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Summary of Emerson Electric Conference Call Company Overview - **Company**: Emerson Electric (NYSE: EMR) - **Date**: February 18, 2026 - **Key Speakers**: Lal Karsanbhai (President and CEO), Mike Baughman (CFO) Key Points Industry and Market Dynamics - Emerson's software business is valued at **$1.6 billion ACV** with a target of **10% growth** in ACV for the year, driven by strong demand in mission-critical applications across regulated industries such as power generation, pharmaceuticals, and energy [1][14] - The company emphasizes the importance of integrating AI into existing software, with products like **Ovation Virtual Advisor** and **Aspen Virtual Advisor** already generating over **$100 million in quotations** [14][21] - The software business is protected by three key moats: 1. **Deterministic and domain expertise** in vertical applications [5][6] 2. Focus on **mission-critical applications** in regulated industries [9] 3. Economic moat through **perpetual licenses** and usage-based tokens [11][12] Financial Performance - Emerson reported a **9% ACV growth** in the last quarter and expects similar growth in the current quarter, despite a **2-point headwind** from a previous job [14] - The company has seen **74% order growth** in the Ovation product line, primarily driven by modernization projects in the U.S. [50][62] - The overall order rate is stable, with a trailing twelve-month rate of **6%**, supported by a strong installed base of **$155 billion** [80][87] Regional Insights - The U.S. market is experiencing strong growth, particularly in sectors like **semiconductors, aerospace and defense, energy, life sciences, and power** [46][48] - Emerson has aligned its strategy to focus on these growth factors, benefiting from favorable U.S. industrial policies [48][49] - The company anticipates continued growth in the Middle East and India, offsetting weaknesses in China and Europe [135][137] Future Outlook - Emerson is committed to returning **$10 billion** in cash to shareholders, with plans for **$6 billion in share repurchases** and **$4 billion in dividends** [172] - The company is focused on enhancing its R&D investment, which has increased from **4% to 8%**, aiming for **double-digit growth** in technology innovation [184] - Emerson is preparing for potential growth in the nuclear sector and is actively pursuing opportunities in emerging markets like India and the Middle East [76][137] Challenges and Considerations - The company has assumed a **weak recovery** in China and Europe in its forecasts, which could impact overall growth if conditions improve unexpectedly [37][38] - There are ongoing challenges in the automotive sector, particularly in the electrical batteries and ADAS markets, which remain weak [106][108] - Emerson is monitoring supply chain dynamics, particularly regarding DRAM availability and tariffs, which could affect costs but are not expected to materially impact overall financial performance [152][154] Conclusion - Emerson Electric is strategically positioned for growth through its focus on software integration, strong market presence in critical industries, and commitment to shareholder returns. The company is navigating challenges in certain markets while capitalizing on opportunities in the U.S. and emerging markets.

Core Insights - The company experienced a strong end to the calendar year with a 9% increase in trailing 3-month orders and a 6% increase in trailing 12-month orders, indicating robust demand [1] - The backlog increased by 9% during the quarter, providing confidence in executing the company's strategic plan, particularly for the second half of the year and looking ahead to 2027 [1] Growth Drivers - The order strength was driven by five identified growth vectors: power generation, energy markets (particularly LNG), semiconductor growth, life sciences, and aerospace and defense [1] - Geographically, growth was concentrated in the United States, the Arabian Peninsula, and select countries including Brazil, Japan, and parts of Southeast Asia [1]

