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Item 7. Management’s Discussion and Analysis

2025-11-10 compared with 2024-11-12 · 159 added, 188 removed, 421 unchanged (45% of the section changed)

10 unchanged sentences

Generally, a non-GAAP financial measure is a numerical measure of a company’s operating performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly comparable measure calculated and presented in accordance with U.S.

For exa mple, non-GAAP measures may exclude the impact of certain items such as acquisitions or divestitures, amortization of intangibles, restructuring costs, discrete taxes, ch anges in reporting segments, gains, losses and impairments, or items outside of management’s control, such as foreign currency exchange rate fluctuations.

For exa mple, non-GAAP measures may exclude the impact of certain items such as acquisitions or divestitures, amortization of intangibles, restructuring costs, discrete taxes, gains, losses and impairments, or items outside of management’s control, such as foreign currency exchange rate fluctuations.

Management believes that the following non-GAAP financial measures provide investors and analysts useful insight into the Company’s financial position and operating performance.

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Adjusted EBITDA (defined as EBITDA excluding restructuring expense, first year purchase accounting related items and transaction fees, and certain gains, losses or impairments) and adjusted EBITDA margin (defined as Adjusted EBITDA divided by net sales) are also used to exclude the impact of non-operational items.

All of these are commonly used financial measures utilized by management to evaluate performance (U.S.

All of these are commonly used financial measures

utilized by management to evaluate performance (U.S.

GAAP measures:

pretax earnings or pretax profit margin, segment earnings or segment margin ).

Earnings and earnings per share excluding certain gains and losses, impairments, restructuring costs, impacts of acquisitions or divestitures, amortization of intangibles, discrete taxes, or other items provide additional insight into the underlying, ongoing operating performance of the Company and facilitate period-to-period comparisons by excluding the earnings impact of these items.

Management believes that presenting earnings and earnings per

share excluding these items is more representative of the Company’s operational performance and may be more useful for investors (U.S.

Adjusted earnings and earnings per share, which exclude certain gains and losses, impairments, restructuring costs, impacts of acquisitions or divestitures, amortization of intangibles, discrete taxes, or other items provide additional insight into the underlying, ongoing operating performance of the Company and facilitate period-to-period comparisons by excluding the earnings impact of these items.

Management believes that presenting adjusted earnings and earnings per share excluding these items is more representative of the Company’s operational performance and may be more useful for investors (U.S.

GAAP measures:

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Adjusted Diluted EPS – Earnings from continuing operations $ 4.44 5.49 6.00 24 % 9 %

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.

On March 12, 2025, Emerson completed its purchase of the remaining outstanding shares of common stock of AspenTech not already owned by the Company for approximately $ 7.2 billion.

As a result of the transaction, AspenTech is now a wholly owned subsidiary of the Company.

AspenTech was reorganized upon completion of the transaction and now reports to Control Systems & Software leadership.

AspenTech's results, which were previously reported as a separate segment, are now consolidated into the Control Systems & Software segment for all periods presented.

See Notes 4 and 20.

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 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.

On June 6, 2024, the Company entered into definitive agreements to sell its 40 percent non-controlling common equity interest in Copeland to private equity funds managed by Blackstone for $1.5 billion and its note receivable to Copeland for $1.9 billion, and the transactions were subsequently completed in August 2024.

Upon entering into the note agreement, the Company recorded a pretax loss in continuing operations of $279 ($217 after-tax, $0.38 per share) to adjust the carrying value of the note to $1.9 billion to reflect the transaction price, while the Company recognized a gain of $539 ($435 after-tax) in discontinued operations upon the sale of the common equity interest.

In addition, 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, have been reclassified and are now reported as discontinued operations for all periods presented.

See Notes 5 and 8 for further detail.

Overall, in 2025 sales were $18.0 billion, up 3 percent compared with the prior year.

Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, were up 6 percent.

The Test & Measurement acquisition added 9.5 percent and the divestiture of Metran, Emerson's Russia-based manufacturing subsidiary, deducted 0.5 percent.

Net earnings from continuing operations attributable to common stockholders were $1,618 in 2024, down 29 percent compared with prior year earnings of $2,286, and diluted earnings per share from continuing operations were $2.82, down 29 percent versus $3.96 in 2023.

The decrease was primarily due to purchase accounting related impacts from the NI acquisition and higher associated restructuring charges, and the loss on the sale of the Copeland note receivable.

Adjusted diluted earnings per share from continuing operations were $5.49 compared with $4.44 in the prior year, reflecting sales growth and strong operating performance, as well as a $0.45 contribution from Test & Measurement.

The Company generated operating cash flow from continuing operations of $3.3 billion in 2024, an increase of $607, or 22 percent, reflecting higher earnings (excluding the impact of non-cash items related to the NI acquisition and the loss on the Copeland note receivable).

Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, were also up 3 percent.

Net earnings from continuing operations attributable to common stockholders were $2,285 in 2025, up 41 percent compared with prior year earnings of $1,618, and diluted earnings per share from continuing operations were $4.03, up 43 percent versus $2.82 in 2024.

The prior year included purchase accounting related impacts from the NI acquisition and higher associated restructuring charges, and a pretax loss of $279 ($217 after-tax, $0.38 per share) related to the Company's definitive agreement to sell its Copeland note receivable for $1.9 billion.

Adjusted diluted earnings per share from continuing operations were $6.00 compared with $5.49 in the prior year, reflecting sales growth and strong operating performance.

The Company generated operating cash flow from continuing operations of $3.7 billion in 2025, an increase of $359, or 11 percent, reflecting higher earnings and favorable changes in working capital.

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.

2023 2024 2025

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Restructuring and related costs 0.14 0.33 0.23

Acquisition/divestiture fees and related costs 0.13 0.26 0.33

Discrete taxes — (0.10) 0.06

Amortization of acquisition-related inventory step-up — 0.38 —

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

(in 2022) 0.15 0.13 0.26

Loss on divestiture of businesses — — 0.09

Loss on Copeland note receivable — 0.38 —

Discrete taxes — — (0.10)

Loss on divestiture of businesses — 0.09 —

Gain on subordinated interest (0.21) (0.10) —

National Instruments investment gain (0.07) — —

Other investment-related gains (0.02) — —

AspenTech Micromine purchase price hedge (0.02) — —

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Operations 1.06 0.62

Noncontrolling interests — 0.13

Corporate and other (0.02) —

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Pensions — (0.09)

Gains on sales of capital assets in 2022 (0.02) —

Effective tax rate (0.06) —

Interest income on Copeland note receivable 0.05 0.06

Other (0.01) —

Share repurchases 0.14 0.03

Interest expense, net 0.06 (0.20)

Share count 0.03 0.08

Adjusted diluted earnings from continuing operations per share - current year $ 5.49 6.00

Net sales for 2025 were $18.0 billion, an increase of $0.5 billion, or 3 percent compared with 2024.

