Emerson Electric (EMR) Q2 2026 earnings summary

Executive summary

• Q2 2026 underlying orders grew 5%, led by Software & Systems and strong demand in North America and India, despite a 1 point impact from the Middle East conflict.

• Underlying sales growth was 0.5%, below expectations, while net sales rose 3% year-over-year to $4.6B.

• Adjusted EPS increased 4% to $1.54, near the top end of guidance, and adjusted segment EBITA margin reached 27.6%.

• Annual contract value (ACV) of software grew 9% year-over-year, ending at $1.64 billion.

• Growth verticals, including power, LNG, life sciences, and aerospace, delivered exceptional strength, up 22% year-over-year.

Financial highlights

• Q2 net sales were $4.6B (+3% YoY); adjusted segment EBITA margin was 27.6%, with price contributing 3.5 points to growth.

• Free cash flow was $694M in Q2, with a margin of 15.2%; backlog ended at $8.2B, up 9% year-over-year.

• Adjusted EPS improved to $1.54 from $1.48 year-over-year; Q2 net earnings were $618M (+27% YoY).

• Test & Measurement grew 12–16% year-over-year; Ovation business up mid-teens, driven by power demand.

• Software & Systems margin was 29.2%, down 250 bps year-over-year due to a contract renewal dynamic.

Outlook and guidance

• Full-year 2026 sales growth expected at ~4.5%, with underlying growth of ~3% and a 1.5% FX tailwind.

• Adjusted segment EBITA margin expected at ~28%; adjusted EPS guidance raised to $6.45–$6.55.

• Q3 2026 adjusted EPS expected at $1.65–$1.70; free cash flow for the year projected at $3.5–$3.6B.

• Capital return plan includes ~$2.2B to shareholders via ~$1B share repurchases and ~$1.2B dividends.

• Guidance assumes gradual resumption of Middle East activity and net neutral tariff impact.