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Subjects: EARNINGS, Conference Call, Webcast

Emerson Reports Third Quarter 2022 Results; Updates 2022 Outlook


Emerson (NYSE: EMR) today reported results for its third fiscal quarter ended June 30, 2022 and updated its full year outlook for fiscal 2022.

June trailing three-month underlying orders were up 10 percent. Third quarter net sales were up 7 percent and underlying sales were up 7 percent. By geography, the Americas were up 14 percent, Europe was flat and Asia, Middle East & Africa was down 1 percent. China was down 6 percent, primarily due to COVID-19 lockdowns.

Third quarter pretax margin of 23.9 percent was up 720 basis points. Adjusted EBITA margin4 was 22.8 percent, up 270 basis points.

Earnings per share were $1.54 for the quarter, up 48 percent. Adjusted earnings per share were $1.38, up 16 percent, which includes an $0.08 net AspenTech impact.

Operating cash flow was $740 million for the quarter, down 33 percent, and free cash flow was $630 million, down 36 percent. Cash flow results reflected higher working capital due to increased sales and continued supply chain constraints.

"Emerson delivered another strong quarter as we continue to see double-digit growth in underlying orders and strong demand for our technology, software and solutions," said Emerson President and Chief Executive Officer Lal Karsanbhai. "Portfolio actions, including AspenTech which increased our adjusted earnings per share for the quarter by 8 cents, are delivering immediate value to customers and shareholders. The strength in demand and continued growth in backlog provides confidence to execute our plan despite COVID-19 lockdowns in China and continued global supply chain constraints, specifically with electronic components, which impacted our sales conversion this quarter."

"We have made significant progress on our portfolio journey this year," Karsanbhai continued. "These actions, including yesterday's announced agreement to sell InSinkErator, represent Emerson's continued commitment to creating a higher growth, more diversified and cohesive portfolio."

Portfolio Progress

Earlier this week, Emerson announced it has reached an agreement to sell the InSinkErator® business to Whirlpool Corporation for $3.0 billion. More details on the transaction can be found in our Form 8-K filed Aug. 8, 2022.

On May 16, Emerson closed its transaction with AspenTech creating a global software leader positioned to advance customers' sustainability and operational excellence goals, and a platform to deploy M&A capital. AspenTech's July agreement to acquire end-to-end mining software provider, Micromine, is an example of this increased flexibility.

In the third quarter, Emerson also closed the divestiture of Therm-O-Disc and acquired Fluxa, a life sciences process knowledge management leader.

Business Platform Results

Automation Solutions5 June trailing three-month underlying orders were up 13 percent and backlog increased $100 million compared to the prior quarter to $6.2 billion despite $132 million of debooking in Russia.

Net sales were flat in the quarter, with underlying sales up 4 percent. The Americas were up 12 percent, Europe was down 2 percent and Asia, Middle East & Africa was down 3 percent. China was down 2 percent.

Segment EBIT margin increased 40 basis points to 18.5 percent and adjusted segment EBITA6 margin increased 70 basis points to 21.0 percent.

Commercial & Residential Solutions June trailing three-month underlying orders were up 5 percent and backlog decreased $100 million compared to the prior quarter to $1.3 billion and was flat excluding the impact of the Therm-O-Disc divestiture.

Net sales increased 8 percent in the quarter, with underlying sales up 13 percent. The Americas were up 16 percent, Europe was up 6 percent and Asia, Middle East & Africa was up 5 percent. China was down 18 percent.

Segment EBIT margin increased 10 basis points to 21.4 percent and adjusted segment EBITA margin decreased 50 basis points to 22.0 percent.

AspenTech7 net sales were $239 million for the quarter. Segment EBIT margin was 23.7 percent and adjusted segment EBITA margin was 53.8 percent.

2022 Updated Outlook

Emerson updated its 2022 full year outlook to reflect the impacts of the AspenTech and Therm-O-Disc transactions, and write-offs associated with its announced Russia exit while considering continued macroeconomic and geopolitical uncertainty, supply chain constraints, exchange rate fluctuations and challenges related to COVID-19. Net sales guidance is reduced to 7 to 8 percent and underlying sales guidance is narrowed to 9 to 10 percent. Earnings per share guidance is increased to $5.25 to $5.35 and adjusted earnings per share guidance is increased to $5.05 to $5.15. Operating cash flow is now expected to be $3.0 billion due to higher working capital from increased sales and continued supply chain constraints. Capital spending was reduced to approximately $525 million and free cash flow is now expected to be $2.5 billion. Share repurchase is expected to be approximately $500 million.

