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Emerson Reports Fourth Quarter and Full Year 2021 Results; Provides Initial 2022 Outlook

  • Strong orders demand continues with Trailing Three-Month Orders up 16%.
  • Fourth quarter Net Sales were $4.9 billion up 9 percent from the year prior despite an estimated $175 million impact due to supply chain, logistics and labor constraints. Fourth quarter Underlying Sales were up 7 percent. Full year Net Sales of $18.2 billion were up 9 percent; Full year Underlying Sales were up 5%, both in-line with guidance.
  • Fourth quarter GAAP EPS was $1.11, down 8 percent from the year prior; Adjusted EPS, which excludes restructuring and first year purchase accounting charges, was $1.21, up 10 percent. Full year GAAP EPS was $3.82, up 18 percent from the year prior; Adjusted EPS was $4.10, up 19 percent, ahead of GAAP EPS guidance of $3.79 +/-$0.01 and Adjusted EPS guidance of $4.07 +/- $0.01.
  • Completed the 65th year of consecutive increased quarterly dividends per share. Declared increase of quarterly cash dividend to $0.515 per share of common stock payable December 10, 2021 to stockholders of record November 12, 2021.

Emerson (NYSE: EMR) today reported results for the fourth quarter and fiscal year ended September 30, 2021.

“A rigorous focus on culture, our portfolio and operational execution is critical to our continued success, and I am incredibly proud of the initiative from our global team in these key areas," said Emerson President and CEO Lal Karsanbhai. "Our team has been working hard to mitigate the near-term impact of supply chain challenges which have created obstacles across the essential industries we serve. We don't expect the global supply chain landscape to hinder our success around long-term value creation, and we continue to progress toward our cost reset targets.

“This past quarter, we took action on our vision of a reimagined Emerson. We are advancing our culture across the organization through employee initiatives and a renewed focus on integrating environmental, social and governance (ESG) priorities. We also took an exceptional step toward expanding our software portfolio by announcing the strategic transaction with AspenTech. This transaction will create an industrial software leader by creating synergies and a differentiated vehicle for software acquisitions. This opportunity to deepen our industrial software capability is a meaningful step in a portfolio evolution that will ultimately drive higher growth and value creation. I'm energized as we enter a new fiscal year, and I know our team is ready to perform.”

September Trailing Three-Month Underlying Orders were up 16 percent, as demand continues to be strong in key hybrid and discrete automation as well as residential markets. Late-cycle process automation and commercial markets continue to improve and orders activity is increasing related to customer sustainability initiatives, notably decarbonization programs.

Fourth quarter Net Sales were up 9 percent and Underlying Sales were up 7 percent, excluding favorable currency of 1 percent and an impact of 1 percent from acquisitions. Revenue fell into the lower end of our guidance due to an estimated $175 million impact from supply chain, logistics and labor constraints. North America continued its strong recovery in the fourth quarter despite supply chain challenges, with the Americas up 16 percent, while Europe was down 2 percent. Asia, Middle East & Africa was down 3 percent, with China up 10 percent. For the full year, Net Sales were up 9 percent and Underlying Sales were up 5 percent. The Americas were up 6 percent and Europe and Asia, Middle East & Africa were both up 5 percent, with China up 15 percent.

Fourth quarter Pretax Margin of 16.7 percent was down 10 basis points and Adjusted EBIT Margin, which excludes restructuring and first year purchase accounting charges, was 19.0 percent, down 30 basis points. Adjusted EBIT margin was unfavorably impacted by price-cost headwinds in Commercial & Residential Solutions and lower volume due to supply chain constraints across the enterprise, together worth 200 basis points. For the full year, Pretax Margin of 16.0 percent was up 210 basis points while Adjusted EBIT Margin for the year was 18.0 percent, up 130 basis points and both in line with guidance.

Earnings Per Share were $1.11 for the quarter, down 8 percent, and Adjusted Earnings Per Share, which excludes restructuring and first year purchase accounting charges, were $1.21, up 10 percent. Earnings Per Share for the year were $3.82, up 18 percent, and Adjusted Earnings Per Share were $4.10, up 19 percent. Earnings for the year exceeded guidance and included $0.59 of operational improvements over the prior year.

