- Earnings call transcript Q4 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the Emerson Fourth Quarter and Full Year 2022 Earnings and Climate Technologies Announcement Conference Call. [Operator Instructions] Please note this event is being recorded. I'd now like to turn the conference over to Colleen Mettler. Please go ahead.

Colleen Mettler

Good morning, everyone and thank you for joining us to discuss our Q4 and full year 2022 earnings and an exciting milestone in our portfolio transformation. by Financial Chief the Officer, joined Karsanbhai; Officer, presentation. am Chief and Frank I President Executive and Lal Today, Dellaquila for Krishnan. Also Operating is us Ram here our with Officer, Chief the encourage slide the I page website. our of follow to along Investor presentation is available everyone which on with This presentation include questions to forward-looking company's the including and year. the for responses outlook remainder may statements, of the on disclosed most cause Information results to SEC report those that recent from Emerson's on could subsequent actual XX-K with today, factors filed available on materially is and as the Form annual vary SEC filings. hold After our remarks, Q&A you we one. will limiting to your the questions appreciate and With Officer, that, to Executive Lal over Karsanbhai. call now I turn the Chief Emerson's President and will

Lal Karsanbhai

Please saying finish Slide underlying leverage results begin an XX% XXXX. a results turn me the to you, $X.XX, for I'm global that representing prior Allow in to Thank you Thank and increase operational morning today. X%, Colleen. to X. by of Good proud in the a thank over with strong team year. of very XXXX, of EPS delivered growth of Emerson's us for had We adjusted you. XX%, joining sales

inclusive announcing of of ambitious discuss XXXX, excellent potential after underwent company. near-shoring. a on the have pure-play and the path Climate identified creation sale Emerson to and importantly, call, higher-growth majority we end exposed we Emerson's of segments Blackstone. will a portfolio a for by this company transformational today's shareholders. to with the Emerson, cohesive strong automation outlook forward culture, journey markets in February be transformation, aligned value Technologies growth a CEO significant market becoming achieved world's for and investment. Today, accelerate sustainability, vision agenda, Alongside required embarked interest for portfolio new will including secular most forward, portfolio an operational we unique to trends, assessment of to our a This a transformation execution. security business we supported a comprehensive in As portfolio We digital to a of designed Directors, Board and bold on going market during based the diverse end Shortly create milestone automation by a we and energy execution. XXXX, of

to M&A of We serving capabilities composed to in organically along ample leading is have technology which discrete disciplined process, deployment room and and control stack invest capital devices, build software, hybrid through automation customers industries. both and our industry-leading and is intelligent in

a while through maintaining cash our our and to commitment our our provide XXth think dividend. to details I’m I’ll Frank. share. time our We To this better results, year excited turn now at XXXX, to per of on and will increased optimistic shareholders future. enter during XX cannot years Emerson about the call return be of do my In consecutive the more dividends share to we repurchase over

Frank Dellaquila

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

Solutions a finish adjusted fourth at improved EBITDA Underlying XX% AspenTech. XX%. leverage, Segment XX% basis good year. grew the Lal EBITDA As Automation excluding was Commercial XX% mentioned, sales on at strong with XXX to quarter Residential points and & a by very margins

significant XX% points was particular, sequential previous calls. improvement as the the we accelerated In communicated the exceptional of a Commercial $X.XX total Solutions quarter price Residential points $X.XX year, a delivered more share half, fourth and performance to grew year-over-year earnings improvement, and in continue up realization Adjusted continue contribution incremental Price businesses solid, than the XX Orders leverage second of in realized both the $X.XX including despite quarter XX%, that in Residential in XXX improved Operational be roll. and headwind, X-month with half driving margin. from on remains points. on in the sales XXXX. currency Automation of XXXX. peaking plans billion into in and for Automation Solutions improved robust price the both X% will in per in million XXX Commercial in Within margin quarter AspenTech Automation at on basis second exceeding commercial supports reduced Solutions X% $X.X segment the our basis platforms. but and a residential margins by outlook backlog $XXX was

