EMERSON ELECTRIC CO

Previous wording

To supplement the Company’s financial information presented in accordance with U.S. generally accepted accounting principles (U.S. GAAP), management periodically uses certain “non-GAAP financial measures,” as such term is defined in Regulation G under SEC rules, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. For example, non-GAAP measures may exclude the impact of certain items such as acquisitions or divestitures, amortization of intangibles, restructuring costs, discrete taxes, gains, losses and impairments, or items outside of management’s control, such as foreign currency exchange rate fluctuations. Management believes that the following non-GAAP financial measures provide investors and analysts useful insight into the Company’s financial position and operating performance. Any non-GAAP measure provided should be viewed in addition to, and not as an alternative to, the most directly comparable measure determined in accordance with U.S. GAAP, as identified in italics below. Further, the calculation of these non-GAAP financial measures maydiffer from the calculation of similarly titled financial measures presented by other companies and therefore may not be comparable among companies.

Current wording

To supplement the Company’s financial information presented in accordance with U.S. generally accepted accounting principles (U.S. GAAP), management periodically uses certain “non-GAAP financial measures,” as such term is defined in Regulation G under SEC rules, to clarify and enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with U.S. GAAP. For example, non-GAAP measures may exclude the impact of certain items such as acquisitions or divestitures, amortization of intangibles, restructuring and related costs, the mark-to-market adjustment on pension and other postretirement plans, discrete taxes, gains, losses and impairments, or items outside of management’s control, such as foreign currency exchange rate fluctuations. Management believes that the following non-GAAP financial measures provide investors and analysts useful insight into the Company’s financial position and operating performance. Any non-GAAP measure provided should be viewed in addition to, and not as an alternative to, the most directly comparable measure determined in accordance with U.S. GAAP, as identified in italics below. Further, the calculation of these non-GAAP financial measures maydiffer from the calculation of similarly titled financial measures presented by other companies and therefore may not be comparable among companies.

Previous wording

Operating profit (defined as net sales less cost of sales and selling, general and administrative expenses) and operating profit margin (defined as operating profit divided by net sales) are indicative of short-term operational performance and ongoing profitability. Management closely monitors operating profit and operating profit margin of each business to evaluate past performance and actions required to improve profitability. EBIT (defined as earnings before deductions for interest expense, net, related party interest income, and income taxes) and total segment EBIT, and EBIT margin (defined as EBIT divided by net sales) and total segment EBIT margin, are financial measures that exclude the impact of financing on the capital structure and income taxes. Adjusted EBITA and adjusted segment EBITA (defined as earnings excluding interest expense, net, related party interest income, income taxes, intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction fees, and certain gains, losses or impairments) and adjusted EBITA margin and adjusted segment EBITA margin (defined as adjusted EBITA divided by net sales) are measures used by management to evaluate the Company's operational performance, as they exclude the impact of acquisition-related investments and non-operational items. EBITDA (defined as EBIT excluding depreciation and amortization) and EBITDA margin (defined as EBITDA divided by net sales) are also used as measures of the Company's current operating performance, as they exclude the impact of capital and acquisition-related investments. Adjusted EBITDA (defined as EBITDA excluding restructuring expense, first year purchase accounting related items and transaction fees, and certain gains, losses or impairments) and adjusted EBITDA margin (defined as Adjusted EBITDA divided by net sales) are also used to exclude the impact of non-operational items. All of these are commonly used financial measures utilized by management to evaluate performance (U.S. GAAP measures: pretax earnings or pretax profit margin, segment earnings or segment margin).

Current wording

Operating profit (defined as net sales less cost of sales and selling, general and administrative expenses) and operating profit margin (defined as operating profit divided by net sales) are indicative of short-term operational performance and ongoing profitability. Management closely monitors operating profit and operating profit margin of each business to evaluate past performance and actions required to improve profitability. EBIT (defined as earnings before deductions for interest expense, net, related party interest income, and income taxes) and total segment EBIT, and EBIT margin (defined as EBIT divided by net sales) and total segment EBIT margin, are financial measures that exclude the impact of financing on the capital structure and income taxes. Adjusted EBITA and adjusted segment EBITA (defined as earnings excluding interest expense, net, related party interest income, income taxes, intangibles amortization expense, restructuring and related costs, first year purchase accounting related items and transaction fees, the mark-to-market adjustment on pension and other postretirement plans, and certain gains, losses or impairments) and adjusted EBITA margin and adjusted segment EBITA margin (defined as adjusted EBITA divided by net sales) are measures used by management to evaluate the Company's operational performance, as they exclude the impact of acquisition-related investments and non-operational items. EBITDA (defined as EBIT excluding depreciation and amortization) and EBITDA margin (defined as EBITDA divided by net sales) are also used as measures of the Company's current operating performance, as they exclude the impact of capital and acquisition-related investments. Adjusted EBITDA (defined as EBITDA excluding restructuring and related costs, first year purchase accounting related items and transaction fees, and certain gains, losses or impairments) and adjusted EBITDA margin (defined as Adjusted EBITDA divided by net sales) are also used to exclude the impact of non-operational items. All of these are commonly used financial measures utilized by management to evaluate performance (U.S. GAAP measures: pretax earnings or pretax profit margin, segment earnings or segment margin).

