Emerson Electric Company · NYSE:EMR
Emerson Electric — Q2 2023 Earnings Presentation
29 slides from Emerson Electric's earnings presentation, May 3, 2023
Slide 1: Emerson 2023 Q2 Earnings
Emerson 2023 Q2 Earnings May 3, 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: 2023 Q2 Summary
2023 Q2 Summary Results Prior Guidance Comments Demand remains strong in process and hybrid industries Underlying Orders 7% partially offset by moderating discrete orders Underlying Sales Growth 14% 8% – 10% All world areas and both business groups up double digits Sales growth, positive mix and acc
Slide 4: Innovation And Growth Platforms Provide Foundation For Long-Term Growth
Innovation And Growth Platforms Provide Foundation For Long-Term Growth INNOVATION ENERGY TRANSITION Emerson Recognized Intermountain Power Agency On Fortune Magazine’s 2023 Hydrogen Power “America’s Most Innovative Companies” List Emerson to provide software and automation for 30% hydrogen fuel pla
Slide 5: NI Acquisition Advances Emerson's Global Automation Focus
NI Acquisition Advances Emerson’s Global Automation Focus Leading Automation Diversified End Platform Market Exposure Expands Emerson’s Exposure to discrete markets: portfolio to include semiconductor & electronics, automation of test & aerospace & defense, and measurement processes transportation &
Slide 6: Transformation Journey Resulting In A Cohesive, Higher-Growth, Higher-Margin Company
Transformation Journey Resulting In A Cohesive, Higher-Growth, Higher-Margin Company (2020) (Post-Acquisitions) Sales $17B ~$16B Gross Profit Margin 42% ~49% Adjusted Segment EBITA Margin 19% ~23% Software % of Sales 6% ~14% 10% 3% Other 19% 19% Life Sciences / Medical Oil & Gas 20% Other Energy 8%
Slide 7: New Board Appointments Underscore Commitment To Board Refreshment And Innovation
New Board Appointments Underscore Commitment To Board Refreshment And Innovation Leticia Gonçalves Jim McKelvey Key Skills and Experience Key Skills and Experience Global Cultural Growth Innovation & Business Growth Business Transformation Focus Technology Development Focus 7
Slide 8: CFO Transition Announcement
CFO Transition Announcement Frank Dellaquila Mike Baughman Retiring after 32 years at Emerson; CFO since 2009 35+ years of financial and operational experience at Emerson, Baxter and PwC Will serve as senior advisor to the CEO through September 30, 2023 Most recently Vice President and Controller 8
Slide 9: 2023 Q2 Performance Summary
2023 Q2 Performance Summary SALES ADJUSTED SEGMENT ADJUSTED EPS FREE CASH FLOW EBITA $3.8B 24.6% $1.09 $513M $3.3B 21.4% $0.87 $312M 14% Underlying 320 bps 25% 64% 2022 2023 2022 2023 2022 2023 2022 2023 All world areas and both Operating leverage (excluding AspenTech contribution to AspenTech contr
Slide 10: 2022 Q2 To 2023 Q2 Adjusted EPS Bridge
2022 Q2 To 2023 Q2 Adjusted EPS Bridge $0.26 ($0.03) ($0.05) $0.04 $1.09 Stock Comp $0.01 $0.87 Tax ($0.06) 25% YoY 2022 Operations FX Other / Share 2023 Non-Operating Count 10
Slide 11: 2023 Industry Outlook
2023 Industry Outlook Energy transition spend continues to accelerate PROCESS HSD- LDD Underlying Sales LNG momentum in North America and Middle East Chemical greenfield investments strong in Asia and U.S. Reshoring trends driving life sciences activity HYBRID HSD Underlying Sales Lithium and batt
Slide 12: 2023 Continuing Operations Guidance
2023 Continuing Operations Guidance DETAILS 2023 Q3 2023 Emerson operations strength offsets reduced AspenTech Net Sales Growth 10.5% – 12.5% 9% – 10.5% guidance Underlying Sales Growth 10% – 12% 8.5% – 10% AspenTech contribution: 2023 Adjusted EPS: ~$0.25 2023 Free Cash Flow: ~$0.3B Operating Lever
Slide 13: Appendix
Appendix
Slide 14: 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 Q2 2023 Q2 Net Sale
Slide 15: Unique Structure Allows For Value Creating Opportunities
Unique Structure Allows For Value Creating Opportunities Significant Value + Climate Technologies 45% common equity ($1.9B) and Creation + Opportunity to deploy $7.8B seller’s note ($2.25B) Opportunities after-tax cash proceeds + 55% owner of industrial software leader Higher-growth, more profitable
