1
First Quarter 2020Earnings Conference Call
February 4, 2020
2
Safe Harbor StatementOur commentary and responses to your questions may contain forward-looking statements, including our outlook for the remainder of the fiscal year, and Emerson undertakes no obligation to update any such statements to reflect later developments. Factors that could cause actual results to vary materially from those discussed today include those provided in our most recent Annual Report on Form 10-K and subsequent reports filed with the SEC as well as the outcome and ultimate impact of the Board of Directors Review of Operations, Portfolio and Capital Allocation announced on October 1st, 2019.
Non-GAAP MeasuresIn this call we will discuss some non-GAAP measures (denoted with *) in talking about our company’s performance, and the reconciliation of those measures to the most comparable GAAP measures is contained within this presentation or available at our website www.Emerson.comunder Investors.
Q1 2020 Results
4
2019 2020
First Quarter 2020 Results
ADJUSTED EPS*, WHICH EXCLUDES RESTRUCTURING AND RELATED CHARGES,WAS IN-LINE WITH NOVEMBER GUIDANCE OF $0.67 FOR THE QUARTER
Underlying sales* were flat; Dec 3-month trailing underlying orders +1%
– Automation Solutions +1% underlying sales*; Dec 3-month trailing underlying orders +2%
• Growth somewhat below expectations driven by weakness in North America upstream oil & gas and global discrete markets
– Commercial & Residential Solutions (1%) underlying sales*; Dec 3-month trailing underlying orders (1%)
• Growth and profitability in-line with expectations; Softer conditions in professional tools and cold chain somewhat offset by growth in Asia
Initiated $97M of restructuring actions in the quarter
– Combined with incremental $35M from 2H of 2019, supports second half margin improvement
Solid cash flow generation
– Operating cash flow increased to $424M, up over $100M versus prior year
– Free cash flow* increased to $310M, up over $140M
SUMMARY EPS
EPS
$4.15B $4.15B
ADJ* $0.75 $0.67
NET SALES
flat
Underlying Sales*: flat
4
T3M Orders, Excl. Acq / Div, Incl. FX
Oct (5) to 0%
Nov (5) to 0%
Dec 0%
11%
GAAP $0.74 $0.5328%
2019 2020
First Quarter 2020 P&L Summary
35
Positive price-cost offset by unfavorable business
and regional mix
In line with guidance of $0.67 for quarter
Includes 150 bps unfavorable stock compensation
due to higher stock price
Includes 220 bps unfavorable stock
compensation, pension charges, and FX
transaction losses. Excluding those items, strong
operating leverage due to prior year restructuring
actions
Restructuring and related costs of $110 and $10
are excluded from 2020 and 2019, respectively
Higher pension costs driven by lower interest rates
($M EXCEPT EPS) 2019 2020 Change
Sales $4,147 $4,151 flat
Gross profit $1,761 $1,759 flat
% of sales 42.5% 42.4% (10) bps
SG&A expense ($1,077) ($1,123)
% of sales 26.0% 27.1% 110 bps
FX transactions $4 ($11) ($15)
Amortization and other ($44) ($57) ($13)
Adj EBIT* $644 $568 (12%)
% of sales* 15.5% 13.7% (180) bps
Adj EBITDA* % of sales 20.4% 18.7% (170) bps
Tax Rate 20.9% 22.2%
Shares 627.8 614.1
Adjusted EPS* $0.75 $0.67 (11%)
6Emerson Confidential
First Quarter 2020 Underlying Sales
Total Europe, flat (Western Europe +2%)
Americas, (2%)
Asia, Middle East
& Africa, 6%
Underlying sales* flat
Acquisitions, net 1 pts
FX impact (1) pts
Net sales flat
UNDERLYING SALES CHANGE
DEMAND IN NORTH AMERICA WAS BELOW EXPECTATIONS, PRIMARILY IN UPSTREAM OIL & GAS AND SHORT CYCLE DISTRIBUTION CHANNELS
6
Weakness in North America was
largely offset by strength in Asia,
Middle East & Africa
6
First Quarter 2020 Business Segment Earnings & Cash Flow($M) 2019 2020 CHG.