added for we the higher exceeding capital supply and we XX% cash down sales XXXX, nonoperating the adjusting prior Adjusted the our more adjusted EBITDA $XXX the and in items, in improvement. strong X%, guidance we XXXX turn end improved our a reset and the excellent EBITDA conversion Solutions. Please XX% mainly year. million to from program points our the review known at EPS flow XX% Underlying ongoing widely operational growth of working up believe up of XX% basis versus goal low XX%, seasonally segment We which that delivered year its in mix, for initiated quarter management geographic after $X.XX. Emerson and was year typically mainly the was sales was margins financial well contributed geopolitical with for our and Nonetheless, meeting in focused AspenTech is Portfolio sales favorable and quarter cost constraints gains free nearly points the than guidance. enabled primarily of a challenges. of year, EBITDA to TOD from exit divertive we'll year by flow full addition what the business. cash throughout impact prior of Adjusted earlier to the high adjusted XX% basis the of in Russia. despite of detail. $X.XX, nearly for the program achieved chain X and Slide XXX for due performance target. experienced cost year, in actions, benefits XXX% XXXX XX full incremental of were was Automation product by planned. margin versus This ahead AspenTech performance year That Free

business of by margins progressed was the ended down Adjusted price significant delivered continued we the sales business achievement underlying moderated as The America gained XX%, Each the markets expected performance strong XX% played XX% momentum anticipated committed improvement Turning but for to North improved component for due underlying Solutions Commercial half points, excellent business electronic EBITDA remain X% the for points but profit sales growth Technologies and EBITDA XX% the led grew profitability year actions demand in the and were for cost. pricing year we year by incremental Tools the planned Demand to favorable Automation growth throughout. Home XX sales second second of the by markets of points price Traditional at the half, mid- as XX.X%, Solutions markets margins. year, the Automation drove realization. China. in range. out Sales including despite largely Commercial these Americas hybrid while challenges. and progressed, Solutions in process grew discrete and year. Europe. broad-based with supported much realization. up Climate and Residential basis were to cushioned the with Products as adjusted Residential single-digit high versus results. the ongoing year prior price XX XXX basis were Underlying price growth as in actions. & the the in delivered &

the EBITDA. results X XX% for from contributed of business planned. heritage and sales results Page a as financial and AspenTech of reminder, of XX, $XXX Please contributed are at And to EPS X AspenTech initiatives a full proceeding million May adjusted businesses closing XXXX. year Commercial turn walk. as integration the XXXX include Emerson's date

I contributed operations contributed XXXX $X.XX. XX%, share was As primarily $X.XX. driven each EPS which items $X.XX, Nonoperating and repurchase said, adjusted up by

XXXX a pleased challenging very our were financial are environment. which in with results We achieved

I month. portfolio provide to turn back Now, significant the made on Lal announcement perspective will this we it his to

Lal Karsanbhai

X. you, Please join Slide Thank me on Frank.

portfolio guided map into a on journey. a today and by definitive automation a to pure-play Our step has significant that And been transform marks Emerson clear company. journey road

approximately financial milestone the Emerson Technologies transaction Climate of Emerson valuation to in and divest The benefits. interest the a exit monetize of will XXXX announcement Blackstone future from Our our additional in Technologies proceeds cash is ownership. invest of the cash to of providing proceeds for noncontrolling enables $X.X EBITDA, majority also attractive majority growth. with billion transaction pretax Climate an structure XX.Xx compelling business to our upfront

of the are profitability. With Climate exit creating with a Technologies, a growth higher company we cohesive and portfolio,

and proceeds to from our technology software and return in business will be leading exposure focus divestiture that growth automation end capital market on the Our strengthen and to acquisitions digital The secular diversify strategic sustainability, capture transformation, our shareholders. and trends will near-shoring. will to decarbonization positioned

time spend opportunity excited we this we the which about discussing moment. will -- are creation We will transaction in value have unlocks a long-term

the I'll that, details over Before go timing. the Frank of and have transaction

Frank Dellaquila

turn Please XX. Slide to Lal. Thanks,

background alternative explored to our and the Before process cycle how we external I full of rigorous complexity our and relevant highlights some began and we transaction both of the us business weighing process market determine walk on automation including all shareholders. company, the and transaction range provide management where the efficient structures into the valuation, accomplish divest are pure-play of Climate through public for made decision the We point. timing advisers our to the to equities. a execution, Technologies in separation, the I'd factors, to a When value-creating this decision for that most to Emerson way transform the Board a structure, analytical with to brought like in for

