Emerson Electric (EMR) 8 Feb 232023 Q1 Earnings call transcript

Good morning, and welcome to the Emerson First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Colleen Mettler, Vice President Investor Relations. ahead. go Please

Financial morning. quarter Good joined joining for Karsanbhai; us President Operating and Thank Ram Officer, XXXX Thanks earnings first Krishnan. Chief Lal Officer, fiscal Chief I'm Frank conference Emerson's Dellaquila; and Chief you. Executive for Officer, call. by Today,

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

I Lal will opening remarks. over to pass call Karsanbhai, Emerson President for the and CEO, now

I'd for shareholders begin in confident for Emerson strength geographic our and like Thank the Emerson global yet from like delivering to thanking both industry you, your quarter. Board Good joining to and remain extend and We Colleen. of by I'd team. family morning, strong thank a another an confidence the operational perspective. you appreciation continued about our also management markets my us. Directors of of to the for this

by the grow, continues funnel project $X billion exceeding at This that exemplified end is quarter. our the of to

announcement like review over say in discuss outlook I'd about performance, and of a I strong turn Before few the location call morning. of to headquarters review a quarter our year, and this conducted the our the comprehensive quarter's options. for second words We the three-month

strength X% was productivity the quarter in strong weighed location out in remains market and was safety decline to Please as order underlying down orders automation forward broad rigorous trajectory planned. for and demand comps. against played strong was look appropriate by slightly double-digit as as a expected orders as Emerson. largely first to selected tough very Slide first now End finding turn this was an region. following quarter process, Louis X. Operationally, St. the we

slightly shutdowns Sequential underlying met versus China. by impacted expectations X% end orders underlying at quarter. the were September in also up Sales growth, our X%

well our Adjusted business by of the was of strength was very to XXs was quarter expectation. XX% $X.XX items. management performed Operating Our excluding and operationally, for two main system. the AspenTech and high ahead EPS our leverage, displaying mid Emerson below-the-line impacted

was compensation a and driven headwind quarter increase stock its the the $X.XX Stock subsequent remaining on impact a versus plan. by XXXX, throughout mark-to-market XX% price

AspenTech's more anticipated. overall section. headwind While financials, a of color stock we provide our the compensation expect headwind Frank this rolling stock will on in slight than worse X% the from into his addition comp was

Similarly, FX was worse than originally expected.

headwinds, our However, despite to continued above as operations execute. these performed guidance business

billion share repurchase Lastly, our the of first we quarter. committed completed $X in

some Turning creation XX. laid the through to we like successes see and X. Slide priorities I'd exciting we value momentum in walk strong November on out the to

we January, East state-of-the-art late hub the on Middle manufacturing ground in visited the in our new and innovation Arabia. First, had Saudi break opportunity to and

to commitment of This hydrogen our to investment innovation regionalization excellence. focusing fuels, segments only cost for like transition region, and our not manufacturing. on the strategy best clean but our also spur designed clean operational the Pillars and is to energy demonstrates

an to chosen the hydrogen our was for supply, world's of projects automation by largest facility will As example investment provide Emerson NEOM. green the

the local processes differentiators. key base tons Emerson XXX production provide will power in throughout plant renewable technology installed of Middle and support The a were and East using hydrogen Emerson's day Automation green generation.

joint Secondly, succeed Emerson and our with AspenTech solutions. continue to customer

product facility, the by largest first ethane automate the it products. we AspenTech Chevron offering automation successfully facility engineering to Middle Laffan. AspenTech were serve will of selected the East's example our $X expanded In the scale with jointly DeltaV main system The our control Emerson project Phillips, how commercial for differentiated agreement and QatarEnergy a Ras with leading customers. to as and and billion providing simulation provides quarter, is contractor an

and one Diosynth Europe. the processing we will of projects and these at multiple clear to the The the success to conference, sciences differentiating through Emerson's investor in in mining markets. streams, life as expansion an continued contract In for our FUJIFILM These Biotechnologies largest diversify our and first include continues awarded of three growth in CDMOs leader are a Europe. bioreactors commitment quarter, Emerson project Lastly, metals platforms demonstration the discussed markets. and Emerson automation was automation

the to in I share cash. our to briefly proposal over Frank, discuss turn I wanted for National call per Before acquire $XX to Instruments

public available on offer made correspondence ni.com. XXXX, our value at our with and As NI know, since you maximizing on January XX is we May,

with the is interest moving of swiftly Emerson advisers committed NI transaction. and our in strategic Emerson believe the towards financing review proposal conditions with anticipated acquisition is in participating regulatory premium is and NI process. compelling its continued shareholders. concerns best to engagement We of all-cash look or an and and and forward to agreed We no an NI

commenting That for focus that these said, going our assured of continue execute we to we'll we're call NI is diligence to the not time. on proposal opportunities. performance quarter, as Be financial further be and for review our this the at this

