EMR - Earnings call transcript Q4 2021

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Operator

Good day and welcome to The Emerson Fourth Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. event recorded. this that note is being Please I Colleen Mettler, to turn over to the conference please would like go ahead.

Colleen Mettler

along on Thank year-end Today, thank quarter President available encourage and Slide which you. you for Frank Financial Officer, Krishnan. I Chief Executive joining presentation, Please and follow Good Lal website. is Dellaquila, Emerson's and Q. Karsanbhai, everyone Chief and Earnings with am I fiscal Call. slide Conference our join joined by Operating the me Officer, Ram morning Chief fourth to Officer, on

always, statements and degree As this to statement contain presentation take measures. Please on forward-looking may read risks which business note safe harbor include and of time the a uncertainties. non-GAAP

like is where to highlight As turn I X making difference. would Emerson to Slide I a areas X,

First, forum, in panelists Chief (ph), United will Climate Officer, Change attending Glasgow. be the [Indiscernible] of discussions. our Adjacent be Nations will participating Mike this XX X Innovation in notable year's Conference a Mike Train Sustainability Sustainable

software, cell, abatement carbon between and enable of BayoTech technology, to and and The on to medium BayoTech in net In buy fleet, the products, commercial the worked sectors. year enterprises has hydrogen. of low and autonomous support greening X many initiative. Emerson Emerson trucking and to pathways, of first example, to second agreement, small to deliver Mike how the hydrogen fully cost, and production by will recent breakthrough units hard building to with in adopt to innovation automation cement. this green abate notable discussion of, and steel accelerate Emerson support low One hydrogen will drive supporting to be greening announcement advanced fuel projects distribution hundreds a

environmentally have Emerson exciting designed that tomorrow's accelerate initiatives seen sustainable automation into technologies, real to development by Ventures, capital, to A the and $XXX venture be in cutting-edge key disruptive is providing technology release. industries. announcement potential and will commitment customer formal in investment software commitment challenges. the press to insights of Another innovation million will The industrial solutions, discrete advance corporate solve a information our more

Finally, has historically February. conference our been investor in

However, to presentation at to comments. our have Exchange President New over to on York Emerson's May. move be conference investor AspenTech, Lal with will his decided announcement we It opening to the now the I'd to XXXX. for Karsanbhai May due the turn recent located and CEO, Stock like XXth

Lal Karsanbhai

ago. was year planned Thank Emerson. you we Colleen, XXXX and obviously It than everyone. a morning, year for a phenomenal very differently good developed

was well Furthermore, creation Thank and strong both also Residential was all, it for will confidence want world. of and in brought Process as thank I I recovery as through was For from for CEO orders the anything The XXXX leveraged and underlying and experienced And all this however, time my like to were the But demand XX%. of an labor environment experienced we the XXXX XXX%. swing logistics, $XXX XX% resins, our you. around characterized agenda markets. cash X.X% was operationally, to in job. our in and that support our September in of assumptions of Air Conditioning the our did from challenges. fiscal a of and not one, with the fourth Emerson XX%. the around notably, by points teams for end I new lead The Emerson quality free a rewarding table. which of heard excellent, Automation significantly fabulous and cost a world is equally November the and express organization. in Company extensions. sincere electronics, before. named And challenging was form and KOBX to we value supply gratitude dissimilar continues to grew material challenged to year. to important, automation million cost the X price operated Through employees markets conversion steel, This up inflation, quarter Board at We was shareholders The in a the team. hybrid have be discrete by our flow chain, mix inclusive your plus in business, trailing Automation. management you've earnings Emerson's Directors X-months

labor to by experienced overtime costs. unavailability turnover logistics price a of rates, alongside challenges, higher absenteeism, our said a to by Having lastly that, fourth resulted in business. and the the which the addition, a quarter the and manufacturing $XXX In environment quarter, we characterized in and wanes costs, and cost EPS in missed then It leverage. X% million In and grew XXXX had challenging sales U.S. Company operating EPS. and impact climate was for impact negative XX% $X.XX we quarter $X.XX

'XX, some to thoughts. Turning and initial

was too as Price year, with from it assumption cost a XXXX. than improvement fourth unwind a similar positive sequential price The challenges quarter, as go and second go optimistic the ago, the and is year demand significantly chain of first stronger. The look not the half continued will backdrop million to of very $XXX The be we much through year the for the for cycle I'm demand. AC slight supply of The we in half against QX. operating the has moderate unpredictability, XXXX. cost year more will strong residential environment in XXXX. is but stable

addresses methane KOBX. to carbon team on the XX% as and of sustainability sales execution as driven transformation incremental continue Most and, we LNG have that's expect and know, our the one digital notably, markets automation confidence will modernizations, by in I you markets, deliver projects pillars identified we MRO capture. to replacement for reduction in XXXX. creation. underlying we and However, value that select three accelerated emissions strengthen, This driven and management

diversity very Board. enterprise. initiatives. named The first and Emerson's Train greenhouse Mike named we board as Turley Chair Company's Company's the we Sustainability ESG we as the steps taken And Officer. as equally bonus advanced first People of to significant intensity gas to our journey and have hired Elizabeth for commitments modernize accelerate the The annual We reductions. in our James Chief We the have Adefioye culture compensation targets set the measures long-term changes Chief Officer. to the made our of ESG and structure include to proud I'm independent

