UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-Q

ý
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934


For the quarterly period ended December 31, 20172023


OR


¨☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934


For the transition period from ____________________ to __________________


Commission file number 1-278


EMERSON ELECTRIC CO.
(Exact name of registrant as specified in its charter)
Missouri
logo_emersona12.jpg
43-0259330
Missouri
(State or other jurisdiction of

incorporation or organization)
logoemerson3.jpg
43-0259330
(I.R.S. Employer

Identification No.)
8000 W. Florissant Ave.
 
 
P.O. Box 4100
St. Louis,Missouri
63136
(Address of principal executive offices)
63136
(Zip Code)


Registrant's telephone number, including area code: (314) (314) 553-2000


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)		Name of each exchange on which registered
Common Stock of $0.50 par value per shareEMRNew York Stock Exchange
NYSE Chicago
0.375% Notes due 2024EMR 24New York Stock Exchange
1.250% Notes due 2025EMR 25ANew York Stock Exchange
2.000% Notes due 2029EMR 29New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý☒ No ¨☐


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ý☒ No ¨☐








Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerý
☒
Accelerated filer¨☐
Non-accelerated filer¨   (Do not check if a smaller reporting company)
☐
Smaller reporting company¨☐
Emerging growth company¨☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐No ý☒


Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common stock of $0.50 par value per share outstanding at JanuaryDecember 31, 2018: 634,837,581 shares.

2023:571.7 million shares.


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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements


Consolidated Statements of Earnings
EMERSON ELECTRIC CO. & SUBSIDIARIES

Three months ended December 31, 20162022 and 20172023
(Dollars in millions, except per share amounts; unaudited)
 Three Months Ended
December 31,
 2022 2023 
Net sales$3,373 4,117 
Cost of sales1,753 2,201 
Selling, general and administrative expenses1,030 1,277 
Other deductions, net120 487 
Interest expense (net of interest income of $20 and $40, respectively)48 44 
Interest income from related party— (31)
Earnings from continuing operations before income taxes422 139 
Income taxes98 7 
Earnings from continuing operations324 132 
Discontinued operations, net of tax of $966 and $—, respectively2,002 — 
Net earnings2,326 132 
Less: Noncontrolling interests in subsidiaries(5)(10)
Net earnings common stockholders$2,331 142 
Earnings common stockholders:
Earnings from continuing operations$329 142 
Discontinued operations2,002 — 
Net earnings common stockholders$2,331 142 
Basic earnings per share common stockholders:
     Earnings from continuing operations$0.56 0.25 
     Discontinued operations3.43 — 
Basic earnings per common share$3.99 0.25 
Diluted earnings per share common stockholders:
Earnings from continuing operations$0.56 0.25 
Discontinued operations3.41 — 
Diluted earnings per common share$3.97 0.25 
Weighted average outstanding shares:
Basic583.6 570.8 
Diluted586.7 573.3 
 Three Months Ended
December 31,
 2016
 2017
Net sales$3,216
 3,816
    
Costs and expenses:   
Cost of sales1,851
 2,195
Selling, general and administrative expenses822
 992
Other deductions, net33
 88
Interest expense (net of interest income of $6 and $11, respectively)46
 38
    
Earnings from continuing operations before income taxes464
 503
    
Income taxes94
 109
    
Earnings from continuing operations370
 394
    
Discontinued operations, net of tax(55) —
    
Net earnings315
 394
    
Less: Noncontrolling interests in earnings of subsidiaries6
 2
    
Net earnings common stockholders$309
 392
    
Earnings common stockholders:   
     Earnings from continuing operations$364
 392
     Discontinued operations, net of tax(55) —
Net earnings common stockholders$309
 392
    
Basic earnings per share common stockholders:   
     Earnings from continuing operations$0.56
 0.61
     Discontinued operations(0.08) —
Basic earnings per common share$0.48
 0.61
    
Diluted earnings per share common stockholders:   
     Earnings from continuing operations$0.56
 0.61
     Discontinued operations(0.08) —
Diluted earnings per common share$0.48
 0.61
    
Cash dividends per common share$0.48
 0.485
    
    
    
    
See accompanying Notes to Consolidated Financial Statements.



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1




Consolidated Statements of Comprehensive Income
EMERSON ELECTRIC CO. & SUBSIDIARIES


Three months ended December 31, 20162022 and 20172023
(Dollars in millions; unaudited)

 Three Months Ended December 31,
 2022 2023 
Net earnings$2,326 132 
Other comprehensive income (loss), net of tax:
Foreign currency translation241 174 
Pension and postretirement(16)(12)
Cash flow hedges10 3 
        Total other comprehensive income (loss)235 165 
Comprehensive income2,561 297 
Less: Noncontrolling interests in subsidiaries— (8)
Comprehensive income common stockholders$2,561 305 

 Three Months Ended December 31,
  2016

 2017
Net earnings $315
  394
      
Other comprehensive income (loss), net of tax:     
Foreign currency translation (103)  7
Pension and postretirement 55
  23
Cash flow hedges 15
  (3)
        Total other comprehensive income (33)  27
      
Comprehensive income 282
  421
      
Less: Noncontrolling interests in comprehensive
income of subsidiaries
 4
  2
Comprehensive income common stockholders $278
  419



































































See accompanying Notes to Consolidated Financial Statements.




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2




Consolidated Balance Sheets
EMERSON ELECTRIC CO. & SUBSIDIARIES


(Dollars and shares in millions, except per share amounts; unaudited)
 Sept 30, 2017 Dec 31, 2017
ASSETS   
Current assets   
Cash and equivalents$3,062
 3,096
Receivables, less allowances of $91 and $99, respectively3,072
 2,881
Inventories1,696
 1,845
Other current assets422
 330
Total current assets8,252
 8,152
    
Property, plant and equipment, net3,321
 3,279
Other assets 
  
Goodwill5,316
 5,616
Other intangible assets1,890
 2,118
Other810
 693
Total other assets8,016
 8,427
Total assets$19,589
 19,858
    
LIABILITIES AND EQUITY 
  
Current liabilities 
  
Short-term borrowings and current maturities of long-term debt$862
 2,093
Accounts payable1,776
 1,596
Accrued expenses2,342
 2,286
Income taxes65
 217
Total current liabilities5,045
 6,192
    
Long-term debt3,794
 3,375
    
Other liabilities1,980
 1,903
    
Equity 
  
Common stock, $0.50 par value; authorized, 1,200,000,000 shares; issued, 953,354,012 shares; outstanding, 641,691,971 shares and 634,221,544 shares, respectively477
 477
Additional paid-in-capital297
 306
Retained earnings21,995
 22,079
Accumulated other comprehensive income (loss)(1,019) (992)
Cost of common stock in treasury, 311,662,041 shares and 319,132,468 shares, respectively(13,032) (13,521)
Common stockholders’ equity8,718
 8,349
Noncontrolling interests in subsidiaries52
 39
Total equity8,770
 8,388
Total liabilities and equity$19,589
 19,858





 Sept 30, 2023Dec 31, 2023
ASSETS  
Current assets  
Cash and equivalents$8,051 2,076 
Receivables, less allowances of $100 and $112, respectively2,518 2,759 
Inventories2,006 2,432 
Other current assets1,244 1,399 
Total current assets13,819 8,666 
Property, plant and equipment, net2,363 2,701 
Other assets 
Goodwill14,480 17,983 
Other intangible assets6,263 11,270 
Copeland note receivable and equity investment3,255 3,253 
Other2,566 2,640 
Total other assets26,564 35,146 
Total assets$42,746 46,513 
LIABILITIES AND EQUITY  
Current liabilities  
Short-term borrowings and current maturities of long-term debt$547 3,227 
Accounts payable1,275 1,234 
Accrued expenses3,210 3,304 
Total current liabilities5,032 7,765 
Long-term debt7,610 7,632 
Other liabilities3,506 4,561 
Equity  
Common stock, $0.50 par value; authorized, 1,200.0 shares; issued, 953.4 shares; outstanding, 572.0 shares and 571.7 shares, respectively477 477 
Additional paid-in-capital62 140 
Retained earnings40,070 39,910 
Accumulated other comprehensive income (loss)(1,253)(1,090)
Cost of common stock in treasury, 381.4 shares and 381.7 shares, respectively(18,667)(18,763)
Common stockholders’ equity20,689 20,674 
Noncontrolling interests in subsidiaries5,909 5,881 
Total equity26,598 26,555 
Total liabilities and equity$42,746 46,513 
See accompanying Notes to Consolidated Financial Statements.