Frank. I that, will turn call With now the to over

Lal, Slide morning, you, to X. and everyone. good Thank turn Please

for had XXXX. XX% our growth by expectations driven a mentioned, the in Underlying software at we control operational very to Devices. X%, strong sales Intelligent start X% and were quarter in within As Lal and

particularly and process five-point and was with up four-point drag XX%, were as demand by prior year Net Europe, crisis by from sales continued in which chemical. growth area energy in World affected X%. by the led sales from underlying energy up a below X% AspenTech. were Americas, was The currency strong contribution sales, a driven

adjusting up were after X% Russia. However, the impact sales for of

Chemical the offset shutdowns. and East we sales By in year, East, was and for due this sustainability modernization we versus XXXX. year-on-year close our plant and in investments and Middle driven in investments continue assess challenging by remains balance comparisons and like code-related sporadic strength China, North in mainly dam of and Sales flat the a to as chemical steady are we Middle industry, but Asia, and see Africa outlook market prior as energy Asia, by later cycle strength energy in America were eye chemical. to markets keeping on

quarter, up sales cycle single-digits. discrete business life was The that our by earlier productivity, commercial starts quarter in sales weakness to we process was the up sales growth are with more and early which safety by difficult in Similarly, lap signs hybrid in for metals business first out. offset down high but bottoming XX% industry reshoring high as in and were Discrete comps. sciences investments single-digits were Overall, single-digits, mid and led mining. this were up continued

during approximately we Price end points Overall, continued during four our conversations additional our quarter contributed the XXXX, markets fiscal the the giving Backlog actions price with the health confident rest strong about execute of on million feel opportunity grew $XXX indicate in pricing beginning from and of to actions driving quarter year $X.X plan. of investments billion, the the realization. customers growth are as our at taken XXXX during XXXX. us and ample to

accretive North the points XXX margin improved XX%, expansion price to the segment was and margin AspenTech. excluding Adjusted was margin mix to in quarter. America leverage basis contributed by and EBITDA

performance EBITDA expansion. by points, up XXX of with margins basis Devices Software and were Intelligent AspenTech. adjusted led strong was XXX control points basis

move was the to Adjusted $X.XX, when details and the discuss EPS we chart. next I'll

of chain was challenged. cash to $XXX XX% working the this supply but impact Lastly, flow on free million still year-over-year, chart, which is down capital, trade improving, due including mainly of performance, is

the year, through working on We as trade improving free the year. full XXX% of expectation progress conversion capital are for and flow we reiterate our focused we cash

Turning the our X. is prior to adjusted EPS bridge This Slide versus year.

wanted to to adjusted sales, on results, operational EPS strong delivered $X.XX I reflecting say very low-XXs in had the First, leverage which that we incremental again, quarter.

unfavorable to impact price and during quarter. stock additional said due legacy an of as increase compensation our impact primarily was treatment required stock the the our recorded comp to of Lal long-term currency. mark-to-market There incentive due in due which The an XX% expense $X.XX was plans, to on $X.XX stock

require these plans The plans mark-to-market last run the new and accounting. XXXX of in do off not will

the forward, stock So from XXXX beyond has from been will historically. in comp reduced be what it going variability dramatically and

treatment addition transaction Other the share quarter. in impacts. was in the through the $X.XX accounting long-term contributed Currency our quarter and repurchase primarily customary and contracts translation of items non-operating to by driven

to turn Slide Please X.

Turning to our XXXX outlook.

We continue to end see strength markets. across our

and and secular process, As are markets November our relevant all and be to to mid hybrid grow in for to we trends high-single discrete business long-term October, growth communicated XXXX. successes driving are in The we expected in XXXX. continue discussed in digits

the by Energy LNG be continue minutes Middle transition in investments, to North strong successes Energy America accelerate especially to highlighted the continues as and including security few spend evidenced ago. East. a Lal

metals in and U.S. sciences life vehicles also value to value reshoring and chains is hybrid, and around spend Those to the forward investments electric centered electrification discrete benefiting due mining move markets, especially chains. continue are In

The one down is weakness which Productivity the Safety XX% segment, first in was in business and our commercial the exposure we within see today quarter. the

year as of a easier these comparisons signs throughout we move the see expect as to We demand. we sales early in improve face and we turn

X. Slide to turn Please

robust We’re maintaining guide is to sales strength less our expect points, markets X.X expected to We X.X%. at for backlog. underlying X growth points. at be the underlying and of full year in headwind remains now a The to guidance our currency X.X% end based and on AspenTech contribute

point our from increasing are previous to X% net expectations a the we guide. XX% of to Therefore, sales

