Emerson Electric Posts Strong Q3 Sales Growth, Updates 2024 Outlook

Emerson Electric Co EMR shares are trading lower on Wednesday after the company reported third-quarter FY24 net sales growth of 11% Y/Y to $4.38 billion, beating the consensus of $4.29 billion.

Underlying sales were up 3% Y/Y, and underlying orders increased by 3% Y/Y in the quarter.

Sales by Segments: Final Control $1.05 billion (+1% Y/Y), Measurement & Analytical $982 million (+8% Y/Y), Discrete Automation $618 million (-8% Y/Y); Safety & Productivity $351 million (-3% Y/Y), Control Systems & Software $700 million (+6% Y/Y), AspenTech $343 million (+7% Y/Y), and Test & Measurement $355 million.

Adjusted Total Segment EBITA was $1.19 billion compared to $1.06 billion in the prior year quarter, and the margin improved by 20 bps to 27.1%.

Adjusted EPS improved 11% Y/Y to $1.43, beating the consensus of $1.42.

Emerson’s operating cash flow for the quarter totaled $1.07 billion, compared to $842 million in the prior year, and free cash flow was $975 million (+27% Y/Y).

Emerson held cash and equivalents of $2.30 billion as of June-end.

Dividend: Emerson declared a quarterly cash dividend per share of $0.525, payable on Sept. 10, to stockholders of record on Aug. 16, 2024.

Emerson President and Chief Executive Officer Lal Karsanbhai said, “Demand in process and hybrid markets, led by a constructive capex cycle, continues to meet expectations. Our operating leverage performance demonstrates the benefits of our highly differentiated technology and world-class Emerson Management System, giving us the confidence to execute on our plan for 2024.”

“In the quarter, we also took another important step to simplify our portfolio and enhance our focus as a global leader in automation with the definitive agreement to completely exit the Copeland business.”

Outlook: For FY24, Emerson Electric revised its net sales growth outlook to ~15% (prior: 15% – 16%), with underlying sales growth to ~6% (from 5.5%-6.5% earlier) and adjusted EPS to $5.45-$5.50 (from $5.40-$5.50) vs. consensus $5.47.

Emerson expects an operating cash flow of ~$3.2 billion and an FCF of ~$2.8 billion for FY24.

The outlook includes approximately $300 million for share repurchases and about $1.2 billion in dividend payments for FY24.

Also Read: Emerson Doubles Down on Automation: $3.5B Copeland Sale Fuels Strategy Shift

Investors can gain exposure to the stock via ProShares S&P Kensho Smart Factories ETF MAKX and Gabelli Automation ETF GAST.

Price Action: EMR shares are down 3.6% at $103.83 at last check Wednesday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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