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Consolidated Statements of Equity
EMERSON ELECTRIC CO. & SUBSIDIARIES

Three months ended December 31, 2022 and 2023
(Dollars in millions; unaudited)
Three Months Ended December 31,
2022 2023 
Common stock$477 477 
Additional paid-in-capital
     Beginning balance57 62 
     Stock plans55 119 
     AspenTech purchases of common stock— (41)
        Ending balance112 140 
Retained earnings
     Beginning balance28,053 40,070 
     Net earnings common stockholders2,331 142 
Dividends paid (per share: $0.52 and $0.525, respectively)(308)(302)
        Ending balance30,076 39,910 
Accumulated other comprehensive income (loss)
     Beginning balance(1,485)(1,253)
     Foreign currency translation236 172 
     Pension and postretirement(16)(12)
     Cash flow hedges10 3 
        Ending balance(1,255)(1,090)
Treasury stock
     Beginning balance(16,738)(18,667)
     Purchases(2,000)(175)
     Issued under stock plans55 79 
        Ending balance(18,683)(18,763)
Common stockholders' equity10,727 20,674 
Noncontrolling interests in subsidiaries
     Beginning balance5,952 5,909 
     Net earnings (loss)(5)(10)
     Stock plans35 11 
     AspenTech purchases of common stock— (31)
     Other comprehensive income5 2 
        Ending balance5,987 5,881 
Total equity$16,714 26,555 

See accompanying Notes to Consolidated Financial Statements.





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Consolidated Statements of Cash Flows
EMERSON ELECTRIC CO. & SUBSIDIARIES

Three months endedMonths Ended December 31, 20162022 and 20172023
(Dollars in millions; unaudited)
  Three Months Ended
  December 31,
  2016
 2017
Operating activities    
Net earnings $315
 394
Loss from discontinued operations, net of tax 55
 —
Adjustments to reconcile net earnings to net cash provided by operating activities:    
        Depreciation and amortization 143
 187
        Changes in operating working capital (138) (160)
        Other, net 35
 26
            Cash from continuing operations 410
 447
            Cash from discontinued operations (172) —
            Cash provided by operating activities 238
 447
     
Investing activities    
Capital expenditures (100) (96)
Purchases of businesses, net of cash and equivalents acquired (16) (513)
Divestitures of businesses —
 235
Other, net (20) (18)
    Cash from continuing operations (136) (392)
    Cash from discontinued operations 3,894
 —
    Cash provided by (used in) investing activities 3,758
 (392)
     
Financing activities    
Net increase (decrease) in short-term borrowings (2,225) 1,061
Payments of short-term borrowings greater than three months (90) —
Payments of long-term debt (251) (251)
Dividends paid (311) (311)
Purchases of common stock —
 (500)
Other, net (43) (30)
    Cash used in financing activities (2,920) (31)
     
Effect of exchange rate changes on cash and equivalents (107) 10
Increase in cash and equivalents 969
 34
Beginning cash and equivalents 3,182
 3,062
Ending cash and equivalents $4,151
 3,096
     
Changes in operating working capital    
Receivables $212
 216
Inventories (103) (149)
Other current assets 10
 (14)
Accounts payable (119) (129)
Accrued expenses (162) (166)
Income taxes 24
 82
Total changes in operating working capital $(138) (160)



Three Months Ended
December 31,
 2022 2023 
Operating activities  
Net earnings$2,326 132 
Earnings from discontinued operations, net of tax(2,002)— 
Adjustments to reconcile net earnings to net cash provided by operating activities:
        Depreciation and amortization260 422 
        Stock compensation102 74 
        Amortization of acquisition-related inventory step-up— 231 
        Changes in operating working capital(289)(247)
        Other, net(95)(168)
            Cash from continuing operations302 444 
            Cash from discontinued operations116 (29)
            Cash provided by operating activities418 415 
Investing activities
Capital expenditures(59)(77)
Purchases of businesses, net of cash and equivalents acquired— (8,339)
Proceeds from subordinated interest15 — 
Other, net(23)(37)
    Cash from continuing operations(67)(8,453)
    Cash from discontinued operations2,953 1 
    Cash provided by (used in) investing activities2,886 (8,452)
Financing activities
Net increase (decrease) in short-term borrowings(539)2,647 
Payments of long-term debt(9)— 
Dividends paid(306)(300)
Purchases of common stock(2,000)(175)
AspenTech purchases of common stock— (72)
Other, net(41)(45)
    Cash provided by (used in) financing activities(2,895)2,055 
Effect of exchange rate changes on cash and equivalents58 7 
Increase (decrease) in cash and equivalents467 (5,975)
Beginning cash and equivalents1,804 8,051 
Ending cash and equivalents$2,271 2,076 
Changes in operating working capital
Receivables$78 94 
Inventories(193)(97)
Other current assets14 (3)
Accounts payable(58)(89)
Accrued expenses(130)(152)
Total changes in operating working capital$(289)(247)
See accompanying Notes to Consolidated Financial Statements.







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Notes to Consolidated Financial Statements
EMERSON ELECTRIC CO. & SUBSIDIARIES


(Dollars and shares in millions, except per share amounts or where noted)


1.In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary for a fair presentation of operating results for the interim periods presented. Adjustments consist of normal and recurring accruals. The consolidated financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all disclosures required for annual financial statements presented in conformity with U.S. generally accepted accounting principles (GAAP). For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2017.

On December 22, 2017,(1) BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary for a fair presentation of operating results for the interim periods presented. Adjustments consist of normal and recurring accruals. The consolidated financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all disclosures required for annual financial statements presented in conformity with U.S. government enacted tax reform,generally accepted accounting principles (GAAP). For further information, refer to the Tax Cutsconsolidated financial statements and Jobs Act (the “Act”)notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2023.

(2) REVENUE RECOGNITION

Emerson is a global manufacturer that designs and manufactures products and delivers services that bring technology and engineering together to provide innovative solutions for its customers. The majority of the Company's revenues relate to a broad offering of manufactured products and software which are recognized at the point in time when control transfers, while a smaller portion is recognized over time or relates to sales arrangements with multiple performance obligations. See Note 14 for additional information about the Company's revenues.

The following table summarizes the balances of the Company's unbilled receivables (contract assets), which are reported in Other assets (current and noncurrent), and its customer advances (contract liabilities), which are reported in Accrued expenses and Other liabilities.     
Sept 30, 2023Dec 31, 2023
Unbilled receivables (contract assets)$1,453 1,502 
Customer advances (contract liabilities)(897)(1,225)
      Net contract assets (liabilities)$556 277 
The majority of the Company's contract balances relate to (1) arrangements where revenue is recognized over time and payments from customers are made comprehensive changes to federal income tax laws by moving from a globalaccording to a modified territorial tax regime.contractual billing schedule, and (2) revenue from term software license arrangements where the license revenue is recognized upfront upon delivery. 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 adecrease in net tax benefit of $43 ($0.07 per share)contract assets was primarily due to impactsthe acquisition of National Instruments, which increased contract liabilities by approximately $200, while customer billings slightly exceeded revenue recognized for performance completed during the Act, consisting of a $98 benefit on revaluation of net deferred income tax liabilities to the lower tax rate, and $185 of expenseperiod. Revenue recognized for the tax on deemed repatriation of accumulated foreign earnings and withholding taxes partially offset by $130 accruedthree months ended December 31, 2023 included $368 that was included in the beginning contract liability balance. Other factors that impacted the change in net contract assets were immaterial. Revenue recognized for the three months ended December 31, 2023 for performance obligations that were satisfied in previous periods, forincluding cumulative catchup adjustments on the planned repatriationCompany's long-term contracts, was immaterial.

As of non-U.S. cash. GivenDecember 31, 2023, the complexities associatedCompany's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $8.8 billion (of which $1.2 billion was attributable to AspenTech and approximately $500 was attributable to the National Instruments acquisition). The Company expects to recognize approximately 75 percent of its remaining performance obligations as revenue over the next 12 months, with the Act,remainder substantially over 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.following two years.     