We previous performance. and intend Within with cash excellent comp are that year free adjusted we guide. unexpected the the EPS in had that the stock holding conversion flow the operating cover we leverage, operational first guide, at for quarter to headwind

quarter, reducing to to by second Currency a the we of XX%. sales growth X headwind, growth approximately points. continues be For expect underlying sales X%

be net up. AspenTech XX.X% expected sales points XX.X% are X.X contribute approximately to will to and

Leverage data to increase expectations the earnings XX% mid-point and a Adjusted included a on between XXXX share in in again continuing release expected that press $X.XX was basis be this high-XXs. guide. and We’ve the mid for the per filed $X, is X-K of which to ops at morning. our quarterly the is are in

now it operator for you and your attention, Q&A. we’ll to Thank the turn over for

session. Davis first begin Melius with from Research. Instructions] Our Scott [Operator now We’ll question come will the question-and-answer

You go may now ahead.

Ram Hey, good Colleen. Frank and and and Lal morning,

Hey Scott.

morning. Good

morning. Good

of little price the most think about that? clean Couple the you make think was predominantly clear, up up Does are price. I growth these – since price was but pretty slides quarter, X% total items in

quarter, good Yes, the the of approximately Hey points X, in of volume. out Lal Scott, X morning. for X price accounted points here.

Lal? And did that cover costs,

Yes, sir.

your just pretty more sciences. of I color weakness end quick on but sciences, on give follow-up some you bit you Can some or life know a comments on. that made money positive us And Okay. what relating to some are spending – your just peers have market. guys seen be little here life a in customers

would there helpful. color mentioned localization, Thanks. more be but a You perhaps little bit

in States, Yes. No, quarter East Southeast and you Asia, we today. chose Europe, Coast to with predominantly a of a very automation. Asia, active projects United sciences life around It’s It’s capacity. highlight expansion one of globally, variety

driven we in investor It’s the by trends areas. discussed personalized conference, whether medicine, our it’s the or world capacity derisking that at

have offering optimization full into development yet, a of and be bring that’s to us released expand space. avenue space to that in that shortly, give with AspenTech will will we We software but into Scott, the another as you

Okay. year you. guys. luck Helpful. Best of this Thank

Thanks, Scott.

Thank you.

next Morgan Stanley. come from with Josh will Pokrzywinski question Our

You may now ahead. go

everybody. Hi, morning, good

Good morning.

that in to Just kind maybe the chain, in you and while not of there. questions, has about a some backlog surge other conversion backlog of think your had kind backlog this do on conversions relating a pipeline enormous guess guidance? how but couple you’ve names tougher both time I supply of seen had that orders

pace things would And expectation months? Where the feel accelerate? start pipeline Is moderate be projects of a are out do you of looking that the to kind over question, of which next then and you to versus the today second the backlog related how XX see sort about those? pleased of orders at

in businesses feel Yes. that I went Productivity throughout the No, in the the described only very segment pacing we in with Look, increase did weakness through. the with order the Safety we confident quarter backlog as call. do the

almost And grew about to of projects. actually $X.X very sustainability we It the robust. quarter million in projects, number size, large large number in of that very terms transition formation globally, went through well cycle. is a $XXX funnel the executing we’re that, billion capital of Beyond as energy

about So that. good feel very

I perspective, environment is job go from think positive very So And look, we and to my in guidance our convert we think orders quarter see through continue embedded expectation year. to in a as second the our the we an the that business. backlog it’s here, have I

and that you experience do Has bidding. larger projects that one about people there. think the How Great. guys erosion If wave? you kind aggressive been little margin I of I these could follow-up just mega some of feel are on about margin with this on get know projects? seeing your

No.

leverage the nothing There technology it. that bidding, within stack. and nothing our were models. embedded about feel can’t good with our points. the quarter we gained seen our that pricing it’s differentiating manage see quarter, You XX out in in very, of Yes, shipments we we’ve within but the about that capabilities competitive there’s We very ordinary project the

Correct. Best color. Great. the luck. Appreciate of

Our next question Citigroup. come with from Kaplowitz will Andy

You may go ahead. now

Good morning, everyone.

Good morning.

Lal, to look watching in activity seen question you’re and at Safety you I last anywhere any know have of outside mentioned chemicals. follow-up signs of you I bigger just of Productivity? want on the orders, when terms deceleration I

the chemicals? in orders in in I Or of think expect as also you’ve continue past. other you any And to markets? the hold to mentioned focused that. Antonio Americas, said be the process Would orders

really We there. question. and with quarter momentum a a good good strong strong very Americas Western quarter great had Yes, Europe there, momentum

Of because weakness Russia, is course, of market. Europe that we away course, Eastern from of relative walked as

So pretty were the there tough. comparables

Asia then and the East, And very Middle strong.

us quarter, expect year. and we in finish the coming high-single digits but as second in see China back we was down quarter course, the here Of that out the for

So the we’re this put color? segment, Safety second generally, seeing Andy, I just feel beyond based the at not we out Ram, full confident very guide but year on there, point. about quarter the any what Productivity

Yes.