Summary of Emerson Electric FY Conference Call (February 17, 2026) Company Overview - **Company**: Emerson Electric (NYSE: EMR) - **Key Executives**: Lal Karsanbhai (President and CEO), Mike Baughman (CFO) Key Industry Insights - **Order Intake**: Strong end to the calendar year with trailing 3-month orders at 9% and trailing 12-month orders at 6% [3][4] - **Backlog**: Increased by 9% in the quarter, indicating confidence in executing the company's plan [3] - **Growth Vectors**: Significant strength in power generation, LNG, semiconductor growth, life sciences, and aerospace and defense [3][14] - **Geographic Growth**: Concentrated in the United States, Arabian Peninsula, Brazil, Japan, and Southeast Asia [3] Financial Performance - **Power Generation**: Ovation business up 74% in the quarter; total power business up 20% [14] - **MRO Orders**: Mid-single-digit range, supportive of ongoing business growth [4][12] - **Software Renewal Impact**: 2% drag from software renewal dynamic in the first half, underlying growth expected at 4%-6% [12][13] - **ACV Growth**: Grew 9% in the first quarter; expected high single-digit growth in the second quarter [38] Market Challenges - **China and Europe**: No expected recovery in China; weak market conditions in Europe [6] - **Automotive Sector**: Weakness noted in the U.S. automotive market, reflecting a global trend [18] - **Chemical Industry**: Bulk chemicals facing overcapacity issues, expected to take 6-12 months to correct [18][25] Strategic Focus - **Investment in LNG**: Over 50% of global LNG installations run by DeltaV; significant growth opportunities in this sector [28][29] - **AI Integration**: Emerson's software is designed to integrate AI applications, focusing on deep domain expertise and mission-critical applications [30][31][33] - **Pricing Power**: 2.5 points of pricing power expected; ability to manage price increases effectively [44][46] Future Outlook - **Capital Deployment**: Focus on returning cash to shareholders through dividends and share repurchases; potential for bolt-on acquisitions in key verticals [61][62] - **Profitability Improvement**: Expected 240 basis points of margin improvement; confidence in achieving 40% operating leverage in the future [55][58] Additional Insights - **Customer Demand**: Strong demand for AI applications embedded in existing software offerings [33][34] - **Market Positioning**: Emerson's technology positioned well to serve heavily regulated industries, providing a competitive advantage [31][32] - **Innovation**: Continuous innovation in test and measurement and other verticals to maintain market leadership [22][24] This summary encapsulates the key points discussed during the conference call, highlighting Emerson Electric's performance, market conditions, strategic focus, and future outlook.

Group 1 - Dover Corporation (NYSE:DOV) is recognized as a strong performer in the industrial sector, particularly benefiting from the AI trend, despite uncertainties about its long-term valuation [1][4] - The company manufactures a range of products including equipment, components, and software solutions for various applications such as industrial, energy, imaging, and climate [3] - Comparatively, Dover's stock is not historically expensive when evaluated against the S&P 500, indicating potential for further growth [1]

Core Viewpoint - KeyBanc upgraded Emerson Electric Co. to "Overweight" and raised its price target from $155 to $185, reflecting positive sentiment towards the company's future performance [1][6]. Stock Performance - The current stock price of Emerson is $157.32, which is a 3.43% increase from the previous value, with fluctuations between $154.40 and $160.11 on the day [2]. - Over the past year, the stock reached a high of $160.13 and a low of $90.06, with a market capitalization of approximately $88.46 billion [2]. Options Trading Activity - Emerson has seen a significant increase in options trading, with 3,480 call options purchased, representing a 95% increase compared to the typical volume of 1,789 call options, indicating heightened investor interest [3][6]. Insider Transactions - CEO Surendralal Lanca Karsanbhai sold 7,263 shares at an average price of $133 per share, totaling around $966,000, resulting in a 3.57% decrease in his ownership position [4][6]. - Company insiders currently own 0.23% of Emerson's stock, while institutional investors and hedge funds are adjusting their stakes [5]. Trading Volume - Today's trading volume for Emerson is 9,699,161 shares, indicating active trading and interest in the stock [5].

Core Insights - Emerson Electric Co. reported first-quarter fiscal 2026 adjusted earnings of $1.46 per share, exceeding the Zacks Consensus Estimate of $1.41, with a year-over-year increase of 6% [1] - The company's net sales reached $4.35 billion, slightly below the consensus estimate by 0.12%, but showed a 4% year-over-year growth, primarily driven by the Software and Control segment [1] Business Segments' Performance - The Intelligent Devices segment generated net sales of $2.39 billion, reflecting a 4% year-over-year increase, with underlying sales also up 2%. Final Control sales increased to $1.39 billion, while Sensors sales reached $996 million [2] - The Software and Systems segment reported net sales of $1.45 billion, a 5% increase year over year, with underlying sales up 3%. Control Systems & Software sales were $1.04 billion, and Test & Measurement sales increased by 14% to $409 million [3] - The Safety & Productivity segment achieved net sales of $503 million, marking a 3% year-over-year increase, with underlying sales rising by 1% [4] Margin Details - The cost of sales rose by 4.9% year over year to $2.04 billion. The pretax earnings margin decreased to 17.8% from 18.6% in the previous year, while the adjusted EBITA margin remained stable at 26.3% [5] Balance Sheet & Cash Flow - At the end of the first three months of fiscal 2026, Emerson had cash and cash equivalents of $1.75 billion, up from $1.54 billion at the end of fiscal 2025. Long-term debt decreased to $7.58 billion from $8.32 billion [6] - The company generated net cash of $699 million from operating activities, down 10% year over year. Capital expenditure increased to $97 million from $83 million in the previous year. Dividends paid amounted to $312 million, and share repurchases totaled $250 million [7] Q2 Fiscal 2026 Outlook - For the second quarter of fiscal 2026, Emerson anticipates net sales growth of approximately 3-4% year over year and underlying sales growth of about 1-2%. Adjusted earnings per share are expected to be in the range of $1.50-$1.55 [8] FY26 Outlook - Emerson projects net sales growth of approximately 5.5% from the previous year, with underlying sales expected to rise by about 4%. Earnings per share are forecasted to be between $4.78 and $4.93, with adjusted earnings per share estimated at $6.40-$6.55. Operating cash flow is anticipated to be $4.0-$4.1 billion, and free cash flow is estimated at $3.5-$3.6 billion [10]

