Emerson Electric (EMR) 7 Nov 232023 Q4 Earnings call transcript

Good day, and welcome to the Emerson Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Colleen Mettler, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you for joining us for Emerson's Fourth Quarter and Full Year 2023 Earnings Conference Call. by Officer, Chief Operating Mike Krishnan. joined Karsanbhai; Officer, Officer, am Financial Chief Baughman; I President Executive and Lal Ram Today, and Chief

always, with follow is As on everyone presentation, available slide which along website. our encourage I a to

X. Slide on business statements, safe of presentation may and harbor read the the uncertainty. Please statement on which me include a note contain non-GAAP join measures. This Please to and degree risk forward-looking take time

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

Thank for you, delivered our alongside of Colleen. exceptional Good of morning. XXXX strategy. boldly Emerson. the was an Directors, across year dimensions creation team, the three The management value Board

culture. Firstly,

engage an trip that teams. team evidenced completed a in by our with the energizing management are customers to just survey. of around It we as it changes and the me trip our to where culture was evident Emerson we and was world driving Our are our the have opportunity engagement the embraced

was value a targets program. significant culture. in an made sustainability important strides out across as diversity well rolled We multiple engine dimensions employee of significant XXXX We advance inclusion progress metrics year. our and differentiated and our talent as launching proposition, made an

meet portfolio security With our diversified profit to the position secular customers' are and macro focused family the needs. our on and higher unequaled, an welcome transformation. technology with to Ritu to and is stack divestiture acquisition is automation our energy push of us like growth, Copeland transformation create aligned sustainability in and NI, importantly, would is time. Second, This margin, Emerson. digital Emerson to an automation affordability, boundaries largely continue decarbonization and exciting cohesive the to the to NI I of we more Favre drivers, enabled and The complete. to NI have portfolio a near-shoring, critical higher

segment differentiated delivering to XXXX share after Orders X%, management expanded basis another execution. leverage. points XX%. system GP basis Thirdly, and billion. results. expanded is world the year XXX delivering grew adjusted of for XXXX points Underlying Emerson The growth EBITA year and XXX sales earnings XX%, $X.X yet XX% free XX% grew we $X.XX exited areas. flow cash grew was across at in Adjusted XX%, and all over to per

now price in for realization strong the base the XX% business represents around installed with $X.X billion exited have X% of year And XX% MRO world. We backlog, with up year-over-year. year the at a the of billion our and $XXX revenue we

on delivered was devices. a We innovation platform, Aspen models intelligent in releases XXXX. year DeltaV our and It significant of in

XX% Cost Our R&D life sales spend across reflective cost of is as the actions in The of is X% differentiated management Emerson. leverage of rose aggressive to of business. our a percent XXXX. at way

future solve I increasingly who the our company. by their about am challenging optimistic certainly I'd in place our I'm of trust to to world's customers my locations. the significant We by related to the transaction. the XXXX Copeland certain of And and also through we'll end takeout delivered cost the cost driving on commitments of on of humbled Emerson exactness appreciation express centralization delivering and million problems. most to to performance, corporate no $XXX like transformational activities stranded best functional be our activities costs the

employees passion, for work I like but Emerson am your lastly, XX,XXX of single my our I energy Emerson that global to would remarks, over the members around opening to you And hard like thank say one in every and I'd bring team world. to day.

X. Slide to turn Please

year. bears repeating, an was As XXXX exceptional I said it earlier, and

operating leverage cohesive differentiated are sales EPS We growth. with double-digit underlying The growth XX% to this and performance financial was high-growth excited XX% run adjusted portfolio. diversified and

as be be to high expected to expected is expected to XXXX leverage, ahead, and is $X.XX $X.XX, mid- to to to the the XXs soon the year. another plan, we begin $X.XX as contribution on to XXXX. EPS XX, NI, ground look it and executing Operating provide October $X.XX be transaction, closed benefits NI. We adjusted strong we is the from synergy to hit including we running in excluding expect As in roughly early

our life metals and remain sales base resilient X% mining growth, are to parts to investments leveraging are and growth transition, markets. these in expected and platforms and expertise customer our our are leading technology, We in and software, utilizing commitment our expecting innovation. installed X% relationships, focus we our sciences, underlying and driven winning to Energy to of portfolio, by industrial capture

measurement, markets second discrete & are automation business test of the recovery expecting we and factory in down While in half the are our year. both

