What changed in this filing

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Item 1. Financial Statements

2024-02-07 compared with 2023-08-02 · 196 added, 516 removed, 530 unchanged (57% of the section changed)

3 unchanged sentences

& SUBSIDIARIES

Three and nine months ended June 30, 2022 and 2023

Three months ended December 31, 2022 and 2023

(Dollars in millions, except per share amounts;

Three Months Ended

June 30, Nine Months Ended

2022 2023 2022 2023

Net sales $ 3,373 4,117

1 unchanged sentence

Selling, general and administrative expenses 1,030 1,277

Gain on subordinated interest — — ( 453 ) —

Other deductions, net 120 487

Interest expense (net of interest income of $ 20 and $ 40 , respectively)

50 10 140 111

Interest income from related party — ( 31 )

2 unchanged sentences

Earnings from continuing operations 324 132

Discontinued operations, net of tax:

$ 120 , $ 2,014 , $ 260 and $ 3,019 , respectively

697 8,763 1,092 11,030

Discontinued operations, net of tax of $ 966 and $ — , respectively

Net earnings 2,326 132

20 unchanged sentences

& SUBSIDIARIES

Three and nine months ended June 30, 2022 and 2023

Three months ended December 31, 2022 and 2023

(Dollars in millions;

Three Months Ended June 30, Nine Months Ended June 30,

2022 2023 2022 2023

Three Months Ended December 31,

Net earnings $ 2,326 132

12 unchanged sentences

(Dollars and shares in millions, except per share amounts;

Sept 30, 2022 June 30, 2023

Sept 30, 2023 Dec 31, 2023

Current assets

3 unchanged sentences

Other current assets 1,244 1,399

Current assets held-for-sale 1,398 —

Total current assets 13,819 8,666

4 unchanged sentences

Other 2,566 2,640

Noncurrent assets held-for-sale 2,258 —

Total other assets 26,564 35,146

5 unchanged sentences

Accrued expenses 3,210 3,304

Current liabilities held-for-sale 1,348 —

Total current liabilities 5,032 7,765

1 unchanged sentence

Other liabilities 3,506 4,561

Noncurrent liabilities held-for-sale 167 —

Common stock, $ 0.50 par value;

15 unchanged sentences

& SUBSIDIARIES

Three and nine months ended June 30, 2022 and 2023

Three months ended December 31, 2022 and 2023

(Dollars in millions;

Three Months Ended June 30, Nine Months Ended June 30,

2022 2023 2022 2023

Three Months Ended December 31,

Common stock $ 477 477

3 unchanged sentences

AspenTech purchases of common stock — ( 41 )

AspenTech acquisition ( 550 ) — ( 550 ) —

Ending balance 112 140

24 unchanged sentences

Other comprehensive income 5 2

Dividends paid ( 2 ) ( 1 ) ( 2 ) ( 1 )

AspenTech acquisition 5,890 — 5,890 —

Climate Technologies divestiture — ( 29 ) — ( 29 )

Ending balance 5,987 5,881

4 unchanged sentences

& SUBSIDIARIES

Nine Months Ended June 30, 2022 and 2023

Three Months Ended December 31, 2022 and 2023

(Dollars in millions;

Nine Months Ended

Three Months Ended

Operating activities

4 unchanged sentences

Stock compensation 102 74

Amortization of acquisition-related inventory step-up — 231

Changes in operating working capital ( 289 ) ( 247 )

Gain on subordinated interest ( 453 ) —

Other, net ( 95 ) ( 168 )

6 unchanged sentences

Proceeds from subordinated interest 15 —

Proceeds from related party note receivable — 918

Other, net ( 23 ) ( 37 )

4 unchanged sentences

Net increase (decrease) in short-term borrowings ( 539 ) 2,647

Proceeds from short-term borrowings greater than three months 1,162 395

Payments of short-term borrowings greater than three months ( 445 ) ( 400 )

Proceeds from long-term debt 2,975 —

Payments of long-term debt ( 9 ) —

2 unchanged sentences

AspenTech purchases of common stock — ( 72 )

Payment of related party note payable — ( 918 )

Other, net ( 41 ) ( 45 )

1 unchanged sentence

Effect of exchange rate changes on cash and equivalents 58 7

Increase in cash and equivalents 175 8,153

Increase (decrease) in cash and equivalents 467 ( 5,975 )

Beginning cash and equivalents 1,804 8,051

18 unchanged sentences

For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2023.

Over the past two years, Emerson Electric Co.

("Emerson" or 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.

The Company's recent portfolio actions include the combination of its industrial software businesses with Aspen Technology, Inc., with the Company owning 55 percent of the outstanding shares of the combined entity on a fully diluted basis upon closing of the transaction on May 16, 2022, the sale of its Therm-O-Disc business, which was completed on May 31, 2022, the sale of its InSinkErator business, which was completed on October 31, 2022, the sale of a majority stake in its Climate Technologies business, which was completed on May 31, 2023, and the pending acquisition of National Instruments Corporation ("NI"), which was approved by NI shareholders on June 29, 2023 and is expected to close in the first half of Emerson’s fiscal 2024, subject to the completion of customary closing conditions and regulatory approvals.

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 (see Note 14).

(2) REVENUE RECOGNITION

Emerson is a global manufacturer that combines technology and engineering to provide innovative solutions to its customers, largely in the form of tangible products.

The majority of the Company's revenues relate to a broad offering of manufactured products which are recognized at the point in time when control transfers, while a smaller portion is recognized over time or relates to sales arrangements with multiple performance obligations.

Emerson is a global manufacturer that designs and manufactures products and delivers services that bring technology and engineering together to provide innovative solutions for its customers.

The majority of the Company's revenues relate to a broad offering of manufactured products and software which are recognized at the point in time when control transfers, while a smaller portion is recognized over time or relates to sales arrangements with multiple performance obligations.

See Note 14 for additional information about the Company's revenues.

The following table summarizes the balances of the Company's unbilled receivables (contract assets), which are reported in Other assets (current and noncurrent), and its customer advances (contract liabilities), which are reported in Accrued expenses and Other liabilities.

Sept 30, 2022 June 30, 2023

Sept 30, 2023 Dec 31, 2023

Unbilled receivables (contract assets) $ 1,453 1,502

1 unchanged sentence

Net contract assets (liabilities) $ 556 277

The majority of the Company's contract balances relate to (1) arrangements where revenue is recognized over time and payments from customers are made according to a contractual billing schedule, and (2) revenue from term software lice nse arrangements sold by AspenTech where the license revenue is recognized upfront upon delivery.

The decrease in net contract assets was due to customer billings exceeding revenue recognized for performance completed during the period.

Revenue recognized for the three and nine months ended June 30, 2023 included $ 59 and $ 500 , respectively, that was included in the beginning contract liability balance.

The majority of the Company's contract balances relate to (1) arrangements where revenue is recognized over time and payments from customers are made according to a contractual billing schedule, and (2) revenue from term software license arrangements where the license revenue is recognized upfront upon delivery.

The decrease in net contract assets was primarily due to the acquisition of National Instruments, which increased contract liabilities by approximately $ 200 , while customer billings slightly exceeded revenue recognized for performance completed during the period.

Revenue recognized for the three months ended December 31, 2023 included $ 368 that was included in the beginning contract liability balance.

Other factors that impacted the change in net contract assets were immaterial.

Revenue recognized for the three and nine months ended June 30,

2023 for performance obligations that were satisfied in previous periods, including cumulative catchup adjustments on the Company's long-term contracts, was not material.

As of June 30, 2023, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $ 8.2 billion (of which $ 1.3 billion was attributable to AspenTech) .

Revenue recognized for the three months ended December 31, 2023 for performance obligations that were satisfied in previous periods, including cumulative catchup adjustments on the Company's long- term contracts, was immaterial.

As of December 31, 2023, the Company's backlog relating to unsatisfied (or partially unsatisfied) performance obligations in contracts with its customers was approximately $ 8.8 billion (of which $ 1.2 billion was attributable to AspenTech and approximately $ 500 was attributable to the National Instruments acquisition) .

The Company expects to recognize appro ximately 75 percent of its remaining performance obligations as revenue over the next 12 months, with the remainder substantially over the following two years.

3 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2022 2023 2022 2023

Basic shares outstanding 583.6 570.8

2 unchanged sentences

(4) ACQUISITIONS AND DIVESTITURES

Aspen Technology

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) and former Heritage AspenTech stockholders owned the remaining outstanding shares of AspenTech common stock.

AspenTech and its subsidiaries now operate under Heritage AspenTech’s previous name “Aspen Technology, Inc.” and AspenTech common stock is traded on NASDAQ under AspenTech’s previous stock ticker symbol “AZPN.”

The business combination has been accounted for using the acquisition method of accounting with Emerson considered the accounting acquirer of Heritage AspenTech.

The net assets of Heritage AspenTech were recorded at their estimated fair value and for the Emerson Industrial Software Business continue at their historical basis.

The Company recorded a noncontrolling interest of $ 5.9 billion for the 45 percent ownership interest of former Heritage AspenTech stockholders in AspenTech.

The noncontrolling interest associated with the Heritage AspenTech acquired net assets was recorded at fair value determined using the closing market price per share of Heritage AspenTech as of May 16, 2022, while the portion attributable to the Emerson Industrial Software business was recorded at its historical carrying amount.

The impact of recognizing the noncontrolling interest in the Emerson Industrial Software Business resulted in a decrease to additional paid-in-capital of $ 550 .

The following table summarizes the components of the purchase consideration reflected in the acquisition accounting using Heritage AspenTech's shares outstanding and closing market price per share as of May 16, 2022 (in millions except share and per share data):

Heritage AspenTech shares outstanding 66,662,482

Heritage AspenTech share price $ 166.30

Purchase price $ 11,086

National Instruments

On October 11, 2023, the Company completed the acquisition of National Instruments Corporation (“NI”).

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 for the 12 months ended September 30, 2023.

NI is now referred to as Test & Measurement and reported as a new segment in the Software and Control business group, see Note 14.

The following table summarizes the components of the purchase consideration reflected in the acquisition accounting for NI.