with roadmap pathways. turn review, The in of comprehensive Lastly, X-day turning the to X. early Board key in please Directors portfolio a follows. a October. were elements our a meeting We which portfolio, and to the recently We concluded portfolio session defined Slide left culminated with as

is we're it. today Diversification portfolio thinking about critical. how the of terms in Firstly, and

to gas assets. and We oil upstream continue will divest hardware

will Secondly, place value and patients growth three shareholders. over that will action meeting to a with intentionality, proposition lastly, will awareness disconnected time or low we the creation action our All these keen of and commoditized actions assets. of and businesses cycles take we

profitable, large, hunting growth X% X future each with identified projected The at of we activity. M&A supported grow billion ground into Secondly, by higher will high a markets, macros. the than least for $XX and year X end the be our markets to size end

on, the for X have end define on. we that we'll states Lastly, the and journey portfolio in embark embarked that possible

corporation. a we is for X%. markets that X exciting of important identified AspenTech $XX this segment growing transaction a One very Emerson, The Software. an transformational Industrial step billion at step year and the is A for

to diversified uniquely in hope space, phenomenal Company with by one about enable highly to Pietri and Emerson technology transmission software and XX% business for of leadership the by our industrial new is I platform to shareholders, best highly industrial differentiated Antonio transition energy synergy for team I'm AspenTech the a you with can which the positioned will admiration. AspenTech, M&A. the be differentiated as that a will exist who and be owned its this tell. companies future very software greatest optimistic largest will lower carbon I'm AspenTech customers future. markets excited the run of distribution be as personal led opportunities a I a believe served and have The

regulatory completion will Officer. With the call turn of to We Frank close items. the of the I that, quarter expect in over XXXX approval Financial Chief now Emerson's transaction the and following Dellaquila, customary to second the

Frank Dellaquila

if Thank Slide good you turn would. Lal Please X, and morning, to everyone. you

pleased with XXXX. for really results we're So fiscal financial

going in year. broad-based, it's particularly that demand later markets far and we in were strong market. process The we developed, global commercial into strength such conditioning environment exceeding said, air and with the residential far and the and to year the markets great the momentum as U.S. at had began a underlying of America much we in The automation the uncertainty expectations deal thought Lal and demand had was year. as discrete exceeded it continued ended beginning residential year. it And expectations As hybrid we the in of markets the gain the would, North global our

supply results that the chain end you successfully strong issues, labeling towards we're to report year, teams operations to Our able the particularly worked the and today. through deliver of

adjusted to broad see later Towards continue copper, through net per and supply on the through unexpected positive and at guidance hybrid weigh and slide I earnings EBITDA the increase OSI, flow a regarding the margin, driven challenges, exceeding earnings at increased begun up cash under We're Just of underlying was extraordinary very a items as cost challenging Slide the than end benefit that contributed XXX price share, from that at at during than the year-over-year, cost as sequential beginning for growth discrete volume who cost to and of the we challenges, points made overcoming by XX% and capital rising EBITDA Despite was headwind as unfavorable cost fiscal and underlying of underlying was price leverage Please This exceptional underlying strong up XX year. grateful midpoint Process more earnings to overcoming strong the Residential across flat to a $X.XX year-over-year, said, call from half Automation strong stock end than Residential volume quarter XX% of cost. of swing raised an in impact million particularly we're And EBITDA an mark-to-market to growth flow. mainly can totaled and XX% some XX% the The Adjusted underlying sales mentioned X% we mid-teens availability. Cycle versus year, strength employees We've X%, August, we've chain the adjusted per and the these and Operations and XXXX. recovery headwinds in increase volume of $X.XX, more highlights and of markets begin the in we're due fourth at comp expectation you the adjusted continued and of Please that manufacturing supply second were in guided, raw unfavorable in growth accounting. year-over-year growth $X.XX, to ago. in fourth and operations. Price and Slide teams of offset labor $XXX to full-year markets intensifying every Non-operating mainly move Solutions the headwinds, growth fourth-quarter cost net, Share the closed and supply from achieved beginning areas. in EPS, basis share reductions the fiscal EBITDA we you as the well growth happen that drove of X pleased of increased year all most the XX% to leverage strong headwind underlying efficiency. X. our anticipated gave XXXX targets said, Slide was we and operations Adjusted cost prior million actions of in sales I materials, which conditions this that but on This full up to restraints. worsened for $X.XX. Please the guide attributable level, leverage on conversion August cash and chain a the we recent year, Adjusted acquisitions, chain turn year. seen. the key steel These the year. benefits. we years versus of we strong material performance through year. a million leveraged the our to actions. the Operational repurchase $XX the challenges that results. as $X.XX year about driven and strong were and financial face robust, our second versus that in turn EBITDA of ago. from our million effort XX%. Automation $XXX the in world benefited of turned cost with was $X.XX quarter, report, turn throughout key price Adjusted costs, committed $XXX of In our Free $X.XX the by U.S. reset work combination Commercial the the in see, will the significant that basis the to X. growth, year, markets, table. of the did the in profitability. worked as XXX%. first strong delivered EPS all adjusted in earnings while I constraints an that net was you flow X. strong adding a added half, markets from expectation the including which Cash costs resulted year-over-year reduced saw points due and improvement point Commercial segment, as the offset half, adjusted were for more was that spending year, by by the working one total,

