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Item 1. Business

2023-11-13 compared with 2022-11-14 · 100 added, 201 removed, 77 unchanged (80% of the section changed)

ITEM 1 - BUSINESS

Emerson (“the Company”) is a global leader that designs and manufactures products and delivers services that bring technology and engineering together to provide innovative solutions for customers in a wide range of industrial, commercial and consumer markets around the world.

Our purpose is to drive innovation that makes the world healthier, safer, smarter and more sustainable.

Emerson (“the Company”) is a global technology and software company that provides innovative solutions for customers in a wide range of end markets around the world.

Through its leading automation portfolio, Emerson helps process, hybrid and discrete manufacturers optimize operations, protect personnel, reduce emissions and achieve their sustainability goals.

Sales by geographic destination in 2023 were:

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Portfolio management is an integral component of Emerson's growth and value creation strategy.

Over the past 18 months, Emerson has taken significant actions to accelerate the transformation of its portfolio through the completion of strategic acquisitions and divestitures of non-core businesses.

These actions were undertaken to create a higher growth and cohesive industrial technology portfolio as a global automation leader serving a diversified set of end markets with differentiated capabilities in intelligent devices and software.

Over the past two years, the Company has taken significant actions to accelerate the transformation of its portfolio through the completion of strategic acquisitions and divestitures of non-core businesses.

These actions were undertaken to create a higher growth and cohesive industrial technology portfolio as a global automation leader serving a diversified set of end markets.

The Company’s recent portfolio actions include the following transactions:

• On October 31, 2022, the Company announced an agreement to sell a majority stake in its Climate Technologies business (which constitutes the Climate Technologies segment, excluding Therm-O-Disc which was divested earlier in fiscal 2022) to private equity funds managed by Blackstone ("Blackstone") in a transaction valued at $14.0 billion.

Emerson will receive upfront, pre-tax cash proceeds of approximately $9.5 billion and a note of $2.25 billion at close, while retaining a 45 percent non-controlling common equity ownership interest in a new standalone joint venture between Emerson and Blackstone.

The Climate Technologies business, which includes the Copeland compressor business and the entire portfolio of products and services across all residential and commercial HVAC and refrigeration end-markets, had fiscal 2022 net sales of approximately $5.0 billion.

The transaction is expected to close in the first half of calendar year 2023, subject to regulatory approvals and customary closing conditions.

Please refer to our Current Report on Form 8-K, dated October 31, 2022, for additional information.

• On October 11, 2023, the Company completed the acquisition of National Instruments Corporation ("NI") at an equity value of $8.2 billion.

NI, which provides software-connected automated test and measurement systems that enable enterprises to bring products to market faster and at a lower cost, had revenues of approximately $1.7 billion and pretax earnings of approximately $170 mllion for the 12 months ended September 30, 2023.

• On May 31, 2023, the Company completed the previously announced sale of a majority stake in its Climate Technologies business (which constitutes the former Climate Technologies segment, excluding Therm-O-Disc which was divested earlier in 2022) to private equity funds managed by Blackstone in a $14.0 billion transaction.

Emerson received upfront, pre-tax cash proceeds of approximately $9.7 billion and a note receivable with a face value of $2.25 billion (which will accrue 5 percent interest payable in kind by capitalizing interest), while retaining a 40 percent non-controlling common equity interest in a new standalone joint venture between Emerson and Blackstone.

The new standalone business is named Copeland.

• On October 31, 2022, the Company completed the divestiture of its InSinkErator business, which manufactures food waste disposers, to Whirlpool Corporation for $3.0 billion.

This business had fiscal 2022 net sales of $630 million and is reported in the Tools & Home Products segment.

• On May 16, 2022, the Company completed the combination of two of its stand-alone industrial software businesses, Open Systems International, Inc.

and the Geological Simulation Software business (collectively, the “Emerson Industrial Software Business”) with Aspen Technology, Inc.

(“Heritage AspenTech”) to create “New AspenTech”, a diversified, high-performance industrial software leader with greater scale, capabilities and technologies (hereinafter referred to as "AspenTech").

The Company contributed the Emerson Industrial Software Business and $6.0 billion in cash to Heritage AspenTech stockholders and upon closing of the transaction owned 55 percent of the outstanding shares of AspenTech common stock (on a fully diluted basis).

On a pro forma basis, AspenTech had fiscal 2022 net sales of $1.1 billion.