Slide 16: Corporate And Other Items
Corporate And Other Items (in millions) 2023 Q2 2023 Q3 Expectations 2023 Expectations Stock Compensation ($40) ~($60) ~($250) Pension $46 ~$45 ~$180 Corporate & Other (GAAP) ($47) ~($60) ~($210) Corporate Restructuring and Related Costs $3 --- ~$15 Acquisition / Divestiture Fees $10 ~$20 ~$35 NI In
Slide 17: 2023 Continuing Operations GAAP EPS To Adjusted EPS Guidance
2023 Continuing Operations GAAP EPS To Adjusted EPS Guidance 2023 Q3 2023 GAAP EPS $0.92 – $0.96 $3.58 – $3.68 Amortization of Intangibles ~$0.15 ~$0.61 Restructuring and Related Costs ~$0.03 ~$0.12 Russia Exit Costs --- $0.08 AspenTech Micromine Purchase Price Hedge --- ($0.02) Acquisition / Divest
Slide 18: Climate Technologies Reporting
Climate Technologies Reporting All post-closing financial results will be excluded from adjusted EBITA and adjusted EPS. The value of seller’s note, 45% common equity stake and Emerson’s share of earnings/loss will be disclosed, as shown below. A summarized Climate Technologies P&L and balance sheet
Slide 19: AspenTech Results And Guidance
AspenTech Results And Guidance AspenTech Company Guidance KEY TAKEAWAYS AspenTech 2023 Fiscal Year (July 1, 2022 – June 30, 2023) Emerson’s guidance considers the AspenTech public guidance Prior Guidance Current Guidance Quarter results: • 11% ACV growth Annual Contract Value (“ACV”) Growth 10.5% –
Slide 20: AspenTech Contribution To Emerson 2023 Q2 Adjusted EBITA
AspenTech Contribution To Emerson 2023 Q2 Adjusted EBITA AspenTech Reported Financials Emerson Reported AspenTech Segment (Millions) 2023 Q2 (Millions) 2023 Q2 Sales $230 AspenTech sales $230 Net income ($58) AspenTech segment earnings (EBIT) ($54) Income taxes (benefit) ($24) Restructuring --- Inco
Slide 21: AspenTech Contribution To Emerson 2023 Q2 GAAP EPS And Adjusted EPS
AspenTech Contribution To Emerson 2023 Q2 GAAP EPS And Adjusted EPS AspenTech Reported Financials Emerson EPS Contribution (Millions) 2023 Q2 (Millions) 2023 Q2 Sales $230 Sales $230 Net income ($58) Net earnings ($59) Interim tax reporting ($1) Non-controlling interest $26 Net earnings common stock
Slide 22: AspenTech Contribution To Emerson 2023 Q2
AspenTech Contribution To Emerson 2023 Q2 Earnings From Non- Net Earnings Diluted Continuous Controlling Common Earnings (Millions) Pre-Tax Earnings Income Taxes Operations Interest Stockholders Per Share AspenTech company reported ($82) $24 ($58) Interim tax reporting / other $1 $2 ($1) AspenTech c
Slide 23: 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) April Guidance April Guidance February Guidance Underlying Sales Change Q2 FY2023 Q3 FY2023E FY2023E Q2 FY2023E Reported (G
Slide 24: 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) Q2 Earnings Per Share Q2 FY2022 Q2 FY2023 Change Earnings per share (GAAP) $0.72 $0.92 28% Amortization of intangibles 0.09
Slide 25: 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) Backlog Q2 FY2022 Backlog (GAAP) $8.1 AspenTech (1.2) Backlog excluding AspenTech (non-GAAP) $6.9 April Guidance Cash Flow
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) April Guidance AspenTech Segment EBITA Margin Q2 FY2022 Q2 FY2023 Change FY2023E Business segment EBIT / margin (GAAP) $(4)
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) Emerson Post- Sales Acquisitions FY2022 continuing operations sales (GAAP) $14B Acquisitions ~$2B Post-acquisition sales (n
Slide 28: Additional Information And Where To Find It
Additional Information And Where To Find It This communication relates to a proposed business combination transaction between Emerson and NI (the “Proposed Transaction”). This communication does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities or a
Slide 29: 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 and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Se
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