renewables, to won year. We some on the X% We Starting in for position like in year LNG, Emerson. X relevance life a also leadership our won for the up exceptionally additional led by hydrogen, Turning Slide orders we in XXXX marketplace. how the QX, and double-digit our and in performance, year. details China executed teams sciences, of Asia. mining, in for operational and growth remarkable throughout finish This was customers. the markets the with rest our for resulting shows portfolio and X% the year. order metals were growth orders Orders

beating differentiated. this leverage which Emerson drove our system ended talent, exceeding our all our of for sales X% November business double guidance. organization and to last with our I world X.X% our both testament $X.XX, operational is of Underlying our growing XX%. strong The midpoint the EPS XX% XX% November by the a Adjusted across the year, top guidance. year X.X% widespread were August the the performance. original August near most at performance operating was of $X.XX expectation growing and strength to line management initial groups around It of and digits areas proud in to our and up year. with is am guidance

year-over-year billion cash guidance. flow of and XX% free our Lastly, was up August $X.X above

X. Slide to Turning

years embarked Underlying journey focused transformational Emerson demonstrating of create XXXX execution, of power indicative the It our of on sales to leadership shows billion XXXX Emerson strong the execution. automation our caps in System a of and sales our organization. our Our Management of also and $XXX its within market. XXXX remained technology and on is in position of and automation XX% and XXXX, market X shareholders. ability for X% value world-class performance We growth the our served expansion respectively, share

of billion $XXX to to base, both XX% MRO this our in our win the strength as long-term ability company and XXXX business. and Our leverage sales critical a of by evidenced this success projects, new of installed

for digital differentiated we basis at EPS and also across our over XX% leverage have Emerson, distinguished together, delivered gross and and cost are benefits points contributions, the software, have margins. growth. industrials. to all provided positive the more driving Strong of years the XX-plus invest of leverage since further expand remains will gross back-to-back margins, in technology XX% seeing operational price is strong we margin has the and which business, expansion. amongst addition Put also and technology to and percent productivity XXXX. enabled discipline This this XXXX further discipline As expanded XXX Cost NI of XXXX DNA part Emerson

control our of California. our to showcased updates in AspenTech want systems to October, and Please Anaheim, I highlighted strategic couple solutions a throughout Immerse integration Slide technology event on provide X. and our The and different In industries. Emerson we business. turn software with Exchange hosted

and customers our working X,XXX the and with DeltaV, our from attendees AspenTech provider engagements over partnership not understanding three toughest Emerson. presentations, This Tesla, discuss discussing their of only over of and types current but Ovation spent innovation. presentations into next-generation and customer of our keynote provide reactor exciting Biogen; technology; a products who Featuring in important help catalyst XXX our electric important challenges challenges. was These their our to Syzygy, reflected products, the automation and inputs was customers. week roadmap all also with of solve and users' products

boundless customers through leadership and and systems, operational their vision enables It Emerson better to deliver positioned optimization. event, all devices, management This and access next-generation balance that platform. also a unlock our is their unified the software in goals on production to architecture enabling intelligent control automation automation analytics highlighted our this empowers Throughout software. position our uniquely vision, data, to and based decisions sustainability enterprise through and customers we've

vision, of vision. enable products the our to innovation On continue many Disruptive part accelerate systems, this of automation provide we we introduced leading stones At sustainability to asset four new priority portfolio. DeltaV stepping domains: Slide measurement portfolio. software, and automation self-optimizing X, to these areas boundless as significant across technologies, software-defined Immerse, our Each

DeltaV Flex. includes like HMI recent allowing enhancements of DeltaV is XX securely DeltaV data of DeltaV includes a It enterprise into one the X, developed. most the Live, controller, a advanced feature edge The PK version the to our history. And First, also software move users first-of-its-kind subscription their to package introduction biggest environments. rollouts ever in Edge Environment, solution, pack

at look of the in also rest platforms, of are key Throughout the investments solutions areas. and software discarded. strategic is unlocking to we our are next users data that to generation our segments. sustainability to AspenTech, energy devices enabler many transition this we automation portfolio. further focused a position leadership making the As sustainability previously organization, the enabling new our This relevant next-generation on measurement analytical includes releases portfolio in cement of intelligent additions and At and and focused

capabilities like out and works management. self-optimizing AI to addition asset further data In building to enable

in Please and business Measurement new XX, segment will turn to acquisition closed Slide XXXX. Test report of the announced NI as On a we October we the & X.

