume decreased 2 percent including a 4.5 percent negative percent impact related to the timing of software renewals. Unde rlying sales increased 6 percent in the Americas, Europe decreased 5 percent, and Asia, Middle East & Africa was flat (China down 2 percent). Control Systems & Software sales decreased slightly and underlying sales decreased 2 percent, reflecting the negative impact related to the timing of software renewals, partially offset by strong demand in power and life sciences. Sales for Test & Measurement increased $56, or 16 percent, and underlying sales increased 12 percent in the second quarter, reflecting strength in aerospace & defense and semiconductor. Earnings for Software & Systems were $219, anincrease of $5, or 3 percent, while margin decreased slightly to 14.6 percent, reflecting the negative impact related to the timing of software renewals offset byleverage on higher Test & Measurement sales, lower intangibles amortization and savings from cost reduction actions. Adjusted EBITA margin was 29.2 percent, a decrease of 2.5 percentage points, which included a negative impact relating to the timing of software renewals of approximately 3 percentage points.
Current report
Intelligent Devices sales were $2,512 in the second quarter of 2026, an increase of $53, or 2 percent, compared to the prior year. Underlying sales decreased 1 percent on 4 percent lower volume, including a 2 percent negative impact related to the conflict in the Middle East, offset by 3 percent higher price. Underlying sales increased 5 percent in the Americas, while Europe decreased 4 percent and Asia, Middle East & Africa was down 7 percent (China down 13 percent). Sensors sales increased $24, or 2 percent, and underlying sales were flat, reflecting the negative impact related to the conflict in the Middle East offset by strong growth in the Americas. Final Control sales increased $29 or 2 percent, and underlying sales decreased 1 percent, reflecting the negative impact related to the conflict in the Middle East offset by solid growth in the Americas, including strength in power and LNG. Earnings for Intelligent Devices increased $8, or 1 percent, while margin decreased 0.3 percentage points reflecting unfavorable mix and deleverage on lower volume, partially offset by favorable price less net material inflation. Adjusted EBITA margin was 27.9 percent, an increase of 0.8 percentage points.
Current report
Safety & Productivity sales were $547 in the second quarter of 2026, an increase of $25, or 5 percent compared to the prior year. Underlying sales were up 2 percent on 5 percent higher price offset by 3 percent lower volume. Underlying sales increased 5 percent in the Americas, while Asia, Middle East & Africa decreased 7 percent and Europe was down 3 percent. Earnings for Safety & Productivity increased $4, up 3 percent, while margin decreased 0.4 percentage points, reflecting deleverage on lower volume, offset by higher price less net material inflation and savings from cost reduction actions. Adjusted EBITA margin decreased 0.1 percentage points.
Current report
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31
Current report
Following is an analysis of the Company’s operating results for the six months ended March 31, 2026, compared with the six months ended March 31, 2025.
Current report
Net sales for the first six months of 2026 were $8.9 billion, up 3 percent compared with 2025. Software & Systems sales were up 4 percent, Intelligent Device sales were up 3 percent, and Safety & Productivity sales were up 4 percent. Underlying sales were up 1 percent on 3 percent higher price, offset by 2 percent lower volume due to a negative impact of 1.5 percent related to the timing of software renewals and 0.5 percent related to the conflict in the Middle East. Foreign currency translation had a 2 percent favorable impact. Underlying sales increased 7 percent in the U.S. and decreased 3 percent internationally. The Americas was up 4 percent, Europe was down 1 percent and Asia, Middle East & Africa was down 3 percent (China was down 7 percent).
Current report
Other deductions, net were $434 in 2026, a decrease of $212 compared with the prior year, due to a $155 decrease in acquisition/divestiture fees and related costs primarily associated with the AspenTech acquisition in the prior year and lower amortization due to backlog amortization of $52 in the prior year related to the AspenTech acquisition.
