Emerson Electric (NYSE: EMR) grows Q3 EPS 24% and targets $6.55 adjusted 2026 EPS
Rhea-AI Filing Summary
Emerson Electric reported solid third-quarter fiscal 2026 results, with net sales of $4.87 billion, up 7% year over year, and gross margin expanding to 54.5% helped by $82 million of tariff refunds. Earnings from continuing operations attributable to common shareholders rose 24% to $718 million, and diluted EPS from continuing operations increased to $1.28. Adjusted diluted EPS was $1.71, up 13%, driven mainly by higher volume, pricing and lower acquisition-related costs, partly offset by higher restructuring expense.
Software & Systems sales grew 11% and Intelligent Devices 6%, both delivering higher earnings, while Safety & Productivity sales grew 3% but saw lower reported margins due to increased restructuring. For the first nine months, revenue reached $13.78 billion, up 5%, and diluted EPS from continuing operations was $3.45, up 19%; adjusted diluted EPS was $4.71, up 8%.
Operating cash flow from continuing operations for the first nine months was $2.90 billion and free cash flow $2.62 billion, supporting $0.90 billion of share repurchases and $0.94 billion of dividends. Emerson ended June 30 2026 with $42.21 billion in total assets, $20.39 billion of equity, a backlog of about $9.6 billion, and expects fiscal 2026 adjusted diluted EPS of approximately $6.55.
Positive
- Strong earnings growth and margin expansion: Q3 net sales rose 7% to $4.87 billion, diluted EPS from continuing operations increased 24% to $1.28, and adjusted diluted EPS grew 13% to $1.71, supported by higher volume, pricing and lower acquisition-related costs.
- Robust cash generation and shareholder returns: first-nine-month free cash flow reached $2.62 billion, while Emerson repurchased $0.90 billion of stock and paid $0.94 billion in dividends, and plans to return about $2.2 billion to shareholders in fiscal 2026.
Negative
- Higher restructuring and financing costs: restructuring and related costs increased to $164 million for the first nine months of 2026, and net interest expense rose to $258 million, weighing on reported margins in the Safety & Productivity segment and reducing interest coverage to 8.2x.
Key Figures
Q3 2026 Net Sales: $4,873 million
Q3 2026 Diluted EPS (continuing ops): $1.28
Q3 2026 Adjusted Diluted EPS: $1.71
+5 more
8 metrics
Q3 2026 Net Sales
$4,873 million
Net sales for the three months ended June 30, 2026
Q3 2026 Diluted EPS (continuing ops)
$1.28
Diluted earnings per share from continuing operations, up 24% year over year
Q3 2026 Adjusted Diluted EPS
$1.71
Adjusted diluted EPS from continuing operations for the quarter ended June 30, 2026
Nine-month 2026 Operating Cash Flow
$2,902 million
Operating cash flow from continuing operations for the nine months ended June 30, 2026
Nine-month 2026 Free Cash Flow
$2,618 million
Operating cash flow less capital expenditures for the nine months ended June 30, 2026
Fiscal 2026 Expected Adjusted EPS
~$6.55
Company outlook for adjusted diluted earnings per share for fiscal year 2026
Backlog of Performance Obligations
$9.6 billion
Remaining performance obligations as of June 30, 2026
Expected 2026 Restructuring Costs
~$185 million
Fiscal 2026 restructuring expense and related costs guidance
Key Terms
adjusted EBITA, underlying sales, International Emergency Economic Powers Act, free cash flow, +2 more
6 terms
adjusted EBITA financial
"The table below, which shows results on an adjusted EBITA basis, is intended"
Adjusted EBITA is a measure of a company’s operating profit before interest, taxes and amortization, further modified to remove one-time or unusual items so it reflects ongoing business earnings. It matters to investors because it aims to show the company’s core cash-making ability — like listening to an engine without road noise — making comparisons across periods or peers easier, though companies may differ in what they exclude.
underlying sales financial
"Underlying sales were up 6 percent on 3 percent higher volume and 3 percent higher price"
Underlying sales are the company’s revenue figures adjusted to remove one-time or external effects—for example recent acquisitions or disposals, large timing differences, and currency swings—so that sales reflect the ongoing performance of the core business. Investors care because this “clean” view makes it easier to judge whether demand is truly growing or shrinking, and to compare performance across periods or between companies without noise from temporary events.
International Emergency Economic Powers Act regulatory
"ruled that the International Emergency Economic Powers Act (IEEPA) does not authorize the"
A U.S. law that gives the president broad authority to control trade, financial transactions, and assets during a declared national emergency, such as by imposing sanctions, freezing property, or restricting exports and imports. For investors it matters because those powers can suddenly block deals, cut off access to markets or funds, and change the value of companies or securities much like an emergency brake that can stop or reroute economic activity overnight.
free cash flow financial
"Free cash flow of $2,618 in the first nine months of fiscal 2026"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
net investment hedge financial
"have been designated as a hedge of a portion of the investment in these operations"
One Big Beautiful Bill Act regulatory
"In the current year, the One Big Beautiful Bill Act increased the effective tax rate"
A "one big beautiful bill act" is a single, large piece of legislation that bundles many policy changes and measures into one package instead of passing them separately. For investors, it matters because such omnibus bills can swiftly change tax rules, spending levels, industry regulations or subsidies all at once—like a single shopping cart that suddenly adds many items to a household budget—creating broad, rapid shifts in company costs, revenues and market expectations.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Emerson Electric (EMR) perform in Q3 fiscal 2026?
Emerson Electric delivered higher sales and earnings in Q3 2026. Net sales were $4.87 billion, up 7%, with gross margin at 54.5%. Diluted EPS from continuing operations reached $1.28, while adjusted diluted EPS from continuing operations rose to $1.71, up 13% year over year.
What were Emerson Electric (EMR) results for the first nine months of 2026?
Over the first nine months of 2026 Emerson generated revenue of $13.78 billion, up 5%. Diluted EPS from continuing operations was $3.45, up 19%, and adjusted diluted EPS from continuing operations was $4.71, an 8% increase, reflecting pricing gains and lower acquisition-related costs.
How did Emerson Electric's (EMR) business segments perform in Q3 2026?
Performance was broad-based across segments. Software & Systems sales rose 11% to $1.64 billion and Intelligent Devices grew 6% to $2.68 billion, both increasing earnings. Safety & Productivity sales increased 3% to $552 million, though reported margins declined due to higher restructuring expense.
What is Emerson Electric's (EMR) cash flow and capital return profile in 2026?
Emerson is generating substantial cash and returning it to shareholders. First-nine-month operating cash flow from continuing operations was $2.90 billion and free cash flow $2.62 billion. The company repurchased about $0.90 billion of shares, paid $0.94 billion in dividends, and plans total 2026 returns of roughly $2.2 billion.
What 2026 outlook has Emerson Electric (EMR) provided?
Management projects steady growth and strong profitability for 2026. Net sales are expected to rise about 5%, with underlying sales up roughly 3.5%. Reported EPS is forecast around $4.89 and adjusted diluted EPS about $6.55, alongside expected operating cash flow of $4.1 billion.
How do tariff refunds and tax law changes affect Emerson Electric (EMR)?
Recent legal and tax developments have mixed effects. In Q3 2026 Emerson received $82 million of tariff refunds, boosting gross margin by 1.9 percentage points. The One Big Beautiful Bill Act increased the 2026 effective tax rate by about 1 percentage point but is expected to slightly benefit rates from 2027.
What is Emerson Electric's (EMR) backlog and revenue visibility?
Emerson reports a sizable order book supporting future revenue. As of June 30 2026 its backlog was approximately $9.6 billion in remaining performance obligations, with about 75% expected to convert to revenue over the next 12 months and most of the rest over the following two years.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-Q
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2026
OR
EXCHANGE ACT OF 1934
For the transition period from ____________________ to __________________
Commission file number 1-278
(Exact name of registrant as specified in its charter)
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Registrant's telephone number, including area code: (314 ) 553-2000
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||||||||||||||
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common stock of $0.50 par value per share outstanding at June 30, 2026: 557.8 million shares.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Earnings
EMERSON ELECTRIC CO. & SUBSIDIARIES
Three and nine months ended June 30, 2025 and 2026
(Dollars in millions, except per share amounts; unaudited)
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Discontinued operations, net of tax of $ | |||||||||||||||||||||||
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| Less: Noncontrolling interests in subsidiaries | ( | ||||||||||||||||||||||
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| Earnings from continuing operations | $ | $ | |||||||||||||||||||||
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| Net earnings common stockholders | $ | $ | |||||||||||||||||||||
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| Earnings from continuing operations | $ | $ | |||||||||||||||||||||
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| Earnings from continuing operations | $ | $ | |||||||||||||||||||||
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See accompanying Notes to Consolidated Financial Statements.
1
Consolidated Statements of Comprehensive Income
EMERSON ELECTRIC CO. & SUBSIDIARIES
Three and nine months ended June 30, 2025 and 2026
(Dollars in millions; unaudited)
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| Net earnings | $ | $ | |||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||||||||||||||
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| Cash flow hedges | ( | ||||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss) | ( | ( | |||||||||||||||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||||||||||||||
| Less: Noncontrolling interests in subsidiaries | ( | ( | |||||||||||||||||||||||||||||||||
| Comprehensive income common stockholders | $ | $ | |||||||||||||||||||||||||||||||||
See accompanying Notes to Consolidated Financial Statements.