resulting the We opportunities to about are synergies EBITA in moving business. X, NI stock when first approximately end and in comp year the corporate. this in to with progress XX% $XXX with committed excited remain We million by of of very segment already month the the pleased adjusted are the

transformation, openly NI new portion a execute excited have are and we as significant the our company. we portfolio As stated, of to completes

so. our with to We and sheet business, technology flexibility that in have be will, continue balance do bolt-on fill the we gaps to acquisitions active however,

grid we test year and ago: prioritized Industrial be These measurement, segments in introduced will & a automation, factory software, four smart solutions.

attractive completed quarter, acquisitions. also growth leading In of clamp-on our a and complementary of fourth serve gases measuring business these is highly will in Mag for to portfolio energy Vortex Coriolis, markets consisting is Flow, liquids, existing we technology the transition. ] flow FLEXIM steam. [ bolt-on DP global and leader ultrasonic the and two The

We the automation fourth strategic market. combined solutions, $X in also linear AFAG the a offering, the electric industries motion portfolio billion TAM. pneumatic existing creates our in leading discrete motion quarter, motion a with AFAG's asset highly for completed acquisition of factory in a

Please turn X. to Slide

us. accomplish what to transformation able able we the mentioned, large And I accomplish were this slide pieces our last we the As over portfolio are of few shows years. were that behind to

when we this communicated I We that three started journey. have main objectives

have First, cohesiveness, now stack. unmatched which we technology with an

is energy growth aligned to diversification. This largest digital decarbonization, our market diversified less more Second, profile. second further end to industries. And with third, security to drivers. business growth and secular alignment Discrete a to allow secular now move opportunities attractive into expand to affordability, nearshoring, and will Emerson sustainability and cyclical transformation and is our

$XX profits, digits The to low disposing grow today. which we growth low XX% benefits for assets also already operate to GP XX% billion adding the is that -- of of seeing plus cumulatively double single-digit are those the and gross digits. improvement businesses, single expect of worth in profitability seeing remarkable, transactions, are trading businesses profiles we high

the we this We Emerson. energized all by are have opportunity with new

XX. Slide to turn Please

was in strategic content indicative team's projects In over uncertainty. our our the & growth over funnel We're current with relevance $XXX hydrogen, successes project funnel, in XX% encouraged our by already focus environment is considering and of also nearly global wins the are carbon $XX These activity in billion awarded our the in includes fourth rate This sciences, with life mining. Our those the technologies and markets. and interest million platforms. over platforms. LNG, X/X now within growth these of Emerson in strategic capture, of metals opportunity quarter, residing of

fundamental foundational As diversifying our further transition XXXX energy was markets, hybrid year. look a into we portfolio and at

strategic to projects there three were highlight. Specifically, highly

for for it as Biologics our First, plant-wide five Emerson to platform. operations. automation different on Emerson solution was provides and plants DeltaV for The control Samsung skids both selected automate standardizes production

currently future also the with on for the are to leverage software customer We engaging expansion. AspenTech potential

quarter, third selection Emerson's Energy project for Port LNG with Bechtel we in Sempra. Secondly, and Arthur the the highlighted

LNG LNG technology, facility Emerson pressure we trains. quarter, isolation also three capable of will Bechtel relief, our metric of including in Grande per to United and are much pleased project producing States, the world-class control, leading XX.X of for liquefaction we million analytical and and annum were is technology announce LNG selected Energy valves. and tons providing across from the NextDecade This large-scale measurement located another be Rio in Texas

world-leading adaptive we control foundation provider to was power most global Emerson process the evolution to funnel as and paper to utilizing producer. AspenTech AspenTech. with of and the the and a continued at already This wins was relationship table. customer to system finally, strong And quarter demonstrates the into opportunity of incumbent our example a and the win AspenTech move solutions current this able site instead XXXX. of the the in this AspenTech engagement, a These awarded recent our software integrated and the expand sales channel. head the provide DeltaV pulp with displace Through installed the Emerson bring synergy is Emerson's AspenTech chose to customer, through

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

Thanks, fourth X expectations. financial China results, tough in quarter points the line shifted Please a and shutdowns XX shortages. were Lal, everyone. turn morning, X%, summarizes fourth contributed to XXXX sales growing Price growth quarter in good due off our of with component the into approximately to electronic third Slide and when which growth. our quarter from sales comp was that Underlying

sequentially our we expected versus As about million XXXX. with backlog entered up typical where billion, declined $X.X to seasonality, $XXX XX%

an sales Software of we X% grew underlying on AspenTech ownership. which now control includes lapped and year a basis, as

