Emerson Electric (EMR) 4 May 222022 Q2 Earnings call transcript

Good morning and welcome to the Emerson Second Quarter 2022 Earnings Conference Call. All participants are in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Brian Joe. Please go ahead, sir.

you Earnings us Conference thank Quarter Emerson's and XXXX Fiscal Call. morning for for joining Second Good Today, I and am Officer, Ram Lal joined by President Chief Krishnan. Officer, and Financial Frank Dellaquila; Chief Officer, Karsanbhai; Operating Chief Executive

to of always, Please include the presentation, the with on contain forward-looking read website. join statements, which follow X. take Slide degree our slide me on which I on statement encourage business available This harbor As uncertainty. and to non-GAAP Please the along time risk everyone and is presentation safe a may note measures.

Slide X. Turning to

As remarks. Emerson Lal conference. the details distributed as for and The year. date later CEO, our the New person noted investor be will location be presentation this to over will in in More in President held press officially announced Emerson's conference and I'll City. opening approach conference XXXX we now November release, of turn our Karsanbhai, XX the York his

by and everyone. worsened, to our conditions. I'd Thanks, again execute. and in and shareholders growth on results differentiated XX% the support of challenging All commercial, operating growth this, resulted challenging shortages in variances results Good lot Emerson grew war Emerson's ability begin value clearly electronics But led commodity residential. our amid their And lead for and all environment, since in resulted management. our in three-month to in our delivered our changed has of lockdowns Directors like ending inflationary energy proposition, thank to very would to business who spite performance ago. businesses. XX% appreciation China, challenges. we time underlying logistics COVID months global the in morning, Solutions a across extend Ukraine, who conditions Automation X% delivered also thank team, basis, was Brian. and Operating to Board to lastly, thanking return strong in by I strong, my our in a March Orders and in in extensions A believe this of creation you. call three like

sales strong commercial, growth. with in XX% sequentially conversion XX% very and residential, to improving accelerated underlying X%; at Our Automation to growth Solutions

an have in strength Price the of guideline basis $X.XX, I'm diligence, of operating XX% very process impact quarter. labor came for on robust adjusted challenging, is sticking. to $X.XX share our enabled quarter, proud this across team. to area freight broad incremental management $X.XX inflationary We was offsetting our the grew excluding yes, But XX% impact and world the that Bottom our an remained and very business. it is year. activity delivered committed quarter our but the of costs. and XX% per largely Earnings the in profitability We line, it it of performance. is in materials,

has be point we and gas industrial Reshoring, brought robust uniquely is Ukraine forward, North us And environment, energy in East. discrete to and sanctions has led relation a valued by back can manufacturing, in this see on now North positioned been at which largely capitalize in LNG. Emerson should war relates which many the about, Going it talked Middle and Russia America life. The to have this specifically energy, as trend. discussed to of fully to on investments America

However, unchanged. I on energy state remains that perspective should our

oil gas continue commoditized, and businesses. to upstream will divest, We

serve on gas wave Russian market. We and will the core currently both have customer a Sustainability our up European the in to gas two as eliminate shore to source dependence unprecedented investments gas. and transitionary are success, energy processes

to place the can the a AspenTech, topology unique Emerson industry's system leading offering we to and bring now position best-in-class that software devices, market, stack with control intelligent highly succeed. in technology the a Lastly, differentiated

in Our grew reaching projects range. within business in in the $X funnel. nearly to in most billion billion mid-single-digit Demand strong segments KOB quarter, value climate funnel almost that billion, up X sustainability with our the $X remained $X.X across

our through appreciate with the bright. closely challenging this have along customers, OEM work And to future is carrier in we The I made enable environments. navigate us HVAC inflationary as efforts train, actions. and continue price to business to pass We particular, that of

refrigerant current our term, medium We over to ESG residential efficient on trends systems, will the the watch but of through in Europe. acceleration heat capitalize well pump positioned new the cycle standards we're and more adoption carefully,

we're readily be although have and watching attribute applied we the business, and the that positions that which in professional home cannot has in of residential enable disposable activities continued And tools household deliver for Our to business improvements, us weakened products demand, strong that fact income home we strong lieu carefully. much strong to quarter. demand commercial year. from benefit Nevertheless, to in backlog will of results to that other the