Operating Cash Flow was $3.6 billion for the full year, up 16 percent, in line with guidance. Free Cash Flow was $3.0 billion for the year, up 18 percent, also in line with guidance, resulting in Free Cash Flow conversion of 129 percent. Full year cash flow results reflected higher earnings due to volume, operational execution across the two business platforms and favorable trade working capital.

Business Platform Results

Automation Solutions September trailing three-month underlying orders were up 20 percent driven by robust improvement in the Americas. The order backlog decreased by $100 million compared to the prior quarter to $5.4 billion, and was up 16 percent versus the prior year.

Net Sales increased 6 percent in the quarter, with Underlying Sales up 3 percent. Results for the quarter reflected strong recovery in the Americas, ongoing strength across discrete and hybrid markets and continued improvement in longer-cycle process automation markets. Sales were unfavorably impacted by an estimated $125 million due to supply chain and logistics constraints in the quarter. Full year Net Sales were up 4 percent and Underlying Sales were flat versus prior year. Europe and Asia, Middle East & Africa saw low single-digit growth while the Americas were down slightly versus the prior year due to recovery timing. China was up mid teens.

Segment EBIT margin in the quarter was 18.7 percent, up 170 basis points. Adjusted Segment EBIT margin in the quarter, which excludes restructuring and related costs, increased 170 basis points to 20.4 percent driven by savings from cost actions and volume leverage. Total restructuring and related actions in the quarter totaled $52 million. Full year Segment EBIT margin was 16.8 percent up 320 basis points. Full year Adjusted Segment EBIT margin of 18.1 percent was up 230 basis points.

Commercial & Residential Solutions September trailing three-month underlying orders were up 9 percent driven by strong growth in all world areas and business groups. Backlog ended the quarter at $1.1 billion, flat compared to the prior quarter.

Net Sales increased 14 percent in the quarter and Underlying Sales were up 13 percent, with all business groups and geographies showing strong underlying growth driven by continued residential demand in the Americas, heat pump and professional tools demand in Europe and cold chain and heating technologies demand in Asia, Middle East & Africa. Full year Net Sales were up 18 percent and Underlying Sales were up 16 percent. Sales in the Americas, Europe and Asia, Middle East & Africa saw growth in the mid teens for the full year. China was up mid teens as well.

Fourth quarter Segment EBIT margin declined 260 basis points to 18.1 percent. Fourth quarter Adjusted Segment EBIT margin, which excludes restructuring and related costs, declined 340 basis points to 18.7 percent mainly due to price-cost headwinds, partially offset by leverage and cost reduction actions. Total restructuring and related actions in the quarter were $11 million. Full year Segment EBIT margin increased 70 basis points to 20.5 percent and full year Adjusted Segment EBIT margin increased 20 basis points to 20.9 percent.

2022 Outlook

We expect that 2022 will be characterized by strong underlying demand. Strength in discrete and hybrid automation markets, further recovery in process markets and expanding opportunities in sustainability projects is expected to drive Automation Solutions full year net sales and underlying sales growth to mid-to-high single digits. For Commercial & Residential Solutions, residential demand is expected to moderate while the commercial and industrial environment is expected to further improve, driving net sales and underlying sales growth to mid-to-high single digits. We also expect operational challenges to continue through the first half of the year. Price-cost will turn to a tailwind during the second half and is expected to be approximately $100 million favorable for the year.

Starting in fiscal 2022, Emerson will revise Adjusted EBIT and Adjusted EPS to exclude intangibles amortization expense in addition to previously excluded restructuring expense and first year purchase accounting related items. The revised metric for Adjusted EBIT will be referred to as Adjusted EBITA. Adjusted EPS guidance in the tables below is presented using the new definition.

Under the new definitions, fiscal 2021 Adjusted EBITA margin was 19.8 percent and Adjusted EPS was $4.51. For the first quarter 2021, Adjusted EBITA margin was 18.2 percent and Adjusted EPS was $0.93.

The following table summarizes the fiscal year 2022 and first quarter 2022 guidance framework and does not include the impact of the AspenTech transaction, which is expected to close in fiscal 2022.

