Emerson Electric (EMR) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales rose 11% year-over-year to $4.4B, with underlying sales up 3% and growth led by Process and Hybrid businesses; Discrete Automation and Test & Measurement remained soft.

• Adjusted EPS increased 11% to $1.43, exceeding guidance, while GAAP EPS fell 46% due to a $279M pretax loss on the Copeland note receivable.

• Operating and free cash flow both grew 27% year-over-year, reaching $1.07B and $975M, respectively, with a margin of 22.3%.

• Portfolio simplification advanced with the completed sale of the Copeland note receivable for $1.9B and agreement to sell the equity stake for $1.5B, generating ~$2.9B after-tax proceeds for debt reduction.

• Completed NI acquisition, adding $1.7B in annual revenue and boosting Software and Control segment sales.

Financial highlights

• Q3 net sales reached $4.4B (+11% YoY); underlying sales up 3%; price contributed 2 percentage points to growth.

• Adjusted segment EBITA margin was 27.1%, up 20 bps year-over-year; operating leverage at 67%.

• Gross margin for Q3 was 52.8%, up 230 bps year-over-year.

• Free cash flow for Q3 was $975M, with $2.8B expected for the full year.

• AspenTech sales grew 7% in Q3, outperforming expectations.

Outlook and guidance

• FY2024 net sales expected to grow ~15%, with underlying sales up ~6% and 9.5% from NI acquisition.

• Adjusted EPS guidance raised to $5.45–$5.50; free cash flow guidance increased to ~$2.8B.

• Share repurchases expected to reach ~$300M and dividends ~$1.2B for the year.

• Operating cash flow forecast at ~$3.2B for FY2024.

• Test & Measurement full-year adjusted segment EBITDA margin expected at ~23%.