$X.XX today at is XX% and of over the top on growth gave $X.XX we XX% guide bottom, raising the the enables $X.XX confidence or or to XXXX. growth Our which

conversion to business, cash Within we our operational is we announced the which impact today. sale exit the remain committed this to Russia from guide XXXX. Regarding of subsidiary. in flow, Metran This XXX% our includes our decision

our with XX, in for on software also Aspen the shareholder same close May expected to build day. unique, close excited I very will expected highly current with We journey, Antonio continue industrial and working divestiture to this differentiated make about company. We're excited a remain with portfolio to TOD quarter and scheduled meeting progress the

like few words would say a I to people. our about Lastly,

work highly team on With that, the which differentiated A Our way Emerson we enable lot culture best. well. of to a the turn X. by attract on and front this slide to will retain talent great the and underway as work is please and philosophy, are be developing

strong We & I which continue few indicated. a demand to Commercial of three-month as up start Solutions, across comments were on X%. see platforms, orders both I'll Residential with trailing levels

trends comparable and results Home as Asian Products results Tech, European a are hit Climate markets be and seeing decarbonization both and resi versus to continue from Within comparable gaining Climate year ago. strong Tools We support. -- momentum government are broad both commercial strong, heating still hit strength we across and versus

demand As in expected, as season. went Americas positive entered the quarter, began peak US the through we we moderate to cooling as and the but resi remains

market indicative commercial we up resurgent momentum like very, the in and hybrid, of metals continued I globally, Solutions supply cone trailing of and tools and are For three-month discrete. XX% residential investments on And particularly -- XX-plus utilization continues, as the the this are the growth, that through while momentum life the prior and remain of driven year-over-year mining and power improving began gain segments carefully, in America, while for were across mentioned, orders and In year, and to particularly resurging, process, with space, electronics strong strength chain watch that's hybrid semiconductor and and through track grid factory Africa. for as machine discrete while southern Within very automation and the percent continue investments modernization. industrial chemical from science markets renewables business, strong maintained The America Automation Process to quarter. Latin DIY strength slow. momentum. rates we'll go

shale and to a see strong regions investments. We beginning I decarbonization key despite record by at near We're I cycle. investments spend, expect led gas XX%. lows and also continued as growth And reinvestment year-over-year oil of US continued digit up Upstream rates double in in see CapEx in is mentioned, the initiatives.

on prices markets As more segments as you fuels clean these more renewables. the page with on me activity saw share such around little rose, And energy slide, X. oil we color LNG, key let and a next

LNG, of a in to the we Just left here, perspective on the give the on we're terms opportunity of which chart. what US side highlight seeing

and years. which XXX an to currently by East, XXX one predominantly saw being with tons during a XXXX expect MTPAs over that we If forward LNG which predominantly, the we're component, Middle in of million about to came a an you XXXX, component now to a few annum incremental the the underway component We from US per think plus that come wave. XXX XXX XXXX result and coming wave, XXXX invest, had next the Russia MTPAs another way In which capacity a of XXX entering online is XXXX already funded wave online is investment, driven of Australia MTPAs online.

we US this get predominantly, and very a time gas, about tanker period regasification required but will East the exciting of through as not to investments here think then and into are just So Europe segment. Middle the liquefaction, impact which that gas

a Emerson On segments to side pivotal role players this entrants of clean the energy new play energy traditional as and begin renewables. fuels and on such to focus continues as new right-hand chart,

clean the And roughly energy fuels, XX% it grew of the sustainability largest facility results. diversified decarbonization through $X that, to controls gas application as software example Our was brings main for in to facility, renewable selected quarter world's traditional are these of an to expanding projects. now investments also was was diesel selected turn field part to partner This a through sustainability In Emerson And geothermal where CapEx billion the to some the for company quarter, a to chosen funnel the over companies immediate designed provide high-growth geothermal recently the their largest reliability budgets provider Frank Geological oil energy Emerson Emerson portfolio. Emerson supply automation digital sources. relevance. HITA, of dedicating battery as through and world's geological as to in energy lastly, key going safety energy second this exciting Emerson Governor to in and to Belgium with software and and will and the and storage its also go also role modeling of then core application. I'm acquisitions, the the for a Software American Technique in its technology increase Media area offerings reservoir a as Emerson is of which and quarter and In acquisition renewable another second Simulation expanded project. have its

Thank Thanks for you, morning, us. Lal, and joining good everyone.

I'll Slide If you review turn and quarter. to the please would, X

thanks and for realizations that had of the XX%, little a robust quarter the partially in have driving ahead end very want bit we most strong guidance price turned February. when about I Demand As real faced second some dynamic were very provided to offset also I my implemented execution key we continues challenges. quarter. actions continued markets, a by price Lal of the operational to address and that sales talk across The to the everyone will higher in guidance. to said, were they more be that we extend in inflation inflation. driven growth underlying operations

costs performance realized and we Adjusted was would. we material we two positive the was was price and $X.XX points businesses. management. segment and restructuring to excellent. EBITDA guide previous We material net year share prior increased the said For leveraged XX price overall, in as as and other up Adjusted SG&A the enterprise, in to dollars last flat exceeding of points we $X.XX, year, across respect four $X.XX. versus than effective quarter, leveraged increased essentially with did basis versus reflecting which it. turn we the was with per and in inflation, restraint cost actions earnings spending It XX% offset points of more QX was significant, inflation additional February