2022 Guidance

Net Sales Growth

5% to 7%

 

Operating Cash Flow

~$3.8B

Automation Solutions

5% to 7%

 

Capital Spend

~$650M

Commercial & Residential Solutions

6% to 9%

 

Free Cash Flow

~$3.1B

 

 

 

Dividend

~$1.2B

Underlying Sales Growth

6% to 8%

 

Share Repurchase

$250M to $500M

Automation Solutions

6% to 8%

 

 

 

Commercial & Residential Solutions

6% to 9%

 

Tax Rate

~22%

 

 

 

Restructuring Actions

~$150M

GAAP EPS

$4.21 to $4.36

 

Price-Cost

~$100M

Adjusted EPS

$4.82 to $4.97

 

 

 

Quarter 1, 2022 Guidance

Net Sales Growth

7% to 9%

Automation Solutions

6% to 8%

Commercial & Residential Solutions

9% to 12%

 

 

Underlying Sales Growth

7% to 9%

Automation Solutions

6% to 8%

Commercial & Residential Solutions

9% to 12%

 

 

GAAP EPS

$0.85 to $0.89

Adjusted EPS

$0.98 to $1.02

Upcoming Investor Events

Today, beginning at 8:00 a.m. Central Time / 9:00 a.m. Eastern Time, Emerson management will discuss the fourth quarter and fiscal year end results during an investor conference call. Participants can access a live webcast available at www.emerson.com/financial at the time of the call. A replay of the call will be available for 90 days. Conference call slides will be posted in advance of the call on the company website.

Forward-Looking and Cautionary Statements

Statements in this press release 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 Company's ability to successfully complete on the terms and conditions contemplated, and the financial impact of, the proposed AspenTech transaction, 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. The outlook contained herein represents the Company's expectations for its consolidated results, excluding the expected AspenTech transaction.

 

 

 

 

 

 

Table 1

 

 

 

 

 

 

 

 

 

EMERSON AND SUBSIDIARIES

CONSOLIDATED OPERATING RESULTS

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)

 

 

Quarter Ended Sept 30

 

Percent

 

2020

 

2021

 

Change

 

 

 

 

 

 

Net sales

$4,558

 

 

$4,947

 

 

9

%

Costs and expenses:

 

 

 

 

 

Cost of sales

2,676

 

 

2,951

 

 

 

SG&A expenses

946

 

 

1,054

 

 

 

Other deductions, net

131

 

 

75

 

 

 

Interest expense, net

40

 

 

39

 

 

 

Earnings before income taxes

765

 

 

828

 

 

8

%

Income taxes

35

 

 

154

 

 

 

Net earnings

730

 

 

674

 

 

 

Less: Noncontrolling interests in earnings of subsidiaries

7

 

 

4

 

 

 

Net earnings common stockholders

$723

 

 

$670

 

 

(7

)%

 

 

 

 

 

 

Diluted avg. shares outstanding

601.1

 

 

600.5

 

 

 

 

 

 

 

 

 

Diluted earnings per share common share

$1.20

 

 

$1.11

 

 

(8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended Sept 30

 

 

 

2020

 

2021

 

 

Other deductions, net

 

 

 

 

 

Amortization of intangibles

$61

 

 

$77

 

 

 

Restructuring costs

68

 

 

39

 

 

 

Other

2

 

 

(41

)

 

 

Total

$131

 

 

$75

 

 

 

 

 

 

 

 

Table 2

EMERSON AND SUBSIDIARIES

CONSOLIDATED OPERATING RESULTS

(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)

 

 

Year Ended Sept 30

 

Percent

 

2020

 

2021

 

Change

 

 

 

 

 

 

Net sales

$16,785

 

 

$18,236

 

 

9

%

Costs and expenses:

 

 

 

 

 

Cost of sales

9,776

 

 

10,673

 

 

 

SG&A expenses

3,986

 

 

4,179

 

 

 

Other deductions, net

532

 

 

318

 

 

 

Interest expense, net

156

 

 

154

 

 

 

Earnings before income taxes

2,335

 

 

2,912

 

 

25

%

Income taxes

345

 

 

585

 

 

Net earnings

1,990

 

 

2,327

 

 

 

Less: Noncontrolling interests in earnings of subsidiaries

25

 

 

24

 

 

 

Net earnings common stockholders

$1,965

 

 

$2,303

 

 

17

%

 

 

 

 

 

 

Diluted avg. shares outstanding

606.6

 

 

601.8

 

 

 

 

 

 

 

 

 