The it very business in year control came largely systems and prior comparing as against and a expected, QX. was strong software

due volume year-over-year. final businesses, on mainly to ASC grew be led importantly, were showed strong exposed to more The of timing measurement XXX tends QX AspenTech sales due our Intelligent sales analytical in XX.X% and and and process can fiscal be renewals the lower and and sales its devices variable control. to accounting. growth X%, hybrid by ACV at forecast,

Europe demand impacting business in and softer-than-expected the discrete was China down and Our business. automation quarter weakness this with

was the to margin Emerson margin-accretive Adjusted adjusted Operating material XX.X%. segment to $X.XX. AspenTech included ongoing XX%. grew excluding programs price EBITA margin cost, leverage, XX% productivity improved XX not basis which and points deflation, contributed improvement. to Volume, EPS

the quarter free $XXX the Lastly, for was cash XX% up year. million prior of flow from

Please to Slide XX. turn

was exceptional was XX% points summarized, Lal X year contribution. Underlying an As Emerson. with XXXX of for growth sales price

up strong margin Middle East up and control, improved points underlying XX%. geographies and with up growth adjusted with devices, XX%; and Software finished Europe, Emerson growth Operating intelligent All sales sales XXX XX%; Africa reported X%. both of EBITA to basis Asia, leverage, Americas XX%. was segment and XX%. excluding AspenTech,

by growth, from $X.XX talked we've this operations about AspenTech. leverage was price by execution and Adjusted As driven on of margin-accretive EPS product double-digit contribution XX% and with mix. favorable sales project strong throughout grew to cost the our year, teams, $X.XX

Lastly, approximately prior proceeds from free was cash transaction. up of the the on flow XX% includes undeployed the $X.X Copeland versus interest This $XXX year. billion million from

XX.X% a forward. free metric we cash of a represents to expectations. our moving was also flow ahead flow free cash utilize earnings For plan the year, conversion of XX%, This slightly adjusted margin,

year. other and reduced share corporate plan, Copeland billion the EPS the to count for $X.XX contributed the to year-over-year contributed the EPS by details from which from was XX% was XX grew sales due contributed exceptional. accounting performance of to EPS comp a interest share adjusted adjusted XX% the of resulting year-over-year FX $X year. the segment-level offset and prior adjusted note $X.XX items. compensation drivers mostly year EPS prior Stock the Overall, mark-to-market was pension $X.XX. operating growth receivable headwind. a the Slide $X.XX underlying $X.XX stock versus company's $X.XX headwind Operational XX% and primarily was old The growth. leverage for growth repurchase

turn to XXXX year of XX. shaping believe financial We performance. good another is to Slide Please be up

XXXX This Our growth visibility healthy end we markets were sales. into XX% QX good by remain up resulted in orders which generally and resilient for us versus XXXX. evidenced underlying XXXX, entered X% of backlog giving in all levels, has where

We This XXXX us business of business our which sales. constructive. pace visibility MRO also day-to-day through gives replacement good have on remains and XX% perspective business, was good of

funnel, a $X billion billion-plus with XXXX. are where from we up $XX entered we entering Lastly, XXXX

outlook. all secular by feeds our and markets and decarbonization, transformation. end sustainability strong, energy remain security, This hybrid XXXX Process like nearshoring, and driven trends digital

and sales high XXXX. process to expect mid- digits of growth hybrid in We single

We like forward to energy continue markets transition LNG, moving in and see investments hydrogen, carbon capture nuclear, renewables.

is especially We help life continue in successful to our in here being which expanded process and midstream These and to XXXX around customers refining, us confidence to the see investments U.S. give trends our and nearshoring and metals processing the mining, and hybrid and ability in and Europe. the secular in sciences end United States be markets outlook. world metals

Discrete our second have measurement been to in this negative which different a markets discrete businesses. X both to XXXX. the but of the automation obviously turn for X half expect cycle, are & impacts part quarters, begin test in positive Orders and of we to

We business. expect be for expect perspective, balance, single should world we area digits a world From grow flat the to be sales it our mid-single-digit low discrete a range. XXXX each to in to up underlying to areas and in continue

