Emerson(US:EMR)2026-02-17 16:27Summary 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.