Adjusted Segment EBIT* $654 $640 (2%)
% of sales* 15.8% 15.4% (40) bps
Stock compensation $7 ($56) ($63)
Corporate pension and OPEB $27 $13 ($14)
Adj. corporate and other* ($44) ($29) $15
Interest expense, net ($43) ($35) $8
Adjusted pretax earnings* $601 $533 (11%)
% of sales* 14.5% 12.8% (170) bps
Operating cash flow $323 $424 31%
Capital expenditures ($155) ($114)
Free cash flow* $168 $310 85%
Trade working capital $3,063 $3,141
% of sales 18.5% 18.9% 40 bps
7
94% conversion of net earnings*
Includes 40 bps unfavorable FX and
40 bps unfavorable business and regional
mix due to lower North America sales
Weaker than expected December resulted in increase in ending inventory, from lower sales than expected as Q1 began
First Quarter 2020 EPS Bridge
Stock Comp
& Pension
Operational
Performance
FX
Impact Share Repo,
Interest
2019: 20.9%
2020: 22.2%
Increase due to
higher stock
price and lower
discount rates
Q1’19
Adj
EPS*
($0.13)
Q1’20 EPS Headwind
Restructuring
Charges
Adjusted EPS* $0.67, GAAP EPS $0.53
Net and underlying sales* flat
Stock compensation and pension costs higher
Tax Rate
Q1’19
GAAP
EPS
Q1’20
Adj
EPS*
Q1’20
GAAP
EPS
Restructuring
& Related
Charges
HEADWINDS WERE IN LINE WITH EXPECTATIONS; OPERATIONS DELIVERED EPS IMPROVEMENT ON LOWER SALES
8
Adjusted EPS* $0.67 +/- $0.02
Net sales growth ~1%, underlying* 1-2%
Higher stock compensation and pension costs
ResultsGuidance
~7% GROWTHOPS & B/S
✓
✓
Business Platforms
10
First Quarter 2020 Automation Solutions
MARGINS IMPACTED BY UNFAVORABLE BUSINESS MIX AND FX. EXCLUDING THOSE IMPACTS, THE BUSINESS DELIVERED SLIGHTLY IMPROVED ADJUSTEDSEGMENT MARGIN ON LOWER-THAN-EXPECTED SALES
• North America was down low single digits driven by upstream oil & gas softness. Total Europe down 1 percent driven by discrete market softness. Asia, Middle East & Africa growth up 6%, driven by infrastructure investment
• Long-cycle businesses showed steady growth; Final Control up 5%, Systems up 7% underlying*
• Restructuring actions totaled $83M across the platform
• Adjusted EBITDA margin* down 60 bps, driven by unfavorable impact of business mix in North America and FX transaction losses
• First quarter backlog increased 7% to $4.9B sequentially, compared to prior quarter
REPORTED NET SALES
2019 2020
$2,799M $2,852M
T3M Orders, Excl. Acq / Div, Incl. FX
Oct 0%
Nov 0%
Dec 0 to 5%
2%
Underlying Sales* 1%
10
14.5% EBIT% 10.9%
Dec 3-month trailing underlying
orders were up 2%
UNDERLYING SALES CHANGE VS. PY
The Americas (1%)
Total Europe (1%)
Western Europe 3%
Asia, Middle East & Africa 6%
Automation Solutions 1%
FX Impact (1) pt
Acq Impact 2 pts
Reported Net Sales 2%19.3% Adj EBITDA%* 18.7%
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UNDERLYING SALES CHANGE VS. PY
Americas (3%)
Total Europe 1%
Western Europe flat
Asia, Middle East & Africa 5%
Commercial & Residential Solutions (1%)
FX Impact (1) pt
Div Impact (1) pt
Reported Net Sales (3%)
First Quarter 2020Commercial & Residential Solutions
GROWTH IN ASIA, MIDDLE EAST & AFRICA WAS MORE THAN OFFSET BY SOFTNESS IN NORTH AMERICA.