environment. its close we focused you under while these go together in moment, $XX an Blackstone describe of in is majority sale to Emerson in on the achieving business as We representing I financial best upfront multiple intently under are background, are confident businesses our deployment billion, today, headline the the value sale The EBITDA. will that the to at the the will which proceeds multiple upside a capital opportunistic the on a efficiently market with Blackstone's provides an XXXX InSinkErator, terms business to of the retaining assure the elements in meaningful XXx potential business Climate of market world-class our through XX.Xx the environment. most we that I transaction. stake certainty current EBITDA control, of at valuing sell Tech the execution multiple term will for maximizing a can shareholders, attractive of With near in with expected a unsettled in Blackstone enable

own joint billion and equity equity common a equity convertible funded by fully committed upfront cash between The will Technologies Emerson not by and which will the of proceeds as Blackstone until Emerson Technologies. financing time XXXX a the note post-closing. equity note venture conditions. Climate be in responsible of closing and common at addition is a approximately satisfaction upon receive cash In ultimately, IPO, noncontrolling and a at XX% retain will the of also joint billion sale The ownership. to Blackstone and would and including The contribution or preferred. Climate debt the $X.XX XX% that venture its will additional will Emerson managed continue both be $X.X billion Blackstone, proceeds from $X.X customary receive pretax cash operation will consideration $X.X be expected Emerson its new billion, for from from of first calendar of common year will business half interest to close in transaction of closing its entity

transaction, to management this sufficiently eliminating working sale. implemented and platform These from actions required stranded the identify that by costs to Our functions. be corporate would our will any the team we time actions the have is resulted close rightsize

to In rate addition, savings by new $XXX the platform corporate streamline on approximately XXXX. actions working the of our million consistent end and targeting with is run structure management scale, of

headquarters an years. a the Missouri selling Louis, ownership Terms back venture. include option of to an is the lease additional Emerson campus with Additionally, extend St. joint to X-year X

of in During it I’ll potential insights. to long-term on a the St. based turn area including interests. time, Emerson will Louis that assessment Lal With that, back comprehensive the locations, company's undertake additional headquarters for

Lal Karsanbhai

We've many leading has billion segments Slide with products Technologies $X global market a Mita-Teknik and strategic and is invested of and in a The includes and have track turn solutions vision XX. ownership. under announced we And record is a and cohesive life accelerate you, Micromine. attractive software. Therm-O-Disc. profile, step, Slide businesses We've divesting recent of realized portfolio Climate certainly is Please of Climate of ownership as serving into the higher aligned and noncore thrive Thank short Emerson's HVACR leading as mining. Please announcement diversification companies Fluxa very sciences approximately our InSinkErator slower previously not what turn strong acquisitions others way. Climate from billion growing $X growth like Frank. compression technology but we The are positions work These will also to intelligent and has controls. approximately manufacturer markets. creativity. I but were a its and at Technologies our in AspenTech am of and of metals and upside XX. billion for automation potential acquisition Emerson end $XX areas growth profitability to mentioned required automation our related and achieved business proud our I like XX% their renewable along This continue time. in Today's its largest Technologies, in confident valuations, to gross power, growth and there assets Blackstone proceeds

the leading automation markets billion systems able their and intelligent percentage has AspenTech, Turning challenges, global an end emissions sustainability leader Emerson of most is end complete industry. XX. this among portfolio and and control This This Emerson a do differentiated a of hybrid profile, a leading software diverse complex a personnel, the attractive with sales process to industrial XX% scale. $XX positions customers growth across includes and and of solutions Emerson diverse from optimizing our protecting discrete to broad peers. and representing most of achieving inclusive in our operations, software technology. reducing devices, Slide transformation including solve expertise These goals. within markets on and set help as

are these XX. aligned I trends, most secular with pressing of challenges. experiencing Slide are growth as and many markets Turning earlier world's to mentioned the These end key

spending First, and more data, digital are sensing operations. through customers to transformation twins on digital software, intelligent gain more solutions programs, into and other visibility their

transaction AspenTech share we see our during and wallet solutions. shift towards our announcement, customer to discussed we digital continue As software of

investments a projects. It decarbonization as to sustainability infrastructure decarbonization the also pace. and world includes This optimization, introduction reductions the and and of net rapid clean new the existing energy growing efficiency hydrogen. pushes through at energy like sources zero, Next, of includes are emission fuels

Emerson many of incremental investor to around Lastly, is period solutions the discussing these now forward. moving provides. November. to our on effects for these growth industries. near-shoring for trends Underpinning forward call that for Emerson on creating automation, need increased look the We widespread the organic an details drivers programs in back conference over prolonged the world have secular investment growth turn at Frank I'll each more