As expect constraints, the a in chain higher supply defensive inventory due goods the a result we believe, the this includes it included flow on prior when it the year quarter. tax we higher versus was second an stocking of half. course, cash And actually we would in to in This timing expected – second for finished was the shipment to over of it realized quarter. and XX% the year. uncertain. as the of in in timing-related due That will Nonetheless, we $X.XX was have tax We mentioned, Lal Free XX% improve of down the in sales and the is half we had significantly year, mainly rate it awaiting but conversion see benefit to we guide challenge. while year. of top benefit course get the is second of the it year,

Both and positions billion, to $XXX $X.X were at adjusted executed orders, Automation us increased showed and continues up of other production Americas the led X%, XXXX. businesses quarter pace Turning million year-end constraints to X by remaining have due end of and in the mitigate Price KOB X%. in Backlog China. markets gives well times sales. the to platform into which to extremely and quarter longer confidence for very lead strong critical was Operations continue they be effectively in logistics strength, the strong, activity sales All and to XX% by realized solution challenges. the to the underlying us results. key well. inputs,

We be a performance the to realization the electronics significant quarter of prior improved quarter. ability components execute inflation year. leverage, in The recovered balance Automation year second cost expect with platform increase balance experienced will basis the in throughout cost the control, increases respect fiscal sharp the price been and strong XXX that to the addressed backlog general the on higher in XX% improve reflected despite in cost We Solutions that electronic versus has of EBITDA year. in adjusted actions for orders the operational and by points over quarter. is leverage our price to and for

on price less declined sales Underlying of part slightly Price, said well slightly digits in in when as XX%, in very, the we would where under world quarter. positive the Commercial except the and quarter, it material would, in industrial to markets said Another the set very did second be trajectory all realization American due operational also North on they quarter. the a up China, grew X performed in remained strong including areas, described country. inflation, were the operationally but that resi across call. net & lockdowns different points it somewhat challenges. the well Residential this similar, quarter. is we and of double Sales increased strong. Solutions we last we Commercial in turn

opens EBITA into with XXX sales industrial There tools We some going $XXX be million consistent remain people's do-it-yourself are points, impacted online the as moderation in Backlog the see In of inflationary economy the service, to expectations the down up. and environment indications Adjusted diversion are was attention products, of beginning Technologies. things other in slowing strong. projects of mainly increased in the home channel quarter, some as retail our channel and the to basis quarter. begin signs there. to and by Climate

As I freight but margin-dilutive, inflation the by up walk. said, including was remained was leveraged price above-normal restructuring, prior year slightly realized, range negatively costs. gains, $X.XX, transaction that turn to was and reminder, quarter, accounting Adjusted impacted by charges. less net excludes an due $X.XX amortization, exceeding the for Please Adjusted the to tailwind the discrete XX% impacted. a EPS eight nearly versus Operations EPS of the tax in offset also EPS from the and guidance XX% EPS page material was costs by prior item. additional top price adjusted $X.XX, positive and delta and EPS was adjusted one-time transaction to $X.XX inflation was contributed wage end the related $X.XX is, year. in and Again, as at purchase total intangibles AspenTech first year to the

face. the so to continue the turn the operational on provide to So I'm to he over go and we Ram? businesses chain an to update that challenges before guidance, going Ram, this supply can

the and like Clearly, constraints XX. slide to challenging, globally. logistics turn remained inflation the our operating to Please supply, last as has operations electronic impact Frank. commodity you, environment Thank continue few quarters,

in Additionally, began as third challenges geopolitical uncertainty China COVID and introduced and the we quarter. lockdowns exited new QX

the the to progress half. of such a inflation commodities oil front, to commodities geopolitical steel, led less significant our strong magnitude has largely been our On strategy, costs. led through margins increases, but fiscal climate prices will importance second commodities underway constrain logistics as of will expensive regionalization positive leverage to ones the the and to large Price as has rising reversal prices, actions This Due current course of in additional portion year, inflation allows our This our the a causing in some reiterates and supply will material environment and steel. of incremental business. also price the the half again for which be have already material keep place, purchases. inflation Higher intercontinental oil on the incurred us avoid for we second material increased nonferrous our regional bases additional in logistics. the

electronics side, Automation Solutions. concern, the especially availability a On component remains within

expected tight stabilization keep into the see remain times, able demand. are as of XXXX is up capacity well additions to we with market to not lead While

the profitability, price increases impacting are help purchase variances although ease Continued also impact. price proactive our

Our to seeing available outstanding global additional benefit to to of this suppliers redesign we’re components, teams continue do the and qualify products work and come through. clearly utilize effort

to COVID plant Lastly, impact the keeping eye QX. and bigger to the supplier fluid to China were our The second on our we adapt lockdowns We're are as situation have are issues to a due these into necessary. our to heading plant expected minimal, current The across will lockdowns continue situation. be Shanghai, but to constraints impacts a operations a to shutdowns. the but contained operations beginning are country in close see quarter

we of rest global to many differentiated challenging I in teams for our areas While call as execution year, strong will very the headwinds back the face of evidenced a first confident, Frank. performance. now the these over expect operational our confident, by to we're environment in half will deliver turn that

you, Thank Ram.

