Emerson Electric : to Acquire Open Systems International (OSI)

EMERSON TO ACQUIRE

OPEN SYSTEMS INTERNATIONAL (OSI) INC.

August 27, 2020

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 impact of the COVID-19 pandemic, as well as economic and currency conditions, market demand, including related to the pandemic and oil and gas price declines and volatility, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, among others, as set forth in the Company's most recent Annual Report on Form 10-K and subsequent reports filed with the SEC.

Non-GAAP Measures

In this call we will discuss some non-GAAP measures (denoted with *) 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.

Emerson's Active Acquisition Strategy is Mixing into Higher Multiple Control and Data Management Layers

DATA MANAGEMENT & SERVICES

Converts rich data to information and develops actionable insights

CONTROL

Performs action on rich data collected from the field

DEVICES /	16
INSTRUMENTS /
SENSORS
Generates
rich data

2016 - 2020YTD # DEALS:RECENT ACQUISITIONS:

14
		OSI Power
	Insights
			ü inmation (Equity Position)
	from
	are fundamental
	to delivering
	optimization
3					üAmerican Governor
	Customers rely on our		ü Verdant
	control systems, which
	ensure their processes
	are optimized, running safely,
	efficiently, and productively

Our established credibility with customers through world class devices/instruments/sensors lays the foundation to optimize our customers' broad needs

Recent Focus

Emerson Has Tremendous Credibility With Our Customers and Is Uniquely Positioned to Provide Optimized Solutions for Our Customers Up and Down the Technology Value Pyramid

3

OSI and Emerson Together Offer a Complete Electric Utility Solution from Generation to Metering

GENERATION		TRANSMISSION	DISTRIBUTION
Distributed Control		Energy Management		Advanced Distribution
System (DCS)		System (EMS)		Management System (ADMS)
• Controls power		• Controls power flow and		• Controls power flow and voltage to end users and from
generation to match		voltage from plants to distribution		distributed energy resources
demand		• Advises power plants of		• Manages restoration of power following a power outage
• Optimizes plant
	generation needed to
performance		match demand

Distributed Energy Resources (DER)	Distributed Energy Resources (DER)
Hydro Generation
(American Governor)

Gas / Steam Turbine
Utility	Substation	Transmission	Substation	Distribution Lines
Scale Solar		Lines

EMERSON STRENGTH	OSI STRENGTH	4

OSI Adds Attractive Power Transmission & Distribution Software Platform to Emerson's Portfolio

DATA MANAGEMENT

Converts rich data to information and develops actionable insights

Plant Optimization

Process Analytics

Advanced Power Apps

Digital Twin

Asset Analytics

		Emerson Capabilities
Grid Analytics	Digital Twin	OSI Capabilities
EMS (Transmission)	Demand Response	Future Opportunities
GMS (Generation)	Energy Trading
ADMS (Distribution)	DER Dispatch &
Outage Management	Settlement
Behind the Meter
Grid Asset Mgmt
	(BTM) Energy
	Management

CONTROL

Performs action on rich data collected from the field

BOP Controls

Generator Excitation

Turbine Controls

Nuclear Controls

Hydroelectric

Solar/Wind Controls

Distributed Energy Resource Management
SCADA	DER Control
RTU	Microgrid Controls
Battery Storage System Management
Dynamic Line Rating
Phasor Measurement

DEVICES /	Connected Instruments
Connected Valves
INSTRUMENTS /
SENSORS	Machinery Health
Generates	Monitoring
rich data	Power Generation

	Behind the Meter
Smart Meters	Sensors
Substation Sensors	Grid Edge Sensors
Dist. Line Sensors	Intelligent Relays
T&D	Distributed Generation

OSI's Software Portfolio Positions Emerson's Power
Franchise to Lead in the Ongoing Electric Grid Digitization	5

OSI Overview

COMPANY PROFILE

Headquarters	Founded
Minneapolis, MN	1992
2020 Sales	Employees
$167M (FYE 6/30/20)	~1,000