• On July 27, 2022, AspenTech entered into an agreement to acquire Micromine, a global leader in design and operational solutions for the mining industry, for AU $900 (approximately $623 USD based on exchange rates when the transaction was announced).

The transaction is expected to close by the end of calendar 2022, subject to various regulatory approvals.

• On May 31, 2022, the Company completed the divestiture of its Therm-O-Disc sensing and protection technologies business, which was reported in the Climate Technologies segment, to an affiliate of One Rock Capital Partners, LLC.

Further information regarding acquisition and divestiture activity is set forth in Note 4.

For fiscal year 2022, the Company reported four segments:

Automation Solutions ;

and Climate Technologies and Tools & Home Products, which together comprise the Commercial & Residential Solutions business.

A summary of the Company's businesses is described below.

• Automation Solutions - enables process, hybrid and discrete manufacturers to maximize production, protect personnel and the environment, and optimize their energy efficiency and operating costs through a broad

offering of products and integrated solutions, including measurement and analytical instrumentation, industrial valves and equipment, and process control software and systems.

• AspenTech - provides asset optimization software that enables industrial manufacturers to design, operate, and maintain their operations for maximum performance, creating value through improved operational efficiency and productivity, reduced downtime and safety risks, and minimizing energy consumption and emissions.

• Commercial & Residential Solutions - provides products and solutions that promote energy efficiency and sustainability, enhance household and commercial comfort, and protect food quality and sustainability through heating, air conditioning and refrigeration technology, as well as a broad range of tools that promote safety and productivity.

The Company sells products and solutions that support customers in a variety of end markets.

Overall, sales by end market were as follows:

Commercial, 19 percent;

residential, 16 percent;

energy, 15 percent;

chemical, 10 percent;

power & renewables, 9 percent;

general industries, 9 percent;

discrete, 8 percent;

hybrid, 6 percent;

other, 8 percent.

This business had net sales of $630 million in 2022.

• On May 31, 2022 the Company completed the divestiture of its Therm-O-Disc sensing and protection technologies business to an affiliate of One Rock Capital Partners, LLC.

• On May 16, 2022, the Company completed the transactions contemplated by its definitive agreement with Aspen Technology, Inc.

("Heritage AspenTech") to contribute two of Emerson's stand-alone industrial software businesses, Open Systems International, Inc.

and the Geological Simulation Software business (collectively, the “Emerson Industrial Software Business”), along with approximately $6.0 billion in cash to Heritage AspenTech stockholders, to create "New AspenTech", a diversified, high-performance industrial software leader with greater scale, capabilities and technologies (defined as "AspenTech" herein).

Upon closing of the transaction, Emerson owned 55 percent of the outstanding shares of AspenTech common stock (on a fully diluted basis).

AspenTech had 2023 net sales of $1.04 billion.

Further information regarding acquisition and divestiture activity is set forth in Notes 4 and 5.

Certain prior year amounts have been reclassified to conform to the current year presentation.

This includes reporting financial results for Climate Technologies, InSinkErator and Therm-O-Disc as discontinued operations for all periods presented, and the assets and liabilities of Climate Technologies and InSinkErator (prior to completion of the divestitures) as held-for-sale (see Note 5).

In addition, as a result of its portfolio transformation, the Company now reports six segments and two business groups, which are highlighted in the table below (see Note 20 for further details).

Beginning in 2024, the Company will report NI (which will be renamed Test & Measurement) as a new segment in the Software and Control business group.

INTELLIGENT DEVICES SOFTWARE AND CONTROL

• Final Control

• Control Systems & Software

• Measurement & Analytical

• Discrete Automation

• Safety & Productivity

The Company sells products and solutions that support customers in a variety of end markets, including process industries (such as chemical, power & renewables and energy), hybrid industries (life sciences, metals & mining, food & beverage, pulp & paper, and others), discrete industries (including automotive, medical, packaging and semiconductor) and more.

Emerson was incorporated in Missouri in 1890 and has evolved through internal growth and strategic acquisitions.

Management has a well-established set of operating mechanisms to manage its business performance and set strategy.

The Company also has processes undertaken by management with oversight from the Board of Directors to specifically focus on risks in areas such as cybersecurity, compliance, legal, environmental, financial and reputational, among others.

The Company also has processes undertaken by management with oversight from the Board of Directors to specifically focus on risks in areas such as cybersecurity, compliance, legal, sustainability, financial and reputational, among others.

The Company periodically updates, assesses, and monitors its risk exposures, provides timely updates to the Board, and takes actions to mitigate these risks.