Diluted earnings per share common share

$3.24

 

 

$3.82

 

 

18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended Sept 30

 

 

 

2020

 

2021

 

 

Other deductions, net

 

 

 

 

 

Amortization of intangibles

$239

 

 

$300

 

 

 

Restructuring costs

284

 

 

150

 

 

 

Other

9

 

 

(132

)

 

 

Total

$532

 

 

$318

 

 

 

 

 

 

Table 3

EMERSON AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

Years Ended Sept 30

 

2020

 

2021

Assets

 

 

 

Cash and equivalents

$3,315

 

 

$2,354

 

Receivables, net

2,802

 

 

2,971

 

Inventories

1,928

 

 

2,050

 

Other current assets

761

 

 

1,057

 

Total current assets

8,806

 

 

8,432

 

Property, plant & equipment, net

3,688

 

 

3,738

 

Goodwill

6,734

 

 

7,723

 

Other intangible assets

2,468

 

 

2,877

 

Other

1,186

 

 

1,945

 

Total assets

$22,882

 

 

$24,715

 

 

 

 

 

Liabilities and equity

 

 

 

Short-term borrowings and current

 

 

 

maturities of long-term debt

$1,160

 

 

$872

 

Accounts payable

1,715

 

 

2,108

 

Accrued expenses

2,910

 

 

3,266

 

Total current liabilities

5,785

 

 

6,246

 

Long-term debt

6,326

 

 

5,793

 

Other liabilities

2,324

 

 

2,753

 

Total equity

8,447

 

 

9,923

 

Total liabilities and equity

$22,882

 

 

$24,715

 

 

 

 

 

Table 4

EMERSON AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

Year Ended Sept 30

 

 

2020

 

2021

Operating activities

 

 

 

 

Net earnings

 

$1,990

 

 

$2,327

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

854

 

 

969

 

Stock compensation

 

110

 

 

224

 

Pension expense

 

67

 

 

28

 

Pension funding

 

(66

)

 

(41

)

Changes in operating working capital

 

148

 

 

203

 

Other, net

 

(20

)

 

(135

)

Cash provided by operating activities

 

3,083

 

 

3,575

 

 

 

 

 

 

Investing activities

 

 

 

 

Capital expenditures

 

(538

)

 

(581

)

Purchases of businesses, net of cash and equivalents acquired

 

(126

)

 

(1,611

)

Divestitures of businesses

 

 

 

34

 

Other, net

 

(76

)

 

38

 

Cash used in investing activities

 

(740

)

 

(2,120

)

 

 

 

 

 

Financing activities

 

 

 

 

Net increase in short-term borrowings

 

(90

)

 

(504

)

Proceeds from short-term borrowings greater than three months

 

1,043

 

 

71

 

Payments of short-term borrowings greater than three months

 

(1,043

)

 

(71

)

Proceeds from long-term debt

 

2,233

 

 

 

Payments of long-term debt

 

(503

)

 

(308

)

Dividends paid

 

(1,209

)

 

(1,210

)

Purchases of common stock

 

(942

)

 

(500

)

Other, net

 

2

 

 

100

 

Cash used in financing activities

 

(509

)

 

(2,422

)

 

 

 

 

 

Effect of exchange rate changes on cash and equivalents

 

(13

)

 

6

 

Increase (Decrease) in cash and equivalents

 

1,821

 

 

(961

)

Beginning cash and equivalents

 

1,494

 

 

3,315

 

Ending cash and equivalents

 

$3,315

 

 

$2,354

 

 

 

 

 

 

 

 

 

Table 5

EMERSON AND SUBSIDIARIES

SEGMENT SALES AND EARNINGS

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

Quarter Ended Sept 30

 

2020

 

2021

Sales

 

 

 

Measurement & Analytical Instrumentation

$828

 

 

$860

 

Valves, Actuators & Regulators

980

 

 

961

 

Industrial Solutions

542

 

 

610

 

Systems & Software

655

 

 

747

 

Automation Solutions

3,005

 

 

3,178

 

 

 

 

 

Climate Technologies

1,111

 

 

1,289

 

Tools & Home Products

444

 

 

486

 

Commercial & Residential Solutions

1,555

 

 

1,775

 

 

 

 

 

Eliminations

(2

)

 

(6

)

Net sales

$4,558

 

