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    Emerson Electric Co (EMR)

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    Emerson Electric Co. is a global technology and software company that delivers innovative solutions across various end markets, including process, hybrid, and discrete industries . The company operates through two main business groups: Intelligent Devices and Software and Control, offering a wide range of products such as control valves, intelligent instrumentation, solenoid valves, and asset optimization software . Emerson's fiscal 2024 sales reached $17.5 billion, with significant growth driven by its Test & Measurement acquisition and strong performance in its Intelligent Devices and Software and Control segments .

    1. Intelligent Devices

      • Encompasses several segments including Final Control, Measurement & Analytical, Discrete Automation, and Safety & Productivity.
      • Final Control - Provides control valves and regulators, crucial for process and hybrid industries.
      • Measurement & Analytical - Offers intelligent instrumentation for measuring physical properties of liquids or gases.
      • Discrete Automation - Includes solenoid valves and pneumatic equipment primarily for discrete industries.
      • Safety & Productivity - Delivers tools for infrastructure and safety.
    2. Software and Control

      • Comprises Control Systems & Software, Test & Measurement, and AspenTech segments.
      • Control Systems & Software - Provides systems that control plant processes.
      • Test & Measurement - Offers automated test and measurement systems, enhanced by the acquisition of National Instruments.
      • AspenTech - Specializes in asset optimization software for industrial manufacturers.
    NamePositionStart DateShort Bio
    S. L. KarsanbhaiPresident and Chief Executive OfficerFebruary 5, 2021Surendralal (Lal) L. Karsanbhai has been serving as the President and CEO of Emerson Electric Co. since February 5, 2021. He was previously Executive President of Automation Solutions .
    R. R. KrishnanExecutive Vice President and Chief Operating OfficerFebruary 2021Ram R. Krishnan is the Executive Vice President and COO at Emerson Electric Co. since February 2021. He was previously President of Final Control .
    M. J. BaughmanExecutive Vice President, Chief Financial Officer, and Chief Accounting OfficerMay 10, 2023Michael J. Baughman was appointed as Executive Vice President and CFO on May 10, 2023, and has served as Chief Accounting Officer since February 2018 .
    M. H. TrainSenior Vice President and Chief Sustainability OfficerMarch 2021Michael H. Train was appointed as Senior Vice President and Chief Sustainability Officer in March 2021. He previously served as President from October 2018 to March 2021 .
    L. A. FlavinSenior Vice President, Chief Transformation and Chief Compliance OfficerMarch 2021Lisa A. Flavin is the Senior Vice President, Chief Transformation and Chief Compliance Officer. She was appointed as Senior Vice President and Chief Compliance Officer in March 2021 .
    P. ZornioSenior Vice President and Chief Technology OfficerDecember 2022Peter Zornio was appointed as Senior Vice President and Chief Technology Officer in December 2022. He was previously the CTO for the Automation Solutions Group .
    V. RamnathSenior Vice President and Chief Marketing OfficerJune 2023Vidya Ramnath was appointed as Senior Vice President and Chief Marketing Officer in June 2023. She previously served as President of Middle East & Africa .
    N. PiazzaSenior Vice President and Chief People OfficerAugust 2023Nick Piazza was appointed as Senior Vice President and Chief People Officer in August 2023. He was previously Vice President of Global Talent and Human Resource Operations .
    M. TangSenior Vice President, Secretary, and Chief Legal OfficerJanuary 2024Michael Tang was appointed as Senior Vice President, Secretary, and Chief Legal Officer in January 2024. He previously served as Senior Vice President, General Counsel, and Secretary at Agilent Technologies, Inc. .
    1. With the announcement to fully acquire AspenTech and your expectation of immediate cost efficiencies and enhanced operational performance, what are the specific risks and challenges you anticipate in integrating AspenTech into Emerson, and how do you plan to mitigate potential disruptions to AspenTech's existing customer relationships?

    2. Given that nuclear represents about 20% of your overall power business, can you elaborate on any regulatory or technological challenges you face in the nuclear sector, especially as you participate globally, and how might these challenges impact your growth projections in power generation for 2025?

