Emerson Electric Company · NYSE:EMR
Emerson Electric — Q4 2022 Earnings Presentation
40 slides from Emerson Electric's earnings presentation, Nov 2, 2022
Slide 1: Emerson Q4 & Full Year 2022 Earnings and Climate Technologies Announcement
Emerson Q4 & Full Year 2022 Earnings and Climate Technologies Announcement October 31, 2022
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 develo
Slide 3: Q4 and Full Year 2022 Results
Q4 and Full Year 2022 Results 3
Slide 4: 2022 Performance Vs. Guidance
2022 Performance Vs. Guidance Original Guidance Prior Guidance Actual (November 3, 2021) (August 9, 2022) Net Sales Growth 5% – 7% 7% – 8% 8% Acquisitions ~0 pts 1-2 pts 2 pts Divestitures ~0 pts (~1 pt) (1 pt) FX (~1 pt) (2-3 pts) (2 pts) Underlying Sales Growth* 6% – 8% 9% – 10% 9% Automation Solu
Slide 5: 2022 Q4 Performance Summary
2022 Q4 Performance Summary Sales Adjusted Segment EBITA* Free Cash Flow* Adjusted EPS* $5.4B 24.1% $4.9B $1.0B $1.53 21.5% $1.32 $0.6B 12% Underlying* 260 bps 63% 16% 2021 2022 2021 2022 2021 2022 2021 2022 • Strength across all major end markets • 54% adjusted segment EBITA* leverage • Imp
Slide 6: 2022 Performance Summary
2022 Performance Summary Sales Adjusted Segment EBITA* Free Cash Flow* Adjusted EPS* $19.6B 22.3% $18.2B 20.9% $3.0B $5.25 $4.51 $2.4B 9% Underlying* 140 bps 20% 16% 2021 2022 2021 2022 2021 2022 2021 2022 • Broad strength across end markets in • 36% adjusted segment EBITA* leverage • Higher
Slide 7: 2021 To 2022 Adjusted EPS Bridge
2021 To 2022 Adjusted EPS* Bridge $0.68 $0.03 $5.25 $4.51 $0.03 Stock Comp $0.13 Automation Solutions $0.46 Tax ($0.05) AspenTech FX ($0.03) $0.12 Other ($0.02) Commercial & Residential Solutions $0.10 +16% YoY 2021 Adjusted EPS* Non-Operating Operations Share Count 2022 Adjusted EPS* 7
Slide 8: Climate Technologies Announcement
Climate Technologies Announcement 8
Slide 9: Major Milestone In Portfolio Transformation
Major Milestone In Portfolio Transformation Emerson divesting a majority stake in Climate Technologies to Blackstone Creating A Leading Global Pure-Play $9.5B upfront cash and retaining 45% common equity non-controlling interest – transaction Automation valued at 12.7x fiscal 2022 EBITDA* Company Tr
Slide 10: Transaction Highlights
Transaction Highlights Selling majority stake in Climate Technologies to funds managed by Blackstone, valuing the business at $14.0 billion Total upfront, pre-tax cash proceeds of $9.5 billion Key Terms Emerson retains 45% common equity non-controlling interest in new joint venture; Blackstone owns
Slide 11: Climate Technologies $5.0B
CLIMATE GEOGRAPHY END-MARKET TECHNOLOGIES 11% 4% 5% Other Europe Food Retail & Service 22% Leading global manufacturer of HVAC Asia, Middle East 23% 42% and refrigeration compression products, & Africa Cold Chain & Residential Transport related solutions and controls Technology leader enabling energ
Slide 12: Strategic M&A Has Transformed Emerson
Strategic M&A Has Transformed Emerson M&A is transforming the portfolio to a higher growth and cohesive pure-play automation company serving diverse end-markets ACQUISITIONS DIVESTITURES ~$9B Higher Growth and Profitability Cohesive Automation Portfolio ~$18B Lower Growth invested in intelligent gro
Slide 13: Global Automation Leader With World-Class Technology And Software
Global Automation Leader With World-Class Technology And Software $14.2B 23% SOFTWARE & CONTROL SYSTEMS PLC Digital Twin Manufacturing 2022 Net Sales* 2022 Adjusted Segment EBITA* & Supply Chain DCS Engineering Asset Performance Management 13% Software % of Sales GEOGRAPHY END-MARKET INTELLIGENT DEV
Slide 14: Our Portfolio Aligns With Key Secular Growth Drivers
Our Portfolio Aligns With Key Secular Growth Drivers DIGITAL TRANSFORMATION Unlock greater value and improve returns through software and intelligent solutions SUSTAINABILITY & DECARBONIZATION THESE DYNAMICS REQUIRE Decarbonize existing assets while transitioning to new energy markets INCREASED AUTO
Slide 15: Enhanced Growth And Profitability
Enhanced Growth And Profitability Net Sales Underlying Sales CAGR Profitability Capital Intensity Adjusted Adjusted GP Segment GP* Segment $19.6B 4% – 7% EBITA* EBITA* 46% ~3% 42% $14.2B ~2% 22% 23% 1.5% 2022 Pro-Forma 2022* 2012 - 2022* Pro-Forma 2022 Pro-Forma 2022 2022 Pro-Forma 2022 Through the
Slide 16: Committed To Disciplined Capital Allocation
Committed To Disciplined Capital Allocation Accelerating innovation through new processes ORGANIC GROWTH and focus on breakthrough technologies Strategic acquisitions to strengthen and STRATEGIC ACQUISITIONS diversify automation portfolio DIVIDEND Continues to be a priority SHARE REPURCHASE Expectin
Slide 17: Significant Value Creation For Emerson Shareholders
Significant Value Creation For Emerson Shareholders Multiple levers to drive long-term value creation Global Automation Significant Leader + Climate + Opportunity to Technologies Value Creation Metrics compare favorably to deploy ~$10B cash Opportunities automation peers toward strategic equity and