Intelligent Devices sales increased 5 percent, while Software and Control sales increased 48 percent, which included the impact of the Test & Measurement acquisition.

Underlying sales were up 6 percent on 4 percent higher volume and 2 percent higher price.

The Test & Measurement acquisition added 9.5 percent and the divestiture of Metran deducted 0.5 percent.

Intelligent Devices sales increased 2 percent, while Software and Control sales increased 5 percent .

Underlying sales were up 3 percent on 2.5 percent higher price and 0.5 percent higher volume.

Underlying sales were up 5 percent in the U.S.

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Net sales for 2024 were $17.5 billion, an increase of $2.3 billion, or 15 percent compared with 2023 .

Intelligent Devices sales increased 7 percent, while Software and Control sales increased 20 percent, which included the impact of the Heritage AspenTech acquisition.

Intelligent Devices sales increased 5 percent, while Software and Control sales increased 48 percent, which included the impact of the Test & Measurement acquisition.

Underlying sales increased 6 percent on 4 percent higher volume and 2 percent higher price.

Foreign currency translation subtracted 2 percent , the Heritage AspenTech acquisition added 3 percent and the divestiture of Metran deducted 1 percent .

The Test & Measurement acquisition added 9.5 percent and the divestiture of Metran deducted 0.5 percent.

Underlying sales were up 2 percent in the U.S.

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Emerson is a global business with international sales representing 59 percent of total sales in 2025, including U.S.

The Company generally expects faster economic growth in emerging markets in Asia, Latin America, Eastern Europe and Middle East/Africa.

International destination sales, including U.S.

exports, increased 18 percent, to $10.5 billion in 2024, reflecting the Company's overall increase in sales and the impact of the Test & Measurement acquisition.

expo rts of $1.3 billion were up 26 percent compared with 2023.

Underlying international destination sales were up 9 percent and t he Test & Measurement acquisition added 9 percent.

Underlying sales increased 7 percent in Europe, 8 percent in Asia, Middle East & Africa (China down 3 percent), 21 percent in Latin America and 5 percent in Canada.

Origin sales by international subsidiaries, including shipments to the U.S., totaled $9.3 billion in 2024, up 20 percent compared with 2023.

exports, increased 1 percent, to $10.6 billion in 2025, reflecting the Company's overall increase in sale s.

exports of $1.4 billion were up 5 percent compared with 2024.

Underlying international destination sales were up 1 percent.

Underlying sales increased 3 percent in Asia, Middle East & Africa (China down 4 percent) and 7 percent in Canada, while Europe decreased 2 percent and Latin America was flat.

Origin sales by international subsidiaries, including shipments to the U.S., total ed $9.4 billion in 2025, up 1 percent compa red with 2024.

International destination sales, including U.S.

exports, increased 9 percent, to $8.9 billion in 2023, reflecting the Company's overall increase in sales and the impact of the Heritage AspenTech acquisition.

exports, increased 18 percent, to $10.5 billion in 2024, reflecting the Company's overall increase in sales and the impact of the Test & Measurement acquisition.

exports of $1.3 billion were up 26 percent compared with 2023 .

Underlying international destination sales were up 9 percent, as foreign currency translation had a 3 percent unfavorable impact on the comparison, the Heritage AspenTech acquisition added 3 percent and the divestiture of Metran deducted 1 percent.

Underlying sales increased 10 percent in Europe, 9 percent in Asia, Middle East & Africa (China up 4 percent), 14 percent in Latin Americ a and 1 percent in Canada.

Underlying international destination sales were up 9 percent and the Test & Measurement acquisition added 9 percent.

Underlying sales increased 7 percent in Europe, 8 percent in Asia, Middle East & Africa (China down 3 percent), 21 percent in Latin Americ a and 5 percent in Canada.

Origin sales by international subsidiaries, including shipments to the U.S., totaled $9.3 billion in 2024, up 20 percent compared with 2023.

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

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.

On March 12, 2025, Emerson completed its purchase of the remaining outstanding shares of common stock of AspenTech not already owned by the Company for approximately $ 7.2 billion.

Emerson also incurred fees of $ 76 ($65 after-tax) and paid $ 76 to settle certain AspenTech share-based awards that were outstanding prior to the transaction closing.

The purchase of the remaining outstanding shares and related costs are reported as an adjustment to Equity.

Separately, AspenTech incurred $ 127 ($ 113 after-tax) of deal-related fees which are reported as acquisition/divestiture costs in Other deductions, net.

AspenTech is now reported as a part of the Control Systems & Software segment in the Software and Control business group, see Note 20.

On November 15, 2024, AspenTech acquired Open Grid Systems Limited, a global provider of network model management technology and a pioneer in developing model-driven applications supporting open access to data through industry standards, for a total purchase price of $ 46 , net of cash acquired.

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

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In 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 $715, net of cash acquired.

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

In 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.

The Company had previously announced its intention to exit business operations in 2022 and recognized a pretax loss of $181 ($190 after-tax, in total $0.32 per share).

This charge included a loss of $36 in operations and $145 reported in Other deductions ($10 of which is reported in restructuring costs) and was primarily non-cash.

Emerson's historical net sales in Russia represented approximately 2.0 percent of consolidated annual sales.

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) to private equity funds managed by Blackstone in a $14.0 billion transaction.

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) to private equity funds managed by Blackstone in a $14.0 billion transaction.

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).

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Subsequently, on June 6, 2024, the Company entered into definitive agreements to sell its 40 percent non-controlling common equity interest in Copeland to private equity funds managed by Blackstone for $1.5 billion and its note receivable to Copeland for $1.9 billion and the transactions were completed in August 2024.

See Notes 5 and 8 and the discussion below for further details.