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.



In the first quarter of fiscal 2018, the Company adopted updates to ASC 330, Inventory, which changed the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value. These updates did not materially impact the Company's financial statements.


In the first quarter of fiscal 2018, the Company adopted updates to ASC 740, Income Taxes, requiring recognition of the income tax effects of intra-entity transfers of assets other than inventory when the transfer occurs. These updates were adopted on a modified retrospective basis and did not materially impact the Company's financial statements.

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2.    

(3) COMMON SHARES

Reconciliations of weighted-average shares for basic and diluted earnings per common share follow. Earnings allocated to participating securities were inconsequential.
 Three Months Ended
December 31,
 2016
 2017
    
Basic shares outstanding642.8
 638.2
Dilutive shares1.5
 2.3
Diluted shares outstanding644.3
 640.5
Three Months Ended
December 31,
 2022 2023 
Basic shares outstanding583.6 570.8 
Dilutive shares3.1 2.5 
Diluted shares outstanding586.7 573.3 

3.    (4) ACQUISITIONS AND DIVESTITURES

National Instruments

On October 11, 2023, the Company completed the acquisition of National Instruments Corporation (“NI”). 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 approximately $1.7 billion and pretax earnings of approximately $170 for the 12 months ended September 30, 2023. NI is now referred to as Test & Measurement and reported as a new segment in the Software and Control business group, see Note 14.

The following table summarizes the components of the purchase consideration reflected in the acquisition accounting for NI.
Cash paid to acquire remaining NI shares not already owned by Emerson$7,833 
Payoff of NI debt at closing634 
Total consideration paid in cash at closing8,467 
Fair value of NI shares already owned by Emerson prior to acquisition137 
Value of stock-based compensation awards attributable to pre-combination service49 
Total purchase consideration$8,653 

The total purchase consideration for NI was allocated to assets and liabilities as follows. Valuations of acquired assets and liabilities are in-process and subject to refinement.

Cash and equivalents$135 
Receivables310 
Inventory524 
Other current assets140 
Property, plant and equipment336 
Goodwill ($130 expected to be tax-deductible)3,418 
Other intangible assets5,275 
Other assets116 
Total assets10,254 
Accounts payable54 
Accrued expenses325 
Deferred taxes and other liabilities1,222 
Total purchase consideration$8,653 









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The estimated intangible assets attributable to the transaction are comprised of the following (in millions):

AmountEstimated Weighted Average Life (Years)
Developed technology$1,570 9
Customer relationships3,360 15
Trade names210 9
Backlog135 1
Total$5,275 

Results of operations for the three months ended December 31, 2023 attributable to the NI acquisition include sales of $382 and a net loss of $326. The net loss included the impact of inventory step-up amortization, intangibles amortization, retention bonuses, stock compensation expense and restructuring.

Pro Forma Financial Information

Sept 30, 2017 Dec 31, 2017
Inventories     
Finished products $560
  641
Raw materials and work in process 1,136
  1,204
Total $1,696
  1,845


The following unaudited proforma consolidated condensed financial results of operations are presented as if the acquisition of NI occurred on October 1, 2022. 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 ($ in millions, except per share amounts).
 Three Months Ended December 31,
 2022 2023 
Net Sales$3,821 4,136 
Net earnings from continuing operations common stockholders$(141)420 
Diluted earnings per share from continuing operations$(0.24)0.73 

The pro forma results for the three months ended December 31, 2022 include total transaction costs of $198 which were assumed to be incurred in the first quarter of fiscal 2023. These transaction costs include $88 incurred by NI prior to the completion of the transaction and $110 incurred by Emerson in periods subsequent to the first quarter of fiscal 2023. The pro forma results for the three months ended December 31, 2022 also include $105 of ongoing intangibles amortization, as well as backlog amortization of $34, inventory step-up amortization of $213, and retention bonuses of $43 which were all assumed to be incurred in the first quarter of fiscal 2023.

Other Transactions

In the fourth quarter of fiscal 2023, the Company acquired two businesses, Flexim, which is reported in the Measurement & Analytical segment, and Afag, which is reported in the Discrete Automation segment, for $712, net of cash acquired. The Company recognized goodwill of $428 (none of which is expected to be tax deductible) and other identifiable intangible assets of $323, primarily customer relationships and intellectual property with a weighted-average useful life of approximately 9 years.

On March 31, 2023, Emerson completed the divestiture of Metran, its Russia-based manufacturing subsidiary. In the first quarter of fiscal 2023, the Company recognized a pretax loss of $47 in Other deductions ($47 after-tax, in total $0.08 per share) related to its exit of business operations in Russia.
(5) DISCONTINUED OPERATIONS

On May 31, 2023, the Company completed the 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. Emerson received upfront, pre-tax cash proceeds of approximately $9.7 billion and a note receivable with a face value of $2.25 billion (which accrues 5 percent interest payable in kind by capitalizing interest), while retaining a 40 percent non-controlling common equity interest in a new standalone joint venture between Emerson and Blackstone. The Climate Technologies business,


6



8




which includes the Copeland compressor business and the entire portfolio of products and services across all residential and commercial HVAC and refrigeration end-markets, had fiscal 2022 net sales of approximately $5.0 billion and pretax earnings of $1.0 billion. The Company recognized a pretax gain of approximately $10.6 billion in the third quarter of fiscal 2023 (approximately $8.4 billion after-tax including tax expense recognized prior to the completion of the transaction related to subsidiary restructurings). The new standalone business is named Copeland. See Note 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. This business had net sales of $630 and pretax earnings of $152 in fiscal 2022. The Company recognized a pretax gain of approximately $2.8 billion (approximately $2.1 billion after-tax) in the first quarter of fiscal 2023.

The financial results of Climate Technologies and InSinkErator ("ISE") are reported as discontinued operations for the three months ended December 31, 2022 and were as follows:

Three Months Ended December 31, 2022
 Climate TechnologiesISETotal
Net sales$1,064 49 1,113 
Cost of sales702 29 731 
SG&A142 8 150 
Gain on sale of business— (2,780)(2,780)
Other deductions, net32 12 44 
Earnings before income taxes188 2,780 2,968 
Income taxes313 653 966 
Earnings, net of tax$(125)2,127 2,002 

Climate Technologies' results for the three months ended December 31, 2022 included lower expense of $27 due to ceasing depreciation and amortization upon the held-for-sale classification. Other deductions, net for Climate Technologies included $27 of transaction-related costs for the three months ended December 31, 2022. Income taxes for the three months ended December 31, 2022 included approximately $275 for Climate Technologies subsidiary restructurings and approximately $660 related to the gain on the InSinkErator divestiture.

Net cash from operating and investing activities for Climate Technologies, InSinkErator and Therm-O-Disc for the three months ended December 31, 2023 and 2022 were as follows:

Climate TechnologiesISE and TODTotal
 Three Months Ended December 31,Three Months Ended December 31,Three Months Ended December 31,
 2022 2023 2022 2023 2022 2023 
Cash from operating activities$205 (29)(89)— 116 (29)
Cash from investing activities$(43)1 2,996 — 2,953 1 

For the three months ended December 31, 2022, net cash from operating activities reflects the payment of ISE transaction fees and unfavorable working capital. Cash from investing activities reflects the proceeds of approximately $3.0 billion related to the InSinkErator divestiture.






9


 Sept 30, 2017 Dec 31, 2017
Property, plant and equipment, net   
Property, plant and equipment, at cost $7,873
  7,930
Less: Accumulated depreciation 4,552
  4,651
     Total $3,321
  3,279

(6) PENSION & POSTRETIREMENT PLANS

Total periodic pension and postretirement (income) expense is summarized below:
 Three Months Ended December 31,
 2022 2023 
Service cost$12 9 
Interest cost54 55 
Expected return on plan assets(71)(74)
Net amortization(20)(14)
Total$(25)(24)

(7) OTHER DEDUCTIONS, NET

Other deductions, net are summarized below:
 Three Months Ended
December 31,
 2022 2023 
Amortization of intangibles (intellectual property and customer relationships)$118 274 
Restructuring costs10 83 
Acquisition/divestiture costs— 80 
Foreign currency transaction (gains) losses(7)34 
Investment-related gains & gains from sales of capital assets(4)— 
Loss on Copeland equity method investment— 36 
Russia business exit47 — 
Other(44)(20)
Total$120 487 

Intangibles amortization for the three months ended December 31, 2023 included $139 related to the NI acquisition. Foreign currency transaction gains for the three months ended December 31, 2022 included a mark-to-market gain of $35 related to foreign currency forward contracts that were terminated in June 2023. Other is composed of several items, including pension expense, litigation costs, provision for bad debt and other items, none of which is individually significant.







