Core Viewpoint - Emerson Electric's recent earnings report showed mixed results, with adjusted earnings per share exceeding estimates but net sales falling short, leading to a decline in share price over the past month [1][2][3]. Financial Performance - Adjusted earnings for Q1 fiscal 2025 were $1.38 per share, surpassing the Zacks Consensus Estimate of $1.28, marking a 13.1% increase year over year [2]. - Net sales reached $4.18 billion, slightly below the consensus estimate of $4.21 billion, with a year-over-year increase of 1% [3]. - Underlying sales grew by 2% year over year [3]. Segment Performance - The Intelligent Devices segment reported net sales of $2.84 billion, a 0.7% increase year over year, though it fell short of the estimated $2.88 billion [4]. - Within this segment, Final Control sales rose 3.8% to $976 million, Measurement & Analytical sales increased 3% to $975 million, while Discrete Automation sales declined 5.4% to $580 million, and Safety & Productivity sales decreased 3.1% to $312 million [5]. - The Software and Control Automation Solutions segment generated net sales of $1.35 billion, up 2.9% year over year, slightly exceeding the estimate of $1.34 billion [6]. Margin and Cost Analysis - The cost of sales decreased by 11.9% year over year to $1.9 billion, contributing to a pretax earnings margin of 18.6%, up from 4.2% in the previous year [7]. - Adjusted EBITA margin improved to 28% from 24.6% year over year, while selling, general, and administrative expenses fell by 4.2% to $1.2 billion [7]. Balance Sheet and Cash Flow - At the end of Q1 fiscal 2025, cash and cash equivalents stood at $2.8 billion, down from $3.6 billion at the end of fiscal 2024, while long-term debt decreased to $6.6 billion from $7.2 billion [8]. - The company generated net cash of $777 million from operating activities, an increase of 87.2% year over year, with capital expenditures rising to $83 million [9]. Future Outlook - For Q2 fiscal 2025, Emerson anticipates net sales growth between -0.5% and 0.5%, with underlying sales growth expected to be in the range of 1-2% [11]. - The company projects full fiscal year net sales growth of 1.5-3.5%, a reduction from the previous estimate of 3.5-5.5% [12]. - Earnings per share for the fiscal year are expected to be in the range of $4.42-$4.62, with adjusted earnings per share remaining unchanged at $5.85-$6.05 [13]. Market Sentiment - Recent estimates for Emerson Electric have shown a downward trend, indicating a potential shift in market sentiment [14][16]. - The company currently holds a Zacks Rank of 3 (Hold), suggesting an expectation of an in-line return in the coming months [16].

Core Points - Albertsons Companies Inc. will replace Aspen Technology Inc. in the S&P MidCap 400 effective March 11, 2025 [1] - Emerson Electric Co. is acquiring Aspen Technology, with the deal expected to be completed soon [1] Company Changes - Addition of Albertsons Companies to S&P MidCap 400 under the ticker ACI in the Consumer Staples sector [1] - Deletion of Aspen Technology from S&P MidCap 400 under the ticker AZPN in the Information Technology sector [1]

Core Viewpoint - Emerson Electric Co. is experiencing growth due to strong performance across its segments and strategic acquisitions, making it an attractive option for investors [1][3]. Segmental Strength - Healthy demand in most end markets is positively impacting Emerson's results, with underlying sales increasing by 2% in the fiscal first quarter [3]. - The Intelligent Devices and Software and Control segments are showing solid momentum, particularly in the Final Control business and Measurement & Analytical business, supported by robust growth across geographies and strong backlog conversion [4]. Accretive Acquisitions - Emerson is enhancing its product portfolio through acquisitions, including a deal to acquire the remaining shares of AspenTech for $265 per share, increasing its ownership to 100% [5]. - The acquisitions of Afag and Flexim in the fourth quarter of fiscal 2023 have expanded Emerson's capabilities in factory automation and flow measurement [6]. - The recent acquisition of National Instruments for $8.2 billion has strengthened Emerson's position in global automation, particularly in high-growth markets such as semiconductors and electric vehicles [7]. Rewards to Shareholders - Emerson is committed to returning value to shareholders, having paid out $301 million in dividends and repurchased $899 million in common stocks in the fiscal first quarter [8]. - The company plans to repurchase shares worth $2 billion and distribute $1.2 billion in dividends in fiscal 2025, alongside a 0.5% dividend increase in November 2024 [8]. Business Weakness - Despite overall strength, Emerson is facing challenges in the Safety & Productivity, Discrete Automation, and Test & Measurement segments, with sales declines of 3%, 5%, and 6% respectively in the first quarter of fiscal 2025 [9]. Forex Woes - Emerson's international operations expose it to currency fluctuation risks, with adverse foreign currency translation impacting sales by 1% year over year in the fourth quarter and an expected impact of approximately 1.5% in fiscal 2025 [10].