XX% positive strong. total our is then KOBX I resilient to sales think the close for now Western And company Europe very is mix which been of being business, new in us. very has the

building. So good sign funnel is that’s Andy, project a and the

So Productivity, at of this point, Safety no outside in the core business and of signs weaknesses.

you talked delivered this bit, And Very of XX%. but about you little helpful, then a guys. incrementals

the price, QX? reason but as mentioned have the better And mix any change the that you in did for And is talked that price a there costs would that versus you You Americas. throughout I bit would in from year? little for a the major about year? could know strength Is you positive continue reason come why go than thought bit

Yes.

like with strong quarter, we as think half cost see see levels first I to as go the we’re both commodities And in year. with and we favorable. price at also high but softening through fundamentally holding price going commodities logistics well as saw into as frankly, we coupled second the the turn

QX mix, cost, to expect which think really, So price but soften through through the is, continue also Americas I year. the year. strong margin we in should yes, performance And don’t sales North the America

saw we the So dynamics the should QX continue year. through in

it Appreciate guys.

Thanks, Andy.

from next will RBC Our Markets. question come Deane with Capital Dray

now may go ahead. You

morning, you. Good everyone. Thank

Deane. morning, Good

in so important Look, Emerson many in it’s an had a years. I know day for presence St. such Louis. has the community happy

I’m sure So news great everybody. that’s for

Thanks, Deane.

the pretty all through. excited the process I decision think went that and we’re about we

disruptions And and it the also avoids and logistics so forth.

be great for it that’s would question, My hear. Frank. So to

We’re supply the flow. of you’re still industrials. chewing The still free of on For working capital? inventory to conversion, with has in reaffirming chains such the the lots enough up seeing are required that what free buffer cash working underperformance capital year, XXX% flow change seeing for cash across

do playing you out? how this So see

in improving terms good inventory that and getting and Yes, and of the order Deane. is of Mainly, It be morning, helpful in supply story. to timing, backlog out ways the always to it’s down receipts adjusting has around aren’t get but materials. inventory an chain difficulty in

will robust that and need of fundamental the backlog backlog the certainly be have the out the that level. part quarters. thing three we that’s is a So have, big that next we a change And shipping over needs get inventory to we to that

with sure that ops and in supply had the detail quarterly forward. it’s going about reviews comment we a Ram execution businesses further can chain when implications. our I’m and Ram I So our discuss now little on

delivered first the Yes. I you mean at positively Frank, supply now, think were the the in at in said it. pace chain somewhat we day, the which of I surprised the quarter. end right

three one obviously, on the some that’s, positions that but in and remains news reasons So us quarters in that the execute of I ways, was good that the the of think backlog make remainder our built, they’re inventory that in to focus. the optimizing backlog, poised And which slight adjustments it given of drive will But how do. ultimately, the we we’ll supply chains, from down to to come we’re in better. material execution performing

businesses this as core at and of automation cleanup to in just willingness some comment any point monetization to then follow-up, we would the way potential a moves you less businesses. what’s be for under that Board And Great. in other not know I timing pure-play maybe just the just is the look been there’s provided terms and It’s of yet the of those could new the specifics potential portfolio framework. on can of – more

question. great That’s

We’re Investor – also active to we’re continue of but point, that have and going the to we Conference managers acquisitions. of to be cohesive automation build bolt-on where on company, to to continue that the opportunities when inclusive At necessary. do and so, XXXX don’t November impetus voiced in we’ll but portfolio, we our the is prune an pursue critical to both this

course, existing – would pursuit continuing not Of we’re very after the expect But a also NII that look aware you’re anything But busy to XXXX. at I of. there scale of the portfolio. that I

you. Got it. Thank

you. Thank

Julian will next Our question Mitchell with come from Barclays.

You may now go ahead.

morning. good Hi,

of sort color. good had we’ve think I top-down

margins weak points revenue were business see that little then how despite performance. the out up, you year? quite but questions So of maybe safety trying starting a I it’s One I balance playing a a on business I sales just year-on-year you, small the look on little just the bit. a Maybe the slope the at pieces guess two there. some in about and productivity, for of XXX of think, organic was bit secondly, to talk it. segment realize And the

So maybe understand sustainable? us that it delivered and how help is you

Ram Julian, here. Yes.

it In or through positive of materials at and certainly softening improvement last executed to looking second in the favorable that through of drive focused cost safety of to terms think of clearly half get by negative, we some in QX but kind business restructuring full be in will then price margin should as the strong of the buildup year the we’re close anticipate close The flat second had how business I we strong and we cost performance the business, the that savings X for – sales, the points productivity. the year. price slowdown going That’s second QX. a in driven and the performance, costs year. into half in flowing Obviously, continued then price anticipating half or margin material year we the

helpful. then Ram. very That’s Thank the And business. on you, just discrete secondly,

a I mentioned X and us think, You areas lot And of remind vertical? of whether domestic there. Maybe softening. the in by main of grew, also, assume kind quarter. think are there’s briefly elements your strength cycle I what early And points some in I discrete, it’s in also Europe business you

little the the through X% expand on whether holding of balance business growth a rate and bit see that that of maybe discrete kind So you the year?