Key Industries

Power Transmission & Distribution,

Natural Gas Distribution, Water

and Wastewater

Description

A leading independent provider of grid automation software solutions for utilities, providing real-time management and optimization of power transmission and distribution

SALES MIX

By Geography

International

15%

85%	North America

SOFTWARE APPLICATIONS PORTFOLIO

GMS	EMS	DMS	OMS	DERMS	DR	Microgrid	Other
Generation	Transmission	Distribution	Outage Mgmt	Distributed	Demand	Solutions
Generation	Response
Energy Mgmt. Sys.		Adv. Distribution Mgmt. System
(EMS)			(ADMS)

monarchTM (real-time platform) +

Cumulus (cloud technologies) + Chronus (historian)

SCADA, Field Communications, Alarming, Trending,

Visualization, Load Shed, Study Mode, API's, etc.

End Market

Gas Distribution 1% 1% Water & Waste

Power	46%	52%	Power
Distribution	Transmission

6

OSI Complements Strong Emerson Power Franchises and Doubles Served Market to $5.4B

TOTAL ACCESSIBLE GLOBAL POWER	Source: ARC,
	MARKET $5.4B WITH OSI			HIS, internal
			estimates
Current Emerson Market	ExpandedEmerson Market (w/ OSI)
Power Generation Control Systems	Transmission & Distribution Automation
$1.9B		$0.8B	$1.3B			$1.4B
Distributed Control Systems		DCS Software &	Energy Management	Advanced Distribution
(DCS)		Applications	Systems		Management Systems
2019 Power						5%
		2019 Transmission
Generation	24%
and Distribution

DCS Market	Market
Emerson
OSI Participation
Participation

ATTRACTIVE PENETRATION POTENTIAL

65% of Utilities Have Yet to Transition to ADMS

Adoption		44%
		2025F
ADMS	35%
27%	2019
		2014

Emerson	1998	2019
Participation
Global	13%	24%

OSI	2019	2029F
Participation
Global	5%	2x+

• North American Utilities have

shifted CAPEX budgets from

~50% T&D in 2009 to ~67%

T&D in 2019

• Advanced Transmission &

Source: ARC, HIS, internal estimate

Source: LEK, Navigant, internal estimates

With OSI, Emerson has a tremendous opportunity to replicate our proven market penetration strategy with leading technology and unparalleled customer intimacy

Distribution Automation

Technologies Market expected

to grow 7% CAGR from 2020

to 2030

Source: LEK, C3	7

Significant Opportunity for Pull-Through and Cross-Selling to Grow Emerson and OSI Installed Base

Very Large		Emerson in 17
Integrated Utilities
	~2,200 TWh
Top 20 Companies
~2,500 TWh Produced		OSI in 9

Large & Mid-Sized Utilities		Emerson in 24
Next 50 Companies		~500 TWh
~1,000 TWh Produced		OSI in 22
Mid-Sized,Co-Op & Muni's		Emerson in 209 of
	Generators
2,900 Companies		~450 TWh
(500 have Generation)
~1,100 TWh Produced		OSI in 330
	of Total

GROWTH SYNERGY

OPPORTUNITIES

• Joint customer executive engagements
• Drive Generation and Transmission & Distribution platform standardization
• Joint project pursuit and account management to expand sales reach
• Installed base cross selling opportunities
• Product integration for seamless connectivity and transfer of data

Ovation Software Controls ~50% of the Large-Scale Electricity Generated in the US -
Cross Sale Opportunity for OSI's T&D Capabilities to Ovation Installed Base	8

Highly Strategic Acquisition With Strong Profitability and Cash Flow in an Attractive Growth Market