If we'll the slide to go through for XX, the turn please and you would, outlook year.

investments robust and process Lal as the events Solutions increasing recent call, the continued operational growth value challenges at like the hybrid our to challenges like traditional discrete demand our across as XXXX markets. across we Together fuels, gas gen around across very In drive and growth is single modernization, strengthening in will markets in and the demand the high challenges. to power top across not They market LNG markets So all discussed. will in continue digits. areas as spur markets outlook chemicals, see enterprise. battery strengthening process, we and storage mentioned Lal demand Automation are are the incremental markets, renewables, for basic strong with in grid world and oil as transition that demand nearly This process well chain. businesses and clean energy of emerging

also markets expect prices, remain strong. strong demand high all mid commodity are single metals digits, science Discrete and electronics in hybrid CapEx. and to and boosting automation range We to continued including strong investments investments the semiconductor, factory remain high life at XX% with mining

the demand encouraged had It's as -- constraints, situation, we're China, COVID in remaining the underlying which evolving chain, in and by to are to while supply we impact Ram situation. somewhat an we In is of XXXX. availability, around electronics regarding continue expect uncertainty unfold. as that So there logistics and and potentially there's outlined, already that particular, continue an expect quarter, will challenges how to into

Continued from to and is & also of are consumer due year. to XXXX industrial the launches full Tech, moderate growth, the strength Climate by we Home sales underpinning our with Overall, our growth challenges European new heating retail core Residential Products Solutions those earlier. sales also call. as the by for to of US businesses. our strong in Automation these is in orders fiscal expected markets, regulation I and the heating sales effect level have for continues guide Tools said residential our business, the exit the quarter supported and to described momentum product have by year currently the sales for to changes. as inflation, reduction in against and underway Lal European markets backlog included and commercial double-digit have they will Commercial we top confidence Asian for volume continued third half evolve. second provide Demand In resi growth deal Solutions, markets. growth and challenges despite the Russian at Climate expect guide we commercial the the we and related and in In as & strong be supported

Please outlook. to benefit However, continued business. Tools Professional the for the turn will slide industrial XX momentum

by points by We and are XX%, will to versus prior driven sales incremental increasing range guide underlying price X% at the our the Automation X% to to Solutions by two remain X%. outlook demand guide.

commercial increasing attributable to business. is residential to XX% substantially our being sales realized previous and expectation underlying for on discussed in and incremental to As the XX%, we're slide, price this the

as price less the we expect This that We different. context tailwinds traditional the previously we This inflation business. in discussed see have the price/cost net to in year to communicated. for is material second continue of is always half this relationship

protect significant inflation or We additional areas, are mitigating are to actions cost other in constrain implementing dilute seeing significant profits. These price however, we margins. actions, and

about have For want in we past, that less capture the in as the realizing doesn't are as inflation inflation price challenge. this the but that to the was well reason, inflation. out and other as our net we're breadth margins actions material that price/cost, of I dynamic as of generally going than in costs implementing material-driven to described XXXX, really and the more point material we realization XXX% resurgent are achieving residential. talk incremental offset elements We're of overall pressures we price substantial for price commercial to

get We to stronger total in will even XX% the the to pressure but year for drive incrementals would inflation operations, Solutions price leverage we than leverage commercial/residential ago equation. continue on due in for differently there probably Automation three for months the we'll thought with we and

as guide, sheet other the were timing the share and the of as now some inventory is Operating $X.X elements remain issues. to same billion February. chain from dividend, they well supply be cash increased other due flow to constraints expected in balance The mainly resulting as repurchase tax,

of related our for expense sales both and fees the billion billion are and of estimated the although includes that fees gain Vertiv we through we debt first financing of for up $X.XX booked EPS at under $X.XX booked or with closing. to business, term to to XXX% issued the moves a in represents top other The this now when reminder, AspenTech $XXX not payments run included reduction in guide, our estimated that million we Russia quarter we're profits after the to We related and anticipation and operating tax cash the the to cash GAAP the $X absorbing December to Inside the the impact they last bottom we guide charging guide cost have but improved conversion absorbing potential in any year. adjusted flow $X.XX. within related in charges, be estimate precision. well really two is the items first close at the Also of exit result this me, associated we cash impact of no AspenTech are this quarter. flow to future gain as guidance operational yet -- in the pardon the XXXX clear, or numbers guide flow, the as impact realized is which any on Free gain converting TOD operating are of approximately GAAP is from which tax XXX% expected to the is divestiture, resulting with interest the The not is included EPS these transaction nor known or outlook, of $X updated transaction, quarter.

to growth XXXX QX be is X% Slide and I'll to sales the XX%. X%, net underlying to quarter. sales XX. cover growth third between expected X% Turning