• Softness in North American HVAC markets persisted
• Asia, Middle East & Africa grew 5%, driven by Asian energy efficient heat pump demand
• Global professional tools and cold chain markets showed softness, each down mid-single digits
• Adjusted EBITDA margin* up 90 bps driven by favorable price-cost and benefits from prior year restructuring actions
• Initiated $10M of restructuring actions in the quarter
2019 2020
$1,338M $1,303M
Underlying Sales* (1%)
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17.7% 18.2%EBIT%
REPORTED NET SALES
T3M Orders, Excl. Acq / Div, Incl. FX
Oct (5) to 0%
Nov (5) to 0%
Dec (5) to 0%
Dec 3-month underlying orders
were down 1%
(3%)
22.8% Adj EBITDA%* 23.7%
2020 Q2 and Full Year Outlook
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Fiscal 2020 Updated Outlook
RAISED ADJUSTED EPS GUIDANCE 7 CENTS AT THE MIDPOINT FOR THE BENEFIT OF $215 MILLION PLANNED RESTRUCTURING ACTIONS IN FISCAL 2020
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Earnings Call
Nov 5, 2019
Updated Guidance
Feb 4, 2020
Net Sales Growth
Acquisitions impact
FX Impact
(3%) – 1%
Flat
(1%)
(2%) – 2%
Flat
Flat
Underlying Sales* Growth
Automation Solutions
Commercial & Residential Solutions
(2%) – 2%
(1%) – 3%
(3%) – 1%
No Change
GAAP EPS
Adjusted EPS*
Tax Rate
N/A
$3.48 to $3.72
~23%
$3.27 to $3.52
$3.55 to $3.80
~23%
Restructuring Costs / EPS Impact
Associated EPS Benefit
N/A
--
~$215M / ($0.26)
+$0.07
Operating Cash Flow
Capex
Free Cash Flow*
$3.1B
$600M
$2.5B
$3.15B
$650M
$2.5B
Macroeconomic outlook remains challenging
Includes $215M restructuring and ~$0.07 associated EPS benefit
Minimal net cash impact of restructuring actions
Restructuring by segmentAutomation Sol. $175MCommercial & Res. $35MCorp. $5M
Note: Guidance excludes any potential impact from the Coronavirus
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~7% GROWTHOPS & BALANCE SHEET
Fiscal 2020 Adjusted EPS Bridge
OPERATIONAL EXECUTION, LOWER DEBT COST & STRONG, FLEXIBLE BALANCE SHEET DRIVE ~24 CENTS OF EPS IN 2020 ON FLAT TO DOWN SALES
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$3.55 to $3.80
Midpt.
2019Adj EPS*
2020Adj EPS*
($0.26)
2020 EPS Headwind
Operational
Performance
FX
Impact
Share Repo,
InterestAdj 2019*: 21.6%
2020E: ~23%
Increase due to higher
stock price and lower
discount rates
2019EPS,
GAAP
Restructuring
ChargesDiscrete Tax
Benefits
Underlying Sales* Growth (2%) – 2%Automation Solutions (1%) – 3%
Commercial & Residential Solutions (3%) – 1%
Stock compensation up due to higher stock price
Pension costs up due to lower discount rates
Stock Comp &
Pension
Tax Rate
Includes impact of full year planned
restructuring actions of $215M
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Fiscal Second Quarter 2020 Guidance
ASSUMES NO IMPACT FROM CORONAVIRUS IN CHINA SALES OR ACROSS ASIAPACIFIC. TOUGH NORTH AMERICA COMPS CONTINUE TO DRIVE UNFAVORABLE MIX
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Q2 2020 Guidance
Net Sales (2%) – Flat
Underlying Sales* (1%) – 1%
GAAP EPS $0.75 +/- $0.02
Adjusted EPS* $0.81 +/- $0.02
Total Segment Adj. EBIT %* ~+20 bps
Total Segment Adj EBITDA %* ~+60 bps
Q2 Adjusted EPS Bridges
Q2’19 Q2’20E
GAAP EPS $0.84 $0.75+/- $0.02
Less: Discrete Tax ($0.02) --
Add: Restructuring +$0.01 +$0.06
Adjusted EPS* $0.83 $0.81+/- $0.02
Memo: Restructuring $ $10M ~$50M
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Automation Solutions
Commercial &
Residential Solutions
H1E H2E H1E H2E
Net Sales ~$5.8B ~$6.5B ~$2.8B ~$3.2B