Current report
Business Segments
Current report
SOFTWARE & SYSTEMS
Current report
INTELLIGENT DEVICES
Current report
Intelligent Devices sales were $4,902 in the first six months of 2026, an increase of $137, or 3 percent compared to the prior year. Underlying sales were up slightly on 3 percent higher price offset by 3 percent lower volume, including a 1 percent negative impact related to the conflict in the Middle East. Underlying sales increased 5 percent in the Americas, decreased 1 percent in Europe, and decreased 5 percent in Asia, Middle East & Africa (China down 10 percent). Sensor sales increased $48, or 2 percent, and underlying sales increased slightly, reflecting solid growth in the Americas. Final Control sales increased $89, or 3 percent, and underlying sales increased slightly, reflecting solid growth in the Americas, with strength in power and LNG. Earnings for Intelligent Devices increased $15, up 1 percent percent, while margin decreased 0.4 percentage points, reflecting unfavorable mix, unfavorable foreign currency transaction comparisons and deleverage on lower volume, partially offset by favorable price less net material inflation. Adjusted EBITA margin increased 0.1 percentage points.
Current report
SAFETY & PRODUCTIVITY
Current report
Total cash provided by operating activities was $1,478, an increase of $460 compared with $1,018 in the prior year. The increase reflects $585 of income taxes paid in the second quarter of fiscal 2025 related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland, offset by lower operating cash flow from continuing operations.
Removed paragraphs (2)
Previous report
Earnings attributable to common stockholders were $605, up 3 percent, and diluted earnings per share were $1.07, up 5 percent compared with $1.02 in the prior year. Adjusted diluted earnings per share were $1.46, up 6 percent compared with $1.38 in the prior year.
Previous report
Intelligent Devices sales were $2,390 in the first quarterof 2026, an increase of $84, or 4 percent. Underlying sales increased 2 percent on 3 percent higher price, offset by 1 percent lower volume. Underlying sales increased 3 percent in the Americas, Europe increased 3 percent and Asia, Middle East & Africa was down 2 percent (China down 8 percent). Sensors sales increased$24, or 2 percent, reflecting solid growth in Europe. Sales for Final Control increased$60, or 4 percent, reflecting strong growth in the Americas and solid growth in Europe, with strength in power. Earnings for Intelligent Devices were$597, an increase of$7, or 1 percent, while margin decreased 0.6 percentage points to 25.0 percent, reflecting unfavorable foreign currency transaction comparisons, deleverage on lower volume and unfavorable mix, partially offset by favorable price less net material inflation. Adjusted EBITA margin was 26.9 percent, a decrease of 0.7 percentage points.
Reworded paragraphs (18)
Previous wording
For the first quarter of fiscal 2026, net sales were $4.3 billion, up 4 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 2 percent favorable impact.
Current wording
For the second quarter of fiscal 2026, net sales were $4.6 billion, up 3 percent compared with the prior year. Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, were up 0.5 percent, including a negative 1 percent impact related to the conflict in the Middle East. The conflict remains dynamic and continuation or escalation of the conflict could adversely impact our business or results of operations in future periods. Foreign currency translation had a 2.5 percent favorable impact.
Previous wording
Following is an analysis of the Company’s operating results for the first quarter ended December 31, 2025 compared with the first quarter ended December 31, 2024.
Current wording
Following is an analysis of the Company’s operating results for the second quarter ended March 31, 2026, compared with the second quarter ended March 31, 2025.
Previous wording
Net sales for the first quarter of fiscal 2026 were $4.3 billion, up 4 percent compared with 2025. Software & Systems sales were up 5 percent, Intelligent Devices sales were up 4 percent, and Safety & Productivity sales were up 3 percent. Underlying sales were up 2 percent on 3 percent higher price, offset by 1 percent lower volume due to a negative impact related to the timing of software renewals. Foreign currency translation had a 2 percent favorable impact. Underlying sales were up 6 percent in the U.S. and flat internationally. The Americas was up 3 percent, Europe was up 3 percent, while Asia, Middle East & Africa was flat (China down 5 percent).