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See also Item 1A - “Risk Factors” and Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

AUTOMATION SOLUTIONS

The Automation Solutions segment offers a broad array of products, integrated solutions, software and services which enable process, hybrid and discrete manufacturers to maximize production, protect personnel and the environment, reduce project costs, and optimize their energy efficiency and operating costs.

Markets served include energy, chemical, power & renewables , life sciences, food and beverage, automotive, pulp and paper, metals and mining, and municipal water supplies.

The segment’s major product offerings are Measurement & Analytical Instrumentation, Valves, Actuators & Regulators, Industrial Solutions and Systems & Software, which are further described below.

Across these product offerings, Automation Solutions offers the Plantweb TM Digital Ecosystem, a comprehensive Industrial Internet of Things (IIoT) architecture that provides remote monitoring by combining intelligent field sensors, communication gateways and controllers, software, and complementary partner technologies.

This IIoT architecture delivers measurable business performance improvements to customers by providing insights into production performance, energy consumption, reliability of specific equipment or process units, and safety.

Together with the broad offering of products and integrated solutions, Automation Solutions also provides a portfolio of services and lifecycle service centers which offer consulting, engineering, systems development, project management, training, maintenance, and troublesho oting expertise to aid in process optimization.

Sales by geographic destination in 2022 for Automation Solutions were:

the Americas, 47 percent;

Asia, Middle East & Africa, 35 percent (China, 15 percent);

and Europe, 18 percent.

Measurement & Analytical Instrumentation

Measurement instrumentation measures the physical properties of liquids or gases in a process stream, such as pressure, temperature, level, rate and amount of flow, and communicates this information to a process control system or other software applications.

Measurement technologies provided by the Company include Coriolis direct mass flow, magnetic flow, vortex flow, ultrasonic flow, differential pressure, ultra-low flow fluid measurement, corrosion measurement, acoustic measurement, temperature sensors, radar-based tank gauging and magnetic level gauging.

The Company’s measurement products are often used in custody transfer applications, such as the transfer of gasoline from a storage tank to a tanker truck, where precise metering of the amount of fluid transferred

helps ensure accurate asset management.

Complementary products include onshore and subsea multi-phase meters, wet gas meters, downhole gauges and corrosion/erosion measuring instruments.

Analytical instrumentation analyzes the chemical composition of process fluids and emissions to enhance quality and efficiency, as well as environmental compliance.

The Company’s analytical technologies include process gas chromatographs, in-situ oxygen analyzers, infrared gas and process fluid analyzers, combustion analyzers and systems, and analyzers that measure pH, conductivity and water quality.

The Company provides sensors to detect combustible and toxic gases, and flames.

These devices support the safety of both people and process plant assets.

Measurement and analytical instrumentation technologies are also available with highly secure and reliable wireless communication capability, allowing customers to monitor processes or equipment that were previously not measurable (remote, moving/rotating) or not economical to measure due to the high cost and difficulty of running wires in industrial process plants.

Valves, Actuators & Regulators

The primary role of an industrial valve is to control, isolate, or regulate the flow of liquids or gases to achieve safe operation along with reliability and optimized performance.

Control, isolation and pressure relief valves respond to commands from a control system to continuously and precisely modulate the flow of process fluids and gases.

Engineered on/off valves are typically used to achieve tight shutoff, even in high-pressure and high-temperature processes.

The Company designs, engineers and manufactures ball, gate, globe, check, sliding stem, rotary, high performance butterfly, triple offset, and severe services valves for critical applications.

The Company also designs and manufactures sophisticated smart actuation and control technologies that continuously monitor valve health and remotely control valve positions to foster proactive and predictive maintenance as well as decrease the risk of unplanned shutdowns.

The Company provides pressure management products, including pressure relief, vacuum relief, and gauge valves designed to control fugitive emissions.

The Company also supplies a line of industrial and residential regulators, whose function is to reduce the pressure of fluids and gases moving from high-pressure supply lines into lower pressure systems, and also manufactures tank and terminal safety equipment, including hatches, vent pressure and vacuum relief valves, and flame arrestors for storage tanks in the oil and gas, petrochemical, refining and other process industries.

Industrial Solutions

Industrial Solutions include fluid control and pneumatic mechanisms, electrical distribution equipment, materials joining solutions and precision cleaning products which are used in a variety of manufacturing operations to provide integrated solutions to customers.

Pneumatic products transform air or gas into energy and power for use in manufacturing operations such as food processing and packaging, life sciences and petrochemical processing.

