| •Measurement & Analytical | •AspenTech | | | •Discrete Automation | | | | 8. | Other deductions, net are summarized below:•Safety & Productivity |
| | | | | | | | | | | Three Months Ended December 31, | | 2016 | | | | 2017 |
| | | | | | | Amortization of intangibles | | $ | 22 |
| | | 56 |
| Restructuring costs | | 11 |
| | | 15 |
| Other | | — |
| | | 17 |
| Total | | $ | 33 |
| | | 88 |
|
The increase in amortization and restructuring in the first quarter of 2018 is due to the valves & controls acquisition. Other for the first quarter includes unfavorable foreign currency transactions of $22 compared with the prior year, partially offset by lower acquisition/divestiture costs of $4.
| | | 9. | Restructuring expense reflects costs associated with the Company’s ongoing efforts to improve operational efficiency and deploy assets globally in order to remain competitive on a worldwide basis. The Company expects full year 2018 restructuring expense to be approximately $85. The full year expense includes $15 incurred to date, as well as costs to complete actions initiated before the end of the first quarter and actions anticipated to be approved and initiated during the remainder of the year. Costs for the three months endedDecember 31, 2017 largely relate to restructuring of the global cost structure consistent with the current level of economic activity, as well as the redeployment of resources for future growth.
|
Restructuring expense by business segment follows:
| | | | | | | | | | | Three Months Ended December 31, | | 2016 | | | 2017 | | | | | | | | Automation Solutions | | $ | 6 |
| | | 10 |
| | | | | | | Climate Technologies | | 4 |
| | | 5 |
| Tools & Home Products | | 1 |
| | | — |
| Commercial & Residential Solutions | | 5 |
| | | 5 |
| | | | | | | Total | | $ | 11 |
| | | 15 |
|
Details of the change in the liability for restructuring costs during the three months ended December 31, 2017 follow: | | | | | | | | | | | | | | | | | | | Sept 30, 2017 | | | Expense | | | Utilized/Paid | | | Dec 31, 2017 | | | | | | | | | | | | | | Severance and benefits | | $ | 60 |
| | | 10 |
| | | 14 |
| | | 56 |
| Lease and other contract terminations | | 4 |
| | | 2 |
| | | 1 |
| | | 5 |
| Vacant facility and other shutdown costs | | 1 |
| | | 1 |
| | | 1 |
| | | 1 |
| Start-up and moving costs | | — |
| | | 2 |
| | | 2 |
| | | — |
| Total | | $ | 65 |
| | | 15 |
| | | 18 |
| | | 62 |
|
| | | 10. | Business Segments – The Company designs and manufactures products and delivers services that bring technology and engineering together to provide innovative solutions for customers in a wide range of industrial, commercial and consumer markets around
|
The new segments were previously described as follows: Final Control was the world. |
The Automation Solutions segment enables process, hybrid and discrete manufacturers to maximize production, protect personnel and the environment, and optimize their energy efficiency and operating costs through a broad offering of integrated solutions and products, including measurement and analytical instrumentation, industrial valves and equipment, and process control systems. Significant end markets serviced include oil and gas, refining, chemicals and power generation, as well as pharmaceuticals, food and beverage, automotive, pulp and paper, metals and mining, and municipal water supplies. The segment's major product offerings are described below.
Measurement & Analytical Instrumentation products measure the physical properties of liquids or gases in a process stream and communicate this information to a process control system or other software applications, and analyze the chemical composition of process fluids and emissions to enhance quality and efficiency, as well as environmental compliance.
Valves, Actuators & Regulators consists of control, isolation and pressure relief valves which respond to commands from a control system to continuously and precisely modulateproduct offering; Measurement & Analytical was the flow of process fluids, smart actuation and control technologies, pressure management products, and industrial and residential regulators that reduceMeasurement & Analytical instrumentation product offering; Discrete Automation was the pressure of fluids moving from high-pressure supply lines into lower pressure systems.
Industrial Solutions provides fluid power and control mechanisms, electrical distribution equipment, and materials joining and precision cleaning products which are used in a variety of manufacturing operations to provide integrated solutions to customers.
Process Control Systems product offering; Safety & Solutions provides a digital ecosystem that controls plant processes by communicating with and adjustingProductivity was the "intelligent" plant devices described above to provide precision measurement, control, monitoring, asset optimization, and plant safety and reliability for plants that produce power, or process fluids or other items.
The Commercial & Residential Solutions business consists of the Climate Technologies and Tools & Home Products segments. This business provides productssegment, excluding the divested InSinkErator business; Control Systems & Software was the Systems & Software product offering; and, solutions that promote energy efficiency, enhance household and commercial comfort, and protect food quality and sustainability through heating, air conditioning and refrigeration technology, as wellAspenTech remains unchanged. The AspenTech segment was identified in the third quarter of fiscal 2022 as a broad range of tools and appliance solutions.
The Climate Technologies segment provides products, services and solutions for all areasresult of the climate control industry, including residential heatingHeritage AspenTech acquisition and cooling, commercial air conditioning, commercial and industrial refrigeration, and cold chain management. Products include compressors, temperature sensors and controls, thermostats, flow controls, and stationary and mobile remote monitoring technologies and services that enable homeowners and businesses to better manage their heating, air conditioning and refrigeration systems for improved control and comfort, and lower energy costs.
The Tools & Home Products segment offers tools for professionals and homeowners and appliance solutions. Products include professional pipe-working tools, residential and commercial food waste disposers, and wet-dry vacuums.
Summarized information aboutreflects the Company'scombined results of operations byHeritage AspenTech and the Emerson Industrial Software Business (see Note 4 for further details). The results for this new segment include the historical results of the Emerson Industrial Software Business (which were previously reported in
the Control Systems & Software segment), while results related to the Heritage AspenTech business segment follows:only include periods subsequent to the close of the transaction. Prior year amounts have been reclassified to conform to the current year presentation.
|
| | | | | | | | | | | | |
| Three Months Ended December 31, |
| Sales | | Earnings |
| 2016 |
| | 2017 |
| | 2016 |
| | 2017 |
|
| | | | | | | |
Automation Solutions | $ | 1,967 |
| | 2,572 |
| | 326 |
| | 386 |
|
| | | | | | | |
Climate Technologies | 859 |
| | 922 |
| | 161 |
| | 165 |
|
Tools & Home Products | 393 |
| | 330 |
| | 88 |
| | 87 |
|
Commercial & Residential Solutions | 1,252 |
| | 1,252 |
| | 249 |
| | 252 |
|
| | | | | | | |
Differences in accounting methods | | | | | 33 |
| | 51 |
|
Corporate and other | | | | | (98 | ) | | (148 | ) |
Eliminations/Interest | (3 | ) | | (8 | ) | | (46 | ) | | (38 | ) |
Total | $ | 3,216 |
| | 3,816 |
| | 464 |
| | 503 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Nine Months Ended June 30, |
| Sales | | Earnings | | Sales | | Earnings |
| 2022 | | | 2023 | | | 2022 | | | 2023 | | | 2022 | | | 2023 | | | 2022 | | | 2023 | |
| | | | | | | | | | | | | | | |
Final Control | $ | 905 | | | 1,035 | | | 150 | | | 245 | | | 2,606 | | | 2,889 | | | 424 | | | 618 | |
Measurement & Analytical | 788 | | | 913 | | | 189 | | | 257 | | | 2,294 | | | 2,550 | | | 535 | | | 661 | |
Discrete Automation | 633 | | | 668 | | | 115 | | | 124 | | | 1,894 | | | 1,969 | | | 365 | | | 378 | |
Safety & Productivity | 360 | | | 363 | | | 69 | | | 82 | | | 1,066 | | | 1,034 | | | 199 | | | 228 | |
Intelligent Devices | 2,686 | | | 2,979 | | | 523 | | | 708 | | | 7,860 | | | 8,442 | | | 1,523 | | | 1,885 | |
| | | | | | | | | | | | | | | |
Control Systems & Software | 568 | | | 663 | | | 77 | | | 144 | | | 1,711 | | | 1,892 | | | 294 | | | 378 | |
AspenTech | 239 | | | 320 | | | 57 | | | 27 | | | 405 | | | 793 | | | 51 | | | (60) | |
Software and Control | 807 | | | 983 | | | 134 | | | 171 | | | 2,116 | | | 2,685 | | | 345 | | | 318 | |
| | | | | | | | | | | | | | | |
Stock compensation | | | | | (15) | | | (56) | | | | | | | (92) | | | (198) | |
Unallocated pension and postretirement costs | | | | | 25 | | | 42 | | | | | | | 76 | | | 133 | |
Corporate and other | | | | | (239) | | | (43) | | | | | | | (336) | | | (154) | |
Gain on subordinated interest | | | | | — | | | — | | | | | | | 453 | | | — | |
Loss on Copeland equity method investment | | | | | — | | | (61) | | | | | | | — | | | (61) | |
Eliminations/Interest | (28) | | | (16) | | | (50) | | | (10) | | | (64) | | | (52) | | | (140) | | | (111) | |
Interest income from related party | | | | | — | | | 10 | | | | | | | | | 10 | |
Total | $ | 3,465 | | | 3,946 | | | 378 | | | 761 | | | 9,912 | | | 11,075 | | | 1,829 | | | 1,822 | |
Corporate and other for the first quarter of 2018 includes valves & controls first year acquisition accounting charges of $10 related to inventorythree and $15 for backlog amortization, as well as higher incentive stock compensation of $40.
