Emerson Electric Company · NYSE:EMR
Emerson Electric — Q4 2023 Earnings Presentation
33 slides from Emerson Electric's earnings presentation, Nov 7, 2023
Slide 1: Emerson 2023 Q4 & Full Year 2023 Earnings
Emerson 2023 Q4 & Full Year 2023 Earnings November 7, 2023
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: Strong Performance In 2023 And Healthy 2024 Expectations
Strong Performance In 2023 And Healthy 2024 Expectations EXCEPTIONAL 2023 RESULTS 2024 OUTLOOK Portfolio Transformation Steps Expecting Strong Results Underlying sales: 4% – 6%; operating leverage2: mid-to- Closed Copeland transaction; NI transaction closed high 40s; adjusted EPS midpoint growth: 18
Slide 4: 2023 Summary
2023 Summary August Results Comments Guidance Q4 underlying orders also up 5% Underlying Orders1 5% Process and hybrid up HSD; discrete and other down LSD-MSD Both business groups up ~10% Underlying Sales Growth 10% ~10% Americas up 10%; Europe up 10%; Asia, Middle East & Africa up 9% Strong operati
Slide 5: World-Class Performance Since 2021
World-Class Performance Since 2021 Sales ($M) Adjusted Segment EBITA Margins $13,804 $15,165 25.0% $12,932 22.8% 20.5% 10% 53% 7% Underlying 60% Leverage1 Underlying Leverage1 2021 2022 2023 2021 2022 2023 Gross Profit Margins Adjusted Earnings Per Share $4.44 49.0% 44.3% 45.7% $3.64 $3.01 140 330 2
Slide 6: Emerson Exchange Immerse Demonstrated Emerson's Automation Leadership
Emerson Exchange Immerse Demonstrated Emerson’s Automation Leadership CUSTOMER TESTIMONIALS SHOWCASED INNOVATION Presentations from >100 customers highlighting Emerson’s New Product Releases Enabling Control Systems & Software solutions Boundless Automation Vision 6
Slide 7: Substantial Progress On Breakthrough Innovations Expected To Accelerate Growth
Substantial Progress On Breakthrough Innovations Expected To Accelerate Growth Next-Gen Disruptive Software-Defined Edge Radar Portfolio Measurement Automation Environment Technologies Systems Next-Gen Hyperconverged Pressure / Temperature High-margin core Dramatic shift Infrastructure products with
Slide 8: Recent Transactions Underscore Commitment To Expanding Automation Leadership
Recent Transactions Underscore Commitment To Expanding Automation Leadership NI FLEXIM Transaction Closed October 11, 2023 Transaction Reported as new Test & Measurement segment Closed 2023 Q4 Growth Drivers $1.7B 35K Global leader in clamp-on ultrasonic flow measurement Nearshoring Net Sales Custom
Slide 9: Actions Resulting In Higher Growth, More Profitable And Cohesive Portfolio
Actions Resulting In Higher Growth, More Profitable And Cohesive Portfolio ~75% ~30% Acquisitions ~$18B HSD-LDD Growth Expectations Estimated Adjusted Estimated Adjusted Invested in intelligent Gross Profit % EBITA % automation technology and software Gross Adjusted Growth Profit EBITA ~$18B Divesti
Slide 10: Project Wins In Q4 Demonstrate Continued Shift Towards Growth Platforms
Project Wins In Q4 Demonstrate Continued Shift Towards Growth Platforms PROJECT FUNNEL Q4 PROJECT WINS Traditional Power Chemical EV Battery Carbon Capture Sustainability & Decarbonization: $2.9B LNG & Nuclear Energy Transition: $5.0B Clean Fuels Growth Platforms: $6.6B Traditional ~$500M Energy Tra
Slide 11: 2023 Q4 Performance Summary
2023 Q4 Performance Summary SALES ADJUSTED SEGMENT ADJUSTED EPS FREE CASH FLOW EBITA $1.29 $838M $3.9B $4.1B 25.5% $713M 24.7% $1.07 5% Underlying 80 bps 21% 17% 2022 2023 2022 2023 2022 2023 2022 2023 All world areas positive led by Operating leverage (excluding AspenTech contribution to 2023 Q4 FC
Slide 12: 2023 Performance Summary