10



 Sept 30, 2017 Dec 31, 2017
Goodwill by business segment     
Automation Solutions $4,704
  5,005
      
Climate Technologies 555
  555
Tools & Home Products 57
  56
Commercial & Residential Solutions 612
  611
      
     Total $5,316
  5,616
(8) RESTRUCTURING COSTS

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 fiscal 2024 restructuring expense and related costs to be approximately $250, including costs to complete actions initiated in the first three months of the year.

Restructuring expense by business segment follows:

 Three Months Ended December 31,
 2022 2023 
Final Control$(1)3 
Measurement & Analytical1 3 
Discrete Automation1 10 
Safety & Productivity— — 
Intelligent Devices1 16 
Control Systems & Software1 1 
Test & Measurement— 40 
AspenTech— — 
Software and Control1 41 
Corporate8 26 
Total$10 83 
Corporate restructuring of $26 for the three months ended December 31, 2023 is comprised entirely of integration-related stock compensation expense attributable to NI.
Details of the change in the liability for restructuring costs during the three months ended December 31, 2023 follow:
 Sept 30, 2023ExpenseUtilized/PaidDec 31, 2023
Severance and benefits$85 79 56 108 
Other2 4 3 3 
Total$87 83 59 111 
The tables above do not include $5 and $4 of costs related to restructuring actions incurred for the three months ended December 31, 2022 and 2023, respectively, that are required to be reported in cost of sales.
(9) TAXES

Income taxes were $7 in the first quarter of fiscal 2024 and $98 in 2023, resulting in effective tax rates of 5 percent and 23 percent, respectively. The current year rate included a $57 ($0.10 per share) benefit related to discrete tax items and the impact of inventory step-up amortization, which in total had a 16 percentage point impact on the rate. The prior year rate included a 2 percentage point unfavorable impact related to the Russia charge, which had no related tax benefit.








11



(10) EQUITY METHOD INVESTMENT AND NOTE RECEIVABLE

As discussed in Note 5, the Company completed the divestiture of a majority stake in Copeland on May 31, 2023, and received upfront, pre-tax cash proceeds of approximately $9.7 billion and a note receivable with a face value of $2.25 billion, while retaining a 40 percent non-controlling common equity interest in Copeland.
The Company records its share of Copeland's income or loss using the equity method of accounting. For the three months ended December 31, 2023 the Company recorded a loss of $36 in Other deductions to reflect its share of Copeland's losses and a tax benefit of $9 in Income taxes related to Copeland's U.S. business, which is taxed as a partnership (in total, a loss of $0.04 per share). The Company recognized non-cash interest income on the note receivable of $31, which is reported in Interest income from related party and capitalized to the carrying value of the note.
As of December 31, 2023, the carrying values of the retained equity investment and note receivable were $1,129 and $2,124, respectively.
Summarized financial information for Copeland for the three months ended December 31, 2023 is as follows.
Three Months Ended December 31,
2023
Net sales$1,024
Gross profit$345
Income (loss) from continuing operations$(93)
Net income (loss)$(93)
Net income (loss) attributable to shareholders$(90)

(11) OTHER FINANCIAL INFORMATION

Sept 30, 2023Dec 31, 2023
Inventories
Finished products$446 624 
Raw materials and work in process1,560 1,808 
Total$2,006 2,432 
Property, plant and equipment, net  
Property, plant and equipment, at cost$5,524 5,953 
Less: Accumulated depreciation3,161 3,252 
     Total$2,363 2,701 
Goodwill by business segment
Final Control$2,660 2,687 
Measurement & Analytical1,545 1,568 
Discrete Automation892 910 
Safety & Productivity388 399 
Intelligent Devices5,485 5,564 
Control Systems & Software668 672 
Test & Measurement— 3,418 
AspenTech8,327 8,329 
Software and Control8,995 12,419 
     Total$14,480 17,983 





12



Sept 30, 2023Dec 31, 2023
Other intangible assets  
Gross carrying amount$10,111 15,481 
Less: Accumulated amortization3,848 4,211 
     Net carrying amount$6,263 11,270 
Other intangible assets include customer relationships, net, of $3,353 and $6,612 and intellectual property, net, of $2,707 and $4,445 as of September 30, 2023 and December 31, 2023, respectively.
The increase in goodwill and intangibles was primarily due to the NI acquisition. See Note 4.
Three Months Ended December 31,
2022 2023 
Depreciation and amortization expense include the following:
Depreciation expense$74 79 
Amortization of intangibles (includes $49 and $49 reported in Cost of Sales, respectively)167 323 
Amortization of capitalized software19 20 
Total$260 422 
Amortization of intangibles included $139 related to the NI acquisition for the three months ended December 31, 2023.
Sept 30, 2023Dec 31, 2023
Other assets include the following:
Pension assets$995 1,024 
Operating lease right-of-use assets550 635 
Unbilled receivables (contract assets)559 606 
Deferred income taxes100 98 
Asbestos-related insurance receivables53 50 
As of December 31, 2023, the Company had one operating lease that had not yet commenced with a lease term of approximately 15 years and total undiscounted future minimum payments of approximately $80. This lease is expected to commence in the second quarter of fiscal 2024 and will be recorded as a right-of-use asset and lease liability.
Accrued expenses include the following:
Customer advances (contract liabilities)$861 1,133 
Employee compensation618 499 
Income taxes207 274 
Operating lease liabilities (current)144 157 
Product warranty84 73 
Other liabilities include the following:  
Deferred income taxes$1,959 2,827 
Operating lease liabilities (noncurrent)404 465 
Pension and postretirement liabilities435 449 
Asbestos litigation173 169 
The increase in goodwilldeferred income tax liabilities reflects the acquisitionimpact of Paradigm.the NI acquisition. See Note 11.4.






13


 Sept 30, 2017 Dec 31, 2017
Accrued expenses include the following     
Employee compensation $531
  548
Customer advanced payments $505
  539
Product warranty $120
  128

 Sept 30, 2017 Dec 31, 2017
Other liabilities     
Pension and postretirement liabilities $664
  659
Deferred income taxes 425
  244
Asbestos litigation 340
  336
Other 551
  664
     Total $1,980
  1,903
(12) FINANCIAL INSTRUMENTS
Other long-term assets include $132 of asbestos-related insurance receivables.

4.Following is a discussion regarding the Company’s use of financial instruments:
Hedging Activities – As of December 31, 2017,2023, the notional amount of foreign currency hedge positions was approximately $1.6 billion, and commodity hedge contracts totaled approximately $124 (primarily 49 million pounds of copper and aluminum).$2.8 billion. All derivatives receiving deferralhedge accounting are cash flow hedges. The majority of hedging gains and losses deferred as of December 31, 20172023 are expected to be recognized over the next 12 months as the underlying forecasted transactions occur. Gains and losses on foreign currency derivatives reported in otherOther deductions, net reflect hedges of balance sheet exposures that do not receive deferralhedge accounting.
Net Investment Hedge – In fiscal 2019, the Company issued euro-denominated debt of €1.5 billion. The euro notes reduce foreign currency risk associated with the Company's international subsidiaries that use the euro as their functional currency and have been designated as a hedge of a portion of the investment in these operations. Foreign currency gains or losses associated with the euro-denominated debt are deferred in accumulated other comprehensive income (loss) and will remain until the hedged investment is sold or substantially liquidated.
The following gains and losses are included in earnings and other comprehensive income (OCI) for the three months endedDecember 31, 20172022 and 2016:
2023:
Into EarningsInto OCI
1st Quarter1st Quarter
Gains (Losses)Location2022 2023 2022 2023 
CommodityCost of sales$(8)— 11 — 
Foreign currencySales(1)— 4 7 
Foreign currencyCost of sales8 3 (3)1 
Foreign currencyOther deductions, net5 15 
Net Investment Hedges
Euro denominated debt— (123)(55)
     Total $4 18 (111)(47)
    Into Earnings Into OCI
    1st Quarter 1st Quarter
Gains (Losses) Location 2016
 2017
 2016
 2017
Commodity Cost of sales $(2) 5
 10
 13
Foreign currency Sales, cost of sales (10) —
 2
 (12)
Foreign currency Other deductions, net 6
 —
    