Products include solenoid and pneumatic valves, valve position indicators, pneumatic cylinders and actuators, air preparation equipment, and pressure, vacuum, temperature switches and automobile assembly.

Electrical distribution consists of a broad line of components for current- and noncurrent-carrying electrical distribution devices, including conduit and cable fittings, plugs and other receptacles, industrial lighting, enclosures and controls.

Electrical distribution products are used in hazardous, industrial and commercial environments, such as oil and gas drilling and production sites, petrochemical plants and commercial buildings.

Plastic and metal joining technologies and equipment are supplied to a diversified manufacturing customer base, including automotive, medical devices, business and consumer electronics, and textile manufacturing.

The Company also provides precision cleaning and liquid processing solutions to industrial and commercial manufacturers.

Products include ultrasonic joining and cleaning equipment;

linear and orbital vibration welding equipment;

systems for hot plate, spin and laser welding;

and aqueous, semi-aqueous and vapor cleaning systems.

Systems & Software

The Company provides process control systems and software that control plant processes by collecting and analyzing information from measurement devices in the plant and using that information to adjust valves, pumps, motors, drives and other control hardware for maximum product quality and process efficiency and safety.

Software capabilities also include life sciences operations management, upstream oil and gas reservoir simulation and

production optimization modeling, pipeline and terminal management, operations management simulation, and training systems.

The Company’s process control systems can be extended wirelessly to support a mobile workforce with handheld tools/communicators, provide site-wide location tracking of people and assets, and enable video monitoring and communication with wireless field devices, thereby increasing the information available to operators.

The principal worldwide distribution channel for Automation Solutions is a direct sales force, while a network of independent sales representatives, and to a lesser extent independent distributors purchasing products for resale, are also utilized.

Approximately half of the sales in the United States are made through a direct sales force with the remainder primarily through independent sales representatives and distributors.

In Europe and Asia, sales are primarily made through a direct sales force with the remainder split evenly between independent sales representatives and distributors.

Service/trademarks and trade names within (but not exclusive to) Automation Solutions include Emerson Automation Solutions, Appleton, ASCO, Aventics, Bettis, Branson, DeltaV, Fisher, Keystone, KTM, Micro Motion, Monarch, Ovation, Plantweb, Rosemount and Vanessa.

INTELLIGENT DEVICES

Final Control

The Final Control segment is a leading global provider of control valves, isolation valves, shutoff valves, pressure relief valves, pressure safety valves, actuators, and regulators for process and hybrid industries.

These solutions respond to commands from a control system to continuously and precisely control and regulate the flow of liquids or gases to achieve safe operation along with reliability and optimized performance.

Products within our Final Control segment are marketed under a variety of brands including:

Anderson Greenwood, Bettis, Crosby, Fisher, Keystone, KTM and Vanessa.

Measurement & Analytical

The Measurement & Analytical segment is a leading supplier of intelligent instrumentation measuring the physical properties of liquids or gases, such as pressure, temperature, level, flow, acoustics, corrosion, pH, conductivity, water quality, toxic gases, and flame.

The instrumentation transfers data to control systems and automation software, allowing process and hybrid industry operators to make educated decisions regarding production, reliability and safety.

Products within our Measurement & Analytical segment are marketed under a variety of brands including:

Flexim, Micro Motion and Rosemount.

Discrete Automation

The Discrete Automation segment includes solenoid valves, pneumatic valves, valve position indicators, pneumatic cylinders and actuators, air preparation equipment, pressure and temperature switches, electric linear motion solutions, programmable automation control systems and software, electrical distribution equipment, and materials joining solutions used primarily in discrete industries.

Products within our Discrete Automation segment are marketed under a variety of brands including:

Afag, Appleton, ASCO, Aventics, Branson, Movicon, PACSystems, SolaHD, TESCOM, and TopWorx.

Safety & Productivity

The Safety & Productivity segment offers tools for professionals and homeowners that promote safety and productivity.

Pipe-working tools include pipe wrenches, pipe cutters, pipe threading and roll grooving equipment,

battery hydraulic tools for press connections, drain cleaners, tubing tools and diagnostic systems, including sewer inspection cameras and locating equipment.

Electrical tools include conduit benders and cable pulling equipment, battery hydraulic tools for cutting and crimping electrical cable, and hole-making equipment.

Other professional tools include water jetters, wet-dry vacuums, commercial vacuums and hand tools.

Products within our Safety & Productivity segment are marketed under a variety of brands including:

Greenlee, Klauke, ProTeam and RIDGID.