EPS $X.XX current positioned or on month and I the very assuming want challenges likely electronic the And improve, basis uncontrollable critical shortages. quarter, We out between very to open these is the the strong quarter point very we We year. shutdown, EPS, XX% quarter continued out real a a expect including deliver good this are considers the Automation XX%. stabilize Q&A. the same for and to to and them. fourth work X%; navigating, Solutions to and to the We're variables on into then And COVID underlying we through well close I impacts will would $X quarter. third adjusted up that range with between that and be the $X.XX; residential, GAAP it expected between to the year. intend environment one are the that, to the and $X.XX be that sales in businesses commercial X% guide and of described for

you. Thank

the come ahead. We Sachs. Instructions] go Please begun the Joe Ritchie will Goldman now question from with question-and-answer And will session [Operator first

Thanks. everyone. Good morning,

Joe. morning, Good

what in with I And I you how that quarter? kind want your lockdowns the saw off maybe today, I'm the of just through trend Solutions. factoring saw Automation and you with for impacts are guidance? did the to China double-digit in growth then associated start that like in that curious,

your speak business, -- in Joe, at just the sol. the both I'll in and high strong business conversion and to both auto Yes. sales orders around look when quarter question mid-teens, the focusing in but activity, destination also you to on mid-teens. Very

by look at orders feel we strong the the about look the quarter. in those is commercial/residential through climate very Joe, when were resi to when momentum driven base more infra outlook The cycle. the for very softer I But in activity I -- And as outlook feel we the have went strong activity somewhat muted, sol. So project continue activity, we I the I for the the about installed year, see China, at auto us.

conversion, In want to Ram, terms of speak it. sales you to if

Yes.

Hopefully, we're have opened we Shanghai that as that go think, experienced got in obviously, last I weeks. the partially us Joe, May, So have supply we have up. chain China, we been starting where constraints open area to this in into the supplies plants the of month Clearly, those a XX We we've across up across see impacted. four China week. and we have few around Shanghai,

improve improving to for kind situation the go that as the as April baked expecting a was but us, of quarter. and do are guidance. into situations tough that's we – month that the quarter, believe through We through we built we the in

to XXXX. and if that, original know up it that in margins we That's in a helpful. potentially see apologies assumption slightly follow-on I was flat an earlier. Great. ask If I missed there could could Okay. question, C&RS, But I

on expect any in that commentary that how understand expand price/cost C&RS Just in of margins you how year. business would help And in us to – then the the be helpful. the second half

morning, Frank. is this good Joe, Yeah.

second all price/cost, the the loaded the we in business. to sequentially incremental Tech. that come The because improve of Year-over-year struggling through. a in will to for get Climate price margins the inflation along So based the the as the expected is back-end on price, push will half year incremental are we've in

year, So but out thought dilutes the in consistent dollars cover EBIT would dollars, the strong do the year-over-year inflation going is price we with what the of and margins. business and business that EBIT deliver at the the to will we increase beginning incremental

makes Thank back I’ll Frank. sense, get That Yeah. you. in queue.

Joe. Thanks,

The with Tusa will from go Please next come question ahead. JPMorgan. Steve

Good guys. morning. Hey,

Hey, Steve.

Steve. morning, Good

speaker Sorry, I on the there. was

Just real basis? of trends slowing you noted of of C&RS orders, the Any a front on order side. of the the some standouts the other sequential where a in was either of on monthly of bit or signs a Any accelerating? residential on in standout moderation terms kind order part there kind on

– side we're good No, question. watching resi But automation the traffic and partners continues. tools not strength our side look, the Steve. but just climate that, No, the on the watching beyond Yeah, in obviously, big-box there. the for home beyond through carefully, very

I opportunities be energized business. very KOB Solutions. there. funnel robust seeing strong, there. XX% by grow the to about wave the very coming quarter the KOB the That's But X and for that think been project X X in continues engine the a capital us, Automation feel at we're outlook in now and with

Beyond that, comment. nothing else to Ram?

strong, American business I actually, our And European No. And HVAC North business remains also the strong. remains very pump Steve, heat residential think very, strong.

Okay.

kind will? in the of side it's So resi of more you tools, if

Correct.

Yeah.

Appreciate a Thanks Great. guys. it. lot Okay.

Thanks, Steve.

with Davis The from question Please Research. come Scott go next ahead. Melius will

everyone. morning, Good

Good morning, Scott.