Previous wording

Adjusted earnings and earnings per share, which exclude certain gains and losses, impairments, restructuring costs, impacts of acquisitions or divestitures, amortization of intangibles, discrete taxes, or other items provide additional insight into the underlying, ongoing operating performance of the Company and facilitate period-to-period comparisons by excluding the earnings impact of these items. Management believes that presenting adjusted earnings and earnings per share excluding these items is more representative of the Company’s operational performance and may be more useful for investors (U.S. GAAP measures: earnings, earnings per share).

Current wording

Adjusted earnings and earnings per share, which exclude certain gains and losses, impairments, restructuring and related costs, impacts of acquisitions or divestitures, amortization of intangibles, the mark-to-market adjustment on pension and other postretirement plans, discrete taxes, or other items provide additional insight into the underlying, ongoing operating performance of the Company and facilitate period-to-period comparisons by excluding the earnings impact of these items. Management believes that presenting adjusted earnings and earnings per share excluding these items is more representative of the Company’s operational performance and may be more useful for investors (U.S. GAAP measures: earnings, earnings per share).

Previous wording

Overall, in 2025 sales were $18.0 billion, up 3 percent compared with the prior year. Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, were also up 3 percent.

Current wording

In fiscal 2026, net sales were $19.0 billion, up 5 percent compared with the prior year. Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, were up 4 percent, despite a negative impact of approximately 1 percent related to the timing of software renewals and the conflict in the Middle East. Foreign currency had a 1 percent favorable impact.

Previous wording

Net earnings from continuing operations attributable to common stockholders were $2,285 in 2025, up 41 percent compared with prior year earnings of $1,618, and diluted earnings per share from continuing operations were $4.03, up 43 percent versus $2.82 in 2024. The prior year included purchase accounting related impacts from the NI acquisition and higher associated restructuring charges, and a pretax loss of $279 ($217 after-tax, $0.38 per share) related to the Company's definitive agreement to sell its Copeland note receivable for $1.9 billion. Adjusted diluted earnings per share from continuing operations were $6.00 compared with $5.49 in the prior year, reflecting sales growth and strong operating performance.

Current wording

Net earnings from continuing operations attributable to common stockholders were $2,691 in 2026, up 19 percent compared with prior year earnings of $2,262, and diluted earnings per share from continuing operations were $4.79, up 20 percent versus $3.99 in 2025. Adjusted diluted earnings per share from continuing operations were $6.59 compared with $6.01 in the prior year, up 10 percent. Overall, results reflected sales growth and strong operating performance.

Previous wording

The Company generated operating cash flow from continuing operations of $3.7 billion in 2025, an increase of $359, or 11 percent, reflecting higher earnings and favorable changes in working capital.

Current wording

The Company generated operating cash flow from continuing operations of $4.0 billion in 2026, an increase of $302, or 8 percent, reflecting higher earnings, partially offset by an increase in operating working capital.

Previous wording

The table below presents the Company's diluted earnings per share from continuing operations on an adjusted basis to facilitate period-to-period comparisons and provide additional insight into the underlying, ongoing operating performance of the Company. Adjusted diluted earnings per share from continuing operations excludes intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction-related costs, interest income on undeployed proceeds related to the Copeland transaction, and certain gains, losses or impairments.

Current wording

The table below presents the Company's diluted earnings per share from continuing operations on an adjusted basis to facilitate period-to-period comparisons and provide additional insight into the underlying, ongoing operating performance of the Company. Adjusted diluted earnings per share from continuing operations excludes intangibles amortization expense, restructuring and related costs, first year purchase accounting related items and transaction-related costs, the mark-to-market adjustment on pension and other postretirement plans, discrete taxes, and certain gains, losses or impairments.

Previous wording

Net sales for 2025 were $18.0 billion, an increase of $0.5 billion, or 3 percent compared with 2024. Intelligent Devices sales increased 2 percent, while Software and Control sales increased 5 percent. Underlying sales were up 3 percent on 2.5 percent higher price and 0.5 percent higher volume. Underlying sales were up 5 percent in the U.S. and up 1 percent internationally.

Current wording

Net sales for 2025 were $18.0 billion, an increase of $0.5 billion, or 3 percent compared with 2024. Software & Systems sales increased 5 percent and Intelligent Devices sales increased 3 percent, while Safety & Productivity sales decreased 2 percent. Underlying sales increased 3 percent on 2.5 percent higher price and 0.5 percent higher volume. Underlying sales were up 5 percent in the U.S. and up 1 percent internationally.

Previous wording

Emerson is a global business with international sales representing 59 percent of total sales in 2025, including U.S. exports.

Current wording

Emerson is a global business with international destination sales representing 58 percent of total sales in 2026, including U.S. exports.