     Total   $(6) 5
 12
 1



7

Regardless of whether derivatives and non-derivative financial instruments receive deferralhedge accounting, the Company expects hedging gains or losses to be essentially offset by losses or gains on the related underlying exposures. The amounts ultimately recognized will differ from those presented above for open positions, which remain subject to ongoing market price fluctuations until settlement. Derivatives receiving deferralhedge accounting are highly effective and no amounts were excluded from the assessmentassessment of hedge effectiveness. Hedge ineffectiveness was immaterial for the three months ended December 31, 2017and 2016.
Fair Value Measurement– Valuations for all derivatives, the Company's note receivable from Copeland, and the Company's long-term debt fall within Level 2 of the GAAP valuation hierarchy. The fair value of the note receivable as of December 31, 2023 was approximately $2.0 billion, which was lower than the carrying value by approximately $100. See Note 10 for further details. As of December 31, 2017,2023, the fair value of long-term debt was $4,092,approximately $7.4 billion, which exceededwas lower than the carrying value by $278. At December 31, 2017, the$847. The fair valuesvalue of commodity contracts and foreign currency contracts, werewhich are reported in otherOther current assets and accrued expenses. ValuationsAccrued expenses, did not materially change since September 30, 2023. Commodity contracts related to discontinued operations and were novated to Copeland upon the completion of derivative contract positions are summarized below:  the transaction.
 September 30, 2017 December 31, 2017
 Assets Liabilities Assets Liabilities
Foreign Currency $26
 18
 11
 19
Commodity $12
 —
 20
 —

Counterparties to derivatives arrangementsarrangements are companies with investment-grade credit ratings. The Company has bilateral collateral arrangements with counterparties with credit rating-based posting thresholds that vary depending on the arrangement. If credit ratings on the Company's debt fall below pre-established levels, counterparties can require immediate full collateralization of all derivatives in net liability positions. The maximum amount that could potentially have been required was $11.immaterial. The Company also can demand full collateralization of derivatives in net asset positions should any counterparty credit ratings fall below certain thresholds. No collateral was posted with counterparties and none was held by the Company as of December 31, 2017.2023.


5.The change in equity for the first three months of 2018 is shown below:  





14


 
Common
Stockholders'
Equity
 
Noncontrolling
Interests in Subsidiaries
 Total Equity
Balance at September 30, 2017 $8,718
  52
  8,770
Net earnings 392
  2
  394
Other comprehensive income (loss) 27
  —
  27
Cash dividends (311)  (15)  (326)
Purchases of treasury stock, net of issuances (480)  —
  (480)
Adoption of accounting standard update 3
  —
  3
Balance at December 31, 2017 $8,349
  39
  8,388


(13) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Activity in Accumulated other comprehensive income (loss) for the three months ended December 31, 2022 and 2023 is shown below, net of income taxes: 
Three Months Ended December 31,
2022 2023 
Foreign currency translation
   Beginning balance$(1,265)(1,012)
   Other comprehensive income (loss), net of tax of $28 and $13, respectively236 172 
   Ending balance(1,029)(840)
Pension and postretirement
   Beginning balance(222)(247)
Amortization of deferred actuarial losses into earnings, net of tax of $4 and $2, respectively(16)(12)
   Ending balance(238)(259)
Cash flow hedges
   Beginning balance2 6 
Gains deferred during the period, net of taxes of $(3) and $(2), respectively9 6 
   Reclassification of realized (gains) losses to sales and cost of sales, net of tax of $— and $—, respectively1 (3)
   Ending balance12 9 
Accumulated other comprehensive income (loss)$(1,255)(1,090)



8



15



6.Activity in accumulated other comprehensive income (loss) for the three months ended December 31, 2017 and 2016 is shown below:  

 Three Months Ended December 31,
  2016
  2017
Foreign currency translation     
   Beginning balance $(812)  (369)
   Other comprehensive income (loss) before reclassifications (367)  24
   Reclassified to gain/loss on sale of businesses 266
  (17)
   Ending balance (913)  (362)
      
Pension and postretirement     
   Beginning balance (1,162)  (662)
   Amortization of deferred actuarial losses into earnings 35
  23
   Reclassified to gain/loss on sale of businesses 20
  —
   Ending balance (1,107)  (639)
      
Cash flow hedges     
   Beginning balance (25)  12
   Deferral of gains (losses) arising during the period 8
  1
   Reclassification of realized (gains) losses to sales and cost of sales 7
  (4)
   Ending balance (10)  9
      
Accumulated other comprehensive income (loss) $(2,030)  (992)
      
Activity above is shown net of income taxes for the three months ended December 31, 2017 and 2016, respectively, as follows: amortization of pension and postretirement deferred actuarial losses: $(8) and $(18); pension and postretirement divestiture: $- and $(7); deferral of cash flow hedging gains (losses): $- and $(4); reclassification of realized cash flow hedging (gains) losses: $1 and $(5).
(14) BUSINESS SEGMENTS
7.Total periodic pension and postretirement expense is summarized below:

 Three Months Ended December 31,
  2016  2017
Service cost $21
  19
Interest cost 42
  46
Expected return on plan assets (86)  (87)
Net amortization 53
  31
Total $30
  9

8.Other deductions, net are summarized below:
 Three Months Ended
December 31,
 2016   2017
      
Amortization of intangibles $22
  56
Restructuring costs 11
  15
Other —
  17
Total $33
  88

The increaseAs disclosed in amortizationNote 4, the Company completed the acquisition of NI on October 11, 2023. NI is now referred to as Test & Measurement and restructuringreported as a new segment 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.Software and Control business group.


9


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 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 modulate the flow of process fluids, smart actuation and control technologies, pressure management products, and industrial and residential regulators that reduce 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.


10

Process Control Systems & Solutions provides a digital ecosystem that controls plant processes by communicating with and adjusting 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 products 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 well as a broad range of tools and appliance solutions.
The Climate Technologies segment provides products, services and solutions for all areas of the climate control industry, including residential heating 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 about the Company's results of operations by business segment follows:

 Three Months Ended December 31,
 Sales Earnings
 2016
 2017
 2016
 2017
        
Automation Solutions$1,967
 2,572
 326
 386
        
Climate Technologies859
 922
 161
 165
Tools & Home Products393
 330
 88
 87
Commercial & Residential Solutions1,252
 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 December 31,
 SalesEarnings (Loss)
 2022 2023 2022 2023 
Final Control$862 940 158 194 
Measurement & Analytical749 947 175 235 
Discrete Automation618 613 121 97 
Safety & Productivity310 322 63 68 
Intelligent Devices2,539 2,822 517 594 
Control Systems & Software606 675 107 149 
Test & Measurement— 382 — (78)
AspenTech243 257 (33)(35)
Software and Control849 1,314 74 36 
Stock compensation(102)(74)
Unallocated pension and postretirement costs45 31 
Corporate and other(64)(399)
Loss on Copeland equity method investment— (36)
Eliminations/Interest(15)(19)(48)(44)
Interest income from related party— 31 
     Total$3,373 4,117 422 139 
Corporate and other for the first quarter of 2018 includes valves & controls first year acquisition accounting charges of $10 related to inventory and $15 for backlog amortization, as well as higher incentive stockStock 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


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.



12

The financial results of the network power systems and power generation, motors and drives businesses reported as discontinued operations for the three months ended December 31, 2016 were2023 included $30 of integration-related stock compensation expense attributable to NI ($26 of which was reported as follows:
 
Three Months Ended
Dec 31, 2016
  
Net sales$940
Cost of sales626
SG&A242
Other (income) deductions, net(421)
Earnings (Loss) before income taxes493
Income taxes548
Earnings (Loss), net of tax$(55)

Discontinued operations for the first quarter of 2017 included a loss of $55, consisting of net earnings from 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, a loss of $38 to write down the power generation, motorsrestructuring costs). Corporate and drives business to the sales price less cost to sell, and lower expense of $27 due to ceasing depreciation and amortization for the discontinued businesses held-for-sale.

