Emerson Electric Company · NYSE:EMR
Emerson Electric — Q4 2021 Earnings Presentation
38 slides from Emerson Electric's earnings presentation, Nov 3, 2021
Slide 1: Emerson Q4 Earnings Conference Call
Emerson Q4 Earnings Conference Call November 3, 2021
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements in this presentation and our commentary and responses to questions 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 develop
Slide 3: Announcing Emerson Ventures
Announcing EMERSON VENTURES Emerson Ventures invests in early-stage companies with innovative technologies that complement our growth strategies $100 million over next five years for initial and follow- on investments GREENING WITH Emerson INVESTMENT FOCUS Emerson’s Chief Sustainability Officer, Mik
Slide 4: Emerson and AspenTech Agreement to Create High-Performance Industrial Software Leader
Emerson and AspenTech Announced on October 11, 2021, the Agreement to Create a High-Performance Industrial Software Leader Accelerates and unlocks value of Emerson’s software strategy and builds a higher growth, more diversified and sustainable portfolio Next Steps and Current VALUE CREATION FOR EME
Slide 5: Q4 and Full Year 2021 Results
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Slide 6: Fiscal 2021 Performance
Fiscal 2021 Performance Original Guidance Prior Guidance Actual (November 3, 2020) (August 4, 2021) Net Sales Growth 1% – 4% 9% – 10% 9% Acquisitions FX 1 pt 1 pt 1 pt 3 pts 1 pt 3 pts ✓ Underlying Sales* Growth (1%) – 2% 5% – 6% 5% Automation Solutions (4%) – (1%) Flat – 1% Flat ✓ Commercial & Resi
Slide 7: Fiscal 2021 Performance Summary
Fiscal 2021 Performance Summary Sales Adjusted Segment EBIT* Free Cash Flow* Adjusted EPS* $18.2B $3.0B $4.10 $16.8B 19.1% $3.46 17.5% $2.5B 5% Underlying* 160 bps 18% 19% 2020 2021 2020 2021 2020 2021 2020 2021 • Continued recovery of key end markets • Strong margin growth driven by volume,
Slide 8: Full Year 2020 to 2021 Adjusted EPS Bridge
Full Year 2020 to 2021 Adjusted EPS* Bridge $0.59 $0.03 $4.10 Share Repurchase $3.46 ($0.11) $0.13 Operations $0.78 Pension $0.05 FX $0.09 Supply Chain & Price- Stock Comp ($0.16) Gains $0.06 Cost Impact ($0.19) Tax ($0.02) 2021 2020 Adjusted EPS* Adjusted EPS* +19% YoY Non-Operating Operations and
Slide 9: Q4 2021 Performance Summary
Q4 2021 Performance Summary Sales Adjusted Segment EBIT* Free Cash Flow* Adjusted EPS* $4.9B $1.0B $1.21 $4.6B 19.9% 19.8% $1.10 $0.6B 7% Underlying* 10 bps 39% 10% 2020 2021 2020 2021 2020 2021 2020 2021 • $175M impact due to supply chain, • Reflects price-cost impact in Commercial • Result
Slide 10: Historic Pricing Levels on Commodities and Electronics Driving Net Material Inflation
Historic Pricing Levels on Commodities and Electronics Driving Significant Net Material Inflation in the First Half of 2022 Price Net Material Inflation Q1 Q2 Q3 Q4 2021 Q1E Q2E H2E 2022E Price – NMI $20M ($5M) ($50M) ($55M) ($90M) ($65M) – + + ~$100M Note: Bar sizes illustrative 10
Slide 11: Unprecedented Inflation, Availability and Supply Chain Challenges
Unprecedented Inflation, Availability and Supply Chain Challenges Impacting Global Operations COMMODITIES ELECTRONICS North American Cold-Rolled Steel Pricing Microcontroller Lead Times $2,400 • 245% price increase over 14 Q1FY21 • Shortages and lead time months on North American cold- Internal Part
Slide 12: Despite Headwinds, Our Teams Have Responded Well to Meet Customers' Needs