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

Emerson's historical net sales in Russia represented approximately 2.0 percent of consolidated annual sales.

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 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 2022.

Climate Technologies (including equity method losses related to the Company's non-controlling common equity interest in Copeland), 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 (collectively, the “Emerson

Industrial 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).

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

See Notes 4, 5 and 8 and Item 1A - "Risk Factors" for further information on acquisitions and divestitures.

COST OF SALES

Cost of sales for 2025 were $8,497, a decrease of $110 compared with $8,607 in 2024.

Gross profit was $9,519 in 2025 compared to $8,885 in 2024, while gross margin increased 2.0 percentage poi nts to 52.8 percent.

The prior year reflected the impact from acquisition-related inventory step-up amortization of $231, which negatively impacted margins by approximately 1.3 percentage points.

Favorable price less net material inflation also contributed to the increase in gross margin.

Cost of sales for 2024 were $8,607 , an increase of $869 compared with $7,738 in 2023, reflecting the impact of higher volume and the Test & Measurement acquisition.

Gross profit was $8,885 in 2024 compared to $7,427 in 2023, while gross margin increased 1.8 percentage poi nts to 50.8 percent, reflecting the Test & Measurement acquisition and higher price partially offset by the impact from acquisition-related inventory step-up amortization of $231, which negatively impacted margins by approximately 1.3 percentage points.

Cost of sales for 2023 were $7,738 , an increase of $240 compared with $7,498 in 2022.

G ross profit was $7,427 in 2023 compared to $6,306 in 2022 , while gross margin increased 3.3 percentage points to 49.0 percent 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.

G ross profit was $8,885 in 2024 compared to $7,427 in 2023 , while gross margin increased 1.8 percentage points to 50.8 percent, reflecting the Test & Measurement acquisition and higher price partially offset by the impact from acquisition-related inventory step-up amortization of $231, which negatively impacted margins by approximately 1.3 percentage points.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

SG&A expenses of $5,103 in 2025 decreased $39 compared with 2024 and SG&A as a percent of sales decreased 1.1 percentage points to 28.3 percent, reflecting savings from cost reduction actions (primarily at Test & Measurement and AspenTech).

SG&A expenses of $5,142 in 2024 increased $956 compared with 2023 and SG&A as a percent of sales increased 1.8 percentage points to 29.4 percent, reflecting the impact of the Test & Measurement acquisition, partially offset by strong operating leverage on higher sales.

SG&A expenses of $4,186 in 2023 increased $572 compared with 2022 and SG&A as a percent of sales increased 1.4 percentage points to 27.6 percent, reflecting the Heritage AspenTech acquisition and higher stock compensation expense of $125, of which $75 related to Emerson stock plans due to a higher share price and $50 was attributable to AspenTech stock plans.

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

SALE OF COPELAND NOTE RECEIVABLE AND EQUITY INTEREST

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GAIN ON SUBORDINATED INTEREST

In the first quarter of 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 2022, $358 after-tax, $0.60 per share) and received the remaining $15 related to the pretax gain in the first quarter of 2023.

In 2023, the Company received additional distributions totaling $161 ($122 after-tax, $0.21 per share) and in 2024, received its final distribution of $79 ($60 after-tax, $0.10 per share).

In 2023, the Company received distributions related to its subordinated interest in Vertiv totaling $161 ($122 after-tax, $0.21 per share) and received $15 related to gains recognized in 2022.

In 2024, the Company received its final distribution of $79 ($60 after-tax, $0.10 per share).

OTHER DEDUCTIONS, NET

Other deductions, net were $1,245 in 2025, a decrease of $189 compared with 2024, reflecting lower intangibles amortization of $193 (including $136 of backlog amortization in the prior year related to the Test & Measurement

acquisition) and lower restructuring expense of $92, partially offset by higher acquisition/divestiture fees and related costs which increased by $118.

The prior year also included divestiture losses of $48.

Other deductions, net were $1,434 in 2024, an increase of $928 compared with 2023.

The current year included intangibles amortization related to the Test & Measurement acquisition of $560, while restructuring costs increased by $156 and acquisition/divestiture costs increased by $27.

2024 included intangibles amortization related to the Test & Measurement acquisition of $560, while restructuring costs increased by $156 and acquisition/divestiture costs increased by $27.

The Company also incurred divestiture losses of $48 ($50 after-tax, $0.09 per share).

Other deductions, net were $506 in 2023, a decrease of $13 compared with 2022 , and included higher intangibles amortization of $146 primarily related to the Heritage AspenTech acquisition and an unfavorable impact from foreign currency transactions of $112 reflecting losses in the current year compared to gains in the prior year.

The prior year included a charge of $145 related to the Company exiting its business in Russia compared to a charge of $47 in

In 2023, the Company recognized a mark-to-market gain of $56 on its equity investment in NI, and a mark-to-market gain of $24 r elated to foreign currency forward contracts entered into by AspenTech to mitigate the impact of foreign currency exchange associated with the Micromine purchase price compared to a loss of $50 in 2022.

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

See Notes 6 and 7.

INTEREST EXPENSE, NET

Interest expense, net was $237 , $175 and $34 in 2025, 2024 and 2023, respectively.

The increase in 2025 reflects higher levels of debt to support the AspenTech transaction.

Results in 2023 included interest income on undeployed proceeds from the Copeland transaction of $141 ($108 after-tax, $0.19 per share).

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EARNINGS BEFORE INCOME TAXES

Pretax earnings from conti nuing operations of $2,020 decreased $883 in 2024, down 30 percent compared with 2023, which included the impact of acquisition-related inventory step-up amortization, higher amortization due to the Test & Measurement acquisition, and the loss on the Copeland note receivable discussed above.

Earnings increased $191 in Intelligent Devices and decreased $140 in Software and Control.

Pretax earnings from continuing operations of $2,903 increased $471 in 2023, up 19 percent compared with 2022.

Pretax earnings from conti nuing operations of $2,934 increased $914 in 2025, up 45 percent compared with 2024.

Earnings increased $146 in Intelligent Devices and increased $545 in Software and Control.

Pretax earnings from continuing operations of $2,020 decreased $883 in 2024, down 30 percent compared with 2023, which included the impact of acquisition-related inventory step-up amortization, higher amortization due to the Test & Measurement acquisition, and the loss on the Copeland note receivable.