2
Consolidated Balance Sheets
EMERSON ELECTRIC CO. & SUBSIDIARIES
(Dollars and shares in millions, except per share amounts; unaudited)
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| Total liabilities and equity | $ | ||||||||||
See accompanying Notes to Consolidated Financial Statements.
3
Consolidated Statements of Equity
EMERSON ELECTRIC CO. & SUBSIDIARIES
Three and nine months ended June 30, 2025 and 2026
(Dollars in millions; unaudited)
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
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| Purchase of noncontrolling interest | ( | ||||||||||||||||||||||
| Settlement of AspenTech share awards | ( | ||||||||||||||||||||||
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| Purchase of noncontrolling interest | ( | ||||||||||||||||||||||
| Other comprehensive income | ( | ( | ( | ||||||||||||||||||||
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| Total equity | $ | $ | |||||||||||||||||||||
See accompanying Notes to Consolidated Financial Statements.
4
Consolidated Statements of Cash Flows
EMERSON ELECTRIC CO. & SUBSIDIARIES
Nine Months Ended June 30, 2025 and 2026
(Dollars in millions; unaudited)
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| June 30, | ||||||||||||||
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| Operating activities | ||||||||||||||
| Net earnings | $ | |||||||||||||
| Earnings from discontinued operations, net of tax | ( | |||||||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Stock compensation | ||||||||||||||
| Changes in operating working capital | ( | ( | ||||||||||||
| Other, net | ( | ( | ||||||||||||
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| Investing activities | ||||||||||||||
| Capital expenditures | ( | ( | ||||||||||||
| Purchases of businesses, net of cash and equivalents acquired | ( | |||||||||||||
| Other, net | ( | ( | ||||||||||||
| Cash used in investing activities | ( | ( | ||||||||||||
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| Payments on short-term borrowings greater than three months | ( | ( | ||||||||||||
| Proceeds from long-term debt | ||||||||||||||
| Payments of long-term debt | ( | ( | ||||||||||||
| Dividends paid | ( | ( | ||||||||||||
| Purchases of common stock | ( | ( | ||||||||||||
| Purchase of noncontrolling interest | ( | |||||||||||||
| Settlement of AspenTech share awards | ( | |||||||||||||
| Other, net | ( | ( | ||||||||||||
| Cash used in financing activities | ( | ( | ||||||||||||
| Effect of exchange rate changes on cash and equivalents | ( | ( | ||||||||||||
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| Accounts payable | ( | |||||||||||||
| Accrued expenses | ( | |||||||||||||
| Total changes in operating working capital | $ | ( | ( | |||||||||||
See accompanying Notes to Consolidated Financial Statements.
5
Notes to Consolidated Financial Statements
EMERSON ELECTRIC CO. & SUBSIDIARIES
(Dollars and shares in millions, except per share amounts or where noted)
(1) BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated financial statements of Emerson Electric Co. ("Emerson", "we", "us", "our" or the "Company") include all adjustments necessary for a fair presentation of operating results for the interim periods presented. Adjustments consist of normal and recurring accruals. The consolidated financial statements are presented in accordance with the requirements of Form 10-Q and consequently do not include all disclosures required for annual financial statements presented in conformity with U.S. generally accepted accounting principles (GAAP). For further information, refer to the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2025.
(2) REVENUE RECOGNITION
Emerson is a global technology and software company that provides innovative solutions for customers in a wide range of end markets around the world. The majority of the Company's revenues relate to a broad offering of manufactured products and software which are recognized at the point in time when control transfers, while a smaller portion is recognized over time or relates to sales arrangements with multiple performance obligations. See Note 15 for additional information about the Company's revenues.
The following table summarizes the balances of the Company's unbilled receivables (contract assets), which are reported in Other assets (current and noncurrent), and its customer advances (contract liabilities), which are reported in Accrued expenses and Other liabilities.
| Sept 30, 2025 | June 30, 2026 | ||||||||||||||||
| Unbilled receivables (contract assets) | $ | ||||||||||||||||
| Customer advances (contract liabilities) | ( | ( | |||||||||||||||
| Net contract assets | $ | ||||||||||||||||
The majority of the Company's contract balances relate to (1) arrangements where revenue is recognized over time and payments from customers are made according to a contractual billing schedule, and (2) revenue from term software license arrangements where the license revenue is recognized upfront upon delivery. The change in net contract assets was immaterial during the period. Revenue recognized for the three and nine months ended June 30, 2026 included $119 and $709 , respectively, that was included in the beginning contract liability balance. Other factors that impacted the change in net contract assets were immaterial. Revenue recognized for the three and nine months ended June 30, 2026 for performance obligations that were satisfied in previous periods, including cumulative catchup adjustments on the Company's long-term contracts, was immaterial.
6
(3) COMMON SHARES
Reconciliations of weighted-average shares for basic and diluted earnings per common share follow. Earnings allocated to participating securities were inconsequential.
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2026 | 2025 | 2026 | ||||||||||||||||||||
| Basic shares outstanding | |||||||||||||||||||||||
| Dilutive shares | |||||||||||||||||||||||
| Diluted shares outstanding | |||||||||||||||||||||||
(4) ACQUISITIONS AND DIVESTITURES
AspenTech
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 in 2025. Separately, AspenTech incurred $127 ($113 after-tax) of deal-related fees which are reported as acquisition/divestiture costs in Other deductions, net in 2025. AspenTech is now reported as a part of the Control Systems & Software segment in the Software & Systems business group, see Note 15.
Other Transactions
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. The Company recognized goodwill of $32 (none of which is expected to be tax deductible) and other identifiable intangible assets of $20 , consisting of developed technology and customer relationships with a weighted-average useful life of approximately 5 years.
(5) DISCONTINUED OPERATIONS
On May 31, 2023, the Company completed the sale of a majority stake in its Climate Technologies business to private equity funds managed by Blackstone. As a part of this transaction, Emerson retained a 40 percent non-controlling common equity interest in a new standalone joint venture between Emerson and Blackstone named Copeland. Subsequently, in August of 2024, the Company sold its 40 percent non-controlling common equity interest in Copeland to private equity funds managed by Blackstone for $1.5 billion.
Earnings before income taxes from discontinued operations for the three and nine months ended June 30, 2025 were $4 and $5 , respectively. Earnings from discontinued operations, net of tax for the three and nine months ended June 30, 2025 were $6 and $7 , respectively.
Cash from discontinued operating activities of $576 for the nine months ended June 30, 2025 primarily represents income taxes paid related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland.
7
(6) PENSION & POSTRETIREMENT PLANS
Total periodic pension and postretirement (income) expense is summarized below:
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2025 | 2026 | 2025 | 2026 | ||||||||||||||||||||||||||||||||
| Service cost | $ | $ | |||||||||||||||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Net amortization | |||||||||||||||||||||||||||||||||||
| Total | $ | ( | ( | $ | ( | ( | |||||||||||||||||||||||||||||
(7) OTHER DEDUCTIONS, NET
Other deductions, net are summarized below:
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2025 | 2026 | 2025 | 2026 | ||||||||||||||||||||||||||||||||
| Amortization of intangibles (intellectual property and customer relationships) | $ | $ | |||||||||||||||||||||||||||||||||
| Restructuring costs | |||||||||||||||||||||||||||||||||||
| Acquisition/divestiture fees and related costs | |||||||||||||||||||||||||||||||||||
| Foreign currency transaction (gains) losses | |||||||||||||||||||||||||||||||||||
| Other | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||||||||||||||
For the three and nine months ended June 30, 2026, the decreases in acquisition/divestiture costs and intangibles amortization are primarily related to the AspenTech transaction, including backlog amortization of $13 and $65 , respectively, in the prior year. Other is composed of several items, including a portion of pension expense (income), litigation costs, provision for bad debt and other items, none of which is individually significant.
8
(8) RESTRUCTURING COSTS
Restructuring expense reflects costs associated with the Company’s ongoing efforts to improve operational efficiency and deploy assets globally in order to remain competitive on a worldwide basis. The Company expects fiscal 2026 restructuring expense and related costs to be approximately $185 , including costs to complete actions initiated in the first nine months of the year.
Restructuring expense by business segment follows:
| Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2026 | 2025 | 2026 | |||||||||||||||||||||||||||||||||||
| Control Systems & Software | $ | $ | ||||||||||||||||||||||||||||||||||||
| Test & Measurement | ||||||||||||||||||||||||||||||||||||||
| Software & Systems | ||||||||||||||||||||||||||||||||||||||
| Sensors | ||||||||||||||||||||||||||||||||||||||
| Final Control | ||||||||||||||||||||||||||||||||||||||
| Intelligent Devices | ||||||||||||||||||||||||||||||||||||||
| Safety & Productivity | ( | |||||||||||||||||||||||||||||||||||||
| Corporate | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||||||||||||||
Details of the change in the liability for restructuring costs during the nine months ended June 30, 2026 follow:
| Sept 30, 2025 | Expense | Utilized/Paid | June 30, 2026 | ||||||||||||||||||||||||||||||||
| Severance and benefits | $ | ||||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||
| Total | $ | ||||||||||||||||||||||||||||||||||
The tables above do not include $12 and $4 of costs related to restructuring actions incurred for the three months ended June 30, 2026 and 2025, respectively, that are required to be reported in cost of sales and selling, general and administrative expenses; year-to-date amounts are $23 and $11 , respectively. Corporate restructuring for the three and nine months ended June 30, 2025 includes $20 and $21 , respectively, of integration-related stock compensation expense attributable to the AspenTech transaction.