Yes.

carefully networks. other We direct levels elements. saw business States, be global robust. of signs well of as a watching United stocking broad there, that through have weakness distribution That both a as in very OEM terms into We strength Julian. in balanced a business we’re very although from very continues No to and our perspective, the

driven the Our earlier, for heavily It’s by – the in which and discrete business, us. within as places are quarter, was well. France Germany, which strong in business Western European very markets particularly critical I like cited

perspective, PCs, growth automation well side, China now are in outside market. a on Asia, in with China, very of plants. again, the good And a devices strong movement for PLCs color material feel lastly, the very industrial there. of on control and course, then and And recovering Julian? various the From the around positioned any technology we that Ram, with

No.

segments factory perspective, automation broadly the a I think mean, and – business. industrial I within automation from segment have we

in The think So both frankly, I single-digit that do impacted experienced. China, high anticipate somewhat X% overall. by shutdowns was well. the we those which mid that for continue business very year growth And business to in to

we year. through as that frankly, expect So go we to improve the

That’s great, thank you.

next Jeff from Our will come with question Sprague Research. Vertical

may ahead. go You now

Good thanks. morning, everyone. Hey,

Good morning.

Good morning.

versus so can a and point what the the one assumed you adjustments. housekeeping year want translation on contract of FX, to we of – And headwinds, elaborate first it the for headwind, was $X.XX expectations? your or just normal but addition expected Maybe back me then little Could comp there kind to I some a finer headwind. was some just like put So $X.XX backlog for entire is then the we and projects, other saying changed that’s seems to and that in a bit? Can clarify come how what you’re on just you just on original FX?

Frank. Yes. Good morning, Jeff. It’s Yes.

originally year on FX, range double-digit – moderated. back $X.XX guide the had current from we on It’s mean, low the the in – the $X.XX to on So now. in currency That’s impact I probably for October. in

turn So again bit as on we of I stock asked a improvement comp the mean, based there then have you little dollar. And about the in well. an

we was XX%-odd then the or driven increase bit in of a Emerson, an yes, on mark-to-market of for less the in by the and So had had in the legacy the we that the impact there, built plans. quarter for increase price and more addition stock flattish AspenTech little

incremental So or in had of to that and we the the $X.XX guide, $X.XX $X.XX entirely was versus kind year-over-year what guide.

which we embedded there, that’s is – year, will which the and kind that now year overcome had headwind within the guide. So absorb it the we just are we in and big of

of some front couple your on like and what And kind content project law, of tail maybe Could this, the sense green the product us benchmark dollar these call project maybe you the projects project, of hydrogen large like the give here. interesting out a end you like? of just – a the maybe of looks looks scope just on what

I gigawatt XXX,XXX dollars gigawatt for in it’s as about per terms XXX,XXX hydrogen, – much parameters, very that we fall automation the Yes. laid think per believe there Ram? again, instrumentation we out, the – all and is then, it’s of and million for laid we if million of example. petrochemicals No, the of downstream very KOBX, out $XX what – within I But these not the there’s think to on scale. come. type in course, significant I’m mistaken, to business example, $XX ethylene, the Jeff, And

So, some that these first are to about specific highlighted, of system The the and instrumentation there’s very sizable. we in which then purchase, million $XX one further come. DeltaV is course, of

very sizable but in So in. capacity, they’re line terms in of dollars scale, they’re the with automation of market how on we about per think depending

Thank it. Got you.

next Steve with will Our Tusa question come from JPMorgan.

go now may You ahead.