guess bit ask you back less just go quarter little it year. Has to ago? in months shifted to by were demand mean, three this is, I I back are way of a the up just And and if we availability, couple I matching to right? half you the to than confident A perhaps confident, another last of were mean, guys things. the today supply chip I you want more think,

tougher. my let perspective will its gotten is, Ram I but give perspective, its

which different market didn't that three about that, as were to where have feel go happens obviously here, China April there. that's have having watch carefully the May But supply and better chain the get the in creates what all creative, It the between I month COVID the in But – we how it. lockdowns and that's -- Ram? qualify in challenges. Ukraine. of China of certainly go through war we But the get through and for said how so and to P&L versus into quarter, open watch variability, We ago. variances months more essentially suppliers, we'll

at stabilized, Yes. times on lead And chip particularly the pre-COVID electronics levels. they but running of have the or Xx are shortages,

see And so, had impacting And several to that improvement weeks. are at improve but that component we'll was continue this and weekly on we we But that thought start we hopefully, managing but over to environment. next we're haven't. point, see that fight a we the – piece The our shortages, improve in to the the shortages, basis would businesses. in hoped shortages

of stuff or hard are And then to SKUs, same a get Is -- it board? this is Is it the different list it helpful. stability super there of is list? stuff that's list a different changing, there That's or other quarter? the more across

that use mean, and I of residential in of components primarily Automation business would our say type some parts similar, it's business. our commercial we similar and Solutions I

say So, changing. shortages it's I wouldn't not say, But I the would think I improving. are

it Okay. I on. pass will you. Thank

The will Obin Andrew question go come from next of Please Bank ahead. with America.

how guys are you? Hi,

Hey Andrew.

like to math, X/X of growth seems it I incrementals. the revenue seems increase This relative be in EPS, apologize. inflation. there that which offsets is based Just high additional and this real is a our increase, X/X the volume normal is – just price But with like and on

So volume? first the stronger second, characterization, right? was And that where is

So don't if or X/X exactly Andrew, I X/X. it's know

the with items. underlying as characterization volume pressures I increase out the forecast very that But some actually comes is a increase well. there is of when most margins. right, think It underlying generally, leverage is the through factor strong inflation you the in revenue price,

specifically? markets end what But

Automation.

Automation. Yes.

say, it's, yes. would this And entirely at I Solutions, Automation almost Yes. point. residential, price-driven

And a and conversations Intel. core do kind Is you. of those just -- about through to brokers talk supply years? coming trailing-edge at months going manufacturers? Instruments, are What places you America sort of you. it There's capacity of capacity think with chip for sort follow-up, on like instead having more chain, US how Texas from available do a Thank guys? it six two you think months, the in the months XX to lot able back is six become takes when capacity with incremental maybe like to in of Got in struggling real or actually -- and long it North redesign availability. lower going you're of you And

Yes.

great So Andrew, question.

same having the Automation of months into likes on important to we first go is nine very really that's good to at the that answer TI. the Texas our chips the -- Instruments, suppliers it's for XX offering, that, dialogue we expect are our types Solutions or are discussions the when particularly online We product in for really when with TI of which discussion. time exact we've line to capacity off, with been this are us come First least to part, believe like NXP, important suppliers

So that's being what's really planned.

last in nine at then. the we'll We months, XX capacity lead that times. least until see to constraints expect impact But to hopefully,

So 'XX? early calendar

Yes.

Thank you so much.

Thank you.

Andrew. you, Thank

Andy go The with next ahead. Please Kaplowitz come from will Citigroup. question

Good morning everyone.

Good morning.

morning. Good

talk Solution projects commodity are about Maybe thinking large customers are can about Automation prices at more your supportive. point? this Obviously, how you

energy but inflation, talked You higher higher about also independence there's rates. and LNG,

KOBX out do you saying here? what customers are these about CapEx cycle with the how investments? So moving your plays think bigger forward And

Yes. Good question, Andy.

strong in a sustainability the and to a that's So, reflected around in There's actual twofold. and One, to there in continues growing they're both total lot spend investments. what creativity funnel the now are itself of to funded. our KOB And implemented. Those inside support terms of being be about funnel. semblance be Boardroom of how they continue

investments three war, we I confident was in what the seen particularly in And Qatar, continue XX accelerated. opportunities we've to we're places: that's in other gas and biggest move On there. relevant really only the into gas. the quarter very and is -- Louisiana, a number across we're back around work seeing lot now in news FID those a LNG those Texas. were work, A into good We The coming a done in a those. been in of had with was and and play has amount of completed, significant of Louisiana Texas. lot shelved. in engineering So forward. seen and activities those the around that pre-pandemic feel as engineering the in went conversation of days through change CapEx, that how of And And we've lot

the change Ram, that significant forward. anything and well. biggest be would a very add? as gas that Obviously, I in the to very in us we go acceleration opportunity think for is funnel, So plays

project just I entering funnel. through. talked coming And we methanol globally, being projects ethylene, billion frankly, online are add, capacity Yes. seeing more some would our refining $X

So I across good board. think activity the

following up on LNG then. maybe Thanks. And just

You this when How actually mentioned peak -- the there And think be MTPA you will out? at play you work could is right do and or how XXX do underway, XXX of already think point Emerson's your on now? more. burning revenue in through But will the long cycle impact is much your how the backlog businesses? be

total, fair it opportunity, the revenue, let's say, Look, Emerson at into divide years, to five you it about can you in Yeah. if think it's over Andy. size $X and I billion say that size

you of As years know, for four is jobs. on cycle five construction to the each these

billion divide laid So take the number I five. and essentially automation that XXX out for $X it by the

Now what Italy that in freighters. in places the my and the and which tankers regasification and doesn't opportunities, Europe, in see Poland opinion, include, Germany, we'll is in like

So that's fair. in about addition to this. But

size MTPAs, $XX at math we'd that. the that's five did per million just how you If

it Appreicate guys.