SOFTWARE AND CONTROL

Control Systems & Software

The Control Systems & Software segment provides control systems and software that control plant processes by collecting and analyzing information from measurement devices in the plant and using that information to adjust valves, pumps, motors, drives and other control hardware for maximum product quality, process efficiency and safety.

These solutions include distributed control systems, safety instrumented systems, SCADA systems, application software, digital twins, asset performance management and cybersecurity.

Control Systems & Software solutions are predominantly used by process and hybrid manufacturers.

Products within our Control Systems & Software segment are marketed under a variety of brands including:

AMS, DeltaV and Ovation.

AspenTech is a global leader in asset optimization software that enables industrial manufacturers to design, operate, and maintain their operations for maximum performance.

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The purpose-built software drives value for customers by improving operational efficiency and maximizing productivity, reducing unplanned downtime and safety risks, and minimizing energy consumption and emissions.

Sales by geographic destination in 2022 for AspenTech were:

the Americas, 55 percent;

Asia, Middle East & Africa, 21 percent (China, 3 percent);

and Europe, 24 percent.

Heritage AspenTech

Heritage AspenTech combines decades of modeling and operations expertise with big data, artificial intelligence, and advanced analytics.

Heritage AspenTech’s unique asset lifecycle approach and market-leading solutions help customers achieve new levels of efficiency, accelerate innovation and reduce emissions and waste, without compromising safety.

Heritage AspenTech develops software applications to design and optimize industrial operations across three principal business areas:

engineering, manufacturing and supply chain, and asset performance management.

Customers use the solutions to help advance sustainability technology pathways in improving resource efficiencies, such as energy, water or feedstock;

supporting energy transition and decarbonization initiatives, including integrating renewable and alternative energy sources, such as biofuels;

innovating new approaches for the hydrogen economy and carbon capture;

and, enabling recycling efficiencies for waste reduction throughout operations with advanced simulation and scale-up solutions.

OSI Business (Digital Grid Management)

The OSI business offers operational technology (OT) solutions that enable electric, gas, and water utilities and asset operators to manage and optimize the digital grid, incorporating all types of generation, industrial cogeneration, transmission, distribution, and microgrids.

The OSI business’ energy management solution (EMS) monitors, controls, and optimizes the increasingly interconnected transmission networks and generation fleets to manage grid stability and ensure security and regulatory compliance.

Its advanced distribution management solution (ADMS), distributed energy resource management solution (DERMS) and Outage Management offerings provide system resiliency, efficiency, and safety by monitoring, controlling and modeling the distribution network as utilities seek to increase reliability, predict and react to increasingly dynamic supply and demand patterns, resolve outages faster and in a more automated manner, and manage field service digitally.

The Company acquired this business on October 1, 2020.

SSE Business Subsurface Science & Engineering

The SSE business provides geoscience and modeling software for optimization across subsurface engineering and operations.

SSE software empowers decision makers to reduce uncertainty, improve confidence, minimize risk, and support responsible asset management.

Used extensively by the global energy industry, SSE solutions also have applications that extend into geothermal energy and carbon capture and storage.

The SSE business provides end-to-end workflows from seismic analysis and interpretation to reservoir and production simulation and from asset appraisal to operational planning and execution, to optimize production and utilization and minimize energy use, water use, and fugitive emissions.

SSE software is also employed to screen and assess oil and saline aquifer reservoirs for CO2 sequestration and to monitor CO2 storage.

As discussed above, AspenTech entered into an agreement in fiscal 2022 to acquire Micromine, a global leader in design and operational solutions for the mining industry, and the transaction is expected to close by the end of calendar 2022, subject to various regulatory approvals.

The principal worldwide distribution channel for AspenTech is a direct sales force.

COMMERCIAL & RESIDENTIAL SOLUTIONS

The Commercial & Residential Solutions business consists of the Climate Technologies and Tools & Home Products segments, and provides products and solutions that promote energy efficiency and sustainability, enhance household and commercial comfort, and protect food quality and sustainability through heating, air conditioning and refrigeration technology, as well as a broad rang e of tools and appliance solutions.

Sales by geographic destination in 2022 for Commercial & Residential Solutions were:

t he Americas, 71 percent;

Asia, Middle East & Africa, 17 percent (China, 7 percent);

and Europe, 12 percent.