Earnings increased $191 in Intelligent Devices and decreased $140 in Software and Contr ol.

See the Business Segments discussion that follows and Note 20.

In come taxes were $696, $415 and $642 for 2025, 2024 and 2023, respectively, resulting in effective tax rates of 24 percent, 21 percent and 22 percent in 2025, 2024 and 2023, respectively.

The current year rate included a $57 ($0.10 per share) benefit related to discrete tax items and a benefit related to the filing of the prior year U.S.

The current year rate was negatively impacted by discrete tax items totaling $36 ($0.06 per share) and fees incurred by AspenTech which were not fully deductible (see Note 4).

In total, the net impact of these items increased the rate by approximately 2 percentage points.

The prior year rate included a $57 ($0.10 per share) benefit related to discrete tax items and a benefit from return-to-provision adjustments related to the filing of the prior year U.S.

tax return, partially offset by unfavorable impacts from inventory step-up amortization and the divestiture losses (see Note 4), which were non-deductible for tax purposes.

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NET EARNINGS AND EARNINGS PER SHARE

Net earnings from continuing operations attributable to common stockholders in 2024 were $1,618, down 29 percent compared with 2023, and diluted earnings per share from continuing operations were $2.82, down 29 percent compared with $3.96 in 2023, reflecting the impact of acquisition-related inventory step-up amortization, higher amortization due to the Test & Measurement acquisition, and the loss on the Copeland note receivable discussed above.

Net earnings from continuing operations attributable to common stockholders in 2025 were $2,285, up 41 percent compared with 2024, and diluted earnings per share from continuing operations were $4.03, up 43 percent compared with $2.82 in 2024.

Adjusted diluted earnings per share from continuing operations were $6.00 compared with $5.49 in the prior year.

See the analysis of adjusted earnings per share in the Overview section for further detai ls.

Earnings from discontinued operations attributable to common stockholders in 2024 were $350 ($0.61 per share) and included the gain on the sale of the Company's 40 percent non-controlling common equity interest in Copeland of $539 ($435 after-tax).

Earnings from discontinued operations in 2023 were $10,933 ($18.92 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.

Earnings from discontinued operations attributable to common stockholders in 2025 were $8 ($0.01 per share), compared to $350 ($0.61 per share) in 2024.

Net earni ngs attributable to common stockholders were $2,293 ($4.04 per share) compared with $1,968 ($3.43 per share) in 2024 .

Net earnings from continuing operations attributable to common stockholders in 2023 were $2,286 , up 21 percent compared with 2022 , and diluted earnings per share from continuing operations were $3.96, up 25 percent compared with $3.16 in 2022, reflecting strong operating results.

Net earnings from continuing operations attributable to common stockholders in 2024 were $1,618 , down 29 percent compared with 2023 , and diluted earnings per share from continuing operations were $2.82, down 29 percent compared with $3.96 in 2023, reflecting the impact of acquisition-related inventory step-up amortization, higher amortization due to the Test & Measurement acquisition, and the loss on the Copeland note receivable.

Adjusted diluted earnings per share from continuing operations were $5.49 compared with $4.44 in the prior year.

See the analysis of adjusted earnings per share in the Overview section for further details.

Earnin gs from discontinued operations attributable to common stockholders in 2023 wer e $10,933 ($18.92 per share) compared to $1,345 ($2.25 per share) in 2022.

Earnin gs from discontinued operations attributable to common stockholders in 2024 wer e $350 ($0.61 per share) and included the gain on the sale of the Company's 40 percent non-controlling common equity interest in Copeland of $539 ($435 after-tax).

Net earnings common stockholders w ere $1,968 ($3.43 per share) in 2024 compared with $13,219 ($22.88 per share) in 2023 .

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Restructuring and related costs 92 244 162

Acquisition/divestiture fees and related costs 84 220 277

Amortization of acquisition-related inventory step-up — 231 —

Acquisition/divestiture and related costs 91 84 220

Loss on divestitures of businesses — — 48

Loss on Copeland note receivable — 279 —

Loss on divestitures of businesses — 48 —

Gain on subordinated interest (161) (79) —

National Instruments investment gain (56) — —

Other investment-related gains (14) — —

AspenTech Micromine purchase price hedge (24) — —

33 unchanged sentences

2024 - Intelligent Devices sales were $12.4 billion in 2025, an increase of $239, or 2 percent.

Underlying sales increased 5 percent on 3 percent higher volume and 2 percent higher price.

Underlying sales increased 2 percent on higher price, while volume was favorable at Final Control and Measurement & Analytical, offset by decreased volume at Discrete Automation and Safety & Productivity.

Underlying sales increased 3 percent in the Americas (U.S.

up 1 percent), increased 5 percent in Europe and increased 9 percent in Asia, Middle East & Africa (China down 2 percent).

Sales for Final Control increased $234, or 6 percent, reflecting strength in energy and power end markets.

Sa les for Measurement & Analytical increased $466, or 13 percent, reflecting robust growth in all geographies and strong backlog conversion.

D iscrete Automation sales decreased $129, or 5 percent, reflecting softness in all geographies.

Safety & Productivity sales increased $2, essentially flat, reflecting moderate results across all geographies.

Earnings for Intellig ent Devices were $2,807 , an increase of $191 , or 7 percent , and margin increased 0.5 percentage points to 23.1 percent, reflecting leverage on higher sales and favorable price less net material inflation, partially offset by increases in other costs.

up 4 percent), decreased 3 percent in Europe and increased 2 percent in Asia, Middle East & Africa (China down 3 percent).

Sales for Final Control increased $176, or 4 percent, reflecting strength in power end markets.

Sa les for Measurement & Analytical increased $82, or 2 percent, reflecting mixed geographic results and difficult comparisons.

D iscrete Automation sales increased $15, or 1 percent, reflecting solid growth in the Americas, mostly offset by softness in Europe and Asia, Middle East & Africa.

Safety & Productivity sales decreased $34, or 2 percent , reflecting softness in all geographies.

Earnings for Intellig ent Devices were $2,953 , an increase of $146 , or 5 percent , and margin increased 0.7 percentage points to 23.8 percent, reflecting favorable price less net material inflation.

Adj usted EBITA margin was 25.9 percent , an increase of 0.5 percentage points.