Frank Dellaquila

Thank Emerson Emerson's on to we The enhanced through-the-cycle to a Slide low highlights Benefits from pervasive will levels. factors will transformation on in Lal several Please digits an increase transformation. metrics growth rate Lal emphasis trends profile slide you, single-digit XX. turn Lal. key financial mentioned to This growth important position its become as that to business. secular focused automation the this high single innovation and be mid- from historical discussed

the fixed an margins cost range. high-margin in software XX% to Our profitability, of strong these will incremental cash and more drive of at Emerson's will sales wide-sized to new based levels portfolio recurring Emerson higher approximately have process capital Slide intensive reflected turn return income. on margins exposure with content shareholders. Climate our capital concentrated technologies. structure higher balances enhance Please growth XXX% expected be and approximately our trends, growth aftermarket as R&D programs through the reiterate management will and subscription will net our and X% on priority of accelerate cash be invest InSinkErator at revenues. our to will conversion increasing breakthrough less XX. Structurally, to while provide want and spend be will to disciplined received growth shareholders. focusing from expand processes innovation of internal our returns and robust strategy organic drive that allocation to and proceeds The ability we our to to Driving divestitures commitment a higher new to portfolio We capital to growth Tech continuing a continue

diversity. will XXXX, enhance repurchases. And capacity through to end defined our for share Our cash that strategic dividend growth to automation and shareholders the morning We believe shareholders. market dividend Slide year. and to step we committed $X XX. intend of year. that increase slide stock Please announced us returns acquisitions enable support our in we XXth in the potential. our of balance We sheet the believe value to this unlocking this is transaction through process during will providing pursue remain our accelerate This consecutive in to to we meaningful repurchase walks verticals for critical a billion fiscal And turn the levers multiple creation our value we

and First the flow software that of margins, content. company cash outlook, profit conversion is our against automation peers importantly, of favorably the benchmarks free terms new value in growth a and Emerson,

The second leader a controlling since premier cap market our position in XX. the AspenTech, closed we transaction industrial XX% ownership May whose increased is on lever software has

enables the a the provides benefit part in vehicle a AspenTech our business significant industrial past strategic for have of also we synergies As through software. investment to in further Emerson, discussed high multiple and

Tech Third net $XX the of via to billion proceeds divestitures from return enables shareholders and of scale is and M&A Climate which at and in growth cash organic deployment capital repurchase. capital share for InSinkErator the approximately

Finally, over note additional in Climate time, our this will monetized retain us in $X be noncontrolling believe Tech transaction providing strategic both resources investments. structure common investment allows equity $X.XX a We billion for potential story for why billion which and are we compelling of to all time. can these we Emerson and and it over shareholder unlock shareholders believe I hope transaction you factors this about value result Board value our supporting excited will in a creation. see through the

starting results ago operations I the in the XXXX. Slide for the includes left XXXX slide we'll We Climate as few a financial This reported minutes on to and of InSinkErator side. discussed report and discuss quarter the XX to Technologies, turn XXXX. discontinued please intend Now results outlook Therm-O-Disc first

of the also comprise are the of right side On in for for in data the XXXX. and operations components results that included are reported our the quarter XXXX continuing continuing To will first operations business XXXX our your after Continuing the which a reference. safety capabilities operations rebrand tools is InSinkErator appendix the professional of the core AspenTech of Automation and consist and divestiture. productivity Solutions, of business our

future. information operations of reporting will are guidance in the automation business XX. our new how and the our segments Day that provide November for to for Investor at we provide XXXX plan will we additional on about the in segments process is determining We we communicate on continuing and business focused Also, our

please If to XX. turn Slide you would,

see all in Process, grow XXXX. high discrete to market dynamics to continue and strong to hybrid We mid- markets digits. are expected single

Specifically, LNG, benefit from be will and Emerson medicine resiliency drug all a as hydrogen and and security, clean to fuels for trends. growth energy Life opportunity support Sciences ongoing investment sustainability development. vaccine continues