The following tables summarize the updated fiscal year 2022 guidance framework. All figures are approximate.

2022 Guidance

Net Sales Growth

7% - 8%

Operating Cash Flow

$3.0B

Automation Solutions

4% - 5%

Capital Spend

$525M

Commercial & Residential Solutions

9% - 10%

Free Cash Flow

$2.5B

 

 

Dividend

$1.2B

Underlying Sales Growth

9% - 10%

Share Repurchase

$500M

Automation Solutions

6% - 7%

 

 

Commercial & Residential Solutions

13% - 14%

Tax Rate

22%

 

 

Restructuring Actions

$150M

GAAP EPS

$5.25 - $5.35

 

 

Adjusted EPS

$5.05 - $5.15

 

 

Notes:

1 Trailing three-month underlying orders does not include heritage AspenTech, Therm-O-Disc (divested and previously reported in Commercial & Residential Solutions) or Emerson's contributed businesses to AspenTech (previously reported in Automation Solutions).

2 Underlying sales excludes the impact of acquisitions, divestitures, currency translation, heritage AspenTech, Therm-O-Disc and Emerson's contributed businesses to AspenTech.

3 Adjusted EPS excludes restructuring, first year purchase accounting charges, transaction and AspenTech pre-closing costs, a gain from the Therm-O-Disc divestiture, write-offs associated with Emerson's announced Russia exit and intangibles amortization expense.

4 Adjusted EBITA margin excludes restructuring, first year purchase accounting charges, transaction costs, a gain from the Therm-O-Disc divestiture, write-offs associated with Emerson's announced Russia exit and intangibles amortization expense.

5 Automation Solutions net sales, backlog, segment EBIT margin and adjusted segment EBITA margin does not include Emerson's contributed businesses to AspenTech, which have been reclassified to the AspenTech segment.

6 Adjusted segment EBITA margin excludes restructuring and intangible amortization expense.

7 The AspenTech segment includes the full quarter results for Emerson's businesses contributed to AspenTech and the heritage AspenTech business as of May 16, 2022.

Upcoming Investor Events

Today, beginning at 8:00 a.m. Central Time / 9:00 a.m. Eastern Time, Emerson management will discuss the third quarter results during an investor conference call. Participants can access a live webcast available at www.emerson.com/financial at the time of the call. A replay of the call will be available for 90 days. Conference call slides will be posted in advance of the call on the company website.

Forward-Looking and Cautionary Statements

Statements in this press release 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 developments. These risks and uncertainties include the Company's ability to successfully complete on the terms and conditions contemplated, and the financial impact of, the proposed sale of its InSinkErator food waste disposal business, the financial impact of the AspenTech acquisition, the scope, duration and ultimate impacts of the COVID-19 pandemic and the Russia-Ukraine conflict, as well as economic and currency conditions, market demand, including related to the pandemic and oil and gas price declines and volatility, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, inflation, among others, as set forth in the Company's most recent Annual Report on Form 10-K and subsequent reports filed with the SEC. The outlook contained herein represents the Company's expectation for its consolidated results, other than as noted herein.

 

 

 

 

 

Table 1

EMERSON AND SUBSIDIARIES

CONSOLIDATED OPERATING RESULTS

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)

 

 

 

 

 

 

 

Quarter Ended June 30

 

Percent

 

2021

 

2022

 

Change

 

 

 

 

 

 

Net sales

$4,697

 

$5,005

 

7%

Cost of sales

2,715

 

2,908

 

 

SG&A expenses

1,073

 

1,052

 

 

Gain on sale of business

?