CLIMATE TECHNOLOGIES

As discussed above, the Company completed the divestiture of its Therm-O-Disc sensing and protection technologies business on May 31, 2022 and on October 31, 2022, announced an agreement to sell a majority stake in its remaining Climate Technologies business to private equity funds managed by Blackstone, while retaining a 45 percent non-controlling common equity ownership interest in a new standalone joint venture between Emerson and Blackstone.

The transaction with Blackstone is expected to close in the first half of calendar year 2023, subject to regulatory approvals and customary closing conditions.

The Climate Technologies segment, as reported for fiscal 2022, provides products and services for many areas of the climate control industry, including residential heating and cooling, commercial air conditioning, commercial and industrial refrigeration, and cold chain management.

The Company's technologies enable homeowners and businesses to better manage their heating, air conditioning and refrigeration systems for improved control and comfort, and lower energy costs.

Climate Technologies also provides services that digitally control and remotely monitor refrigeration units in grocery stores and other food distribution outlets to enhance food freshness and safety, as well as cargo and transportation monitoring solutions.

Sales by geographic destination in 2022 for Climate Technologies were:

the Americ as, 67 percent;

Asia, Middle East & Africa, 22 percent (China, 9 percent);

and Europe, 11 percent.

Residential and Commercial Heating and Air Conditioning

The Company provides a full range of heating and air conditioning products that help reduce operational and energy costs and create comfortable environments in all types of buildings.

These products include reciprocating and scroll compressors, including ultra-efficient residential scroll compressors with two stages of cooling capacity, as well as variable speed scroll compressors;

system protector and flow control devices;

standard, programmable and Wi-Fi thermostats;

monitoring equipment and electronic controls for gas and electric heating systems;

gas valves for furnaces and water heaters;

and ignition systems for furnaces.

Commercial and Industrial Refrigeration

Commercial and industrial refrigeration technologies are incorporated into equipment to refrigerate food and beverages in supermarkets, convenience stores, food service operations, refrigerated trucks and refrigerated marine transport containers.

Climate Technologies refrigeration products are also used in a wide variety of industrial applications, including medical applications, food processing and cold storage.

Products include reciprocating, scroll and screw compressors;

precision flow controls;

system diagnostics and controls that provide precise temperature management;

and environmental control systems.

Transport and cargo monitoring solutions are also offered, which extend throughout the cold chain to ensure quality and safety as food travels from growers to processing and distribution facilities, and finally to retail points of sale.

Services and Solutions

Services and solutions provides air conditioning, refrigeration and lighting control technologies that enable global customers to optimize the performance of facilities, including large-scale retailers, supermarkets, convenience stores and food service operations.

The Company’s expertise allows customers to reduce energy and maintenance costs, thereby improving overall facility efficiency and uptime.

In addition to industry-leading controls, services include facility design and product management, site commissioning, facility monitoring and energy modeling.

Climate Technologies' sales, primarily to original equipment manufacturers and end users, are made predominantly through worldwide direct sales forces.

Remaining sales are primarily through independent distributor networks throughout the world.

Approximately one-third of this segment's sales are made to a small number of original equipment manufacturers.

Service/trademarks and trade names within (but not exclusive to) the Climate Technologies segment include Emerson Commercial & Residential Solutions, Emerson Climate Technologies, Copeland, CoreSense, Dixell, Lumity, ProAct, Sensi, Vilter and White-Rodgers.

TOOLS & HOME PRODUCTS

The Company’s Tools & Home Products segment offers tools for professionals and homeowners that promote safety and productivity.

Sales by geographic destination in 2022 for this segment were:

the Americas, 80 percent;

Asia, Middle East & Africa, 5 percent;

and Europe, 15 percent.

As discussed above, on October 31, 2022, the Company completed the divestiture of its InSinkErator business, which manufactures food waste disposers, to Whirlpool Corporation.

Professional Tools

Pipe-working tools are used by plumbing and mechanical professionals to install and repair piping systems.

Products include pipe wrenches, pipe cutters, pipe threading and roll grooving equipment, mechanical crimping tube joining systems, drain cleaners, tubing tools, and diagnostic systems, including closed-circuit television pipe inspection and locating equipment.

Electrical tools are used by industry professionals for numerous tasks related to the installation of wire and cable, including bending, termination and hole-making.

Other professional tools include water jetters, wet-dry vacuums, commercial vacuums and bolt cutters.

The Company also offers do-it-yourself tools, available at retail home improvement outlets, which include drain cleaning equipment, pipe and tube working tools, and wet-dry vacuums.

The principal worldwide distribution channels for Tools & Home Products are distributors and direct sales forces.

Professional tools are sold worldwide almost exclusively through distributors .