Please have XX, guidance. we our where outlined to turn XXXX Slide

our and later guidance sales XXXX growth to for X%. Our resiliency continued robust of exposure, orders X% backlog underlying cycle support

growth expected add Test and is intelligent guidance software within is both control a from billion & sales. range is FX tailwind. and measurement be to to and underlying $X.X of devices underlying expected or XXXX reported points expect XX.X We XX to approximately this excluded sales. another X-point for be to sales to

from expected to to ongoing Price incremental committed & XXXX accretive a operational productivity further which be will to differentiated excludes will AspenTech, includes leverage, savings in Operating cost rightsizing. margins is remain now through which high drive drive cost mid- platform savings our the execution. and in XXXX, and to measurement, our We and test in cost continue includes be XXs margin benefits. corporate but

$X.XX to XXXX, and from expect midpoint. $X.XX This $X.XX inclusive an compensation in in We adjusted $X.XX XX% between AspenTech. and of stock from $X.XX includes to EPS increase at from approximately to $X.XX the $X.XX NI, XXXX approximately increase to

There are be line roughly which in detail found offset movements some the pension in corporate year-over-year. below other and compensation, This appendix. can the stock items,

stock stock million. NI expense Net our reported reminder, be interest corporate line approximately to is item. a in $XXX compensation As is now from compensation expected

billion to to will on next Lastly, free cash more flow slide. which we $X.X the is billion, be $X.X discuss detail expected in

we to X.X% to Adjusted quarter, expect contribute with sales the expected increase increase first in between approximately midpoint. to $X.XX. be leverage is a underlying the and X.X% the expected XX% at mid-XXs. to NI is EPS For $X.XX, $X

transaction, proceeds will flow some regarding on billion I interest $XXX of over cash XX.X% we XX after-tax of This additional approximately increase repeat a operations. or included the sales. We our from just cash from discuss with not the of XXXX. XXXX flow. of starting approximately As million from undeployed $X.X into which foundation free mentioned, Slide base Copeland cash another million Taking contribution details free ended operations and $XXX million free from will flow, in cash and we $XXX expect of on NI from consideration of this $X.X billion

cash $X.X of have flow. This flow resulted free billion in cash approximately XX.X% a would of or free margin

XXXX. However, headwinds we have two in

$XXX we payments the expect NI acquisition-related and with bolt-on cash million approximately acquisitions. First, associated of

of margin. of future CapEx expected rate billion of of bring X.X% $X.X increase up XX.X% $X.X free flow us our of to CapEx free guidance sales. X% Including expecting to historical facility our we or approximately two flow to XX.X% and will our expansions, related to are which sales, an Second, approximately billion cash these spend elevated cash to headwinds from

committed four Internal in remain breakthrough spend quickly Before innovation self-optimizing with driven discuss X% increase turn disciplined investments XX. Slide and XXXX. and over We R&D revenue technologies allocation priority automation was and up This asset high of the capital will measurement, Disruptive now NI and mix domains: Q&A, capital by software. representing remain to in priority. systems, allocation. further to a sustainability, in software-defined this development increased growth call accelerated on our will organic we XXXX I This

dividend the declared with We also $X.XXX XXth our and remain of committed dividend today, are dividends we year consecutive beginning increased per share this announced our to quarter.

side flexibility. is right chart we have of where this The

be We strong we active strategic returns to pursuit portfolio strengthen of our will in will targeted on acquisitions continue and to in remain bolt-on areas these committed to investments.

million have repurchases to Finally, XXXX. approximately we of share plan in $XXX

new we the and energized on We as are fiscal are we enter plans. execution year, focused of the our

open the Thanks for back will to call attention. to your for questions. turn it I the operator

Jeff comes Our Instructions] Sprague Research. [Operator first with Vertical question from

Just NATI of I couple specific questions, a could. if

the with noise bolt-ons. Some

could of finally, fourth XXXX? you for also, first progressed any in the that clear color in bit And maybe quarter? their NATI target if happens the how be orders could little much you provide just on a And So revenues year. in how of synergy around

Yes, Jeff, Lal here.

as had XX% in NI, markets, that plan half is the revenue, the as are we expressed place. I billion core down year. out the in we business, exiting not get we the we stated, quarter underlying expect to discrete still It's second do on as the environment, to sales in in very like the $X.X assumption. Mike much in the reported. flatten presentation the the into much So challenging Orders is which of my our aligned in as at And orders at

orders very well. synergies. we much then environment. And an off start, from in Look, although a feel under plan challenging X. to team's that So in The perspective, got day lastly really they're very, good a on very still executing