Hi. Good morning.

morning. Good

talk guys the flow in? in you Can coming for quarters? in couple see in confident of How you the especially coming just you that? where about And guidance next that some Aspen are maybe particular, cash

little out Frank. – cut a you bit is Steve, this Yes.

the You cut beginning mean, your of bit out a question. at little again... I

cash flow. forward… flow moving free Aspen Yes, Aspen and cash confident free in how

hear. didn’t or didn’t I We hear

ahead. think On I I Steve, go – plan. Yes. mean,

plan, very seasonal. on Yes,

have our we fourth it a and will we third – they’ll be in flow the think it the quarter. based So And plan, past, they quarter, as we cash their see be quarter. so quarter that will in big heavily deliver on

and – or be guide, for On Steve, quarter will them quarter. the – be big third quarter third I will Yes. our think

I background seasonal that. flow, to obviously, cash expect would mean, Yes. on and the I But maintain. the their pattern that they that the for color mean, and is can provide we

cash. your influence does it Yes, Right.

doesn’t Is it is you take this? – go how if the kind for coveted wall that. they’re NATI, seem a to curious – of below have to asset this comes view like owners are just guys? you I $XX. guys anything on to going you willing guys really for the mean So When it

we’re be of purchaser very then the not can with be I asset. clear to the going you,

That Thanks, is very a you much. Appreciate it. answer. definitive Thank guys.

Our next Wolfe Nigel come Research. question from will with Coe

go now may ahead. You

Thanks. morning. Good Okay.

NATI so I the asking questions on price, be move that. Okay. won’t I’ll from purchase on

if to I can. Just to want go back FX,

mentioned think contract and not heard before. you it’s I’ve I from something Emerson long-term marks,

backlog had So know I we’ve revaluation. some

beyond caused we once FX? How on line plan? mark what stock about size on roll that? maybe below off the that we stuff, talk And that what year just to should this comp just is maybe So normalized the this

Okay.

hi. Nigel, So This Frank. is

the the – a the significant the currency was of we on yes, to of accounting had due So it significant was of the quarter, in – portion impact long-term a contracts. that

Korea are have currency mark-to-market contracts. to long-term translation these typically to they about opposed we other to in China. markets when like in are and where Europe and talking currency Typically, we about you as tend and be places EPCs, So to talk

most where are the marks you’ll to but mark-to-market basically mark you And the down. zero contract get of the brings the accounting contract And and closes big cycle what backfill a to up depending the during the is out, those those contract, life when and on a it’s you in quarters, life for not of contracts, enough matter.

it. – specifically talk it’s And was the helpful, drives that’s contracts. big and matter drives to not not derivatives about that’s we word This the derivatives. that just We don’t quarter, talk so embedded long-term but on try enough it was it’s $X.XX because embedded what it to $X.XX, mark accounting that or about it,

embedded pay Yes, above my grade. Okay. derivatives,

but that, so on follow on But up move – just on some the there’s pieces we’ll let’s the guide, here. offline. from So moving

of about have is like then benefits talk that the very And anything well, neutral. offset. The plan, environment noise corrections, sales of buyback are dollar of planning got acceleration. just fiscal, quarter highlighting we these macro So some some the major got relevant with FX you’re China see What you for, markets? the the prior weaker and of the your half the of other But piece? especially maybe then our et and to some highlight? markets there We’ve marks what year it back of in Is kind lockdowns certainly sort in do you’d comp some relative versus offset feels year. else stock some the moving discrete short-cycle model by inventory second probably share peers in in cetera. some Is the

Yes.

fundamentally a perspective, built a mid-single orders with the From have we we Ram acceleration chain. with the us improving crack, here, year, supply obviously, on the in that shipping backlog described take sales. and sales in digits I’ll So holding to

QX as So the QX, absolute we’ll backlog. into in and sales certainly, QX we the execute ramp-up on expect

haven’t of distributors. any go in seen of terms Certainly, discrete we a destocking, In distributor our it lot businesses our of businesses. through

through our process distributors. go of Some businesses

seen haven’t then price that to we the And the anticipate given year to do We strong dynamics just and seeing. top through it of growth off, remain we’re as it what will will it contribute well. nor

you. Thank

from will Joe Our come next Sachs. Ritchie with Goldman question

ahead. go now may You

Thanks. Good morning, everyone.

Good morning, Joe.

Lal, I AspenTech noticed mentioned then than know, margin EBITDA thus for that that a guys. going in is the bit? Hey color as was wins around how Can [indiscernible] of tough that I well. just lighter you And you little that what basis. But touch some just the a you far? a interesting. on guys year seasonality provide expect business adjusted Maybe some full was like

Yes.

us, synergy very, the where So good in plan. for won going very according synergies lot to Aspen we’ve Laffan content. a a early Ras think some from like And perspective, of frankly, AspenTech, I on built projects is

the I selling think our and of sales as and the continues capabilities their engagement channels channel sales planned.

and of we our them bundling of in wins work half we’re terms and on second pick of the projects, a for there into of what year. type Now process revenue success AspenTech up as perpetual driving is the is ACV in licenses a converting into lot really momentum go should

forecast quarter fourth no performance, good the into numbers, then the It will the and built built presented their Obviously, in we’ve good be feel about performance. certainly they quarter. or Seasonally, we’ve this plan year. third sales we about the on and again the We it their the year, in pretty feel last the third quarter, Emerson biggest was synergies. for and plan the quarter So EBITDA concerns consolidated AspenTech. is our pretty margin