Cash paid to acquire remaining NI shares not already owned by Emerson $ 7,833

Payoff of NI debt at closing 634

Total consideration paid in cash at closing 8,467

Fair value of NI shares already owned by Emerson prior to acquisition 137

Value of stock-based compensation awards attributable to pre-combination service 49

Total purchase consideration $ 8,653

The total purchase consideration for Heritage AspenTech was allocated to assets and liabilities as follows.

The total purchase consideration for NI was allocated to assets and liabilities as follows.

Valuations of acquired assets and liabilities are in-process and subject to refinement.

Cash and equivalents $ 135

Receivables 310

Inventory 524

Other current assets 140

Property, plant equipment 4

Property, plant and equipment 336

Goodwill ($ 130 expected to be tax-deductible)

2 unchanged sentences

Total assets 10,254

Short-term borrowings 27

Accounts payable 54

Accrued expenses 325

Long-term debt 255

Deferred taxes and other liabilities 1,222

Total purchase consideration $ 8,653

Emerson's cash contribution of approximately $ 6.0 billion was paid out at approximately $ 87.69 per share (on a fully diluted basis) to holders of issued and outstanding shares of Heritage AspenTech common stock as of the closing of the transactions, with $ 168 of cash remaining on AspenTech's balance sheet as of the closing which is not included in the allocation of purchase consideration above.

The estimated intangible assets attributable to the transaction are comprised of the following (in millions) :

2 unchanged sentences

Customer relationships 3,360 15

Trade names 430 Indefinite-lived

Trade names 210 9

Backlog 135 1

Total $ 5,275

Results of operations for the three and nine months ended June 30, 2023 attributable to the Heritage AspenTech acquisition include sales of $ 257 and $ 576 , respectively, compared to $ 173 for the three and nine months ended June 30, 2022, while the impact to GAAP net earnings was not material in both years.

Results of operations for the three months ended December 31, 2023 attributable to the NI acquisition include sales of $ 382 and a net loss of $ 326 .

The net loss included the impact of inventory step-up amortization, intangibles amortization, retention bonuses, stock compensation expense and restructuring.

Pro Forma Financial Information

The following unaudited proforma consolidated condensed financial results of operations are presented as if the acquisition of Heritage AspenTech occurred on Oct ober 1, 2020.

The following unaudited proforma consolidated condensed financial results of operations are presented as if the acquisition of NI occurred on October 1, 2022.

The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the acquisition occurred as of that time ($ in millions, except per share amounts).

Three Months Ended June 30, Nine Months Ended June 30,

Three Months Ended December 31,

Net Sales $ 3,821 4,136

1 unchanged sentence

Diluted earnings per share from continuing operations $ ( 0.24 ) 0.73

The pro forma results for the nine months ended June 30, 2022 include $ 159 of transaction costs which were assumed to be incurred in the first fiscal quarter of 2021.

Of these transaction costs, $ 61 and $ 91 were included in the Company's reported results for the three and nine months ended June 30, 2022, respectively, but have been excluded from the fiscal 2022 pro forma results above.

In addition, Heritage AspenTech incurred $ 68 of transaction costs prior to the completion of the acquisition that were not included in Emerson's reported results.

The pro forma results for the nine months ended June 30, 2022 include estimated interest exp ense of $ 56 related to the issuance of $ 3 billion of term debt and increased commercial paper borrowings to fund the acquisition.

The pro forma results for the three months ended December 31, 2022 include total transaction costs of $ 198 which were assumed to be incurred in the first quarter of fiscal 2023.

These transaction costs include $ 88 incurred by NI prior to the completion of the transaction and $ 110 incurred by Emerson in periods subsequent to the first quarter of fiscal 2023.

The pro forma results for the three months ended December 31, 2022 also include $ 105 of ongoing intangibles amortization, as well as backlog amortization of $ 34 , inventory step-up amortization of $ 213 , and retention bonuses of $ 43 which were all assumed to be incurred in the first quarter of fiscal 2023.

Other Transactions

On April 12, 2023, Emerson announced an agreement to acquire National Instruments Corporation ("NI") for $ 60 per share in cash at an equity value of $ 8.2 billion.

The effective price per share is $ 59.61 considering shares previously acquired by Emerson, see Note 12.

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 $ 1.66 billion in 2022.

On June 29, 2023, NI's shareholders voted to approve the proposed transaction and it is expected to close in the first half of Emerson’s fiscal 2024, subject to the completion of customary closing conditions and regulatory approvals.

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).

On August 1, 2023, AspenTech announced the termination of the agreement to purchase Micromine.

AspenTech, along with the sellers of Micromine, had been waiting to secure a final Russian regulatory approval as a condition to the closing of the transaction.

As this process continued, the timing and requirements necessary to get this approval became increasingly unclear.

This lack of clarity on the potential for, and timing of, a successful review led AspenTech and the sellers of Micromine to this mutual course of action.

AspenTech will not pay any termination fee as part of this arrangement.

In the fourth quarter of fiscal 2023, the Company acquired two businesses, Flexim, which is reported in the Measurement & Analytical segment, and Afag, which is reported in the Discrete Automation segment, for $ 712 , net of cash acquired.

The Company recognized goodwill of $ 428 ( none of which is expected to be tax deductible) and other identifiable intangible assets of $ 323 , primarily customer relationships and intellectual property with a weighted-average useful life of approximately 9 years.

On March 31, 2023, Emerson completed the divestiture of Metran, its Russia-based manufacturing subsidiary.

In the first quarter of fiscal 2023, the Company recognized a pretax loss of $ 47 in Other deductions ($ 47 after-tax, in total $ 0.08 per share) related to its exit of business operations in Russia.

In the third quarter of fiscal 2022, the Company announced its intention to exit business operations in Russia and recognized a pretax loss of $ 162 ($ 174 after-tax, in total $ 0.29 per share).

This charge included a loss of $ 32 in operations and $ 130 reported in Other deductions ($ 9 of which is reported in restructuring costs) and was primarily non-cash.

In the first quarter of fiscal 2022, the Company received a distribution of $ 438 related to its subordinated interest in Vertiv (in total, a pretax gain of $ 453 was recognized in the first quarter of fiscal 2022, $ 358 after-tax, $ 0.60 per share) and received the remaining $15 related to the pretax gain in the first quarter of fiscal 2023.

Based on the terms of the agreement and the current calculation, the Company could receive additional distributions of approximately $ 150 which are expected to be received over the next two -to- three years .

However, the distributions are contingent on the timing and price at which Vertiv shares are sold by the equity holders and therefore, there can be no assurance as to the amount or timing of the remaining distributions to the Company.

(5) DISCONTINUED OPERATIONS

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 fiscal 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 (an increase of $ 0.2 billion from when the transaction was announced due to Blackstone's decision to purchase an additional 5 percent of the common equity) 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 (down from 45 percent when the transaction was announced) 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 and pretax earnings of $ 1.0 billion.

The Company recognized a pretax gain of approximately $ 10.6 billion (approximately $ 8.4 billion after-tax including tax expense recognized in prior quarters related to subsidiary restructurings).

On May 31, 2023, the Company completed the 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 fiscal 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 accrues 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 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 and pretax earnings of $ 1.0 billion.

The Company recognized a pretax gain of approximately $ 10.6 billion in the third quarter of fiscal 2023 (approximately $ 8.4 billion after-tax including tax expense recognized prior to the completion of the transaction related to subsidiary restructurings).

The new standalone business is named Copeland.

3 unchanged sentences

The Company recognized a pretax gain of approximately $ 2.8 billion (approximately $ 2.1 billion after-tax) in the first quarter of fiscal 2023.

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.

The Company recognized a pretax gain of $ 486 ($ 429 after-tax) in the third fiscal quarter of 2022.

The financial results of Climate Technologies, InSinkErator ("ISE") and Therm-O-Disc ("TOD") (through the completion of the divestitures), are reported as discontinued operations for the three and nine months ended June 30, 2023 and 2022 and were as follows:

Climate Technologies ISE and TOD Total

Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30,

2022 2023 2022 2023 2022 2023

Net sales $ 1,325 847 215 — 1,540 847

Cost of sales 892 516 137 — 1,029 516

SG&A 129 122 29 — 158 122

Gain on sale of business — ( 10,576 ) — — — ( 10,576 )

Other deductions, net 14 8 ( 478 ) — ( 464 ) 8

Earnings before income taxes 290 10,777 527 — 817 10,777

Income taxes 63 2,014 57 — 120 2,014

Earnings, net of tax $ 227 8,763 470 — 697 8,763

Climate Technologies ISE and TOD Total

Nine Months Ended June 30, Nine Months Ended June 30, Nine Months Ended June 30,

2022 2023 2022 2023 2022 2023

The financial results of Climate Technologies and InSinkErator ("ISE") are reported as discontinued operations for the three months ended December 31, 2022 and were as follows:

Three Months Ended December 31, 2022

Climate Technologies ISE Total

Net sales $ 1,064 49 1,113

6 unchanged sentences

Earnings, net of tax $ ( 125 ) 2,127 2,002

Climate Technologies' results for the three and nine months ended June 30, 2023 include lower expense of $ 26 and $ 96 , respectively, due to ceasing depreciation and amortization upon the held-for-sale classification.

Other deductions, net for Climate Technologies included $ 57 of transaction-related costs for the nine months ended June 30, 2023.

Income taxes for the nine months ended June 30, 2023 included approximately $ 2.2 billion for the gain on the Copeland transaction and subsidiary restructurings in prior quarters, and approximately $ 660 related to the gain on the InSinkErator divestiture.

The aggregate carrying amounts of the major classes of assets and liabilities classified as held-for-sale as of June 30, 2023 and September 30, 2022 are summarized as follows:

Climate Technologies ISE Total

30, June 30, Sept.

Assets 2022 2023 2022 2023 2022 2023

Receivables $ 747 — 68 — 815 —

Inventories 449 — 81 — 530 —

Other current assets 49 — 4 — 53 —

Property, plant & equipment, net 1,122 — 141 — 1,263 —

Goodwill 716 — 2 — 718 —

Other noncurrent assets 265 — 12 — 277 —

Total assets held-for-sale $ 3,348 — 308 — 3,656 —

Accounts payable $ 752 — 60 — 812 —

Other current liabilities 475 — 61 — 536 —

Deferred taxes and other noncurrent liabilities

154 — 13 — 167 —

Total liabilities held-for-sale $ 1,381 — 134 — 1,515 —

Net cash from operating and investing activities for Climate Technologies, InSinkErator and Therm-O-Disc for the nine months ended June 30, 2023 and 2022 were as follows:

Climate Technologies' results for the three months ended December 31, 2022 included lower expense of $ 27 due to ceasing depreciation and amortization upon the held-for-sale classification.