Service/trademarks and trade names within (but not exclusive to) the Tools & Home Products segment include Emerson, Emerson Professional Tools, Greenlee, Klauke, ProTeam and RIDGID.

Test & Measurement

As discussed above, Emerson completed the acquisition of NI on October 11, 2023.

This business will be referred to as Test & Measurement and reported as a new segment in the Software and Control business group in 2024.

Test & Measurement provides software-connected automated test and measurement systems that enable enterprises to bring products to market faster and at a lower cost.

The Test & Measurement platform spans the full range of customer needs including modular instrumentation, data acquisition and control solutions, and general-purpose development software.

RESEARCH & DEVELOPMENT

Investing in innovation to accelerate organic growth is a critical component of Emerson's value creation strategy.

The Company is focused on key growth initiatives across its software, control and intelligent devices portfolio.

These initiatives include disruptive measurement technologies, software-defined automation systems, self-optimizing asset software and sustainability solutions.

Total spending for R&D, engineering expense and customer-funded engineering and development was 6.9 percent of sales in 2023 compared to 6.3 percent in 2022.

The principal worldwide distribution channel for a majority of the Company's product offerings is through a direct sales force, while a network of independent sales representatives, and to a lesser extent independent distributors purchasing products for resale, are also utilized.

RAW MATERIALS

The Company's major requirements for basic raw materials include steel, copper, cast iron, electronics, rare earth metals, aluminum and brass;

The Company's major requirements for basic raw materials include steel, cast iron, electronics, rare earth metals, aluminum and brass;

and to a lesser extent, plastics and petroleum-based chemicals.

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However, the supply of materials or other items could be disrupted by natural disasters or other events.

In fiscal 2022, the Company continued to navigate supply chain disruptions and experienced higher freight costs.

Electronic component availability was challenging and lead times stabilized at elevated levels.

Despite these challenging conditions, the raw materials and various purchased components needed for the Company’s products have generally been available in sufficient quantities.

In 2023, freight costs and service levels returned to pre-pandemic levels, while the supply chain improved, including the availability of electronic components.

Despite market price volatility for certain requirements, the raw materials and various purchased components needed for the Company’s products have generally been available in

sufficient quantities.

See Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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While this proprietary intellectual property portfolio is important to the Company in the aggregate, management does not regard any of its segments as being dependent on any single patent, trademark registration or license.

The Company’s estimated consolidated order backlog was $8.1 billion and $6.5 billion at September 30, 2022 and 2021, respectively.

The Company’s estimated consolidated order backlog was $7.8 billion and $7.0 billion at September 30, 2023 and 2022, respectively, of which approximately $1.2 billion and $1.1 billion related to AspenTech.

Approximately 75 percent of the Company’s consolidated backlog is expected to be recognized as revenue over the next 12 months, with the remainder substantially over the subsequent two years thereafter.

Backlog by business at September 30, 2022 and 2021 follows (dollars in millions):

Automation Solutions $ 5,098 5,807

AspenTech 328 1,042

Commercial & Residential Solutions 1,107 1,204

Backlog by business group at September 30, 2023 and 2022 follows (dollars in millions):

Intelligent Devices $ 3,930 4,471

Software and Control 3,058 3,302

Total Backlog $ 6,988 7,773

The increase in backlog for the AspenTech segment in fiscal 2022 is related to the Heritage AspenTech acquisition.

The Company's businesses operate in highly competitive markets.

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Our manufacturing locations generate waste, of which treatment, storage, transportation and disposal are subject to U.S.

federal, state, foreign and/or local laws and regulations relating to protection of the

federal, state, foreign and/or local laws and regulations relating to protection of the environment.

The Company continually works to minimize the environmental impact of its operations through safe technologies, facility design and operating procedures.

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HUMAN CAPITAL RESOURCES

Emerson is dedicated to modernizing our workplace culture so our company can meet the needs and expectations of today's workers and attract talent that will help us thrive.

We believe the Company’s success depends on its ability to attract, develop and retain key personnel, and in 2021, we hired our first Chief People Officer, Elizabeth Adefioye, to help ensure the Company remains focused on this goal.

The skills, experience and industry knowledge of key employees significantly benefit our operations and performance.

Emerson is dedicated to modernizing our workplace culture to meet the needs and expectations of today's workers and attract talent that will help us thrive.

In 2023, the Company launched its first-ever employee value proposition, Let's Go, which serves as an invitation to employees and potential employees to join the Company in our bold aspiration to create a healthier, safer, smarter and more sustainable world.