 

(483)

 

 

Other deductions, net

88

 

283

 

 

Interest expense, net

37

 

50

 

 

Earnings before income taxes

784

 

1,195

 

52%

Income taxes

151

 

243

 

 

Net earnings

633

 

952

 

 

Less: Noncontrolling interests in subsidiaries

6

 

31

 

 

Net earnings common stockholders

$627

 

$921

 

47%

 

 

 

 

 

 

Diluted avg. shares outstanding

602.1

 

596.2

 

 

 

 

 

 

 

 

Diluted earnings per share common share

$1.04

 

$1.54

 

48%

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended June 30

 

 

 

2021

 

2022

 

 

Other deductions, net

 

 

 

 

 

Amortization of intangibles

$71

 

$98

 

 

Restructuring costs

28

 

31

 

 

Other

(11)

 

154

 

 

Total

$88

 

$283

 

 

 

 

 

 

 

Table 2

EMERSON AND SUBSIDIARIES

CONSOLIDATED OPERATING RESULTS

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)

 

 

 

 

 

 

 

Nine Months Ended June 30

 

Percent

 

2021

 

2022

 

Change

 

 

 

 

 

 

Net sales

$13,289

 

$14,269

 

7%

Cost of sales

7,722

 

8,398

 

 

SG&A expenses

3,125

 

3,112

 

 

Gain on subordinated interest

?

 

(453)

 

 

Gain on sale of business

?

 

(483)

 

 

Other deductions, net

243

 

374

 

 

Interest expense, net

115

 

140

 

 

Earnings before income taxes

2,084

 

3,181

 

53%

Income taxes

431

 

659

 

 

Net earnings

1,653

 

2,522

 

 

Less: Noncontrolling interests in subsidiaries

20

 

31

 

 

Net earnings common stockholders

$1,633

 

$2,491

 

53%

 

 

 

 

 

 

Diluted avg. shares outstanding

602.3

 

596.9

 

 

 

 

 

 

 

 

Diluted earnings per share common share

$2.71

 

$4.17

 

54%

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended June 30

 

 

 

2021

 

2022

 

 

Other deductions, net

 

 

 

 

 

Amortization of intangibles

$223

 

$223

 

 

Restructuring costs

111

 

50

 

 

Other

(91)

 

101

 

 

Total

$243

 

$374

 

 

 

 

 

Table 3

EMERSON AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

 

 

 

Quarter Ended June 30

 

2021

 

2022

Assets

 

 

 

Cash and equivalents

$2,860

 

$2,529

Receivables, net

2,754

 

2,957

Inventories

2,114

 

2,319

Other current assets

1,038

 

1,570

Total current assets

8,766

 

9,375

Property, plant & equipment, net

3,664

 

3,359

Goodwill

7,777

 

14,748

Other intangible assets

2,993

 

6,930

Other

1,284

 

2,630

Total assets

$24,484

 

$37,042

 

 

 

 

Liabilities and equity

 

 

 

Short-term borrowings and current maturities of long-term debt

$1,478

 

$3,227

Accounts payable

1,966

 

2,040

Accrued expenses

3,226

 

3,545

Total current liabilities

6,670

 

8,812

Long-term debt

5,835

 

8,367

Other liabilities

2,640

 

3,576

Equity

 

 

 

Common stockholders' equity

9,291

 

10,315

Noncontrolling interests in subsidiaries

48

 

5,972

Total equity

9,339

 

16,287

Total liabilities and equity

$24,484

 

$37,042

 

 

 

 

Table 4

EMERSON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended June 30

 

 

2021

 

2022

Operating activities

 

 

 

 

Net earnings

 

$1,653

 

$2,522

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

720

 

722

Stock compensation

 

191

 

107

Pension expense

 

23

 

2

Changes in operating working capital

 

246

 

(706)

Gain on subordinated interest

 

?

 

(453)

Gain on sale of business

 

?

 

(428)

Other, net

 

(113)

 

(61)

Cash provided by operating activities

 

2,720

 

1,705

 

 

 

 

 

Investing activities

 

 

 

 

Capital expenditures

 

(350)

 

(335)

Purchases of businesses, net of cash and equivalents acquired

 

(1,611)

 

(5,615)

Divestitures of businesses

 

?

 

578

Proceeds from subordinated interest

 

?

 

438

Other, net

 

53

 

(41)

Cash provided by (used in) investing activities

 

(1,908)

 

(4,975)

 

 

 

 

 

Financing activities

 

 

 

 

Net increase in short-term borrowings

 

31

 

1,633

Proceeds from short-term borrowings greater than three months

 

71

 

1,162

Payments of short-term borrowings greater than three months

 

?

 

(445)

Proceeds from long-term debt

 

?