 

$4,947

 

 

 

 

 

Earnings

 

 

 

Automation Solutions

$511

 

 

$595

 

 

 

 

 

Climate Technologies

238

 

 

234

 

Tools & Home Products

84

 

 

88

 

Commercial & Residential Solutions

322

 

 

322

 

 

 

 

 

Stock compensation

(41

)

 

(33

)

Unallocated pension and postretirement costs

16

 

 

23

 

Corporate and other

(3

)

 

(40

)

Interest expense, net

(40

)

 

(39

)

Earnings before income taxes

$765

 

 

$828

 

 

 

 

 

Restructuring costs

 

 

 

Automation Solutions

$50

 

 

$29

 

 

 

 

 

Climate Technologies

9

 

 

7

 

Tools & Home Products

9

 

 

3

 

Commercial & Residential Solutions

18

 

 

10

 

 

 

 

 

Corporate

 

 

 

Total

$68

 

 

$39

 

The table above does not include $5 and $27 of costs related to restructuring actions that

were reported in cost of sales and selling, general and administrative expenses for the

three months ended September 30, 2020 and 2021, respectively.

 

 

 

 

Depreciation and Amortization

 

 

 

Automation Solutions

$143

 

 

$168

 

 

 

 

 

Climate Technologies

51

 

 

47

 

Tools & Home Products

19

 

 

17

 

Commercial & Residential Solutions

70

 

 

64

 

 

 

 

 

Corporate and other

10

 

 

17

 

Total

$223

 

 

$249

 

 

Table 6

EMERSON AND SUBSIDIARIES

SEGMENT SALES AND EARNINGS

(DOLLARS IN MILLIONS, UNAUDITED)

 

 

Year Ended Sept 30

 

2020

 

2021

Sales

 

 

 

Measurement & Analytical Instrumentation

$3,108

 

 

$3,071

 

Valves, Actuators & Regulators

3,589

 

 

3,483

 

Industrial Solutions

2,012

 

 

2,266

 

Systems & Software

2,446

 

 

2,790

 

Automation Solutions

11,155

 

 

11,610

 

 

 

 

 

Climate Technologies

3,980

 

 

4,748

 

Tools & Home Products

1,663

 

 

1,905

 

Commercial & Residential Solutions

5,643

 

 

6,653

 

 

 

 

 

Eliminations

(13

)

 

(27

)

Net sales

$16,785

 

 

$18,236

 

 

 

 

 

Earnings

 

 

 

Automation Solutions

$1,523

 

 

$1,948

 

 

 

 

 

Climate Technologies

801

 

 

965

 

Tools & Home Products

317

 

 

399

 

Commercial & Residential Solutions

1,118

 

 

1,364

 

 

 

 

 

Stock compensation

(110

)

 

(224

)

Unallocated pension and postretirement costs

53

 

 

94

 

Corporate and other

(93

)

 

(116

)

Interest expense, net

(156

)

 

(154

)

Earnings before income taxes

$2,335

 

 

$2,912

 

 

 

 

 

Restructuring costs

 

 

 

Automation Solutions

$232

 

 

$123

 

 

 

 

 

Climate Technologies

23

 

 

15

 

Tools & Home Products

21

 

 

7

 

Commercial & Residential Solutions

44

 

 

22

 

 

 

 

 

Corporate

8

 

 

5

 

Total

$284

 

 

$150

 

The table above does not include $20 and $38 of costs related to restructuring actions

that were reported in cost of sales and selling, general and administrative expenses for

the twelve months ended September 30, 2020 and 2021, respectively.

 

 

 

 

Depreciation and Amortization

$557

 

 

$632

 

Automation Solutions

 

 

 

 

 

 

 

Climate Technologies

184

 

 

191

 

Tools & Home Products

77

 

 

76

 

Commercial & Residential Solutions

261

 

 

267

 

 

 

 

 

Corporate and other

36

 

 

70

 

Total

$854

 

 

$969

 

Table 7

EMERSON AND SUBSIDIARIES

ADJUSTED EBITA & EPS

(DOLLARS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)

 

As discussed herein, starting in fiscal 2022, Emerson will revise Adjusted EBIT and Adjusted EPS

to exclude intangibles amortization expense, in addition to previously excluded restructuring expense and

first year purchase accounting related items. To facilitate investor understanding and comparison, the

Company is providing historical Adjusted EBITA and Adjusted EPS on this new basis.

