Emerson Electric Shares Plummet On Q4 Miss, CEO Expects NI Deal To Solve Challenges

Emerson Electric Co EMR reported fourth-quarter (Q4) FY23 net sales growth of 5% year-over-year to $4.09 billion, missing the consensus of $4.19 billion.

Q3 Underlying sales and orders were up 5% Y/Y.

Adjusted EPS improved 21% Y/Y to $1.29, missing the consensus of $1.31.

Sales by Segments: Final Control $1.08 billion (+8% Y/Y), Measurement & Analytical $1.05 billion (+15% Y/Y), Discrete Automation $666 million (-8% Y/Y); Safety & Productivity $354 million (+4% Y/Y), Control Systems & Software $714 million (+3% Y/Y), and AspenTech $249 million (-1% Y/Y).

Emerson's operating cash for the fiscal totaled $2.73 billion, compared to $2.05 billion in FY22. Adjusted Free cash flow was $2.63 billion (+35% Y/Y).

Adjusted Total Segment EBITA was $1.05 billion compared to $963 million in 4Q22, and the margin improved by 60 bps to 25.5%.

EMR held cash and equivalents of $8.05 billion as of Sept. 30, 2023.

The National Instruments (NI) acquisition completes Emerson's transformation into an automation leader, CEO Lal Karsanbhai said.

"Our differentiated portfolio with NI and accelerated investments in new-to-the-world innovation provide a unique opportunity to solve many of our customers' toughest challenges and create long-term shareholder value," Karsanbhai added.

1Q24 Outlook: Emerson Electric expects net sales growth of 14% - 17.5%, with underlying sales growth of 6.5% - 8.5%.

The company expects an adjusted EPS of $1- $1.05 versus the consensus of $1.12. 

FY24 Outlook: Emerson Electric expects net sales growth of 13% - 15.5%, with underlying sales growth of 4% - 6%.

EMR expects an adjusted EPS of $5.15 - $5.35 versus the consensus of $5.25. Sees operating cash flow of $3 billion -$3.1 billion and FCF of $2.6 billion-$2.7 billion.

Price Action: EMR shares are trading lower by 7.88% at $84.51 on the last check Tuesday.