 

2,975

Payments of long-term debt

 

(305)

 

(512)

Dividends paid

 

(909)

 

(918)

Purchases of common stock

 

(268)

 

(418)

Other, net

 

89

 

80

Cash provided by (used in) financing activities

 

(1,291)

 

3,557

 

 

 

 

 

Effect of exchange rate changes on cash and equivalents

 

24

 

(112)

Increase (Decrease) in cash and equivalents

 

(455)

 

175

Beginning cash and equivalents

 

3,315

 

2,354

Ending cash and equivalents

 

$2,860

 

$2,529

 

 

 

 

 

 

 

 

Table 5

EMERSON AND SUBSIDIARIES

SEGMENT SALES AND EARNINGS

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

 

 

 

Quarter Ended June 30

 

2021

 

2022

Sales

 

 

 

Measurement & Analytical Instrumentation

$781

 

$785

Valves, Actuators & Regulators

880

 

905

Industrial Solutions

593

 

575

Systems & Software

611

 

607

Automation Solutions

2,865

 

2,872

 

 

 

 

AspenTech

82

 

239

 

 

 

 

Climate Technologies

1,268

 

1,380

Tools & Home Products

489

 

522

Commercial & Residential Solutions

1,757

 

1,902

 

 

 

 

Eliminations

(7)

 

(8)

Net sales

$4,697

 

$5,005

 

 

 

 

Earnings

 

 

 

Automation Solutions

$519

 

$530

 

 

 

 

AspenTech

2

 

57

 

 

 

 

Climate Technologies

274

 

300

Tools & Home Products

101

 

107

Commercial & Residential Solutions

375

 

407

 

 

 

 

Stock compensation

(66)

 

(16)

Unallocated pension and postretirement costs

24

 

25

Corporate and other

(33)

 

(241)

Gain on sale of business

?

 

483

Interest expense, net

(37)

 

(50)

Earnings before income taxes

$784

 

$1,195

 

 

 

 

Restructuring costs

 

 

 

Automation Solutions

$20

 

$20

 

 

 

 

AspenTech

(2)

 

1

 

 

 

 

Climate Technologies

4

 

2

Tools & Home Products

2

 

(1)

Commercial & Residential Solutions

6

 

1

 

 

 

 

Corporate

4

 

9

Total

$28

 

$31

The table above does not include $4 and $12 of costs related to restructuring actions that were reported in cost of sales and selling, general and administrative expenses for the three months ended June 30, 2021 and 2022, respectively.

 

 

 

 

Depreciation and Amortization

 

 

 

Automation Solutions

$128

 

$127

 

 

 

 

AspenTech

24

 

73

 

 

 

 

Climate Technologies

48

 

43

Tools & Home Products

20

 

19

Commercial & Residential Solutions

68

 

62

 

 

 

 

Corporate and other

17

 

8

Total

$237

 

$270

 

 

 

Table 6

EMERSON AND SUBSIDIARIES

SEGMENT SALES AND EARNINGS

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

 

 

 

Nine Months Ended June 30

 

2021

 

2022

Sales

 

 

 

Measurement & Analytical Instrumentation

$2,211

 

$2,287

Valves, Actuators & Regulators

2,522

 

2,604

Industrial Solutions

1,656

 

1,743

Systems & Software

1,804

 

1,817

Automation Solutions

8,193

 

8,451

 

 

 

 

AspenTech

239

 

405

 

 

 

 

Climate Technologies

3,459

 

3,884

Tools & Home Products

1,419

 

1,546

Commercial & Residential Solutions

4,878

 

5,430

 

 

 

 

Eliminations

(21)

 

(17)

Net sales

$13,289

 

$14,269

 

 

 

 

Earnings

 

 

 

Automation Solutions

$1,354

 

$1,618

 

 

 

 

AspenTech

(1)

 

51

 

 

 

 

Climate Technologies

731

 

754

Tools & Home Products

311

 

317

Commercial & Residential Solutions

1,042

 

1,071

 

 

 

 

Stock compensation

(191)

 

(107)

Unallocated pension and postretirement costs

71

 

76

Corporate and other

(76)

 

(324)

Gain on subordinated interest

?

 

453

Gain on sale of business

?