Previous wording

International destination sales, including U.S. exports, increased 18 percent, to $10.5 billion in 2024, reflecting the Company's overall increase in sales and the impact of the Test & Measurement acquisition. U.S. exports of $1.3 billion were up 26 percent compared with 2023. Underlying international destination sales were up 9 percent and the Test & Measurement acquisition added 9 percent. Underlying sales increased 7 percent in Europe, 8 percent in Asia, Middle East & Africa (China down 3 percent), 21 percent in Latin America and 5 percent in Canada. Origin sales by international subsidiaries, including shipments to the U.S., totaled $9.3 billion in 2024, up 20 percent compared with 2023.

Current wording

International destination sales, including U.S. exports, increased 3 percent, to $10.9 billion in 2026, reflecting the Company's overall increase in sales. U.S. exports of $1.4 billion were up 2 percent compared with 2025. Underlying international destination sales were up 1 percent. Underlying sales increased 3 percent in Asia, Middle East & Africa (China down 7 percent) and 2 percent in Canada, while Europe decreased 1 percent and Latin America decreased 6 percent. Origin sales by international subsidiaries, including shipments to the U.S., totaled $9.7 billion in 2026, up 3 percent compared with 2025.

Previous wording

Portfolio management is an integral component of Emerson's growth and value creation strategy. Over the past three years, the Company has taken significant actions to accelerate the transformation of its portfolio through the completion of strategic acquisitions and divestitures of non-core businesses. These actions were undertaken to create a cohesive, higher growth and higher margin industrial technology portfolio as a global automation leader serving a diversified set of end markets. The Company’s recent portfolio actions include the following transactions:

Current wording

Portfolio management is an integral component of Emerson's growth and value creation strategy. Over the past several years, the Company has taken significant actions to accelerate the transformation of its portfolio through the completion of strategic acquisitions and divestitures of non-core businesses. These actions were undertaken to create a cohesive, higher growth and higher margin industrial technology portfolio as a global automation leader serving a diversified set of end markets. The Company’s recent portfolio actions include the following transactions:

Previous wording

On March 12, 2025, Emerson completed its purchase of the remaining outstanding shares of common stock of AspenTech not already owned by the Company for approximately $7.2 billion. Emerson also incurred fees of $76 ($65 after-tax) and paid $76 to settle certain AspenTech share-based awards that were outstanding prior to the transaction closing. The purchase of the remaining outstanding shares and related costs are reported as an adjustment to Equity. Separately, AspenTech incurred $127 ($113 after-tax) of deal-related fees which are reported as acquisition/divestiture costs in Other deductions, net. AspenTech is now reported as a part of the Control Systems & Software segment in the Software and Control business group, see Note 20.

Current wording

On March 12, 2025, Emerson completed its purchase of the remaining outstanding shares of common stock of AspenTech not already owned by the Company for approximately $7.2 billion. Emerson also incurred fees of $76 ($65 after-tax) and paid $76 to settle certain AspenTech share-based awards that were outstanding prior to the transaction closing. The purchase of the remaining outstanding shares and related costs are reported as an adjustment to Equity. Separately, AspenTech incurred $127 ($113 after-tax) of deal-related fees which are reported as acquisition/divestiture costs in Other deductions, net. AspenTech is now reported as a part of the Control Systems & Software segment in the Software & Systems business group, see Note 20.

Previous wording

On October 11, 2023, the Company completed the acquisition of National Instruments Corporation ("NI"), which is now referred to as Test & Measurement and reported as a segment in the Software and Control business group. NI provides software-connected automated test and measurement systems that enable enterprises to bring products to market faster and at a lower cost, and had revenues of approximately $1.7 billion for the 12 months ended September 30, 2023. See Note 4.

Current wording

On October 11, 2023, the Company completed the acquisition of National Instruments Corporation ("NI") at an equity value of $8.2 billion. NI provides software-connected automated test and measurement systems that enable enterprises to bring products to market faster and at a lower cost. NI is now referred to as Test & Measurement and reported as a segment in the Software & Systems business group.

Previous wording

Cost of sales for 2025 were $8,497, a decrease of $110 compared with $8,607 in 2024. Gross profit was $9,519 in 2025 compared to $8,885 in 2024, while gross margin increased 2.0 percentage points to 52.8 percent. The prior year reflected the impact from acquisition-related inventory step-up amortization of $231, which negatively impacted margins by approximately 1.3 percentage points. Favorable price less net material inflation also contributed to the increase in gross margin.

Current wording

Cost of sales for 2025 were$8,497, a decrease of$110 compared with$8,607 in 2024. Gross profit was$9,519 in 2025 compared to$8,885 in 2024, while gross margin increased 2.0 percentage points to 52.8 percent. The prior year reflected the impact from acquisition-related inventory step-up amortization of $231, which negatively impacted margins by approximately 1.3 percentage points. Favorable price less net material inflation also contributed to the increase in gross margin.

Previous wording

In 2023, the Company received distributions related to its subordinated interest in Vertiv totaling $161 ($122 after-tax, $0.21 per share) and received $15 related to gains recognized in 2022. In 2024, the Company received its final distribution of $79 ($60 after-tax, $0.10 per share).

Current wording

In 2024, the Company received its final distribution of $79 ($60 after-tax, $0.10 per share) related to its subordinated interest in Vertiv.