Current wording
Net sales for the second quarter of fiscal 2026 were $4.6 billion, up 3 percent compared with 2025. Software and System sales were up 4 percent, Intelligent Devices sales were up 2 percent, and Safety & Productivity sales were up 5 percent. Underlying sales were up 0.5 percent on 3.5 percent higher price, offset by 3 percent lower volume due to a negative impact of 2 percent related to the timing of software renewals and 1 percent related to the conflict in the Middle East. Foreign currency translation had a 2.5 percent favorable impact. Underlying sales were up 9 percent in the U.S. and down 5 percent internationally. The Americas was up 5 percent, Europe was down 4 percent, and Asia, Middle East & Africa was down 5 percent (China down 9 percent).
Previous wording
Cost of sales for the first quarter of fiscal 2026 were $2,035, an increase of $95 compared with 2025 and gross margin of 53.2 percent decreased 0.3 percentage points. Gross margin was negatively impacted by tariffs, which were more than offset by targeted price actions but diluted margins, and the timing of software renewals. In total, these items negatively impacted gross margin by approximately 0.9 percentage points.
Current wording
Cost of sales for the second quarter of fiscal 2026 were $2,140, an increase of $79 compared with 2025, and gross margin of 53.1 percent decreased 0.4 percentage points. Gross margin was negatively impacted by tariffs, which were more than offset by targeted price actions but diluted margins, and the timing of software renewals. In total, these items negatively impacted gross margin by approximately 0.8 percentage points.
Previous wording
Other deductions, net were $204 for the first quarter of fiscal 2026, a decrease of $24 compared with the prior year, reflecting lower amortization due to backlog amortization of $26 in the prior year related to the AspenTech acquisition.
Current wording
Other deductions, net were $229 for the second quarter of fiscal 2026, a decrease of $189 compared with the prior year, due to a $143 decrease in acquisition/divestiture fees and related costs primarily associated with the AspenTech acquisition in the prior year and lower amortization due to backlog amortization of $26 in the prior year related to the AspenTech acquisition.
Previous wording
Following is an analysis of operating results for the Company’s business segments for the first quarter ended December 31, 2025, compared with the first quarter ended December 31, 2024. The Company defines segment earnings as earnings before interest and taxes. See Note 13 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, 2026, compared with the second quarter ended March 31, 2025. 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
Selling, general and administrative (SG&A) expenses of $1,242 increased $18 and SG&A as apercent of sales decreased 0.7 percentage points to 28.6 percent compared with the prior year, reflecting leverage on higher sales and savings from cost reduction actions.
Current wording
SG&A expenses of $2,559 increased $53 and SG&A as a percent of sales decreased 0.4 percentage points to 28.7 percent, reflecting savings from cost reduction actions and leverage on higher sales.
Previous wording
Pretax earnings of $775 were flat compared with the prior year. Earnings increased $51 in Software & Control, $7 in Intelligent Devices, and$1 in Safety & Productivity, see the Business Segments discussion that follows and Note 13.
Current wording
Pretax earnings of $1,568 increased $164 compared with prior year, reflecting the impact of the AspenTech acquisition-related costs in the prior year discussed above. Earnings increased $59 in Software & Systems, $15 in Intelligent Devices, and $2 in Safety & Productivity, see the Business Segments discussion that follows and Note 15.
Previous wording
Income taxes were $169 in the first quarter of fiscal 2026 and $182 in 2025, resulting in effective tax rates of 22 percent and 24 percent, respectively. In the current year, the One Big Beautiful Bill Act (the "OBBBA") increased the effective tax rate by approximately 1 percentage point due to a lower tax deduction for foreign derived intangible income from the change to domestic research and development in fiscal 2026. The Company expects the OBBBA to slightly benefit the effective tax rate beginning in fiscal 2027. Excluding the impact related to the OBBBA, the lower rate in the current year reflected favorable tax items compared to unfavorable items in the prior year.