Net cash from operating and investing activities for the network power systems and power generation, motors and drives businessesother for the three months ended December 31, 20162023 included acquisition-related inventory step-up amortization of $231 and acquisition/divestiture fees and related costs of $130, while 2022 included a loss of $47 related to the Company's exit of business operations in Russia and a mark-to-market gain of $35 related to foreign currency forward contracts that were as follows:    terminated in June 2023.






16



  
Three Months Ended
Dec 31, 2016
   
Cash from operating activities $(172)
Cash from investing activities $3,894
Depreciation and amortization (includes intellectual property, customer relationships and capitalized software) by business segment are summarized below:

Three Months Ended December 31,
2022 2023 
Final Control$45 40 
Measurement & Analytical30 40 
Discrete Automation21 22 
Safety & Productivity14 14 
Intelligent Devices110 116 
Control Systems & Software21 21 
Test & Measurement— 151 
AspenTech123 123 
Software and Control144 295 
Corporate and other6 11 
     Total$260 422 
Operating cash flow used by discontinued operations of $172Test & Measurement depreciation and amortization for the three months ended December 31, 20162023 included paymentsintangibles amortization of $139 for income taxes and fees relateddue to the transactions.acquisition.

Sales by geographic destination, Americas, Asia, Middle East & Africa ("AMEA") and Europe, are summarized below:


Three Months Ended December 31,Three Months Ended December 31,
20222023
AmericasAMEAEuropeTotalAmericasAMEAEuropeTotal
Final Control$446 308 108 862 454 370 116 940 
Measurement & Analytical396 246 107 749 475 325 147 947 
Discrete Automation291 175 152 618 286 162 165 613 
Safety & Productivity236 17 57 310 243 16 63 322 
Intelligent Devices1,369 746 424 2,539 1,458 873 491 2,822 
Control Systems & Software294 185 127 606 325 209 141 675 
Test & Measurement— — — — 164 99 119 382 
AspenTech112 63 68 243 140 60 57 257 
Software and Control406 248 195 849 629 368 317 1,314 
     Total$1,775 994 619 3,388 2,087 1,241 808 4,136 


13



17




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 October 11, 2023, the Company completed the acquisition of National Instruments Corporation (“NI”), which is now referred to as Test & Measurement and reported as a new segment in the Software and Control business group. NI provides software-connected automated test and measurement systems that enable enterprises to bring products to market faster and at a lower cost, and had revenues of approximately $1.7 billion for the 12 months ended September 30, 2023. See Note 4.

For the first quarter of 2018fiscal 2024, net sales were $3.8$4.1 billion, up 1922 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 10 percent. Foreign currency translation had a 1 percent reflecting improving trends in energy-relatedfavorable impact, the Test & Measurement acquisition added 12 percent and general industrial markets, while HVAC and refrigeration markets remained favorable.the divestiture of Metran, Emerson's Russia-based manufacturing subsidiary, deducted 1 percent.
Earnings from continuing operations attributable to common stockholders were $392 million, up 8$142, down 57 percent, compared with $364 million in 2017, and diluted earnings per share from continuing operations were $0.61, up 9$0.25, down 55 percent compared with $0.56 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,$1.22, up 2756 percent reflecting the impact of discontinued operationscompared with $0.78 in the prior year.year, reflecting the strong sales growth and operating performance, as well as a $0.13 contribution from Test & Measurement.

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, and certain gains, losses or impairments.
Three Months Ended Dec 3120222023
Diluted earnings from continuing operations per share$0.56 0.25 
Amortization of intangibles0.15 0.36 
Restructuring and related costs0.02 0.12 
Acquisition/divestiture fees and related costs— 0.17 
Amortization of acquisition-related inventory step-up— 0.38 
Loss on Copeland equity method investment— 0.04 
Discrete tax benefits— (0.10)
Russia business exit0.08 — 
AspenTech Micromine purchase price hedge(0.03)— 
Adjusted diluted earnings from continuing operations per share$0.78 1.22 





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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 - Dec 31, 2022$0.78
    Operations0.33
    Stock compensation0.08
    Interest income from related party0.04
    Share count0.02
    Effective tax rate(0.03)
Adjusted diluted earnings from continuing operations per share - Dec 31, 2023$1.22

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31


Following is an analysis of the Company’s operating results for the first quarter ended December 31, 2017,2022, compared with the first quarter ended December 31, 2016.2023.
20222023Change
(dollars in millions, except per share amounts)   
Net sales$3,373 4,117 22 %
Gross profit$1,620 1,916 18 %
Percent of sales48.0 %46.5 %(1.5) pts
SG&A$1,030 1,277 24 %
Percent of sales30.5 %31.0 %0.5 pts
Other deductions, net$120 487  
Amortization of intangibles$118 274 
Restructuring costs$10 83 
Interest expense, net$48 44  
Interest income from related party$— (31)
Earnings from continuing operations before income taxes$422 139 (67)%
Percent of sales12.5 %3.4 %(9.1) pts
Earnings from continuing operations common stockholders$329 142 (57)%
Percent of sales9.8 %3.4 %(6.4) pts
Net earnings common stockholders$2,331 142 (94)%
Diluted EPS - Earnings from continuing operations$0.56 0.25 (55)%
Diluted EPS - Net earnings$3.97 0.25 (94)%
Adjusted Diluted EPS - Earnings from continuing operations$0.78 1.22 56 %

Three Months Ended Dec 312016 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 sales42.4% 42.5%  
      
SG&A$822
 992
  
Percent of sales25.5% 26.0%  
Other deductions, net$33
 88
  
Interest expense, net$46
 38
  
      
Earnings from continuing operations before income taxes$464
 503
 9%
Percent of sales14.4% 13.2%  
Earnings from continuing operations common stockholders$364
 392
 8%
Net earnings common stockholders$309
 392
 27%
Percent of sales9.6% 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 first quarter of 2018fiscal 2024 were $3.8$4.1 billion, an increase of $600 millionup 22 percent compared with $3.2 billion in 2017. 2023. Intelligent Devices sales were up 11 percent, while Software and Control sales were up 55 percent, which included the impact of the Test & Measurement acquisition. Underlying sales increased 7were up 10 percent ($229 million) on 8 percent higher volume. Acquisitionsvolume and 2 percent higher price. Foreign currency translation had a 1 percent favorable impact, the Test & Measurement acquisition added 12 percent ($373 million) and foreign currency translation added 3 percent ($75 million), while 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 9 percent in the U.S. and 7up 11 percent internationally. The Americas was up 8 percent, Europe was up 10 percent, and Asia, Middle East & Africa was up 15 percent (China up 239 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..







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Cost of sales for the first quarter of 2018fiscal 2024 were $2.2 billion,$2,201, an increase of $344 million$448 compared with $1.9 billion in 2017, primarily due to acquisitions,2023, reflecting the impact of higher volume and the impact of foreign currency translation.Test & Measurement acquisition. Gross margin improved slightly to 42.5 percentof 46.5% decreased 1.5 percentage points, reflecting leverage on higher volume, savingsthe impact from cost reduction actions and favorable mix, largely offsetacquisition-related inventory step-up amortization of $231, which negatively impacted margins by dilution of 1.65.6 percentage pointspoints. Excluding this impact, gross margin improved due to the valvesTest & controls operationsMeasurement acquisition and first year acquisition accounting charges of $10 million related to inventory.higher price.




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Selling, general and administrative (SG&A) expensesexpenses of $992 million$1,277 increased $170 million compared with the prior year, primarily due to acquisitions$247 and an increase in volume. SG&A as a percent of sales increased 0.5 percentage points to 26.031.0 percent reflecting higher incentive stock compensation of $40 million due to an increase in the Company's stock price, partially offset by leverage on the higher volume.

Other deductions, net were $88 million in 2018, an increase of $55 million compared with the prior year, largely due toreflecting the impact of the Test & Measurement acquisition, partially offset by lower stock compensation expense and strong operating leverage on higher sales.
Other deductions, net were $487 for the first quarter of fiscal 2024, an increase of $367 compared with the prior year. The current year included intangibles amortization related to the Test & Measurement acquisition of $19 million$139, restructuring costs of $83, acquisition/divestiture costs of $80 and backlog amortizationa loss of $15 million, primarily$36 on the Company's equity method investment in Copeland. The prior year included a charge of $47 related to the valves & controls acquisition,Company exiting its business in Russia and unfavorable a mark-to-market gain of $35 related to foreign currency transactions of $22 million. forward contracts that were terminated in June 2023. See Note 8.7 and Note 10.