 

 

 

2021

 

 

Q1

 

Q2

 

Q3

 

Q4

 

FY

 

 

 

 

 

 

 

 

 

 

 

Pretax earnings (GAAP)

 

$

563

 

 

737

 

 

784

 

 

828

 

 

2,912

 

Interest expense, net

 

40

 

 

38

 

 

37

 

 

39

 

 

154

 

Earnings before interest and taxes*

 

$

603

 

 

775

 

 

821

 

 

867

 

 

3,066

 

Restructuring

 

69

 

 

21

 

 

32

 

 

66

 

 

188

 

Gain on acquisition of full ownership of equity investment

 

(17

)

 

 

 

 

 

 

 

(17

)

OSI purchase accounting items

 

21

 

 

10

 

 

10

 

 

9

 

 

50

 

Prior adjusted earnings before interest and taxes*

 

$

676

 

 

806

 

 

863

 

 

942

 

 

3,287

 

Amortization of intangibles

 

81

 

 

82

 

 

79

 

 

85

 

 

327

 

Adjusted EBITA*

 

$

757

 

 

888

 

 

942

 

 

1,027

 

 

3,614

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

Q1

 

Q2

 

Q3

 

Q4

 

FY

 

 

 

 

 

 

 

 

 

 

 

Pretax earnings (GAAP)

 

$

423

 

 

689

 

 

458

 

 

765

 

 

2,335

 

Interest expense, net

 

35

 

 

36

 

 

45

 

 

40

 

 

156

 

Earnings before interest and taxes*

 

$

458

 

 

725

 

 

503

 

 

805

 

 

2,491

 

Restructuring and advisory fees

 

110

 

 

40

 

 

94

 

 

73

 

 

317

 

Prior adjusted earnings before interest and taxes*

 

$

568

 

 

765

 

 

597

 

 

878

 

 

2,808

 

Amortization of intangibles

 

63

 

 

63

 

 

65

 

 

65

 

 

256

 

Adjusted EBITA*

 

$

631

 

 

828

 

 

662

 

 

943

 

 

3,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

Q1

 

Q2

 

Q3

 

Q4

 

FY

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per share

 

$

0.74

 

 

0.93

 

 

1.04

 

 

1.11

 

 

3.82

 

Restructuring and advisory fees

 

0.09

 

 

 

0.03

 

 

0.04

 

 

0.08

 

 

0.24

 

Gain on acquisition of full ownership of equity investment

 

(0.03

)

 

 

 

 

 

 

 

 

(0.03

)

OSI purchase accounting items

 

0.03

 

 

 

0.01

 

 

0.01

 

 

0.02

 

 

0.07

 

Prior adjusted earnings per share

 

$

0.83

 

 

 

0.97

 

 

1.09

 

 

1.21

 

 

4.10

 

Amortization of intangibles

 

0.10

 

 

 

0.10

 

 

0.10

 

 

0.11

 

 

0.41

 

Adjusted earnings per share*

 

$

0.93

 

 

 

1.07

 

 

1.19

 

 

1.32

 

 

4.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

Q1

 

Q2

 

Q3

 

Q4

 

FY

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings per share

 

$

0.53

 

 

 

0.84

 

 

0.67

 

 

1.20

 

 

3.24

 

Restructuring and advisory fees

 

0.14

 

 

 

0.05

 

 

0.13

 

 

0.10

 

 

0.42

 

Discrete tax items

 

 

 

 

 

 

 

 

(0.20

)

 

(0.20

)

Prior adjusted earnings per share

 

$

0.67

 

 

 

0.89

 

 

0.80

 

 

1.10

 

 

3.46

 

Amortization of intangibles

 

0.08

 

 

 

0.08

 

 

0.08

 

 

0.08

 

 

0.32

 

Adjusted earnings per share*

 

$

0.75

 

 

 

0.97

 

 

0.88

 

 

1.18

 

 

3.78

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliations of Non-GAAP Financial Measures & Other

 

 

 

 

 

Table 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliations of Non-GAAP measures (denoted by *) with the most directly comparable GAAP measure (dollars in millions, except per share amounts):

 

 

 

 

 

 