Automation Solutions sales by major product offering are summarized below:
|
| | | | | | | | |
| Three Months Ended December 31, |
| | 2016 |
| | | 2017 |
|
| | | | | |
Measurement & Analytical Instrumentation | | $ | 682 |
| | | 772 |
|
Valves, Actuators & Regulators | | 449 |
| | | 867 |
|
Industrial Solutions | | 367 |
| | | 424 |
|
Process Control Systems & Solutions | | 469 |
| | | 509 |
|
Total | | $ | 1,967 |
| | | 2,572 |
|
| |
11. | On December 1, 2017, the Company acquired Paradigm, a provider of software solutions for the oil and gas industry, for $505, net of cash acquired. This business had annual sales of approximately $140 and is included in the Measurement & Analytical Instrumentation product offering within Automation Solutions. The Company recognized goodwill of $304 ($160 of which is expected to be tax deductible), and identifiable intangible assets of $248, primarily intellectual property and customer relationships with weighted-average useful lives of approximately 11 years. Valuations of acquired assets and liabilities are in process and subject to refinement. The Company also acquired one smaller business in the Automation Solutions segment. Total cash paid for all businesses was $513, net of cash acquired. |
On January 10, 2018, the Company completed the acquisition of Cooper-Atkins for $247, net of cash acquired. This business, which manufactures temperature management and monitoring products for foodservice markets, will be reported in the Climate Technologies segment.
On October 2, 2017, the Company sold its residential storage business for $200 in cash, subject to post-closing adjustments, and recognized a small pretax gain and an after-tax loss of $24 ($0.04 per share) in the first quarter of 2018 due to income taxes resulting from nondeductible goodwill. The Company will realize approximately $150 in after-tax cash proceeds from the sale. Assets and liabilities for this business were classified as held-for-sale in the consolidated balance sheet at September 30, 2017 as follows: current assets, $73; other assets, $176; and accrued expenses and other liabilities, $61. This business was previously reported within the Tools & Home Products segment.
On April 28, 2017, the Company completed the acquisition of Pentair's valves & controls business for $2.960 billion, net of cash acquired of $207, subject to certain post-closing adjustments. This business, with annualized sales of approximately $1.4 billion, is a manufacturer of control, isolation and pressure relief valves and actuators, and complements the Valves, Actuators & Regulators product offering within Automation Solutions.
Results for the first quarter ended December 31, 2017 included first year pretax acquisition accounting charges related to inventory and backlog of $25, $19 after-tax, $0.03 per share.
Pro Forma Financial Information
The following unaudited pro forma consolidated condensed financial results of operations are presented as if the acquisition of the valves & controls business occurred on October 1, 2015. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition occurred as of that time. |
| | | | |
| Three Months Ended Dec 31, 2016
|
| | |
Net sales | | $ | 3,620 |
|
Net earnings from continuing operations common stockholders | | $ | 362 |
|
Diluted earnings per share from continuing operations | | $ | 0.56 |
|
| |
12. | Discontinued Operations – In fiscal 2017, the Company completed the previously announced strategic repositioning actions to streamline its portfolio and drive growth in its core businesses. On November 30, 2016, the Company completed the sale of its network power systems business for $4 billion in cash and retained a subordinated interest in distributions, contingent upon the equity holders first receiving a threshold return on their initial investment. Additionally, on January 31, 2017, the Company completed the sale of its power generation, motors and drives business for approximately $1.2 billion, subject to post-closing adjustments.
|
The financial results of the network power systems and power generation, motors and drives businesses reported as discontinued operations for the threenine months ended December 31, 2016 were as follows:
|
| | | |
| Three Months Ended Dec 31, 2016 |
| |
Net sales | $ | 940 |
|
Cost of sales | 626 |
|
SG&A | 242 |
|
Other (income) deductions, net | (421 | ) |
Earnings (Loss) before income taxes | 493 |
|
Income taxes | 548 |
|
Earnings (Loss), net of tax | $ | (55 | ) |
Discontinued operations for the first quarter of 2017June 30, 2022 included a loss of $55, consisting$162 related to the Company's exit of net earnings frombusiness operations of $14, an after-tax gain on the divestiture of the network power systems business of $86 ($465 pretax), income tax expense of$144 for repatriation of sales proceeds,in Russia and a loss of $38 to write down$47 for the power generation, motors and drives business to the sales price less cost to sell, and lower expense of $27 due to ceasing depreciationnine months ended June 30, 2023.
Depreciation and amortization for the discontinued businesses held-for-sale.(includes intellectual property, customer relationships and capitalized software) by business segment are summarized below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Nine Months Ended June 30, |
| | 2022 | | | 2023 | | | | 2022 | | | 2023 | |
Final Control | | $ | 53 | | | 39 | | | | 156 | | | 129 | |
Measurement & Analytical | | 27 | | | 26 | | | | 88 | | | 84 | |
Discrete Automation | | 22 | | | 20 | | | | 67 | | | 63 | |
Safety & Productivity | | 15 | | | 15 | | | | 44 | | | 44 | |
Intelligent Devices | | 117 | | | 100 | | | | 355 | | | 320 | |
| | | | | | | | | |
Control Systems & Software | | 24 | | | 22 | | | | 71 | | | 67 | |
AspenTech | | 72 | | | 123 | | | | 119 | | | 369 | |
Software and Control | | 96 | | | 145 | | | | 190 | | | 436 | |
| | | | | | | | | |
Corporate and other | | 9 | | | 12 | | | | 26 | | | 24 | |
Total | | $ | 222 | | | 257 | | | | 571 | | | 780 | |
Net cash from operating and investing activities for the network power systems and power generation, motors and drives businesses for the three months ended December 31, 2016 were as follows: |
| | | | |
| | Three Months Ended Dec 31, 2016 |
| | |
Cash from operating activities | | $ | (172 | ) |
Cash from investing activities | | $ | 3,894 |
|
Operating cash flow used by discontinued operations of $172 for the three months ended December 31, 2016 included payments of $139 for income taxes and fees related to the transactions.
Sales by geographic destination, Americas, Asia, Middle East & Africa ("AMEA") and Europe, are summarized below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Three Months Ended June 30, |
| 2022 | | 2023 |
| | Americas | | AMEA | | Europe | | Total | | Americas | | AMEA | | Europe | | Total |
Final Control | | $ | 434 | | | 338 | | | 133 | | | 905 | | | 498 | | | 399 | | | 138 | | | 1,035 | |
Measurement & Analytical | | 397 | | | 274 | | | 117 | | | 788 | | | 482 | | | 303 | | | 128 | | | 913 | |
Discrete Automation | | 320 | | | 150 | | | 163 | | | 633 | | | 312 | | | 180 | | | 176 | | | 668 | |
Safety & Productivity | | 270 | | | 20 | | | 70 | | | 360 | | | 269 | | | 18 | | | 76 | | | 363 | |
Intelligent Devices | | 1,421 | | | 782 | | | 483 | | | 2,686 | | | 1,561 | | | 900 | | | 518 | | | 2,979 | |
| | | | | | | | | | | | | | | | |
Control Systems & Software | | 289 | | | 166 | | | 113 | | | 568 | | | 322 | | | 207 | | | 134 | | | 663 | |
AspenTech | | 131 | | | 50 | | | 58 | | | 239 | | | 111 | | | 104 | | | 105 | | | 320 | |
Software and Control | | 420 | | | 216 | | | 171 | | | 807 | | | 433 | | | 311 | | | 239 | | | 983 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total | | $ | 1,841 | | | 998 | | | 654 | | | 3,493 | | | 1,994 | | | 1,211 | | | 757 | | | 3,962 | |
| | | | | | | | | | | | | | | | |
| Nine Months Ended June 30, | | Nine Months Ended June 30, |
| 2022 | | 2023 |
| | Americas | | AMEA | | Europe | | Total | | Americas | | AMEA | | Europe | | Total |
Final Control | | $ | 1,197 | | | 1,012 | | | 397 | | | 2,606 | | | 1,438 | | | 1,069 | | | 382 | | | 2,889 | |
Measurement & Analytical | | 1,069 | | | 865 | | | 360 | | | 2,294 | | | 1,333 | | | 853 | | | 364 | | | 2,550 | |
Discrete Automation | | 890 | | | 504 | | | 500 | | | 1,894 | | | 914 | | | 539 | | | 516 | | | 1,969 | |
Safety & Productivity | | 801 | | | 52 | | | 213 | | | 1,066 | | | 777 | | | 51 | | | 206 | | | 1,034 | |
Intelligent Devices | | 3,957 | | | 2,433 | | | 1,470 | | | 7,860 | | | 4,462 | | | 2,512 | | | 1,468 | | | 8,442 | |
| | | | | | | | | | | | | | | | |
Control Systems & Software | | 839 | | | 514 | | | 358 | | | 1,711 | | | 930 | | | 578 | | | 384 | | | 1,892 | |
AspenTech | | 233 | | | 85 | | | 87 | | | 405 | | | 337 | | | 228 | | | 228 | | | 793 | |
Software and Control | | 1,072 | | | 599 | | | 445 | | | 2,116 | | | 1,267 | | | 806 | | | 612 | | | 2,685 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total | | $ | 5,029 | | | 3,032 | | | 1,915 | | | 9,976 | | | 5,729 | | | 3,318 | | | 2,080 | | | 11,127 | |
Items 2 and 3.
