What changed in this filing

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Item 1. Business

2024-11-12 compared with 2023-11-13 · 63 added, 56 removed, 121 unchanged (50% of the section changed)

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

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

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

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

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

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

The Company’s recent portfolio actions include the following transactions (note that all d ollars in Item 1 are in millions, except where noted) :

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

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

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

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

The 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 2022 net sales of approximately $5.0 billion.

The new standalone business is named Copeland.

• 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 2022;

the new standalone business is named Copeland) 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, while retaining a 40 percent non-controlling common equity interest in a new standalone joint venture between Emerson and Blackstone.

Subsequently, in August 2024, Emerson sold its 40 percent non-controlling common equity interest in Copeland to private equity funds managed by Blackstone for $1.5 billion and sold the note receivable to Copeland for $1.9 billion.

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

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

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

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AspenTech had 2023 net sales of $1.04 billion.

• On November 5, 2024, the Company announced a proposal to acquire all outstanding shares of common stock of AspenTech not already owned by Emerson for $240 per share in cash, which implies a fully diluted market capitalization for AspenTech of $15.3 billion and an enterprise value of $15.1 billion.

The Company currently owns approximately 57 percent of AspenTech's outstanding shares of common stock.

The proposal is not subject to any financing condition and would be financed from cash on hand, committed lines of credit and/or other available sources of financing.

Also on November 5, 2024, the Company announced that it is exploring strategic alternatives, including a cash sale, for its Safety & Productivity segment.

No assurance can be given whether the proposal or the review will lead to one or more transactions or as to any of the terms or conditions of such transactions.

See Item 1A - "Risk Factors" for additional information.

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

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

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

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

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

This includes the equity method losses related to the Company's non-controlling common equity interest in Copeland, which were reported since May 2023 in Other deductions, net, and have now been reclassified and reported as discontinued operations for all periods presented (see Note 5).

Beginning in 2024, the Company reports NI (which is now referred to as Test & Measurement) as a new segment in the Software and Control business group.

As a result of its portfolio transformation discussed above, the Company now reports seven segments and two business groups, which are highlighted in the table below (see Note 20 for further details).

INTELLIGENT DEVICES SOFTWARE AND CONTROL

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• Measurement & Analytical

• Test & Measurement

• Discrete Automation

• Safety & Productivity

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

The Company's comprehensive automation portfolio includes intelligent devices, control systems and design and optimization software solutions to support a diverse set of industries and infrastructure, including process industries (such as chemical, power & renewables and energy), hybrid industries (life sciences, metals & mining, food & beverage, pulp & paper, and others), discrete industries (including automotive, medical, packaging and semiconductor) and more.

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

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

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

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

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

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

These devices transfer data and asset management information to control systems and automation software, allowing process and hybrid industry operators to make educated decisions regarding production, reliability, sustainability and safety.

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

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Discrete Automation

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

solutions, programmable automation control systems and software, electrical distribution equipment, and materials joining solutions used primarily in discrete industries.

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

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Safety & Productivity

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

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

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

The Safety & Productivity segment delivers tools for professionals and homeowners that support infrastructure, promote safety and enhance productivity.

Pipe-working tools include pipe wrenches and cutters, pipe threading and roll grooving equipment, battery hydraulic tools for press connections, drain cleaners and diagnostic systems, including sewer inspection cameras and locating equipment.

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

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Control Systems & Software

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

The Control Systems & Software segment provides control systems and software that control plant processes by collecting and analyzing information from measurement devices in the plant.

These technologies determine optimal settings with software based on a customer's specific algorithms and use that information to adjust valves, pumps, motors, drives and other control hardware for maximum product quality, process efficiency, sustainability and safety.

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

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AMS, DeltaV and Ovation.

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

AspenTech combines decades of modeling, simulation, and optimization capabilities with industrial operations expertise and applies advanced analytics to improve the profitability and sustainability of production assets.

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

Test & Measurement

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

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

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

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

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

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

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

AspenTech combines decades of modeling, simulation and optimization capabilities with industrial operations expertise and applies advanced analytics to improve the profitability and sustainability of production assets.

RESEARCH & DEVELOPMENT

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

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

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

Total spending for R&D, engineering expense and customer-funded engineering and development was 8.1 percent of sales in 2024 compared to 6.9 percent in 2023 and 6.3 percent in 2022.

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

RAW MATERIALS

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

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

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

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

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

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

sufficient quantities.

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

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

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

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

The Company’s estimated consolidated order backlog was $8.4 billion and $7.8 billion at September 30, 2024 and 2023, respectively, of which approximately $1.3 billion and $1.2 billion related to AspenTech, while approximately $400 was attributable to Test & Measurement.