29 unchanged sentences

Underlying sales increased 3 percent in the Americas (U.S.

up 12 percent), increased 9 percent in Europe and increased 8 percent in Asia, Middle East & Africa (China up 2 percent).

Sales for Final Control increased $363, or 10 percent.

Underlying sales increased 13 percent, reflecting strength in chemical and energy end markets and across all geographies, particularly in the U.S.

Sales for Measurement & Analytical increased $380, or 12 percent.

Underlying sales increased 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 $23, or 1 percent, while underlying sales increased 3 percent, reflecting softening demand in the second half of the year, with all geographies up low-to-mid single digits for the full year.

Safety & Productivity sales decreased $14, or 1 percent, and underlying sales decreased 1 percent, reflecting softness in the Americas and Europe, while Asia, Middle East & Africa was up slightly.

Earnings for Intelligent Devices were $2,616, an increase of $447, or 21 percent, and margin increased 2.6 percentage points to 22.6 percent, reflecting favorable price less net material inflation, leverage on higher sales and favorable mix, partially offset by wage and other inflation.

up 1 percent), increased 5 percent in Europe and increased 9 percent in Asia, Middle East & Africa (China down 2 percent).

Sales for Final Control increased $234, or 6 percent, reflecting strength in energy and power end markets.

Sales for Measurement & Analytical increased $466, or 13 percent, reflecting robust growth in all geographies and strong backlog conversion.

Discrete Automation sales decreased $129, or 5 percent, reflecting softness in all geographies.

Safety & Productivity sales increased $2, essentially flat, reflecting moderate results across all geographies.

Earnings for Intelligent Devices were $2,807, an increase of $191, or 7 percent, and margin increased 0.5 percentage points to 23.1 percent, reflecting leverage on higher sales and favorable price less net material inflation, partially offset by increases in other costs.

Adjusted EBITA margin was 25.4 percent, an increase of 0.8 percentage points.

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Test & Measurement 1,464 1,486 2 % (1) % — % 1 %

AspenTech 1,042 1,093 5 % — % — % 5 %

Total $ 5,399 5,691 5 % — % — % 5 %

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Test & Measurement (290) (68) 77 %

AspenTech (107) (73) 32 %

Total $ 282 827 193 %

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Test & Measurement 560 425

AspenTech 486 486

Total $ 1,072 893

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Test & Measurement 81 18

AspenTech 1 8

Total $ 104 43

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Adjusted EBITA Margin 27.0 % 31.0 % 4.0 pts

2023 - Software and Control sales were $5.4 billion in 2024, an increase of $1,751, or 48 percent compared to the prior year, reflecting the impact of the Test & Measurement acquisition.

2024 - Software and Control sales were $5.7 billion in 2025, an increase of $292, or 5 percent compared to the prior year.

Underlying sales increased 5 percent on 2.5 percent higher volume and 2.5 percent higher price.

Underlying sales increased 9 percent in the Americas (U.S.

up 7 percent), increased 9 percent in Europe and increased 8 percent in Asia, Middle East & Africa (China down 5 percent).

Sales for Control Systems & Software increased $236, or 9 percent, reflecting strong international demand in process and hybrid end markets while power end markets were strong globally.

Test & Measurement sales were $1,464.

Sales for AspenTech increased $51, or 5 percent, reflecting higher maintenance and services revenue.

Earnings for Software and Control were $282, a decrease of $140, or 33 percent, and margin decreased 6.4 percentage points to 5.2 percent, reflecting the impact from $560 of incremental intangibles amortization related to the Test & Measurement acquisition.

Adjusted EBITA margin was 27.0 percent, an increase of 1.2 percentage points, reflecting leverage on higher sales and higher price, partially offset by the impact of the Test & Measurement acquisition.

up 10 percent), decreased 1 percent in Europe and increased 4 percent in Asia, Middle East & Africa (China down 6 percent).

Sales for Control Systems & Software increased $270, or 7 percent, reflecting strong growth at AspenTech (including a favorable impact related to the timing of contract renewals) and favorable demand in process and power end markets across all geographies.

Test & Measurement sales increased $22, or 2 percent, reflecting strong growth in the Americas, offset by softness in Europe and China.

Earnings for Software and Control were $827, an increase of $545, or 193 percent, and margin increased 9.3 percentage points to 14.5 percent, reflecting leverage on higher Control Systems & Software sales (including a benefit related to the timing of AspenTech contract renewals), higher price, savings from cost reduction actions (primarily at Test & Measurement and AspenTech), lower intangibles amortization, and lower restructuring and related costs compared to the prior year.

Adjusted EBITA margin was 31.0 percent, an increase of 4.0 percentage points.

SOFTWARE AND CONTROL

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Test & Measurement — 1,464 — %

AspenTech 656 1,042 59 % — % (60) % (1) %

Total $ 3,648 5,399 48 % — % (40) % 8 %

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Test & Measurement — (290)

AspenTech 12 (107) (967) %

Total $ 422 282 (33) %

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Test & Measurement — 560

AspenTech 237 486

Total $ 508 1,072

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Test & Measurement — 81

AspenTech — 1

Total $ 10 104

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Adjusted EBITA Margin 25.8 % 27.0 % 1.2 pts

2022 - Software and Control sales were $3.6 billion in 2023, an increase of $594, or 20 percent compared to 2022, reflecting the impact of the Heritage AspenTech acquisition and strong growth in Control Systems & Software.

2023 - Software and Control sales were $5.4 billion in 2024, an increase of $1,751, or 48 percent compared to 2023, reflecting the impact of the NI acquisition.

Underlying sales increased 8 percent on 5 percent higher volume and 3 percent higher price.

Underlying sales increased 8 percent in the Americas (U.S.

up 6 percent), increased 11 percent in Europe and increased 13 percent in Asia, Middle East & Africa (China up 16 percent).

Sales for Control Systems & Software increased $208, or 9 percent, and underlying sales increased 11 percent, reflecting global strength in process end markets while power end markets were up modestly.

Sales for AspenTech increased $386, or 59 percent, due to the acquisition of Heritage AspenTech.

Earnings for Software and Control were $422, a decrease of $27, or 6 percent, and margin decreased 3.1 percentage points to 11.6 percent, reflecting the impact from $249 of incremental intangibles amortization related to the Heritage AspenTech acquisition.