Previous wording

Other deductions, net were $1,245 in 2025, a decrease of $189 compared with 2024, reflecting lower intangibles amortization of $193 (including $136 of backlog amortization in the prior year related to the Test & Measurement acquisition) and lower restructuring expense of $92, partially offset by higher acquisition/divestiture fees and related costs which increased by $118. The prior year also included divestiture losses of $48.

Current wording

Other deductions, net were $1,274 in 2025, a decrease of $149 compared with 2024, reflecting lower intangibles amortization of $193 (including $136 of backlog amortization in the prior year related to the Test & Measurement acquisition) and lower restructuring expense of $92, partially offset by higher acquisition/divestiture fees and related costs which increased by $118. The impact of the pension and OPEB mark-to-market adjustment was expense of $34 in 2025 compared to income of $111 in 2024. The prior year also included divestiture losses of $48 ($50 after-tax, $0.09 per share).

Previous wording

Interest income from related party was $86 and $41 in 2024 and 2023, respectively and reflects non-cash interest income on the Copeland note receivable, which was capitalized to the carrying value of the note through the date of the sale agreement.

Current wording

Interest income from related party was $86 in 2024 and reflects non-cash interest income on the Copeland note receivable, which was capitalized to the carrying value of the note through the date of the sale agreement.

Previous wording

Pretax earnings from conti nuing operations of $2,934 increased $914 in 2025, up 45 percent compared with 2024. Earnings increased $146 in Intelligent Devices and increased $545 in Software and Control.

Current wording

Pretax earnings from conti nuing operations of $3,489 increased $584 in 2026, up 20 percent compared with 2025. Earnings increased $250 in Software & Systems and increased $116 in Intelligent Devices, while Safety & Productivity decreased $2.

Previous wording

Income taxes were $696, $415 and $642 for 2025, 2024 and 2023, respectively, resulting in effective tax rates of 24 percent, 21 percent and 22 percent in 2025, 2024 and 2023, respectively. The current year rate was negatively impacted by discrete tax items totaling $36 ($0.06 per share) and fees incurred by AspenTech which were not fully deductible (see Note 4). In total, the net impact of these items increased the rate by approximately 2 percentage points. The prior year rate included a $57 ($0.10 per share) benefit related to discrete tax items and a benefit from return-to-provision adjustments related to the filing of the prior year U.S. tax return, partially offset by unfavorable impacts from inventory step-up amortization and the divestiture losses (see Note 4), which were non-deductible for tax purposes. In total, the net impact of these items benefited the rate by approximately 1 percentage point. See Note 16.

Current wording

Income taxes were $796, $690 and $420 for 2026, 2025 and 2024, respectively, resulting in effective tax rates of 23 percent, 24 percent and 21 percent in 2026, 2025 and 2024, 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 that reduced the rate by approximately 2 percentage points. The prior year rate was negatively impacted by discrete tax items totaling $36 ($0.06 per share) and fees incurred by AspenTech which were not fully deductible (see Note 4). In total, the net impact of these items increased the rate by approximately 2 percentage points. See Note 16.

Previous wording

Net earnings from continuing operations attributable to common stockholders in 2025 were $2,285, up 41 percent compared with 2024, and diluted earnings per share from continuing operations were $4.03, up 43 percent compared with $2.82 in 2024. Adjusted diluted earnings per share from continuing operations were $6.00 compared with $5.49 in the prior year. See theanalysis of adjusted earnings per share in the Overview section for further details. Earnings from discontinued operations attributable to common stockholders in 2025 were $8 ($0.01 per share), compared to $350 ($0.61 per share) in 2024. Net earnings attributable tocommon stockholders were $2,293 ($4.04 per share) compared with $1,968 ($3.43 per share) in 2024.

Current wording

Net earnings from continuing operations attributable to common stockholders in 2025 were$2,262, up 39 percent compared with 2024, and diluted earnings per share from continuing operations were $3.99, up 41 percent compared with $2.83 in 2024. Adjusted diluted earnings per share from continuing operations were $6.01 compared with $5.35 in the prior year. See the analysis of adjusted earnings per share in the Overview section for further details. Earnings from discontinued operations attributable to common stockholders in 2025 were $8 ($0.01 per share), compared to $350 ($0.61 per share) in 2024. Net earnings common stockholders were $2,270 ($4.00 per share) in 2025 compared with $1,974 ($3.44 per share) in 2024.

Previous wording

2025 vs. 2024 - Software and Control sales were $5.7 billion in 2025, an increase of $292, or 5 percent compared to the prior year. Underlying sales increased 5 percent on 2.5 percent higher volume and 2.5 percent higher price. Underlying sales increased 9 percent in the Americas (U.S. up 10 percent), decreased 1 percent in Europe and increased 4 percent in Asia, Middle East & Africa (China down 6 percent). Sales for Control Systems & Software increased $270, or 7 percent, reflecting strong growth at AspenTech (including a favorable impact related to the timing of contract renewals) and favorable demand in process and power end markets across all geographies. Test & Measurement sales increased $22, or 2 percent, reflecting strong growth in the Americas, offset by softness in Europe and China. Earnings for Software and Control were $827, an increase of $545, or 193 percent, and margin increased 9.3 percentage points to 14.5 percent, reflecting leverage on higher Control Systems & Software sales (including a benefit related to the timing of AspenTech contract renewals), higher price, savings from cost reduction actions (primarily at Test & Measurement and AspenTech), lower intangibles amortization, and lower restructuring and related costs compared to the prior year. Adjusted EBITA margin was 31.0 percent, an increase of 4.0 percentage points.

