Emerson Electric (EMR) Investor Update summary

Strategic growth, transformation, and market positioning

• Completed a major transformation to a global automation leader, with 88–90% of sales in automation and a growing software component, now representing up to 14% of sales and growing at low double digits.

• Focused on high-growth verticals—power, LNG, life sciences, semiconductors, and aerospace/defense—which represent 22% of revenue and over 50% of the new product funnel, with strong order momentum in power and life sciences.

• Orders in power grew 30% in 2025, with accelerating trends in semiconductors and life sciences, building backlog for future revenue.

• The installed base of $155 billion and 125,000 active customers provide resilience and recurring revenue, with MRO and modernization driving mid-single-digit growth.

• Holds leading positions in control systems, modeling & optimization software, and test automation, with a differentiated, domain-specific software business protected from AI disruption.

Operational excellence and margin expansion

• Targeting 30% adjusted segment EBITDA/EBITA margin by 2028, with 2.4 percentage points of expansion driven by price realization, operational excellence, and acquisition synergies.

• Margin expansion supported by disciplined pricing, digital transformation, and ongoing productivity initiatives, including agentic AI and 10–15% operational savings from digital transformation.

• Footprint optimization aims to reduce manufacturing sites from 117 to 100, leveraging regionalization and best-cost locations.

• Acquisition synergies from NI and AspenTech are on track, with NI margins targeted at 31% and AspenTech at 55% by 2028.

• Price discipline remains strong, with 2–2.5% annual price increases built into the plan, consistently outpacing net material inflation.

Financial framework, performance, and capital allocation

• 2028 targets: $21 billion revenue, 30% adjusted segment EBITDA/EBITA margin, $8.00 adjusted EPS, 18–20% free cash flow margin, and $12 billion cumulative free cash flow.

• 2025 net sales reached $18.0B, with a 27.6% adjusted segment EBITA margin and $6.00 adjusted EPS; 2026 guidance includes ~4% underlying sales growth, 28% margin, and $6.35–$6.55 EPS.

• $10 billion to be returned to shareholders through 2028 via dividends and share repurchases, with a clear policy of annual dividend increases and $6 billion in buybacks.

• Cash return on invested capital expected to rise from 11.5% to 22.9% by 2028 as cash flow grows and capital is returned to shareholders.

• CapEx remains light at 2–2.5% of sales, with targeted investments in North America, Mexico, and select international markets; M&A limited to bolt-ons in growth and technology areas.