Emerson Electric Shares Gain On Q3 Beat, Raised FY23 Outlook

Emerson Electric Co EMR reported third-quarter FY23 net sales growth of 14% year-over-year to $3.95 billion, beating the consensus of $3.89 billion.

Q3 Underlying sales were up 14%, and underlying orders were up 3%.

Adjusted EPS improved 40% Y/Y to $1.29, beating the consensus of $1.09.

Emerson's operating cash flow year-to-date totaled $1.28 billion, compared to $1.71 billion in 3Q22. 

Q3 operating cash flow was $842 million, up 76% Y/Y, and adjusted free cash flow was $769 million (+83% Y/Y).

Sales by Segments: Final Control $1.04 billion (+14% Y/Y), Measurement & Analytical $913 million (+16% Y/Y), Discrete Automation $668 million (+6% Y/Y); Safety & Productivity $363 million (+1% Y/Y), Control Systems & Software $663 million (+17% Y/Y), and AspenTech $320 million (+34% Y/Y).

Adjusted Total Segment EBITA was $1.06 billion (+31.4% Y/Y), and the margin improved by 370 bps to 26.9%.

EMR held cash and equivalents of $9.96 billion as of June 30, 2023.

"Our performance over the last nine months demonstrates the strength of our technology and the strategic benefits of our exposure to attractive end-markets. As we close out 2023 and look ahead to 2024, Emerson is uniquely positioned, based on the breadth and depth of our capabilities and long-standing customer relationships, to capture our customers' investments in energy security and affordability, sustainability and decarbonization, digital transformation, and nearshoring," commented Emerson President and Chief Executive Officer Lal Karsanbhai.

FY23 Outlook raised: Emerson Electric expects net sales growth of ~10.5% (prior expectation 9%-10.5%), with underlying sales growth of ~10% (prior 8.5%-10%).

EMR expects an adjusted EPS of $4.40 - $4.45 (prior $4.15-$4.25) versus the consensus of $4.21. Operating cash flow of $2.5 billion -$2.6 billion and FCF of $2.2 billion-$2.3 billion.

Price Action: EMR shares are trading higher by 3.57% at $94.90 premarket on Wednesday.