(9) TAXES
Income taxes were $198 in the third quarter of fiscal 2026 and $154 in 2025, resulting in effective tax rates of 22 percent and 21 percent, respectively. In the current year, the One Big Beautiful Bill Act (the "OBBBA") increased the effective tax rate by approximately 1 percentage point due to a lower tax deduction for foreign-derived intangible income from the change to domestic research and development in fiscal 2026.
Income taxes were $542 in the first nine months of fiscal 2026 and $536 in 2025, resulting in effective tax rates of 22 percent and 25 percent, respectively. The current year rate was negatively impacted by approximately 1 percentage point due to the OBBBA impact discussed above. Excluding the impact related to the OBBBA, the lower rate in the current year reflected favorable tax items that reduced the rate by approximately 2 percentage points. The prior year rate was negatively impacted by $49 ($0.09 per share) of discrete tax items related to the AspenTech transaction. In addition, the fees incurred by AspenTech were not fully deductible. In total, the net impact of these items increased the prior year rate by approximately 3 percentage points.
9
(10) OTHER FINANCIAL INFORMATION
| Sept 30, 2025 | June 30, 2026 | ||||||||||||||||
| Inventories | |||||||||||||||||
| Finished products | $ | ||||||||||||||||
| Raw materials and work in process | |||||||||||||||||
| Total | $ | ||||||||||||||||
| Property, plant and equipment, net | |||||||||||||||||
| Property, plant and equipment, at cost | $ | ||||||||||||||||
| Less: Accumulated depreciation | |||||||||||||||||
| Total | $ | ||||||||||||||||
| Goodwill by business segment | ||||||||||||||
| Control Systems & Software | $ | |||||||||||||
| Test & Measurement | ||||||||||||||
| Software & Systems | ||||||||||||||
| Sensors | ||||||||||||||
| Final Control | ||||||||||||||
| Intelligent Devices | ||||||||||||||
| Safety & Productivity | ||||||||||||||
| Total | $ | |||||||||||||
| Sept 30, 2025 | June 30, 2026 | ||||||||||||||||
| Other intangible assets | |||||||||||||||||
| Gross carrying amount | $ | ||||||||||||||||
| Less: Accumulated amortization | |||||||||||||||||
| Net carrying amount | $ | ||||||||||||||||
Other intangible assets include customer relationships, net, of $5,375 and $5,801 and intellectual property, net, of $3,052 and $3,411 as of June 30, 2026 and September 30, 2025, respectively.
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2026 | 2025 | 2026 | ||||||||||||||||||||
| Depreciation and amortization expense include the following: | |||||||||||||||||||||||
| Depreciation expense | $ | $ | |||||||||||||||||||||
Amortization of intangibles (includes $ | |||||||||||||||||||||||
| Amortization of capitalized software | |||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||
10
| Sept 30, 2025 | June 30, 2026 | ||||||||||||||||
| Other assets include the following: | |||||||||||||||||
| Pension assets | $ | ||||||||||||||||
| Operating lease right-of-use assets | |||||||||||||||||
| Unbilled receivables (contract assets) | |||||||||||||||||
| Deferred income taxes | |||||||||||||||||
| Asbestos-related insurance receivables | |||||||||||||||||
| Accrued expenses include the following: | |||||||||||||||||
| Customer advances (contract liabilities) | $ | ||||||||||||||||
| Employee compensation | |||||||||||||||||
| Product warranty | |||||||||||||||||
| Income taxes | |||||||||||||||||
| Sept 30, 2025 | June 30, 2026 | ||||||||||||||||
| Other liabilities include the following: | |||||||||||||||||
| Deferred income taxes | $ | ||||||||||||||||
| Operating lease liabilities (noncurrent) | |||||||||||||||||
| Pension and postretirement liabilities | |||||||||||||||||
| Asbestos litigation | |||||||||||||||||
(11) DEBT
On February 10, 2026, the Company entered into a $2 billion 364-day revolving backup credit facility to support commercial paper borrowings. This facility replaces the Company's $3 billion 364-day revolving backup credit facility entered into on February 11, 2025, which expired by its terms. This facility is in addition to the Company's existing $3.5 billion five-year revolving backup credit facility with various banks, which was entered into in February 2023. Both credit facilities are unsecured and may be accessed under various interest rate alternatives at the Company's option. The fees to maintain the facilities are immaterial and the Company has not incurred any borrowings under either facility or previous facilities.
11
(12) FINANCIAL INSTRUMENTS
Hedging Activities – As of June 30, 2026, the notional amount of foreign currency hedge positions was approximately $3.9 billion. All derivatives receiving hedge accounting are cash flow hedges. The majority of hedging gains and losses deferred as of June 30, 2026 are expected to be recognized over the next 12 months as the underlying forecasted transactions occur. Gains and losses on foreign currency derivatives reported in Other deductions, net reflect hedges of balance sheet exposures that do not receive hedge accounting. Cash flows related to foreign currency hedges are classified within operating cash flows.
Net Investment Hedge – In fiscal 2019, the Company issued euro-denominated debt of €1.5 billion, of which €500 was repaid in 2024. During the current year, the Company repaid an additional €500 of 1.25 % euro notes that matured in October 2025. In fiscal 2025, the Company issued €500 of 3.0 % notes due March 2031 and €500 of 3.5 % notes due March 2037. The euro notes reduce foreign currency risk associated with the Company's international subsidiaries that use the euro as their functional currency and have been designated as a hedge of a portion of the investment in these operations. Foreign currency gains or losses associated with the euro-denominated debt are deferred in accumulated other comprehensive income (loss) and will remain until the hedged investment is sold or substantially liquidated. Cash flows related to the euro-denominated debt are classified within financing cash flows.
The following gains and losses are included in earnings and other comprehensive income (OCI) for the three and nine months ended June 30, 2025 and 2026:
| Into Earnings | Into OCI | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3rd Quarter | Nine Months | 3rd Quarter | Nine Months | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gains (Losses) | Location | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency | Sales | $ | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency | Cost of sales | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency | Other deductions, net | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Investment Hedges | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Euro denominated debt | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Regardless of whether derivatives and non-derivative financial instruments receive hedge accounting, the Company expects hedging gains or losses to be offset by losses or gains on the related underlying exposures. The amounts ultimately recognized will differ from those presented above for open positions, which remain subject to ongoing market price fluctuations until settlement. Derivatives receiving hedge accounting are highly effective and no amounts were excluded from the assessment of hedge effectiveness.
Fair Value Measurement – Valuations for all derivatives and the Company's long-term debt fall within Level 2 of the GAAP valuation hierarchy. As of June 30, 2026, the fair value of long-term debt was approximately $7.5 billion, which was lower than the carrying value by $762 . The fair value of foreign currency contracts, which are reported in Other current assets and Accrued expenses, did not materially change since September 30, 2025.
Counterparties to derivatives arrangements are companies with investment-grade credit ratings. The Company has bilateral collateral arrangements with counterparties with credit rating-based posting thresholds that vary depending on the arrangement. If credit ratings on the Company's debt fall below pre-established levels, counterparties can require immediate full collateralization of all derivatives in net liability positions. The maximum amount that could potentially have been required was immaterial. The Company also can demand full collateralization of derivatives in net asset positions should any counterparty credit ratings fall below certain thresholds. No collateral was posted with counterparties and none was held by the Company as of June 30, 2026.
12
(13) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Activity in Accumulated other comprehensive income (loss) for the three and nine months ended June 30, 2026 and 2025 is shown below, net of income taxes: | |||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2025 | 2026 | 2025 | 2026 | ||||||||||||||||||||||||||||||||
| Foreign currency translation | |||||||||||||||||||||||||||||||||||
| Beginning balance | $ | ( | ( | $ | ( | ( | |||||||||||||||||||||||||||||
Other comprehensive income (loss), net of tax of $ | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Purchase of noncontrolling interest | |||||||||||||||||||||||||||||||||||
| Ending balance | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Pension and postretirement | |||||||||||||||||||||||||||||||||||
| Beginning balance | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
Amortization of deferred actuarial losses into earnings, net of tax of $ | |||||||||||||||||||||||||||||||||||
| Ending balance | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Cash flow hedges | |||||||||||||||||||||||||||||||||||
| Beginning balance | ( | ||||||||||||||||||||||||||||||||||
Gains deferred during the period, net of taxes of $ | |||||||||||||||||||||||||||||||||||
Reclassification of realized (gains) losses to sales and cost of sales, net of tax of $ | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Ending balance | |||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income (loss) | $ | ( | ( | $ | ( | ( | |||||||||||||||||||||||||||||
(14) STOCK-BASED COMPENSATION
In 2025, the Board of Directors of the Company adopted and shareholders approved the 2025 Employee Stock Purchase Plan (the “ESPP”), and the plan commenced on January 1, 2026. The ESPP permits eligible employees to purchase shares of common stock at a discount through payroll deductions with a maximum of 10 million shares of common stock available to be issued over the term of the plan. The shares purchasable under the ESPP shall be shares of authorized but unissued or reacquired common stock, including shares of common stock purchased on the open market.
(15) BUSINESS SEGMENTS
On November 20, 2025, Emerson announced that with the completion of the Company's portfolio transformation, it has revised its management organization and updated its reportable segments. Effective in fiscal 2026, Emerson now reports results for five segments which are described in further detail below. Prior year amounts have been reclassified to conform to the current year presentation.