 

483

Interest expense, net

(115)

 

(140)

Earnings before income taxes

$2,084

 

$3,181

 

 

 

 

Restructuring costs

 

 

 

Automation Solutions

$92

 

$33

 

 

 

 

AspenTech

2

 

1

 

 

 

 

Climate Technologies

8

 

5

Tools & Home Products

4

 

1

Commercial & Residential Solutions

12

 

6

 

 

 

 

Corporate

5

 

10

Total

$111

 

$50

The table above does not include $11 and $26 of costs related to restructuring actions that were reported in cost of sales and selling, general and administrative expenses for the nine months ended June 30, 2021 and 2022, respectively.

 

 

 

 

Depreciation and Amortization

 

 

 

 

 

 

 

Automation Solutions

$393

 

$383

AspenTech

71

 

119

 

 

 

 

Climate Technologies

144

 

136

Tools & Home Products

59

 

58

Commercial & Residential Solutions

203

 

194

 

 

 

 

Corporate and other

53

 

26

Total

$720

 

$722

Table 7

EMERSON AND SUBSIDIARIES

ADJUSTED EBITA & EPS SUPPLEMENTAL

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)

 

The following tables, which show results on an adjusted EBITA basis and diluted earnings per share on an adjusted basis, are intended to supplement the Company's discussion of its results of operations herein. The Company defines adjusted EBITA as earnings excluding interest expense, net, income taxes, intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction fees, and certain gains, losses or impairments. Adjusted earnings per share excludes intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction fees, and certain gains, losses or impairments. Adjusted EBITA, adjusted EBITA margin, and adjusted earnings per share are measures used by management and may be useful for investors to evaluate the Company's operational performance.

 

 

Quarter Ended June 30

 

2021

 

2022

 

 

 

 

Pretax earnings

$784

 

$1,195

Percent of sales

16.7%

 

23.9%

Interest expense, net

37

 

50

Restructuring and related costs

32

 

34

Amortization of intangibles

79

 

124

Gain on sale of business

?

 

(483)

Russia business exit

?

 

162

Acquisition/divestiture costs

?

 

61

OSI first year acquisition accounting charges

10

 

?

Adjusted EBITA

$942

 

$1,143

Percent of sales

20.1%

 

22.8%

 

 

 

 

 

Quarter Ended June 30

 

2021

 

2022

 

 

 

 

GAAP earnings per share

$1.04

 

$1.54

 

 

 

 

Restructuring and related costs

0.04

 

0.05

Amortization of intangibles

0.10

 

0.13

Gain on sale of business

?

 

(0.72)

Russia business exit

?

 

0.29

Acquisition/divestiture costs and interest on AspenTech debt

?

 

0.09

OSI first year acquisition accounting charges

0.01

 

?

 

 

 

 

Adjusted earnings per share

$1.19

 

$1.38

 

 

 

 

Table 8

EMERSON AND SUBSIDIARIES

ADJUSTED EBITA & EPS SUPPLEMENTAL

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)

 

 

Nine Months Ended June 30

 

2021

 

2022

 

 

 

 

Pretax earnings

$2,084

 

$3,181

Percent of sales

15.7%

 

22.3%

Interest expense, net

115

 

140

Restructuring and related costs

122

 

67

Amortization of intangibles

242

 

277

Gain on subordinated interest

?

 

(453)

Gain on sale of business

?

 

(483)

Russia business exit

?

 

162

Acquisition/divestiture costs

?

 

97

Gain on acquisition of full ownership of equity investment

(17)

 

?

OSI first year acquisition accounting charges and fees

41

 

?

Adjusted EBITA

$2,587

 

$2,988

Percent of sales

19.5%

 

20.9%

 

 

 

 

 

Nine Months Ended June 30

 

2021

 

2022

 

 

 

 

GAAP earnings per share

$2.71

 

$4.17

 

 

 

 

Restructuring and related costs

0.16

 

0.09

Amortization of intangibles

0.30

 

0.33

Gain on subordinated interest

?

 

(0.60)

Gain on sale of business

?

 

(0.72)

Russia business exit

?

 

0.29

Acquisition/divestiture costs and interest on AspenTech debt

?

 

0.16

Gain on acquisition of full ownership of equity investment

(0.03)

 

?

OSI first year acquisition accounting charges and fees

0.05

 

?