 

 

 

 

 

Q4 2021 Underlying Sales Change

Auto Solns

 

Comm & Res

Solns

 

Emerson

 

 

Reported (GAAP)

6

%

 

14

%

 

9

%

 

 

(Favorable) / Unfavorable FX

(1

)%

 

(1

)%

 

(1

)%

 

 

Acquisitions / Divestitures

(2

)%

 

-

%

 

(1

)%

 

 

Underlying*

3

%

 

13

%

 

7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

2021 Underlying Sales Change

Auto Solns

 

Comm & Res

Solns

 

Emerson

 

 

Reported (GAAP)

4

%

 

18

%

 

9

%

 

 

(Favorable) / Unfavorable FX

(2

)%

 

(2

)%

 

(3

)%

 

 

Acquisitions / Divestitures

(2

)%

 

-

%

 

(1

)%

 

 

Underlying*

-

%

 

16

%

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

FY 2022E Underlying Sales Change

Auto Solns

 

Comm & Res

Solns

 

Emerson

 

 

Reported (GAAP)

5% - 7

%

 

6% - 9

%

 

5% - 7

%

 

 

(Favorable) / Unfavorable FX

1

%

 

-

%

 

1

%

 

 

Acquisitions / Divestitures

-

%

 

-

%

 

-

%

 

 

Underlying*

6% - 8

%

 

6% - 9

%

 

6% - 8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 2022E Underlying Sales Change

Auto Solns

 

Comm & Res

Solns

 

Emerson

 

 

Reported (GAAP)

6% - 8

%

 

9% - 12

%

 

7% - 9

%

 

 

(Favorable) / Unfavorable FX

-

%

 

-

%

 

-

%

 

 

Acquisitions / Divestitures

-

%

 

-

%

 

-

%

 

 

Underlying*

6% - 8

%

 

9% - 12

%

 

7% - 9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 Earnings Per Share

Q4 FY20

 

Q4 FY21

 

Change

 

 

Earnings per share (GAAP)

$

1.20

 

 

$

1.11

 

 

(8

)%

 

 

Restructuring and related charges

0.10

 

 

0.08

 

 

(2

)%

 

 

Certain tax benefits

(0.20

 

 

 

18

%

 

 

OSI purchase accounting items

 

 

0.02

 

 

2

%

 

 

Adjusted earnings per share*

$

1.10

 

 

$

1.21

 

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share

FY20

 

FY21

 

Change

 

Q1 FY21

Earnings per share (GAAP)

$

3.24

 

 

$

3.82

 

 

18

%

 

$

0.74

 

Restructuring and related charges

0.42

 

 

0.24

 

 

(7

)%

 

0.09

 

Certain tax benefits

(0.20

 

 

 

7

%

 

 

OSI purchase accounting and fees

 

 

0.07

 

 

2

%

 

0.03

 

Gain on acquisition of full ownership of equity investment

 

 

(0.03

 

(1

)%

 

(0.03

Adjusted earnings per share*

$

3.46

 

 

4.10

 

 

19

%

 

0.83

 

Amortization of intangibles

 

 

 

0.41

 

 

 

 

 

0.10

 

Adjusted earnings per share*

 

 

 

$

4.51

 

 

 

 

 

$

0.93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Share

FY2021E

Aug.

Guidance

 

FY2022E

 

Q1

FY2022E

 

 

Earnings per share (GAAP)

$3.78 - $3.80

 

 

$4.21 - $4.36

 

 

$0.85 - $0.89

 

 

Restructuring

0.24

 

 

0.19

 

 

0.03

 

 

 

OSI purchase accounting items & fees

0.07

 

 

 

 

 

 

 

Gain on acquisition of full ownership of equity investment

(0.03

 

 

 

 

 

 

Amortization of intangibles

 

 

0.42

 

 

0.10

 

 

 

Adjusted earnings per share*

$4.06 - $4.08

 

 

$4.82 - $4.97

 

 

$0.98 - $1.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q4 EBIT Margin

Q4 FY20

 

Q4 FY21

 

Change

 

 

Pretax margin (GAAP)

16.8

 %

 

16.7

%

 

(10)

bps

 

 

Interest expense, net

0.9

 %

 

0.8

%

 

(10)

bps

 

 

EBIT margin*

17.7

 