XXXX for X our growth previous be expect accelerated in the to off strong another year coming business years. We discrete

be world European Americas be on led is offset strong, the resulting and optimistic to especially the semiconductor, continue from our EV demand perspective, long-term prospects businesses. to a manufacturing we area expected from effects energy to markets. by growth energy be downside as We lag continue likely about discrete, will for From electronics crisis within to expect growth and investments. chemical discrete

rates. keep a additional sales AspenTech. AspenTech growth sales key Acquisitions, are in between guidance strength margins current through from our headwind offset markets, operational XX. committed for our add the at U.S. negative still and our of our approximately to driving of dollar, X.X%. by at incremental developments headwind expected X.X Expected we end mid-XXs points business with this to expect but EPS to China support execution reported points strong growth and $X.XX underlying sales X.X% mid-single-digit exchange from growth, We Please XXXX. continue remain approximately on We with backlog watch to leverage to in turn to currency in equating robust together a our mainly growth close point, Slide X to another

to note and the We $XXX the XX% cash EPS XXXX, does could $X.XX income the expected increase exceed rates at interest guide that a year. XXX%. fiscal proceeds $X to in is not EPS close Free expect flow through $X.XX from which approximate from interest conversion to adjusted increase we divestiture adjusted midpoint. if XXXX include any halfway between at Please undeployed million in continue to current

about the growth For per and at and Adjusted the first to sales per to earnings quarter, will between X% reducing and XX% by substantial first $X.XX, Currency a earnings midpoint. a underlying X%. we $X.XX expect be current sales is quarter, be rates. at the headwind share and share in exchange points approximately increase expected between X net $X.XX by increase

to Thank we I’ll Q&A, to some for back it head Before you. comments. closing pass Lal

Lal Karsanbhai

the company. in transformation you The our about and financial future value provides Emerson to cash automation Thank opportunities transaction Technologies out build high-growth to our our we creation the leading look ahead. from the you, $X.X step tremendous the excitement cohesive billion Climate portfolio. share We transaction portfolio a Frank. marks optionality hope as biggest of strategically upfront proceeds The

in we speaking will trying about on We ongoing Thank our we creation you are to We more again strategy. us joining conference a never for will to great Emerson. and about the look you investor rest forward value company today. our share excited I'm where of with future all be better. November, at of

Colleen Mettler

you, Lal. Thank

will it to We turn now Q&A.

the over you to will one. at turn just call I the call, the of mentioned the As questions we operator. With limit your will that, ask top that to

Operator

from question comes Kaplowitz Andy first Our Instructions] [Operator from Citigroup.

Andy Kaplowitz

so the give a billion Congrats cash more the little you the of color it’s use Lal, but $XX transaction. know I on maybe you’ll can early have us into deal. post you’ll

you’ll about share color talk And Aspen month. a spending you spending number on on can the any more a You is priorities but repurchases in the for that billion more list? talked you give spending bit about about $X new us Is growth pillars little could on the talk one that cash?

Lal Karsanbhai

$X conference work around our segments our we discipline Yes. priority as X when is put go segments. that alongside underway described is at lot The on is is say those continues But equally investor M&A. share important. we very in the industry repurchase obviously, Certainly, I of I -- Andy. segments. in But place meet November to each X in I in -- these we into work detail will that important. We'll Board billion speak that activity know, identify potential very important of a

we'll what stack. and tell good we that each They consistent And the can every one consistent we'll about I are we I a is a those need market -- with with growth end diversification and that within perspective discussion higher So our have they're of about automation you our business. when meet. think

Operator

next Obin Bank question Andrew The comes of America. from from

Andrew Obin

guys I on analyst going are but of know have use meeting to an you I’m proceeds. still probe going to

You but deploying you sort and understanding if the of assets. stated to would that you active – plan well, a very have capital monetizing been that my the was not stated have the assets you for were monetize

to public. If I So available, of was to didn’t capital. target a to I private because on you just want was plenty you have that think that is that company funnel want want visibility the that doesn’t the sell have what’s There understand there sell. a

in space. seems sort So you’re look it wondering just I’m the like? what automation sizable – funnel target of looking just And like a for does

Lal Karsanbhai

names Andrew. I you to me of can't the do listing I want Obviously, Thanks, companies. start know that.

Andrew Obin

would I love it.

Lal Karsanbhai

Andy. said, I've As

alignment the higher And in we are to and exposure solutions. differentiated the We're looking a going Emerson shareholder. large relative be technology. to technology strength markets. So market for There and and we're it of stack certainly Number in to opportunities We're position diligent things. clearly, for has be the automation looking sizable to looking impactful on in for to be relevant couple one, profitability for very growth.