Core Viewpoint - Emerson Electric Co. is a diversified technology and engineering company operating in various end markets, with two major reporting segments: Intelligent Devices and Software & Control [1]. Group 1 - The company has a strong focus on technology and engineering, indicating a broad range of applications across different industries [1]. - Emerson Electric Co. is listed on the New York Stock Exchange under the ticker symbol EMR [1].

Group 1: Core Investment Thesis - Timeless stocks, or "Dividend Kings," are companies that have consistently raised dividends for at least 50 consecutive years, indicating strong business models and cultures [3] - The focus is on high-quality businesses that can provide steady returns over generations, rather than stocks with planned exit strategies [2] Group 2: Company Profiles - **Emerson Electric**: This automation company has raised its dividend for 67 consecutive years and is positioned to benefit from trends like automation and energy efficiency. Management projects 4% to 7% annualized organic revenue growth and double-digit earnings growth over the long term. The dividend payout ratio is a comfortable 35% of this year's earnings estimates [5][6][7] - **Illinois Tool Works**: A diversified conglomerate that has grown its dividend for 53 consecutive years. It operates across seven segments, which helps it withstand economic downturns. The dividend consumes just over 58% of this year's estimated earnings, and analysts expect earnings growth of 5% to 6% annually over the next three to five years [8][10][11] - **Genuine Parts**: This automotive and industrial parts distributor has a steady business model with 68 consecutive years of dividend increases. It generates approximately $23 billion in annual revenue and operates in a market worth an estimated $350 billion. The company spends about half its earnings on dividends and has a long-term estimated earnings growth rate of 7% [12][13][14]

Core Insights - Emerson and Zitara Technologies have formed a strategic partnership to integrate Zitara's advanced battery management software into Emerson's Ovation™ automation platform, enhancing battery performance and monitoring solutions for customers [1][2][3] Company Overview - Emerson is a global technology and software company that provides innovative solutions for essential industries, focusing on automation and sustainability [5] - Zitara, founded in 2019, specializes in advanced battery management software, utilizing algorithms and machine learning to optimize battery performance and safety [6] Partnership Details - The collaboration aims to enhance energy storage management, optimize battery usage, and improve battery lifetime and safety across various applications [2][3] - The integration of Zitara's software into the Ovation platform will support utilities in managing distributed energy resources and meeting the demand for reliable and sustainable power [3][4] - Both companies emphasize their commitment to advancing technology in the power and water sector and facilitating the transition to sustainable energy solutions [4]

Compelling and certain value of $265 per share in cash, unanimously recommended by the independent AspenTech Special Committee, represents Emerson's best and final price ST. LOUIS, Feb. 10, 2025 /PRNewswire/ -- Emerson (NYSE: EMR) today acknowledged the public statement released by Elliott Investment Management L.P. on February 7, 2025 regarding the tender offer under which Emerson will acquire all outstanding shares of common stock of Aspen Technology, Inc. (NASDAQ: AZPN) ("AspenTech") not already owned by ...

Core Insights - Emerson Electric Co. reported first-quarter fiscal 2025 adjusted earnings of $1.38 per share, exceeding the Zacks Consensus Estimate of $1.28, marking a 13.1% year-over-year increase [1] - The company's net sales were $4.18 billion, slightly missing the consensus estimate of $4.21 billion, with a year-over-year increase of 1% [1] Financial Performance - The Intelligent Devices segment generated net sales of $2.84 billion, up 0.7% year over year, while the Software & Control Automation Solutions segment reported net sales of $1.35 billion, up 2.9% year over year [3][5] - The cost of sales decreased by 11.9% year over year to $1.9 billion, with a pretax earnings margin of 18.6% compared to 4.2% in the previous year [6] - The company generated net cash of $777 million from operating activities, an increase of 87.2% year over year [8] Segment Performance - In the Intelligent Devices segment, Final Control sales increased by 3.8% to $976 million, while Discrete Automation sales declined by 5.4% to $580 million [4] - In the Software & Control segment, AspenTech's sales surged by 17.9% to $303 million, while Test & Measurement sales fell by 6% to $359 million [5] Outlook - For Q2 fiscal 2025, Emerson anticipates net sales growth between -0.5% to 0.5% and earnings per share in the range of $1.01 to $1.05 [9] - The full fiscal year 2025 outlook includes net sales growth of 1.5% to 3.5%, revised down from a previous estimate of 3.5% to 5.5% [10] Major Developments - Emerson signed an agreement to acquire the remaining shares of Aspen Technology for $7.2 billion, valuing the company at a market capitalization of $17 billion [12][13]