2023 Performance Summary SALES ADJUSTED SEGMENT ADJUSTED EPS FREE CASH FLOW EBITA $15.2B 25.0% $4.44 $2.4B $13.8B 22.8% $3.64 $1.7B 10% Underlying 220 bps 22% 35% 2022 2023 2022 2023 2022 2023 2022 2023 All world areas up 9-10% Operating leverage (excluding Driven by strong sales and AspenTech contr
Slide 13: 2022 To 2023 Adjusted EPS Bridge
2022 To 2023 Adjusted EPS Bridge $0.77 ($0.12) ($0.04) $0.14 $0.05 $4.44 Stock Comp ($0.16) $3.64 Pension $0.07 Tax $0.01 Corp & Other $0.04 22% 2022 Operations FX Other / Share Interest From 2023 Non-Operating Count Copeland Note Receivable1 1 Included in adjusted EPS post-Copeland transaction clos
Slide 14: 2024 Outlook Led By Process And Hybrid Industries
2024 Outlook Led By Process And Hybrid Industries CURRENT ENVIRONMENT 2024 ASSUMPTIONS Resilient Demand Environment Process / Hybrid Demand Remains Strong Full year 2023 and 2023 Q4 orders up 5% Secular trends (energy security, sustainability & decarbonization, nearshoring) driving demand Healthy Ba
Slide 15: 2024 Continuing Operations Guidance
2024 Continuing Operations Guidance DETAILS 2024 Q1 2024 AspenTech contribution: 2024 Adjusted EPS: $0.32 – $0.34 Net Sales Growth 14% – 17.5% 13% – 15.5% 2024 Free Cash Flow: $350M – $375M FX ~0 pts ~(1 pts) Acquisitions (NI) 8.5 – 10 pts 10 – 10.5 pts Divestitures ~(1 pts) ~0 pts Underlying Sales
Slide 16: 2023 To 2024 Free Cash Flow Guidance Bridge
2023 To 2024 Free Cash Flow Guidance Bridge ~$0.35B ~$2.9B ~($0.25B) $2.6B – $2.7B ~$0.3B $2.4B ($0.1B) $2.3B ~($0.2B) Acquisition Related ~($0.05B) Higher Capex 15.2% – 15.6% 14.9% ~16.8% 15.4% of sales of sales of sales of sales 2023 Reported Interest From 2023 NI Other 2024 Expected Headwinds 202
Slide 17: Committed To Disciplined Capital Allocation
Committed To Disciplined Capital Allocation ORGANIC INVESTMENTS STRATEGIC ACQUISITIONS Accelerating innovation through new processes and focus on breakthrough technologies Focused on strategic bolt-on acquisitions to strengthen automation portfolio and diversify end markets RD&E 6% RD&E 6% RD&E 7% T
Slide 18: Appendix
Appendix
Slide 19: Global Automation Leader With Diversified End-Market Exposure
Global Automation Leader With Diversified End-Market Exposure ~$17B ~13% >60% ~$150B Net Software MRO / Recurring Installed Sales % Of Sales Revenue Base 20% 16% 21% Europe Other Energy 17% End Geography 50% General Americas Market Industries 17% Discrete 30% 8% Asia, Middle Hybrid East & Africa 12%
Slide 20: Corporate And Other Items
Corporate And Other Items (in millions) 2023 Q4 2023 2024 Q1 Expectations 2024 Expectations Stock Compensation ($52) ($250) ~($50) ~($215) Pension $38 $171 ~$30 ~$140 Copeland Equity Loss ($116) ($177) ~($80) ~($160) Corporate & Other – GAAP $91 ($63) ~($185) ~($330) Corporate Restructuring and Rela
Slide 21: NI 2023 Results (Emerson Fiscal Year)
NI 2023 Results (Emerson Fiscal Year) (Millions) Q1 Q2 Q3 Q4 2023 Sales $448 $437 $417 $391 $1,693 Pretax Earnings $49 $54 $32 $34 $169 Net Interest Expense / (Income) $7 $8 $10 $9 $34 Earnings Before Interest and Taxes (EBIT) $56 $62 $42 $43 $203 % of sales 12.6% 14.2% 10.0% 11.1% 12.0% Stock Based
Slide 22: AspenTech Contribution To Emerson 2023 Q4 Adjusted EBITA
AspenTech Contribution To Emerson 2023 Q4 Adjusted EBITA AspenTech Reported Financials Emerson Reported AspenTech Segment (Millions) 2023 Q4 (Millions) 2023 Q4 Sales $249 AspenTech sales $249 Net income ($35) AspenTech segment earnings (EBIT) ($47) Income taxes (benefit) ($17) Amortization of intang
Slide 23: AspenTech Contribution To Emerson 2023 Q4 GAAP EPS And Adjusted EPS