Pretax earnings from continuing operations of $503 million increased $39 million, or 9 percent.$139 decreased $283, down 67 percent compared with the prior year. Earnings increased $60 million$77 in Automation SolutionsIntelligent Devices and $3 milliondecreased $38 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. InIncome taxes were $7 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 afiscal 2024 and $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 and $94 million for 2017,2023, resulting in effective tax rates of 225 percent and 2023 percent, respectively. The effective taxcurrent year rate for the first quarter of 2017 included a $47 million$57 ($0.070.10 per share) incomebenefit related to discrete tax benefit from restructuringitems and the impact of inventory step-up amortization, which in total had a foreign subsidiary. 16 percentage point impact on the rate. The effectiveprior year rate included a 2 percentage point unfavorable impact related to the Russia charge, which had no related 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.benefit.


Earnings from continuing operations attributable to common stockholders were $392 million, up 8$142, down 57 percent, and diluted earnings per share from continuing operations were $0.61, up 9 percent. Earnings per share include a $0.03 per share benefit from$0.25, down 55 percent compared with $0.56 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 $1.22 compared with $0.78 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 $2,002 ($3.41 per share) in the prior year, reflecting the $2.1 billion after-tax gain on the InSinkErator divestiture. See Note 5.

Net earnings common stockholders in the first quarter of 2018fiscal 2024 were $392 million, up 27 percent,$142 compared with $309 million$2,331 in the prior year, and earnings per share were $0.61, up 27 percent,$0.25 compared with $0.48$3.97 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.





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Three Months Ended Dec 3120222023Change
Earnings from continuing operations before income taxes$422 139 (67)%
      Percent of sales12.5 %3.4 %(9.1) pts
    Interest expense, net48 44 
    Interest income from related party— (31)
    Amortization of intangibles167 323 
    Restructuring and related costs15 87 
    Acquisition/divestiture fees and related costs— 134 
    Amortization of acquisition-related inventory step-up— 231 
    Loss on Copeland equity method investment— 36 
    Russia business exit47 — 
    AspenTech Micromine purchase price hedge gain(35)— 
Adjusted EBITA from continuing operations$664 963 45 %
      Percent of sales19.7 %23.4 %3.7 pts







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Business Segments
Following is an analysis of operating results for the Company’s business segments for the first quarter ended December 31, 2017,2022, compared with the first quarter ended December 31, 2016.2023. 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
20222023ChangeFXAcq/DivU/L
Sales:
Final Control$862 940 9 %(1)%1 %9 %
Measurement & Analytical749 947 26 %— %2 %28 %
Discrete Automation618 613 (1)%(1)%— %(2)%
Safety & Productivity310 322 4 %(1)%— %3 %
     Total$2,539 2,822 11 %(1)%1 %11 %
Earnings:
Final Control$158 194 22 %
Measurement & Analytical175 235 34 %
Discrete Automation121 97 (20)%
Safety & Productivity63 68 8 %
     Total$517 594 15 %
     Margin20.4 %21.0 %0.6 pts
Amortization of intangibles:
Final Control$22 22 
Measurement & Analytical5 20 
Discrete Automation7 9 
Safety & Productivity6 6 
     Total$40 57 
Restructuring and related costs:
Final Control$4 7 
Measurement & Analytical1 3 
Discrete Automation1 10 
Safety & Productivity— — 
     Total$6 20 
Adjusted EBITA$563 671 19 %
Adjusted EBITA Margin22.2 %23.8 %1.6 pts
Three Months Ended Dec 312016 2017 Change
(dollars in millions)     
      
Sales$1,967
 2,572
 31%
Earnings$326
 386
 18%
     Margin16.6% 15.0%  
Sales by Major Product Offering     
Measurement & Analytical Instrumentation$682
 772
 13%
Valves, Actuators & Regulators449
 867
 93%
Industrial Solutions367
 424
 15%
Process Control Systems & Solutions469
 509
 9%
     Total$1,967
 2,572
 31%

Automation SolutionsIntelligent Devices sales were $2.6$2.8 billion in the first quarter of 2024, an increase of $605 million,$283, or 3111 percent. Underlying sales increased 11 percent on 9 percent higher volume and 2 percent higher price. Underlying sales increased 6 percent in the Americas, Europe increased 14 percent and Asia, Middle East & Africa was up 18 percent (China up 10 percent). Final Control sales increased $78, or 9 percent, ($176 million) on higher volume. Acquisitions added 19 percent ($373 million) reflecting strength in energy and foreign currency translation had a 3 percent ($56 million) favorable impact.power end markets. Sales for Measurement & Analytical Instrumentation increased 13$198, or 26 percent, reflecting robust growth in all geographies and Processstrong backlog conversion. Discrete Automation sales decreased $5, or 1 percent, reflecting softness in the Americas and Asia, Middle East & Africa. Safety & Productivity sales increased $12, or 4 percent, reflecting solid demand in the Americas and Europe. Earnings for Intelligent Devices were $594, an increase of $77, or 15 percent, and margin increased 0.6 percentage points to 21.0 percent. Adjusted EBITA margin was 23.8 percent, an increase of 1.6 percentage points, reflecting leverage on higher sales and favorable price less net material inflation, partially offset by higher headcount and other costs.






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SOFTWARE AND CONTROL
20222023ChangeFXAcq/DivU/L
Sales:
Control Systems & Software$606 675 11 %(1)%1 %11 %
Test & Measurement— 382 — %
AspenTech243 257 6 %— %— %6 %
     Total$849 1,314 55 %(1)%(45)%9 %
Earnings:
Control Systems & Software$107 149 40 %
Test & Measurement— (78)#DIV/0!
AspenTech(33)(35)(7)%
     Total$74 36 (51)%
     Margin8.7 %2.8 %(5.9) pts
Amortization of intangibles:
Control Systems & Software$6 5 
Test & Measurement— 139 
AspenTech121 122 
Total$127 266 
Restructuring and related costs:
Control Systems & Software$1 1 
Test & Measurement— 40 
AspenTech— — 
     Total$1 41 
Adjusted EBITA$202 343 70 %
Adjusted EBITA Margin23.8 %26.1 %2.3 pts

Software and Control sales were $1,314 in the first quarter of 2024, an increase of $465, or 55 percent compared to the prior year, reflecting the impact of the Test & Measurement acquisition and strong growth in Control Systems & Solutions increasedSoftware. Underlying sales were up 9 percent on increased spending by global oil7 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 932 percent led by the valves & controls acquisition ($349 million) and broad-based demand across end markets, including energy, chemical and life sciences. Industrial Solutions sales increased $57 million, or 15 percent, driven by favorable global trends in general industrial end markets.higher price. Underlying sales increased 14 percent in the U.S. and decreased 1Americas, 2 percent in Europe. Sales increased 13Europe and 9 percent in Asia, Middle East & Africa (China up 224 percent) supported by. Control Systems & Software sales increased $69, or 11 percent, reflecting robust global demand in process end markets and strong demand in process automationpower end markets in the Americas and discrete markets, while Canada was up 18 percent and Latin America was up 6 percent. Sales decreased 7 percent inAsia, Middle East/East & Africa. Earnings were $386 million, an increase of $60 million, or 18 percent. The increase was driven by higher volume, leverage and cost reduction savings, partially offset by unfavorable foreign currency transactions of $26 million compared with the prior year. Margin declined 1.6 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 valvesTest & controls acquisition, which includes intangibles amortization of $18 million.