Management's Discussion and Analysis of Financial Condition and Results of Operations
(Dollars are in millions, except per share amounts or where noted)
OVERVIEW
Net sales
On April 12, 2023, Emerson announced an agreement to acquire National Instruments Corporation ("NI") for $60 per share in cash at an equity value of $8.2 billion. The effective price per share is $59.61 considering shares previously acquired by Emerson, see Note 12. NI, which provides software-connected automated test and measurement systems that enable enterprises to bring products to market faster and at a lower cost, had revenues of $1.66 billion in 2022. On June 29, 2023, NI's shareholders voted to approve the proposed transaction and it is expected to close in the first half of Emerson’s fiscal 2024, subject to the completion of customary closing conditions and regulatory approvals.
On May 31, 2023, the Company completed the previously announced sale of a majority stake in its Climate Technologies business (which constitutes the former Climate Technologies segment, excluding Therm-O-Disc which was divested earlier in fiscal 2022) to private equity funds managed by Blackstone in a $14.0 billion transaction. The Company recognized a pretax gain of approximately $10.6 billion (approximately $8.4 billion after-tax including tax expense recognized in prior quarters related to subsidiary restructurings). The new standalone business is named Copeland. See Notes 5 and 10 for further details.
On October 31, 2022, the Company completed the divestiture of its InSinkErator business, which manufactures food waste disposers, to Whirlpool Corporation for $3.0 billion, and the Company recognized a pretax gain of approximately $2.8 billion (approximately $2.1 billion after-tax) in the first quarter of 2018fiscal 2023.
Climate Technologies, Therm-O-Disc and InSinkErator are reported within discontinued operations for all periods presented. See Note 5.
On May 16, 2022, the Company completed the transactions contemplated by its definitive agreement with Aspen Technology, Inc. ("Heritage AspenTech") to contribute two of Emerson's stand-alone industrial software businesses, Open Systems International, Inc. and the Geological Simulation Software business, along with approximately $6.0 billion in cash to Heritage AspenTech stockholders, to create "New AspenTech" (defined as "AspenTech" herein). Upon closing of the transaction, Emerson owned 55 percent of the outstanding shares of AspenTech common stock (on a fully diluted basis). See Note 4. Due to the timing of the acquisition in the prior year, the results for the first half of fiscal 2022 do not include the results of Heritage AspenTech.
For the third quarter of fiscal 2023, net sales from continuing operations were $3.8$3.9 billion, up 1914 percent supported by acquisitions, net of a divestiture, which added 9 percent.compared with the prior year. Underlying sales, increased 7which exclude foreign currency translation, acquisitions and divestitures, were up 14 percent. Foreign currency translation had a 1 percent reflecting improving trends in energy-related unfavorable impact, the AspenTech acquisition added 2 percent and general industrial markets, while HVACthe divestiture of Metran, Emerson's Russia-based manufacturing subsidiary, deducted 1 percent. Sales growth was strong across the majority of the Company's business segments and refrigeration markets remained favorable.all geographies were up double digits.
Earnings from continuing operations attributable to common stockholders were $392 million,$592, up 8162 percent, compared with $364 million in 2017, and diluted earnings per share from continuing operations were $0.61,$1.03, up 9171 percent compared with $0.56$0.38 in 2017. Net earnings common stockholders were $392 million, up 27 percent, andthe prior year. Adjusted diluted earnings per share from continuing operations were $0.61, up 27 percent, reflecting the impact of discontinued operations$1.29 compared with $0.92 in the prior year.year, reflecting the strong sales growth and operating performance.
The table below presents the Company's diluted earnings per share from continuing operations on an adjusted basis to facilitate period-to-period comparisons and provide additional insight into the underlying, ongoing operating performance of the Company. Adjusted diluted earnings per share from continuing operations excludes intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction-related costs, interest income on undeployed proceeds related to the Copeland transaction, gains or losses on the Copeland equity method investment, and certain gains, losses or impairments.
| | | | | | | | | | | | | | | | | | | | |
Three Months Ended June 30 | | | | 2022 | | 2023 |
| | | | | | |
Diluted earnings from continuing operations per share | | | | $ | 0.38 | | | 1.03 | |
| | | | | | |
Amortization of intangibles | | | | 0.12 | | | 0.15 | |
Restructuring and related costs | | | | 0.04 | | | 0.02 | |
Acquisition/divestiture costs and pre-acquisition interest on AspenTech debt | | | | 0.09 | | | 0.07 | |
National Instruments investment gain | | | | — | | | (0.02) | |
Interest income on undeployed proceeds from Copeland transaction | | | | — | | | (0.05) | |
Loss on Copeland equity method investment | | | | — | | | 0.09 | |
Russia business exit | | | | 0.29 | | | — | |
| | | | | | |
Adjusted diluted earnings from continuing operations per share | | | | $ | 0.92 | | | 1.29 | |
The table below summarizes the changes in adjusted diluted earnings per share from continuing operations. The items identified below are discussed throughout MD&A, see further discussion above and in the Business Segments and Financial Position sections below.
| | | | | | | | |
| | Three Months Ended |
Adjusted diluted earnings from continuing operations per share - June 30, 2022 | | $ | 0.92 | |
| | |
Operations | | 0.29 | |
Corporate & other | | 0.03 | |
Stock compensation | | (0.06) | |
Pensions | | 0.02 | |
Effective tax rate | | 0.03 | |
Share count | | 0.04 | |
Interest income on Copeland note receivable | | 0.02 | |
| | |
Adjusted diluted earnings from continuing operations per share - June 30, 2023 | | $ | 1.29 | |
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30
Following is an analysis of the Company’s operating results for the firstthird quarter ended December 31, 2017,June 30, 2022, compared with the firstthird quarter ended December 31, 2016.June 30, 2023. | | | | | | | | | | | | | | | | | |
| 2022 | | 2023 | | Change |
(dollars in millions, except per share amounts) | | | | | |
| | | | | |
Net sales | $ | 3,465 | | | 3,946 | | | 14 | % |
Gross profit | $ | 1,586 | | | 1,994 | | | 26 | % |
Percent of sales | 45.8 | % | | 50.5 | % | | 4.7 pts |
| | | | | |
SG&A | $ | 894 | | | 1,042 | | | 16 | % |
Percent of sales | 25.8 | % | | 26.4 | % | | 0.6 pts |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Other deductions, net | $ | 264 | | | 191 | | | |
Amortization of intangibles | $ | 93 | | | 120 | | | |
Restructuring costs | $ | 29 | | | 12 | | | |
| | | | | |
Interest expense, net | $ | 50 | | | 10 | | | |
Interest income from related party | $ | — | | | (10) | | | |
| | | | | |
Earnings from continuing operations before income taxes | $ | 378 | | | 761 | | | 101 | % |
Percent of sales | 10.9 | % | | 19.3 | % | | 8.4 pts |
Earnings from continuing operations common stockholders | $ | 226 | | | 592 | | | 162 | % |
Percent of sales | 6.5 | % | | 15.1 | % | | 8.6 pts |
Net earnings common stockholders | $ | 921 | | | 9,352 | | | 914 | % |
| | | | | |
| | | | | |
Diluted EPS - Earnings from continuing operations | $ | 0.38 | | | 1.03 | | | 171 | % |
Diluted EPS - Net earnings | $ | 1.54 | | | 16.28 | | | 957 | % |
| | | | | |
|
| | | | | | | | | |
Three Months Ended Dec 31 | 2016 | | 2017 | | Change |
(dollars in millions, except per share amounts) | |
| | |
| | |
| | | | | |
Net sales | $ | 3,216 |
| | 3,816 |
| | 19 | % |
Gross profit | $ | 1,365 |
| | 1,621 |
| | 19 | % |
Percent of sales | 42.4 | % | | 42.5 | % | | |
|
| | | | | |
SG&A | $ | 822 |
| | 992 |
| | |
|
Percent of sales | 25.5 | % | | 26.0 | % | | |
|
Other deductions, net | $ | 33 |
| | 88 |
| | |
|
Interest expense, net | $ | 46 |
| | 38 |
| | |
|
| | | | | |
Earnings from continuing operations before income taxes | $ | 464 |
| | 503 |
| | 9 | % |
Percent of sales | 14.4 | % | | 13.2 | % | | |
|
Earnings from continuing operations common stockholders | $ | 364 |
| | 392 |
| | 8 | % |
Net earnings common stockholders | $ | 309 |
| | 392 |
| | 27 | % |
Percent of sales | 9.6 | % | | 10.3 | % | | |
|
| | | | | |
Diluted EPS - Earnings from continuing operations | $ | 0.56 |
| | 0.61 |
| | 9 | % |
Diluted EPS - Net earnings | $ | 0.48 |
| | 0.61 |
| | 27 | % |
Net sales for the firstthird quarter of 2018fiscal 2023 were $3.8$3.9 billion, an increase of $600 millionup 14 percent compared with $3.2 billion in 2017.2022. Intelligent Devices sales were up 11 percent, while Software and Control sales were up 22 percent, which included the impact of the Heritage AspenTech acquisition. Underlying sales increased 7were up 14 percent ($229 million) on 9 percent higher volume. Acquisitions added 12volume and 5 percent ($373 million) and foreignhigher price. Foreign currency translation had a 1 percent negative impact, the Heritage AspenTech acquisition added 32 percent ($75 million), whileand the divestiture of the residential storage business subtracted 3 percent ($77 million).Metran, Emerson's Russia-based manufacturing subsidiary, deducted 1 percent. Underlying sales increased 8were up 10 percent in the U.S. and 7up 17 percent internationally. AsiaThe Americas was up 1511 percent, Europe was up 13 percent, and Asia, Middle East & Africa was up 20 percent (China up 2324 percent), while sales in Europe were flat. Canada increased 14 percent and Latin America increased 4 percent. Middle East/Africa was down 5 percent. Sales increased $605 million in Automation Solutions, supported by acquisitions and broad-based demand across energy-related and general industrial markets. Commercial & Residential Solutions sales were flat, as favorable demand in global HVAC and refrigeration markets was offset by the divestiture of the residential storage business..