Financial Data and Key Metrics Changes - The company reported underlying sales growth of 2%, with process and hybrid businesses up approximately 5%, while discrete businesses were down approximately 4% [46] - Adjusted earnings per share (EPS) grew 13% year-over-year to $1.38, exceeding expectations [22][50] - Free cash flow was $694 million, representing a margin of approximately 17% and an increase of 89% compared to Q1 2024 [23][50] - Gross profit margin reached a record 53.5%, reflecting the value of the transformed portfolio [21] - Adjusted segment EBITDA margin improved by 340 basis points to 28%, driven by strong operational performance [22][48] Business Line Data and Key Metrics Changes - Underlying orders were up 1% year-over-year, led by healthy processing hybrid markets, which were up low-single digits [18] - Software solutions saw a robust underlying demand with 10% growth in annual contract value (ACV), led by double-digit growth from control systems and software [11] - The discrete business, including safety and productivity, was down approximately 4%, with expectations for a recovery in the second half of the year [46][52] Market Data and Key Metrics Changes - Demand in China remained muted, with strength in power offset by weakness in chemical and discrete end markets [20] - Orders growth was led by robust demand in the Middle East and strength in the U.S., particularly from maintenance, repair, and operations (MRO) business [19] - The backlog increased slightly to $7.3 billion, with total backlog up 4% excluding foreign exchange effects [48] Company Strategy and Development Direction - The company is focused on disciplined M&A around bolt-on opportunities post portfolio transformation, with a commitment to return cash to shareholders through dividends and share repurchases [102] - The strategic alternatives process for safety and productivity is still underway, with updates to be provided when appropriate [14] - The company is optimistic about the LNG market, expecting significant opportunities as additional projects are announced to meet growing demand for gas [30][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver on 2025 plans, reiterating guidance for underlying sales, adjusted EPS, and free cash flow [12][52] - The company expects a meaningful recovery in discrete businesses against easier comparisons in the second half of the year [52] - Management noted that investments in energy security and decarbonization are continuing, with no signs of a slowdown in the sustainability funnel [80] Other Important Information - The company completed approximately $1 billion of share repurchases in the quarter as guided [23] - The impact of tariffs has been minimal due to proactive measures taken since 2018, with expectations for de minimis impact from Canada and Mexico [16][17] Q&A Session Summary Question: Could you provide specifics on Mexico's exposure to tariffs? - Management feels comfortable with the understanding of exposure related to potential tariffs in Mexico and is prepared to implement price and surcharge activities if necessary [61] Question: Can you distinguish between the discrete businesses' performance expectations? - Management indicated that the commentary applies across both legacy discrete and test and measurement businesses, with some strength in semiconductors and MRO, but caution in factory automation and automotive [64] Question: What is the impact of foreign exchange on sales and EPS? - The foreign exchange headwind impacted sales, but there was a benefit to EPS due to transactional FX that did not occur in the current year [70][71] Question: What is the outlook for order growth and book-to-bill ratios? - Management does not forecast orders publicly but indicated that book-to-bill was greater than one in the first quarter and expects it to be about one for the full year [127] Question: How does the company view the LNG market and its win rates? - The lifting of the moratorium on new LNG permits is expected to significantly impact investments, with strong win rates in North America and the Middle East [115][116] Question: What are the expectations for margins moving forward? - Management confirmed that while cost reductions will continue, the mix dynamic that drove high margins in Q1 is expected to temper as the year progresses [141][144]

Statements in this presentation and our commentary and responses to questions that are not strictly historical may be "forward-looking" statements, which involve risks and uncertainties, and Emerson undertakes no obligation to update any such statements to reflect later developments. These risks and uncertainties include the scope, duration and ultimate impacts of the Russia-Ukraine and other global conflicts, as well as economic and currency conditions, market demand, pricing, protection of intellectual pr ...