Emerson Electric Co.

Q3 underlying sales increased 6% and underlying orders increased 7%. Adjusted segment EBITDA margin was 28.5%, up 140 basis points year over year, and adjusted EPS was $1.71, up 13%. Free cash flow was $1.3 billion, up 36%, with a 27.1% margin. Backlog ended at $8.2 billion, up 7% year over year, and software ACV grew 9% to $1.68 billion. For the full year, Emerson raised guidance to 5% GAAP sales growth, 3.5% underlying sales growth, about 28% adjusted segment EBITDA margin, adjusted EPS of about $6.55, and free cash flow of about $3.6 billion. Q4 sales growth is expected to be about 5%, with adjusted EPS of about $1.85 and adjusted segment EBITDA margin of 28.5%.

Lal Karsanbhai said the quarter reflected strong execution, customer intimacy, innovation, and operational discipline, and he emphasized that Emerson is benefiting from secular automation demand. He highlighted especially strong performance in power, semiconductors, Test & Measurement, and software, and said the company is leaning into AI-enabled automation with a new Chief Technology and AI Officer role. On the Middle East, he described conditions as still dynamic but said repair work is underway, field service activity is back to pre-conflict levels, and the long-term outlook remains robust.

Mike Baughman detailed Q3 results showing 6% underlying sales growth, 140 basis points of margin expansion to 28.5%, and 13% EPS growth to $1.71. He said price contributed 3 points, price-cost remained “green,” and $82 million of tariff refunds were received in the quarter, which helped both margin and cash flow. He also noted Q3 free cash flow of $1.3 billion, year-to-date free cash flow up 9%, and reaffirmed full-year cash flow guidance of about $3.6 billion along with roughly $2.2 billion of capital returned through dividends and buybacks.

Analysts focused on the strength in semiconductors, power, and Test & Measurement, with management saying those gains reflect both a strong market and participation/share gains, especially in power generation, behind-the-meter data centers, and digital grid management. Questions also centered on the project funnel, pricing, tariffs, China, and the Middle East; management said funnel conversion remains steady, pricing is healthy, and the Middle East still creates about a $25 million Q3 headwind with similar impact expected in Q4. On software, management said the renewal headwind reverses in Q4 and that ACV should exit 2026 above 10%, giving them confidence in 2027.