Thank you.

Thanks.

Pokrzywinski with The Morgan next Stanley. will come go question from Please ahead. Josh

guys. morning Hi. Good

Hi Josh.

Josh. Hi

So question Andy's on there. just to follow-up

these materials replacing a higher. there's industry customers the I'm it guys something anything this anything material and should like business project the KOB less Is like just if about like opportunity has digital, is in smaller as Just, we of this the the like is there way you bill lot and things, physical where that digital kind lot there a of, a one? the changed on gets seems wondering think be a the Because or as project? maybe build asset upcycle. the X/X enter approaching upcycle your new are and wondering with more of

thoughts But analytics And that's if as see software Yeah. is that table, customers. for as top increase look, on No, in the of you as of it's materials think software optimization an capability do we capabilities a an stack. asset of great what the far brings relevant question. and like I'll well. the about more use let these to Ram give AspenTech the increasingly bill his

be that change. the would biggest So

You still farm got elements. use to control

what pipes. through sense You still have to goes

control the and process, with spend. very recipe the ultimately, the a analytics control talking You're is optimizing and Ram? more see increasing think, we of you strenuous to have performance about temperature. But pressure conditions of where I system. And layer still the

spot You're on.

sustainability a the as software around be, hydrogen, Lal look think, attractive wave wave is there going perspective, content the mentioned. facility. just waves LNG you us as the that et I if biofuels, additional in as what from prior a is for just obviously, just And as content to cetera, get then would you chemical with rich at the

getting don't to analytics that software and we we smaller. content In the the with in content get will and net-net, more it just So anywhere the data addition mechanical general, see augmented typically instrumentation have.

a you on contracts inflation terms just Thanks. helpful. that protect Because projects do the price indexing the side? in Got of yourself it. anything have That's follow-up. And then to longer these quick are guys in cycle, you're or putting escalators

some Yeah. there's and on very speak kind like do there most keep in are to software, obviously, and of. mind, enter, little of elements No. detailed agreements control material these very material. that inflation ultimately have Look, But we on commercial protection elements

on we work So it'd that those hard. very, very final more really the be side control

Perfect. Thanks.

Thanks.

Dray ahead. come with Deane go RBC will question Please, Markets. from next Capital The

everyone. morning, Good you. Thank

Good morning, Deane.

Good morning, Deane.

close goals Hey. the soon. of XXX-day like coming any I that share? gate? could plans you are What know you Aspen out right up is the Do have

Yes.

So -- detail. to we've we've of it plans great plenty planning thought great Deane, is this day to Ram question. Obviously, here. integration had relates as Yes, time that one, for and particularly have been plan in channel through been

of getting global of a on on will organization going a the basis pieces. the So sales is focus which significant sales a one part on the really day it, synergies, lot

So, yes. yes, the is, answer

of the day plays it one going. which But there technology ready collaboration, will technology obviously, the certainly get front mean, out. as well lots I as on we're underway to front, on Secondly, and integration term, the of longer a on there's opportunities lot be sales dialogue

could great any hear. Anything share? specific That's that on to comments April? you then, And

equation through But work the the on No. Look, us positive. trends positive of demand very think in April, COVID that the that, we talked I March, China, those. in impacted through we lockdowns side continue about beyond we're the to

you. Great. Thank

come Nigel Research. Wolfe with next ahead. go Coe Your will question from Please,

Good Thanks. morning, everyone.

morning, Nigel. good Hey,

Nigel. Hi,

Hi, Nigel.

Can me? you hear

Yes.

Yes.

yes. Yes, Yes.

Yes.

Okay. Great. Thank you.

is incremental than better in are and I -- XX%, So look, if my margin extremely calculations think AS expected. margin strong, correct you came

moderation towards some pointing think sequential I maybe XQ. from were you

over what's So just the in the driving And curious, how do see the you incremental that margins? balance year? upside of strength the and the

Yes.

peak hi, result is business this here seeing of effort. What anymore, two work or hard -- this but the margin the this don't three done over all years. talk in that We we're coming about mean, So, fruition Frank. was the hard Nigel, to that is, all is I

business -- NMI, despite been even some of that the because reset. kinds incrementals, the extent, strong very So despite unusual in other they're basic printing cost is structure very, this which to inflation, incremental of has business

the So in the say, incrementals of in and in we be as were extremely QX, and to you they'll strong balance strong mid-XXs the year. QX, expect continue again,