Underlying Growth* ~0.5% ~+1% ~(1%) ~(1%)
Segment EBIT % – GAAP ~12.3% ~18.5% ~19.8% ~22.5%
Add:
Restructuring $125M $50M $20M $15M
Depreciation & Amortization $280M $290M $130M $135M
Adj. Segment EBITDA %* ~19.2% ~24.0% ~25.0% ~27.0%
vs. Prior Year ~Flat ~+150 bps ~+100 bps ~+100 bps
Fiscal 2020 Platform Expected PerformanceFirst and Second Half
ON FLAT UNDERLYING SALES, WE EXPECT STRONG SECOND HALF LEVERAGE DRIVEN BY H2 2019 AND H1 2020 RESTRUCTURING ACTIONS AGGRESSIVE COST RESET ACTIONS 16
- North America Mix
- Q1 FX Loss
+ PY Restructuring Benefit
+ Price-Cost
+ SG&A Control
+ Restructuring benefits ramp H2
H2 Margin ImprovementH1 Auto Sol Margin
Automation SolutionsCommercial &
Residential Solutions
This Model Assumes
Midpoint of Expected
Underlying Sales Ranges
– Flat Total Emerson
China Operations
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ESTIMATED RESUMPTION OF OPERATIONS
Emerson Operations in China:Safety is One of Our Core Values and We Will Not Take Chances
FISCAL YEAR 2019 SALES IN CHINA WERE ~$2.0B. EMERSON HAS NO MAJOR FACILITIES AND LIMITED SUPPLY CHAIN ACTIVITY IN HUBEI REGION
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XINJIANG
QINGHAI
NEI MONGOL
GANSU
NINGXIA
SHAANXIXIZANG
SICHUANCHONGQING
YUNNAN
GUIZHOU
GUANGXI
HAINAN
TAIWAN
HUNANJIANGXI
ZHEJIANG
FUJIAN
GUANGDONG
HONG KONGMACAU
Shanghai
SHANGHAI
Guangzhou
Chengdu
JIANGSU
ANHUIHUBEI
HENAN
SHANXI
SHANDONG
Beijiing
Shenyang
HEBEIBEIJING SHI
TIANJIN
LIAONING
JILIN
HEILONGJIANG
Major Emerson facility
Feb. 10 Beijing
Xian
Tianjin
Shenzhen
Zhuhai
Shanghai
Suzhou
Nanjing
Total Emerson Employees in China
10,700
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Emerson Operations in China:Safety is One of Our Core Values and We Will Not Take Chances
FISCAL YEAR 2019 SALES IN CHINA WERE ~$2.0B. EMERSON HAS NO MAJOR FACILITIES AND LIMITED SUPPLY CHAIN ACTIVITY IN HUBEI REGION
19
Emerson has a total 60+ facilities and 10,700 employees in China
Emerson footprint and facilities are concentrated in the east near Shanghai and Beijing, south near Hong Kong and Guangzhou, and western parts of the country near X’ian --- limited presence in central Hubei Province
We expect to have limited visibility on actual impact to operations until after the “extended” Chinese New Year period ends – currently forecasted to February 10th, but could be extended
Key issues will be supply chain interruption, export recovery, and timing of customer factory restart
China supply chain ~$750M, of which ~$250M is for export
Expected initial impact to fiscal year 2020 2nd quarter: approximately $50-$100M
• Expect to recover most of this figure by end of fiscal year or by end of calendar year 2020
• Does depend on how customers re-initiate operations, and also how the supply chain recovers after inactivity for 2-3 weeks
Appendix
Reconciliation of Non-GAAP Measures
21
This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts)
Q1 2020 Underlying Sales Change Auto Solns
Comm &
Res Solns Emerson
Reported (GAAP) 2% (3)% -%
(Favorable) / Unfavorable FX 1% 1% 1%
Acquisitions / Divestitures (2)% 1% (1)%
Underlying* 1% (1)% -%
Q1 2020E November 2019 Underlying Sales Change Emerson
Reported (GAAP) ~1%
(Favorable) / Unfavorable FX ~1%
Acquisitions / Divestitures ~ (0.5)%
Underlying* 1 - 2%
FY 2020E Underlying Sales Change Auto Solns
Comm &
Res Solns Emerson
Reported (GAAP) (1)% - 3% (4)% - 0% (2)% - 2%
(Favorable) / Unfavorable FX ~ - % ~ - % ~ - %
Acquisitions / Divestitures ~ - % ~ 1% ~ - %
Underlying* (1)% - 3% (3)% - 1% (2)% - 2%
