Emerson Electric (NYSE:EMR) 2026 Conference February 18, 2026 08:50 AM ET Company ParticipantsLal Karsanbhai - President and CEOMichael Baughman - EVP and CFOModeratorWe're gonna get started again. We are really excited to have Emerson with us today. We've got Lal Karsanbhai, who's the President and CEO of Emerson, and Mike Baughman, who is the CFO. Lal, as I walk over to you, it's been a year since you closed the acquisition of the remaining shares of AspenTech, almost a year. And I know you had a vision, ...

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.