The Control Systems & Software segment delivers a portfolio of automation systems, intelligent software and industrial AI solutions. This segment empowers industrial organizations worldwide to harness data, optimize performance and achieve operational excellence on the plant level and across the enterprise.
Featuring market-leading brands and technologies – including DeltaV™ and Ovation™ control systems and AspenTech’s asset optimization software – this segment integrates advanced automation, edge-to-cloud analytics and AI. These solutions enable customers to make faster, smarter decisions, boost productivity and accelerate their digital transformation in complex environments. This segment also now includes programmable automation controllers, which were previously reported in the former Discrete Automation segment.
13
The Test & Measurement segment offers an integrated portfolio of intelligent test platforms, modular hardware and powerful software to accelerate innovation, reduce complexity and enhance product quality. With automated test solutions, the NI brand delivers flexible, AI-enabled tools that provide insights and adaptability for measurement and control challenges across diverse industries.
Featuring open software architectures, flexible hardware systems and expert services, Test & Measurement enables customers to connect data and automation, optimize testing processes and assist in reliable performance. By integrating advanced analytics and automation technologies, these solutions help companies drive efficiency and respond quickly to evolving demands.
The Control Systems & Software and Test & Measurement segments are combined and reported as the Software & Systems group.
The Sensors segment (formerly described as Measurement & Analytical) delivers leading sensing and measurement solutions that provide real-time, reliable data for the world’s most essential applications. Leveraging innovative technologies and trusted brands like Rosemount and Micro Motion, the segment helps customers to monitor critical parameters, optimize operations and support safer, more sustainable performance.
With a comprehensive portfolio that includes secure, wireless and non-intrusive instrumentation, Emerson’s Sensors segment empowers organizations to detect, analyze and respond to changing conditions in even the harshest environments. By integrating advanced sensors with automation platforms and analytics, these solutions help customers unlock operational insights, ensure compliance and accelerate productivity at scale.
The Final Control segment is a leading supplier of valves, digital valve controllers, actuators and regulators engineered to excel in the most demanding conditions. Anchored by trusted brands like Fisher, ASCO and Bettis, the segment empowers customers to precisely manage the flow of liquids and gases for safer, more reliable and efficient operations. This segment also now includes the fluid & motion control business from the former Discrete Automation segment.
With solutions spanning control, isolation and pressure relief valves, as well as solenoid and pneumatic valves, valve position indicators, cylinders, air preparation equipment and electric linear motion, Final Control supports critical applications across a wide range of industries. By combining deep expertise with leading technologies, these solutions help customers optimize performance and drive long-term sustainability.
The Sensors and Final Control segments are combined and reported as the Intelligent Devices group.
The Safety & Productivity segment delivers innovative tools, connected equipment and technologies that empower professionals in the mechanical, electrical and plumbing industries. The segment provides a comprehensive range of mechanical, electrical and diagnostic solutions to support critical infrastructure, promote safety and drive productivity across construction, maintenance and industrial environments. This segment also now includes the electrical equipment and materials joining businesses from the former Discrete Automation segment.
14
Summarized information about the Company's results of operations by business segment follows:
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| 2025 | |||||||||||||||||||||||||||||||||||||||||
| Control Systems & Software | Test & Measurement | Software & Systems | Sensors | Final Control | Intelligent Devices | Safety & Productivity | |||||||||||||||||||||||||||||||||||
| Net Sales | $ | ||||||||||||||||||||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||||||||||||||||||||
| Other deductions, net | |||||||||||||||||||||||||||||||||||||||||
| Earnings (Loss) | $ | ( | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| 2026 | |||||||||||||||||||||||||||||||||||||||||
| Control Systems & Software | Test & Measurement | Software & Systems | Sensors | Final Control | Intelligent Devices | Safety & Productivity | |||||||||||||||||||||||||||||||||||
| Net Sales | $ | ||||||||||||||||||||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||||||||||||||||||||
| Other deductions, net | |||||||||||||||||||||||||||||||||||||||||
| Earnings (Loss) | $ | ||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| 2025 | |||||||||||||||||||||||||||||||||||||||||
| Control Systems & Software | Test & Measurement | Software & Systems | Sensors | Final Control | Intelligent Devices | Safety & Productivity | |||||||||||||||||||||||||||||||||||
| Net Sales | $ | ||||||||||||||||||||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||||||||||||||||||||
| Other deductions, net | |||||||||||||||||||||||||||||||||||||||||
| Earnings (Loss) | $ | ( | |||||||||||||||||||||||||||||||||||||||
| Nine Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| 2026 | |||||||||||||||||||||||||||||||||||||||||
| Control Systems & Software | Test & Measurement | Software & Systems | Sensors | Final Control | Intelligent Devices | Safety & Productivity | |||||||||||||||||||||||||||||||||||
| Net Sales | $ | ||||||||||||||||||||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||||||||||||||||||||
| Other deductions, net | |||||||||||||||||||||||||||||||||||||||||
| Earnings (Loss) | $ | ||||||||||||||||||||||||||||||||||||||||
15
The following table reconciles the total segment results from the tables above to the Company's consolidated results.
| Earnings (Loss) | |||||||||||||||||||||||
| Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2026 | 2025 | 2026 | ||||||||||||||||||||
| Segment Totals | $ | $ | |||||||||||||||||||||
| Corporate items: | |||||||||||||||||||||||
| Stock compensation | ( | ( | ( | ( | |||||||||||||||||||
| Unallocated pension and postretirement costs | |||||||||||||||||||||||
| Corporate and other | ( | ( | ( | ( | |||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||
Stock compensation for the three and nine months ended June 30, 2026 included integration-related stock compensation expense of $4 and $13 , respectively; prior year amounts were $26 and $37 , respectively (of which $20 and $21 was reported as restructuring costs). Corporate and other for the three and nine months ended June 30, 2026 included acquisition/divestiture fees and related costs of $28 and $41 , respectively; prior year amounts were $38 and $216 , respectively.
In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act ("IEEPA") does not authorize the imposition of tariffs. Subsequently, on April 20, 2026, U.S. Customs and Border Protection launched an administrative portal through which eligible importers could submit claims for refunds. During the three months ended June 30, 2026, the Company filed certain claims and received tariff refunds of $82 ($0.11 per share), and the benefit was recorded in Cost of sales. This benefit is reflected in Corporate and Other in the table above. The timing and amount of any further tariff refunds remain uncertain, and, accordingly, no benefit was recognized as of June 30, 2026 for any additional potential refunds related to IEEPA tariffs previously paid.
Additional segment financial information is presented in the tables below:
| Total Assets | Depreciation and Amortization | ||||||||||||||||||||||||||||||||||
| As of Sept. 30, | As of June 30, | Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||||||||||||
| 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | ||||||||||||||||||||||||||||||
| Control Systems & Software | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Test & Measurement | |||||||||||||||||||||||||||||||||||
| Software & Systems | |||||||||||||||||||||||||||||||||||
| Sensors | |||||||||||||||||||||||||||||||||||
| Final Control | |||||||||||||||||||||||||||||||||||
| Intelligent Devices | |||||||||||||||||||||||||||||||||||
| Safety & Productivity | |||||||||||||||||||||||||||||||||||
| Corporate and other | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||||||||||||||||||||
16
Sales by geographic destination, Americas, Asia, Middle East & Africa ("AMEA") and Europe, are summarized below:
| Three Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Americas | AMEA | Europe | Total | Americas | AMEA | Europe | Total | |||||||||||||||||||||||||||||||||||||||||||
| Control Systems & Software | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Test & Measurement | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Software & Systems | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Sensors | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Final Control | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Intelligent Devices | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Safety & Productivity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Americas | AMEA | Europe | Total | Americas | AMEA | Europe | Total | |||||||||||||||||||||||||||||||||||||||||||
| Control Systems & Software | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
| Test & Measurement | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Software & Systems | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Sensors | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Final Control | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Intelligent Devices | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Safety & Productivity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
17
Items 2 and 3.
Management's Discussion and Analysis of Financial Condition and Results of Operations
(Dollars are in millions, except per share amounts or where noted)
OVERVIEW
For the third quarter of fiscal 2026, net sales were $4.9 billion, up 7 percent compared with the prior year. Underlying sales, which exclude foreign currency translation, acquisitions and divestitures, were up 6 percent. Foreign currency translation had a 1 percent favorable impact.
Earnings from continuing operations attributable to common stockholders were $718, up 24 percent, and diluted earnings per share from continuing operations were $1.28, up 24 percent compared with $1.03 in the prior year. Adjusted diluted earnings per share from continuing operations were $1.71, up 13 percent compared with $1.52 in the prior year. Overall, results reflected sales growth and strong operating performance.