Current wording

2025 vs. 2024 - Software & Systems sales were$5.8 billion in 2025, an increase of$303, or 5 percent compared to 2024. Underlying sales increased 5 percent on 2.5 percent higher volume and 2.5 percent higher price. Underlying sales increased 9 percent in the Americas (U.S. up 10 percent), decreased 1 percent in Europe and increased 4 percent in Asia, Middle East & Africa (China down 6 percent). Sales for Control Systems & Software increased $282, or 7 percent, reflecting strong growth at AspenTech (including a favorable impact related to the timing of software renewals) and favorable demand in process and power end markets across all geographies. Test & Measurement sales increased $21 or 2 percent. Earnings for Software & Systems were$835, an increase of$556, and margin increased 9.4 percentage points to 14.4 percent, reflecting leverage on higher Control Systems & Software sales (including a benefit related to the timing of AspenTech software renewals), higher price, savings from cost reduction actions (primarily at Test & Measurement and AspenTech), lower intangibles amortization, and lower restructuring and related costs compared to the prior year. Adjusted EBITA margin was 30.6 percent, an increase of 4.1 percentage points.

Previous wording

2025 vs. 2024 - Intelligent Devices sales were $12.4 billion in 2025, an increase of $239, or 2 percent. Underlying sales increased 2 percent on higher price, while volume was favorable at Final Control and Measurement & Analytical, offset by decreased volume at Discrete Automation and Safety & Productivity. Underlying sales increased 3 percent in the Americas (U.S. up 4 percent), decreased 3 percent in Europe and increased 2 percent in Asia, Middle East & Africa (China down 3 percent). Sales for Final Control increased $176, or 4 percent, reflecting strength in power end markets. Sales for Measurement & Analytical increased $82, or 2 percent, reflecting mixed geographic results and difficult comparisons. Discrete Automation sales increased $15, or 1 percent, reflecting solid growth in the Americas, mostly offset by softness in Europe and Asia, Middle East & Africa. Safety & Productivity sales decreased $34, or 2 percent, reflecting softness in all geographies. Earnings for Intelligent Devices were$2,953, an increase of$146, or 5 percent, and margin increased 0.7 percentage points to 23.8 percent, reflecting favorable price less net material inflation. Adjusted EBITA margin was 25.9 percent, an increase of 0.5 percentage points.

Current wording

2025 vs. 2024 - Intelligent Devices sales were$10.1 billion in 2025, an increase of$252, or 3 percent. Underlying sales increased 3 percent on 2 percent higher price and 1 percent higher volume. Underlying sales increased 4 percent in the Americas (U.S. up 5 percent), decreased 2 percent in Europe and increased 2 percent in Asia, Middle East & Africa (China down 4 percent). Sales for Sensors increased $79, or 2 percent, reflecting mixed geographic results and difficult comparisons. Sales for Final Control increased $173, or 3 percent, reflecting strength in power end markets. Earnings for Intelligent Devices were $2,527, an increase of $148, or 6 percent, and margin increased 0.9 percentage points to 25.1 percent, reflecting favorable price less net material inflation. Adjusted EBITA margin was 27.2 percent, an increase of 0.6 percentage points.

Previous wording

Emerson maintains a conservative financial structure to provide the strength and flexibility necessary to achieve our strategic objectives and efficiently deploy 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 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 efficiently deploy 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 stockholders' equity of $21 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

The Company continues to generate substantial operating cash flow, including approximately $3.7 billion from continuing operations in 2025. Cash flows have been and are expected to be sufficient for at least the next 12 months to meet the Company’s operating requirements, including those related to salaries and wages, working capital, capital expenditures, and other liquidity requirements associated with operations. The Company also has certain contractual obligations, primarily long-term debt and operating leases (see Notes 9, 12 and 13). The Company has been able to readily meet all its funding requirements and currently believes that sufficient funds will be available to meet its needs for the foreseeable future through operating cash flow, existing resources, short- and long-term debt capacity, or its revolving backup credit facilities under which it has not incurred any borrowings.

Current wording

The Company continues to generate substantial operating cash flow, including approximately $4.0 billion from continuing operations in 2026. Cash flows have been and are expected to be sufficient for at least the next 12 months to meet the Company’s operating requirements, including those related to salaries and wages, working capital, capital expenditures, and other liquidity requirements associated with operations. The Company also has certain contractual obligations, primarily long-term debt and operating leases (see Notes 9, 12 and 13). The Company has been able to readily meet all its funding requirements and currently believes that sufficient funds will be available to meet its needs for the foreseeable future through operating cash flow, existing resources, short- and long-term debt capacity, or its revolving backup credit facilities under which it has not incurred any borrowings.