Slide 18: 2023 Outlook
2023 Outlook y. EMERSON.
Slide 19: Continuing Operations
Continuing Operations Starting in 2023 Q1, Emerson intends to report Climate Technologies, InSinkErator and Therm-O-Disc financial results as discontinued operations. Below are Emerson’s 2022 reported and continuing operations financials. 2022 Q1 and 2021 continuing operations results have been prov
Slide 20: 2023 Industry Outlook – Continuing Operations
2023 Industry Outlook – Continuing Operations Energy security and resiliency driving increased capital investments in energy markets Brownfield decarbonization, renewables, clean fuels and hydrogen investments continue to accelerate Life sciences growth supported by capacity expansions and MSD – HSD
Slide 21: 2023 Guidance – Continuing Operations
2023 Guidance – Continuing Operations1 Key Assumptions 2023 Q1 2023 Net Sales Growth 6% – 8% 7% – 9% Order strength and backlog support FX (~6 pts) (~3.5 pts) 2023 sales growth Acquisitions / Divestitures ~6 pts ~4 pts Underlying Sales Growth* 6% – 8% 6.5% – 8.5% Tax rate: ~22.5% Operating Leverage2
Slide 22: Emerson In Motion
Long-Term Value Creation For Emerson Shareholders Emerson In Motion Monetization of Climate Technologies at an attractive valuation with significant upfront proceeds Transforming into a leading global pure-play automation company Investor Conference Portfolio addresses many of the world’s secular No
Slide 23: Appendix
Appendix y. EMERSON.
Slide 24: 2022 World Area Underlying Sales Growth
2022 World Area Underlying Sales Growth Commercial & Q4 Automation Residential Solutions Solutions Emerson Americas 21% 12% 17% Europe Flat 12% 3% Asia, Middle East & Africa 10% (2%) 7% China 14% (8%) 9% 13% 10% 12% Commercial & 2022 Automation Residential Solutions Solutions Emerson Americas 14% 15
Slide 25: Continuing Operations
Continuing Operations1 (MILLIONS, EXCEPT EPS) 2021 2022 2022 Q1 Sales* $12,932 $13,804 $3,156 Underlying sales growth* 1% 7% 6% Gross Profit* % 44.3% 45.7% 44.8% Adjusted Segment EBITA* % 20.5% 22.8% 21.4% Earnings Per Share* $2.35 $3.16 $1.25 Adjusted EPS* $3.01 $3.64 $0.79 Operating Cash Flow* $2,
Slide 26: AspenTech Contribution To Emerson 2022 Q4 Adjusted EBITA
AspenTech Contribution To Emerson 2022 Q4 Adjusted EBITA* The below illustrates how AspenTech reported financials flow into Emerson. Please note certain items are captured under Emerson corporate. Aspe n T e c h R e port e d F i n a n c i al s E m e rs on R e po r t e d A s p e n T e c h S e gm en t
Slide 27: AspenTech Contribution To Emerson 2022 Q4 GAAP EPS And Adjusted EPS
AspenTech Contribution To Emerson 2022 Q4 GAAP EPS And Adjusted EPS* The below illustrates how AspenTech reported financials flow into Emerson EPS. Aspe n T e c h R e port e d F i n a n c i al s E m e r s on E P S Con t ri bu t i on (MILLIONS) Results (MILLIONS, EXCEPT EPS) Results Sales $251 Sales
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) Commercial Automation & Residential 2022 Underlying Sales Change Solutions Solutions Emerson Reported (G
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) Commercial Automation & Residential FY 2022E November 2021 Guidance Underlying Sales Change Solutions So
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) Underlying Sales Change - Continuing Operations FY21 FY22 Q1 FY22 Reported (GAAP) 5% 8% 8% Divested busi
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 Earnings Per Share FY21 FY22 Change Earnings per share (GAAP) $ 1.11 $ 1.24 12% Restructuring and rel
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) Earnings Per Share - Continuing Operations FY21 FY22 Q1 FY22 Earnings per share reported (GAAP) $ 3.82 $
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) FY23 EPS Growth Earnings Per Share Growth - Continuing Operations Midpoint Earnings per share (GAAP) 14%
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) Business Segment EBITA Margin FY21 FY22 Change Pretax earnings margin (GAAP) 16.0% 20.8% 480 bps Corp. i
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 Commercial & Residential Solutions EBIT Margin Q4 2021 Q4 2022 Change Commercial & Residential Soluti
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) Business FY22 Adjusted Business Segment EBITA Leverage Segment Pretax margin leverage 84% Corp. items an
Slide 37: 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) Cash Flow FY21 FY22 Change Operating cash flow (GAAP) $ 3,575 $ 2,922 (18)% Capital expenditures (581) (
Slide 38: 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 billions, except per share amounts) Climate Technologies EBITDA FY22 Climate Technologies pretax earnings (GAAP) $1.00 Amortization/deprecia
Slide 39: 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 billions, except per share amounts) Emerson Underlying Sales CAGR 10-YR CAGR Emerson sales growth (GAAP) (2.2)% FX/acquisitions/divestitures
Slide 40: 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) Emerson Acquisitions Adjusted Gross Profit Margin Acquired businesses gross profit margin (GAAP) ~ 70% A
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