Despite Headwinds, Our Teams Have Responded Well to Meet Customers’ Needs 1 SUPPLY AVAILABILITY 2 LOGISTICS 3 LABOR Ramped up secondary Leveraged contract Accelerated hiring and sources and qualified prices and volume adjusted wages to alternative suppliers with carriers ensure competitiveness Incre
Slide 13: Q1 and Full Year 2022 Outlook
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Slide 14: Emerson Trailing Three Month Underlying Orders Versus Prior Year
Automation Solutions Emerson Trailing Three Month Underlying • New infrastructure (KOB1) bookings expected to Orders Versus Prior Year improve driven by LNG and Decarbonization projects Jul Aug Sep • Digital transformation and factory automation 60% Automation Solutions 19% 17% 20% programs driving
Slide 15: 2022 Will Be Characterized by Strong Underlying Demand
2022 Will Be Characterized by Strong Underlying Demand and Improving Operating Environment 2022 Landscape 2022 Guidance Assumptions Solid underlying demand in key end markets Process automation continuing recovery Moderating with mid single digit growth residential demand Supply chain and price-cost
Slide 16: 2022 Guidance
2022 Guidance ADJUSTED EPS BRIDGE Net Sales Growth 5% – 7% Acquisitions ~0 pts 2021 2022E FX (~1 pt) GAAP EPS $3.82 $4.21 – $4.36 Underlying Sales* Growth 6% – 8% Automation Solutions 6% – 8% Commercial & Residential Solutions 6% – 9% Restructuring / Other $0.28 ~$0.19 Price-Cost ~+$100M Restructuri
Slide 17: Q1 2022 Guidance
Q1 2022 Guidance ADJUSTED EPS BRIDGE Net Sales Growth 7% – 9% Q1 2021 Q1 2022E GAAP EPS $0.74 $0.85 – $0.89 Underlying Sales* Growth 7% – 9% Automation Solutions 6% – 8% Restructuring / Other $0.09 ~$0.03 Commercial & Residential Solutions 9% – 12% Prior Adjusted EPS* $0.83 $0.88 – $0.92 GAAP EPS $0
Slide 18: Q&A
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Slide 19: Appendix
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Slide 20: Q4 2021 P&L Summary
Q4 2021 P&L Summary ($M, EXCEPT EPS) 2020 2021 Change Sales $4,558 $4,947 9% Gross profit $1,882 $1,996 % of sales 41.3% 40.4% (90 bps) SG&A expense ($946) ($1,054) % of sales 20.8% 21.3% 50 bps EBIT* $805 $867 % of sales* 17.7% 17.5% (20 bps) Adj EBIT* $878 $942 % of sales* 19.3% 19.0% (30 bps) Tax
Slide 21: Q4 2021 Earnings & Cash Flow
Q4 2021 Earnings & Cash Flow ($M) 2020 2021 Change Adjusted Segment EBIT* $906 $980 8% % of sales* 19.9% 19.8% (10 bps) Stock compensation ($41) ($33) $8 Corporate pension and OPEB $16 $23 $7 Adjusted corporate and other* ($3) ($28) ($25) Interest expense, net ($40) ($39) $1 Adjusted pretax earnings
Slide 22: Adjusted EBITA and Adjusted EPS Bridges
Adjusted EBITA* and Adjusted EPS* Bridges Starting in 2022, Emerson will move to Adjusted EBITA* and Adjusted EPS*, excluding intangibles amortization expense Q1 Full Year ($M) 2020 2021 2020 2021 EBIT* $458 $603 $2,491 $3,066 Restructuring $110 $69 $317 $188 Gains --- ($17) --- ($17) First-Year Pur
Slide 23: Adjusted EBITA Supplemental
Adjusted EBITA* Supplemental Starting in fiscal 2022, Emerson will revise Adjusted EBIT to exclude intangibles amortization expense, in addition to previously excluded restructuring expense and first year purchase accounting related items 2021 Q1 Q2 Q3 Q4 FY Pretax earnings (GAAP) $ 563 737 784 828
Slide 24: Adjusted Segment EBITA Supplemental
