Emerson Q1 Results: Resilient Process & Hybrid Markets Offset Weak Discrete Automation

Emerson Electric Company EMR shares are trading lower premarket on Wednesday after the company reported first-quarter FY25 results.

Net sales growth of 1% year over year (Y/Y) to $4.175 billion missed the consensus of $4.23 billion.

Underlying sales were up 2% Y/Y and underlying orders increased by 1% Y/Y in the quarter.

Sales by Segments: Final Control $940 million (+4%), Measurement & Analytical $947 million (+3%), Discrete Automation $613 million (-5%); Safety & Productivity $322 million (-3%), Control Systems & Software $675 million (+2%), AspenTech $257 million (+18%), and Test & Measurement $382 million (-6%).

Adjusted Segment EBITDA was $1.169 billion compared to $1.014 billion in the prior year quarter and the margin improved to 28.0% from 24.6% a year ago quarter.

Adjusted EPS improved 13% Y/Y to $1.38, beating the consensus of $1.28.

Emerson's operating cash flow for the quarter totaled $777 million, compared to $444 million in the prior year; free cash flow was $694 million (+89% Y/Y).

Emerson held cash and equivalents of $2.83 billion as of December-end.

Dividend: Emerson declared a quarterly cash dividend per share of $0.5275, payable on March 10, to stockholders of record on February 14, 2025.

"We reiterate our guide for underlying sales, earnings per share and cash flow driven by resilient demand in process and hybrid markets, expected second half discrete recovery and our proven ability to execute,” Emerson president and CEO Lal Karsanbhai said.

”Our team remains energized, and we look forward to continuing the positive momentum across our business, including progressing in the final phase of our portfolio transformation.”

Outlook: For FY25, Emerson Electric now expects its net sales growth outlook of 1.5% – 3.5% (vs. 3.5% – 5.5% prior).

The company reaffirmed the outlook for underlying sales growth of 3% – 5% and adjusted EPS of $5.85 – $6.05 vs. consensus $5.94.

Emerson continues to expect an operating cash flow of $3.6 billion – $3.7 billion and an FCF of $3.2 billion – $3.3 billion for FY25.

For the second quarter, the company projects net sales growth of (0.5)% – 0.5% and adjusted EPS of $1.38 – $1.42 vs. consensus of $1.46.

Emerson expects to return around $3.2 billion to shareholders through around $2.0 billion of share buyback and about $1.2 billion of dividend payments for 2025.

Read: Emerson Electric To Buy Out AspenTech Minority Stake In $7.2 Billion Cash Deal

Investors can gain exposure to the stock via ProShares S&P Kensho Smart Factories ETF MAKX and Themes US Infrastructure ETF HWAY.

Price Action: EMR shares are down 0.52% at $127.03 premarket at the last check Wednesday.

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