Adjusted EBITA margin was 25.8 percent, an increase of 2.3 percentage points, reflecting leverage on higher sales, higher price and favorable mix, partially offset by inflation and unfavorable foreign currency transactions.

up 7 percent), increased 9 percent in Europe and increased 8 percent in Asia, Middle East & Africa (China down 5 percent).

Sales for Control Systems & Software increased $287, or 8 percent, reflecting strong international demand in process and hybrid end markets while power end markets were strong globally.

AspenTech sales were up modestly.

Test & Measurement sales were $ 1,464.

Financial Position, Liquidity and Capital Resources

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Emerson is in a strong financial position, with total assets of $42 billion and stockholders' equity of $20 billion, and has the resources available for reinvestment in existing businesses, strategic acquisitions and managing its capital structure on a short- and long-term basis.

The Company continues to generate substantial operating cash flow, including over $3.3 billion from continuing operations in 2024.

Cash flows have been and are expected to be sufficient for at least the next 12 months to meet

the Company’s operating requirements, including those related to salaries and wages, working capital, capital expenditures, and other liquidity requirements associated with operations.

Th e Company also has certain contractual obligations, primarily long-term debt and operating leases (see Notes 9, 12 and 13).

The Company has been able to readily meet all its funding requirements and currently believes that sufficient funds will be available to meet its needs for the foreseeable future through operating cash flow, existing resources, short- and long-term debt capacity, or its $3.5 billion revolving backup credit facility under which it has not incurred any borrowings.

The Company continues to generate substantial operating cash flow, including approximately $3.7 billion from continuing operations in 2025.

Cash flows have been and are expected to be sufficient for at least the next 12 months to meet the Company’s operating requirements, including those related to salaries and wages, working capital, capital expenditures, and other liquidity requirements associated with operations.

The Company also has certain contractual obligations, primarily long-term debt and operating leases (see Notes 9, 12 and 13).

The Company has been able to readily meet all its funding requirements and currently believes that sufficient funds will be available to meet its needs for the foreseeable future through operating cash flow, existing resources, short- and long-term debt capacity, or its revolving backup credit facilities under which it has not incurred any borrowings.

2023 2024 2025

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Percent of sales 8.5 % 8.0 % 11.3 %

Operating cash flow from continuing operations for 2024 was $3.3 billion, an increase of $607, or 22 percent compared with 2023, reflecting higher earnings (excluding the impact of non-cash items related to the NI acquisition and the loss on the Copeland note receivable).

Acquisition-related costs and integration activities negatively impacted operating cash flow in the current year by approximately $235.

AspenTech generated operating cash flow of approximately $320 compared to approximately $310 in the prior year.

Operating cash flow from continuing operations for 2023 was $2.7 billion, an increase of 32 percent compared to $2.0 billion in 2022, reflecting higher earnings (excluding the impacts in both years from the Vertiv subordinated interest gains and higher Heritage AspenTech intangibles amortization in 2023).

Operating cash flow from continuing operations for 2025 was $3.7 billion, an increase of $359, or 11 percent compared with 2024, reflecting higher earnings and favorable changes in working capital.

Operating cash flow from continuing operations for 2024 was $3.3 billion, an increase of 22 percent compared to $2.7 billion in 2023, reflecting higher earnings (excluding the impact of non-cash items related to the NI acquisition and the loss on the Copeland note receivable).

Acquisition-related costs and integration activities negatively impacted 2024 operating cash flow by approximately $235.

At September 30, 2025, operating working capital as a percent of sales was 11.3 percent compared with 8.0 percent in 2024 and 8.5 percent in 2023.

Total operating working capital increased in 2024 due to the NI acquisition, but improved as a percent of sales compared to 2023 due improvements in inventory levels.

Operating working capital was elevated in 2023 due to higher inventory levels to support sales growth and higher receivables.

The change in operating working capital compared to the prior year was due to the payment of income taxes of approximately $0.6 billion in 2025 related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland.

Total operating working capital increased in 2024 due to the NI acquisition, but improved as a percent of sales compared to 2023 due to improvements in inventory levels.

Free cash flow from continuing operations (operating cash flow less capital expenditures) was $3,245 in 2025, up 12 percent, reflecting the increase in operating cash flow.

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Total cash provided by operating activities including the impact of discontinued operations was $3,098, $3,332 and $637 in 2025, 2024 and 2023, respectively.

The decrease in 2023 was due to approximately $2.3 billion of income taxes paid related to the gains on the Copeland transaction and InSinkErator divestiture and subsidiary restructurings related to the Copeland transaction.

Investing cash flow from discontinued operations was $3.4 billion in 2024, reflecting the proceeds of approximately $1.5 billion related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland and $1.9 billion related to the sale of the note receivable, while 2023 was $12.5 billion, reflecting the proceeds from the Copeland transaction and InSinkErator divestiture.

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 included 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.

The decrease in 2025 reflected higher operating cash flow from continuing operations, offset by approximately $0.6 billion of income taxes paid related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland.

The lower cash flow in 2023 was due to approximately $2.3 billion of income taxes paid related to the gains on the Copeland transaction and InSinkErator divestiture and subsidiary restructurings related to the Copeland transaction.

Dividends were $1,192 ($2.11 per share) in 2025, compared with $1,201 ($2.10 per share) in 2024 and $1,198 ($2.08 per share) in 2023.

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Purchases of Emerson common stock totaled $1,167, $435 and $2,000 in 2025, 2024 and 2023, respectively, at average per share prices of $125.66, $99.04 and $94.09.

AspenTech repurchases were $208 in 2024 and $214 in 2023, and the Company's current common ownership percentage is approximately 57 percent.

In November 2015, the Board of Directors authorized the purchase of up to 70 million shares, and during 2022, the remaining shares available under this authorization were purchased.

In March 2020, the Board of Directors authorized the purchase of an additional 60 million shares and a total of approximately 28.9 million shares remain available.

The Company purchased 4.4 million shares in 2024, 21.3 million shares in 2023 and 5.7 million shares in 2022 under the authorizations.

AspenTech repurchases were $208 in 2024.

In November 2025, the Board of Directors authorized the purchase of up 50 million shares.

This is in addition to the authorization approved by the Board in March 2020 for the purchase of up to 60 million shares, of which approximately 19.6 million shares remain available at September 30, 2025.