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 and related costs, first year purchase accounting related items and transaction-related costs, discrete taxes and certain gains, losses or impairments.
| Three Months Ended June 30, | 2025 | 2026 | ||||||||||||||||||
| Diluted earnings from continuing operations per share | $ | 1.03 | 1.28 | |||||||||||||||||
| Amortization of intangibles | 0.37 | 0.35 | ||||||||||||||||||
| Restructuring and related costs | 0.06 | 0.13 | ||||||||||||||||||
| Acquisition/divestiture fees and related costs | 0.06 | 0.05 | ||||||||||||||||||
| Discrete taxes | — | 0.01 | ||||||||||||||||||
| IEEPA tariff refunds | — | (0.11) | ||||||||||||||||||
| Adjusted diluted earnings from continuing operations per share | $ | 1.52 | 1.71 | |||||||||||||||||
The table below summarizes the changes in adjusted diluted earnings per share from continuing operations. The items identified below are discussed throughout MD&A, see further discussion above and in the Business Segments and Financial Position sections below.
| Three Months Ended | ||||||||
Adjusted diluted earnings from continuing operations per share - June 30, 2025 | $ | 1.52 | ||||||
| Operations | 0.19 | |||||||
| Foreign currency | 0.03 | |||||||
| Share count | 0.01 | |||||||
| Stock compensation | (0.03) | |||||||
| Other | (0.01) | |||||||
Adjusted diluted earnings from continuing operations per share - June 30, 2026 | $ | 1.71 | ||||||
18
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30
Following is an analysis of the Company’s operating results for the third quarter ended June 30, 2026, compared with the third quarter ended June 30, 2025.
| 2025 | 2026 | Change | |||||||||||||||
| (dollars in millions, except per share amounts) | |||||||||||||||||
| Net sales | $ | 4,553 | 4,873 | 7 | % | ||||||||||||
| Gross profit | $ | 2,393 | 2,655 | 11 | % | ||||||||||||
| Percent of sales | 52.6 | % | 54.5 | % | 1.9 pts | ||||||||||||
| SG&A | $ | 1,266 | 1,343 | 6 | % | ||||||||||||
| Percent of sales | 27.8 | % | 27.6 | % | (0.2) pts | ||||||||||||
| Other deductions, net | $ | 298 | 311 | ||||||||||||||
| Amortization of intangibles | $ | 219 | 204 | ||||||||||||||
| Restructuring costs | $ | 37 | 87 | ||||||||||||||
| Interest expense, net | $ | 95 | 85 | ||||||||||||||
| Earnings from continuing operations before income taxes | $ | 734 | 916 | 25 | % | ||||||||||||
| Percent of sales | 16.1 | % | 18.8 | % | 2.7 pts | ||||||||||||
| Earnings from continuing operations common stockholders | $ | 580 | 718 | 24 | % | ||||||||||||
| Percent of sales | 12.7 | % | 14.7 | % | 2.0 pts | ||||||||||||
| Net earnings common stockholders | $ | 586 | 718 | 23 | % | ||||||||||||
| Diluted EPS - Earnings from continuing operations | $ | 1.03 | 1.28 | 24 | % | ||||||||||||
| Diluted EPS - Net earnings | $ | 1.04 | 1.28 | 23 | % | ||||||||||||
| Adjusted Diluted EPS - Earnings from continuing operations | $ | 1.52 | 1.71 | 13 | % | ||||||||||||
Net sales for the third quarter of fiscal 2026 were $4.9 billion, up 7 percent compared with 2025. Software & Systems sales were up 11 percent, Intelligent Devices sales were up 6 percent, and Safety & Productivity sales were up 3 percent. Underlying sales were up 6 percent on 3 percent higher volume and 3 percent higher price. Foreign currency translation had a 1 percent favorable impact. Underlying sales were up 10 percent in the U.S. and up 4 percent internationally. The Americas was up 8 percent, Europe was down 1 percent, and Asia, Middle East & Africa was up 8 percent (China down 3 percent).
In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act ("IEEPA") does not authorize the imposition of tariffs. Subsequently, on April 20, 2026, U.S. Customs and Border Protection launched an administrative portal through which eligible importers could submit claims for refunds. During the three months ended June 30, 2026, the Company filed certain claims and received tariff refunds of $82 ($0.11 per share), and the benefit was recorded in Cost of sales. The timing and amount of any further tariff refunds remain uncertain, and, accordingly, no benefit was recognized as of June 30, 2026 for any additional potential refunds related to IEEPA tariffs previously paid.
Cost of sales for the third quarter of fiscal 2026 were $2,218, an increase of $58 compared with 2025, and gross margin of 54.5 percent increased 1.9 percentage points. Gross margin increased primarily due to the tariff refunds discussed above.
Selling, general and administrative (SG&A) expenses of $1,343 increased $77 and SG&A as a percent of sales was 27.6 percent, a decrease of 0.2 percentage points. SG&A as a percent of sales decreased due to leverage on higher sales and savings from cost reduction actions.
Other deductions, net were $311 for the third quarter of fiscal 2026, an increase of $13 compared with the prior year, due to an increase in restructuring costs, partially offset by lower amortization. See Note 7.
19
Pretax earnings from continuing operations of $916 increased $182, up 25 percent compared with the prior year, reflecting strong operating results as well as the tariff refunds discussed above. Earnings increased $51 in Software & Systems and $55 in Intelligent Devices, and decreased $10 in Safety and Productivity. See the Business Segments discussion that follows and Note 15.
Income taxes were $198 in the third quarter of fiscal 2026 and $154 in 2025, resulting in effective tax rates of 22 percent and 21 percent, respectively. In the current year, the One Big Beautiful Bill Act (the "OBBBA") increased the effective tax rate by approximately 1 percentage point due to lower tax deduction for foreign-derived intangible income from the change to domestic research and development in fiscal 2026. The Company expects the OBBBA to slightly benefit the effective tax rate beginning in fiscal 2027.
Earnings from continuing operations attributable to common stockholders were $718, up 24 percent, and diluted earnings per share from continuing operations were $1.28, up 24 percent compared with $1.03 in the prior year. Adjusted diluted earnings per share from continuing operations were $1.71 compared with $1.52 in the prior year, up 13 percent. Overall, the increase in earnings per share reflected strong operating results. See the analysis above of adjusted earnings per share for further details.
The table below, which shows results on an adjusted EBITA basis, is intended to supplement the Company's discussion of its results of operations herein. The Company defines adjusted EBITA as earnings from continuing operations excluding interest expense, net, income taxes, intangibles amortization expense, restructuring and related costs, first year purchase accounting related items and transaction-related costs, and certain gains, losses or impairments. Adjusted EBITA and adjusted EBITA margin are measures used by management and may be useful for investors to evaluate the Company's operational performance.
| Three Months Ended June 30, | 2025 | 2026 | Change | ||||||||||||||
| Earnings from continuing operations before income taxes | $ | 734 | 916 | 25 | % | ||||||||||||
| Percent of sales | 16.1 | % | 18.8 | % | 2.7 pts | ||||||||||||
| Interest expense, net | 95 | 85 | |||||||||||||||
| Amortization of intangibles | 269 | 253 | |||||||||||||||
| Restructuring and related costs | 41 | 99 | |||||||||||||||
| Acquisition/divestiture fees and related costs | 44 | 32 | |||||||||||||||
| IEEPA tariff refunds | — | (82) | |||||||||||||||
| Adjusted EBITA from continuing operations | $ | 1,183 | 1,303 | 10 | % | ||||||||||||
| Percent of sales | 26.0 | % | 26.7 | % | 0.7 pts | ||||||||||||
20
Business Segments
Following is an analysis of operating results for the Company’s business segments for the third quarter ended June 30, 2026, compared with the third quarter ended June 30, 2025. The Company defines segment earnings as earnings before interest and taxes. See Note 15 for a discussion of the Company's business segments.
SOFTWARE & SYSTEMS
| 2025 | 2026 | Change | FX | Acq/Div | U/L | ||||||||||||||||||||||||||||||
| Sales: | |||||||||||||||||||||||||||||||||||
| Control Systems & Software | $ | 1,120 | 1,199 | 7 | % | — | % | — | % | 7 | % | ||||||||||||||||||||||||
| Test & Measurement | 360 | 445 | 23 | % | — | % | — | % | 23 | % | |||||||||||||||||||||||||
| Total | $ | 1,480 | 1,644 | 11 | % | — | % | — | % | 11 | % | ||||||||||||||||||||||||
| Earnings: | |||||||||||||||||||||||||||||||||||
| Control Systems & Software | $ | 271 | 285 | 5 | % | ||||||||||||||||||||||||||||||
| Test & Measurement | (26) | 11 | 144 | % | |||||||||||||||||||||||||||||||
| Total | $ | 245 | 296 | 21 | % | ||||||||||||||||||||||||||||||
| Margin | 16.6 | % | 18.0 | % | 1.4 pts | ||||||||||||||||||||||||||||||
| Amortization of intangibles: | |||||||||||||||||||||||||||||||||||
| Control Systems & Software | $ | 114 | 100 | ||||||||||||||||||||||||||||||||
| Test & Measurement | 107 | 108 | |||||||||||||||||||||||||||||||||
| Total | $ | 221 | 208 | ||||||||||||||||||||||||||||||||
| Restructuring and related costs: | |||||||||||||||||||||||||||||||||||
| Control Systems & Software | $ | 8 | 6 | ||||||||||||||||||||||||||||||||
| Test & Measurement | — | 13 | |||||||||||||||||||||||||||||||||
| Total | $ | 8 | 19 | ||||||||||||||||||||||||||||||||
| Adjusted EBITA | $ | 474 | 523 | 10 | % | ||||||||||||||||||||||||||||||
| Adjusted EBITA Margin | 32.1 | % | 31.8 | % | (0.3) pts | ||||||||||||||||||||||||||||||
Software & Systems sales were $1,644 in the third quarter of 2026, an increase of $164, or 11 percent. Underlying sales were up 11 percent on 7 percent higher volume and 4 percent higher price. Underlying sales increased 13 percent in the Americas and 16 percent in Asia, Middle East & Africa (China up 14 percent), while Europe decreased 1 percent. Control Systems & Software sales increased 7 percent, reflecting strong demand in power. Sales for Test & Measurement increased $85, or 23 percent, reflecting strength in semiconductor and aerospace & defense. Earnings for Software & Systems were $296, an increase of $51, or 21 percent, while margin increased 1.4 percentage points to 18.0 percent, reflecting leverage on higher sales, lower intangibles amortization and savings from cost reduction actions. Adjusted EBITA margin was 31.8 percent, a decrease of 0.3 percentage points.