Other deductions, net for Climate Technologies included $ 27 of transaction-related costs for the three months ended December 31, 2022.

Income taxes for the three months ended December 31, 2022 included approximately $ 275 for Climate Technologies subsidiary restructurings and approximately $ 660 related to the gain on the InSinkErator divestiture.

Net cash from operating and investing activities for Climate Technologies, InSinkErator and Therm-O-Disc for the three months ended December 31, 2023 and 2022 were as follows:

Climate Technologies ISE and TOD Total

Nine Months Ended June 30, Nine Months Ended June 30, Nine Months Ended June 30,

Three Months Ended December 31, Three Months Ended December 31, Three Months Ended December 31,

2022 2023 2022 2023 2022 2023

1 unchanged sentence

Cash from investing activities $ ( 43 ) 1 2,996 — 2,953 1

Cash from operating activities for the nine months ended June 30, 2023 reflects approximate ly $ 750 of incom e taxes paid related to the gain on the InSinkErator divestiture and the Climate Technologies subsidiary restructurings and the impact from transaction fees.

Cash from investing activities for the nine months ended June 30, 2023 reflects the proceeds of approximately $ 9.7 billion related to the Copeland transaction and approximately $ 3.0 billion related to the InSinkErator divestiture.

For the three months ended December 31, 2022, net cash from operating activities reflects the payment of ISE transaction fees and unfavorable working capital.

Cash from investing activities reflects the proceeds of approximately $ 3.0 billion related to the InSinkErator divestiture.

(6) PENSION & POSTRETIREMENT PLANS

Total periodic pension and postretirement (income) expense is summarized below:

Three Months Ended June 30, Nine Months Ended June 30,

2022 2023 2022 2023

Three Months Ended December 31,

Service cost $ 12 9

7 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2022 2023 2022 2023

Amortization of intangibles (intellectual property and

customer relationships) $ 93 120 207 357

Amortization of intangibles (intellectual property and customer relationships) $ 118 274

Restructuring costs 10 83

1 unchanged sentence

Foreign currency transaction (gains) losses ( 7 ) 34

Investment-related gains & gains from sales of capital

— ( 26 ) ( 16 ) ( 63 )

Investment-related gains & gains from sales of capital assets

Loss on Copeland equity method investment — 36

2 unchanged sentences

Total $ 120 487

Intangibles amortization for the three and nine months ended June 30, 2023 included $ 65 and $ 193 , respectively, related to the Heritage AspenTech acquisition, compared to $ 32 for the three and nine months ended June 30, 2022.

Foreign currency transaction gains/losses for the three and nine months ended June 30, 2023 included a mark-to-market gain of $ 3 and $ 24 , respectively, related to foreign currency forward contracts entered into by AspenTec h to mitigate the impact of foreign currency exchange associated with the Micromine purchase price.

On June 21, 2023, AspenTech terminated all outstanding foreign currency forward contracts.

The Company recognized a mark-to-market gain of $ 12 and $ 47 for the three and nine months ended June 30, 2023, respectively, related to its equity investment in National Instruments Corporation (see Note 12 for further information).

Intangibles amortization for the three months ended December 31, 2023 included $ 139 related to the NI acquisition.

Foreign currency transaction gains for the three months ended December 31, 2022 included a mark-to-market gain of $ 35 related to foreign currency forward contracts that were terminated in June 2023.

Other is composed of several items, including pension expense, litigation costs, provision for bad debt and other items, none of which is individually significant.

1 unchanged sentence

Restructuring expense reflects costs associated with the Company’s ongoing efforts to improve operational efficiency and deploy assets globally in order to remain competitive on a worldwide basis.

The Company expects fiscal 2023 restructuring expense and related costs to be approximately $ 110 , including costs to complete actions initiated in the first nine months of the year.

The Company expects fiscal 2024 restructuring expense and related costs to be approximately $ 250 , including costs to complete actions initiated in the first three months of the year.

Restructuring expense by business segment follows:

Three Months Ended June 30, Nine Months Ended

2022 2023 2022 2023

Three Months Ended December 31,

Final Control $ ( 1 ) 3

4 unchanged sentences

Control Systems & Software 1 1

Test & Measurement — 40

AspenTech — —

2 unchanged sentences

Total $ 10 83

Details of the change in the liability for restructuring costs during the nine months ended June 30, 2023 follow:

Sept 30, 2022 Expense Utilized/Paid June 30, 2023

Corporate restructuring of $ 26 for the three months ended December 31, 2023 is comprised entirely of integration-related stock compensation expense attributable to NI.

Details of the change in the liability for restructuring costs during the three months ended December 31, 2023 follow:

Sept 30, 2023 Expense Utilized/Paid Dec 31, 2023

Severance and benefits $ 85 79 56 108

1 unchanged sentence

Total $ 87 83 59 111

The tables above do not include $ 11 and $ 1 of costs related to restructuring actions incurred for the three months ended June 30, 2022 and 2023, respectively, that are required to be reported in cost of sales and selling, general and administrative expenses;

year-to-date amounts are $ 24 and $ 13 , respectively.

Income taxes were $ 158 in the third quarter of fiscal 2023 and $ 123 in 2022, resulting in effective tax rates of 21 percent and 33 percent, respectively.

The prior year rate reflected a 12 percentage point impact from the Russia business exit.

Income taxes were $ 390 in the first nine of months of fiscal 2023 and $ 399 in 2022, resulting in effective tax rates of 21 percent and 22 percent, respectively.

The prior year rate reflected the impact of the Russia business exit which was essentially offset by a benefit related to the completion of tax examinations.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic, and among other things, provides tax relief to businesses.

Tax provisions of the CARES Act include the deferral of certain payroll taxes, relief for retaining employees, and other provisions.

The Company deferred $ 73 of certain payroll taxes through the end of calendar year 2020, of which approximately $ 37 was paid in December 2021 and the remainder was paid in December 2022.

The tables above do not include $ 5 and $ 4 of costs related to restructuring actions incurred for the three months ended December 31, 2022 and 2023, respectively, that are required to be reported in cost of sales.

Income taxes were $ 7 in the first quarter of fiscal 2024 and $ 98 in 2023, resulting in effective tax rates of 5 percent and 23 percent, respectively.

The current year rate included a $ 57 ($ 0.10 per share) benefit related to discrete tax items and the impact of inventory step-up amortization, which in total had a 16 percentage point impact on the rate.

The prior year rate included a 2 per centage point unfavorable impact related to the Russia charge, which had no related tax benefit.

(10) EQUITY METHOD INVESTMENT AND NOTE RECEIVABLE

As discussed in Note 5, the Company completed the divestiture of a majority stake in Copeland on May 31, 2023, and received upfront, pre-tax cash proceeds of approximately $ 9.7 billion and a note receivable with a face value of $ 2.25 billion, while retaining a 40 percent non-controlling common equity interest in Copeland.

As a result of the transaction, the Company deconsolidated Copeland from its financial statements, as it no longer has a controlling interest, and initially recognized its common equity investment and note receivable at fair values of $ 1,359 and $ 2,052 , respectively.

The fair value of the common equity investment was determined using a discounted cash flow model, which included estimating financial projections for Copeland and applying an appropriate discount rate, and an option pricing model based on various assumptions.

Fair value for the note receivable was determined using a market approach primarily based on interest rates for companies with similar credit quality and the expected duration of the note.

The Company records its share of Copeland's income or loss using the equity method of accounting.

For the three and nine months ended June 30, 2023 the Company recorded a loss of $ 61 in Other deductions to reflect its share of Copeland's reported GAAP losses and a tax benefit of $ 10 in Income taxes related to Copeland's U.S.

business, which is taxed as a partnership (in total, $ 0.09 per share).

For the three months ended December 31, 2023 the Company recorded a loss of $ 36 in Other deductions to reflect its share of Copeland's losses and a tax benefit of $ 9 in Income taxes related to Copeland's U.S.

business, which is taxed as a partnership (in total, a loss of $ 0.04 per share).

The Company recognized non-cash interest income on the note receivable of $ 31 , which is reported in Interest income from related party and capitalized to the carrying value of the note.

As of June 30, 2023, the carrying values of the retained equity investment and note receivable were $ 1,296 and $ 2,063 , respectively.

During the three months ended June 30, 2023, the Company settled a note receivable and note payable with Copeland of $ 918 , which is reported in Investing and Financing cash flows, respectively.

Summarized financial information for Copeland for the three and nine months ended June 30, 2023 is as follows.

Copeland's results only reflect activity subsequent to the Company's divestiture of its majority stake.

Three and Nine Months Ended June 30,

As of December 31, 2023, the carrying values of the retained equity investment and note receivable were $ 1,129 and $ 2,124 , respectively.

Summarized financial information for Copeland for the three months ended December 31, 2023 is as follows.

Three Months Ended December 31,

Net sales $ 1,024

4 unchanged sentences

(11) OTHER FINANCIAL INFORMATION

Sept 30, 2022 June 30, 2023

Sept 30, 2023 Dec 31, 2023

Finished products $ 446 624

12 unchanged sentences

Control Systems & Software 668 672

Test & Measurement — 3,418

AspenTech 8,327 8,329

1 unchanged sentence

Total $ 14,480 17,983

Sept 30, 2023 Dec 31, 2023

Other intangible assets

2 unchanged sentences

Net carrying amount $ 6,263 11,270

Other intangible assets include customer relationships, net, of $ 3,436 and $ 3,261 and intellectual property, net, of $ 2,934 and $ 2,685 as of September 30, 2022 and June 30, 2023, respectively.

Three Months Ended June 30, Nine Months Ended June 30,

2022 2023 2022 2023

Other intangible assets include customer relationships, net, of $ 3,353 and $ 6,612 and intellectual property, net, of $ 2,707 and $ 4,445 as of September 30, 2023 and December 31, 2023, respectively.