areas. cost fourth net logistics million $XXX the in Adjusted was labor quarter, commercial segment, growth somewhat growth prior point declined and year. increasingly the mainly by growth up support the by supply midpoint market power in per impact end despite due the the from million reduced the chain, residential. Automation to recovery reflecting Adjusted versus headwinds or XX different higher particularly chain strong about due by constraints underlying $XXX year. XX%, and and strong $X.XX up other volume versus supply that in Sales up XXX in supply negative This with prior the guidance markets, share offset sales constraints. with from declines price working to in Americas, dropped flow world X%. X% Free across ways. chemical and demand cash the and X%, drove basis affected underlying from Solutions to points, Regarding chain of constraints generation partially platforms points both $X.XX basis achieved X was impact sales XX% EBITDA exceeding earnings were capital Company the were

in billion, million at Typically or year-to-date less of now would XX% sits the more Our end backlog QX. backlog was at and up quarter. $X.X our than $XXX the third reduce

Commercial before drove over have the However, point levels above of expected due strong EBITDA. material to Strong supply driven XXX pump due Ram residential in reduced and were and that, color leverage sharply as million to headwinds, basis America operational points and chain to backlog in adjusted constraints, in home decline well worse some increasing increased a in as cost we X XX%, and by other little August are than residential improvement cost orders remained adjusted elevated the demand we XXX price with heat which cost, were with. basis or we about I'm supply North strength drove reductions expected, together that which underlying products, it EBITDA. Sales expected, provide perhaps around constraints, a issues turn to With to expected. going in would and a otherwise Europe. by points dealing chain continued $XX sales HVAC the

Ram Krishnan

you XXXX, Net headwinds, Thank impact is can as global a turn see, XX. accelerated labor continues inflation, the electronics supply, you, our Please and to through availability constraints, material as commodity Clearly, challenge, environment Frank. inflation by Climate business. chart, Technologies increased Slide logistics operations. fiscal cold as pricing, operating impact monthly American being steel with see felt increases steel months. of in primarily roll streak our prices, majority XX can North once the to the by extending the you October, again driven on price of to

However, for a fiscal start increases positive in the next material the steel over of in first October, the dropped to more inflation the half ton peak flatten importantly, sign do in of steel have to funds and to magnitude around anticipate a and months recent 'XX. We net prices out hot-rolled $XX few prices us. declined

on continue will material stay contractual by confident diligent cost and half a that focused 'XX. more We surcharges We executing aggressive pricing agreements, fiscal turn on remain our our positive pass-through freight be annual price will general strong green price to and for increases. plans for second the and of

Our current will the fiscal $XXX plans year. indicate million that be price cost for approximately tailwind a

slide. next the to Turning

as coming elevated the in and start in that at levels prices see high commodity of elastic months. North flattening, providing mentioned are front, decline have prices Plastic to Copper supply today, will to earlier, the are cold-rolled prices On they the price elevated our to will but dampen late, the hedge demand, impact optimism while showing as steel signs steel we challenges. American have year. some I weather-related surged fiscal remained resin positions prices due also of

decommits restrictions Now, our which closely times, have are led Several prices. and Southeast forecast, manufacturers improving of out suppliers become an and key component the power industrial at electronics in increase at China, has key watching we're which Asia, outages to in while a lead EMS to and silicon constrained. pushed Furthermore, COVID-related common remains has occurrence suppliers. impact extended suppliers has shortages capacity in increased delivery

platforms are components expediting an on over with us, businesses by particularly is clearly have impact proving [Indiscernible] several performed of in well disruptions and congestion key and on related For China electronic impacting fiscal These avoided are global drivers. years Port to the supply multiple regionalization both importance done is add significant being strategy. is units COVID of our the operations. our to dynamics and on shortages supply expensive business and lower freight, in the past many times, U.S., have logistics XXXX. strong Extended critical airfreight a into are exemplified regional the ocean parts this basis, remain which expected This the in has and very work costs. weather challenge variation regionalize how even we and highlighting

our these Finally, absenteeism many of impacted driven hiring High U.S. turnover have and for challenges Midwest, in predominantly time. labor levels the intense. increased productivity over available old continue and in retention competition and of is plants, as locations, in

the Now to a chain to availability on continuity needs customers. our global are ensure global supply tirelessly being our shipment to our on Slide solutions operations the make to basis unprecedented implemented teams material to and challenges, lines meet of have real-time XX, of worked despite and Many creative plans, our continue of freight commitments. supply

Our teams stepped and have where qualified free leveraged suppliers leveraged our supplier strong in sources, agreements, alternate to utilized contractual needed. assist relationships,

to work our Our we labor us additional regional continue for availability multi-sourcing producing of factory and in footprint, spent years has actions our these that plans with our us manufacturing resiliency needs. times. automation an the forces hiring back stable production challenges. to have around developing, network shifts customers through certainly of been and to global disciplined advantage supply as we allowed capacity enhanced record as challenging meet ensured, and investments are unlock Many [Indiscernible] to plans levels, our at Accelerated

year. walk to it to take through 'XX fiscal thank I'll turn want for outlook. to an outstanding operational global I teams sincerely With Finally, our delivering Lal to over our this that, opportunity

