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- **Revenue Resilience**: 3% growth in 2025, driven by Test & Measurement (12% Q4) and automation tech. 
- **Profit Expansion**: 27.6% EBITDA margin, $3.24B free cash flow. 
- **2026 Outlook**: 5.5% sales growth, $6.35-$6.55 EPS, $3.5B free cash. 
- **AI Momentum**: ACV up 10% to $1.56B, with AI solutions like Guardian Virtual Adviser. 
- **Risks**: Europe/China flat, $120M software renewal headwind in 2026. 
- **Capital Return**: $2.2B total (1B buybacks, 1.2B dividends), 5% dividend hike.

**【CEO Summary Section】**
- **Revenue Growth**: Underlying sales grew 3% in 2025, driven by Test & Measurement (up 12% in Q4) and automation technologies. 
- **Profitability**: Adjusted EBITDA margin expanded to 27.6%, with $3.24 billion free cash flow (up 12% YoY). 
- **2026 Outlook**: Guiding for 5.5% sales growth, $6.35-$6.55 EPS, and $3.5B-$3.6B free cash flow. 
- **Strategic Focus**: AI-powered solutions like Guardian Virtual Adviser and AspenTech's subsurface intelligence, plus $2.2B capital return (1B buybacks, 1.2B dividends). 

**【CFO Financial Commentary】**
- **2025 Results**: 
  - Revenue: $11.1B (3% growth), with 5% from price/cost, 2.5% from mix. 
  - Margins: 27.6% EBITDA (up 160bps), 52.8% gross margin. 
  - Cash Flow: $3.24B free cash (18% margin). 
- **2026 Guidance**: 
  - Sales: 5.5% growth (4% underlying, 1.5pts from price). 
  - Earnings: $6.35-$6.55 EPS (80bps margin expansion). 
  - Synergies: $100M/year from AspenTech, $50M/year from Test & Measurement. 
- **Key Dynamics**: 
  - $120M headwind from software renewals in 2026, reversing in 2027-28. 
  - Europe/China expected flat, Americas/Middle East high-single-digit growth. 

**【Q&A Highlights】**
- **Software Renewals**: 2026 has $120M headwind, but ACV (annual contract value) grows 10%+. Free cash flow unaffected. 
- **Test & Measurement**: Aerospace/defense up 27%, semicon up 12%, broad portfolio up 10%. 
- **Geographic Risks**: Europe/China weakness offset by strength in Americas/India. 
- **Power Growth**: Ovation controls 30% of global power generation, with 18% Q4 orders in nuclear. 
- **Capital Allocation**: 5% dividend increase, $1B buybacks, $1B debt reduction. 
- **LNG Projects**: Emerson automation selected for $16.5MTPA Calcasieu LNG terminal. 
- **AI Adoption**: ACV up 10% to $1.56B, with Rule of 45 (45% cash conversion).

Emerson Electric Co. (EMR) Q4 2025 Earnings Call Transcript

- **Revenue Growth**: Q3 revenue up 3%, with Test & Measurement leading at 16%. Q4 expected to accelerate to 5-6% growth.
- **Strategic Innovations**: Ovation Virtual Adviser adoption surging, with 80% of modernization projects upgrading to AI-enabled systems.
- **Profitability**: Adjusted EPS of $1.52 (6% YoY growth), free cash flow $3.2 billion (20% YoY increase).
- **Tariff Mitigation**: Reduced tariff impact to $115 million, with surcharges easing to offset $0.5 billion in revenue.
- **Future Outlook**: 2026 guidance for 27.5% EBITDA margin, 5-7% underlying orders growth, driven by Test & Measurement recovery and LNG/power investments.