The increase in goodwill and intangibles was primarily due to the NI acquisition.

Three Months Ended December 31,

Depreciation and amortization expense include the following:

1 unchanged sentence

Amortization of intangibles (includes $ 49 and $ 49 reported in Cost of Sales, respectively)

124 169 266 504

Amortization of capitalized software 19 20

Total $ 260 422

Amortization of intangibles included $ 99 and $ 297 , related to the Heritage AspenTech acquisition for the three and nine months ended June 30, 2023, respectively, compared to $ 49 for the three and nine months ended June 30, 2022.

For the three and nine months ended June 30, 2022, $5 of amortization of intangibles included in the table above is reported as a restructuring related cost.

Sept 30, 2022 June 30, 2023

Amortization of intangibles included $ 139 related to the NI acquisition for the three months ended December 31, 2023.

Sept 30, 2023 Dec 31, 2023

Other assets include the following:

Pension assets $ 995 1,024

Unbilled receivables (contract assets) 428 536

Operating lease right-of-use assets 550 635

Unbilled receivables (contract assets) 559 606

Deferred income taxes 100 98

Asbestos-related insurance receivables 53 50

As of December 31, 2023, the Company had one operating lease that had not yet commenced with a lease term of approximately 15 years and total undiscounted future minimum payments of approximately $ 80 .

This lease is expected to commence in the second quarter of fiscal 2024 and will be recorded as a right-of-use asset and lease liability.

Accrued expenses include the following:

4 unchanged sentences

Product warranty 84 73

The increase in Income taxes was due to remaining income taxes payable of approximately $ 1.5 billion related to the Copeland transaction and the gain on the InSinkErator divestiture, which are largely expected to be paid by the end of fiscal 2023.

Other liabilities include the following:

Deferred income taxes $ 1,959 2,827

Pension and postretirement liabilities 427 452

Operating lease liabilities (noncurrent) 404 465

Pension and postretirement liabilities 435 449

Asbestos litigation 173 169

Deferred income taxes included approximately $ 540 related to the Copeland transaction as of June 30, 2023.

The increase in deferred income tax liabilities reflects the impact of the NI acquisition.

(12) FINANCIAL INSTRUMENTS

Hedging Activities – As of June 30, 2023, the notional amount of foreign currency hedge positions was approximately $ 2.3 billion.

Hedging Activities – As of December 31, 2023, the notional amount of foreign currency hedge positions was approximately $ 2.8 billion.

All derivatives receiving hedge accounting are cash flow hedges.

The majority of hedging gains and losses deferred as of June 30, 2023 are expected to be recognized over the next 12 months as the underlying forecasted transactions occur.

The majority of hedging gains and losses deferred as of December 31, 2023 are expected to be recognized over the next 12 months as the underlying forecasted transactions occur.

Gains and losses on foreign currency derivatives reported in Other deductions, net reflect hedges of balance sheet exposures that do not receive hedge accounting.

2 unchanged sentences

Foreign currency gains or losses associated with the euro-denominated debt are deferred in accumulated other comprehensive income (loss) and will remain until the hedged investment is sold or substantially liquidated.

The following gains and losses are included in earnings and other comprehensive income (OCI) for the three and nine months ended June 30, 2022 and 2023:

The following gains and losses are included in earnings and other comprehensive income (OCI) for the three months ended December 31, 2022 and 2023:

Into Earnings Into OCI

3rd Quarter Nine Months 3rd Quarter Nine Months

1st Quarter 1st Quarter

Gains (Losses) Location 2022 2023 2022 2023

1 unchanged sentence

Foreign currency

( 1 ) — — ( 2 ) ( 3 ) ( 2 ) ( 5 ) 1

Foreign currency

Cost of sales

10 42 21 60 15 24 32 38

Foreign currency

Other deductions, net

56 ( 91 ) 108 ( 108 )

Net Investment Hedges

4 unchanged sentences

Derivatives receiving hedge accounting are highly effective and no amounts were excluded from the as sessment of hedge effectiveness.

Equity Investment – The Company has an equity investment in National Instruments Corporation ("NI"), valued at $ 128 as of June 30, 2023 (reported in Other current assets), and recognized a mark-to-market gain of $ 12 and $ 47 for the three and nine months ended June 30, 2023, respectively.

On April 12, 2023, Emerson announced an agreement to acquire NI for $ 60 per share in cash for the remaining shares not already owned by Emerson.

Fair Value Measurement – Valuations for all derivatives and the Company's long-term debt fall within Level 2 of the GAAP valuation hierarchy.

As of June 30, 2023, the fair value of long-term debt was approximately $ 7.2 billion, which was lower than the carrying value by $ 1,055 .

Fair Value Measurement – Valuations for all derivatives, the Company's note receivable from Copeland, and the Company's long-term debt fall within Level 2 of the GAAP valuation hierarchy.

The fair value of the note receivable as of December 31, 2023 was approximately $ 2.0 billion, which was lower than the carrying value by approximately $ 100 .

See Note 10 for further details.

As of December 31, 2023, the fair value of long-term debt was approximately $ 7.4 billion, which was lower than the carrying value by $ 847 .

The fair value of foreign currency contracts, which are reported in Other current assets and Accrued expenses, did not materially change since September 30, 2023.

Commodity contracts, which related to discontinued operations, were novated to Copeland upon the completion of the transaction and therefore no amounts are reported in the Company's balance sheet as of June 30, 2023.

The fair value of the Company's equity investment in National Instruments falls within Level 1 and was based on the most recent quoted closing market price from its principal exchange for the period ended June 30, 2023.

Commodity contracts related to discontinued operations and were novated to Copeland upon the completion of the transaction.

Counterparties to derivatives arran gements are companies with investment-grade credit ratings.

3 unchanged sentences

The Company also can demand full collateralization of derivatives in net asset positions should any counterparty credit ratings fall below certain thresholds.

No collateral was posted with counterparties and none was held by the Company as of June 30, 2023.

No collateral was posted with counterparties and none was held by the Company as of December 31, 2023.

(13) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Activity in Accumulated other comprehensive income (loss) for the three and nine months ended June 30, 2022 and 2023 is shown below, net of income taxes:

Three Months Ended June 30, Nine Months Ended June 30,

2022 2023 2022 2023

Activity in Accumulated other comprehensive income (loss) for the three months ended December 31, 2022 and 2023 is shown below, net of income taxes:

Three Months Ended December 31,

Foreign currency translation

1 unchanged sentence

Other comprehensive income (loss), net of tax of $ 28 and $ 13 , respectively

( 186 ) ( 10 ) ( 317 ) 337

Reclassified to gain on sale of business — 95 — 95

Ending balance ( 1,029 ) ( 840 )

3 unchanged sentences

( 16 ) ( 12 )

Reclassified to gain on sale of business — 22 — 22

Ending balance ( 238 ) ( 259 )

2 unchanged sentences

Gains deferred during the period, net of taxes of $( 3 ) and $( 2 ), respectively

( 15 ) 7 14 34

Reclassification of realized (gains) losses to sales and cost of sales, net of tax of $ — and $ — , respectively

( 12 ) ( 7 ) ( 31 ) ( 11 )

Reclassified to gain on sale of business — ( 19 ) — ( 19 )

Ending balance 12 9

1 unchanged sentence

(14) BUSINESS SEGMENTS

As disclosed in Note 5, the financial results of Climate Technologies, InSinkErator and Therm-O-Disc are reported as discontinued operations for all periods presented.

As a result of these portfolio actions, the Company has realigned its business segments and now reports six segments and two business groups, which are highlighted in the table below.

The Company also reclassified certain product sales that were previously reported in Control Systems & Software to Discrete Automation.

INTELLIGENT DEVICES SOFTWARE AND CONTROL

• Final Control

• Control Systems & Software

• Measurement & Analytical

• Discrete Automation

• Safety & Productivity

The new segments were previously described as follows:

Final Control was the Valves, Actuators & Regulators product offering;

Measurement & Analytical was the Measurement & Analytical instrumentation product offering;

Discrete Automation was the Industrial Solutions product offering;

Safety & Productivity was the Tools & Home Products segment, excluding the divested InSinkErator business;

Control Systems & Software was the Systems & Software product offering;

and, AspenTech remains unchanged.

The AspenTech segment was identified in the third quarter of fiscal 2022 as a result of the Heritage AspenTech acquisition and reflects the combined results of Heritage AspenTech and the Emerson Industrial Software Business (see Note 4 for further details).

The results for this new segment include the historical results of the Emerson Industrial Software Business (which were previously reported in

the Control Systems & Software segment), while results related to the Heritage AspenTech business only include periods subsequent to the close of the transaction.

Prior year amounts have been reclassified to conform to the current year presentation.

Three Months Ended June 30, Nine Months Ended June 30,

Sales Earnings Sales Earnings

As disclosed in Note 4, the Company completed the acquisition of NI on October 11, 2023.

NI is now referred to as Test & Measurement and reported as a new segment in the Software and Control business group.

Summarized information about the Company's results of operations by business segment follows:

Three Months Ended December 31,

Sales Earnings (Loss)

2022 2023 2022 2023

5 unchanged sentences

Control Systems & Software 606 675 107 149

Test & Measurement — 382 — ( 78 )

AspenTech 243 257 ( 33 ) ( 35 )

4 unchanged sentences

Corporate and other ( 64 ) ( 399 )

Gain on subordinated interest — — 453 —

Loss on Copeland equity method investment — ( 36 )

2 unchanged sentences

Total $ 3,373 4,117 422 139

Corporate and other for the three and nine months ended June 30, 2022 included a loss of $ 162 related to the Company's exit of business operations in Russia and a loss of $ 47 for the nine months ended June 30, 2023.

Stock compensation for the three months ended December 31, 2023 included $ 30 of integration-related stock compensation expense attributable to NI ($ 26 of which was reported as restructuring costs).

Corporate and other for the three months ended December 31, 2023 included acquisition-related inventory step-up amortization of $ 231 and acquisition/divestiture fees and related costs of $ 130 , while 2022 included a loss of $ 47 related to the Company's exit of business operations in Russia and a mark-to-market gain of $ 35 related to foreign currency forward contracts that were terminated in June 2023.