M&A So you, a doing great those It's principles. are the I robust. and it. by very Vincent in job active. tell funnel is the led team guiding And our with is Servello And will Ram

Operator

Tusa comes JPMorgan. question from next Steve The from

Steve Tusa

Congratulations.

Lal Karsanbhai

you, Thank Steve.

Steve Tusa

congrats Yes. for on Busy Lal you, that. start

walk you getting clear. numbers crystal the XXX% like not a quite to of you’ve given, the to billion have? tad not just was clear on structure you us leverage just did valuation? bit, JV $XX the First can the of will guys what And like all, to It’s that based kind just how me are

Frank Dellaquila

Frank. Sure. Steve, is this

the billion -- $XX if billion, is you've a the the basically to senior you That third-party got Blackstone from equity there by basically, debt, debt being form common other $X.X about parties. So get bank $X.X billion, preferred. and of in contributed convertible billion $X and debt of

So $X.XX but walk PIK and get you get to that get if equity, PIK including through how the that's our you can to and billion retained there. you -- numbers up, retained note, $XX contribution, billion the our you exact add we our note you

Steve Tusa

then tax just quick one an the And And on Okay. basis? implications after-tax follow-up. just then

Frank Dellaquila

Sure.

upfront the we expect tax after-tax will the proceeds about on proceeds. on pretax, [indiscernible] upfront $X.X an around billion; So after $X.X basis, be

Steve Tusa

are guide. last the then of And on A&S X%, business. about The guess, one one orders underlying the I up for core kind

forward? something orders You're trend do that normalizes? you exiting as about time number I giving the that? you lead year going to of to expect that, that but trending kind these at than how you're what's that the conversion Is And confidence guiding mean, higher actually accelerates? that backlog just

Ram Krishnan

will spot the X% Yes, I we’ve in of backlog year. Steve, and plus that you’re automation then $X.X next got orders think, Ram billion into convert Yes, on, around underlying here. are business

So sales pretty with the comfortable guide. we’re

Operator

Morgan Stanley. comes from Pokrzywinski The from next Josh question

Josh Pokrzywinski

deal. the on Congrats

Just of imagine that. think a question, growth that of Steve’s ‘XX the price point outlook and got X a you in that I would how that about on Because maybe should we had of lot with order that follow-up you volumetrically?

the think, of quarter. in You business this said core got I points X price, you about

the Just of how you’re for into pieces kind wondering the how that equation volume of draw baking backlog we guidance? ‘XX? much should the of And then think different about

Ram Krishnan

Yes.

for rest X perspective, business. And is I of points price be the backlog a of automation we've the price, think got volume. from So X, will billion high the $X.X

have the So baked conversion we'll backlog into plant.

price plus X% X% volume rest growth, So to would I say backlog the drawdown.

Josh Pokrzywinski

feet helpful. their to a it down while pin energy appreciable then That’s is but this, still Or done these be Ukraine? so that hard move uptick for customers Got have any be or your because to result takes recent Russia, new on it. Ukraine as that is a of would from this premature? does And and that specifically might investments LNG

Lal Karsanbhai

Louisiana, in they're Texas through it's and think Europe. are I in Bechtel going as activity, robust. significant. and of Mexico number vastly very we're of projects very and No, The in such have contractor engaged funding engineered security been are incredibly energy is engineering active, the And The to particularly that through [ph] Josh. response

we're we're about what so now. right And excited seeing pretty

Operator

question next from Wolfe Coe The from Research. comes Nigel

Nigel Coe

are really busy. You guys

on just deal. clarification. quick congratulations So the want a I

how guessing you the within the or Is even just First software-centric the trying of it automation was you is of on that continue just that minimum about mean, [indiscernible] I are think a possibility? confirm it’s adjustments When options, crack then possibility about you automation, And mix, the call if type to operations. to just that? at of companies? the in AspenTech maybe I that. more the of I’m dictate all, so proceeds. base you the buying more installed define And opportunities? minority in Or looking $X.XX

Lal Karsanbhai

So turn I'll I'll and Frank the first part for C Nigel. it of take Parts B to question, your and

we on we of the a in are So that which AspenTech, X-year transaction. time standstill announced at

comfortable structure operate the current going that perspective, that's we how ownership to working. to have which from we we with that very under So continue are feel

to the then the an towards around to move We'll consistent opportunities across continues and we will entire the investments growth investments structure. Secondly, market control that at diversification. look M&A, software within We'll you're There across look eye predominantly intelligent Those system devices. stack with are and And in as aggressively. obviously, Frank? probe absolutely But occur AspenTech terms of it's area. right. the continue around future automation stack.