And around moving the then, here. dollar obviously, a is fair bit

factor a And all sometimes, moving around here? impact margins. the FX we at some Is that have seen AS

impact. material No. Not significantly. really. a No, not Not

moves? US portfolio. CapEx, you very change gas, NG And Do cetera. more natural time about stands then, around my you design that away portfolio tone and towards engine security? you more Obviously, the diversification been feel and the you've administration feel oil headroom maybe have some follow-on vocal et on for in Lal from upstream The Do to gas. diversifying the

meaningful I and just terms that's The energy if as that the fuel the and that some -- not world its of as working November of We're hopefully, sciences to at the we'll obviously, very our market. Look, around you at terms subject investments I to I the length markets, for committed meet oil life just diversification do look in about believe in in upstream portfolio talk to work over actively applicable oil needs. to of time, But aggressively that commoditized company. continuing but gas technology remain because And assets, the we in -- of we is differentiated remain vision, required a we're the to investor that in the transitionary gas very committed and element steps. And and going Nigel, other the to. No. management. many in equation at offset, in our committed gas, gas said remain be in on conference

Thanks. great. Okay,

sir. you, Thank

The from Moll next ahead. Stephens. Please question come go will with Tommy

question. morning taking thanks my for Good and

Good morning Tommy.

the your items. of some be think commodity we business. severe low embedded pricing pretty a Potentially, assumption net sol for you've and is be you we about started oil auto But a inflationary topic incrementals, on gas price, to given wanted talk not through environment to mean really would there my as a about year, next the got dynamics able I recent been that's Digging to even the through if in downturn year pass past. I year base just back think the you've an call to option of or But half on this really tailwind. here? got price from

your Should front? on that balances, cash bullish be You've across we cetera, got margins, base. fairly et profitability, record customer

Solutions, is positive our Automation obviously, just in And about market. differentiate We specifically space a there. comes basis to price that but structure, and the continue meaningful of the technology price, that speaking ability of our you market drive are not a to from history relevance -- activity of long and have in Tommy? Look, the we

implement to to But P&L. anything? some Frank, ability realized continue our we're of We're also So, increases in through to into end the price remain I actively it that needed, across four confident as organizations business users. for look, just cases, price up space. our selling and that working but with very be not in to

to that commodity exception pricing. impactful Tommy, in business that value electronics the business. price year a it's situation, unusual situation, its on this it the in is the The through with capture side of not captures respect and as business with to ability very business year of strong other It's nearly as Yes, out.

now, commodity an price on to of stepping a business significant that the pricing, broad terms it's with what's with variable power pricing come typically, That have in dealing year electronics. because in it steady. unusual it's of mean, really there's P&L they is embedded this now. we have not but that these impact, we as The even the I Right a going swings, So We're no of incremental result up kinds are is while yes, determinative. situation. very

to And of commodities makeup big element the to the that business structure a cost just cost not Yes. that, is as of add a structure. of

we've price/cost, but -- been as we'll green be into get traditionally to the year. as of and said, continue the So we Frank half price/cost green second

Thank outlook resi circle HVAC. you. wanted for helpful. then to That's shifting to back the I And gears,

for may least certainly the North be trends that trends half. of the been the there year-to-date at and of You gave focus, a back slowing America some lot terms and context in there's

you're could So there in underlying in -- on terms of seeing give us what additional insight what demand? you

the reflected Yeah. the products weakened quarter. rates. as Look, residential order has as went a home whole, seen our through particularly we business just run And we've that in in

to business we that the as climate how Tommy. into we'll season, get side strong remained climate but date. feel pretty translates, Our good the watch on has And about still,

Thank you. I’ll turn it back.

The ahead. next AllianceBernstein. question Brendan will with come from go Luecke Please

Thanks taking all. Morning for question. the

morning, Good Brendan.

morning. Good

the Circling color to you business, the guide is back Solutions? Can impact what question. the size of on year Automation Russia offer the that in to point for the some on out

Sure.

significantly represented we figure relative ramp profitability will So is. business what determine and intend this that full And we've the to we year exit the a a on to be what and the out business to it been those the mean of sales. -- context, total began, exactly through average within with X%, back year since, we It the piece that normal be the I the say scaling full year X% year without balance basis guide. business details we it, mean, exit half that we I'd can conflict to that I contribution the call X.X% you the But about slow company. the now as are. a as had covered year of of until it. said we've We have of expect

on And then X follow-up one KOB quick Fantastic. Solutions. within Automation

you're is it how much price? often again dynamics those the the that there that improvement? driving to, in revenues? by fact that here. struck bit speak yourself And guess, for was find situations of you Can biggest little the competitive you Just How growth and driver a how I

the in and revenue XX% Automation sticky. of business. quarter -- KOB That the Look, replacement is price-sensitive least price Yeah. was the the most -- where where the business we all is me least excuse X, of which one the a the businesses Solutions -- in is margin-sensitive MRO

reflected was as of that So in through March. the Solutions the of end Automation went we results

Thank you.

Thanks.

Thanks.

as today. session as question-and-answer today's well presentation. our our concludes call conference attending for you for This Thank

disconnect. now may You