EMERSON ELECTRIC CO. 2024 Q2
Emerson Earnings
May 8, 2024
Safe Harbor Statement
Statements in this presentation and our commentary and responses to questions that are not strictly historical may be "forward-looking" statements, which involve risks and uncertainties, and Emerson undertakes no obligation to update any such statements to reflect later developments. These risks and uncertainties include the scope, duration and ultimate impacts of the Russia-Ukraine and other global conflicts, as well as economic and currency conditions, market demand, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, inflation, among others, as set forth in the Company's most recent Annual Report on Form 10-K and subsequent reports filed with the SEC. The outlook contained herein represents the Company's expectation for its consolidated results, other than as noted herein.
Non-GAAP Measures
In this presentation we will discuss some non-GAAP measures in talking about our company's performance, and the reconciliation of those measures to the most comparable GAAP measures is contained within this presentation or available at our website, www.Emerson.com, under Investors.
Continuing Operations
All financial metrics in this presentation are on a continuing operations basis, unless otherwise noted.
E M E R S O N | 2
Calvin Butler to Join Emerson's
Board of Directors
Effective August 1, 2024 | Board will expand to 12 members
President and CEO
Exelon
Committee Participation
Corporate Governance and Nominating Committee
Key Skills and Experience
Business | External | Clean |
Transformation | Affairs | Energy |
E M E R S O N | 3
Key Messages
Strong Q2 Performance
Sales, operating leverage and adjusted EPS all exceeded Q2 expectations
Stronger price and mix than expected
Test & Measurement Update
Q2 slightly exceeded expectations
Updating fiscal 2024 sales guidance to ~$1.5B on softer orders
Protecting profit with accelerated synergies, now $100M in 2024
Current End-Market Demand
LSD underlying orders growth in H1 - Process & Hybrid up MSD and Discrete down MSD
Expecting MSD in H2 and LSD - MSD growth for the full year
Increasing Full Year Guidance
Increasing underlying sales, adjusted EPS and free cash flow
Considers the delay in Discrete recovery and adjusts for AspenTech's latest guidance revision
E M E R S O N | 4
2024 Q2 Key
Metrics
Exceeded
Expectations
Results | Prior Guidance |
Underlying Sales Growth | 8% | 3.5% - 5.5% |
Gross Profit Margin | 52.2% |
Operating Leverage1 | 54% | Low to Mid 40s |
Adjusted EPS | $1.36 | $1.22 - $1.26 |
Free Cash Flow | $675M |
E M E R S O N | 5
1 Excludes Test & Measurement
Continued Strength in Large Projects
PROJECT FUNNEL
EV Battery | |
Carbon Capture | Sustainability & Decarbonization: $3.0B |
Energy Transition: $5.3B | |
Growth Platforms: $7.0B |
Clean Fuels | ||
Traditional | ||
Energy | ||
Hydrogen | ||
Renewables | $10.8B | Chemical |
Nuclear
Traditional
Power
Life
Sciences
LNG | Metals & |
Mining |
PROJECT WINS
Sustainability &
Decarbonization
Nuclear
Traditional
Energy
LNG
Metals & Mining | ~$350M |
Life Sciences
Traditional Power | Chemical |
E M E R S O N | 6
U.S. Data Center Annual
Electricity Consumption (TWh)
22%
CAGR
372
95
20232030
AI data center racks require ~7x the
power of traditional data racks
AI Driven Investments in Data Centers Heralds a Step Change in the Growth of Power in the U.S.
Impact on Utilities | |||
Georgia | Dominion | North America Electric | |
Power | Energy | Reliability Corporation |
"Current projections reflect load | "Data centers…have been a | Latest 9-year growth forecast |
growth…approximately 17 | source of significant increase | of new electricity demand |
times greater than previously | in demand which is expected | more than doubled; at levels |
forecasted." | to continue over the next | of load growth not seen in the |
decade." | past decade |
Hyperscaler Capex Surges With AI
Infrastructure Investments
Microsoft | Quarterly capex ($14B) up 79% |
year-over-year and expect further | |
sequential increases |
Quarterly capex ($12B) up 90% | |
year-over-year and expect ~$50B | |
capex in 2024 ($34B in 2023) |
Emerson Software and Control
50% N.A. power
generation automated by
Ovation (20% global)
Digital Grid Management
40% N.A. market share in real-time grid management software1 (20% global)
1 Market size for software on ACV basis | E M E R S O N | 7 |
Sources: Red Chalk Group, L.E.K. Consulting, WSJ, public company reports and presentations, internal estimates |
2024 Q2 Performance Summary
Sales
$4.4B
$3.8B
Sales growth led by process | ||||
and hybrid businesses | ||||
8% | Price contributed 3 pts | |||
Underlying | ||||
Test & Measurement $367M | ||||
Backlog1: $7.55B | ||||
2023 | 2024 | |||
Adjusted EPS | ||||
$1.36 | ||||
$1.09 | Strong operational performance | |||
Test & Measurement contributed | ||||
25% | $0.11 | |||
AspenTech increased $0.06 | ||||
versus prior year | ||||
2023 | 2024 |
1 Excludes AspenTech
2 Excludes Test & Measurement
Adjusted Segment EBITA
24.6% | 26.0% | |
Leverage on volume, favorable | ||
mix and price-cost drove margin | ||
140 | expansion | |
Operating leverage2: 54% | ||
bps |
Test & Measurement 21.4%
Adjusted EBITA
20232024
Free Cash Flow
$675M
$513M | Includes cash outflows for | |
acquisition-related costs, | ||
integration activities and higher | ||
32% | capex, totaling ~$70M | |
YTD of $1.0B up 38% versus | ||
prior year | ||
2023 | 2024 |
E M E R S O N | 8
2023 Q2 to 2024 Q2
Adjusted EPS Bridge
$0.27 | $0.00 | $1.36 |
Interest $0.04
Corporate & Other ($0.02)
FX ($0.02)
$1.09
Software & Control $0.18
Intelligent Devices $0.09
25%
2023 | Operations | Other / | 2024 |
Non-Operating |
E M E R S O N | 9
2024 Guidance
2024 Q3 | 2024 | |
Net Sales Growth | 11% - 12.5% | 15% - 16% |
FX | ~(1 pts) | ~(0.5 pts) |
Acquisitions (NI) | ~9 pts | ~10 pts |
Divestitures | ~0 pts | ~0 pts |
Underlying Sales Growth | 3% - 4.5% | 5.5% - 6.5% |
Operating Leverage1 | Mid 30s | Low to Mid 40s |
Adjusted EPS | $1.38 - $1.42 | $5.40 - $5.50 |
Test & Measurement Contribution2 | $0.40 - $0.45 | |
AspenTech Contribution | $0.30 - $0.32 | |
Free Cash Flow | ~$2.7B | |
Share repurchase: ~$500M
Dividend payments: $1.2B
Tax rate: ~22%
1 | Excludes Test & Measurement | E M E R S O N | 10 |
2 | Includes the impact of stock compensation and tax |
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Disclaimer
Emerson Electric Co. published this content on 08 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 14:54:02 UTC.