Cost of sales for the firstthird quarter of 2018fiscal 2023 were $2.2 billion,$1,952, an increase of $344 million$73 compared with $1.9 billion in 2017, primarily due to acquisitions, higher volume and the impact of foreign currency translation.2022. Gross margin improved slightly to 42.5of 50.5 percent reflecting leverage on higher volume, savings from cost reduction actions and favorable mix, largely offset by dilution of 1.6increased 4.7 percentage points due to favorable price less net material inflation, the valves & controls operationsimpact of the Heritage AspenTech acquisition which benefited margins by 0.6 percentage points, and first year acquisition accounting charges of $10 million related to inventory.favorable mix.
Selling, general and administrative (SG&A) expensesexpenses of $992 million$1,042 increased $170 million$148 and SG&A as a percent of sales increased 0.6 percentage points to 26.4 percent compared with the prior year, primarilyreflecting higher stock compensation expense due to acquisitionsa higher share price and an increase in volume. SG&A as a percentthe impact of sales increased 0.5 percentage points to 26.0 percent, reflecting higher incentive stock compensation of $40 million due to an increase in the Company's stock price,Heritage AspenTech acquisition, partially offset by strong operating leverage on the higher volume.sales.
Other deductions, net were $88 million$191 in 2018, an increase2023, a decrease of $55 million$73 compared with the prior year. The prior year largely due to higher intangibles amortizationincluded a charge of $19 million and backlog amortization of $15 million, primarily$130 related to the valves & controls acquisition, and unfavorable foreign currency transactionsCompany exiting its business in Russia ($9 of $22 million. which is reported in restructuring costs) while the current year included a loss of $61 on the Company's equity method investment in Copeland. See Note 8.7 and Note 10.
Pretax earnings from continuing operations of $503 million$761 increased $39 million, or 9 percent.$383, up 101 percent compared with the prior year, reflecting strong operating leverage on higher sales. Earnings increased $60 million$185 in Automation SolutionsIntelligent Devices and $3 millionincreased $37 in Commercial & Residential Solutions. See Note 10Software and Control, see the following Business Segments discussion.discussion that follows and Note 14.
On December 22, 2017, the U.S. government enacted tax reform, the Tax Cuts and Jobs Act (the "Act"), which made comprehensive changes to federal income tax laws by moving from a global to a modified territorial tax regime. The Act includes a reduction of the U.S. corporate income tax rate from 35 percent to 21 percent along with the elimination of certain deductions and credits, and a one-time “deemed repatriation” of accumulated foreign earnings. In the first quarter, the Company recognized a net tax benefit of $43 million ($0.07 per share) due to impacts of the Act, consisting of a $98 million benefit on revaluation of net deferred income tax liabilities to the lower tax rate, and $185 million of expense for the tax on deemed repatriation of accumulated foreign earnings and withholding taxes partially offset by $130 million accrued in previous periods for the planned repatriation of non-U.S. cash. Given the complexities associated with the Act, the ultimate effects on repatriation cost and other tax items may differ materially from these provisional amounts due to additional regulatory guidance that may be issued and further evaluation of the Company’s actions, assumptions and interpretations.
Income taxes were $109 million for 2018$158 in the third quarter of fiscal 2023 and $94 million for 2017,$123 in 2022, resulting in effective tax rates of 2221 percent and 2033 percent, respectively. The effective taxprior year rate forreflected a 12 percentage point impact from the first quarter of 2017 included a $47 million ($0.07 per share) income tax benefit from restructuring a foreign subsidiary. The effective tax rate for full year 2018 is currently expected to be approximately 25 to 27 percent. In 2019 and thereafter, the tax rate is expected to be approximately 25 percent.Russia business exit.
Earnings from continuing operations attributable to common stockholders were $392 million,$592, up 8162 percent, and diluted earnings per share from continuing operations were $0.61,$1.03, up 9 percent. Earnings per share include a $0.03 per share benefit from171 percent compared with $0.38 in the lower corporate federal income tax rate on first quarter earnings. In addition, results include the $0.07 per share net benefit of the tax law change, offset by a $(0.04) per share loss on the residential storage divestiture and $0.03prior year. Adjusted diluted earnings per share from firstcontinuing operations were $1.29 compared with $0.92 in the prior year, acquisition accounting charges.reflecting strong operating results. See the analysis above of adjusted earnings per share for further details.
Earnings from discontinued operations were $8,760 ($15.25 per share) compared to $695 ($1.16 per share) in the prior year, reflecting the gain on the Copeland transaction. See Note 5.
Net earnings common stockholders in the firstthird quarter of 2018fiscal 2023 were $392 million, up 27 percent,$9,352 compared with $309 million$921 in the prior year, and earnings per share were $0.61, up 27 percent,$16.28 compared with $0.48$1.54 in 2017. Resultsthe prior year.
The table below, which shows results from continuing operations on an adjusted EBITA basis, is intended to supplement the Company's discussion of its results of operations herein. The Company defines adjusted EBITA as earnings from continuing operations excluding interest expense, net, income taxes, intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction-related costs, gains or losses on the Copeland equity method investment, and certain gains, losses or impairments. Adjusted EBITA and adjusted EBITA margin are measures used by management and may be useful for 2017 includedinvestors to evaluate the impact of discontinued operations, which was a net loss of $55 million ($0.08 per share). See Note 12.Company's operational performance.
| | | | | | | | | | | | | | | | | |
Three Months Ended June 30 | 2022 | | 2023 | | Change |
| | | | | |
Earnings from continuing operations before income taxes | $ | 378 | | | 761 | | | 101 | % |
Percent of sales | 10.9 | % | | 19.3 | % | | 8.4 pts |
Interest expense, net | 50 | | | 10 | | | |
Interest income from related party | — | | | (10) | | | |
Amortization of intangibles | 119 | | | 169 | | | |
Restructuring and related costs | 31 | | | 13 | | | |
Acquisition/divestiture costs | 61 | | | 38 | | | |
National Instruments investment gain | — | | | (12) | | | |
Loss on Copeland equity method investment | — | | | 61 | | | |
Russia business exit | 162 | | | — | | | |
AspenTech Micromine purchase price hedge gain | — | | | (3) | | | |
Adjusted EBITA from continuing operations | $ | 801 | | | 1,027 | | | 28 | % |
Percent of sales | 23.1 | % | | 26.0 | % | | 2.9 pts |
Business Segments
Following is an analysis of operating results for the Company’s business segments for the firstthird quarter ended December 31, 2017,June 30, 2022, compared with the firstthird quarter ended December 31, 2016.June 30, 2023. The Company defines segment earnings as earnings before interest and taxes. See Notes 1 and 10Note 14 for a discussion of the Company's business segments.