This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts)
Reconciliation of Non-GAAP Measures
22
Q2 2020E Underlying Sales Change Emerson
Reported (GAAP) (2)% - 0%
(Favorable) / Unfavorable FX ~ 1%
Acquisitions / Divestitures ~ - %
Underlying* (1)% - 1%
H1 2020E Underlying Sales Change Auto Solns
Comm &
Res Solns
Reported (GAAP) ~ 0.5% ~ (3)%
(Favorable) / Unfavorable FX ~ 1% ~ 1%
Acquisitions / Divestitures ~ (1)% ~ 1%
Underlying* ~ 0.5% ~ (1)%
H2 2020E Underlying Sales Change Auto Solns
Comm &
Res Solns
Reported (GAAP) ~ 1% ~ (2)%
(Favorable) / Unfavorable FX ~ - % ~ - %
Acquisitions / Divestitures ~ - % ~ 1%
Underlying* ~ 1% ~ (1)%
This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts)
Reconciliation of Non-GAAP Measures
23
EBIT Q1 FY19 Q1 FY20 Change
Pretax earnings (GAAP) $ 591 $ 423 (28)%
Interest expense, net 43 35 -%
Earnings before interest and taxes* $ 634 $ 458 (28)%
Restructuring and related charges 10 110 16%
Adjusted earnings before interest and taxes* $ 644 $ 568 (12)%
EBIT Margin Q1 FY19 Q1 FY20 Change
Pretax margin (GAAP) 14.2% 10.2% (400) bps
Interest expense, net % of sales 1.1% 0.8% (30) bps
EBIT margin* 15.3% 11.0% (430) bps
Restructuring and related charges % of sales 0.2% 2.7% 250 bps
Adjusted EBIT margin* 15.5% 13.7% (180) bps
Depreciation / amortization % of sales 4.9% 5.0% 10 bps
Adjusted EBITDA margin* 20.4% 18.7% (170) bps
Q1 Earnings Per Share Q1 FY19 Q1 FY20 Change
Earnings per share (GAAP) $ 0.74 $ 0.53 (28)%
Restructuring and related charges 0.01 0.14 17%
Adjusted earnings per share* $ 0.75 $ 0.67 (11)%
FY 2020E Earnings Per Share Q2 2020E FY 2020E
Earnings per share (GAAP) $0.73 - $0.77 $3.27 - $3.52
Restructuring and related charges ~ 0.06 ~ 0.28
Adjusted earnings per share* $0.79 - $0.83 $3.55 - $3.80
Reconciliation of Non-GAAP Measures
This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts)
FY 2020E Midpoint Earnings Per Share FY 2019
FY 2020E
Midpoint Change
Earnings per share (GAAP) $ 3.71 $ 3.39 (9)%
Discrete tax benefits (0.14) - 4%
Restructuring and related charges 0.12 0.28 5%
Adjusted earnings per share* $ 3.69 $ 3.67 ~ - %
Business Segment EBIT Q1 FY19 Q1 FY20 Change
Pretax earnings (GAAP) $ 591 $ 423 (28)%
Corp. items and interest expense, net 53 124 13%
Business segment EBIT* 644 547 (15)%
Restructuring charges 10 93 13%
Adjusted business segment EBIT* $ 654 $ 640 (2)%
Business Segment EBIT Margin Q1 FY19 Q1 FY20 Change
Pretax margin (GAAP) 14.2% 10.2% (400) bps
Corp. items and interest expense, net % of sales 1.4% 3.0% 160 bps
Business segment EBIT margin* 15.6% 13.2% (240) bps
Restructuring charges % of sales 0.2% 2.2% 200 bps
Adjusted business segment EBIT margin* 15.8% 15.4% (40) bps
Pretax Earnings Q1 FY19 Q1 FY20 Change
Pretax earnings (GAAP) $ 591 $ 423 (28)%
Restructuring and related charges 10 110 17%
Adjusted pretax earnings* $ 601 $ 533 (11)%
This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts)
Reconciliation of Non-GAAP Measures
25
Corporate and Other Q1 FY19 Q1 FY20 Change
Corporate and other (GAAP) $ (44) $ (46) (2)
Restructuring and related charges - 17 17
Adjusted Corporate and other* $ (44) $ (29) 15
Pretax Margin Q1 FY19 Q1 FY20 Change
Pretax margin (GAAP) 14.2% 10.2% (400) bps
Restructuring and related charges 0.3% 2.6% 230 bps
Adjusted pretax margin* 14.5% 12.8% (170) bps
Automation Solutions Segment EBIT Margin Q1 FY19 Q1 FY20 Change
Automation Solutions Segment EBIT margin (GAAP) 14.5% 10.9% (360) bps
Restructuring charges 0.2% 2.9% 270 bps