Frank Dellaquila

that help need is I'm I'm to A, this got you to Part me not out going On I with it. again sure question. Frank. Nigel,

Nigel Coe

Yes.

Okay.

let me to take correct this. So

continuing think about EPS is So X.XX, is is you I just it which – did adjustments. about

InSinkErator about about [indiscernible] to getting cost. from I’m PP, then contribution and that’s contribution trying some X/X from So

Frank Dellaquila

to don't have have I right ballpark, the I are In on the we or from pieces come that. now on to mid-XXXs for back that between across -- mean, it's you and we'll as to InSinkErator walk Therm-O-Disc. give but take the Emerald $X.XX roughly you ops continuing exactly close, as in and

Operator

Sprague from Vertical comes question Partners. next The from Jeff Research

Jeff Sprague

to maybe automation about just of of be tools. could I of as sorts? of kind it which I we think Lal, adjacency particular how productivity Or piece wondering Congrats. the on should I framed guess heard portfolio? solutions an that that guess part

Lal Karsanbhai

business tools productivity. the rebrand did as safety we Yes,

business right. So is and talking point. this about technology-driven a know, It we're as you you have application what that industrial is, commercial at here

safety time. that's lot broadly amount Automation voltage and about about the around across within be gas we short the do accomplished element Solutions, a think said There's think entire detection a platform. in we have So a it it which leverage it. detection, way as to significant that you of portfolio, that, Having

portfolio And unlock continue was made Climate potential. most to significant Our was -- belief our progress -- look, and that the will board's to belief very active but date. move this across the that But management to excited be we've company. for the we're about

Jeff Sprague

just entity, a follow-up, again At economics. just you upfront, note ultimately and to if actually the that could, a so back maybe about the leveraged then a EV PIK end of to this I highly play just guys just with and note out? you being pulling you the got And on structure think XX% how deal out expect I’m much and trying

Frank Dellaquila

this Jeff, PIK $X.XX we're senior about Frank. back cap end. in note billion optimistic Actually, very The the is the structure. is

So we the the to paid feel out that appropriate very time. confident on value at going we're get accreted that on

concerns no we think have are for good. we that. business prospects very So the about the And

So as very the occurs, us. at equity to well the that event common be going is time interest good think that we for monetization our

So -- a the on as leverage and there's cap well.

overall for cap it's as are is we So Xx the going structure leverage high the good the as that in is and PIK and cap feel go. leverage is structure and to we on have about we debt going about the and where what business

Operator

Credit The from Walsh question Suisse. John from next comes

John Walsh

Congratulations.

Lal Karsanbhai

you, John. Thank

John Walsh

to next expectation different out tie we half? looking talk at a of talk in year, it the it? of couple price you ways, and but us as kind maybe can little year about guidance side for come Or the for second equation on of through a together about maybe the you going all It’s go half, next first bit inflation cost

Ram Krishnan

for as the a go basis fourth and green Well, last business I green 'XX. price think year we throughout quarter on expect in were next be us, as into to year. we green was automation and we cost the Certainly,

the for to price into bake you expect cost continue. will exact into And not right ops year, be numbers positive going the we're to we or will. to going as year. And go But the so yet, give automation you Emerson possibly in think can expectation business next we continuing I

Operator

Snyder from comes UBS. question next from Chris The

Chris Snyder

follow to wanted I deployment. one up with on capital a quick

should at liquidity and the we build deal company over portfolio. So after the automation has Will assume M&A that Or will deals side the spoken further come out term? close about a injection? company the on near the lot M&A look the to further

Lal Karsanbhai

consummate. Look, deals time. markets time and these working take building markets. always studying relationships and take No. about thinking and We're to Things

close some I So ongoing timing but with prior or after process with be whether predict And it's to us. you. shortly there well activity honest an aligned be can't it for comes may

Operator

The comes Goldman question Ritchie from Sachs. next Joe from

Joe Ritchie

question. My first question, clarification a Slide XX, just

like billion, this to control going be the is I So that, guys $X.X InSinkErator? software Products like how business systems, going is segmenting billion what, like then And tools and you excluding $X.X intelligent forward. guess old devices, are roughly, in within revenues, and Home