17.5

%

 

(20)

bps

 

 

Restructuring

1.6

%

 

1.2

%

 

(40)

bps

 

 

OSI purchase accounting items

-

%

 

0.3

%

 

30

bps

 

 

Adjusted EBIT margin*

19.3

%

 

19.0

%

 

(30)

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

EBIT Margin

FY20

 

FY21

 

Change

 

Q1 FY21

Pretax margin (GAAP)

13.9

%

 

16.0

%

 

210

bps

 

13.5

%

Interest expense, net

0.9

%

 

0.8

%

 

(10)

bps

 

1.0

%

Earnings before interest and taxes margin*

14.8

%

 

16.8

%

 

200

bps

 

14.5

%

Restructuring

1.9

%

 

1.0

%

 

(90)

bps

 

1.7

%

OSI purchase accounting items

-

%

 

0.3

%

 

30

bps

 

0.5

%

Gain on acquisition of full ownership of equity investment

-

%

 

(0.1

)% 

 

(10)

bps

 

(0.4

)%

Adjusted earnings before interest and taxes margin*

16.7

%

 

18.0

%

 

130

bps

 

16.3

%

Amortization of intangibles

 

 

 

1.8

%

 

 

 

 

1.9

%

Adjusted EBITA margin*

 

 

 

19.8

%

 

 

 

 

18.2

%

 

 

 

 

 

 

 

 

 

 

 

Q4 Automation Solutions Segment EBIT Margin

Q4 FY20

 

Q4 FY21

 

Change

 

 

Automation Solutions Segment EBIT margin (GAAP)

17.0

%

 

18.7

%

 

170

bps

 

 

Restructuring and related charges impact

1.7

%

 

1.7

%

 

-

bps

 

 

Automation Solutions Adjusted Segment EBIT margin*

18.7

%

 

20.4

%

 

170

bps

 

 

 

     

Q4 Commercial & Residential EBIT Margin

Q4 FY20

 

Q4 FY21

 

Change

 

 

Commercial & Residential EBIT margin (GAAP)

20.7

%

 

18.1

%

 

(260)

bps

 

 

Restructuring and related charges impact

1.4

%

 

0.6

%

 

(80)

bps

 

 

Commercial & Residential Adjusted Segment EBIT margin*

22.1

%

 

18.7

%

 

(340)

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

Automation Solutions Segment EBIT Margin

FY20

 

FY21

 

Change

 

 

Automation Solutions Segment EBIT margin (GAAP)

13.6

%

 

16.8

%

 

320

bps

 

 

Restructuring and related charges impact

2.2

%

 

1.3

%

 

(90)

bps

 

 

Automation Solutions Adjusted Segment EBIT margin*

15.8

%

 

18.1

%

 

230

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial & Residential EBIT Margin

FY20

 

FY21

 

Change

 

 

Commercial & Residential EBIT margin (GAAP)

19.8

%

 

20.5

%

 

70

bps

 

 

Restructuring and related charges impact

0.9

%

 

0.4

%

 

(50)

bps

 

 

Commercial & Residential Adjusted Segment EBIT margin*

20.7

%

 

20.9

%

 

20

bps

 

 

 

     

 

 

Year-To-Date Cash Flow

FY20

 

FY21

 

% Change

 

FY2022E

Operating cash flow (GAAP)

$

3,083

 

 

$

3,575

 

 

16

%

 

 

~$ 3.8B

 

Capital expenditures

(538

)

 

(581

 

2

%

 

 

(0.650

)

Free cash flow*

$

2,545

 

 

$

2,994

 

 

18

%

 

 

~$ 3.1B

 

 

 

 

 

 

 

 

 

 

 

 

Net Earnings to Cash Flow Conversion

FY21

 

 

 

 

 

 

 

 

Operating cash flow conversion (GAAP)

154

%

 

 

 

 

 

 

 

 

Capital expenditures

(25

)%

 

 

 

 

 

 

 

 

Free cash flow to conversion*

129

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note 1: Underlying sales exclude the impact of acquisitions, divestitures and currency translation.

Note 2: All fiscal year 2022E figures are approximate, except where range is given.

 

Contacts

For Emerson

Investor Contact: Colleen Mettler (314) 553-2197

Media Contact: Casey Murphy (314) 982-6220

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