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

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

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

The Company continually works to minimize the environmental impact of its operations through safe

technologies, facility design and operating procedures.

Compliance with government regulations, including environmental regulations, has not had, and based on current information and the applicable laws and regulations currently in effect, is not expected to have a material effect on the Company's capital expenditures (including expenditures for environmental control facilities), earnings or competitive position.

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

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

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

The skills, experience and industry knowledge of

key employees significantly benefit our operations and performance.

In 2022, Emerson introduced Let's Go , the Company's first-ever employee value proposition (EVP), inviting our global workforce and potential hires to join in making the world healthier, safer, smarter and more sustainable.

Building on this momentum, Emerson in 2024 focused on activating its EVP among employees by further defining it across five key cultural areas:

Legacy of Innovation;

Challenging, Purposeful Work;

Diverse People, Working Together;

Limitless Growth;

and Global and Local Impact.

Collectively, these five areas form Emerson's differentiated employee experience.

By substantiating progress and achievements in each of these areas, the Company is strengthening its culture and enabling its EVP to be considered at every touchpoint of the employee lifecycle and experience - from HR programs to the actions of leaders, behavioral norms and physical work environment.

The skills, experience and industry knowledge of key employees significantly benefit Emerson's operations and performance.

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

The Company supports and develops its employees through global training and development programs that build and strengthen employees’ leadership and professional skills.

Emerson supports and develops its employees through global training and development programs that build and strengthen employees' leadership and professional skills.

Leadership development programs include intensive learning programs for new leaders as well as more established leaders.

The Company also partners with educational institutions and nonprofit organizations to help prepare current and future workers with the knowledge and skills they need to succeed.

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

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

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

To assess and improve employee retention and engagement, Emerson implemented a globally consistent, digital continuous listening strategy in 2023 through which all employees across the Company are surveyed annually and their feedback is used to drive actions that address areas of employee interest and concern.

In 2024, 89 percent of employees participated (up from 85 percent in 2023) and Emerson's overall engagement score increased to 79 percent (up from 78 percent).

In addition, Emerson's inclusion index score increased by 3.5 percentage points to 79 percent.

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

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

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

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

In 2024, the Company's total recordable rate of injuries was 0.30, and its lost or restricted workday case rate was 0.22 (both measured as the number of incidents per 100 employees).

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

The Company is committed to efforts to elevate the representation of women and U.S.

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

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

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

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

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

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

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

The Company is committed to efforts to build diverse teams and foster a work environment that supports our large global workforce and helps us innovate for our customers.

Overall, women represent 33 percent of our global workforce and 24 percent of leadership positions are held by women.

In the U.S., minorities represent 36 percent of our workforce and 23 percent of our leadership positions.

Employee levels are managed to align with the pace of business and management believes it has sufficient human capital to operate its business successfully.

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

We are proud to have been named to Fortune Magazine's "America's Most Innovative Companies" list for 2023 and as a "Best Employer for Diversity" by Forbes in 2022.

Employee levels are managed to align with the pace of busin ess and management believes it has sufficient human capital to operate its business successfully.

The Company and its subsidiaries had approximately 73,000 employees at September 30, 2024.

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

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

A small portion of the Company’s U.S.

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

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

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

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

Greening Of Emerson demonstrates our efforts to improve our internal environmental sustainability performance, including reducing our GHG emissions and energy and water consumption.

Greening By Emerson is our approach to delivering technology, solutions and expertise (including through our software offerings) that support and enable our customers’ decarbonization and environmental sustainability efforts.

Greening Of Emerson demonstrates our efforts to improve our internal environmental sustainability performance, including reducing our GHG emissions and energy and water consumption as well as engaging suppliers and other value chain partners.

Greening By Emerson is our approach to delivering hardware and software technology, solutions and expertise that support and enable our customers’ decarbonization and environmental sustainability efforts.

Greening With Emerson reflects how we foster collaboration among stakeholders by participating in environmental sustainability industry forums, partnering to develop innovative solutions, and engaging with governments globally to support sustainability-related policies and regulations.

Emerson’s environmental sustainability initiatives and strategy are discussed further in our 2022 Environmental, Social and Governance Report, which can be found on our website at www.Emerson.com;

Emerson’s environmental sustainability initiatives and strategy are discussed further in our 2023 Sustainability Report, which can be found on our website at www.Emerson.com;

this report is not incorporated by reference and should not be considered part of this Form 10-K.

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

What changed 10-K

Item 1. Business