Super helpful, question. Ram. follow-on my And then maybe

highlighted your where of While, opportunities? Investor at you pipeline opportunities terms the Day, your these the those pipeline guys recently all movement automation seen about just I’m and you extending. have in talked most in technology you of big wondering and

good it’s Yes. No, a question.

also but project and in and terms Of came is grew quarter; of the what in I the secondly, the particularly the One sciences, exited active in a two quarter terms funnel were booked in course, in saw very of predominant projects suggest have in not and of the hence build-up we element growth funnel life significantly did we activity. the areas: funnel, that robust, just which that would in which dimension additive by terms also terms the which in only also dollars both And here. the East size of getting that continues predominantly not you became but Middle projects here projects, be about to and projects, in tells and is funnel. transition, just U.S. number in are of of $X.X the very a the funnel eight grew energy by which that larger, the billion, of but average in to

momentum order up remains the is, Louisiana. on very, was positioned. good of the A – we meaningful. these progress will go ramp add size our a Texas quarter we Bechtel, and thing very are through lot projects funnel projects through where year. on what half many And would in last we I we’re is well of of the And expectation large, as those U.S. the in booking the LNG those second activity only with FID LNG saw And the the in going in associated the

Great. hear. to Thank Nice you.

with from question Wells next come Fargo. will O’Dea Joe Our

now ahead. may You go

sort Hi. cost. wanted Thanks to questions. and my for I price of start taking on price

in price XXXX. parts increases the side some the business? thinking then can On the what And margin the Is And of of you quarter? year? course also cadence the I you’re concentrated you those over the think broad-based? Are price noted the to cost impact start in about impact things, that of that for size more of

to increases? the You price about talk want

Yes.

did as – I’ll we increase crack had the in we good typically enter October, fiscal Select mean, price year. a a increases. a have from we product do take the I increases price at in price Jan. So lines

We the realized think have a price midyear In increases April lines was more in quarter. X% for slated around general, though, pricing time the frame. first few I product price

at as levels the year. We expect go it to those we through stay

strong. remain will pricing So

what a should the the year, expect through. become quarter in in the inflation [ph] the we as it to Through year, we price Again, will then price material see it those incremental put Net be we’ll through year. back through than first also the continue margin. tailwind through might go of half increases go they year. as bigger we increases be will was the entire we accretive As to roll

between half from all rolls on margin through, good accretive, somewhere it in story we but the the depends really point a and through it all So a go how certainly point, standpoint as year.

think of a PMI about semiconductors outside you batteries outlook the picture areas of PMI price, Got sort some that there mean, to And slowdown. of continue no seeing think the low-single kind touch Discrete side kind between mid-single can we sort than of see on the digit Discrete areas volume on but growth through I to it and But as industry like assume and of end combination that. kind for structural questions would seeing cycle things of that of of what indicators then and really Discrete of faster of low-single on digit when short digits. in expectations sort of markets? just not macro. back growing of digit circle just are the up of it. some connection low-single expect And sort these we of we’re then just sort about I and wanted I that’s some a bigger some thinking volume growing your slowing, macro of I growth kind

Yes.

said most of So you it.

that growth is we’re – low-single that a digit really automotive volume, digit watch. think frankly to we low-single cautious the the vectors plan LSD, carefully something are from battery to on price, sector I semiconductors, manufacturing, going have is

haven’t forecast an slowdown in we to on so watch we area and then slowing that in But that our the distribution, have far. levels of based have carefully. We automotive PMI again, sector. could good to is your any And certainly But seen yet. there point, very performance is terms anticipated stocking had what be

mid-single put I think pretty So digit about that good feel all if we forecast. together, our you

Thanks very Got much. it.

from Our Oppenheimer. with next question Glynn will Christopher come

may You ahead. go now

everybody. morning, Good Thanks.

suppose bit orders organic X.X X% book-to-bill book-to-bill. a outlook I with a of the to the growth seems the growth. which backlog versus little a tie But wanted function little prior Just up that’s incongruous year $XXX million suggests

that might consider normal market do what So just net how book-to-bill versus a you mix? interpretation size on in you could characterize end and you comment moderately wondering if backlog expanding

Yes.

a I number. number. GAAP But So X% is think underlying $XXX is The are sales an net-net, the you right. million

at of the If think first I the orders you sense and build backlog. the last quarter with sales, makes X% million looked $XXX year and in calibrated versus

business. of I this in for normalized level a think our expectation backlog

terms as We’re for high could of be billion chain level we $X going that’s million to And improve, normalized probably the least – have to And of of execute if the where this what to too $XXX supply sales. backlog to at the were level normally to in the chain close that’s year. supply optimal. continues through we’re

to answer $X about $XXX it’s we your million what question would’ve So anticipated. higher to directly, billion than

you. Thank Great.

question Our Cowen. next come will Gautam with from Khanna

go You ahead. may now

Yes. Thank you. guys. Good morning,

Good morning.