Previous wording

Operating cash flow from continuing operations for 2025 was $3.7 billion, an increase of $359, or 11 percent compared with 2024, reflecting higher earnings and favorable changes in working capital. Operating cash flow from continuing operations for 2024 was $3.3 billion, an increase of 22 percent compared to $2.7 billion in 2023, reflecting higher earnings (excluding the impact of non-cash items related to the NI acquisition and the loss on the Copeland note receivable). Acquisition-related costs and integration activities negatively impacted 2024 operating cash flow by approximately $235.

Current wording

Operating cash flow from continuing operations for 2026 was $4.0 billion, an increase of $302, or 8 percent compared with 2025, reflecting higher earnings, partially offset by an increase in operating working capital. Operating cash flow from continuing operations for 2025 was $3.7 billion, an increase of 11 percent compared to $3.3 billion in 2024, reflecting higher earnings and favorable changes in working capital.

Previous wording

At September 30, 2025, operating working capital as a percent of sales was 11.3 percent compared with 8.0 percent in 2024 and 8.5 percent in 2023. The change in operating working capital compared to the prior year was due to the payment of income taxes of approximately $0.6 billion in 2025 related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland. Total operating working capital increased in 2024 due to the NI acquisition, but improved as a percent of sales compared to 2023 due to improvements in inventory levels.

Current wording

At September 30, 2026, operating working capital as a percent of sales was 11.9 percent compared with 11.3 percent in 2025 and 8.0 percent in 2024. Operating working capital increased in 2026 and included an increase in inventory. The change in operating working capital in 2025 compared to 2024 was due to the payment of income taxes of approximately $0.6 billion in 2025 related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland.

Previous wording

Free cash flow from continuing operations (operating cash flow less capital expenditures) was $3,245 in 2025, up 12 percent, reflecting the increase in operating cash flow. Free cash flow from continuing operations was $2,898 in 2024, compared with $2,347 in 2023. Net cash paid in connection with acquisitions was $37, $8,342 and $705 in 2025, 2024 and 2023, respectively.

Current wording

Free cash flow from continuing operations (operating cash flow less capital expenditures) was $3,535 in 2026, up 9 percent, reflecting the increase in operating cash flow. Free cash flow from continuing operations was $3,245 in 2025, compared with $2,898 in 2024. Net cash paid in connection with acquisitions was $6, $37 and $8,342 in 2026, 2025 and 2024, respectively.

Previous wording

Total cash provided by operating activities including the impact of discontinued operations was $3,098, $3,332 and $637 in 2025, 2024 and 2023, respectively. The decrease in 2025 reflected higher operating cash flow from continuing operations, offset by approximately $0.6 billion of income taxes paid related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland. The lower cash flow in 2023 was due to approximately $2.3 billion of income taxes paid related to the gains on the Copeland transaction and InSinkErator divestiture and subsidiary restructurings related to the Copeland transaction.

Current wording

Total cash provided by operating activities including the impact of discontinued operations was $3,978, $3,098 and $3,332 in 2026, 2025 and 2024, respectively. The decrease in 2025 reflected higher operating cash flow from continuing operations, offset by approximately $0.6 billion of income taxes paid related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland.

Previous wording

Dividends were $1,192 ($2.11 per share) in 2025, compared with $1,201 ($2.10 per share) in 2024 and $1,198 ($2.08 per share) in 2023. In November 2025, the Board of Directors voted to increase the quarterly cash dividend to an annualized rate of $2.22 per share.

Current wording

Dividends were $1,244 ($2.22 per share) in 2026, compared with $1,192 ($2.11 per share) in 2025 and $1,201 ($2.10 per share) in 2024. In November 2026, the Board of Directors voted to increase the quarterly cash dividend to an annualized rate of $2.38 per share.

Previous wording

Purchases of Emerson common stock totaled $1,167, $435 and $2,000 in 2025, 2024 and 2023, respectively, at average per share prices of $125.66, $99.04 and $94.09. AspenTech repurchases were $208 in 2024. In November 2025, the Board of Directors authorized the purchase of up 50 million shares. This is in addition to the authorization approved by the Board in March 2020 for the purchase of up to 60 million shares, of which approximately 19.6 million shares remain available at September 30, 2025. The Company purchased 9.3 million shares in 2025, 4.4 million shares in 2024 and 21.3 million shares in 2023.

Current wording

Purchases of Emerson common stock totaled $1,000, $1,167 and $435 in 2026, 2025 and 2024, respectively, at average per share prices of $139.29, $125.66 and $99.04. AspenTech repurchases were $208 in 2024. The Company purchased 7.2 million shares in 2026, 9.3 million shares in 2025 and 4.4 million shares in 2024. In November 2025, the Board of Directors authorized the purchase of up to 50 million shares. This is in addition to the authorization approved by the Board in March 2020 for the purchase of up to 60 million shares. Approximately 62.4 million shares remain available at September 30, 2026.