Depreciation and amortization (includes intellectual property, customer relationships and capitalized software) by business segment are summarized below:

Three Months Ended June 30, Nine Months Ended June 30,

2022 2023 2022 2023

Three Months Ended December 31,

Final Control $ 45 40

4 unchanged sentences

Control Systems & Software 21 21

Test & Measurement — 151

AspenTech 123 123

2 unchanged sentences

Total $ 260 422

Test & Measurement depreciation and amortization for the three months ended December 31, 2023 included intangibles amortization of $ 139 due to the acquisition.

Sales by geographic destination, Americas, Asia, Middle East & Africa ("AMEA") and Europe, are summarized below:

Three Months Ended June 30, Three Months Ended June 30,

Americas AMEA Europe Total Americas AMEA Europe Total

Final Control $ 434 338 133 905 498 399 138 1,035

Measurement & Analytical 397 274 117 788 482 303 128 913

Discrete Automation 320 150 163 633 312 180 176 668

Safety & Productivity 270 20 70 360 269 18 76 363

Intelligent Devices 1,421 782 483 2,686 1,561 900 518 2,979

Control Systems & Software 289 166 113 568 322 207 134 663

AspenTech 131 50 58 239 111 104 105 320

Software and Control 420 216 171 807 433 311 239 983

Total $ 1,841 998 654 3,493 1,994 1,211 757 3,962

Nine Months Ended June 30, Nine Months Ended June 30,

Three Months Ended December 31, Three Months Ended December 31,

Americas AMEA Europe Total Americas AMEA Europe Total

5 unchanged sentences

Control Systems & Software 294 185 127 606 325 209 141 675

Test & Measurement — — — — 164 99 119 382

AspenTech 112 63 68 243 140 60 57 257

4 unchanged sentences

(Dollars are in millions, except per share amounts or where noted)

On April 12, 2023, Emerson announced an agreement to acquire National Instruments Corporation ("NI") for $60 per share in cash at an equity value of $8.2 billion.

The effective price per share is $59.61 considering shares previously acquired by Emerson, see Note 12.

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 $1.66 billion in 2022.

O n June 29, 2023, NI's shareholders voted to approve the proposed transaction and it is expected to close in the first half of Emerson’s fiscal 2024, subject to the completion of customary closing conditions and regulatory approvals.

The Company recognized a pretax gain of approximately $10.6 billion (approximately $8.4 billion after-tax including tax expense recognized in prior quarters related to subsidiary restructurings).

The new standalone business is named Copeland.

See Notes 5 and 10 for further details.

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 , and the Company recognized a pretax gain of approximately $2.8 billion (approximately $2.1 billion after-tax) in the first quarter of fiscal 2023.

Climate Technologies, Therm-O-Disc and InSinkErator are reported within discontinued operations for all periods presented.

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, along with approximately $6.0 billion in cash to Heritage AspenTech stockholders, to create "New AspenTech" (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).

Due to the timing of the acquisition in the prior year, the results for the first half of fiscal 2022 do not include the results of Heritage AspenTech.

For the third quarter of fiscal 2023, net sales from continuing operations were $3.9 billion, up 14 percent compared with the prior year.

On October 11, 2023, the Company completed the acquisition of National Instruments Corporation (“NI”), which is now referred to as Test & Measurement and reported as a new segment in the Software and Control business group.

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

For the first quarter of fiscal 2024, net sales were $4.1 billion, up 22 percent compared with the prior year.

Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, were up 10 percent.

Foreign currency translation had a 1 percent unfavorable impact, the AspenTech acquisition added 2 percent and the divestiture of Metran, Emerson's Russia-based manufacturing subsidiary, deducted 1 percent .

Sales growth was strong across the majority of the Company's business segments and all geographies were up double digits.

Earnings from continuing operations attributable to common stockholders were $592, up 162 percent, and diluted earnings per share from continuing operations were $1.03, up 171 percent compared with $0.38 in the prior year.

Adjusted diluted earnings per share from continuing operations were $1.29 compared with $0.92 in the prior year, reflecting the strong sales growth and operating performance.

Foreign currency translation had a 1 percent favorable impact, the Test & Measurement acquisition added 12 percent and the divestiture of Metran, Emerson's Russia-based manufacturing subsidiary, deducted 1 percent.

Earnings from continuing operations attributable to common stockholders were $142, down 57 percent, and diluted earnings per share from continuing operations were $0.25, down 55 percent compared with $0.56 in the prior year.

Adjusted diluted earnings per share from continuing operations were $1.22, up 56 percent compared with $0.78 in the prior year, reflecting the strong sales growth and operating performance, as well as a $0.13 contribution from Test & Measurement.

The table below presents the Company's diluted earnings per share from continuing operations on an adjusted basis to facilitate period-to-period comparisons and provide additional insight into the underlying, ongoing operating performance of the Company.

Adjusted diluted earnings per share from continuing operations excludes intangibles amortization expense, restructuring expense, first year purchase accounting related items and transaction-related costs, interest income on undeployed proceeds related to the Copeland transaction, gains or losses on the Copeland equity method investment, and certain gains, losses or impairments.

Three Months Ended June 30 2022 2023

Three Months Ended Dec 31 2022 2023

Diluted earnings from continuing operations per share $ 0.56 0.25

1 unchanged sentence

Restructuring and related costs 0.02 0.12

Acquisition/divestiture costs and pre-acquisition interest on AspenTech debt 0.09 0.07

National Instruments investment gain — (0.02)

Interest income on undeployed proceeds from Copeland transaction — (0.05)

Acquisition/divestiture fees and related costs — 0.17

Amortization of acquisition-related inventory step-up — 0.38

Loss on Copeland equity method investment — 0.04

Discrete tax benefits — (0.10)

Russia business exit 0.08 —

AspenTech Micromine purchase price hedge (0.03) —

Adjusted diluted earnings from continuing operations per share $ 0.78 1.22

2 unchanged sentences

Three Months Ended

Adjusted diluted earnings from continuing operations per share - June 30, 2022

Adjusted diluted earnings from continuing operations per share - Dec 31, 2022

Operations 0.33

Corporate & other 0.03

Stock compensation 0.08

Pensions 0.02

Effective tax rate 0.03

Interest income from related party 0.04

Share count 0.02

Interest income on Copeland note receivable 0.02

Adjusted diluted earnings from continuing operations per share - June 30, 2023

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30

Following is an analysis of the Company’s operating results for the third quarter ended June 30, 2022, compared with the third quarter ended June 30, 2023.

Effective tax rate (0.03)

Adjusted diluted earnings from continuing operations per share - Dec 31, 2023

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31

Following is an analysis of the Company’s operating results for the first quarter ended December 31, 2022, compared with the first quarter ended December 31, 2023.

2022 2023 Change

17 unchanged sentences

Diluted EPS - Net earnings $ 3.97 0.25 (94) %

Net sales for the third quarter of fiscal 2023 were $3.9 billion, up 14 percent compared with 2022.

Intelligent Devices sales were up 11 percent, while Software and Control sales were up 22 percent, which included the impact of the Heritage AspenTech acquisition.

Adjusted Diluted EPS - Earnings from continuing operations $ 0.78 1.22 56 %

Net sales for the first quarter of fiscal 2024 were $4.1 billion, up 22 percent compared with 2023.

Intelligent Devices sales were up 11 percent, while Software and Control sales were up 55 percent , which included the impact of the Test & Measurement acquisition.

Underlying sales were up 10 percent on 8 percent higher volume and 2 percent higher price.

For eign currency translation had a 1 percent negative impact, the Heritage AspenTech acquisition added 2 percent and the divestiture of Metran, Emerson's Russia-based manufacturing subsidiary, deducted 1 percent.

For eign currency translation had a 1 percent favorable impact, t he Test & Measurement acquisition added 12 percent and the divestiture of Metran, Emerson's Russia-based manufacturing subsidiary, deducted 1 percent.

Underlying sales were up 9 percent in the U.S.

1 unchanged sentence

The Americas was up 8 percent, Europe was up 10 percent, and Asia, Middle East & Africa was up 15 percent (China up 9 percent).

Cost of sales for the third quarter of fiscal 2023 were $1,952, an increase of $73 compared with 2022.

Gross margin of 50.5 percent increased 4.7 percentage points due to favorable price less net material inflation, the impact of the Heritage AspenTech acquisition which benefited margins by 0.6 percentage points, and favorable mix.

Selling, general and administrative (SG&A) expens es of $1,042 increased $148 and SG&A as a percent of sales increased 0.6 percentage points to 26.4 percent compared with the prior year, reflecting higher stock compensation expense due to a higher share price and the impact of the Heritage AspenTech acquisition, partially offset by strong operating leverage on higher sales.

Other deductions, net were $191 in 2023, a decrease of $73 compared with the prior year.

The prior year included a charge of $130 related to the Company exiting its business in Russia ($9 of which is reported in restructuring costs) while the current year included a loss of $61 on the Company's equity method investment in Copeland.

Cost of sales for the first quarter of fiscal 2024 were $2,201, an increase of $448 compared with 2023, reflecting the impact of higher volume and the Test & Measurement acquisition.

Gross margin of 46.5% decreased 1.5 percentage po ints, reflecting the impact from acquisition-related inventory step-up amortization of $231, which negatively impacted margins by 5.6 percentage points.

Excluding this impact, gross margin improved due to the Test & Measurement acquisition and higher price.

Selling, general and administrative (SG&A) expens es of $1,277 increased $247 and SG&A as a percent of sales increased 0.5 percentage points to 31.0 percent compared with the prior year, reflecting the impact of the Test & Measurement acquisition, partially offset by lower stock compensation expense and strong operating leverage on higher sales.

Other deductions, net were $487 for the first quarter of fiscal 2024, an increase of $367 compared with the prior year.

The current year included intangibles amortization r elated to the Test & Measurement acquisition of $139, restructuring costs of $83, acquisition/divestiture costs of $80 and a loss of $36 on the Company's equity method investment in Copeland.

The prior year included a charge of $47 related to the Company exiting its business in Russia and a mark-to-market gain of $35 related to foreign currency forward contracts that were terminated in June 2023.

See Note 7 and Note 10.

Pretax earnings from continuing operations of $761 increased $383, up 101 percent compared with the prior year, reflecting strong operating leverage on higher sales.