I We guidance the will I did, about be say that the on X given will What in X. years. is delivered half year first haven't synergies

Right. an thinking But guide maybe as for Mike. it's just organic the just about unrelated And XXXX. for question,

bit room to much X% those how numbers. little You're order in It XXXX? share like organic Maybe there's exiting for of in just X% price is at price here X% embedded X% growth, right? feels with a that

X%. the XXXX is assumption Jeff, Yes. price

Our with comes next Steve Tusa from question JPMorgan.

$XXX guidance, running kind how that talk the cash kind then of that million through what into does that's trend just 'XX? year, And on within you Can you're all about assuming this of capital? working

onetime and of with of question really in the the higher million the second part we've acquisitions year half the start I'll $XXX first. The the is the second that related or got. some to and Yes, CapEx

just working capital? Great. And then

Working the for XX off and Yes, basis capital about at expecting capital trade of we we're revenue. working working exited points capital, coming year. XX.X%, about XX.X%

sheet we in So balance a to of XXXX. expect goodness do have little bit

just just And on the one, of trending backlog, last guys How see going how you one the guys seasonally, Great. of you funnel orders. a do then and over kind bit, orders see backlog course up year-ended the backlog do stepped to here? the year

Steve. X%, challenges comment, discrete, exit we Obviously, have I'll there. out optimism, have Yes, we we momentum at business. in have so as about and we talked Obviously, in the some we

to I the start think year, year, of the into low in expectation to orders. about get mid-single-digit single expectations is flat at year, somewhere the the the exiting range. digit low the -- And the for But as my second my we in of mid-single single as you digits. half are think full

holds, on pattern a as be -- just XXXX. there There that we backlog Steve, shouldn't change then in backlog. meaningful exit And

the backlog So should remain healthy.

next Mitchell comes Julian The with Barclays. from question

first just at XX. Slide off, Maybe looking

just the leverage something And steadily segment growth sales happening sales up that? subsegment when Is mix I assume should organic or that's . there steps QX wanted the that after understand year? why steps decelerates to through any one with So the growth that, down? or we organic driving operating

that growth been softness in we've first that. in are innovation. -- ramping on the plays up is we of and platforms half there expecting bit discrete a say There's the mix. I little Yes, our year automation of spend would the around And

bit first come as as year-over-year well. so the of that into first And quarter, quarter leverage there's a into a comparable you that little plays

I see.

leverage. and sort pushes getting really up that it's of So the better op discrete

yes, -- That's correct. that's

the restructuring in up given rates. you business the leverage see trend and half, will would expansion discrete in the Again, driving drive obviously, come orders, we're the the second which in margin that through

there instead versus That's now. around, sort months, suppose, later soft of discrete this helpful. of hold should process a then would by is specific year? around discrete see discrete reasons I followed up historically, quick process this any following and differently lower And follow-up cycles automation in Are time just we be why history XX

been trends very we've on very good unusual One in and some we the question, carefully. lot of going Julian. The that matter is world the a watching have about It's that secular thought a right fact now.

lot our the three metals energy is process value nuclear; driven important impacting significant nearshoring chain; investment and thirdly, the gas which a of which life affordability The activities equally think activity, and I and mining sciences and impacts in natural security, areas: continued by sustainability. and critical liquefied

I point there. commitment customers' we're past we're and tipping think in terms seeing investments sustainability, around continued of the our

and you something believe economic we go should impact we those whether as strength certain So will transcend cycles, process that to will through Ram, of about how the we think add? XXXX. have

a been correction I'd the saw. cycles point forward as Yes. move we the other cause Julian, in in the to has And prior make, spend is opposed disciplined. we capital hasn't as There a industries, to boom capital process, hybrid been pretty

that that continue all trends sustainability capital longer. tailwind, think a we investments that I we run to for the lot spend disciplined provide where identified So the process plus, obviously, expect to

see. I

you... So

hybrid. In hybrid. In Yes.

it. Got

stay on through steady process fairly the orders should growth hybrid XXXX? So

is yes. expectation, our That

Fantastic.

question Nigel Wolfe from next Research. Coe comes The with

Okay.