Lal Karsanbhai

Ram. Thanks

looking were The process prior trailing to on continues as I'll of strengthening will that to I for up the to the XXXX spend. current some markets. be automation And orders and prior, year, said the solutions we Let's In course the continue continued X 'XX, automation believe hybrid in please and platforms. the discrete investments month XX team automation by environment. demand of forward both XX% the driven, versus strong turn color Slide give across to and

single-digits, Increased business. growth give up drove While were by bookings drive extended KOBX by shutdown of will in into span in XX% substantial new de XXXX, 'XX up high leading To more believe XXXX summer. year-over-year activity the through. strong orders globally, for be you pull spring Shutdown and further for shutdown each that site to will turnaround bookings bookings year-over-year, increased the turnaround infrastructure were upside. XXXX KOBX improve growth. driven with and X,XXX -- L&G through than to season the up walk-down carbonization chemicals turnaround single-digit access I with mid and the walk-downs XXXX walk-down and in activity perspective, driving led KOBX outage most - XX% is early providing expected refining,

has orders Solutions, and XX-month Turning Overall, into the U.S. Residential then including service new X% momentum, began Climate of into food further strong little will food Asia Comp. be to to and in Europe continue moderate. Commercial service, continue and refrigeration, rates September. Technology bit XXXX, heading order a markets, XXXX, to thinking and aftermarket by builds In were to residential while quick many driven key commercial our store HVAC, the have retail Keith restaurants,

this will to underlying will and Slide XXXX, an improving in momentum in Meanwhile, second XX, annual to over it growth, half, to be XX% progressing completed. I've has seen. done looking ahead Over year and first endure with demand half, in the Great remaining discrete to our late suppressed of is be work, significant significant automation previous been continue and cycle to complete. high-single-digit its growth. chain strong the facility characterized we projects with -- will process have tailwinds left recovery the a our moderate hybrid Emerson's programs. XX.X%, Supply Turning mid-single-digit return believe positive by year. XX% continue the quarter with of expect of The The of environment. strong business first these headwinds operating to sustainability we mid-single-digit savings amount growth realized and cost pressuring get adjusted benefit but Investor spend Based team through EBITDA and record. restructuring allocated macro as restructuring longer-term of as markets residential our opportunities commercial conference, too noted our Solutions. towards provide demand Residential budgets projects. earlier, work continue And on projects and in Growth in stabilizes, landscape, communicated XXXX be end because environments respectively. price will further XXXX. a leverage, Decarbonization we demand industrial improving Commercial will in

Let's and XX Slide to turn talk guidance. about

growth this be in be will X% landscape, of to and to and to while X% Residential growth expect sales given for we underlying X% Solutions of sales XX%. growth Commercial X%, net X%. So will X% sales Automation XXXX Solutions Underlying

programs we Ram includes turning to restructuring price year for million reset spend cost identified our activities, additional and accounting are million. of in planned in restructuring cost and remaining footprint expect the excludes had fiscal EPS that approximately to tailwind the been discussed, As purchasing $XXX the and the including year. like Historically, minimal activities of first-year adjusted our items on $XXX program, calculation. other

Looking $X.XX of right, of to $X.XX. XXXX adjusted to removing when of the the amortization our prior of expense the impact bridge $X.XX EPS at intangibles, the increases column

is driving to our $X.XX, amortization adjusted the and expense XXXX, approximately by between -- $X.XX expected EPS be For to driven $X.XX.

the release. Additional XXXX. that transaction, quarter Please tables are as second does details guidance as the impact old press the AspenTech on appendix, the provided which of as calendar not is the note to said in year include accounting of close I earlier, calculation in well the in the expected

single-digits, expect Turning X% growth with sales is sales of $X.XX. Residential while mid-to-high back Thank to I to the expected Commercial across be Solutions commercial that, roughly broad sales and to Mettler. and Colleen underlying X% $X.XX. underlying will residential underlying Solutions between solutions experience quarter strength and XXXX, will the EPS be Automation the the you. to Slide in in over Solutions. And with Automation quarter for be turn first to growth Adjusted underlying Amortization low XX, will high double-digit $X.XX the growth expected to call is single-digits range. we

Colleen Mettler

Will. Thank you

Q&A to call. call portion now operator turn We will our start the the the of to

Operator

the now begin Instructions]. question-and-answer We [Operator session. will

The ahead. first with question Kaplowitz Citigroup. Please go is from Andy

Andy Kaplowitz

Hey, good morning, guys.

Lal Karsanbhai

Good morning, Andy.

Frank Dellaquila

Good Andy. morning,

Andy Kaplowitz

When over Solutions, little Well, could you Automation give nice Obviously, how hitting? orders a few you're Decarbs. KOBX bookings well And types is then in FYXX. maybe color levels more out bit. those projects a begin you you maintain obviously LNG and but help very thinking recovery could months? come current as of think that up more it's C&RS, at continued could moderating to in play And next us bookings Asia difficult you see mentioned they in held get comps into do a in growth despite the

into color expect what more maybe So you there.