The Company purchased 9.3 million shares in 2025, 4.4 million shares in 2024 and 21.3 million shares in 2023.

LEVERAGE/CAPITALIZATION

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Total debt, which includes long-term debt, current maturities of long-term debt, commercial paper and other short-term borrowings, was $13,116, $7,687 and $8,157 as of September 30, 2025, 2024 and 2023, respectively.

The increase in 2025 reflects increased short-term borrowings and long-term debt to fund the AspenTech transaction.

Overall, the Company's commercial paper borrowings increased to approximately $4.2 billion at September 30, 2025.

In March 2025, the Company issued €500 of 3.0% notes due March 2031, $500 of 5.0% notes due March 2035, and €500 of 3.5% notes due March 2037.

The decrease in 2024 reflected the repayment of €500 of 0.375% euro notes that matured in May 2024.

The decrease in 2023 included a net reduction in short-term borrowings of approximately $1.6 billion and repayments of long-term debt of $741 (including $264 related to AspenTech's repayment of the outstanding balance on its existing term loan facility plus accrued interest).

Activity in 2022 included the issuance of $3 billion of long-term debt and increased commercial paper borrowings of approximately $1.3 billion.

The Company used the net proceeds from the sale of the notes and the increased commercial paper borrowings to fund the majority of its contribution of approximately $6.0 billion to existing stockholders of Heritage AspenTech as part of the transaction.

Long-term debt was issued in December 2021 as follows:

$1 billion of 2.0% notes due December 2028, $1 billion of 2.2% notes due December 2031, and $1 billion of 2.8% notes due December 2051.

Additionally, the Company repaid $500 of 2.625% notes that matured in 2022.

See Note 4 and Note 13.

The total debt-to-total capital ratio decreased slightly in 2024, reflecting repayments of long-term debt, while the net debt-to-net capital ratio increased reflecting the use of cash held on the balance sheet at September 30, 2023 that was used to complete the NI acquisition.

These ratios decreased in 2023 compared to 2022 due to the proceeds and after-tax gains (which increased common stockholder's equity) on the Copeland transaction and InSinkErator divestiture.

The increase in the debt-to-total capital ratios in 2025 reflects the increased commercial paper and long-term debt discussed above.

The total debt-to-capital ratio decreased slightly in 2024, reflecting repayments of long-term debt, while the net debt-to-net capital ratio increased reflecting the use of cash held on the balance sheet at September 30, 2023 that was used to complete the NI acquisition.

Although the Company's financial leverage and debt ratios are currently elevated compared to its historical levels, Emerson expects to retain its investment-grade long-term debt ratings.

Further, the Company expects its leverage and debt ratios to improve through disciplined capital allocation, which includes using a portion of its cash flows to reduce net debt.

The interest coverage ratio is computed as earnings before income taxes plus interest expense, divided by interest expense.

The decrease in 2024 reflects lower GAAP pretax earnings largely due to the NI acquisition.

The interest coverage ratio in 2025 reflects higher interest expense due to the increased short-term borrowings and long-term debt discussed above.

The lower ratio in 2024 reflects 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 $595, acquisition/divestiture fees and related costs of $220, higher restructuring and related costs of $152, the loss of $279 on the Copeland note receivable and the gain on the subordinated interest of $79, the interest coverage ratio was 11.6X.

The Company's earnings increased in 2023 which offset higher interest expense due to the increased long-term debt and commercial paper borrowings to fund the Heritage AspenTech acquisition.

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 February 11, 2025, the Company entered into a $3 billion, 364-day revolving backup credit facility to support increased commercial paper borrowings in connection with the AspenTech transaction.

This facility is in addition to the Company's existing $3.5 billion revolving backup credit facility with various banks, which was entered into in February 2023.

The credit facilities are maintained to support general corporate purposes, including commercial paper borrowings.

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

The credit facilities contain no financial covenants and are not subject to termination based on a change of credit rating or material adverse changes.

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

Fees to maintain the facilities are immaterial.

The Company also maintains a universal shelf registration statement on file with the SEC under which it can issue debt securities, preferred stock, common stock, warrants, share purchase contracts or share purchase units without a predetermined limit.

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The value of derivatives and other financial instruments is subject to change as a result of market movements in rates and prices.

Sensitivity analysis is one technique used to fo recast the impact of these movements.

Sensitivity analysis is one technique used to fo recast

the impact of these movements.

Based on a hypothetical 10 percent increase in interest rates or a 10 percent weakening in the U.S.

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Assets and liabilities acquired in business combinations, including intangible assets, are accounted for using the acquisition method and recorded at their respective fair values.

In 2024, the Company completed the acquisition of National Instruments Corporation and in 2022 completed the acquisition of Aspen Technology, Inc.

and engaged independent third-party valuation specialists to assist in the determination of the fair value of intangible assets.

In 2024, the Company completed the acquisition of National Instruments Corporation and engaged an independent third-party valuation specialist to assist in the determination of the fair value of intangible assets.

This included the use of certain assumptions and estimates, including projected revenue for customer relationship and developed technology intangible assets, the attrition rate for customer relationship intangible assets, and the obsolescence rate for developed technology intangible assets.

Although we believe the assumptions and estimates to be reasonable and appropriate, they require judgement and are based on experience and historical information obtained from National Instruments Corporation and Aspen Technology, Inc.

Although we believe the assumptions and estimates to be reasonable and appropriate, they require judgment and are based on experience and historical information obtained from National Instruments Corporation.

LONG-LIVED ASSETS

Long-lived assets, which include property, plant and equipment, goodwill and identifiable intangible assets, are reviewed for impairment whenever events or changes in business circumstances indicate impairment may exist.

the Company determines that the carrying value of a long-lived asset may not be recoverable, a permanent impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its estimated fair value.

If the Company determines that the carrying value of a long-lived asset may not be recoverable, a permanent impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its estimated fair value.

Reporting units are also reviewed for possible goodwill impairment at least annually, in the fourth quarter.

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Fair value is generally estimated using an income approach that discounts estimated future cash flows using discount rates judged by management to be commensurate with the applicable risk.

Estimates of future sales, operating results, cash flows and discount rates are subject to changes in the economic environment, including such factors as the general level of market interest rates, expected equity market returns and the volatility of markets served, particularly when recessionary economic circumstances continue for an extended period of time.