Instruments, think, National high I organic. implies sales digit think single the that that slightly like math maybe my I And were the looks fiscal down, So the flattish it organic. down XQ correct? Is right to Is guide number?

what on wondering that? be the helpful. That orders? would profile on is Just And anything

Yes.

XX% And from orders, we're our $X.X So half guiding last year -- you down remain expect to will the translate fourth Ram the billion their the to are a down that for here, X% positive right, and which for as the in down perspective, in the quarter, in first to turn indicated, From the quarter we quarter. should half. sales fourth second orders And sales X% perspective. is orders Nigel. Lal positive an turn

in down sales positive quarters for we'll X the fourth and quarter. So have first the

unusual order Okay. just to think on from a QoQ. the Great. don't sorry, season's X.X the that's perspective. Maybe down to I I number. missed from clarify, X.X I'm And then backlog, backlog

Was there? consumption. the any there? I I think there sure FX organic understand to it's make see movement backlog normal want just to XQ revaluation impacts to

GAAP No. That's consistent basis. a

next The Melius Davis from with comes question Scott Research.

Congrats like done. sounds update and China leave on were get just all Lal, there. around it you you and world, were saw the from the there. maybe just stuff in an what you it pretty seems topical I'll to it

I, year. said orders very trip was Yes, look, But in exited May. China. hit later do that that, this XX% on had actually, did We'll having the China. we in year not in China. a We good there particular in I at

the robustness really There hybrid about year, but again. States Europe around spaces, will process on for the investments unlike expect continue mid-single there energy very to the So the -- security Sales in we we certainly, continue into United feel struggling and discrete are not process But significant. and strength XXXX. the there digits as momentum core see in nearshoring side. good our hybrid and and the are

And then in was discrete the I'd negative, assume quarter? this China

negative the quarter. is it Yes, in Yes, sir.

The Joe Next from question Wells comes O'Dea with Fargo.

in running, little as $X.XX the cost the the on But course contribution? upfront heavy be kind just contribution One, for the would I a of year. of $X.XX a earnings quarter quarter better first the sort any on earnings for year. guess, NI's the or thinking of then and year anything you're progression about detail of that the that more that's through cadence, the rest

that we else the profits. the second expansion obviously, of there's, drive No, the what anything there incremental expressed, as Ram to as of will tape tale mean, But really I Joe. a to have year that's the leverage half volume I and get is. don't add,

that in sort on the of focus and products on or R&D gain on share step that as the like what outside the sort insight as additional that? is Okay. it sort of and verticals on And even R&D, Any context sounds are returns it up higher revenue you around context that? to 'XX. investments prioritization dollars your want, then goes R&D X%, side well the getting returns of Any sort investment? the of And around then on

in, us mixes mixes we get benefit perspective, the and and comes NI in From us also yes, a then dollars up. coming Aspen of that up

we as on. to So continue innovation, that you'll see to and commitment accelerate growth, move increase

also measurement the performance measurement, that lot the guys. the next-generation around we've development showed technology a automation referenced is of with the It's Lal sensing investment technologies management. where which the of technology business; automation you our across consistently terms really is asset four and system, in in disruptive in a going, is our the presentation; collaborative Aspen And technology investment areas system

So that's see those can terms where in that we investment's world company, the innovation and to new we going. are where an the automation opportunity drive the areas lots as type of of

Christopher Glynn question next from The Oppenheimer. with comes

comment. Just funnel curious about the conversion

the I those the projects picking size ramps that newer the rates of and indicated quarter, think as some applications. you technologies last of conversion and up of are

trend curious, Or the and line, just guidance? you're that that much if So opportunity? could is be notion 'XX fiscal seeing an baked into acceleration how further of

to No. Chris, begin with. No, see to continue organically funnel the Lal here. expand look, we

we the have quarter-over-quarter, interesting, So thought growth platforms it the the did organization. from which in spots where focus us. most what's growing It's to grow it important we But is the along show it's was growing why of you. for right

sustainability So the which billion today, security are that big and is decarbonization of energy large $X.X of part transition and comprises and of part that a it. funnel about of

aligned If you they're very with look aligned we as big are much XX% a at energy platform-ish converting growth the of the about way winning at part wins, here. transition the funnel, same what the on in

are in good movement optimism, particularly But in to affordability course, national of purely about watching it. FID through of energy have So it really that feel continue elements. carefully, terms security, We're time, elements. at this other and or to connected products we nearshoring point

good see So we feel front we of us. what in about pretty

I kind of channel On versus end what demand? you of in another. terms are discrete, seeing ask impacts if could And

a that. And if a slowdown with referencing destocking, Certainly mean, market-driven. channel in we're in I North purely you're our terms the an discrete own see obviously that that segment slowness is European frankly, 'XX rate we The not order see an seeing from China you in and versus automation second of end perspective, to factory and builders, overall the market a lot for the Well, expect machine discrete, positive as peers orders America. discrete, exposure a our in of were holding have our in decline lot peers do half business. more