Lal Karsanbhai

capacity, No, I I'll U.S. that business Andy Very free highly environment discipline and that think of seen and Automation. see And and many where strength a companies continue of that. the the to optimistic to oil I'm we're start and sort. -- year. in a about right U.S. will on the carbon move initiatives. seeing the continue I an The to Automation going honestly Process with and throughout significant some decarbonization that we're OPEC see with to of things the up shale drive lot We've NLCs, in particularly caption at and some with the the is of that -- larger uncertain already in programs environment That's $XXX accelerating others strength forward integrated the type will we now, the with in not restraint flaring projects

will programs there's side in field automation, and of additions and pursuing of significant are Those expansion half towards or we're Andy, One LNG investment L&G, be year. two which second are pursuit. both the awarded the in of that the is significant the being Baltic capacity likely course On investment in Qatar X terms the very North the largest. so

the strength residential. in and the commercial, for moderating as by we upheld year the air very us, in marketplace, commercial through to see is mark with Yes, the go but, obviously Turning conditioning which residential I relevant.

that business in So the Commercial driven I by do AC. see more moderation the mixed of bag Residential in residential a

Andy Kaplowitz

we've oil that that Emerson announcement the one Well of doubled diversifying man, investors main concerns of instead that's gas. and helpful, is your posting on obviously of down deal actually heard from

sure you concern. I'm that So anticipated

us Lal. So long-term different gives I of market, earlier in view you a but maybe exceeding that chance best you that gave your it in you the hitting said just you know Ultimately, believe as year? software industrial or guidance on, AspenTech the remarks, could you the the head you address think prepared is

Lal Karsanbhai

in that of particularly obviously terms -- design that are these on new importance I on terms in of do. journey. brings customers projects. particularly incredibly we're as the the And to of solutions think -- optimization table term embark the the will of I new and be broad these in -- the seeing software is incredibly sustainability the that AspenTech assets, relevant what

of the platform Energy be will the spend regard share energy component investments the there Aspen transition core important, so, been board for be here it's is a for other will part the growth undertaken the segment. in segments value. of from And I And as and core long opportunity, whether but go to regarded diversification, and this Having continue in for of which for synergy in a wallet has and more the forward. I've a position the we as that, M&A, TD, importantly said important that time,

Andy Kaplowitz

Lal. Thanks,

Lal Karsanbhai

Andy. Thanks,

Operator

is next Walsh from The with Suisse, Credit John ahead. please question go

John Walsh

Good Hi. everyone. morning,

Frank Dellaquila

Good morning.

Lal Karsanbhai

Good morning. John.

John Walsh

little talk bridge the more to Just wanted bit margin a year. about the here through

leverage. remain the prepared underlying in think I remarks, you confident in your XX%

aware there QX models guide just certainly implies that. think Is something driven, cost-timing price of or QX there all starting below we should about the I Your that margin we're our performance. be for -- for else the it is

Frank Dellaquila

This Frank. is John. morning, cost primarily it driven. price Yes, is Good Yes.

for as the leverage some will for margins years. We the will we to of the through, have -- we through the that below price XX% happen. assumption then increase which the will plans and we -- as half had be first The go rolls year, the

we the as fact but in the get half ramp there residential and commercial we're we it's throughout year that Automation cost to then, in we the we how is get the where in second in that's are normalizes positive leverage confident turned fact obviously, Solutions very as So have price will then, and there, good go year. will of

John Walsh

Great. us? Lal earlier a revenue that and of the you And Could about, the in then the for What about maybe you portfolio. assets, question size that for assets, bucket? around some still talking that around pruning the some upstream within oil portfolio call, disconnected size talked you're gas is

Lal Karsanbhai

time. over on do not tell the I'm going the that, that be will divestitures John, I No, done to will you activities but

noted done have and Obviously, at the here. very have transaction they'll large a on be incoming assets earlier, times well. we times, horizon as I impending carefully As with

that's in zeros and firm I believer hence, And segment energy to to down that and drive to bucket will I that. tell So to -- in for do path. do will we're I'm a ones, of to wallet continue move apologize share I sizing you. am But going terms away structure. that the what the not I hardware John, of from going that entire you. continue

John Walsh

you the Thank much. shot. questions. the you Worth No. very Appreciate taking

Lal Karsanbhai

Thanks, John.

Operator

ahead. Bank is from question next Please go Obin The America. Andrew with of

Andrew Obin

guys. morning, Good

Lal Karsanbhai

Andrew. morning, Good

Frank Dellaquila

morning, Good Andrew.

Andrew Obin

Sol, to particular, into got organic one X% at revenue the question peers your color, the then XX% do you know X% the growth, backlog some in guidance? year-over-year One reconcile yesterday results incorporated in how growth, gave disconnect. FYXX What's from FYXX us year-over-year we and Auto XX% orders but I of guidance? looking revenue guys just you

Lal Karsanbhai

the as still business. are have Obviously, went as -- favorable quarter, into we in the that finished September some into comps we we and first

-- I across segments market into supply think that's certain So And somewhat the go how of optimistic. normalizing important and business. the But that, it I is in I I underlying it. of I element strong was to three very think that But guiding right, terms and then for uncertainties said one chain the remaining very I very demand that of the think felt still in as the wanted opportunities think some be, be environment, us there's demand is of strong. will having we strong guide a environment, in as served what well. to And you're cautious with picture the