Previous wording

Total debt, which includes long-term debt, current maturities of long-term debt, commercial paper and other short-term borrowings, was $13,116, $7,687 and $8,157 as of September 30, 2025, 2024 and 2023, respectively. The increase in 2025 reflects increased short-term borrowings and long-term debt to fund the AspenTech transaction. Overall, the Company's commercial paper borrowings increased to approximately $4.2 billion at September 30, 2025. In March 2025, the Company issued €500 of 3.0% notes due March 2031, $500 of 5.0% notes due March 2035, and €500 of 3.5% notes due March 2037. The decrease in 2024 reflected the repayment of €500 of 0.375% euro notes that matured in May 2024. See Note 4 and Note 13.

Current wording

In 2026, the Company used a portion of its cash flows to reduce net debt. The increase in 2025 reflects increased short-term borrowings and long-term debt to fund the AspenTech transaction. In March 2025, the Company issued €500 of 3.0% notes due March 2031, $500 of 5.0% notes due March 2035, and €500 of 3.5% notes due March 2037. The decrease in 2024 reflected the repayment of €500 of 0.375% euro notes that matured in May 2024. See Note 4 and Note 13.

Previous wording

The interest coverage ratio is computed as earnings before income taxes plus interest expense, divided by interest expense. The interest coverage ratio in 2025 reflects higher interest expense due to the increased short-term borrowings and long-term debt discussed above. The lower ratio in 2024 reflects lower GAAP pretax earnings largely due to the NI acquisition. Excluding the impact from acquisition-related inventory step-up amortization of $231, higher intangibles amortization of $595, acquisition/divestiture fees and related costs of $220, higher restructuring and related costs of $152, the loss of $279 on the Copeland note receivable and the gain on the subordinated interest of $79, the interest coverage ratio was 11.6X.

Current wording

The increase in the debt-to-total capital ratios in 2025 and 2026 compared to 2024 reflects the increased commercial paper and long-term debt discussed above. The interest coverage ratio is computed as earnings before income taxes plus interest expense, divided by interest expense. The interest coverage ratio improvements in 2026 and 2025 reflect increasing earnings before income taxes.

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 in connection with the AspenTech transaction. This facility is in addition to the Company's existing $3.5 billion revolving backup credit facility with various banks, which was entered into in February 2023. The credit facilities are maintained to support general corporate purposes, including commercial paper borrowings. The Company has not incurred any borrowings under these or previous facilities. The credit facilities contain no financial covenants and are not subject to termination based on a change of credit rating or material adverse changes. The facilities are unsecured and may be accessed under various interest rate alternatives at the Company’s option. Fees to maintain the facilities are immaterial. The Company also maintains a universal shelf registration statement on file with the SEC under which it can issue debt securities, preferred stock, common stock, warrants, share purchase contracts orshare purchase units without a predetermined limit. Securities can be sold in one or more separate offerings with the size, price and terms to be determined at the time of sale.

Current wording

On February 10, 2026, the Company entered into a $2 billion 364-day revolving backup credit facility to support commercial paper borrowings. This facility replaced the Company's $3 billion, 364-day revolving backup credit facility 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. The credit facilities are maintained to support general corporate purposes, including commercial paper borrowings. The Company has not incurred any borrowings under these or previous facilities. The credit facilities contain no financial covenants and are not subject to termination based on a change of credit rating or material adverse changes. The facilities are unsecured and may be accessed under various interest rate alternatives at the Company’s option. Fees to maintain the facilities are immaterial. The Company also maintains a universal shelf registration statement on file with the SEC under which it can issue debt securities, preferred stock, common stock, warrants, share purchase contracts orshare purchase units without a predetermined limit. Securities can be sold in one or more separate offerings with the size, price and terms to be determined at the time of sale.

Previous wording

The Company maintains a prudent long-term investment strategy consistent with the duration of pension obligations. The determination of defined benefit plan expense and liabilities is dependent on various assumptions, including the expected annual rate of return on plan assets, the discount rate and the rate of annual compensation increases. In accordance with U.S. generally accepted accounting principles, actual results that differ from the Company's assumptions are accumulated as deferred actuarial gains or losses and amortized to expense in future periods. The Company's principal U.S. defined benefit plan is closed to employees hired after January 1, 2016 while shorter-tenured employees ceased accruing benefits effective October 1, 2016. Effective January 1, 2025, the Company implemented a new profit sharing retirement program for all U.S. non-union employees. Eligible employees receive a base contribution to a cash balance account administered within the principal U.S. defined benefit plan, funded by surplus pension assets, as well as a potential profit sharing contribution to their defined contribution account. For employees that had continued to accrue benefits in the principal U.S. defined benefit plan, future service after December 31, 2024 is frozen.

Current wording

The Company's principal U.S. defined benefit plan is closed to employees hired after January 1, 2016 while shorter-tenured employees ceased accruing benefits effective October 1, 2016. Effective January 1, 2025, the Company implemented a new profit sharing retirement program for all U.S. non-union employees. Eligible employees receive a base contribution to a cash balance account administered within the principal U.S. defined benefit plan, funded by surplus pension assets, as well as a potential profit sharing contribution to their defined contribution account. For employees that had continued to accrue benefits in the principal U.S. defined benefit plan, future service after December 31, 2024 is frozen.