21
INTELLIGENT DEVICES
| 2025 | 2026 | Change | FX | Acq/Div | U/L | ||||||||||||||||||||||||||||||
| Sales: | |||||||||||||||||||||||||||||||||||
| Sensors | $ | 1,013 | 1,091 | 8 | % | (1) | % | — | % | 7 | % | ||||||||||||||||||||||||
| Final Control | 1,522 | 1,586 | 4 | % | (1) | % | — | % | 3 | % | |||||||||||||||||||||||||
| Total | $ | 2,535 | 2,677 | 6 | % | (1) | % | — | % | 5 | % | ||||||||||||||||||||||||
| Earnings: | |||||||||||||||||||||||||||||||||||
| Sensors | $ | 246 | 303 | 23 | % | ||||||||||||||||||||||||||||||
| Final Control | 351 | 349 | (1) | % | |||||||||||||||||||||||||||||||
| Total | $ | 597 | 652 | 9 | % | ||||||||||||||||||||||||||||||
| Margin | 23.5 | % | 24.3 | % | 0.8 pts | ||||||||||||||||||||||||||||||
| Amortization of intangibles: | |||||||||||||||||||||||||||||||||||
| Sensors | $ | 11 | 11 | ||||||||||||||||||||||||||||||||
| Final Control | 30 | 27 | |||||||||||||||||||||||||||||||||
| Total | $ | 41 | 38 | ||||||||||||||||||||||||||||||||
| Restructuring and related costs: | |||||||||||||||||||||||||||||||||||
| Sensors | $ | 2 | 9 | ||||||||||||||||||||||||||||||||
| Final Control | 8 | 48 | |||||||||||||||||||||||||||||||||
| Total | $ | 10 | 57 | ||||||||||||||||||||||||||||||||
| Adjusted EBITA | $ | 648 | 747 | 15 | % | ||||||||||||||||||||||||||||||
| Adjusted EBITA Margin | 25.5 | % | 27.9 | % | 2.4 pts | ||||||||||||||||||||||||||||||
Intelligent Devices sales were $2,677 in the third quarter of 2026, an increase of $142, or 6 percent, compared to the prior year. Underlying sales increased 5 percent on 3 percent higher price and 2 percent higher volume. Underlying sales increased 6 percent in the Americas and 5 percent in Asia, Middle East & Africa (China down 8 percent), while Europe was flat. Sensors sales increased $78, or 8 percent, and underlying sales increased 7 percent, reflecting strong growth in the Americas, including strength in power and LNG. Final Control sales increased $64 or 4 percent, and underlying sales increased 3 percent, reflecting strong growth in Asia, Middle East & Africa and solid growth in the Americas, with strength in power. Earnings for Intelligent Devices increased $55, or 9 percent, while margin increased 0.8 percentage points reflecting leverage on higher sales and favorable price less net material inflation, partially offset by unfavorable mix resulting from increased greenfield project activity and increased restructuring costs. Adjusted EBITA margin was 27.9 percent, an increase of 2.4 percentage points, reflecting strong operating results.
22
SAFETY & PRODUCTIVITY
| 2025 | 2026 | Change | FX | Acq/Div | U/L | ||||||||||||||||||||||||||||||
| Sales | $ | 538 | 552 | 3 | % | (1) | % | — | % | 2 | % | ||||||||||||||||||||||||
| Earnings | $ | 103 | 93 | (10) | % | ||||||||||||||||||||||||||||||
| Margin | 19.2 | % | 16.9 | % | (2.3) pts | ||||||||||||||||||||||||||||||
| Amortization of intangibles | $ | 7 | 7 | ||||||||||||||||||||||||||||||||
| Restructuring and related costs | $ | — | 17 | ||||||||||||||||||||||||||||||||
| Adjusted EBITA | $ | 110 | 117 | 6 | % | ||||||||||||||||||||||||||||||
| Adjusted EBITA Margin | 20.4 | % | 21.2 | % | 0.8 pts | ||||||||||||||||||||||||||||||
Safety & Productivity sales were $552 in the third quarter of 2026, an increase of $14, or 3 percent compared to the prior year. Underlying sales were up 2 percent on 4 percent higher price offset by 2 percent lower volume. Underlying sales increased 4 percent in the Americas and increased 1 percent in Asia, Middle East & Africa, while Europe decreased 6 percent. Earnings for Safety & Productivity decreased $10, down 10 percent, while margin decreased 2.3 percentage points, reflecting increased restructuring costs and deleverage on lower volume, partially offset by favorable price less net material inflation and savings from cost reduction actions. Adjusted EBITA margin increased 0.8 percentage points.
23
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30
Following is an analysis of the Company’s operating results for the nine months ended June 30, 2026, compared with the nine months ended June 30, 2025.
| 2025 | 2026 | Change | |||||||||||||||
| (dollars in millions, except per share amounts) | |||||||||||||||||
| Net sales | $ | 13,161 | 13,781 | 5 | % | ||||||||||||
| Gross profit | $ | 7,000 | 7,388 | 6 | % | ||||||||||||
| Percent of sales | 53.2 | % | 53.6 | % | 0.4 pts | ||||||||||||
| SG&A | $ | 3,773 | 3,902 | 3 | % | ||||||||||||
| Percent of sales | 28.7 | % | 28.3 | % | (0.4) pts | ||||||||||||
| Other deductions, net | $ | 944 | 744 | ||||||||||||||
| Amortization of intangibles | $ | 677 | 613 | ||||||||||||||
| Restructuring costs | $ | 70 | 141 | ||||||||||||||
| Interest expense, net | $ | 145 | 258 | ||||||||||||||
| Earnings from continuing operations before income taxes | $ | 2,138 | 2,484 | 16 | % | ||||||||||||
| Percent of sales | 16.2 | % | 18.0 | % | 1.8 pts | ||||||||||||
| Earnings from continuing operations common stockholders | $ | 1,650 | 1,941 | 18 | % | ||||||||||||
| Percent of sales | 12.5 | % | 14.1 | % | 1.6 pts | ||||||||||||
| Net earnings common stockholders | $ | 1,657 | 1,941 | 17 | % | ||||||||||||
| Diluted EPS - Earnings from continuing operations | $ | 2.91 | 3.45 | 19 | % | ||||||||||||
| Diluted EPS - Net earnings | $ | 2.92 | 3.45 | 18 | % | ||||||||||||
| Adjusted Diluted EPS - Earnings from continuing operations | $ | 4.38 | 4.71 | 8 | % | ||||||||||||
Net sales for the first nine months of 2026 were $13.8 billion, up 5 percent compared with 2025. Software & Systems sales were up 7 percent, Intelligent Devices sales were up 4 percent, and Safety & Productivity sales were up 3 percent. Underlying sales were up 3 percent on 3 percent higher price, while volume was negatively impacted by approximately 1.5 percent related to the timing of software renewals and the conflict in the Middle East. Foreign currency translation had a 2 percent favorable impact. Underlying sales increased 8 percent in the U.S. and decreased 1 percent internationally. The Americas was up 6 percent, Europe was down 1 percent and Asia, Middle East & Africa was up 1 percent (China was down 5 percent).
Cost of sales for 2026 were $6,393, an increase of $232 compared with 2025, and gross margin of 53.6 percent increased 0.4 percentage points. Gross margin increased primarily due to favorable price less net material inflation and tariff refunds of $82 ($0.11 per share), partially offset by the negative impact related to the timing of software renewals. See Note 15 for further discussion of the tariff refunds.
SG&A expenses of $3,902 increased $129 and SG&A as a percent of sales decreased 0.4 percentage points to 28.3%, reflecting savings from cost reduction actions and leverage on higher sales.
Other deductions, net were $744 in 2026, a decrease of $200 compared with the prior year, due to a $175 decrease in acquisition/divestiture fees and related costs primarily associated with the AspenTech acquisition in the prior year and lower amortization due to backlog amortization of $65 in the prior year related to the AspenTech acquisition.
Interest expense, net was $258, an increase of $113 compared with 2025, due to increased short-term borrowings and long-term debt to fund the AspenTech transaction in March 2025.
24
Pretax earnings of $2,484 increased $346 compared with prior year, reflecting the impact of the AspenTech acquisition-related costs in the prior year discussed above and leverage on higher sales. Earnings increased $109 in Software & Systems and $71 in Intelligent Devices, and decreased $7 in Safety & Productivity, see the Business Segments discussion that follows and Note 15.
Income taxes were $542 in the first nine months of fiscal 2026 and $536 in 2025, resulting in effective tax rates of 22 percent and 25 percent, respectively. In the current year, the One Big Beautiful Bill Act (the "OBBBA") increased the effective tax rate by approximately 1 percentage point due to lower tax deduction for foreign-derived intangible income from the change to domestic research and development in fiscal 2026. The Company expects the OBBBA to slightly benefit the effective tax rate beginning in fiscal 2027. Excluding the impact related to the OBBBA, the lower rate in the current year reflected favorable tax items that reduced the rate by approximately 2 percentage points. The prior year rate was negatively impacted by $49 ($0.09 per share) of discrete tax items related to the AspenTech transaction. In addition, the fees incurred by AspenTech were not fully deductible. Overall, these items increased the prior year rate by approximately 3 percentage points.