Andrew Obin

date and question sense, of big investors. a sort other for lot to perfect was get of Makes

fiscal a and your be What's one in different companies sense How the of businesses, backlogs worried Thank And plays your a year. in there's sense think, bringing customers, to you. backlogs inventories you even has little season, to channel. very theme don't have throughout calendar many strong seen this inventories earning lot channel your and think team we next midyear, big right, even 'XX, of because sort want that this however discuss, out seems bringing that bit cycle just was very companies And of do these companies short-cycle who this may up the than Just usually. 'XX are one customers? I your Investors sometime of well, way? end your up, because for or not that

Lal Karsanbhai

booked as really application and to not of directly KOBX, start, Yeah. in end-user And part the the of Ram a they predominantly XX% into I automation obviously it for comments went side, couple into on into I'll the but I'll inventories, ship concern. business, that as the turn to Look, -- a application. year well. -- don't see [Indiscernible] was Most of

comment Business, a into you As you. turn perhaps few Ram, the Climate from

Ram Krishnan

would have the and through the our inventory been inventories would wholesale OEM. supply material. that wholesale Andrew, bringing be would challenges Yeah, OEMs getting both said, times channel in to is and the community, they people end normal across in in where base are I our out more through and think say I as With anticipate the into chain customer slightly I elevated say

say maybe slight be I it's but and unseasonal. elevated or per not unreasonable would So something it's not big levels, it say issue that a it'd is

Andrew Obin

I your a answer. lot. really Thanks appreciate

Lal Karsanbhai

Andrew. Thanks,

Operator

The next Moll ahead. Tommy with Stephens. question Please is from go

Tommy Moll

Morning and taking for thanks questions. my

Lal Karsanbhai

Tommy. Thanks,

Tommy Moll

I wanted outlook to on Automation Solutions. your for start

and X% what called XXXX the your assumptions you think I for I'm curious in outlook. are underlying gas and for X% oil visibility there customers. to

there's potentially rolled potential? fiscal budgets well, when and year, of early or at crude out substantial are your You're months here, at when those them planning several advance just next of year-end lot I'm if looking in some a wondering $XX year upside and

Lal Karsanbhai

terms budgets. Tommy, Obviously, some picked seeing that amount in will assumed, it the two you bidding have strength question. know, to are capital phases. are and spend, up obviously as months -- assume and KOBX I've we XXXX. X jobs falls as which continue is through the great a strength LNG significant that That X budget a months those XXXX, believe into. of are the beyond and is, go we accelerate through What we operating we their in of the of budgets, the of continued But a It's half where second and environments [Indiscernible], KOBX in fiscal capital ahead seeing funded and moving

else out is sustainable type be capital a there methane that the comes investments. I would at plans. of Tommy, see would emissions big We But Again, deal. what expect, will the

of think, saw from carbon something go standards. through course, capture, will as the U.S. And around be of we which more I I the those year. we think and significant more

we'll we'll you're So watch right, see. we that Jan. very carefully But go into as

Tommy Moll

line on in timeframe helpful. helpful. that. the fair was to plan What's you you any revenue is be asset I anecdotes refresh in you've OSI. wanted it's such able synergies 'XX? to contribution And us were on your you pivot to for those drive to some Can the 'XX? what be say think, top short going could to Thank how realized I would and share That's for you since acquiring Thanks. a likely

Lal Karsanbhai

won So phenomenal with in approximately for Netherlands power growing Europe, and a million $XXX Australia, Synergy of customer in XXXX. in distribution Northern won the transmission large first flags. project significantly first distribution year in Germany. to critical in in the revenue approximately $XXX the transmission in our We in We plans, we're globally. the our execution producers companies the Company, first ahead Well a large in U.S.. And XXXX, Again, with board very project great engaged planting Tasmania. transmission

synergies, and the and growth realizing So profitability. great

really feel the with -- business. it acquisition. momentum in lots good goes the of it And AspenTech, I about as So goes into into

Tommy Moll

back. it, appreciate I I'll and turn it

Lal Karsanbhai

gentleman. Thanks,

Frank Dellaquila

you. Thank

Operator

The Pokrzywinski Morgan with from go next Stanley. is Please Josh ahead. question

Josh Pokrzywinski

guys. morning, good Hi

Lal Karsanbhai

Good Morning, morning. Josh. Good

Josh Pokrzywinski

Auto automation on in a shore say, versus growth that or controls usual? you Any XXXX side? outlook wider mechanical side, and Well, guys up hoping balance some of just of and the the software type the maybe differential spread yesterday. Rockwell to versus there for on than are the business, looking more observation wondering Sol at, Is

Lal Karsanbhai

really. Obviously, systems has business outgrown our software our device business. Well, and not

a software said final transformation you those device-based, KOBX bifurcation the digital having broad the little go a you beyond device through difference in bit alignment that, point I be portfolio But honest. have of of don't look where a to significant initiatives business you'd Our business outgrown lot a some of if the KOBX of we which and But, heavy so that really or businesses, -- the I'd type see really them. remainder wouldn't control. both between a perhaps I layer dependent as and it's will go of business. of are Because delta we as that, see is through suggest at note

Josh Pokrzywinski

OEM And apologize over CNRS. shifting coming I Got the it. steel first, I based you prices is on of comes if that that that set, That's mentioned contractually if that embedded prospectively there. then Maybe missed the what guess like, know Thanks. price it's divined helpful. the how the is and going down. -- is it. just I outlook. What's And I to to some calculation of with futures. in is sort down, relationships then, -- for

Lal Karsanbhai

ahead. Go ahead. Go Yeah.