AUTOMATION SOLUTIONSINTELLIGENT DEVICES
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | 2023 | | Change | | FX | | Acq/Div | | U/L |
| | | | | | | | | | | |
| | | | | | | | | | | |
Sales: | | | | | | | | | | | |
Final Control | $ | 905 | | | 1,035 | | | 14 | % | | 1 | % | | 1 | % | | 16 | % |
Measurement & Analytical | 788 | | | 913 | | | 16 | % | | 1 | % | | 3 | % | | 20 | % |
Discrete Automation | 633 | | | 668 | | | 6 | % | | — | % | | — | % | | 6 | % |
Safety & Productivity | 360 | | | 363 | | | 1 | % | | (1) | % | | — | % | | — | % |
Total | $ | 2,686 | | | 2,979 | | | 11 | % | | 1 | % | | 1 | % | | 13 | % |
| | | | | | | | | | | |
Earnings: | | | | | | | | | | | |
Final Control | $ | 150 | | | 245 | | | 63 | % | | | | | | |
Measurement & Analytical | 189 | | | 257 | | | 36 | % | | | | | | |
Discrete Automation | 115 | | | 124 | | | 8 | % | | | | | | |
Safety & Productivity | 69 | | | 82 | | | 18 | % | | | | | | |
Total | $ | 523 | | | 708 | | | 35 | % | | | | | | |
Margin | 19.5 | % | | 23.7 | % | | 4.2 pts | | | | | | |
| | | | | | | | | | | |
Amortization of intangibles: | | | | | | | | | | | |
Final Control | $ | 23 | | | 22 | | | | | | | | | |
Measurement & Analytical | 4 | | | 5 | | | | | | | | | |
Discrete Automation | 8 | | | 8 | | | | | | | | | |
Safety & Productivity | 7 | | | 7 | | | | | | | | | |
Total | $ | 42 | | | 42 | | | | | | | | | |
| | | | | | | | | | | |
Restructuring and related costs: | | | | | | | | | | | |
Final Control | $ | 18 | | | (1) | | | | | | | | | |
Measurement & Analytical | 4 | | | 1 | | | | | | | | | |
Discrete Automation | 1 | | | 12 | | | | | | | | | |
Safety & Productivity | (1) | | | (1) | | | | | | | | | |
Total | $ | 22 | | | 11 | | | | | | | | | |
| | | | | | | | | | | |
Adjusted EBITA | $ | 587 | | | 761 | | | 29 | % | | | | | | |
Adjusted EBITA Margin | 21.9 | % | | 25.5 | % | | 3.6 pts | | | | | | |
|
| | | | | | | | | |
Three Months Ended Dec 31 | 2016 | | 2017 | | Change |
(dollars in millions) | | | | | |
| | | | | |
Sales | $ | 1,967 |
| | 2,572 |
| | 31 | % |
Earnings | $ | 326 |
| | 386 |
| | 18 | % |
Margin | 16.6 | % | | 15.0 | % | | |
|
|
| | | | | | | | | |
Sales by Major Product Offering | | | | | |
Measurement & Analytical Instrumentation | $ | 682 |
| | 772 |
| | 13 | % |
Valves, Actuators & Regulators | 449 |
| | 867 |
| | 93 | % |
Industrial Solutions | 367 |
| | 424 |
| | 15 | % |
Process Control Systems & Solutions | 469 |
| | 509 |
| | 9 | % |
Total | $ | 1,967 |
| | 2,572 |
| | 31 | % |
Automation SolutionsIntelligent Devices sales were $2.6$3.0 billion in the firstthird quarterof 2023, an increase of $605 million,$293, or 3111 percent. Underlying sales increased 913 percent ($176 million) on 8 percent higher volume. Acquisitions addedvolume and 5 percent higher price. Underlying sales increased 10 percent in the Americas, Europe increased 11 percent and Asia, Middle East & Africa was up 19 percent ($373 million)(China up 20 percent). Final Control sales increased $130, or 14 percent, while underlying sales were up 16 percent, reflecting strength in energy and foreign currency translation had a 3 percent ($56 million) favorable impact.chemical end markets, with broad-based strength across geographies. Sales for Measurement & Analytical Instrumentation increased 13$125, or 16 percent, and Processunderlying sales were up 20 percent, reflecting robust growth in all geographies due to strong demand across industries and backlog conversion. Discrete Automation sales increased $35, or 6 percent due to higher price and slightly higher volume, reflecting moderating demand, particularly in the Americas and Europe. Safety & Productivity sales increased $3, or 1 percent, and underlying sales were flat, reflecting softening global demand offset by higher price. Earnings for Intelligent Devices were $708, an increase of $185, or 35 percent, and margin increased 4.2 percentage points to 23.7 percent, reflecting favorable price less net material inflation and leverage on higher sales, partially offset by wage and other inflation. Adjusted EBITA margin was 25.5 percent, an increase of 3.6 percentage points.
SOFTWARE AND CONTROL
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | 2023 | | Change | | FX | | Acq/Div | | U/L |
| | | | | | | | | | | |
| | | | | | | | | | | |
Sales: | | | | | | | | | | | |
Control Systems & Software | $ | 568 | | | 663 | | | 17 | % | | 1 | % | | 1 | % | | 19 | % |
AspenTech | 239 | | | 320 | | | 34 | % | | — | % | | 34 | % | | — | % |
Total | $ | 807 | | | 983 | | | 22 | % | | — | % | | (3) | % | | 19 | % |
| | | | | | | | | | | |
Earnings: | | | | | | | | | | | |
Control Systems & Software | $ | 77 | | | 144 | | | 89 | % | | | | | | |
AspenTech | 57 | | | 27 | | | (54) | % | | | | | | |
Total | $ | 134 | | | 171 | | | 28 | % | | | | | | |
Margin | 16.5 | % | | 17.4 | % | | 0.9 pts | | | | | | |
| | | | | | | | | | | |
Amortization of intangibles: | | | | | | | | | | | |
Control Systems & Software | $ | 6 | | | 6 | | | | | | | | | |
AspenTech | 71 | | | 121 | | | | | | | | | |
Total | $ | 77 | | | 127 | | | | | | | | | |
| | | | | | | | | | | |
Restructuring and related costs: | | | | | | | | | | | |
Control Systems & Software | $ | 7 | | | 1 | | | | | | | | | |
AspenTech | 1 | | | — | | | | | | | | | |
Total | $ | 8 | | | 1 | | | | | | | | | |
| | | | | | | | | | | |
Adjusted EBITA | $ | 219 | | | 299 | | | 38 | % | | | | | | |
Adjusted EBITA Margin | 27.0 | % | | 30.4 | % | | 3.4 pts | | | | | | |
Software and Control sales were $983 in the third quarter of 2023, an increase of $176, or 22 percent compared to the prior year, reflecting the impact of the Heritage AspenTech acquisition and strong growth in Control Systems & Solutions increased 9Software. Underlying sales were up 19 percent on increased spending by global oil16 percent higher volume and gas customers, strong MRO demand and growth of small and mid-sized projects focused on facility expansion and optimization. Valves, Actuators & Regulators increased $418 million, or 933 percent led by the valves & controls acquisition ($349 million) and broad-based demand across end markets, including energy, chemical and life sciences. Industrial Solutionshigher price. Underlying sales increased $57 million,12 percent in the Americas, 23 percent in Europe and 28 percent in Asia, Middle East & Africa (China up 48 percent). Control Systems & Software sales increased $95, or 1517 percent, drivenwhile underlying sales increased 19 percent, reflecting robust global demand in process end markets. AspenTech sales increased $81, or 34 percent, due to the acquisition of Heritage AspenTech. Earnings for Software and Control increased $37, up 28 percent, and margin increased 0.9 percentage points, which included the impact from $50 of incremental intangibles amortization related to the Heritage AspenTech acquisition. Adjusted EBITA margin increased 3.4 percentage points, reflecting leverage on higher sales and favorable mix, partially offset by favorable global trends in general industrial end markets.inflation and unfavorable foreign currency transactions.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30
Following is an analysis of the Company’s operating results for the nine months ended June 30, 2022, compared with the nine months ended June 30, 2023. | | | | | | | | | | | | | | | | | |
| 2022 | | 2023 | | Change |
(dollars in millions, except per share amounts) | | | | | |
| | | | | |
Net sales | $ | 9,912 | | | 11,075 | | | 12 | % |
Gross profit | $ | 4,477 | | | 5,415 | | | 21 | % |
Percent of sales | 45.2 | % | | 48.9 | % | | 3.7 pts |
| | | | | |
SG&A | $ | 2,631 | | | 3,072 | | | 17 | % |
Percent of sales | 26.6 | % | | 27.7 | % | | 1.1 pts |
| | | | | |
Gain on subordinated interest | $ | (453) | | | — | | | |
Other deductions, net | $ | 330 | | | 420 | | | |
Amortization of intangibles | $ | 207 | | | 357 | | | |
Restructuring costs | $ | 44 | | | 41 | | | |
| | | | | |
Interest expense, net | $ | 140 | | | 111 | | | |
Interest income from related party | $ | — | | | (10) | | | |
| | | | | |
Earnings from continuing operations before income taxes | $ | 1,829 | | | 1,822 | | | — | % |
Percent of sales | 18.5 | % | | 16.5 | % | | (2.0) pts |
Earnings from continuing operations common stockholders | $ | 1,400 | | | 1,451 | | | 4 | % |
Percent of sales | 14.1 | % | | 13.1 | % | | (1.0) pts |
Net earnings common stockholders | $ | 2,491 | | | 12,475 | | | 401 | % |
| | | | | |
Diluted EPS - Earnings from continuing operations | $ | 2.34 | | | 2.51 | | | 7 | % |
Diluted EPS - Net earnings | $ | 4.17 | | | 21.56 | | | 417 | % |
Net sales for the first nine months of 2023 were $11.1 billion, up 12 percent compared with 2022. Intelligent Devices sales were up 7 percent, while Software and Control sales were up 27 percent, which included the impact of the Heritage AspenTech acquisition. Underlying sales were up 12 percent on 7 percent higher volume and 5 percent higher price. Foreign currency translation subtracted 3 percent, the Heritage AspenTech acquisition added 4 percent and the divestiture of Metran deducted 1 percent. Underlying sales increased 1413 percent in the U.S. and increased 11 percent internationally. The Americas was up 13 percent, Europe was up 10 percent and Asia, Middle East & Africa was up 11 percent (China was up 7 percent).
Cost of sales for 2023 were $5,660, an increase of $225 versus $5,435 in 2022. Gross margin of 48.9 percent increased 3.7 percentage points due to favorable price less net material inflation, the impact of the Heritage AspenTech acquisition which benefited margins by 0.9 percentage points, and favorable mix.
SG&A expenses of $3,072 increased $441 and SG&A as a percent of sales increased 1.1 percentage points to 27.7 percent, reflecting the Heritage AspenTech acquisition and higher stock compensation expense of $106, of which $55 related to Emerson stock plans due to a decreasing stock price in the prior year compared to an increasing stock price in the current year, and $51 was attributable to AspenTech stock plans. These items were partially offset by strong operating leverage on higher sales.
In the first quarter of fiscal 2022, the Company received a distribution of $438 related to its subordinated interest in Vertiv (in total, a pretax gain of $453 was recognized in the first quarter of fiscal 2022, $358 after-tax, $0.60 per share) and received the remaining $15 related to the pretax gain in the first quarter of fiscal 2023. Based on the terms of the agreement and the current calculation, the Company could receive additional distributions of approximately $150 which are expected to be received over the next two-to-three years. However, the distributions are contingent on the timing and price at which Vertiv shares are sold by the equity holders and therefore, there can be no assurance as to the amount or timing of the remaining distributions to the Company.