分组1 - Emerson Electric reported quarterly earnings of $1.46 per share, exceeding the Zacks Consensus Estimate of $1.41 per share, and up from $1.38 per share a year ago, indicating a positive earnings surprise of +3.47% [1][2] - The company posted revenues of $4.35 billion for the quarter ended December 2025, which was slightly below the Zacks Consensus Estimate by 0.12%, but an increase from $4.18 billion year-over-year [3] - Over the last four quarters, Emerson Electric has surpassed consensus EPS estimates three times, while it has only topped revenue estimates once [2][3] 分组2 - Emerson Electric shares have increased approximately 12% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.9% [4] - The current consensus EPS estimate for the upcoming quarter is $1.57 on revenues of $4.64 billion, and for the current fiscal year, it is $6.47 on revenues of $18.86 billion [8] - The Manufacturing - Electronics industry, to which Emerson Electric belongs, is currently ranked in the top 40% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [9]

Financial Data and Key Metrics Changes - Emerson's underlying sales growth was 2% year-over-year, with adjusted segment EBITDA margin at 27.7% and adjusted earnings per share at $1.46, reflecting a 6% increase year-over-year [10][19][24] - The backlog ended the quarter at $7.9 billion, up 9% year-over-year, with a book-to-bill ratio of 1.13 [19][63] Business Line Data and Key Metrics Changes - Software and systems reported a 3% underlying sales growth, driven by test and measurement, which grew 11% [19][23] - Intelligent devices grew 2%, while safety and productivity increased by 1% [19][24] - Ovation business saw a significant increase of 74% in orders, driven by large project wins [14][40] Market Data and Key Metrics Changes - North America orders were up 18%, with strong performance in power and LNG sectors [38][97] - The Middle East and Africa experienced a 9% growth, while Europe and China showed ongoing softness [14][38][75] Company Strategy and Development Direction - Emerson aims to return $10 billion to shareholders through share repurchase and dividends, with a focus on organic growth and operational excellence [7][11] - The company is aligned with secular tailwinds such as electrification, energy security, and nearshoring, expecting these to drive growth over the next three years [5][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2026 targets, supported by a good start to the year and operational excellence [10][11] - The company anticipates continued strong demand in North America, India, and the Middle East, while acknowledging challenges in Europe and China [14][75] Other Important Information - Emerson was named the 2026 Industrial IoT Company of the Year, highlighting its leadership in industrial IoT technology [11] - The company released DeltaV version 16, enhancing its software-defined automation vision [12] Q&A Session Summary Question: Can you break down the 9% order growth in Q1 between process and hybrid? - Management noted that power orders were driven by modernization and behind-the-meter power generating capacity at data centers, with significant growth in test and measurement orders [34][36][40] Question: What is the expected impact of AI on software growth? - Management believes AI capabilities will accelerate growth in software offerings, with minimal disruption expected [41][43] Question: Are the orders in power pushing beyond this year into multi-year phases? - Management confirmed confidence in backlog timing supporting sales into 2027, particularly in power and LNG sectors [46][47] Question: What is the outlook for weak verticals like chemicals? - Management indicated continued flat activity in Europe, particularly in chemicals, with a bearish outlook for China [75][76] Question: What is the opportunity in Venezuela? - Management acknowledged a long-established history in Venezuela and plans to mobilize for potential growth, particularly in power generation [104][106] Question: Any updates on tariffs and mitigation activity? - Management reported some positive developments regarding tariffs, particularly with China, while noting challenges with Mexico [115] Question: What are the green shoots in China? - Management highlighted good activity in the test and measurement space and broad portfolio business, despite overall softness [117]

Emerson Electric (NYSE:EMR) Q1 2026 Earnings call February 03, 2026 04:30 PM ET Company ParticipantsChigusa Katoku - VP in Equity Research for Electrical Equipment, Machinery, and Multi‑Industry SectorsDoug Ashby - Director of Investor RelationsJeffrey Sprague - Founder and Managing PartnerLal Karsanbhai - President and CEOMike Baughman - EVP and CFORam Krishnan - EVP and COOConference Call ParticipantsAndrew Obin - Managing Director and Senior Analyst for U.S. Multi‑Industry and Machinery SectorAndy Kaplow ...