Kaplowitz Citigroup. from comes question Andy with next The

measurement. ex range, began quarter mid-XX% about FY high Well, I normalized but incrementals mentioned 'XX, the to talk guiding in & you you test to XX% when last think more you're mid- to

us that, off 'XX your could a assess conservative? you So starting it I lower, give price you're of How little into you possible algorithm but algorithm color know your get longer-term for be Is XX%? a more bit still a little tailwind benefits. that your assumptions? the could you like performance and seems it supply would versus getting chain

the We've amount It's significant couple a cost been years. the the Andy. in last There's possible. around in Yes, business. mid-XXs momentum of of operating over

within through have also mentioned, tailwinds but be as just our I XXXX. we we the segments, we're go actions through As will that taking, not the corporate delivered

Now flipped. on flow, measures. side the significantly the having And supply most side, on chain better. of material Obviously, environment of generally said positive is we're that, the on logistics

as fight in different we any very are course, Of a generally, you'd world business. expect in shortages supply spot But chain. we the on

all that's very positive. So

gross we really They'll the And leverage that and a have it's Mike XXXX. of higher further, a the XXXX. business margins Look, are So incremental business. comes a for as -- higher in of the execution. in an XX% expectation expand described, with around

comfortable out basis that with point, at longer-term which And guide from the the as and to put what financial for guide through we this a year. go very about there XXs a So think, in the we perspective talk I on mid- feel through year think high differentiated. plan is, we we

which read uplift little well, takeout, reading will which a businesses, Andy. also platform of amplify through the is in the corporate that We've business and been talking Just has about cost $XXX an in year. the through for bit, 'XX to been this as in million

KOBX also to X what lot on there hear. around I names. like I work? to been activity that more X, you then just And a and higher the Would that great you to could KOBX, It's that know the 'XX, kind we tends KOBX. Is XX% seeing side? expect averaging up hold And retire to are level? want about think that be you help with of margin think you've when given margins, But

the No, XXXX, Andy. range XX% certainly for in expect MRO Yes. we

typically it's business. for most our like price It's right, replaced like absolutely the processes. within of portion You're elastic

located. the great And we base have is $XXX so service specific organizations of of a understanding across mine that we we And we ensure evergreen. where that that keep feel -- our organizations product billion we install and programs the have installed and to selling

XX% would So expectation. think, I right I in about that that. be feel But good the range,

from with question Moll comes next The Stephens. Tommy

to on a follow-up discrete. wanted start Well, I with

out called there You've previously. it's weakness center and Obviously, the been front today.

there half to expect So you the there up I'm were as fiscal a picked demand second return issue? coming can a just shoots you terms look there incremental just through some that to curious, growth, comps point? through visibility call you where in of weakness are pockets green of real the of at is the the more this you last out Or the underlying year quarter? And

No.

element. not a destocking through things. accurately portrayed, it's demand-driven of quarter couple through weakness. as is the experienced Ram we So the What a experiencing -- or we're quarter, have It's

global that in of really a side. our demand stocking focused on. business the across of markets. very nevertheless, But key And we're matter As small discrete it's fact, distributors the through weakness a percentage runs it's

as is the we're comparators benefiting the underlying Now on for obviously significantly half. in having get easier discrete's into from that, we demand said in counting the improving get half. market, us. do second the What not comparables conditions We're second the

some out some around issues that us? there's the just items look outlook you've out quarter there so in side? first Is then single-digit Full the range, And the called on starting the there implied I high comp for the and year full deceleration Makes Are you're in year there point discrete for the you've there. sense. range. conservatism year, given provided mid-single-digit the you consolidated then at the would if

extraordinary cycle. nothing than cautious on to be got other discrete There's we the

appreciate We the insight. Great.

This has question-and-answer today's you The concludes session. now concluded. our for attending conference Thank presentation.

now You disconnect. may