Automation Solutions Adjusted Segment EBIT margin* 14.7% 13.8% (90) bps
Depreciation / amortization 4.6% 4.9% 30 bps
Automation Solutions Adjusted Segment EBITDA margin* 19.3% 18.7% (60) bps
Commercial & Residential Solutions EBIT Margin Q1 FY19 Q1 FY20 Change
Com & Res Sols EBIT margin (GAAP) 17.7% 18.2% 50 bps
Restructuring charges 0.4% 0.7% 30 bps
Com & Res Sols Adjusted EBIT margin* 18.1% 18.9% 80 bps
Depreciation / amortization 4.7% 4.8% 10 bps
Com & Res Sols Adjusted EBITDA margin* 22.8% 23.7% 90 bps
This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts)
Reconciliation of Non-GAAP Measures
26
Cash Flow Q1 FY19 Q1 FY20 $ Change % Change FY20E
Operating cash flow (GAAP) $ 323 $ 424 $ 101 31% $ 3.15B
Capital expenditures (155) (114) 41 54% ~ (650M)
Free cash flow* $ 168 $ 310 $ 142 85% $ 2.5B
Cash Flow to Net Earnings Conversion Q1 FY20 FY20E
Operating cash flow conversion (GAAP) 129% ~ 150%
Capital expenditures (35)% ~ (50)%
Free cash flow conversion* 94% > ~ 100%
Q1 2020 Underlying Sales Change Final Control Systems
Reported (GAAP) 5% 15%
(Favorable) / Unfavorable FX -% 1%
Acquisitions / Divestitures -% (9)%
Underlying* 5% 7%
2019 Quarterly Adjusted EPS Q1 Q2 Q3 Q4 FY19
Reported EPS (GAAP) $ 0.74 $ 0.84 $ 0.97 $ 1.16 $ 3.71
Reported Tax Rate 20.9% 22.3% 20.3% 12.3% 18.6%
Discrete tax benefits - (0.02) (0.03) (0.09) (0.14)
Restructuring Charges 0.01 0.01 0.03 0.07 0.12
Adjusted EPS* $ 0.75 $ 0.83 $ 0.97 $ 1.14 $ 3.69
Adjusted Tax Rate* 20.9% 24.2% 22.7% 19.1% 21.6%
This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts)
Reconciliation of Non-GAAP Measures
27
References to underlying orders in this presentation refer to the Company's trailing three-month average orders growth versus the prior year, excluding currency, acquisitions and divestitures
References to underlying sales in this presentation exclude the impact of acquisitions, divestitures and currency translation.
References to trailing 3-month or T3M orders in this presentation refer to the Company's trailing three-month average orders growth versus the prior year, excluding acquisitions and divestitures
Business Segment EBIT Margin Q2 FY19 Q2 FY20E Change
Pretax margin (GAAP) 14.8% ~ 13.7% ~(150) bps
Corp. items and interest expense, net % of sales 2.1% 2.5% 80 bps
Business segment EBIT margin* 16.9% ~ 16.2% ~ (70) bps
Restructuring charges % of sales 0.2% 1.1% 90 bps
Adjusted business segment EBIT margin* 17.1% ~ 17.3% ~ 20 bps
Depreciation / amortization % of sales 4.2% 4.6% 40 bps
Adjusted business segment EBITDA margin* 21.3% ~ 21.9% ~ 60 bps
Automation Solutions Segment EBIT Margin H1 FY19 H1 FY20E Change H2 FY19 H2 FY20E Change
Automation Solutions Segment EBIT margin (GAAP) 14.7% ~12.3% ~ (240) bps 17.1% ~18.5% ~ 140 bps
Restructuring charges 0.2% 2.2% 200 bps 0.9% 0.9% - bps
Automation Solutions Adjusted Segment EBIT margin* 14.9% ~14.5% ~ (40) bps 18.0% ~19.4% ~ 140 bps
Depreciation / amortization 4.4% 4.7% 30 bps 4.3% 4.6% 30 bps
Automation Solutions Adjusted Segment EBITDA margin* 19.3% ~19.2% ~ flat 22.3% ~24.0% ~ 150 bps
Commercial & Residential Solutions EBIT Margin H1 FY19 H1 FY20E Change H2 FY19 H2 FY20E Change
Com & Res Sols EBIT margin (GAAP) 19.5% ~19.8% ~ 30 bps 21.6% ~22.5% ~ 90 bps
Restructuring charges 0.3% 0.6% 30 bps 0.6% 0.3% (30) bps
Com & Res Sols Adjusted EBIT margin* 19.8% ~20.4% ~ 60 bps 22.2% ~22.8% ~ 60 bps
Depreciation / amortization 4.3% 4.6% 30 bps 3.6% 4.2% 60 bps
Com & Res Sols Adjusted EBITDA margin* 24.1% ~25.0% ~ 100 bps 25.8% ~27.0% ~ 100 bps