Estimates of future sales, operating results, cash flows and discount rates are subject to changes in the economic environment, including such factors as the general level of market interest

rates, expected equity market returns and the volatility of markets served, particularly when recessionary economic circumstances continue for an extended period of time.

RETIREMENT PLANS

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defined benefit plan is closed to employees hired after January 1, 2016 while shorter-tenured employees ceased accruing benefits effective October 1, 2016.

Effective January 1, 2025, the Company is implementing a new profit sharing retirement program for all U.S.

Effective January 1, 2025, the Company implemented a new profit sharing retirement program for all U.S.

non-union employees.

Eligible employees will receive a base contribution to a cash balance account administered within the principal U.S.

defined benefit plan, to be funded by surplus pension assets, as well as a potential profit sharing contribution to their defined contribution account.

After December 31, 2024, future service for employees that had continued to accrue benefits in the principal U.S.

defined benefit plan will be frozen.

Eligible employees receive a base contribution to a cash balance account administered within the principal U.S.

defined benefit plan, funded by surplus pension assets, as well as a potential profit sharing contribution to their defined contribution account.

For employees that had continued to accrue benefits in the principal U.S.

defined benefit plan, future service after December 31, 2024 is frozen.

As of September 30, 2025, the U.S.

pension plans were overfunded by $800 in total (approximately 22 percent in excess of the projected benefit obligation), including unfunded plans totaling $161.

pension plans were overfunded by $856 in total (approximatel y 29 p ercent in excess of the projected benefit obligation), including unfunded plans totaling $161.

plans were underfunded by $65, including unfunded plans totaling $242.

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Deferred tax assets and liabilities arise from temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and consideration of operating loss and tax credit carryforwards.

Deferred income taxes are measured using enacted tax rates in effect for the year in which the temporary differences are expected to be

recovered or settled.

Deferred income taxes are measured using enacted tax rates in effect for the year in which the temporary differences are expected to be recovered or settled.

The impact on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date.

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Uncertainty exists regarding tax positions taken in previously filed tax returns which remain subject to examination, along with positions expected to be taken in future returns.

The Company provides for unrecognized tax benefits, based on the technical merits, when it is more likely than not that an uncertain tax position will not be sustained upon examination.

The Company provides for unrecognized tax benefits,

based on the technical merits, when it is more likely than not that an uncertain tax position will not be sustained upon examination.

Adjustments are made to the uncertain tax positions when facts and circumstances change, such as the closing of a tax audit;

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federal income taxes.

No provision is made for withholding taxes and any applicable U.S.

income taxes on the undistributed earnings of non-U.S.

subsidiaries where these earnings are considered indefinitely invested or otherwise retained for continuing international operations.

No provision is made for withholding taxes and any other applicable income taxes on the undistributed earnings of non-U.S.

subsidiaries where these earnings are considered indefinitely reinvested or otherwise retained for continuing international operations.

Determination of the amount of taxes that might be paid on these undistributed earnings if eventually remitted is not practicable.

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NEW ACCOUNTING PRONOUNCEMENTS

In the fourth quarter of 2025, the Company adopted ASU No.

2023-07 (Topic 280), Improvements to Reportable Segment Disclosures , which requires disclosure of significant segment expenses on an annual and interim basis.

The new standard also requires disclosure of the Company's chief operating decision maker and interim disclosure of each reportable segment's total assets.

This standard has no impact on the accounting for reportable segments.

In 2024, the Company adopted ASU No.

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This standard has no impact on the accounting for government assistance and did not materially impact the Company's disclosures.

In 2022, the Company adopted three accounting standard updates, each of which had an immaterial or no impact on the Company's financial statements.

These included:

• Updates to Accounting Standards Codification ("ASC") 805, Business Combinations , which clarify the accounting for contract assets and liabilities assumed in a business combination.

In general, this will result in contract liabilities being recognized at their historical amounts under ASC 606, rather than at fair value in accordance with the general requirements of ASC 805.

• Updates to ASC 740, Income Taxes , which require the recognition of a franchise tax that is partially based on income as an income-based tax with any incremental amount as a non-income based tax.

These updates also make certain changes to intra-period tax allocation principles and interim tax calculations.

• Updates to ASC 321, Equity Securities , ASC 323 Investments - Equity Method and Joint Ventures , and ASC 815, Derivatives and Hedging , which clarify how to account for the transition into and out of the equity method of accounting when evaluating observable transactions.

In December 2023, the FASB issued ASU No.

2023-09 (Topic 740), Improvements to Income Tax Disclosures , which expands the disclosures required with respect to the income tax rate reconciliation and income taxes paid both in U.S.

and foreign jurisdictions.

The updates, which are effective in fiscal 2026, change disclosures only and will not impact the Company’s results of operations.

In November 2024, the FASB issued ASU No.

2024-03 (Subtopic 220-40), Disaggregation of Income Statement Expenses , which requires expanded disclosures of specific expense categories in the notes to financial statements.

The updates, which are effective for annual periods in fiscal 2028 and interim periods in fiscal 2029, change disclosures only and will not impact the Company’s results of operations.

FISCAL 2026 OUTLOOK

For fiscal year 2025, consolidated net sales from continuing operations are expected to be up 3.5 to 5.5 percent, with underlying sales up 3 to 5 percent, excluding a 0.5 percent favorable impact from foreign currency translation.

For fiscal year 2026, consolidated net sales from continuing operations are expected to be up approximately 5.5 percent, with underlying sales up approximately 4 percent, excluding a 1.5 percent favorable impact from foreign currency translation.

Earnings per share are expected to be $4.73 to $4.93, while adjusted earnings per share are expected to be $6.35 to $6.55 (see the following reconciliation).

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Operating cash flow is expected to be $4.0 to $4.1 billion and free cash flow, which excludes projected capital spending of approximately $0.45 billion, is expected to be $3.5 to $3.6 billion.

The fiscal 2025 outlook assumes approximately $2.0 billion returned to shareholders through share repurchases (including approximately $1.0 billion expected to be completed in the first fiscal quarter) and approximately $1.2 billion of dividend payments.

The fiscal 2026 outlook assumes approximately $2.2 billion returned to shareholders through approximately $1.0 billion of share repurchases and approximately $1.2 billion of dividend payments.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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 7. Management’s Discussion and Analysis