Emerson Electric (EMR) Investor Update summary

Portfolio and Strategic Transformation

• Shifted from a diversified industrial conglomerate to a global automation leader, with 88-90% of sales focused on automation and a simplified five-segment, three-group structure for clearer reporting.

• Software now represents 14% of business, growing at low double digits, with significant investments in AspenTech and NI to expand industrial software leadership.

• Five key growth markets—power, LNG, life sciences, semiconductors, and aerospace/defense—represent 22% of revenue and over 50% of the new product capital funnel.

• Customer base is highly diversified, with the largest customer at 1.5% of sales and the top 20 at 11%.

• Completed a business transformation positioning for future leadership in automation and exposure to high-growth markets.

Financial Performance, Targets, and Guidance

• 2025 net sales reached $18.0B, with a 27.6% adjusted segment EBITA margin and $6.00 adjusted EPS.

• 2028 targets: $21B net sales, 30% adjusted segment EBITA margin, $8.00 adjusted EPS, 18-20% free cash flow margin, $12B cumulative free cash flow, and $10B returned to shareholders.

• Projected 4-7% organic sales growth, 40% incremental margins, and 10% adjusted EPS growth through 2028.

• Reiterated 2026 guidance: ~4% underlying sales growth, 28% adjusted segment EBITA margin, $6.35–$6.55 adjusted EPS, and $3.5–$3.6B free cash flow.

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

Operational Excellence and Margin Expansion

• Achieved 700 basis points of margin improvement over five years, with gross profit margin rising from 41.5% in 2021 to 52.8% in 2025.

• 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.

• Price discipline, footprint optimization (reducing sites from 117 to 100), and digital transformation are key levers.

• Regionalization of supply chain and manufacturing (85%+ of cost of goods regionalized) enhances cost structure and resilience.

• Agentic AI and digital transformation in enterprise functions expected to deliver 30% productivity gains in finance and customer care.