 

 

 

 

Adjusted earnings per share

$3.19

 

$3.72

 

 

 

 

 

 

 

Table 9

EMERSON AND SUBSIDIARIES

SEGMENT EBITA

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

 

 

 

Quarter Ended June 30

 

2021

 

2022

Automation Solutions

 

 

 

 

 

 

 

Automation Solutions EBIT

$519

 

$530

Percent of sales

18.1%

 

18.5%

Restructuring and related costs

20

 

31

Amortization of intangibles

44

 

41

Automation Solutions EBITA

$583

 

$602

Percent of sales

20.3%

 

21.0%

 

 

 

 

AspenTech

 

 

 

 

 

 

 

AspenTech EBIT

$2

 

$57

Percent of sales

2.2%

 

23.7%

Restructuring and related costs

(2)

 

1

Amortization of intangibles

22

 

71

AspenTech EBITA

$22

 

$129

Percent of sales

26.7%

 

53.8%

 

 

 

 

Commercial & Residential Solutions

 

 

 

 

 

 

 

Commercial & Residential Solutions EBIT

$375

 

$407

Percent of sales

21.3%

 

21.4%

Restructuring and related costs

7

 

1

Amortization of intangibles

13

 

12

Commercial & Residential Solutions EBITA

$395

 

$420

Percent of sales

22.5%

 

22.0%

 

 

 

Table 10

EMERSON AND SUBSIDIARIES

SEGMENT EBITA

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

 

 

 

Nine Months Ended June 30

 

2021

 

2022

Automation Solutions

 

 

 

 

 

 

 

Automation Solutions EBIT

$1,354

 

$1,618

Percent of sales

16.5%

 

19.1%

Restructuring and related costs

94

 

54

Amortization of intangibles

136

 

125

Automation Solutions EBITA

$1,584

 

$1,797

Percent of sales

19.3%

 

21.3%

 

 

 

 

AspenTech

 

 

 

 

 

 

 

AspenTech EBIT

$(1)

 

$51

Percent of sales

(0.6)%

 

12.5%

Restructuring and related costs

2

 

1

Amortization of intangibles

67

 

116

AspenTech EBITA

$68

 

$168

Percent of sales

28.0%

 

41.2%

 

 

 

 

Commercial & Residential Solutions

 

 

 

 

 

 

 

Commercial & Residential Solutions EBIT

$1,042

 

$1,071

Percent of sales

21.4%

 

19.7%

Restructuring and related costs

15

 

8

Amortization of intangibles

39

 

36

Commercial & Residential Solutions EBITA

$1,096

 

$1,115

Percent of sales

22.5%

 

20.5%

Reconciliations of Non-GAAP Financial Measures & Other

 

Table 11

 

 

 

 

 

 

 

Reconciliations of Non-GAAP measures (denoted by *) with the most directly comparable GAAP measure (dollars in millions, except per share amounts). See tables 7 through 10 for additional non-GAAP reconciliations.

 

 

 

 

 

 

 

Q3 2022 Underlying Sales Change

Auto Solns

 

Comm & Res
Solns

 

Emerson

 

Reported (GAAP)

? %

 

8 %

 

7 %

 

(Favorable) / Unfavorable FX

4 %

 

2 %

 

3 %

 

Acquisitions

? %

 

? %

 

(4)%

 

Divestitures

? %

 

3 %

 

1 %

 

Underlying*

4 %

 

13 %

 

7 %

 

 

 

 

 

 

 

 

FY 2022E Underlying Sales Change

Auto Solns

 

Comm & Res
Solns

 

Emerson

 

Reported (GAAP)

4% - 5%

 

9% - 10%

 

7% - 8%

 

(Favorable) / Unfavorable FX

2 %

 

1 %

 

2% - 3%

 

Acquisitions

? %

 

? %

 

(1)% - (2)%

 

Divestitures

? %

 

3 %

 

~ 1%

 

Underlying*

6% - 7%

 

13% - 14%

 

9% - 10%

 

 

 

 

 

 

 

 

Q3 Earnings Per Share

Q3 FY21

 

Q3 FY22

 

Change

 

Earnings per share (GAAP)

$ 1.04

 

$ 1.54

 

48 %

 

Restructuring and related costs

0.04

 

0.05

 

1 %

 

Amortization of intangibles

0.10

 

0.13

 

3 %

 

Gain on sale of business

?

 

(0.72)

 

(74) %

 

Russia business exit

?

 

0.29

 

30 %

 

Acquisition/divestiture costs and pre-acquisition interest on AspenTech debt

?

 

0.09

 

9 %

 

OSI purchase accounting items

0.01

 

?