Earnings from continuing operations attributable to common stockholders were $1,941, up 18 percent compared with the prior year, and diluted earnings per share from continuing operations were $3.45, up 19 percent compared with $2.91 in 2025. Adjusted diluted earnings per share from continuing operations were $4.71 compared with $4.38 in the prior year, up 8 percent. Overall, the increase in earnings per share reflected strong operating results. See the analysis below of adjusted earnings per share for further details.
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.
| Nine Months Ended June 30, | 2025 | 2026 | ||||||||||||||||||
| Diluted earnings from continuing operations per share | $ | 2.91 | 3.45 | |||||||||||||||||
| Amortization of intangibles | 1.00 | 1.04 | ||||||||||||||||||
| Restructuring and related costs | 0.12 | 0.22 | ||||||||||||||||||
| Acquisition/divestiture fees and related costs | 0.26 | 0.08 | ||||||||||||||||||
| Discrete taxes | 0.09 | 0.03 | ||||||||||||||||||
| IEEPA tariff refunds | — | (0.11) | ||||||||||||||||||
| Adjusted diluted earnings from continuing operations per share | $ | 4.38 | 4.71 | |||||||||||||||||
25
The table below summarizes the changes in adjusted diluted earnings per share from continuing operations. The items identified below are discussed throughout MD&A, see further discussion above and in the Business Segments and Financial Position sections below.
| Nine Months Ended | ||||||||
Adjusted diluted earnings from continuing operations per share - June 30, 2025 | $ | 4.38 | ||||||
| Operations | 0.37 | |||||||
| Impact of software renewals | (0.15) | |||||||
| Foreign currency | 0.10 | |||||||
| Share count | 0.04 | |||||||
| Other | (0.03) | |||||||
Adjusted diluted earnings from continuing operations per share - June 30, 2026 | $ | 4.71 | ||||||
The table below, which shows results on an adjusted EBITA basis, is intended to supplement the Company's discussion of its results of operations herein.
| Nine Months Ended June 30, | 2025 | 2026 | Change | ||||||||||||||
| Earnings from continuing operations before income taxes | $ | 2,138 | 2,484 | 16 | % | ||||||||||||
| Percent of sales | 16.2 | % | 18.0 | % | 1.8 pts | ||||||||||||
| Interest expense, net | 145 | 258 | |||||||||||||||
| Amortization of intangibles | 826 | 761 | |||||||||||||||
| Restructuring and related costs | 81 | 164 | |||||||||||||||
| Acquisition/divestiture fees and related costs | 232 | 54 | |||||||||||||||
| IEEPA tariff refunds | — | (82) | |||||||||||||||
| Adjusted EBITA from continuing operations | $ | 3,422 | 3,639 | 6 | % | ||||||||||||
| Percent of sales | 26.0 | % | 26.4 | % | 0.4 pts | ||||||||||||
26
Business Segments
Following is an analysis of operating results for the Company’s business segments for the nine months ended June 30, 2026, compared with the nine months ended June 30, 2025. The Company defines segment earnings as earnings before interest and taxes. See Note 15 for a discussion of the Company's business segments.
SOFTWARE & SYSTEMS
| 2025 | 2026 | Change | FX | Acq/Div | U/L | |||||||||||||||||||||||||||||||||
| Sales: | ||||||||||||||||||||||||||||||||||||||
| Control Systems & Software | $ | 3,235 | 3,332 | 3 | % | (1) | % | — | % | 2 | % | |||||||||||||||||||||||||||
| Test & Measurement | 1,077 | 1,268 | 18 | % | (3) | % | — | % | 15 | % | ||||||||||||||||||||||||||||
| Total | $ | 4,312 | 4,600 | 7 | % | (2) | % | — | % | 5 | % | |||||||||||||||||||||||||||
| Earnings: | ||||||||||||||||||||||||||||||||||||||
| Control Systems & Software | $ | 717 | 741 | 3 | % | |||||||||||||||||||||||||||||||||
| Test & Measurement | (64) | 21 | 133 | % | ||||||||||||||||||||||||||||||||||
| Total | $ | 653 | 762 | 17 | % | |||||||||||||||||||||||||||||||||
| Margin | 15.2 | % | 16.6 | % | 1.4 pts | |||||||||||||||||||||||||||||||||
| Amortization of intangibles: | ||||||||||||||||||||||||||||||||||||||
| Control Systems & Software | $ | 370 | 303 | |||||||||||||||||||||||||||||||||||
| Test & Measurement | 318 | 322 | ||||||||||||||||||||||||||||||||||||
| Total | $ | 688 | 625 | |||||||||||||||||||||||||||||||||||
| Restructuring and related costs: | ||||||||||||||||||||||||||||||||||||||
| Control Systems & Software | $ | 19 | 10 | |||||||||||||||||||||||||||||||||||
| Test & Measurement | 5 | 19 | ||||||||||||||||||||||||||||||||||||
| Total | $ | 24 | 29 | |||||||||||||||||||||||||||||||||||
| Adjusted EBITA | $ | 1,365 | 1,416 | 4 | % | |||||||||||||||||||||||||||||||||
| Adjusted EBITA Margin | 31.7 | % | 30.8 | % | (0.9) pts | |||||||||||||||||||||||||||||||||
Software & Systems sales were $4,600 in the first nine months of 2026, an increase of 7 percent compared to the prior year. Underlying sales increased 5 percent on 3 percent higher price and 2 percent higher volume (despite a negative 3 percent impact related to the timing of software renewals). Underlying sales increased 7 percent in the Americas, Europe decreased 1 percent, and Asia, Middle East & Africa increased 7 percent (China was up 4 percent). Control Systems & Software sales increased $97, or 3 percent, and underlying sales increased 2 percent reflecting strong demand in power and life sciences, partially offset by the negative impact related to the timing of software renewals. Sales for Test & Measurement increased $191, or 18 percent, and underlying sales increased 15 percent, reflecting strength in aerospace & defense and semiconductor. Earnings for Software & Systems were $762, an increase of $109, or 17 percent, and margin increased 1.4 percentage points, reflecting leverage on higher sales, savings from cost reduction actions and lower intangibles amortization, partially offset by the negative impact related to the timing of software renewals. Adjusted EBITA margin was 30.8 percent, a decrease of 0.9 percentage points, which included a negative impact relating to the timing of software renewals of approximately 2 percentage points.
27
INTELLIGENT DEVICES
| 2025 | 2026 | Change | FX | Acq/Div | U/L | |||||||||||||||||||||||||||||||||
| Sales: | ||||||||||||||||||||||||||||||||||||||
| Sensors | $ | 2,986 | 3,111 | 4 | % | (2) | % | — | % | 2 | % | |||||||||||||||||||||||||||
| Final Control | 4,315 | 4,469 | 4 | % | (2) | % | — | % | 2 | % | ||||||||||||||||||||||||||||
| Total | $ | 7,301 | 7,580 | 4 | % | (2) | % | — | % | 2 | % | |||||||||||||||||||||||||||
| Earnings: | ||||||||||||||||||||||||||||||||||||||
| Sensors | $ | 795 | 845 | 6 | % | |||||||||||||||||||||||||||||||||
| Final Control | 1,012 | 1,033 | 2 | % | ||||||||||||||||||||||||||||||||||
| Total | $ | 1,807 | 1,878 | 4 | % | |||||||||||||||||||||||||||||||||
| Margin | 24.8 | % | 24.8 | % | - pts | |||||||||||||||||||||||||||||||||
| Amortization of intangibles: | ||||||||||||||||||||||||||||||||||||||
| Sensors | $ | 33 | 34 | |||||||||||||||||||||||||||||||||||
| Final Control | 85 | 81 | ||||||||||||||||||||||||||||||||||||
| Total | $ | 118 | 115 | |||||||||||||||||||||||||||||||||||
| Restructuring and related costs: | ||||||||||||||||||||||||||||||||||||||
| Sensors | $ | 5 | 23 | |||||||||||||||||||||||||||||||||||
| Final Control | 18 | 76 | ||||||||||||||||||||||||||||||||||||
| Total | $ | 23 | 99 | |||||||||||||||||||||||||||||||||||
| Adjusted EBITA | $ | 1,948 | 2,092 | 7 | % | |||||||||||||||||||||||||||||||||
| Adjusted EBITA Margin | 26.7 | % | 27.6 | % | 0.9 pts | |||||||||||||||||||||||||||||||||
Intelligent Devices sales were $7,580 in the first nine months of 2026, an increase of $279, or 4 percent compared to the prior year. Underlying sales increased 2 percent on 3 percent higher price partially offset by 1 percent lower volume, including a 0.5 percent negative impact related to the conflict in the Middle East. Underlying sales increased 5 percent in the Americas, decreased 1 percent in Europe, and decreased 2 percent in Asia, Middle East & Africa (China down 10 percent). Sensors sales increased $125, or 4 percent, and underlying sales increased 2 percent, reflecting solid growth in the Americas, with strength in power and LNG. Final Control sales increased $154, or 4 percent, and underlying sales increased 2 percent, reflecting solid growth in the Americas, with strength in power. Earnings for Intelligent Devices increased $71, up 4 percent, while margin was flat, reflecting favorable price less net material inflation and savings from cost reduction actions, offset by increased restructuring costs and unfavorable mix. Adjusted EBITA margin increased 0.9 percentage points.
