Financial Data and Key Metrics Changes - Underlying sales in Q4 2025 increased by 4%, with full-year underlying sales growth at 3%, slightly below expectations due to softer book-to-ship ratios in Europe and China [6][7] - Adjusted earnings per share (EPS) for Q4 was $1.62, and for the full year, adjusted EPS was $6, reflecting a 9% increase year-over-year [7][15] - Free cash flow for the year reached $3.24 billion, up 12% year-over-year, exceeding guidance [7][16] - The company expects sales growth of 5.5% for fiscal 2026, with underlying sales growth of approximately 4% [7][24] Business Line Data and Key Metrics Changes - The software and control segment grew by 5%, while intelligent devices increased by 2% [18] - Process and hybrid businesses were up 4%, and discrete businesses finished the year slightly up at 1% [18] - Test and measurement orders surged by 27% in Q4, with a full-year growth of 12% [6][14] Market Data and Key Metrics Changes - Underlying orders grew by 6% in Q4, with strong performance in North America, India, and the Middle East and Africa, while demand in Europe and China remained soft [8][14] - The backlog at the end of the year was $7.4 billion, up 3% year-over-year [19] - The company reported a gross profit margin of 52.8% and an adjusted segment EBITDA margin of 27.6% for the year [15][19] Company Strategy and Development Direction - Emerson is focused on capitalizing on automation technologies to drive digital transformation and enhance operational efficiency [5][6] - The company plans to return approximately $2.2 billion to shareholders, including $1 billion in share repurchases and $1.2 billion in dividends, marking a 5% increase in dividends per share [7][8] - Emerson aims to achieve $100 million in run-rate synergies from the AspenTech integration by the end of 2026, two years ahead of schedule [16][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, driven by sustained demand in automation and digital transformation [4][6] - The company anticipates continued strength in power, LNG, life sciences, and semiconductor markets, projecting high single-digit to low double-digit growth in these sectors [22][56] - Management acknowledged challenges in Europe and China but remains confident in the overall demand environment [22][100] Other Important Information - The company launched two AI-powered applications aimed at enhancing productivity and workflow automation [12][13] - Emerson's annual contract value (ACV) for software grew by 10% year-over-year, ending at $1.56 billion [7][87] - The company plans to maintain a strong balance sheet, with a net debt to adjusted EBITDA ratio expected to decrease to approximately 2 times by the end of 2026 [31] Q&A Session Summary Question: Clarification on software renewal impact - Management confirmed that the software renewal dynamic is an accounting issue affecting revenue recognition, with no impact on free cash flow [35][40] Question: Orders growth in different segments - Orders in process and hybrid remained resilient at mid-single digits, while discrete orders recovered to high single digits driven by test and measurement [45] Question: Visibility on first half versus second half growth - Management indicated strong visibility for second half growth, with expectations of 6% growth compared to 4% in the first half, excluding the software renewal impact [52][54] Question: Trends in test and measurement and discrete automation - Management noted strong growth in aerospace and defense and semiconductor markets, while automotive remains weak [66] Question: Impact of changing subsidy environment on sustainability projects - Management reported a significant reduction in the outlook for sustainability projects, but this did not impact the current backlog [72][73] Question: Power generation market visibility - Management expressed strong visibility in power generation projects, with significant investments expected in modernization and new capacity [85]