Current wording
Income taxes were $344 in the first six months of fiscal 2026 and $382 in 2025, resulting in effective tax rates of 22 percent and 27 percent, respectively. In the current year, the One Big Beautiful Bill Act (the "OBBBA") increased the effective tax rate by approximately 1 percentage point due to lower tax deduction for foreign derived intangible income from the change to domestic research and development in fiscal 2026. The Company expects the OBBBA to slightly benefit the effective tax rate beginning in fiscal 2027. Excluding the impact related to the OBBBA, the lower rate in the current year reflected favorable tax items that reduced the rate by approximately 2 percentage points. The prior 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.
Previous wording
Earnings attributable to common stockholders were $605, up 3 percent, and diluted earnings per share were $1.07, up 5 percent compared with $1.02 in the prior year. Adjusted diluted earnings per share were $1.46 compared with $1.38 in the prior year, reflecting strong operating results. See the analysis above ofadjusted earnings per share for further details.
Current wording
Earnings attributable to common stockholders were $1,223, up 14 percent compared with the prior year, and diluted earnings per share were $2.17, up 15 percent compared with $1.88 in 2025. Adjusted diluted earnings per share were $3.00 compared with $2.86 in the prior year, reflecting strong operating results. See the analysis below ofadjusted earnings per share for further details.
Previous wording
Software & Systems sales were $1,453 in the first quarter of 2026, an increase of $71, or 5 percent compared to the prior year, reflecting strong growth in Test & Measurement. Underlying sales were up 3 percent on 3 percent higher price, while volume was flat including a negative 3 percent impact related to the timing of software renewals. Underlying sales increased 3 percent in the Americas, 3 percent in Asia, Middle East & Africa (China up 1 percent), and 4 percent in Europe. Control Systems & Software sales increased $21, or 2 percent, andunderlying sales increased slightly, reflecting strong demand in power and life sciences, offset by the negative impact related to the timing of software renewals. Test & Measurement sales increased $50, or 14 percent, and underlying sales increased 11 percent in the first quarter, reflecting strength in aerospace & defense and semiconductor. Earnings for Software & Systems increased $51, up 26 percent, and margin increased 2.9 percentage points, reflecting leverage on higher sales, savings from cost reduction actions, and lower intangibles amortization and restructuring and related costs compared to the prior year. Adjusted EBITA margin increased 0.2 percentage points, which included a negative impact relating to the timing of software renewals of approximately 2 percentage points.
Current wording
Software & Systems sales were $2,956 in the first six months of 2026, an increase of 4 percent compared to the prior year. Underlying sales increased 2 percent on 3 percent higher price while volume decreased 1 percent including a negative 4 percent impact related to the timing of software renewals. Underlying sales increased 4 percent in the Americas, Europe decreased 1 percent, and Asia, Middle East & Africa increased 2 percent (China was flat). Control Systems & Software sales increased $17, or 1 percent, and underlying sales decreased 1 percent reflectingthe negative impact related to the timing of software renewals, partially offset by strong demand in power and life sciences. Sales for Test & Measurement increased $106, or 15 percent, and underlying sales increased 12 percent, reflecting strength in aerospace & defense and semiconductor. Earnings for Software & Systems were $466, an increase of $59, or 14 percent, and margin increased 1.4 percentage points, reflecting leverage on higher sales, lower intangibles amortization and savings from cost reduction actions. Adjusted EBITA margin was 30.2 percent, a decrease of 1.2 percentage points, which included a negative impact relating to the timing of software renewals of approximately 2.5 percentage points.
Previous wording
Safety & Productivity sales were $503 in the first quarter of 2026, an increase of $16, or 3 percent compared to the prior year. Underlying sales were up 1 percent on 5 percent higher price offset by 4 percent lower volume. Underlying sales increased 3 percent in the Americas and 2 percent in Asia, Middle East & Africa, while Europe decreased 6 percent. Earnings for Safety & Productivity increased $1, up 1 percent, while margin decreased 0.5 percentage points, reflecting deleverage on lower volume, offset by higher price less net material inflation and the impact of tariffs, and savings from cost reduction actions. Adjusted EBITA margin decreased 0.4 percentage points.