28
SAFETY & PRODUCTIVITY
| 2025 | 2026 | Change | FX | Acq/Div | U/L | ||||||||||||||||||||||||||||||
| Sales | $ | 1,548 | 1,601 | 3 | % | (1) | % | — | % | 2 | % | ||||||||||||||||||||||||
| Earnings | $ | 305 | 298 | (2) | % | ||||||||||||||||||||||||||||||
| Margin | 19.7 | % | 18.6 | % | (1.1) pts | ||||||||||||||||||||||||||||||
| Amortization of intangibles | $ | 20 | 21 | ||||||||||||||||||||||||||||||||
| Restructuring and related costs | $ | 3 | 21 | ||||||||||||||||||||||||||||||||
| Adjusted EBITA | $ | 328 | 340 | 4 | % | ||||||||||||||||||||||||||||||
| Adjusted EBITA Margin | 21.2 | % | 21.3 | % | 0.1 pts | ||||||||||||||||||||||||||||||
Safety & Productivity sales were $1,601 in the first nine months of 2026, an increase of $53, or 3 percent compared to the prior year. Underlying sales were up 2 percent on 5 percent higher price offset by 3 percent lower volume. Underlying sales increased 4 percent in the Americas, Europe decreased 5 percent and Asia, Middle East & Africa decreased 1 percent. Earnings for Safety & Productivity decreased $7, or 2 percent, while margin decreased 1.1 percentage points, reflecting increased restructuring costs and deleverage on lower volume, offset by favorable price less net material inflation and savings from cost reduction actions. Adjusted EBITA margin increased 0.1 percentage points.
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FINANCIAL CONDITION
Key elements of the Company's financial condition as of and for the nine months ended June 30, 2026 as compared to the year ended September 30, 2025 and the nine months ended June 30, 2025 follow.
| June 30, 2025 | Sept 30, 2025 | June 30, 2026 | |||||||||||||||
| Operating working capital | $ | 2,074 | $ | 2,039 | $ | 2,290 | |||||||||||
| Current ratio | 0.8 | 0.9 | 0.9 | ||||||||||||||
| Total debt-to-total capital | 41.7 | % | 39.3 | % | 39.2 | % | |||||||||||
| Net debt-to-net capital | 37.7 | % | 36.2 | % | 34.9 | % | |||||||||||
| Interest coverage ratio | 9.6 | X | 8.6 | X | 8.2 | X | |||||||||||
Operating working capital increased $251 compared to September 30, 2025, primarily reflecting an increase in inventory. The current ratio remained flat compared to September 30, 2025. The interest coverage ratio (earnings before income taxes plus interest expense, divided by interest expense) of 8.2X for the 12 months ended June 30, 2026 compares to 9.6X for the 12 months ended June 30, 2025. The decrease reflects higher interest expense compared to the prior year.
Operating cash flow from continuing operations for the first nine months of fiscal 2026 was $2,902, an increase of $238 compared with $2,664 in the prior year, reflecting higher earnings, partially offset by an increase in operating working capital. Free cash flow of $2,618 in the first nine months of fiscal 2026 (operating cash flow of $2,902 less capital expenditures of $284) increased $217 compared to free cash flow of $2,401 in 2025 (operating cash flow of $2,664 less capital expenditures of $263), reflecting the increase in operating cash flow. Cash used in investing activities was $322. Cash used in financing activities was $1,920, reflecting share repurchases of $898 and dividends of $935. During the first quarter, the Company repaid €500 of 1.25% euro notes that matured in October 2025.
Total cash provided by operating activities was $2,902, an increase of $814 compared with $2,088 in the prior year. The increase reflects $585 of income taxes paid in the second quarter of fiscal 2025 related to the sale of the Company's 40 percent non-controlling common equity interest in Copeland and higher operating cash flow from continuing operations.
On February 10, 2026, the Company entered into a $2 billion, 364-day revolving backup credit facility to support commercial paper borrowings. The facility replaces the Company’s $3 billion, 364-day credit agreement entered into on February 11, 2025, which expired by its terms. This facility is in addition to the Company's existing $3.5 billion five-year revolving backup credit facility with various banks, which was entered into in February 2023.
Emerson maintains a conservative financial structure to provide the strength and flexibility necessary to achieve our strategic objectives and has been successful in efficiently deploying cash where needed worldwide to fund operations, complete acquisitions and sustain long-term growth. Emerson is in a strong financial position, with total assets of $42 billion and common 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.
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FISCAL 2026 OUTLOOK
For fiscal year 2026, consolidated net sales are expected to be up approximately 5 percent, with underlying sales up approximately 3.5 percent, excluding a 1.5 percent favorable impact from foreign currency translation. Earnings per share are expected to be approximately $4.89, while adjusted earnings per share are expected to be approximately $6.55 (see the following reconciliation).
| Outlook for Fiscal 2026 Earnings Per Share | 2026 | |||||||
| Diluted earnings per share | ~ $4.89 | |||||||
| Amortization of intangibles | ~ 1.39 | |||||||
| Restructuring and related costs | ~ 0.24 | |||||||
| Acquisition/divestiture fees and related costs | ~ 0.09 | |||||||
| Discrete taxes | ~ 0.05 | |||||||
| IEEPA tariff refunds | ~ (0.11) | |||||||
| Adjusted diluted earnings per share | ~ $6.55 | |||||||
Operating cash flow is expected to be approximately $4.1 billion and free cash flow, which excludes projected capital spending of approximately $0.45 billion, is expected to be approximately $3.6 billion. The fiscal 2026 outlook assumes returning approximately $2.2 billion to shareholders through approximately $1.0 billion of share repurchases and approximately $1.2 billion of dividend payments.
Statements in this report that are not strictly historical may be “forward-looking” statements, which represent management’s expectations, based on currently available information. Actual results, performance or achievements could differ materially from those expressed in any forward-looking statement. Any forward-looking statements in this report speak only as of the date of this report. Emerson undertakes no obligation to update any such statements to reflect new information or later developments. Examples of risks and uncertainties that may cause our actual results or performance to be materially different from those expressed or implied by forward-looking statements include the scope, duration and ultimate impacts of the Russia-Ukraine, Middle East and other global conflicts, as well as economic and currency conditions, market demand, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, inflation, among others, which are set forth in the “Risk Factors” of Part I, Item 1A, and the "Safe Harbor Statement" of Part II, Item 7, to the Company's Annual Report on Form 10-K for the year ended September 30, 2025, and in subsequent reports filed with the SEC, which are hereby incorporated by reference. The outlook contained herein represents the Company's expectation for its consolidated results, other than as noted herein.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
There has been no significant change in our exposure to market risk during the three and nine months ended June 30, 2026. For a discussion of our exposure to market risk, refer to Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025.
Item 4. Controls and Procedures
The Company maintains a system of disclosure controls and procedures designed to ensure that information required to be disclosed in its reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported in a timely manner. This system also is designed to ensure information is accumulated and communicated to management, including the Company's certifying officers, to allow timely decisions regarding required disclosure. Based on an evaluation performed, the certifying officers have concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report.
Notwithstanding the foregoing, there can be no assurance that the Company's disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to report material information otherwise required to be set forth in the Company's reports.
There was no change in the Company's internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
| Period | Total Number of Shares Purchased (000s) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (000s) | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (000s) | |||||||||||||||||||||||||||||||
| April 2026 | 315 | $140.64 | 315 | 65,380 | |||||||||||||||||||||||||||||||
| May 2026 | 1,094 | $135.65 | 1,094 | 64,286 | |||||||||||||||||||||||||||||||
| June 2026 | 1,134 | $142.24 | 1,134 | 63,152 | |||||||||||||||||||||||||||||||
| Total | 2,543 | $139.21 | 2,543 | 63,152 | |||||||||||||||||||||||||||||||
In November 2025, the Board of Directors authorized the purchase of up to 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. Approximately 63.2 million shares remain available at June 30, 2026.
Item 5. Other Information
During the three-month period ended June 30, 2026, none of our directors or officers adopted terminated
Item 6. Exhibits
(a) Exhibits (Listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K).
| 31 | Certifications pursuant to Exchange Act Rule 13a-14(a). | ||||
| 32 | Certifications pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350. | ||||
| 101.INS | Attached as Exhibit 101 to this report are the following documents formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Statements of Earnings for the three and nine months ended June 30, 2026 and 2025, (ii) Consolidated Statements of Comprehensive Income for the three and nine months ended June 30, 2026 and 2025, (iii) Consolidated Balance Sheets as of September 30, 2025 and June 30, 2026, (iv) Consolidated Statements of Equity for the three and nine months ended June 30, 2026 and 2025, (v) Consolidated Statements of Cash Flows for the nine months ended June 30, 2026 and 2025, and (vi) Notes to Consolidated Financial Statements for the three and nine months ended June 30, 2026 and 2025. | ||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | ||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | ||||
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| EMERSON ELECTRIC CO. | ||||||||||||||
| By | /s/ M. J. Baughman | |||||||||||||
| M. J. Baughman | ||||||||||||||
| Executive Vice President, Chief Financial Officer | ||||||||||||||
| and Chief Accounting Officer | ||||||||||||||
| (on behalf of the registrant and as Chief Financial Officer) | ||||||||||||||
| August 4, 2026 | ||||||||||||||
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