    3. You are expecting a recovery in discrete markets in the first half of 2025 leading to mid-single-digit sales growth, but with automotive markets, particularly EV, remaining weak, how confident are you in this forecast, and what strategies do you have in place if the recovery in discrete markets does not materialize as expected?

    4. Considering you have not baked in a significant chemical recovery in your plan and are watching China cautiously due to slowdown, how would prolonged weakness in the chemical sector and China impact your 3% to 5% growth guidance, and what contingency plans do you have in place?

    5. While you plan to repurchase approximately $2 billion of common stock and return about 100% of guided free cash flow to shareholders in 2025, at the same time pursuing significant acquisitions and divestitures, how do you reconcile these substantial capital allocations with maintaining your A2A credit rating, and are there risks to your balance sheet or credit metrics?

    Program DetailsProgram 1
    Approval DateMarch 2020
    End Date/DurationOngoing
    Total additional amount60 million shares
    Remaining authorization28.9 million shares
    DetailsAims to return capital to shareholders, with a plan to repurchase approximately $2 billion of common stock in fiscal 2025.
    YearAmount Due (in millions)Debt TypeInterest Rate (%)% of Total Debt
    2025$1,062 3.15% Notes, Other3.15 13.8% = (1,062 / 7,687) * 100
    2026$750 0.875% Notes0.875 9.8% = (750 / 7,687) * 100
    2027$500 1.8% Notes1.8 6.5% = (500 / 7,687) * 100
    2028$1,000 2.0% Notes2.0 13.0% = (1,000 / 7,687) * 100
    2029$529 2.0% Euro Notes2.0 6.9% = (529 / 7,687) * 100
    2030$500 1.95% Notes1.95 6.5% = (500 / 7,687) * 100
    2031$1,000 2.2% Notes2.2 13.0% = (1,000 / 7,687) * 100
    2032$250 6.0% Notes6.0 3.3% = (250 / 7,687) * 100
    2039$550 6.125% & 5.25% Notes6.125, 5.25 7.2% = (550 / 7,687) * 100
    2050$500 2.75% Notes2.75 6.5% = (500 / 7,687) * 100
    2051$1,000 2.8% Notes2.8 13.0% = (1,000 / 7,687) * 100
    NameStart DateEnd DateReason for Change
    KPMG LLP1938 PresentCurrent auditor

    Recent developments and announcements about EMR.

    Financial Reporting

      Earnings Call

      ·
      Nov 5, 2024, 1:01 PM

      Emerson Electric Co. (EMR) recently held its earnings call, where they discussed their financial performance for 2024 and provided guidance for 2025. Here are the key points from the earnings call:

      • Financial Performance: Emerson reported stronger-than-expected free cash flow of $2.9 billion for 2024, a 23% increase year-over-year, despite acquisition-related costs and higher capital expenditures. The company's gross margins reached a record 50.8%, and adjusted segment EBITDA was at a record high of 26% .

      • Revenue and Profit: Underlying sales grew by 6%, led by high single-digit growth in process and hybrid businesses. Adjusted earnings per share (EPS) was $5.49, up 24% from the previous year .

      • Forward Guidance: For 2025, Emerson expects underlying sales to grow by 3% to 5%, with adjusted EPS projected between $5.85 and $6.05. Free cash flow is expected to be between $3.2 billion and $3.3 billion .

      • Strategic Initiatives: Emerson announced plans to acquire the remaining shares of AspenTech, which they believe will accelerate their software-defined automation strategy and provide additional cost efficiencies . They are also exploring strategic alternatives for their Safety & Productivity business, including a potential cash sale .

      • Market Conditions: Emerson highlighted strong project activity in LNG, life sciences, and sustainability sectors. They expect continued growth in these areas, driven by investments in energy transition and decarbonization .

      • Analyst Questions: Analysts inquired about the company's power business, particularly nuclear exposure, and the timeline for software-defined automation. Emerson's executives noted that nuclear represents about 20% of their power business and discussed a phased approach to implementing software-defined automation .

      • Shareholder Returns: Emerson plans to repurchase approximately $2 billion of common stock in fiscal 2025 and expects to return about 100% of their guided free cash flow to shareholders through dividends and share repurchases .

      Overall, Emerson is focused on completing its portfolio transformation and driving shareholder value through strategic acquisitions and operational efficiencies.