**【CEO Summary Section】**
- Emerson reported third-quarter revenue growth of 3%, driven by mid-single-digit growth in process and hybrid businesses, and 2% growth in discrete businesses. Test & Measurement led discrete growth with 16% year-over-year increase.
- Key strategic collaborations include a partnership with TotalEnergies to deploy Emerson's industrial data fabric, enhancing operational performance and AI implementation. The Ovation Virtual Adviser, integrated with Microsoft Azure OpenAI, is seeing strong adoption in power generation.
- Underlying orders grew 6% for the quarter, with Test & Measurement up 20% in the fourth quarter. Emerson expects 5-7% underlying sales growth in Q4, driven by Test & Measurement recovery and sustained process/hybrid demand.
- Margins are expected to improve to 27.5% for the full year, with free cash flow of $3.2 billion, up 20% year-over-year.

**【CFO Financial Commentary】**
- Adjusted EPS of $1.52 for Q3, up 6% year-over-year, with strong cash flow of $970 million (21.3% margin). Free cash flow for the year is projected at $3.2 billion, reflecting operational efficiency and working capital improvements.
- Tariff impact reduced to $115 million for the year, with surcharges easing to offset $0.5 billion in incremental revenue. FX headwinds were partially offset by pricing actions.
- Q4 guidance includes 5-6% underlying sales growth, 27% EBITDA margin, and adjusted EPS of $1.58-$1.62, up 7-10% year-over-year.

**【Q&A Highlights】**
- **Order Momentum**: Q3 orders up 6%, with Test & Measurement leading at 16%. Q4 expected to see 20% growth in Test & Measurement, driven by aerospace, defense, and semiconductor investments.
- **Margins and Tariffs**: CFO noted 40 basis points of margin impact from tariffs in Q3, but expects sequential improvement in Q4 with reduced surcharges.
- **Power and LNG Growth**: Ovation orders up 40% in Q3, with 20%+ growth expected in Q4, fueled by global energy security investments.
- **Discrete Recovery**: Test & Measurement recovery broad-based across regions, with China and North America leading, while factory automation in Europe remains muted.
- **AI and Software**: Ovation Virtual Adviser adoption accelerating, with 80% of modernization projects upgrading to Ovation 4.0, enhancing operational efficiency and AI-driven insights.

Emerson Electric Co. (EMR) Q3 2025 Earnings Call Transcript

- **Q2 Strong Performance**: 4% underlying orders growth, 28% EBITDA margin, and $1.48 EPS beat reflect resilience in Process/Hybrid and nascent Discrete recovery. 
- **Guidance Uptick**: Full-year EPS raised to $5.90-$6.05, driven by tariff mitigation ($245M offset) and 4% sales growth target. 
- **AspenTech Synergy**: $100M cost savings by 2028 and double-digit ACV growth via software integration. 
- **Key Risks**: China discrete automation constrained by automotive, but Process/Hybrid growth in power and LNG offsets. 
- **Tariff Resilience**: Pricing actions and global supply chain flexibility neutralize tariff impact in 2025.

**【CEO Summary Section】**
- Emerson reported Q2 2025 underlying orders growth of 4%, exceeding expectations, with all regions positive, including China. Process and Hybrid businesses grew 6%, while Discrete businesses turned positive with Test and Measurement up 8%. Adjusted EPS of $1.48 exceeded guidance by $0.06, driven by record margin performance. 
- The company raised its full-year adjusted EPS guidance to $5.90-$6.05, reflecting confidence in a 4% underlying sales growth target. Emerson expects a meaningful second-half recovery in discrete sales, with ACV growth of 11% year-over-year in industrial software. 
- The AspenTech acquisition is expected to be modestly accretive in 2025, with $100 million in cost synergies targeted by 2028. The Safety and Productivity business, comprising 8% of sales, will be retained due to its market-leading profitability and alignment with reshoring trends.

**【CFO Financial Commentary】**
- Q2 2025 adjusted segment EBITDA margin reached 28%, a 200 basis point improvement year-over-year, driven by price-cost dynamics and cost reductions. Free cash flow was $738 million, up 14% year-over-year, despite $130 million in acquisition-related costs. 
- The company expects to fully offset $245 million in gross tariff impacts in 2025 through pricing actions, production reconfiguration, and supply chain regionalization. Full-year free cash flow guidance is $3.1 billion-$3.2 billion, reflecting operational performance and AspenTech transaction costs.