Earnings increased $185 in Intelligent Devices and increased $37 in Software and Control, see the Business Segments discussion that follows and Note 14.

Income taxes were $158 in the third quarter of fiscal 2023 and $123 in 2022, resulting in effective tax rates of 21 percent and 33 percent, respectively.

The prior year rate reflected a 12 percentage point impact from the Russia business exit.

Pretax earnings from continuing operations of $139 decreased $283, down 67 percent compared with the prior year.

Earnings increased $77 in Intelligent Devices and decreased $38 in Software and Control, see the Business Segments discussion that follows and Note 14.

Income taxes were $7 in the first quarter of fiscal 2024 and $98 in 2023, resulting in effective tax rates of 5 percent and 23 percent, respectively.

The current year rate included a $57 ($0.10 per share) benefit related to discrete tax items and the impact of inventory step-up amortization, which in total had a 16 percentage point impact on the rate.

The prior year rate included a 2 per centage point unfavorable impact related to the Russia charge, which had no related tax benefit.

Adjusted diluted earnings per share from continuing operations were $1.22 compared with $0.78 in the prior year, reflecting strong operating results.

See the analysis above of adjusted earnings per share for further details.

Earnings from discontinued operations were $8,760 ($15.25 per share) compared to $695 ($1.16 per share) in the prior year, reflecting the gain on the Copeland transaction.

Net earnings common stockholders in the third quarter of fiscal 2023 were $9,352 compared with $921 in the prior year, and earnings per share were $16.28 compared with $1.54 in the prior year.

Earnings from discontinued operations were $2,002 ($3.41 per share) in the prior year, reflecting the $2.1 billion after-tax gain on the InSinkErator divestiture.

Net earnings common stockholders in the first quarter of fiscal 2024 were $142 compared with $2,331 in the prior year, and earnings per share were $0.25 compared with $3.97 in the prior year.

The table below, which shows results from continuing operations on an adjusted EBITA basis, is intended to supplement the Company's discussion of its results of operations herein.

1 unchanged sentence

Adjusted EBITA and adjusted EBITA margin are measures used by management and may be useful for investors to evaluate the Company's operational performance.

Three Months Ended June 30 2022 2023 Change

Three Months Ended Dec 31 2022 2023 Change

Earnings from continuing operations before income taxes $ 422 139 (67) %

4 unchanged sentences

Restructuring and related costs 15 87

Acquisition/divestiture costs 61 38

National Instruments investment gain — (12)

Acquisition/divestiture fees and related costs — 134

Amortization of acquisition-related inventory step-up — 231

Loss on Copeland equity method investment — 36

4 unchanged sentences

Business Segments

Following is an analysis of operating results for the Company’s business segments for the third quarter ended June 30, 2022, compared with the third quarter ended June 30, 2023.

Following is an analysis of operating results for the Company’s business segments for the first quarter ended December 31, 2022, compared with the first quarter ended December 31, 2023.

The Company defines segment earnings as earnings before interest and taxes.

24 unchanged sentences

Safety & Productivity — —

Total $ 22 11

Adjusted EBITA $ 563 671 19 %

Adjusted EBITA Margin 22.2 % 23.8 % 1.6 pts

Intelligent Devices sales were $3.0 billion in the third quarter of 2023, an increase of $293, or 11 percent.

Underlying sales increased 13 percent on 8 percent higher volume and 5 percent higher price.

Unde rlying sales increased 10 percent in the Americas, Europe increased 11 percent and Asia, Middle East & Africa was up 19 percent (China up 20 percent ).

F inal Control sales increased $130 , or 14 percent, while u nderlying sales were up 16 percent, reflecting strength in energy and chemical end markets, with broad-based strength across geographies.

Sales for Measurement & Analytical increased $125 , or 16 percent, and u nderlying sales were up 20 percent , reflecting robust growth in all geographies due to strong demand across industries and backlog conversion.

Discrete Automation sales increased $35, or 6 percent due to higher price and slightly higher volume, reflecting moderating demand, particularly in the Americas and Europe.

Safety & Productivity sales increased $3 , or 1 percent , and underlying sales were flat, reflecting softening global demand offset by higher price.

Earnings for Intelligent Devices were $708 , an increase of $185 , or 35 percent , and margin increased 4.2 percentage points to 23.7 percent, reflecting favorable price less net material inflation and leverage on higher sales, partially offset by wage and other inflation.

Adjusted EBITA margin was 25.5 percent, an increase of 3.6 percentage points.

SOFTWARE AND CONTROL

2022 2023 Change FX Acq/Div U/L

Control Systems & Software $ 568 663 17 % 1 % 1 % 19 %

AspenTech 239 320 34 % — % 34 % — %

Total $ 807 983 22 % — % (3) % 19 %

Control Systems & Software $ 77 144 89 %

AspenTech 57 27 (54) %

Total $ 134 171 28 %

Margin 16.5 % 17.4 % 0.9 pts

Amortization of intangibles:

Control Systems & Software $ 6 6

AspenTech 71 121

Total $ 77 127

Restructuring and related costs:

Control Systems & Software $ 7 1

AspenTech 1 —

Adjusted EBITA $ 219 299 38 %

Adjusted EBITA Margin 27.0 % 30.4 % 3.4 pts

Software and Control sales were $983 in t he third quarter of 2023, an increase of $176, or 22 percent compared to the prior year, reflecting the impact of the Heritage AspenTech acquisition and strong growth in Control Systems & Software.

Underlying sales were up 19 percent on 16 percent higher volume and 3 percent higher price.

U nderlying sales increased 12 percent in the Americas, 23 percent in Europe and 28 percent in Asia, Middle East & Africa ( China up 48 percent).

Control Systems & Software sales increased $95, or 17 percent, while underlying sales increased 19 percent, reflecting robust global demand in process end markets.

AspenTech sales increased $81, or 34 percent, due to the acquisition of Heritage AspenTech.

Earnings for Software and Control increased $37, up 28 percent, and margin increased 0.9 percentage points, which included the impact from $50 of incremental intangibles amortization related to the Heritage AspenTech acquisition.

Adjusted EBITA margin increased 3.4 percentage points, reflecting leverage on higher sales and favorable mix, partially offset by inflation and unfavorable foreign currency transactions.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30

Following is an analysis of the Company’s operating results for the nine months ended June 30, 2022, compared with the nine months ended June 30, 2023.

2022 2023 Change

(dollars in millions, except per share amounts)

Net sales $ 9,912 11,075 12 %

Gross profit $ 4,477 5,415 21 %

Percent of sales 45.2 % 48.9 % 3.7 pts

SG&A $ 2,631 3,072 17 %

Percent of sales 26.6 % 27.7 % 1.1 pts

Gain on subordinated interest $ (453) —

Other deductions, net $ 330 420

Amortization of intangibles $ 207 357

Restructuring costs $ 44 41

Interest expense, net $ 140 111

Interest income from related party $ — (10)

Earnings from continuing operations before income taxes $ 1,829 1,822 — %

Percent of sales 18.5 % 16.5 % (2.0) pts

Earnings from continuing operations common stockholders $ 1,400 1,451 4 %

Percent of sales 14.1 % 13.1 % (1.0) pts

Net earnings common stockholders $ 2,491 12,475 401 %

Diluted EPS - Earnings from continuing operations $ 2.34 2.51 7 %

Diluted EPS - Net earnings $ 4.17 21.56 417 %

Net sales for the first nine months of 2023 were $11.1 billion, up 12 percent compared with 2022.

Intelligent Devices sales were up 7 percent, while Software and Control sales were up 27 percent, which included the impact of the Heritage AspenTech acquisition.

Underlying sales were up 12 percent on 7 percent higher volume and 5 percent higher price.

Foreign currency translation subtracted 3 percent, the Heritage AspenTech acquisition added 4 percent and the divestiture of Metran deducted 1 percent.

Underlying sales increased 13 percent in the U.S.

and increased 11 percent internationally.

The Americas was up 13 percent, Europe was up 10 percent and Asia, Middle East & Africa was up 11 percent (China was up 7 percent).

Cost of sales for 2023 were $5,660, an increase of $225 versus $5,435 in 2022.

Gross margin of 48.9 percent increased 3.7 percentage points due to favorable price less net material inflation, the impact of the Heritage AspenTech acquisition which benefited margins by 0.9 percentage points, and favorable mix.

SG&A expenses of $3,072 increased $441 and SG&A as a percent of sales increased 1.1 percentage points to 27.7 percent, reflecting the Heritage AspenTech acquisition and higher stock compensation expense of $106, of which $55 related to Emerson stock plans due to a decreasing stock price in the prior year compared to an increasing stock price in the current year, and $51 was attributable to AspenTech stock plans.

These items were partially offset by strong operating leverage on higher sales.

In the first quarter of fiscal 2022, the Company received a distribution of $438 related to its subordinated interest in Vertiv (in total, a pretax gain of $453 was recognized in the first quarter of fiscal 2022, $358 after-tax, $0.60 per share) and received the remaining $15 related to the pretax gain in the first quarter of fiscal 2023.

Based on the terms of the agreement and the current calculation, the Company could receive additional distributions of approximately $150 which are expected to be received over the next two-to-three years.

Other deductions, net were $420 in 2023, an increase of $90 compared with the prior year, reflecting higher intangibles amortization of $150 primarily related to the Heritage AspenTech acquisition, a loss of $61 on the Company's equity method investment in Copeland, and an unfavorable impact from foreign currency transactions of $103 reflecting losses in the current year compared to gains in the prior year.

The prior year included a charge of $130 related to the Company exiting its business in Russia ($9 of which is reported in restructuring costs) compared to a charge of $47 in the current year.

The current year also included a mark-to-market gain of $47 on the Company's equity investment in NI and a mark-to-market gain of $24 related to foreign currency forward contracts entered into by AspenTech to mitigate the impact of foreign currency exchange associated with the Micromine purchase price.

On June 21, 2023, AspenTech terminated all outstanding foreign currency forward contracts.

Pretax earnings from continuing operations of $1,822 decreased $7 largely due to the Vertiv gain discussed above offset by strong operating results in the current year.