We believe the Company’s success depends on our ability to attract, develop and retain key personnel.

The skills, experience and industry knowledge of

key employees significantly benefit our operations and performance.

The Company's Board of Directors and management oversee various employee initiatives.

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To assess and improve employee retention and engagement, the Company surveys employees with the assistance of third-party consultants, and takes actions to address areas of employee concern.

Over 26,000 employees participated in our most recent surveys and overall gave high scores in our three focus areas:

employee engagement, processes and procedures related to COVID-19 and diversity.

In 2023, we initiated a continuous listening strategy, with more than 85 percent of employees participating in the survey and an overall engagement score of 78 percent.

The categories of safety, well-being, growth and development, and access to resources and support earned the most favorable scores.

Employee health and safety in the workplace is also one of the Company’s core values.

The Corporate Safety Council oversees our safety efforts, supported by health and safety committees and leaders that operate at the local site level.

The Corporate Safety Council is led by our Chief Operating Officer and oversees our safety efforts, supported by health and safety committees and leaders that operate at the local site level.

Hazards in the workplace are actively identified and management tracks incidents so remedial actions can be taken to improve workplace safety.

In fiscal 2022, the Company reduced its total recordable rate of injuries to 0.28, and its lost or restricted workday case rate was 0.17 (both measured as the number of incidents per 100 employees).

The Company also continued to take appropriate actions throughout 2022 in response to the COVID-19 pandemic and to protect our workforce.

In 2023, the Company's total recordable rate of injuries was 0.30, and its lost or restricted workday case rate was 0.22 (both measured as the number of incidents per 100 employees).

We have identified other human capital priorities, including, among other things, providing competitive wages and benefits and promoting an inclusive work environment.

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minorities and foster an inclusive work environment that supports our large global workforce and helps us innovate for our customers.

Employee Resource Groups have been created to support our diverse workforce and have grown to nearly 12,000 members.

We also have taken actions to enhance diversity, including setting diversity targets for interview slates and recruiting at venues representing women, minorities, U.S.

military veterans, and LGBTQ+ talent.

In 2021, the Company introduced diversity goals at the leadership level and in 2022, added ESG targets, including diversity targets, as a component in the determination of annual bonuses for leadership.

Overall, women represent 31 percent of our U.S.

workforce and on a global basis, 21 percent of leadership positions are held by women.

Employee Resource Groups have been created to support our diverse workforce and have grown to over 13,000 members.

We also have taken actions to enhance diversity, including setting diversity targets for interview slates and targeted recruiting to increase the representation of women, minorities, U.S.

military veterans, individuals with a disability and LGBTQ+ talent within Emerson.

In 2021, the Company introduced diversity goals at the leadership level.

We continue to make progress on our goals and were named a “Best Employer for Diversity” by Forbes.

Overall, women represent 33 percent of our global workforce and 23 percent of leadership positions are held by women.

In the U.S., minorities represent 35 percent of our workforce and 21 percent of our leadership positions.

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The Company and its subsidiaries had approximately 67,000 employees at September 30, 2023.

Management believes that the Company's employee relations are favorable.

Management believes that the Company's employee relation s are favorable.

A small portion of the Company’s U.S.

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Emerson’s global purpose is to drive innovation that makes the world healthier, safer, smarter and more sustainable.

Our environmental sustainability strategy is focused on driving progress within our facilities and helping our

customers achieve their ESG objectives.

Our environmental sustainability strategy is focused on driving progress within our facilities and helping our customers achieve their ESG objectives.

In 2021, we appointed Mike Train as Chief Sustainability Officer.

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To set us on the right pathway, we will target net zero operations and a 25 percent reduction of our value chain emissions by 2030, also compared to a 2021 baseline.

The Company also added ESG targets, including GHG reduction targets, as a component in the determination of annual bonuses for leadership in 2022.

The Company also added ESG targets, including GHG reduction targets, as a component in the determination of annual bonuses for leadership beginning in 2022.

In 2023, we established a goal to achieve zero waste to landfill in our manufacturing facilities by 2032, from a 2022 fiscal year baseline, wherever this is compatible with local conditions and regulations.

We also introduced a new Technology and Environmental Sustainability Board committee, which is tasked with overseeing strategy related to technology and R&D, the Company’s product cybersecurity practices and Emerson’s environmental sustainability goals and programs.

Our environmental sustainability strategy is summarized by our “Greening Of, Greening By, Greening With” framework.

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business