Other deductions, net were $420 in 2023, an increase of $90 compared with the prior year, reflecting higher intangibles amortization of $150 primarily related to the Heritage AspenTech acquisition, a loss of $61 on the Company's equity method investment in Copeland, and an unfavorable impact from foreign currency transactions of $103 reflecting losses in the current year compared to gains in the prior year. The prior year included a charge of $130 related to the Company exiting its business in Russia ($9 of which is reported in restructuring costs) compared to a charge of $47 in the current year. The current year also included a mark-to-market gain of $47 on the Company's equity investment in NI and a mark-to-market gain of $24 related to foreign currency forward contracts entered into by AspenTech to mitigate the impact of foreign currency exchange associated with the Micromine purchase price. On June 21, 2023, AspenTech terminated all outstanding foreign currency forward contracts. See Note 7.
Pretax earnings from continuing operations of $1,822 decreased 1$7 largely due to the Vertiv gain discussed above offset by strong operating results in the current year. Earnings increased $362 in Intelligent Devices and decreased $27 in Software and Control (reflecting the impact of higher intangibles amortization due to the Heritage AspenTech acquisition), see the Business Segments discussion that follows and Note 14.
Income taxes were $390 for the first nine months of 2023 and $399 for 2022, resulting in effective tax rates of 21 percent and 22 percent, respectively. The prior year rate reflected the impact of the Russia business exit which was essentially offset by a benefit related to the completion of tax examinations.
Earnings from continuing operations attributable to common stockholders were $1,451, up 4 percent compared with the prior year, and diluted earnings per share from continuing operations were $2.51, up 7 percent compared with $2.34 in Europe. Sales2022. The prior year included a $0.60 gain related to the Company's subordinated interest in Vertiv. Adjusted diluted earnings per share from continuing operations were $3.15 compared with $2.57 in the prior year, reflecting strong operating results. See the analysis below of adjusted earnings per share for further details.
Earnings from discontinued operations were $11,024 ($19.05 per share) which included the $8.4 billion after-tax gain on the Copeland transaction and the $2.1 billion after-tax gain on the divestiture of InSinkErator, compared to $1,091 ($1.83 per share) in the prior year. See Note 5.
Net earnings common stockholders were $12,475 ($21.56 per share) compared with $2,491 ($4.17 per share) in the prior year.
The table below presents the Company's diluted earnings per share on an adjusted basis to facilitate period-to-period comparisons and provide additional insight into the underlying, ongoing operating performance of the Company.
| | | | | | | | | | | | | | | | | | | | |
Nine Months Ended June 30 | | | | 2022 | | 2023 |
| | | | | | |
Diluted earnings from continuing operations per share | | | | $ | 2.34 | | | 2.51 | |
| | | | | | |
Amortization of intangibles | | | | 0.30 | | | 0.46 | |
Restructuring and related costs | | | | 0.08 | | | 0.07 | |
Acquisition/divestiture costs and pre-acquisition interest on AspenTech debt | | | | 0.16 | | | 0.07 | |
Gain on subordinated interest | | | | (0.60) | | | — | |
National Instruments investment gain | | | | — | | | (0.06) | |
AspenTech Micromine purchase price hedge gain | | | | — | | | (0.02) | |
Interest income on undeployed proceeds from Copeland transaction | | | | — | | | (0.05) | |
Loss on Copeland equity method investment | | | | — | | | 0.09 | |
Russia business exit charge | | | | 0.29 | | | 0.08 | |
| | | | | | |
Adjusted diluted earnings from continuing operations per share | | | | $ | 2.57 | | | 3.15 |
The table below summarizes the changes in adjusted diluted earnings per share. The items identified below are discussed throughout MD&A, see further discussion above and in the Business Segments and Financial Position sections below.
| | | | | | | | |
| | Nine Months Ended |
Adjusted diluted earnings from continuing operations per share - June 30, 2022 | | $ | 2.57 | |
| | |
Operations | | 0.68 | |
Corporate and other | | 0.03 | |
Stock compensation | | (0.13) | |
Foreign currency | | (0.10) | |
Pensions | | 0.06 | |
Effective tax rate | | (0.03) | |
Interest expense, net | | (0.03) | |
Share count | | 0.08 | |
Interest income on Copeland note receivable | | 0.02 | |
| | |
Adjusted diluted earnings from continuing operations per share - June 30, 2023 | | $ | 3.15 | |
The table below, which shows results on an adjusted EBITA basis, is intended to supplement the Company's discussion of its results of operations herein.
| | | | | | | | | | | | | | | | | |
Nine Months Ended June 30 | 2022 | | 2023 | | Change |
| | | | | |
Earnings from continuing operations before income taxes | $ | 1,829 | | | 1,822 | | | — | % |
Percent of sales | 18.5 | % | | 16.5 | % | | (2.0) pts |
Interest expense, net | 140 | | | 111 | | | |
Interest income from related party | — | | | (10) | | | |
Amortization of intangibles | 261 | | | 504 | | | |
Restructuring and related costs | 59 | | | 54 | | | |
Acquisition/divestiture costs | 91 | | | 48 | | | |
Gain on subordinated interest | (453) | | | — | | | |
National Instruments investment gain | — | | | (47) | | | |
AspenTech Micromine purchase price hedge gain | — | | | (24) | | | |
Loss on Copeland equity method investment | — | | | 61 | | | |
Russia business exit charge | 162 | | | 47 | | | |
Adjusted EBITA from continuing operations | $ | 2,089 | | | 2,566 | | | 23 | % |
Percent of sales | 21.1 | % | | 23.2 | % | | 2.1 pts |
Business Segments
Following is an analysis of operating results for the Company’s business segments for the nine months ended June 30, 2022, compared with the nine months ended June 30, 2023. The Company defines segment earnings as earnings before interest and taxes. As a result of the Company's portfolio transformation, the Company has realigned its business segments and now reports six segments and two business groups. See Note 14.
INTELLIGENT DEVICES
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2022 | | 2023 | | Change | | FX | | Acq/Div | | U/L | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Sales: | | | | | | | | | | | | |
Final Control | $ | 2,606 | | | 2,889 | | | 11 | % | | 3 | % | | 1 | % | | 15 | % | |
Measurement & Analytical | 2,294 | | | 2,550 | | | 11 | % | | 3 | % | | 2 | % | | 16 | % | |
Discrete Automation | 1,894 | | | 1,969 | | | 4 | % | | 3 | % | | — | % | | 7 | % | |
Safety & Productivity | 1,066 | | | 1,034 | | | (3) | % | | 1 | % | | — | % | | (2) | % | |
Total | $ | 7,860 | | | 8,442 | | | 7 | % | | 3 | % | | 1 | % | | 11 | % | |
| | | | | | | | | | | | |
Earnings: | | | | | | | | | | | | |
Final Control | $ | 424 | | | 618 | | | 46 | % | | | | | | | |
Measurement & Analytical | 535 | | | 661 | | | 24 | % | | | | | | | |
Discrete Automation | 365 | | | 378 | | | 4 | % | | | | | | | |
Safety & Productivity | 199 | | | 228 | | | 15 | % | | | | | | | |
Total | $ | 1,523 | | | 1,885 | | | 24 | % | | | | | | | |
Margin | 19.4 | % | | 22.3 | % | | 2.9 pts | | | | | | | |
| | | | | | | | | | | | |
Amortization of intangibles: | | | | | | | | | | | | |
Final Control | $ | 71 | | | 66 | | | | | | | | | | |
Measurement & Analytical | 15 | | | 15 | | | | | | | | | | |
Discrete Automation | 23 | | | 22 | | | | | | | | | | |
Safety & Productivity | 20 | | | 20 | | | | | | | | | | |
Total | $ | 129 | | | 123 | | | | | | | | | | |
| | | | | | | | | | | | |
Restructuring and related costs: | | | | | | | | | | | | |
Final Control | $ | 33 | | | 12 | | | | | | | | | | |
Measurement & Analytical | 9 | | | 2 | | | | | | | | | | |
Discrete Automation | 4 | | | 20 | | | | | | | | | | |
Safety & Productivity | — | | | 1 | | | | | | | | | | |
Total | $ | 46 | | | 35 | | | | | | | | | | |
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Adjusted EBITA | $ | 1,698 | | | 2,043 | | | 20 | % | | | | | | | |
Adjusted EBITA Margin | 21.6 | % | | 24.2 | % | | 2.6 pts | | | | | | | |
Intelligent Devices sales were $8.4 billion in the first nine months of 2023, an increase of $582, or 7 percent. Underlying sales increased 11 percent on 6 percent higher volume and 5 percent higher price. Underlying sales increased 13 percent in the Americas, Europe increased 9 percent, and Asia, Middle East & Africa was up 9 percent (China up 22 percent) supported by5 percent). Final Control sales increased $283, or 11 percent. Underlying sales were up 15 percent, reflecting strength in energy and chemical end markets, particularly in the Americas and Asia, Middle East & Africa, while Europe was up moderately. Sales for Measurement & Analytical increased $256, or 11 percent. Underlying sales were up 16 percent, reflecting robust growth in the Americas and Europe due to strong demand, while Asia, Middle East & Africa was up moderately due to softness in China. Discrete Automation sales increased $75, or 4 percent, while underlying sales increased 7 percent, reflecting strong demand in process automationAsia, Middle East & Africa and discrete markets,Europe, while Canadathe Americas was up 18modestly. Safety & Productivity sales decreased $32, or 3 percent, and Latin America wasunderlying sales decreased 2 percent, reflecting softness in the Americas while Europe and Asia, Middle East & Africa were up 6 percent. Sales decreased 7 percent in Middle East/Africa.slightly. Earnings for Intelligent Devices were $386 million,$1,885, an increase of $60 million,$362, or 18 percent. The increase was driven by24 percent, and margin increased 2.9 percentage points to 22.3 percent, reflecting favorable price less net material inflation, leverage on higher volume, leveragesales and cost reduction savings,favorable mix, partially offset by unfavorable foreign currency transactionswage and other inflation. Adjusted EBITA margin was 24.2 percent, an increase of $26 million compared with the prior year. Margin declined 1.62.6 percentage points to 15.0 percent. Margin improved 1.2 percentage points to 17.8 percent, excluding dilution of 2.8 percentage points from the valves & controls acquisition, which includes intangibles amortization of $18 million.points.