Earnings increased $362 in Intelligent Devices and decreased $27 in Software and Control (reflecting the impact of higher intangibles amortization due to the Heritage AspenTech acquisition), see the Business Segments discussion that follows and Note 14.

Income taxes were $390 for the first nine months of 2023 and $399 for 2022, resulting in effective tax rates of 21 percent and 22 percent, respecti vely.

The prior year rate reflected the impact of the Russia business exit which was essentially offset by a benefit related to the completion of tax examinations.

Earnings from continuing operations attributable to common stockholders were $1,451, up 4 percent compared with the prior year, and diluted earnings per share from continuing operations were $2.51, up 7 percent compared with $2.34 in 2022.

The prior year included a $0.60 gain related to the Company's subordinated interest in Vertiv.

Adjusted diluted earnings per share from continuing operations were $3.15 compared with $2.57 in the prior year, reflecting strong operating results.

See the analysis below of adjusted earnings per share for further details.

Earnings from discontinued operations were $11,024 ($19.05 per share) which included the $8.4 billion after-tax gain on the Copeland transaction and the $2.1 billion after-tax gain on the divestiture of InSinkErator, compared to $1,091 ($1.83 per share) in the prior year.

Net earnings common stockholders were $12,475 ( $21.56 per share) compared with $2,491 ( $4.17 per share) in the prior year.

The table below presents the Company's diluted earnings per share on an adjusted basis to facilitate period-to-period comparisons and provide additional insight into the underlying, ongoing operating performance of the Company.

Nine Months Ended June 30 2022 2023

Diluted earnings from continuing operations per share $ 2.34 2.51

Amortization of intangibles 0.30 0.46

Restructuring and related costs 0.08 0.07

Acquisition/divestiture costs and pre-acquisition interest on AspenTech debt 0.16 0.07

Gain on subordinated interest (0.60) —

National Instruments investment gain — (0.06)

AspenTech Micromine purchase price hedge gain — (0.02)

Interest income on undeployed proceeds from Copeland transaction — (0.05)

Loss on Copeland equity method investment — 0.09

Russia business exit charge 0.29 0.08

Adjusted diluted earnings from continuing operations per share $ 2.57 3.15

The table below summarizes the changes in adjusted diluted earnings per share.

The items identified below are discussed throughout MD&A, see further discussion above and in the Business Segments and Financial Position sections below.

Nine Months Ended

Adjusted diluted earnings from continuing operations per share - June 30, 2022

Operations 0.68

Corporate and other 0.03

Stock compensation (0.13)

Foreign currency (0.10)

Pensions 0.06

Effective tax rate (0.03)

Interest expense, net (0.03)

Share count 0.08

Interest income on Copeland note receivable 0.02

Adjusted diluted earnings from continuing operations per share - June 30, 2023

The table below, which shows results on an adjusted EBITA basis, is intended to supplement the Company's discussion of its results of operations herein.

Nine Months Ended June 30 2022 2023 Change

Earnings from continuing operations before income taxes $ 1,829 1,822 — %

Percent of sales 18.5 % 16.5 % (2.0) pts

Interest expense, net 140 111

Interest income from related party — (10)

Amortization of intangibles 261 504

Restructuring and related costs 59 54

Acquisition/divestiture costs 91 48

Gain on subordinated interest (453) —

National Instruments investment gain — (47)

AspenTech Micromine purchase price hedge gain — (24)

Loss on Copeland equity method investment — 61

Russia business exit charge 162 47

Adjusted EBITA from continuing operations $ 2,089 2,566 23 %

Percent of sales 21.1 % 23.2 % 2.1 pts

Business Segments

Following is an analysis of operating results for the Company’s business segments for the nine months ended June 30, 2022, compared with the nine months ended June 30, 2023.

The Company defines segment earnings as earnings before interest and taxes.

As a result of the Company's portfolio transformation, the Company has realigned its business segments and now reports six segments and two business groups.

INTELLIGENT DEVICES

2022 2023 Change FX Acq/Div U/L

Final Control $ 2,606 2,889 11 % 3 % 1 % 15 %

Measurement & Analytical 2,294 2,550 11 % 3 % 2 % 16 %

Discrete Automation 1,894 1,969 4 % 3 % — % 7 %

Safety & Productivity 1,066 1,034 (3) % 1 % — % (2) %

Total $ 7,860 8,442 7 % 3 % 1 % 11 %

Final Control $ 424 618 46 %

Measurement & Analytical 535 661 24 %

Discrete Automation 365 378 4 %

Safety & Productivity 199 228 15 %

Total $ 1,523 1,885 24 %

Margin 19.4 % 22.3 % 2.9 pts

Amortization of intangibles:

Final Control $ 71 66

Measurement & Analytical 15 15

Discrete Automation 23 22

Safety & Productivity 20 20

Total $ 129 123

Restructuring and related costs:

Final Control $ 33 12

Measurement & Analytical 9 2

Discrete Automation 4 20

Safety & Productivity — 1

Total $ 46 35

Adjusted EBITA $ 1,698 2,043 20 %

Adjusted EBITA Margin 21.6 % 24.2 % 2.6 pts

Intelligent Devices sales were $8.4 billion in the first nine months of 2023, an increase of $582, or 7 percent.

Intelligent Devices sales were $2.8 billion in the first quarter of 2024, an increase of $283, or 11 percent.

Underlying sales increased 11 percent on 9 percent higher volume and 2 percent higher price.

Unde rlying sales increased 6 percent in the Americas, Europe increased 14 percent and Asia, Middle East & Africa was up 18 percent (China up 10 percent ).

F inal Control sales increased $283, or 11 percent.

Underlying sales were up 15 percent, reflecting strength in energy and chemical end markets, particularly in the Americas and Asia, Middle East & Africa, while Europe was up moderately.

Sales for Measurement & Analytical increased $256, or 11 percent.

Underlying sales were up 16 percent, reflecting robust growth in the Americas and Europe due to strong demand, while Asia, Middle East & Africa was up moderately due to softness in China.

Discrete Automation sales increased $75, or 4 percent, while underlying sales increased 7 percent, reflecting strong demand in Asia, Middle East & Africa and Europe, while the Americas was up modestly.

Safety & Productivity sales decreased $32, or 3 percent, and underlying sales decreased 2 percent, reflecting softness in the Americas while Europe and Asia, Middle East & Africa were up slightly.

Earnings for Intelligent Devices were $1,885, an increase of $362, or 24 percent, and margin increased 2.9 percentage points to 22.3 percent, reflecting favorable price less net material inflation, leverage on higher sales and favorable mix, partially offset by wage and other inflation.

Adjusted EBITA margin was 24.2 percent, an increase of 2.6 percentage points.

F inal Control sales increased $78 , or 9 percent, reflecting strength in energy and power end markets.

Sales for Measurement & Analytical increased $198 , or 26 percent, reflecting robust growth in all geographies and strong backlog conversion.

Discrete Automation sales decreased $5, or 1 percent, reflecting softness in the Americas and Asia, Middle East & Africa.

Safety & Productivity sales increased $12, or 4 percent, reflecting solid demand in the Americas and Europe.

Earnings for Intelligent Devices were $594 , an increase of $77 , or 15 percent , and margin increased 0.6 percentage points to 21.0 percent.

Adjusted EBITA margin was 23.8 percent, an increase of 1.6 percentage points, reflecting leverage on higher sales and favorable price less net material inflation, partially offset by higher headcount and other costs.

SOFTWARE AND CONTROL

1 unchanged sentence

Control Systems & Software $ 606 675 11 % (1) % 1 % 11 %

Test & Measurement — 382 — %

AspenTech 243 257 6 % — % — % 6 %

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Control Systems & Software $ 107 149 40 %

Test & Measurement — (78) #DIV/0!

AspenTech (33) (35) (7) %

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Control Systems & Software $ 6 5

Test & Measurement — 139

AspenTech 121 122

2 unchanged sentences

Control Systems & Software $ 1 1

Test & Measurement — 40

AspenTech — —

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Adjusted EBITA Margin 23.8 % 26.1 % 2.3 pts

Software and Control sales were $2,685 in th e first nine months of 2023, an increase of $569, or 27 percent compared to the prior year, reflecting the impact of the Heritage AspenTech acquisition and strong growth in Control Systems & Software.

Software and Control sales were $1,314 in the first quarter of 2024, an increase of $465, or 55 percent compared to the prior year, reflecting the impact of the Test & Measurement acquisition and strong growth in Control Systems & Software.

Underlying sales were up 9 percent on 7 percent higher volume and 2 percent higher price.

U nderlying sales increased 12 percent in the Americas, 17 percent in Europe and 18 percent in Asia, Middle East & Africa ( China up 24 percent).

Control Systems & Software sales increased $181, or 11 percent.

Underlying sales increased 15 percent, reflecting global strength in process end markets while power end markets were up moderately.

AspenTech sales increased $388, or 96 percent, due to the acquisition of Heritage AspenTech.

Earnings for Software and Control decreased $27, down 8 percent, and margin decreased 4.5 percentage points, reflecting the impact from $248 of incremental intangibles amortization related to the Heritage AspenTech acquisition.

Adjusted EBITA margin increased 3.4 percentage points, reflecting leverage on higher sales and favorable mix, partially offset by inflation and unfavorable foreign currency transactions.

Underlying sales increased 14 percent in the Americas, 2 percent in Europe and 9 percent in Asia, Middle East & Africa (China up 4 percent).

Control Systems & Software sales increased $69, or 11 percent, reflecting robust global demand in process end markets and strong demand in power end markets in the Americas and Asia, Middle East & Africa.

Test & Measurement sales were $382 in the first quarter, reflecting the impact of the acquisition.

AspenTech sales increased $14, or 6 percent, primarily due to higher maintenance and services revenue.

Earnings for Software and Control decreased $38, down 51 percent, and margin decreased 5.9 percentage points due to the Test & Measurement loss which reflected significant intangibles amortization and restructuring.

Adjusted EBITA margin increased 2.3 percentage points, reflecting leverage on higher sales, higher price and favorable mix.

FINANCIAL CONDITION

Key elements of the Company's financial condition for the nine months ended June 30, 2023 as compared to the year ended September 30, 2022 and the nine months ended June 30, 2022 follow.