Frank Dellaquila

That's Joe. correct. Yes, correct,

Joe Ritchie

secondly, great. I a expectations. in curious, million, lighter roughly, helpful. I'd implied, then embedded this $XX million. like from I'm AspenTech, EBITDA curious, And XXXX bit I was EBITDA? $XX little Okay, quarter AspenTech the be call your than It's I'm the just guidance That's our just for for guess, think what's -- it,

Ram Krishnan

quarter off, for Frank AspenTech. First this seasonally is as -- low think the I mentioned,

the let in have EBITDA plan. an consistent XX% we I'll on comment overall on $XXX the think I million baked you with what is our Frank, So from overall...

Frank Dellaquila

is for quarter mid-XXs, Yes. it is this as be full it’ll year expect, Frank. expect leverages. I this It’s the And when over EBITDA percent very seasonal. Ram XXs, in very low the business I the a but profitable said, would AspenTech. Joe, is would

Operator

from Linzey Brett The comes question next from Mizuho.

Brett Linzey

Congratulations.

Just want come the operating to back leverage. to

guiding think for and volume you’re that next continuing ops Could efficiencies just maybe you other versus cost So we that are the price ‘XX. any in how high maybe terms in for the about incrementals mid- should unbundle out year. to of XXs getting ironed

Lal Karsanbhai

think had correctly this I earlier. No, Ram voiced

the around move historical comfortable that leverage X which to significant remainder to that expect price, been our leverage. We to at portfolio That's guide and then higher. the this operating of has on new a guidance coming volume from up XXs feel this of mid- XX% points significantly with and somewhere high on we from X

Brett Linzey

And outlook, follow-up. just a Okay, to the I quick too. great. wanted to come sales back

X.X% you're like at looks X%, year, it guiding So at midpoint. full the QX

you getting the this be in that comps So Is or mix model? bit difficult despite to half. backlog that does just about of should in the about second timing a rate something growth build thinking suggest little expect we the

Frank Dellaquila

process, the the the expect it’s No, do primarily as moderate year. the so backlog of comes conversion timing acceleration go through we it and we how through some

Operator

O'Dea The Fargo. Wells next question Joe from comes from

Joe O'Dea

around kind pause batteries ask semiconductors about and opportunities across you’re you’re of elevated whether thinking how maybe you that go and to reshoring could I end the of and just pipeline? you that see of strongest timeline of in also the where planning into macro wanted on markets, pipeline of if more uncertainty, outside And things vis-à-vis seeing any the some activity. the a there, detail sort

Lal Karsanbhai

Thank you. No, great question.

I particularly Asia. around seeing be reshoring investments, and consider manufacturing you terms you But comes third United in and drug sciences, significant battery semiconductor. the that medicine. that it in think to I development but manufacturing mentioned just In ones, the will nearshoring, ask Europe, important States from We're X life would of not personalized very in

think costs caution energy would the In the particularly is energy-intensive of Europe challenges, really terms express and macro the I examples. chemical in in such that around one the industries as is to discrete and as or Europe industry environment, I

Operator

DeBlase next The Bank. Nicole from from comes question Deutsche

Nicole DeBlase

guys. Congratulations,

one end quick trends. market AS a Just on

that. could what So little if But the a oil Lal sure big a markets, you or definitely bit comps gas, with and the is orders bit about end did in talk I’m you’re little too. – seeing quarter. anyone fall business a this part key of

Lal Karsanbhai

amount that's LNG earlier, question. new we that into which clearly mentioned, even year, investments America. us secondly, growth. by America growth confidence, particularly The aggressively XXXX. overall gotten I battery business that second sources, clean decarbonization across been the tremendous the but multiple driver of particularly semiconductor just big comps and would to hydrogen investments, life of go investments we more the driven we Yes. we continent. No, Nicole in into category gives And the on done go have have as talked science momentum be as And then good energy industries significant investments, terms North orders Yes, in guide is the more in fuels, a work energy driven is challenging, the really new near-shoring EV investments by drive that's North industries in refineries about conversions, into sustainability

Operator

This for the and concludes conference. today's our session Thank attending question-and-answer presentation. you

disconnect. You may now

Emerson Electric (EMR) 2 Nov 222022 Q4 Earnings call transcript