Emerson Electric (EMR) Q4 2024 earnings summary

Executive summary

• Achieved strong operational performance in FY2024, with sales of $17.5B, record adjusted EPS of $5.49, and significant progress on portfolio transformation, including the integration of Test & Measurement and a proposal to acquire remaining AspenTech shares for $240/share in cash.

• Initiated review of strategic alternatives, including a potential cash sale, for the Safety & Productivity business, which represents 8% of 2024 revenue.

• Plan to return approximately 100% of guided free cash flow to shareholders in 2025 via $2B share repurchase and $1.2B in dividends.

• 2024 marked by strong operational performance, successful National Instruments integration, and record financial results.

• Strategic actions announced mark the final phase of transformation into an industrial technology leader focused on advanced automation solutions.

Financial highlights

• FY2024 underlying sales grew 6% year-over-year to $17.5B, led by process and hybrid businesses; adjusted EPS reached $5.49, up 24% from 2023.

• Free cash flow was $2.9B, up 23% year-over-year, with a margin of 16.6%.

• Adjusted segment EBITA margin was 26% for FY24 and 26.2% in Q4; gross margin reached a record 50.8%.

• Test & Measurement contributed $1.46B in net sales, down 12% year-over-year, but exceeded initial expectations and contributed $0.45 to adjusted EPS.

• AspenTech contributed $0.35 to FY2024 adjusted EPS.

Outlook and guidance

• FY2025 underlying sales expected to grow 3%-5%; adjusted EPS guidance is $5.85-$6.05; free cash flow projected at $3.2B-$3.3B.

• $2B share repurchase and $1.2B in dividend payments planned for 2025, with $1B in repurchases in Q1.

• Process and hybrid markets expected to grow mid-single digits; discrete markets to recover in second half of 2025.

• Test & Measurement sales guided to mid-single digit growth, with orders expected to ramp in the second half.

• China expected to return to growth in H2 2025; North America and Europe to see low to mid-single digit growth.