Current wording
Safety & Productivity sales were $1,050 in the first six months of 2026, an increase of $40, or 4 percent compared to the prior year. Underlying sales were up 2 percent on 5 percent higher price offset by 3 percent lower volume. Underlying sales increased 4 percent in the Americas, Europe decreased 4 percent and Asia, Middle East & Africa decreased 3 percent. Earnings for Safety & Productivity increased $2, or 2 percent, while margin decreased 0.4 percentage points, reflecting deleverage on lower volume, offset by higher price less net material inflation and the impact of tariffs, and savings from cost reduction actions. Adjusted EBITA margin decreased 0.3 percentage points.
Previous wording
Key elements of the Company's financial condition for the three months ended December 31, 2025 as compared to the year ended September 30, 2025 and the three months ended December 31, 2024 follow.
Current wording
Key elements of the Company's financial condition as of and forthe six months ended March 31, 2026 as compared to the year ended September 30, 2025 and the six months ended March 31, 2025 follow.
Previous wording
Operating working capital increased slightly compared to September 30, 2025. The current ratio decreased slightly compared to September 30, 2025. The interest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of 7.9X for the 3 months ended December 31, 2025 compares to 10.0X for the 3 months ended December 31, 2024. The decrease reflects higher interest expense compared to the prior year.
Current wording
Operating working capital increased $571 compared to September 30, 2025, primarily reflecting an increase in inventory and a decrease in accrued expenses. The current ratio remained flat compared to September 30, 2025. The interest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of 7.5X for the 6 months ended March 31, 2026 compares to 9.8X for the 6 months ended March 31, 2025. The decrease reflects higher interest expense compared to the prior year.
Previous wording
Operating cash flow for the first three months of fiscal 2026 was $699, a decrease of $78 compared with $777 in the prior year, reflecting an increase in operating working capital, partially offset by higher earnings. Free cash flow of $602 in the first three months of fiscal 2026 (operating cash flow of $699 less capital expenditures of $97) decreased $92 compared to free cash flow of $694 in 2025 (operating cash flow of $777 less capital expenditures of $83), reflecting the decrease in operating cash flow. Cash used in investing activities was $125, and cash used in financing activities was $364, reflecting share repurchases of $250 and dividends. During the quarter, the Company repaid €500 of 1.25% euro notes that matured in October 2025.
Current wording
Operating cash flow from continuing operations for the first six months of fiscal 2026 was $1,478, a decrease of $125 compared with $1,603 in the prior year, reflecting an increase in operating working capital, partially offset by higher earnings. Free cash flow of $1,296 in the first six months of fiscal 2026 (operating cash flow of $1,478 less capital expenditures of $182) decreased $137 compared to free cash flow of $1,433 in 2025 (operating cash flow of $1,603 less capital expenditures of $170), reflecting the decrease in operating cash flow. Cash used in investing activities was $206. Cash used in financing activities was $1,013, reflecting share repurchases of $542 and dividends. During the first quarter, the Company repaid €500 of 1.25% euro notes that matured in October 2025.
Previous wording
On February 11, 2025, the Company entered into a $3 billion, 364-day revolving backup credit facility to support increased commercial paper borrowings. The Company expects to enter into a new 364-day revolving backup credit facility with a reduced capacity prior to the expiration of the current facility. This facility is in addition to the Company's existing $3.5 billion five-year revolving backup credit facility with various banks, which was entered into in February 2023.
Current wording
On February 10, 2026, the Company entered into a $2 billion, 364-day revolving backup credit facility to support commercial paper borrowings. The facility replaces the Company’s $3 billion, 364-day credit agreement entered into on February 11, 2025, which expired by its terms. This facility is in addition to the Company's existing $3.5 billion five-year revolving backup credit facility with various banks, which was entered into in February 2023.