EXPANDS

SOFTWARE

PORTFOLIO

DIVERSIFIES AND EXTENDS EMERSON INTO AN ATTRACTIVE MARKET

STRONG FINANCIAL PERFORMANCE

• OSI's software platform enables customers to add new capabilities in distributed generation, outage response, load balancing, and demand response management
• Leading modular software technology is disruptive to legacy technologies
• 50%+ recurring revenue supported by 100% customer retention
• Expansion into transmission and distribution automation is a natural extension to Automation Solutions' market-leading power franchise
• Doubles served market to $5.4B in a market growing at 7% with opportunity to expand to additional ~$5B into adjacent T&D markets
• Mega-trendsare driving OSI adoption: decarbonization, digitization, and decentralization
• Significant opportunity to cross-sell to Emerson's US / Global utility customers
• Strong top-linegrowth of ~20% in '20 (15% CAGR in '15-'19)
• Immediately margin accretive at ~35% EBITDA margins and ~25% FCF margins
• Strong backlog and orders profile support forward momentum with existing and new customers, even in COVID environment

TRANSACTION SUMMARY

• Further upside potential from elevated stimulus spending environment
• Cash purchase price $1.6B, ~23.5x NTM EBITDA
• Immediately EPS accretive excl. amortization and other acquisition accounting charges
• Projected closing date early FY21, pro forma 2020E Net Debt to Adj EBITDA* of 1.6x

OSI Adds Software Technology Leadership in Power Transmission &
Distribution to Market Leading Power Generation Franchise	9

Emerson Making Investments in Software-Focused Solutions Across Both Platforms

DATA

MANAGEMENT

Standalone Software

Ex: MonarchTM (OSI),

Plantweb, Zedi, BioG, Sensi

MTM, Paradigm, Syncade

CONTROL

Plant or edge Controllers with embedded high value software

Ex: DeltaV, Ovation, Machinery Health,

FB3000 RTU, Verdant, Supermarket

Controllers, PACSystems PLCs, etc.

DEVICES / INSTRUMENTS / SENSORS

Devices which derive their application value from embedded software or by being connected

Ex: Multivariable & Advanced Phase Measurements, Cargo Trackers, etc

	Orders (1)	What's Included
Standalone	$1.1B	Standalone software
Software &		including support,
	upgrades, licenses &
Associated		subscriptions plus
Engineering		engineering services
Services		specific to software
	implementation
Embedded	$1.3B	Embedded control
Control Software		software and devices
	that generate value
& Software		through software or
Enabled Devices		connectivity
		ü Higher margin
Total Software	$2.4B	ü Consistent growth
ü Recurring revenue
Innovations
	ü Low Capex

ü Strong FCF

(1) 2019 Orders; Includes Pro-Forma 2019 OSI

~$2.4B Software Innovations Expected to Deliver High
Single Digit Growth and Drive Margin Accretion	10

Software Applications, Embedded Control, and Software Enabled Device Examples

DATA

OSI ADMS	Digital Twin

CONTROL

Ovation Control System	Supermarket Control System

DEVICES

Cargo Tracking

Advanced Phase Measurement

Emerson's Software Capabilities Are Pervasive and
Critical to Generating New Insight and Value for Our Customers	11

Emerson Continues to Identify Software Opportunities in Relevant and Growing Spaces

Engineering

Broader Software

Adjacent Software

Document Mgmt.Landscape

Management

Lab Info	Operations	Service	Product Lifecycle
Workflow	Management
Management	Management
	Management

Established

Portfolio

			Test &
			Historian
			Measurement	Quality
	Asset			Management
	Performance	AMS Device		System
		Manager
		Asset			Industry
	Management			Planning &
					Scheduling
	Data Integration		Analytics		(MES)
*partnership		Warehouse
				Management
					Plant
	Alarm	Cloud SCADA EMS/ADMS		Information
		Management
	Management
DeltaV
Automation
Software				Building
				Management
	Supermarket	Life Sciences	Historian	Multi-	Enterprise
	MES	Thermostat	Maintenance
Ovation	Control			Manager
Software
Automation

Software

Geospatial and

Geosystems

Safe Food

• Facility Hygiene

Management

Plant / Enterprise

Analytics

Plant Design

Enterprise Asset Management

12

Q&A

Appendix

Reconciliations