COMMERCIAL & RESIDENTIAL SOLUTIONS
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Three Months Ended Dec 31 | 2016 | | 2017 | | Change |
(dollars in millions) | | | | | |
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Sales: | | | | | |
Climate Technologies | $ | 859 |
| | 922 |
| | 7 | % |
Tools & Home Products | 393 |
| | 330 |
| | (16 | )% |
Total | $ | 1,252 |
| | 1,252 |
| | — | % |
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Earnings: | | | | | |
Climate Technologies | $ | 161 |
| | 165 |
| | 2 | % |
Tools & Home Products | 88 |
| | 87 |
| | (1 | )% |
Total | $ | 249 |
| | 252 |
| | 1 | % |
Margin | 19.9 | % | | 20.1 | % | | |
SOFTWARE AND CONTROL
Commercial & Residential Solutions | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2022 | | 2023 | | Change | | FX | | Acq/Div | | U/L |
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Sales: | | | | | | | | | | | | |
Control Systems & Software | | $ | 1,711 | | | 1,892 | | | 11 | % | | 3 | % | | 1 | % | | 15 | % |
AspenTech | | 405 | | | 793 | | | 96 | % | | — | % | | (96) | % | | — | % |
Total | | $ | 2,116 | | | 2,685 | | | 27 | % | | 3 | % | | (15) | % | | 15 | % |
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Earnings: | | | | | | | | | | | | |
Control Systems & Software | | $ | 294 | | | 378 | | | 29 | % | | | | | | |
AspenTech | | 51 | | | (60) | | | (220) | % | | | | | | |
Total | | $ | 345 | | | 318 | | | (8) | % | | | | | | |
Margin | | 16.3 | % | | 11.8 | % | | (4.5) pts | | | | | | |
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Amortization of intangibles: | | | | | | | | | | | | |
Control Systems & Software | | $ | 16 | | | 17 | | | | | | | | | |
AspenTech | | 116 | | | 364 | | | | | | | | | |
Total | | $ | 132 | | | 381 | | | | | | | | | |
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Restructuring and related costs: | | | | | | | | | | | | |
Control Systems & Software | | $ | 8 | | | 7 | | | | | | | | | |
AspenTech | | 1 | | | — | | | | | | | | | |
Total | | $ | 9 | | | 7 | | | | | | | | | |
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Adjusted EBITA | | $ | 486 | | | 706 | | | 46 | % | | | | | | |
Adjusted EBITA Margin | | 22.9 | % | | 26.3 | % | | 3.4 pts | | | | | | |
Software and Control sales were $1.3 billion$2,685 in thethe first quarter, flatnine months of 2023, an increase of $569, or 27 percent compared to the prior year. Underlying sales were up 5 percent ($58 million) on higher volume and slightly higher price. Foreign currency translation added 2 percent ($19 million), while the divestiture of the residential storage business deducted 7 percent ($77 million). Climate Technologies sales were $922 million in the first quarter, an increase of $63 million, or 7 percent. Global HVAC sales were solid, reflecting robust growth in China on strength in commercial air conditioning and heating, partially offset by a modest decline in U.S. residential air conditioning. Global refrigeration sales were solid led by robust growth in China, while the U.S. was flat. Sensors had solid growth and temperature controls was up slightly. Tools & Home Products sales were $330 million in the first quarter, a decrease of $63 million, or 16 percent,year, reflecting the impact of the residential storage divestiture. Sales for professional tools wereHeritage AspenTech acquisition and strong on favorable demandgrowth in oil and gas and construction-related markets. Wet/dry vacuums had solidControl Systems & Software. Underlying sales growth and food waste disposers were up slightly. Overall, underlying15 percent on 13 percent higher volume and 2 percent higher price. Underlying sales increased 112 percent in the U.S., 1Americas, 17 percent in Europe and 1718 percent in Asia, (ChinaMiddle East & Africa (China up 24 percent). SalesControl Systems & Software sales increased 5$181, or 11 percent. Underlying sales increased 15 percent, reflecting global strength in Canada, 4process end markets while power end markets were up moderately. AspenTech sales increased $388, or 96 percent, in Middle East/Africadue to the acquisition of Heritage AspenTech. Earnings for Software and 1Control decreased $27, down 8 percent, in Latin America. Earnings were $252 million, an increase of $3 million and margin improved 0.2decreased 4.5 percentage points, duereflecting the impact from $248 of incremental intangibles amortization related to the Heritage AspenTech acquisition. Adjusted EBITA margin increased 3.4 percentage points, reflecting leverage on higher volumesales and favorable price,mix, partially offset by higher materials costs. In addition, the residential storage divestiture reduced earnings by $6 million, but benefited margin comparisons 0.8 percentage points, while higher warranty costs of $10 million associated with a specific product issue in Climate Technologies offset this benefit.inflation and unfavorable foreign currency transactions.
FINANCIAL CONDITION
Key elements of the Company's financial condition for the threenine months ended December 31, 2017June 30, 2023 as compared to the year ended September 30, 20172022 and the nine months ended June 30, 2022 follow. | | | | | | | | June 30, 2022 | | Sept 30, 2022 | | June 30, 2023 |
| Sept 30, 2017 |
| | Dec 31, 2017 |
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Working capital (in millions) | $ | 3,207 |
| | 1,960 |
| |
Operating working capital | | Operating working capital | $ | 1,081 | | | $ | 990 | | | $ | (144) | |
Current ratio | 1.6 |
| | 1.3 |
| Current ratio | 1.1 | | | 1.1 | | | 2.4 | |
Total debt-to-total capital | 34.8 | % | | 39.6 | % | Total debt-to-total capital | 52.9 | % | | 50.0 | % | | 28.9 | % |
Net debt-to-net capital | 15.4 | % | | 22.1 | % | Net debt-to-net capital | 46.8 | % | | 45.3 | % | | (8.8) | % |
Interest coverage ratio | 12.6 | X | | 11.2X |
| Interest coverage ratio | 12.6 | X | | 11.7 | X | | 9.8 | X |
The Company's debt-to-capital increased primarilyoperating working capital as of June 30, 2023 includes remaining income taxes payable of approximately $1.5 billion related to the Copeland transaction and the gain on the InSinkErator divestiture, which is largely expected to be paid by the end of fiscal 2023. Excluding these income taxes payable related to discontinued operations, operating working capital remained elevated due to higher borrowingsinventory levels to support acquisitionssales growth and higher receivables. As of June 30, 2023, Emerson's cash and equivalents totaled $9,957, which reflected approximately $9.7 billion of proceeds related to the Copeland transaction which are expected to be used along with other available cash and liquidity to fund the proposed National Instruments transaction. Going forward, Copeland is not expected to issue dividends to the Company but will distribute cash for the Company to pay its share repurchases.of U.S. taxes. The interestCompany's cash also includes $289 attributable to AspenTech which is intended to be used for its own purposes and is not a readily available source of liquidity for other Emerson general business purposes or to return to Emerson shareholders.
The current ratio increased compared to September 30, 2022, reflecting the proceeds from the Copeland transaction. The interest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of 11.2X9.8X for the first threenine months of 2018fiscal 2023 compares to 9.9X12.6X for the first threenine months of 2017. The increase reflectsended June 30, 2022, reflecting higher pretaxinterest expense. Pretax earnings and lower interest expense in the current year.prior year included the Vertiv subordinated interest gain of $453. Excluding the gain, the interest coverage ratio was 9.7X for the nine months ended June 30, 2022.
Operating cash flow from continuing operations for the first threenine months of 2018fiscal 2023 was $447 million,$1,719, an increase of $37 million$484 compared with $410 million$1,235 in the prior year, reflecting higher earnings partially offset by an investment in working capital to support higher levels(excluding the prior year impact of sales activity.the Vertiv subordinated interest gain and the current year impact from Heritage AspenTech intangibles amortization). Operating cash flow from continuing operations funded dividends of $311 million and capital expenditures of $96 million.included approximately $295 generated by AspenTech. Free cashcash flow from continuing operations of $351 million$1,525 in the first nine months of fiscal 2023 (operating cash flow of $447 million$1,719 less capital expenditures of $96 million)$194) increased $41 million$489 compared to free cash flow of $1,036 in 2018. Free2022 (operating cash flow of $1,235 less capital expenditures of $199), reflecting the increase in operating cash flow. Cash provided by investing activities from continuing operations was $310 million$615. Cash used in 2017 (operatingfinancing activities from continuing operations was $6,302 and included Emerson share repurchases of $2.0 billion (and AspenTech repurchases of $100, which increased the Company's common ownership percentage to approximately 56 percent), a net reduction in short-term borrowings of approximately $1.5 billion, repayments of long-term debt of $744 (including $264 related to AspenTech's repayment of the outstanding balance on its existing term loan facility plus accrued interest), and dividend payments of $900.