Previous wording

As of September 30, 2025, the U.S. pension plans were overfunded by $856 in total (approximately 29 percent in excess of the projected benefit obligation), including unfunded plans totaling $161. The non-U.S. plans were underfunded by $65, including unfunded plans totaling $242. The Company contributed a total of $46 to defined benefit plans in 2025 and expects to contribute approximately $40 in 2026. At year-end 2025, the discount rate for U.S. plans was 5.27 percent, and was 4.97 percent in 2024. The assumed investment return on plan assets was 6.50 percent in 2025, 6.50 percent in 2024 and 6.00 percent in 2023, and will be 6.75 percent for 2026. While management believes its assumptions used are appropriate, actual experience may differ. A 0.25 percentage point decrease in the U.S. and non-U.S. discount rates would have increased the total projected benefit obligation at September 30, 2025 by $100 and increased 2026 pension expense by $10. A 0.25 percentage point decrease in the expected return on plan assets would increase 2026 pension expense by $10. See Note 14.

Current wording

As of September 30, 2026, the U.S. pension plans were overfunded by $886 in total (approximately 33 percent in excess of the projected benefit obligation), including unfunded plans totaling $145. The non-U.S. plans were underfunded by $38, including unfunded plans totaling $235. The Company contributed a total of $38 to defined benefit plans in 2026 and expects to contribute approximately $45 in 2027. At year-end 2026, the discount rate for U.S. plans was 6.41 percent, and was 5.27 percent in 2025. The assumed investment return on U.S. plan assets was 6.75 percent in 2026, 6.50 percent in 2025 and 6.50 percent in 2024, and will be 7.40 percent for 2027. While management believes its assumptions used are appropriate, actual experience may differ. A 0.25 percentage point decrease in the U.S. and non-U.S. discount rates would have increased the total projected benefit obligation at September 30, 2026 by $100, increased the 2026 mark-to-market expense by $10, and decreased 2027 pension expense by $5. A 0.25 percentage point decrease in the expected return on plan assets would increase 2027 pension expense by $10. See Notes 1 and 14.

Previous wording

Income tax expense and tax assets and liabilities reflect management's assessment of taxes paid or expected to be paid (received) on items included in the financial statements. Deferred tax assets and liabilities arise from temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and consideration of operating loss and tax credit carryforwards. Deferred income taxes are measured using enacted tax rates in effect for the year in which the temporary differences are expected to be recovered or settled. The impact on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Valuation allowances are provided to reduce deferred tax assets to the amount that will more likely than not be realized. This requires management to make judgments and estimates regarding the amount and timing of the reversal of taxable temporary differences, expected future taxable income, and the impact of tax planning strategies.

Current wording

Income tax expense and tax assets and liabilities reflect management's assessment of taxes paid or expected to be paid (received) on items included in the financial statements. Deferred tax assets and liabilities arise from temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and consideration of losses and other carryforwards. Deferred income taxes are measured using enacted tax rates in effect for the year in which the temporary differences are expected to be recovered or settled. The impact on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Valuation allowances are provided to reduce deferred tax assets to the amount that will more likely than not be realized. This requires management to make judgments and estimates regarding the amount and timing of the reversal of taxable temporary differences, expected future taxable income, and the impact of tax planning strategies.

Previous wording

In December 2023, the FASB issued ASU No. 2023-09 (Topic 740), Improvements to Income Tax Disclosures, which expands the disclosures required with respect to the income tax rate reconciliation and income taxes paid both in U.S. and foreign jurisdictions. The updates, which are effective in fiscal 2026, change disclosures only and will not impact the Company’s results of operations.

Current wording

In the fourth quarter of 2026, the Company adopted ASU No. 2023-09 (Topic 740), Improvements to Income Tax Disclosures, which expands the disclosures required with respect to the income tax rate reconciliation and income taxes paid both in U.S. and foreign jurisdictions. The standard changes disclosures only and had no impact on the Company’s results of operations.

Previous wording

For fiscal year 2026, consolidated net sales from continuing operations 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 $4.73 to $4.93, while adjusted earnings per share are expected to be $6.35 to $6.55 (see the following reconciliation).

Current wording

For fiscal year 2027, consolidated net sales from continuing operations are expected to be up approximately 5 percent, with underlying sales also up approximately 5 percent. Earnings per share are expected to be approximately $5.70, while adjusted earnings per share are expected to be approximately $7.25 (see the following reconciliation).

Previous wording

Operating cash flow is expected to be $4.0 to $4.1 billion and free cash flow, which excludes projected capital spending of approximately $0.45 billion, is expected to be $3.5 to $3.6 billion. The fiscal 2026 outlook assumes approximately $2.2 billion returned to shareholders through approximately $1.0 billion of share repurchases and approximately $1.2 billion of dividend payments.

Current wording

Operating cash flow is expected to be $4.3 to $4.4 billion and free cash flow, which excludes projected capital spending of approximately $0.5 billion, is expected to be $3.8 to $3.9 billion. The fiscal 2027 outlook assumes approximately $3.8 billion returned to shareholders through approximately $2.5 billion of share repurchases and approximately $1.3 billion of dividend payments.