Ram Krishnan

Yes.

So this Krishnan. is Ram

On first. the steel I'll question answer -- the

[Indiscernible] steel into translate will in any 'XX. we've [Indiscernible] modeled pricing second impact the to second half but our in that as So a half. dynamics But moderate to down obviously, 'XX, significant as for it the decline that come really doesn't

concern in carefully. and a that the half. or will in for like we'll impact Obviously, second to help we'd necessarily the us come not 'XX it's us So it watch half second which down

steel piece. the on that's So

the I we piece, will realize going give an pricing we're price is I inflation, don't and the 'XX 'XX convert the dynamics On price think price think out translate that material of exact into through number, inflationary obviously in plus whatever to will but

Josh Pokrzywinski

color. [Indiscernible] [Indiscernible]

Lal Karsanbhai

you. Thank

Operator

The next Dray Capital go Deane with question is Markets. from RBC ahead. Please

Deane Dray

Thank you. Good morning, everyone.

Lal Karsanbhai

Deane. Good morning

Frank Dellaquila

Good Morning Deane.

Deane Dray

helpful. capital Maybe some Frank, flow Thanks. working could. cash your that know average. question called you if would Quick XQ I pressures. for well Free color there below I be was

Frank Dellaquila

ramp strong, prior dislocation bit sales the cash the balance off the I will taking per residential. a Deane mean, was flow the we that a versus nature sheet, year I of fourth particularly, and out, of quarter think the little when were year we very, comparison there the but and very have given the the played in The year cash and commercial normalize. lumpy, in was way

Deane Dray

an they Emerson Got for that Aspen review you. it. folded where industrials, with expectation, -- is And on on driven? Aspen software, it be say then us the Is I part process? position? Thank it have it focusing Is since industrial Aspen? Aspen? new Technology, forth. M&A And you are when Would the for Lal, Does into of so structure a

Lal Karsanbhai

at will Yeah, occur software sure. In And the Industrial AspenTech. -- M&A no.

Lal Karsanbhai

great multiple, there to knowledge. believe a it to we softer But Deane, will a perspective. as market large segments, Having transaction of I the a that will become from occur creation perspective, And will be in. platform will -- said Obviously, that Software market no, acquisitive a only we've with you'll enable those public from transact AspenTech. is will out. those got Deane, be at and see they I that, play X economics Industrial what one M&A we value the work

Deane Dray

That's really Thank helpful. you.

Lal Karsanbhai

Deane. you. Thank Thanks,

Operator

is ahead. Please Jeff question from next Sprague The go with Research. Vertical

Jeff Sprague

Hey, thanks. Good morning, everyone.

Lal Karsanbhai

morning. Good

Jeff Sprague

two Hey states. Emerson. Lal, then you and comment addition good There's option the about end do talking I [Indiscernible] that two. about morning subtraction [Indiscernible] review, the would and suppose as the you're and means continue portfolio to options one to

can certainly you process and share what that separate. more perhaps over might other then mechanisms the or one of would of be interesting? If your that, do you triggering As there the thought there's kind on that be

Lal Karsanbhai

Yeah, I know.

cash going play more earlier think partners we'll the go but is here. this to debates. the to have great That's over cycles, and underlying work through potential, this portfolio to create Balance we were value the between consequently sheet I meaningful and There deliberate the double-digit of of deliver going is and as through A of the number were in keenly more sales shareholders have the through time. months, that, aware that did used the impacts the of value this we there the And as that years. we're AspenTech portfolio and this. EPS. markets. to expression I've we that AspenTech journey. [Indiscernible] as of creation thoughtful the will get But and those alongside the a our side, game, is we can has that to and conversations and The connected. to this were why proposition very over end I go a an to Board. be of well, strong New I when higher transaction potential for strong that end-stage now course, flow, optionality. Balance that's a work there portfolio need on divestiture pathways impacts as of And objective we And X think mentioned over a sheet was for is number expose York think Obviously, I that announcement, we're to have to going be We're here. this we the management, months, And almost with our -- a X body Company, marathon,

Jeff Sprague

little And from you're the in and separate, million, Great. does on and guess question positive get of the And 'XX kind And then just neutral that related, elaborate just bit? 'XX the cost expecting price that 'XX? but that and The actions cost bundled you're as a a Thank actions follow-up, like. kind can then, in of around about talking took margins I you you. here new sort price of price the you what a $XXX cost? on margin both savings a you of arithmetic to doing, in restructuring you're tailwind additional

Frank Dellaquila

Frank. Jeff, this Hey, Yeah. is

up delivering on necessarily way -- in we're of the mean, So thinking the it in terms the on for I price is cost not accretive. leverage about isolation. business the Obviously, the margin

will the plus the it XX% the rolled holistically at looking of operating has quarter. lumpy, in year. price the just and delivering for very cost, through, we're So business roll given very for it terms The distortive way within leverage

that So the margins, total up the getting enterprise, goal delivering delivering and the we're and for for leverage. just operating year, to on focused very

I'll then Regarding and can the in. your a question come the spend. quick let And restructuring stab rollout was take restructuring. continued Ram around and

through as in additional So this we businesses. week, identify opportunities both we go

of to But, significant the for do mean, talked never-ending most cost it is very a executed driving position. kind both margins. frankly, restructuring reduction on we that Some the we part, of businesses. for expect there's in more footprint and we're improve about terms capacity a And that of be next we've continually CapEx to years we breadth see consolidation. cost peak [Indiscernible]. business, the expansion when over [Indiscernible] I and is in the do couple around opportunities trying complex previous the Obviously much to what March in of to will

engaged in higher the improving be bit restructuring may than a our cost that's it's than little places. we levels, but historical So the in in the around right position continuing all some putting capacity

Jeff Sprague

it [Indiscernible] you've said well.