Good morning.

was about talk could stuff. the X KOB I the you a wondering little if bit aftermarket,

full while? seems half XX% I think what like do year normal and a trending is? you see sales over that year you it’s Just on new the you do it or where tilt said been the it because quarter. next quite of a was in think But for the

concerted business the think in we’ll No, we’ve installed the base. And MRO across service replacement of place and those to maximize plus that our effort billion value I a drive that put $XXX are had programs Yes. opportunities.

business within that it’s expect right We’re that supported companies. And I in sitting XX%. that to around we have remain at, you’re right, the by programs range. the operating

that’s business add higher levels. the the through at the pricing would of flows I where segment And

that through obviously will year. remain the So robust

I out follow Climate up, any anything noteworthy? it. then timing the Tech, appreciate And just change on divestment there of the to

in approvals thinking track up business. standing the calendar No, first we’re on about half and regulatory terms still and the this everything’s of year of the

guideline April we’d as well all underway, shifts that’s a there. expect So may so

Thanks, guys.

Yes, sir.

will Tommy from next come Our Moll with Stephens. question

You may ahead. go now

morning, Good my and questions. taking for thanks

Good morning.

morning. Good

embedded little I digit others There of wanted the in double on in any is there do aware But some outlooks discrete, conservatism well outlooks apple hybrid, help you’ve essentially orange the are to these but the digit you Thanks. am there’s outlook often single start to making some I and three, you I provide, the process, reconcile nicely here versus these there heard provided was curious, have provided? industry across singles that would in just we’ve all across what you markets anything variation elsewhere? impacts that range. us in growing of Is comparisons.

big are of elements course indications this we’ve some the that clearly there cover than as The Tommy, we that, semiconductor businesses significant modernizations the of the we market feel well. given that significantly fair the marketplace and different But of very in the of of balanced and we’ve expectations feel our in amount I capital the segments, types higher we’ve are which year today. what replacement. ties the and as of for put trends. in a taken outlooks, no, We’ve each there. overall, pluses feel into of given today. within the And terms you smaller view out have guide account a various terms been others. also that geographic to the blend we’ve again, like speaking recognize, growth based seen In But we’ve about course I a what’s there that on EV pluses quarter Discrete space, into of that the what for

was so say to That’s original as to that… opportunistic you. and extent the was stock the also a I the versus pressure to Is deployment lean view if activity. helpful. ask quarter in about an for And was decided we time? Thank acceleration period X – decision where that wanted of the it should your the that under more You billion of the that an to repurchase full fair plan? in

able it not get done Tommy, really. get is our intent sorry, we communicated quarter. we was as as No, X And billion, to it I’m were done the possible. to Yes. the When this in quickly Frank.

events a market by so just it do commitment driven on desire really not as and the to was it much good quickly. So make

we revisit And think might the for potential any in that point? is at this year, more or the XXXX later pretty possibility for well spoken you about should

repurchase. There’s fire to other intent We’ve do more irons right now. another, current really no in got any the share

no right have do current said We but revisit, change. done we billion So, We can we that. to circumstances revisit and plans now. we’ve always obviously it X

back. Great. you. it Thank I’ll turn

you. Thank

will from question UBS. Chris with last come Snyder Our

go You ahead. now may

wanted I safety to and up follow you. Thank productivity. on

for get understand turning, it on so out. I things you sounds seeing that to hoping mentioned but starting color you’re guys give You also signs seeing see is easier, you’re demand turning there? you’re comps just to early more demand of what bottoming that confidence like

we’ve – off, Yes, into is so I easier. think plan baked what a majority comps of first the getting I

staying today. better comes I sit read levels expectation easier. absolute same as stay plan, think and improve, We’ll quarter. a safety second is better half were baked the should go the which it’s productivity. the numbers they if we not we’ll through into current of to comps the demand at we levels it of And getting with in at through this a point, easier. current get where have better and get and Price So, have the comps But

on Could with presentation the quarter? in called out And some a just maybe that. it’s then the second appreciate in the then how organic reopening? quarter. exiting into China fiscal quarter on you. color China And you how the shutdowns I up on Thank provide headwind follow the China, performed growth from more to

for so performance high-single the with to the digits was half. orders well incoming digits, be the as year China expect down high-single mid-single in sales in both second digits quarter. to And as we Yes, China full mid-single

you. Thank

our attending today’s This Thank presentation. you question-and-answer session conference. concludes and the for

now disconnect. may You