Total cash provided by operating activities was $1,280 including the impact of discontinued operations, and decreased $425 compared with $1,705 in the prior year due to approximately $750 of incomes taxes paid related to the gain on the InSinkErator divestiture and subsidiary restructurings related to the Copeland transaction. Investing cash flow from discontinued operations was $12.5 billion, reflecting proceeds from the Copeland transaction and InSinkErator divestiture.
As of $410 million less capital expendituresJune 30, 2023, goodwill attributable to AspenTech was approximately $8.3 billion. AspenTech conducted its annual impairment test as of $100 million). Divestiture proceedsMay 31, 2023 and determined that the carrying value of $235 millionits stockholders' equity exceeded its market capitalization. Accordingly, to further validate the reasonableness of the initial qualitative assessment and increased short-termevaluation, a reconciliation of AspenTech's market capitalization was performed by calculating an implied control premium. The Company concluded that the implied control premium was reasonable based on a comparison to actual control premiums realized in recent comparable market transactions. If AspenTech's stock price declines and is sustained, further evaluation would be necessary and an impairment of goodwill attributable to AspenTech may result. No impairment of goodwill attributable to AspenTech was recorded in fiscal 2022 or for the nine months ended June 30, 2023.
In February 2023, the Company entered into a $3.5 billion five-year revolving backup credit facility with various banks, which replaced the May 2018 $3.5 billion facility. The credit facility is maintained to support general corporate purposes, including commercial paper borrowings. The Company has not incurred any borrowings were usedunder this or previous facilities. The credit facility contains no financial covenants and is not subject to fund acquisitionstermination based on a change of $513 millioncredit rating or material adverse changes. The facility is unsecured and common stock purchasesmay be accessed under various interest rate alternatives at the Company’s option. Fees to maintain the facility are immaterial.
On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic, and among other things, provides tax relief to businesses. Tax provisions of $500 million.the CARES Act include the deferral of certain payroll taxes, relief for retaining employees, and other provisions. The Company deferred $73 of certain payroll taxes through the end of calendar year 2020, of which approximately $37 was paid in December 2021 and the remainder paid in December 2022.
Emerson'sEmerson maintains a conservative financial structure providesto provide the strength and flexibility necessary to achieve itsour strategic objectives. The Companyobjectives and has been successful in efficiently deploying cash where needed worldwide to fund operations, complete acquisitions and sustain long-term growth. The Company believes that sufficient funds will beEmerson is in a strong financial position, with total assets of $44 billion and common stockholders' equity of $20 billion, and has the resources available to meet the Company’s needsfor reinvestment in the foreseeable future through operating cash flow, existing resources,businesses, strategic acquisitions and managing its capital structure on a short- and long-term debt capacity or backup credit lines.basis.
FISCAL 20182023 OUTLOOK
The Company’s first quarter results reflected continued favorable global economic conditions and solid sales growth in both Automation Solutions and Commercial & Residential Solutions. These favorable trends along with the positive effects of U.S. tax reform support the Company’s outlook for full-year fiscal 2018. Consolidated net sales are expected to be up 11 to 13 percent, with underlying sales up 5 to 7 percent, excluding an approximate 4 percent impact from acquisitions and divestitures and 2 percent from currency translation. Automation Solutions net sales are expected to be up 18 to 20 percent, with underlying sales up 6 to 8 percent excluding an approximate 9 percent impact from acquisitions and 3 percent from currency translation. Commercial & Residential Solutions net sales are expected to be up 1 to 3 percent, with underlying sales up 4 to 6 percent, excluding an approximate 5 percent negative impact from acquisitions and divestitures and 2 percent from favorable currency translation. Earnings per share are expected to be $3.05 to $3.15, including a $0.15 per share benefit from the lower U.S. corporate income tax rate on full-year earnings. The outlook also includes the $0.07 per share net benefit of the tax law change, offset by the $0.04 per share loss on the residential storage divestiture and $0.03 per share from first year acquisition accounting charges. The Company expects operating cash flow of $2.9 billion and capital spending of approximately $575 million. For the second quarter of 2018,full year, consolidated net sales from continuing operations are expected to be up approximately 1810.5 percent, with underlying sales up approximately 710 percent excluding an approximate 8a 1.5 percent unfavorable impact from foreign currency translation and a 2.0 percent impact from acquisitions net of divestitures. Earnings per share from continuing operations are expected to be $3.54 to $3.59, while adjusted earnings per share from continuing operations are expected to be $4.40 to $4.45 (see the following reconciliation).
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Outlook for Fiscal 2023 Earnings Per Share | | 2023 |
| | |
Diluted earnings from continuing operations per share | | $3.54 - $3.59 |
| | |
Amortization of intangibles | | 0.61 | |
Restructuring and related costs | | 0.16 | |
Acquisition/divestiture costs | | 0.10 | |
National Instruments investment gain | | (0.07) | |
AspenTech Micromine purchase price hedge gain | | (0.02) | |
Interest income on undeployed proceeds from Copeland transaction | | (0.19) | |
Loss on Copeland equity method investment | | 0.19 | |
Russia business exit charge | | 0.08 | |
| | |
Adjusted diluted earnings from continuing operations per share | | $4.40 - $4.45 |
Earnings from discontinued operations are not expected to change materially from the amount reported for the nine months ended June 30, 2023 now that the Copeland transaction has been completed. Operating cash flow from continuing operations is expected to be $2.5 to $2.6 billion and divestituresfree cash flow from continuing operations, which excludes projected capital spending of $300 million, is expected to be $2.2 to $2.3 billion. The fiscal 2023 outlook includes $2 billion returned to shareholders through share repurchases completed in the first quarter and 3 percent from currency.
approximately $1.2 billion of dividend payments.
Statements in this report 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 the Company's ability to successfully complete on the terms and conditions contemplated, and the financial impact of, the proposed National Instruments transaction, 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, andcybersecurity, tariffs, competitive and technological factors, inflation, among others, which are set forth in the “Risk Factors” of Part I, Item 1A, and the "Safe Harbor Statement" of Part II, Item 7, to the Company's Annual Report on Form 10-K for the year ended September 30, 20172022 and in subsequent reports filed with the SEC, which are hereby incorporated by reference, as well as the impact of U.S. tax reform as discussed in Note 1 of Notes to Consolidated Financial Statements set forth in Part I, Item 1, of this Quarterly Report on Form 10-Q.reference.
Item 4. Controls and Procedures
The Company maintains a system of disclosure controls and procedures designed to ensure that information required to be disclosed in its reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported in a timely manner. This system also is designed to ensure information is accumulated and communicated to management, including the Company's certifying officers, to allow timely decisions regarding required disclosure. Based on an evaluation performed, the certifying officers have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.
Notwithstanding the foregoing, there can be no assurance that the Company's disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to report material information otherwise required to be set forth in the Company's reports.
There was no change in the Company's internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
Item
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) Issuer PurchasesNeither the Company nor any “affiliated purchaser” repurchased any shares of Equity Securities (shares in 000s). |
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Period | Total Number of Shares Purchased | | Average Price Paid Per Share | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs |
October 2017 | — | | $0.00 | | — | | 56,930 |
November 2017 | 5,007 | | $61.65 | | 5,007 | | 51,923 |
December 2017 | 2,855 | | $67.01 | | 2,855 | | 49,068 |
Total | 7,862 | | $63.60 | | 7,862 | | 49,068 |
Company common stock during the three-month period ended June 30, 2023. In November 2015,March 2020, the Board of Directors authorized the purchase of up to 7060 million shares and 49.1 milliona total of approximately 33.3 shares remain available.available for purchase under the authorization.
Item 5. Other Information
During the three-month period ended June 30, 2023, none of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.
Item 6. Exhibits
(a) Exhibits (Listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K).
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2.1** | Agreement and Plan of Merger, dated as of April 12, 2023, among Emerson Electric Co., Emersub CXIV, Inc., and National Instruments Corporation, incorporated by reference to the Company,s Form 8-K filed on April 12, 2023, File No. 1-278, Exhibit 2.1. |
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101 |
| Attached as Exhibit 101 to this report are the following documents formatted in XBRL (ExtensibleiXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Statements of Earnings for the three and nine months ended December 31, 2017June 30, 2023 and 2016,2022, (ii) Consolidated Statements of Comprehensive Income for the three and nine months ended December 31, 2017June 30, 2023 and 2016,2022, (iii) Consolidated Balance Sheets as of September 30, 20172022 and December 31, 2017,June 30, 2023, (iv) Consolidated Statements of Equity for the three and nine months ended June 30, 2023 and 2022, (v) Consolidated Statements of Cash Flows for the threenine months ended December 31, 2017June 30, 2023 and 2016,2022, and (v)(vi) Notes to Consolidated Financial Statements for the three and nine months ended December 31, 2017. June 30, 2023 and 2022.
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104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
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** | Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Emerson agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | EMERSON ELECTRIC CO. | |
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| | By | /s/ FrankM. J. DellaquilaBaughman | |
| | | FrankMike J. DellaquilaBaughman | |
| | | Senior Executive Vice President and Chief Financial Officer | |
| | | (on behalf of the registrant and as Chief Financial Officer) | |
| | | February 7, 2018August 2, 2023 | |