Lal Karsanbhai

Hello. Okay.

Colleen Mettler

question. next The

Operator

Research. from next Please is from Davis The Melius question ahead. Scott go

Scott Davis

everybody. morning, Good Thanks.

Lal Karsanbhai

Scott. morning, Good

Frank Dellaquila

Morning, Scott.

Scott Davis

had here I XXXX. for for couple of luck a you of Best guys. questions

a Lal, XX% that the tailwind. the price of you a goal. incremental million referenced, include First, or -- more that baseline $XXX Does that price the is

apologize, answered color on but some of you more looking If that. for I just that,

Lal Karsanbhai

first the plan second the we I about very, That's X points in It include as No, we're that that in year, we turning half, tailwinds, Frank I cost it's half, half or first as into think into for does chain. underlying the into said, incremental the that good that's making. were sales. of obviously. will up is be feel the plan. the as get described below and on price But supply fiscal improve what very the whether price. we the of headwinds all Obviously commitment in second-half But rolls

Scott Davis

of those a is your particular Okay, materiality projects represent, get future a comments you we start there where made you LNG, can can where point of methane, types what there? the then around capture, measure orders and the carbon of growth to of the sense that percentage

Lal Karsanbhai

$X of a as identified Scott, question, approximately well. that's KOBX think I billion great We projects. a

but slew distribution, including sustainability our jobs, things. other etc., a capture, and also carbon transmission renewable Biofuels, hydrogen, also whole inclusive of and of includes that Now,

go we've and at funnel, our we to as funnel. forward, So communicate continued I and funnel look how then we -- the our and address

us on, break it to those give will you important for some think be visibility too. I and

that's So think question. fair a I

Scott Davis

luck good Well, in XXXX. Okay.

Lal Karsanbhai

Scott. you, Thank

Scott Davis

it. Thank you. I'll pass

Frank Dellaquila

you, Scott. Thank

Lal Karsanbhai

Thank you.

Operator

next Mitchell ahead. go with Barclays. Please from The Julian question is

Julian Mitchell

Hi, good morning.

good to Just wanted -- morning.

Just wanted Automation to start guide. organic growth Solutions with the

quarters, subsequent about that the then more assuming as this quarter. X% So you're same And business lot X even a that get grows the over the difficult. comps

the there versus move X, go discrete, kind the comps. [Indiscernible] of terms or of through process or organic tougher hybrid growth KOBX, rate just to that understand, year, year you I those So versus the to something that with in of X, as want of segment, everything and steady is either steady-state in changing sort you allows through is hold across even as

Lal Karsanbhai

your hear to good Julian, Yes. voice. question Great Yes.

if QX it I reflected typical This last we our lot in $XXX backlog backlog $XXX was for year So, by performance year, [Indiscernible] QX, normal believe million. about for we million. by at you that million $XXX situation in Automation A example, that the of look Automation, in Solutions. reduced reduced quarter

expect the So that, having obviously, backlog to coming we do KOBX But stronger. situation strong. into the said remain is

will I the half particularly whether making, then our of and activity, we're data in sustainability the that secondly, our as and into are the year. systems think half that will stuff very the around we modernization in I through seeing exception KOBX STL of LNG, know, Obviously, the robust. perhaps and year. the will we up commitments of that the customers is second business, in come that outlined, not most Julian. KOBX, the very, programs with And is the you think the second or go I for But as turn feed part, earlier revenue, some robust, of pick support

Julian Mitchell

the And plus residential revenues just you. to That's business then helpful. Thank switching Com-Res. XX% in a facing. that of

as of in in situation comps. are that the call in slowdown year with that how cliff as you is can you Maybe tough discuss the out sound if you're and the confident major through any growth the through about doesn't you're it OEMs thinking do see it looming today. Resi you Resi, year, You positive but embedding the how sustain Resi

Lal Karsanbhai

we've we I quarter. Train, their Carolina, on our interesting in an the Carrier. we're as obviously, not couple to go that step locked demand Our visited that there's a demand where and of do year. in and to with been the refrigerants perspective But through to I've of of cliff X is 'XX. environment. we customers It's went new down And our down and moderation, and terms efficient projections in spent 'XX believe looming Miami with largest call understanding for got changes OEM fiscal. regulatory the visited time as Efficiency and through a their staying cycle we referred with a went this go very a

Julian Mitchell

Great. Thank you.

Lal Karsanbhai

thank you Julian, we're support. the I thank all Great. time very morning this call. questions appreciate think thank and Well, going your I that, with you much for to you I the for and close your and

Operator

The you Business for conference call has today's attending now concluded. Edition. Thank

may You disconnect. now

Emerson Electric (EMR) 3 Nov 212021 Q4 Earnings call transcript