Previous wording
For fiscal year 2026, consolidated net sales are expected to be up approximately 5.5 percent, with underlying sales up approximately 4 percent, excluding a 1.5 percent favorable impact from foreign currency translation. Earnings per share are expected to be $4.78 to $4.93, while adjusted earnings per share are expected to be $6.40 to $6.55 (see the following reconciliation).
Current wording
For fiscal year 2026, consolidated net sales are expected to be up approximately 4.5 percent, with underlying sales up approximately 3 percent, excluding a 1.5 percent favorable impact from foreign currency translation. Earnings per share are expected to be $4.79 to $4.89, while adjusted earnings per share are expected to be $6.45 to $6.55 (see the following reconciliation).
Previous wording
Statements in this report that are not strictly historical may be “forward-looking” statements, which represent management’s expectations, based on currently available information. Actual results, performance or achievements could differ materially from those expressed in any forward-looking statement. Any forward-looking statements in this report speak only as of the date of this report. Emerson undertakes no obligation to update any such statements to reflect new information or later developments. Examples of risks and uncertainties that may cause or actual results or performance to be materially different from those expressed or implied by forward looking statements include 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, 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, 2025, and in subsequent reports filed with the SEC, which are hereby incorporated by reference. The outlook contained herein represents the Company's expectation for its consolidated results, other than as noted herein.
Current wording
Statements in this report that are not strictly historical may be “forward-looking” statements, which represent management’s expectations, based on currently available information. Actual results, performance or achievements could differ materially from those expressed in any forward-looking statement. Any forward-looking statements in this report speak only as of the date of this report. Emerson undertakes no obligation to update any such statements to reflect new information or later developments. Examples of risks and uncertainties that may cause or actual results or performance to be materially different from those expressed or implied by forward looking statements include the scope, duration and ultimate impacts of the Russia-Ukraine, Middle East and other global conflicts, as well as economic and currency conditions, market demand, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, 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, 2025, and in subsequent reports filed with the SEC, which are hereby incorporated by reference. The outlook contained herein represents the Company's expectation for its consolidated results, other than as noted herein.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
Selling, general and administrative (SG&A) expenses of $1,316 increased $33 and SG&A as apercent of sales was 28.9 percent, consistent with the prior year.
Current report — wording carried from elsewhere
Income taxes were $175 in the second quarter of fiscal 2026 and $199 in 2025, resulting in effective tax rates of 22 percent and 32 percent, respectively. In the current year, the One Big Beautiful Bill Act (the "OBBBA") increased the effective tax rate by approximately 1 percentage point due to lower tax deduction for foreign derived intangible income from the change to domestic research and development in fiscal 2026. The Company expects the OBBBA to slightly benefit the effective tax rate beginning in fiscal 2027. Excluding the impact related to the OBBBA, the lower rate in the current year reflected favorable tax items that reduced the rate by approximately 2 percentage points. The prior 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. In total, the net impact of these items increased the rate by 10 percentage points.
Current report — wording carried from elsewhere
Cost of sales for 2026 were $4,174, an increase of $172 compared with 2025, and gross margin of 53.1 percent decreased 0.4 percentage points. Gross margin was negatively impacted by tariffs, which were more than offset by targeted price actions but diluted margins, and the timing of software renewals. In total, these items negatively impacted gross margin by approximately 0.8 percentage points.
Current report — wording carried from elsewhere
The table below presents the Company's diluted earnings per share on an adjusted basis to facilitate period-to-period comparisons and provide additional insight into the underlying, ongoing operating performance of the Company.
Current report — wording carried from elsewhere
The table below summarizes the changes in adjusted diluted earnings per share. The items identified below are discussed throughout MD&A, see further discussion above and in the Business Segments and Financial Position sections below.
Current report — wording carried from elsewhere
The table below, which shows results on an adjusted EBITA basis, is intended to supplement the Company's discussion of its results of operations herein.
Current report — wording carried from elsewhere
Following is an analysis of operating results for the Company’s business segments for the six months ended March 31, 2026, compared with the six months ended March 31, 2025. The Company defines segment earnings as earnings before interest and taxes. See Note 15 for a discussion of the Company's business segments.