**【Q&A Key Highlights】**
- **Discrete Automation Recovery**: Test and Measurement orders grew 8%, driven by aerospace/defense and portfolio business. However, factory automation remains constrained by automotive weakness in China and Germany. Emerson expects sequential improvement in discrete MRO and test and measurement markets. 
- **Tariff Mitigation**: Emerson will fully offset $245 million in 2025 tariff impacts through pricing actions ($190 million) and operational measures ($55 million). 
- **AspenTech Synergies**: The acquisition is expected to contribute $0.07 to Q2 EPS and drive double-digit ACV growth through collaboration with DeltaV and Ovation platforms. 
- **China Dynamics**: Process and Hybrid businesses in China are benefiting from power and marine investments, while discrete automation faces headwinds from automotive and construction softness.

Emerson Electric (EMR)-7 May 25-2025 Q2 Earnings call transcript

- **Record Margins & Cash Flow**: 53.5% gross margin, 28% EBITDA margin, $694M free cash flow (89% YoY growth).
- **LNG & Power Growth**: 80+ MTPA/year LNG pipeline, 1.8TW global power automation leadership.
- **EPS Beat & Guidance**: $1.38 EPS (+13% YoY), reiterating $5.85-6.05 guidance with 70s operating leverage.
- **Tariff Resilience**: Minimal expected impact via price surcharges and regional supply chains.
- **Discrete Recovery**: Sequential orders growth Q1, targeting H2 low-single-digit recovery.

**【CEO Opening Remarks】**
- **Q1 Performance Highlights**: Underlying sales grew 2% YoY, driven by process and hybrid businesses. Gross profit margin reached a record 53.5%, and adjusted EBITDA margin hit 28% (up 340bps YoY). Free cash flow was $694M, up 89% YoY.
- **Strategic Acquisitions**: Reached agreement to acquire AspenTech at $265/share, positioning for software-driven growth. Safety & Productivity alternatives process ongoing.
- **Tariff Preparedness**: Confident in ability to mitigate impacts via price surcharges and regionalized supply chains, with minimal expected impact from China, Canada, and Mexico tariffs.
- **Growth Platforms**: LNG pipeline expanded to 80+ MTPA/year over next 3 years, with Emerson winning 50%+ of control systems in large projects. Power business reclassified as growth platform, with 10% of 2024 sales and 1.8TW of global power automation.

**【CFO Financial Breakdown】**
- **Revenue Drivers**: Process/hybrid +5% YoY, software/control +4%, intelligent devices +2%. Price contributed 1.5pts to growth, offsetting discrete (-4%) weakness.
- **Profitability**: Adjusted EPS $1.38 (up 13% YoY), driven by 265% operating leverage. Margins benefited from price/cost management, mix (AspenTech), and $100M+ synergy realization.
- **Cash Flow**: Free cash flow $694M (17% margin), up 89% YoY. Completed $1B share buybacks Q1, targeting $3.2B total returns for 2025.
- **Guidance Update**: Reiterate 3-5% underlying sales, $5.85-6.05 EPS. Operating leverage raised to 70s vs. mid-40s prior, reflecting strong Q1 execution.

**【Q&A Key Takeaways】**
- **Discrete Recovery**: Sequential orders growth in Q1, expecting low-single-digit recovery H2. Semiconductor/MRO strength offset automotive/factory automation weakness.
- **LNG Opportunity**: 11.5B project funnel (ex-semi), 70%+ Emerson valves in global LNG. Cedar LNG win highlights FLNG expertise.
- **China Risk**: Down mid-single digits Q1, but expecting H2 recovery in chemical/power. 54% MRO mix provides stability.
- **Margin Sustainability**: Price/cost deflation, mix, and cost reductions will continue driving margins, though Q1 mix boost unlikely to repeat.
- **M&A Strategy**: Post-AspenTech, focus on sub-$1B bolt-ons to expand tech relevance. Share buybacks remain priority alongside organic investment.


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