June 30, 2022 Sept 30, 2022 June 30, 2023

Key elements of the Company's financial condition for the three months ended December 31, 2023 as compared to the year ended September 30, 2023 and the three months ended December 31, 2022 follow.

Dec 31, 2022 Sept 30, 2023 Dec 31, 2023

Operating working capital $ 351 $ 1,283 $ 2,052

3 unchanged sentences

Interest coverage ratio 7.3 X 11.5 X 2.6 X

The Company's operating working capital as of June 30, 2023 includes remaining income taxes payable of approximately $1.5 billion related to the Copeland transaction and the gain on the InSinkErator divestiture, which is largely expected to be paid by the end of fiscal 2023.

Excluding these income taxes payable related to discontinued operations, operating working capital remained elevated due to higher inventory levels to support sales growth and higher receivables.

As of June 30, 2023, Emerson's cash and equivalents totaled $9,957, which reflected approximately $9.7 billion of proceeds related to the Copeland transaction which are expected to be used along with other available cash and liquidity to fund the proposed National Instruments transaction.

Going forward, Copeland is not expected to issue dividends to the Company but will distribute cash for the Company to pay its share of U.S.

The Company's cash also includes $289 attributable to AspenTech which is intended to be used for its own purposes and is not a readily available source of liquidity for other Emerson general business purposes or to return to Emerson shareholders.

The current ratio increased compared to September 30, 2022, reflecting the proceeds from the Copeland transaction.

The i nterest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of 9.8X for the first nine months of fiscal 2023 compares to 12.6X for the nine months ended June 30, 2022, reflecting higher interest expense.

Pretax earnings in the prior year included the Vertiv subordinated interest gain of $453.

Excluding the gain, the interest coverage ratio was 9.7X for the nine months ended June 30, 2022.

Operating cash flow from continuing operations for the first nine months of fiscal 2023 was $1,719, an increase of $484 compared with $1,235 in the prior year, reflecting higher earnings (excluding the prior year impact of the Vertiv subordinated interest gain and the current year impact from Heritage AspenTech intangibles amortization).

Operating cash flow included approximately $295 generated by AspenTech.

Free cas h flow from continuing operations of $1,525 in the first nine months of fiscal 2023 (operating cash flow of $1,719 less capital expenditures of $194) increased $489 compared to free cash flow of $1,036 in 2022 (operating cash flow of $1,235 less capital expenditures of $199), reflecting the increase in operating cash flow.

Cash provided by investing activities from continuing operations was $615.

Cash used in financing activities from continuing operations was $6,302 and included Emerson share repurchases of $2.0 billion (and AspenTech repurchases of $100, which increased the Company's common ownership percentage to approximately 56 percent), a net reduction in short-term borrowings of approximately $1.5 billion, repayments of long-term debt of $744 (including $264 related to AspenTech's repayment of the outstanding balance on its existing term loan facility plus accrued interest), and dividend payments of $900.

Total cash provided by operating activities was $1,280 including the impact of discontinued operations, and decreased $425 compared with $1,705 in the prior year due to approximately $750 of incomes taxes paid related to the gain on the InSinkErator divestiture and subsidiary restructurings related to the Copeland transaction.

Investing cash flow from discontinued operations was $12.5 billion, reflecting proceeds from the Copeland transaction and InSinkErator divestiture.

As of June 30, 2023, goodwill attributable to AspenTech was approximately $8.3 billion.

AspenTech conducted its annual impairment test as of May 31, 2023 and determined that the carrying value of its stockholders' equity exceeded its market capitalization.

Accordingly, to further validate the reasonableness of the initial qualitative assessment and evaluation, a reconciliation of AspenTech's market capitalization was performed by calculating an implied control premium.

The Company concluded that the implied control premium was reasonable based on a comparison to actual control premiums realized in recent comparable market transactions.

If AspenTech's stock price declines and is sustained, further evaluation would be necessary and an impairment of goodwill attributable to AspenTech may result.

No impairment of goodwill attributable to AspenTech was recorded in fiscal 2022 or for the nine months ended June 30, 2023.

In February 2023, the Company entered into a $3.5 billion five-year revolving backup credit facility with various banks, which replaced the May 2018 $3.5 billion facility.

The credit facility is maintained to support general corporate purposes, including commercial paper borrowings.

The Company has not incurred any borrowings under this or previous facilities.

The credit facility contains no financial covenants and is not subject to termination based on a change of credit rating or material adverse changes.

The facility is unsecured and may be accessed under various interest rate alternatives at the Company’s option.

Fees to maintain the facility are immaterial.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic, and am ong other things, provides tax relief to businesses.

Tax provisions of the CARES Act include the deferral of certain payroll taxes, relief for retaining employees, and other provisions.

The Company deferred $73 of certain payroll taxes through the end of calendar year 2020, of which approximately $37 was paid in December 2021 and the remainder paid in December 2022.

Operating working capital increased due to the acquisition of NI, changes in accrued expenses and higher inventory levels to support sales growth.

As of December 31 , 2023, Emerson's cash and equivalents totaled $2,076, which included approximately $180 attributable to AspenTech.

The cash held by AspenTech is intended to be used for its own purposes and is not available to return to Emerson shareholders.

The current ratio decreased compared to September 30, 2023, reflecting the decrease in cash and increase in short-term borrowings used to support the NI acquisition.

The interest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of 2.6X for the first three months of fiscal 2024 compares to 7.3X for the three months ended December 31, 2022, reflecting lower GAAP pretax earnings largely due to the NI acquisition.

Excluding the impact from acquisition-related inventory step-up amortization of $231, higher intangibles amortization of $156, acquisition/divestiture fees and related costs of $134, higher restructuring and related costs of $72, and the loss of $36 on the Copeland equity method investment, the interest coverage ratio was 10.1X.

Operating cash flow from continuing operations for the first three months of fiscal 2024 was $444, an increase of $142 compared with $302 in the prior year, reflecting higher earnings (excluding the impact of items related to the NI acquisition).

Acquisition-related costs and integration activities negatively impacted operating cash flow in the current year by approximately $100.

AspenTech generated approximately $30 compared to $50 in the prior year.

Free cas h flow from continuing operations of $367 in the first three months of fiscal 2024 (operating cash flow of $444 less capital expenditures of $77) increased $124 compared to free cash flow of $243 in 2023 (operating cash flow of $302 less capital expenditures of $59), reflecting the increase in operating cash flow.

Cash used in investing activities from continuing operations was $8,453, reflecting the acquisition of NI.

Cash provided by financing activities from continuing operations was $2,055, reflecting an increase in short-term borrowings of $2,647, partially offset by share repurchases and dividends.

Total cash provided by operating activities was $415 including the impact of discontinued operations, and decreased $3 compared with $418 in the prior year.

Emerson maintains a conservative financial structure to provide the strength and flexibility necessary to achieve our strategic objectives and has been successful in efficiently deploying cash where needed worldwide to fund operations, complete acquisitions and sustain long-term growth.

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FISCAL 2024 OUTLOOK

For the full year, consolidated net sales from continuing operations are expected to be up approximately 10.5 percent, with underlying sales up approximately 10 percent excluding a 1.5 percent unfavorable impact from foreign currency translation and a 2.0 percent impact from acquisitions net of divestitures.

For the full year, consolidated net sales from continuing operations are expected to be up 14.5 percent to 17 percent, with underlying sales up 4.5 percent to 6.5 percent excluding a 10 to 10.5 percent impact from the NI acquisition.

Earnings per share from continuing operations are expected to be $2.80 to $2.95, while adjusted earnings per share from continuing operations are expected to be $5.30 to $5.45 (see the following reconciliation).

3 unchanged sentences

Restructuring and related costs ~ 0.34

Acquisition/divestiture costs 0.10

National Instruments investment gain (0.07)

AspenTech Micromine purchase price hedge gain (0.02)

Interest income on undeployed proceeds from Copeland transaction (0.19)

Loss on Copeland equity method investment ~ 0.20

Russia business exit charge 0.08

Amortization of acquisition-related inventory step-up ~ 0.38

Acquisition/divestiture fees and related costs ~ 0.26

Discrete tax benefits ~ (0.10)

Adjusted diluted earnings from continuing operations per share $5.30- $5.45

Earnings from discontinued operations are not expected to change materially from the amount reported for the nine months ended June 30, 2023 now that the Copeland transaction has been completed.

Operating cash flow from continuing operations is expected to be $2.5 to $2.6 billion and free cash flow from continuing operations, which excludes projected capital spending of $300 million, is expected to be $2.2 to $2.3 billion.

The fiscal 2023 outlook includes $2 billion returned to shareholders through share repurchases completed in the first quarter and approximately $1.2 billion of dividend payments.

Operating cash flow from continuing operations is expected to be $3.0 to $3.1 billion and free cash flow from continuing operations, which excludes projected capital spending of approximately $0.4 billion, is expected to be $2.6 to $2.7 billion.

The fiscal 2024 outlook assumes approximately $500 million returned to shareholders through share repurchases and approximately $1.2 billion of dividend payments.

Statements in this report that are not strictly historical may be "forward-looking" statements, which involve risks and uncertainties, and Emerson undertakes no obligation to update any such statements to reflect later developments.

These risks and uncertainties include the the Company's ability to successfully complete on the terms and conditions contemplated, and the financial impact of, the proposed National Instruments transaction, the scope, duration and ultimate impacts of the COVID-19 pandemic and the Russia-Ukraine conflict, as well as economic and currency conditions, market demand, including related to the pandemic and oil and gas price declines and volatility, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, inflation, among others, which are set forth in the “Risk Factors” of Part I, Item 1A, and the "Safe Harbor Statement" of Part II, Item 7, to the Company's Annual Report on Form 10-K for the year ended September 30, 2022 and in subsequent reports filed with the SEC, which are hereby incorporated by reference.

These risks and uncertainties include the scope, duration and ultimate impacts of the Russia-Ukraine and other global conflicts, as well as economic and currency conditions, market demand, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, inflation, among others, which are set forth in the “Risk Factors” of Part I, Item 1A, and the "Safe Harbor Statement" of Part II, Item 7, to the Company's Annual Report on Form 10-K for the year ended September 30, 2023 and in subsequent reports filed with the SEC, which are hereby incorporated by reference.

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-Q

Item 1. Financial Statements