 

(1) %

 

Adjusted earnings per share*

$ 1.19

 

$ 1.38

 

16 %

 

 

 

 

 

 

 

 

Earnings Per Share

FY22E

 

 

 

 

Earnings per share (GAAP)

$5.25 - $5.35

 

 

 

 

Restructuring and related costs

0.20

 

 

 

 

Amortization of intangibles

0.47

 

 

 

 

Gain on subordinated interest

(0.60)

 

 

 

 

Gain on sale of business

(0.72)

 

 

 

 

 

Russia business exit

0.29

 

 

 

 

 

Acquisition/divestiture costs and pre-acquisition interest on AspenTech debt

0.16

 

 

 

 

Adjusted earnings per share*

$5.05 - $5.15

 

 

 

 

 

 

 

 

 

 

 

EBITA Margin

Q3 FY21

 

Q3 FY22

 

Change

 

Pretax margin (GAAP)

16.7 %

 

23.9 %

 

720 bps

 

Interest expense, net

0.8 %

 

1.0 %

 

20 bps

 

Restructuring and related costs

0.7 %

 

0.7 %

 

- bps

 

Amortization of intangibles

1.7 %

 

2.5 %

 

80 bps

 

Gain on sale of business

? %

 

(9.7) %

 

(970) bps

 

Russia business exit

? %

 

3.2 %

 

320 bps

 

Acquisition/divestiture costs

? %

 

1.2 %

 

120 bps

 

OSI purchase accounting items

0.2 %

 

? %

 

(20) bps

 

Adjusted EBITA margin*

20.1 %

 

22.8 %

 

270 bps

 

 

Automation Solutions Segment EBIT Margin

Q3 FY21

 

Q3 FY22

 

Change

 

Automation Solutions Segment EBIT margin (GAAP)

18.1 %

 

18.5 %

 

40 bps

 

Restructuring and related costs

0.7 %

 

1.1 %

 

40 bps

 

Amortization of intangibles impact

1.5 %

 

1.4 %

 

(10) bps

 

Automation Solutions Adjusted Segment EBITA margin*

20.3 %

 

21.0 %

 

70 bps

 

 

 

 

 

 

 

 

Commercial & Residential Solutions EBIT Margin

Q3 FY21

 

Q3 FY22

 

Change

 

Commercial & Residential EBIT margin (GAAP)

21.3 %

 

21.4 %

 

10 bps

 

Restructuring and related costs

0.4 %

 

? %

 

(40) bps

 

Amortization of intangibles impact

0.8 %

 

0.6 %

 

(20) bps

 

Commercial & Residential Adjusted EBITA margin*

22.5 %

 

22.0 %

 

(50) bps

 

 

 

 

 

 

 

 

AspenTech EBIT Margin

 

 

Q3 FY22

 

 

 

AspenTech EBIT margin (GAAP)

 

 

23.7 %

 

 

 

Restructuring and related costs

 

 

0.3 %

 

 

 

Amortization of intangibles impact

 

 

29.8 %

 

 

 

AspenTech Adjusted EBITA margin*

 

 

53.8 %

 

 

 

 

 

 

 

 

 

 

Q3 Cash Flow

Q3 FY21

 

Q3 FY22

 

Change

 

Operating cash flow (GAAP)

$ 1,105

 

$ 740

 

(33) %

 

Capital expenditures

(128)

 

(110)

 

(3) %

 

Free cash flow*

$ 977

 

$ 630

 

(36) %

 

 

 

FY 2022E Cash Flow

FY 2022E

 

 

 

 

 

Operating cash flow (GAAP)

~ $3.0B

 

 

 

 

 

Capital expenditures

$(525)M

 

 

 

 

 

Free cash flow*

~ $2.5B

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Residential Solutions Backlog

March 31,
2022

 

June 30,
2022

 

Change

 

GAAP backlog

~ $1.4B

 

~ $1.3B

 

$ (0.1)B

 

Therm-O-Disc backlog

(0.1) B

 

$ ?

 

0.1 B

 

Backlog excluding Therm-O-Disc*

~ $1.3B

 

~ $1.3B

 

$ ?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 1: Underlying sales and orders exclude the impact of acquisitions, divestitures and currency translation.

Note 2: All fiscal year 2022E figures are approximate, except where range is given.

 

 

 

 

 

 

 

 


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