AspenTech Contribution To Emerson 2023 Q4 GAAP EPS And Adjusted EPS AspenTech Reported Financials Emerson EPS Contribution (Millions) 2023 Q4 (Millions, except per share) 2023 Q4 Sales $249 Sales $249 Net income ($35) Net earnings ($32) Other $3 Non-controlling interest1 ($14) Net earnings common st
Slide 24: AspenTech Contribution To Emerson 2023 Q4
AspenTech Contribution To Emerson 2023 Q4 Earnings From Non- Net Earnings Diluted Continuous Controlling Common Earnings (Millions) Pre-Tax Earnings Income Taxes Operations Interest1 Stockholders Per Share AspenTech company reported ($52) ($17) ($35) Other $3 --- $3 AspenTech consolidation in Emerso
Slide 25: Endnotes
Endnotes Operating Leverage, or Incremental Margins, throughout the presentation is defined as the ratio of the change in adjusted segment EBITA for the current period less the prior period, divided by the change in the net sales for the current period less the prior period. 2022 Q4 2023 Q4 Net Sale
Slide 26: Reconciliation Of Non-GAAP Measures
Reconciliation Of Non-GAAP Measures This information reconciles non-GAAP measures with the most directly comparable GAAP measure (dollars in millions, except per share amounts) August November November Guidance Guidance Guidance Underlying Sales Change FY22 FY23 FY23E FY24E Q1 FY24E Reported (GAAP)
Slide 27: Reconciliation Of Non-GAAP Measures
Reconciliation Of Non-GAAP Measures This information reconciles non-GAAP measures with the most directly comparable GAAP measure (dollars in millions, except per share amounts) Total Business Segment Adjusted EBITA FY22 FY23 Pretax earnings (GAAP) $2,432 $2,726 Corporate items and interest expense,
Slide 28: Reconciliation Of Non-GAAP Measures
Reconciliation Of Non-GAAP Measures This information reconciles non-GAAP measures with the most directly comparable GAAP measure (dollars in millions, except per share amounts) FY23 vs. FY22 FY22 vs. FY21 Earnings Per Share FY21 FY22 FY23 Change Change Earnings per share (GAAP) $2.35 $3.16 $3.72 18%
Slide 29: Reconciliation Of Non-GAAP Measures
Reconciliation Of Non-GAAP Measures This information reconciles non-GAAP measures with the most directly comparable GAAP measure (dollars in millions, except per share amounts) November November Guidance Guidance NI Earnings Per Share Contribution FY24E Q1 FY24E Earnings per share (GAAP) $0.14 - $0.
Slide 30: Reconciliation Of Non-GAAP Measures
Reconciliation Of Non-GAAP Measures This information reconciles non-GAAP measures with the most directly comparable GAAP measure (dollars in millions, except per share amounts) August Guidance Adjusted Operating EBITA Leverage FY22 FY23 FY23E Q4 FY23 Pretax margin leverage (GAAP) 77% 22% ~15% 152% C
Slide 31: Reconciliation Of Non-GAAP Measures
Reconciliation Of Non-GAAP Measures This information reconciles non-GAAP measures with the most directly comparable GAAP measure (dollars in millions, except per share amounts) Cash Flow Q4 FY22 Q4 FY23 Change Operating cash flow (GAAP) $813 $1,007 24% Capital expenditures (100) (169) (7)% Free cash
Slide 32: Reconciliation Of Non-GAAP Measures
Reconciliation Of Non-GAAP Measures This information reconciles non-GAAP measures with the most directly comparable GAAP measure (dollars in millions, except per share amounts) November Guidance Adjusted Non-Controlling Interest Q4 FY23 FY23 FY24E Non-controlling interest reported (GAAP) $6 $25 ~$(2
Slide 33: Reconciliation Of Non-GAAP Measures
Reconciliation Of Non-GAAP Measures This information reconciles non-GAAP measures with the most directly comparable GAAP measure (dollars in millions, except per share amounts) Post-NI Acquisition Sales FY23 FY23 sales (GAAP) $15.3B NI ~1.7B Post acquisition sales (non-GAAP) ~$17.0B Emerson Acquisit
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