Adjusted Segment EBITA* Supplemental Starting in fiscal 2022, Emerson will revise Adjusted EBIT to exclude intangibles amortization expense, in addition to previously excluded restructuring expense and first year purchase accounting related items Automation Solutions 2021 Q1 Q2 Q3 Q4 FY Automation S
Slide 25: Adjusted Segment EBITA Supplemental
Adjusted Segment EBITA* Supplemental Starting in fiscal 2022, Emerson will revise Adjusted EBIT to exclude intangibles amortization expense, in addition to previously excluded restructuring expense and first year purchase accounting related items Commercial & Residential Solutions 2021 Q1 Q2 Q3 Q4 F
Slide 26: Adjusted EPS Supplemental
Adjusted EPS* Supplemental Starting in fiscal 2022, Emerson will revise Adjusted EPS to exclude intangibles amortization expense, in addition to previously excluded restructuring expense and first year purchase accounting related items 2021 Q1 Q2 Q3 Q4 FY GAAP earnings per share $ 0.74 0.93 1.04 1.1
Slide 27: World Area Underlying Sales Growth
World Area Underlying Sales Growth Asia, Middle East Americas Europe & Africa TOTAL* China Q4 2021 Q4 2021 Q4 2021 Q4 2021 Automation Solutions 19% (2%) (7%) 1% (6%) 2% 3% flat 12% 14% Commercial & Residential Solutions 13% 16% 17% 17% 12% 17% 13% 16% 5% 17% EMERSON* 16% 6% (2%) 5% (3%) 5% 7% 5% 10%
Slide 28: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Comm & Res Q4 2021 Underlying Sales Change Auto Solns Solns Emerson Reported (GAAP) 6% 14% 9% (Favorabl
Slide 29: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Comm & Res FY 2022E Underlying Sales Change Auto Solns Solns Emerson Reported (GAAP) 5% -7% 6% - 9% 5%
Slide 30: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Q4 EBIT Q4 FY20 Q4 FY21 Pretax earnings (GAAP) $ 765 $ 828 Interest expense, net 40 39 Earnings before
Slide 31: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Q4 EBIT Margin Q4 FY20 Q4 FY21 Change Pretax margin (GAAP) 16.8% 16.7% (10) bps Interest expense, net 0
Slide 32: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Q4 Earnings Per Share Q4 FY20 Q4 FY21 Change Earnings per share (GAAP) $ 1.20 $ 1.11 (8)% Restructuring
Slide 33: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Q4 Business Segment EBIT Q4 FY20 Q4 FY21 Change Pretax earnings (GAAP) $ 765 $ 828 8% Corp. items and i
Slide 34: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Q4 Pretax Earnings Q4 FY20 Q4 FY21 Change Pretax earnings (GAAP) $ 765 $ 828 8% Restructuring and relat
Slide 35: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Q4 Automation Solutions Segment EBIT Margin Q4 FY20 Q4 FY21 Change Automation Solutions Segment EBIT ma
Slide 36: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Q4 Cash Flow Q4 FY20 Q4 FY21 % Change Operating cash flow (GAAP) $ 1,229 $ 855 (30)% Capital expenditur
Slide 37: Additional Information and Where to Find It
Additional Information and Where to Find It In connection with the proposed transaction between Emerson Electric Co. (“Emerson”) and Aspen Technology, Inc. (“AspenTech”), a subsidiary of Emerson, Emersub CX, Inc. (“new AspenTech”), will prepare and file with the Securities and Exchange Commission (t
Slide 38: Additional Information and Where to Find It
Additional Information and Where to Find It Caution Concerning Forward-Looking Statements This communication contains “forward-looking” statements as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended by t
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