COMMERCIAL & RESIDENTIAL SOLUTIONS
Three Months Ended Dec 312016 2017 Change
(dollars in millions)     
      
Sales:     
Climate Technologies$859
 922
 7 %
Tools & Home Products393
 330
 (16)%
     Total$1,252
 1,252
 — %
      
Earnings:     
Climate Technologies$161
 165
 2 %
Tools & Home Products88
 87
 (1)%
     Total$249
 252
 1 %
     Margin19.9% 20.1%  



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Commercial & Residential SolutionsMeasurement sales were $1.3 billion$382 in the first quarter, flat 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, reflecting the impact of the residential storage divestiture. Sales for professional tools were strong on favorable demand in oil and gas and construction-related markets. Wet/dry vacuums had solid sales growth and food waste disposers were up slightly. Overall, underlyingacquisition. AspenTech sales increased 1$14, or 6 percent, in the U.S., 1primarily due to higher maintenance and services revenue. Earnings for Software and Control decreased $38, down 51 percent, in Europe and 17 percent in Asia (China up 24 percent). Sales increased 5 percent in Canada, 4 percent in Middle East/Africa and 1 percent in Latin America. Earnings were $252 million, an increase of $3 million and margin improved 0.2decreased 5.9 percentage points due to the Test & Measurement loss which reflected significant intangibles amortization and restructuring. Adjusted EBITA margin increased 2.3 percentage points, reflecting leverage on higher volumesales, higher price and favorable price, 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.mix.







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FINANCIAL CONDITION

Key elements of the Company's financial condition for the three months ended December 31, 20172023 as compared to the year ended September 30, 20172023 and the three months ended December 31, 2022 follow.
Dec 31, 2022Sept 30, 2023Dec 31, 2023
Sept 30, 2017
 Dec 31, 2017
Working capital (in millions)$3,207
 1,960
Operating working capital
Current ratio1.6
 1.3
Total debt-to-total capital34.8% 39.6%Total debt-to-total capital48.1 %28.3 %34.4 %
Net debt-to-net capital15.4% 22.1%Net debt-to-net capital41.7 %0.5 %29.8 %
Interest coverage ratio12.6X 11.2X
Interest coverage ratio7.3 X11.5 X2.6 X
Operating working capital increased due to the acquisition of NI, changes in accrued expenses and higher inventory levels to support sales growth. As of December 31, 2023, Emerson's cash and equivalents totaled $2,076, which included approximately $180 attributable to AspenTech. The cash held by AspenTech is intended to be used for its own purposes and is not available to return to Emerson shareholders.
The Company's debt-to-capital increased primarily duecurrent ratio decreased compared to higherSeptember 30, 2023, reflecting the decrease in cash and increase in short-term borrowings used to support acquisitions and share repurchases.the NI acquisition. The interest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of 11.2X2.6X for the first three months of 2018fiscal 2024 compares to 9.9X7.3X for the first three months of 2017. The increase reflects higherended December 31, 2022, reflecting lower GAAP pretax earnings largely due to the NI acquisition. Excluding the impact from acquisition-related inventory step-up amortization of $231, higher intangibles amortization of $156, acquisition/divestiture fees and lowerrelated costs of $134, higher restructuring and related costs of $72, and the loss of $36 on the Copeland equity method investment, the interest expense in the current year.coverage ratio was 10.1X.

Operating cash flow from continuing operations for the first three months of 2018fiscal 2024 was $447 million,$444, an increase of $37 million$142 compared with $410 million$302 in the prior year, reflecting higher earnings partially offset by an investment in working capital(excluding the impact of items related to support higher levels of sales activity. Operatingthe NI acquisition). Acquisition-related costs and integration activities negatively impacted operating cash flow from continuing operations funded dividends of $311 million and capital expenditures of $96 million.in the current year by approximately $100. AspenTech generated approximately $30 compared to $50 in the prior year. Free cashcash flow from continuing operations of $351 million$367 in the first three months of fiscal 2024 (operating cash flow of $447 million$444 less capital expenditures of $96 million)$77) increased $41 million$124 compared to free cash flow of $243 in 2018. Free2023 (operating cash flow of $302 less capital expenditures of $59), reflecting the increase in operating cash flow. Cash used in investing activities from continuing operations was $310 million$8,453, reflecting the acquisition of NI. Cash provided by financing activities from continuing operations was $2,055, reflecting an increase in 2017 (operating cash flow of $410 million less capital expenditures of $100 million). Divestiture proceeds of $235 million and increased short-term borrowings were used to fund acquisitions of $513 million$2,647, partially offset by share repurchases and common stock purchasesdividends.
Total cash provided by operating activities was $415 including the impact of $500 million.discontinued operations, and decreased $3 compared with $418 in the prior year.

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 $47 billion and common stockholders' equity of $21 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.


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FISCAL 20182024 OUTLOOK

The Company’s first quarter results reflected continued favorable global economic conditions and solidFor the full year, consolidated net 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 salesfrom continuing operations are expected to be up 1114.5 percent to 1317 percent, with underlying sales up 54.5 percent to 76.5 percent excluding an approximate 4a 10 to 10.5 percent impact from acquisitions and divestitures and 2 percentthe NI acquisition. Earnings per share from currency translation. Automation Solutions net salescontinuing operations are expected to be up 18$2.80 to 20 percent, with underlying sales up 6 to 8 percent excluding an approximate 9 percent impact$2.95, while adjusted earnings per share from acquisitions and 3 percent from currency translation. Commercial & Residential Solutions net salescontinuing operations are expected to be up 1$5.30 to 3 percent, with underlying sales up 4 to 6 percent, excluding an approximate 5 percent negative impact$5.45 (see the following reconciliation).
Outlook for Fiscal 2024 Earnings Per Share2024
Diluted earnings from continuing operations per share$2.80 - $2.95
    Amortization of intangibles~ 1.42
    Restructuring and related costs~ 0.34
    Loss on Copeland equity method investment~ 0.20
    Amortization of acquisition-related inventory step-up~ 0.38
    Acquisition/divestiture fees and related costs~ 0.26
    Discrete tax benefits~ (0.10)
Adjusted diluted earnings from continuing operations per share$5.30- $5.45
Operating cash flow from acquisitions and divestitures and 2 percent from favorable currency translation. Earnings per share arecontinuing operations is expected to be $3.05$3.0 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$3.1 billion and $0.03 per share from first year acquisition accounting charges. The Company expects operatingfree cash flow of $2.9 billion andfrom continuing operations, which excludes projected capital spending of approximately $575 million. For the second quarter of 2018, consolidated net sales are$0.4 billion, is expected to be up$2.6 to $2.7 billion. The fiscal 2024 outlook assumes approximately 18 percent, with underlying sales up$500 million returned to shareholders through share repurchases and approximately 7 percent, excluding an approximate 8 percent impact from acquisitions and divestitures and 3 percent from currency.

$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 scope, duration and ultimate impacts of the Russia-Ukraine and other global conflicts, as well as economic and currency conditions, market demand, 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, 20172023 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.





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25





PART II. OTHER INFORMATION
Item
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) Issuer Purchases of Equity Securities (shares in 000s).
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 20175,007 $61.65 5,007 51,923
December 20172,855 $67.01 2,855 49,068
     Total7,862 $63.60 7,862 49,068
PeriodTotal Number of Shares
Purchased		Average Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 20231,869 $93.631,869 31,415
November 2023— $0.00— 31,415
December 2023— $0.00— 31,415
     Total1,869 $93.631,869 31,415

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 31.4 shares remain available.available for purchase under the authorization.


Item 5. Other Information
During the three-month period ended December 31, 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). 
10.1
Letter Agreement dated November 8, 2017 by and28, 2023 between Emerson Electric Co. and Edgar M. Purvis,Sara Y. Bosco, incorporated by reference to the Company's Form 8-K filed on November 30, 2023, File No. 1-278, Exhibit 10.1
10.2
12
10.3
31
32
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 months ended December 31, 20172023 and 2016,2022, (ii) Consolidated Statements of Comprehensive Income for the three months ended December 31, 20172023 and 2016,2022, (iii) Consolidated Balance Sheets as of September 30, 20172023 and December 31, 2017,2023, (iv) Consolidated Statements of Equity for the three months ended December 31, 2023 and 2022, (v) Consolidated Statements of Cash Flows for the three months ended December 31, 20172023 and 2016,2022, and (v)(vi) Notes to Consolidated Financial Statements for the three months ended December 31, 2017.  2023 and 2022.  


104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).    




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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.
EMERSON ELECTRIC CO.
By/s/ M. J. Baughman
ByM. J. Baughman/s/ Frank J. Dellaquila
Frank J. Dellaquila
Senior Executive Vice President, and Chief Financial Officer
and Chief Accounting Officer
(on behalf of the registrant and as Chief Financial Officer)
February 7, 20182024





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