Third quarter 2026
Filed Aug 4, 2026Emerson Reports Third Quarter 2026 Results; Raises 2026 Outlook
Third-quarter net sales increased 7%, underlying orders increased 7%, adjusted segment EBITA margin expanded 140 bps to 28.5%, adjusted EPS increased 13%, and free cash flow increased 36%. Management raised its fiscal 2026 outlook.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Underlying Ordersother | 7% | – | 7% |
| Net SalesGAAP | $4,873 million | – | 7% |
| Underlying Salesother | 6% | – | 6% |
| Cost of salesGAAP | $2,218 million | – | – |
| SG&A expensesGAAP | $1,343 million | – | – |
| Other deductions, netGAAP | $311 million | – | – |
| Interest expense, netGAAP | $85 million | – | – |
| Earnings from continuing operations before income taxesGAAP | $916 million | – | – |
| Pretax Earnings MarginGAAP | 18.8% | – | 270 bps |
| Income taxesGAAP | $198 million | – | – |
| Earnings from continuing operationsGAAP | $718 million | – | – |
| Net earningsGAAP | $718 million | – | – |
| Net earnings common stockholdersGAAP | $718 million | – | – |
| Diluted average shares outstandingGAAP | 561.1 million | – | – |
| GAAP Earnings Per Share, continuing operationsGAAP | $1.28 | – | 24% |
| Diluted earnings per common shareGAAP | $1.28 | – | – |
| Adjusted Segment EBITAnon-GAAP | $1,387 million | – | – |
| Adjusted Segment EBITA Marginnon-GAAP | 28.5% | – | 140 bps |
| Adjusted Earnings Per Sharenon-GAAP | $1.71 | – | 13% |
| Operating Cash FlowGAAP | $1,425 million | – | 34% |
| Free Cash Flownon-GAAP | $1,323 million | – | 36% |
| Nine Months Net SalesGAAP | $13,781 million | – | – |
| Nine Months Earnings from continuing operations before income taxesGAAP | $2,484 million | – | – |
| Nine Months Earnings from continuing operationsGAAP | $1,942 million | – | – |
| Nine Months Net earningsGAAP | $1,942 million | – | – |
| Nine Months Net earnings common stockholdersGAAP | $1,941 million | – | – |
| Nine Months Diluted earnings per common shareGAAP | $3.45 | – | – |
| Nine Months Adjusted Segment EBITAother | $13,781 million | – | 5% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Control Systems & SoftwareUnderlying sales growth was 7%. | $1,199 million | – | 7% |
| Test & MeasurementUnderlying sales growth was 23%. | $445 million | – | 23% |
| Software & SystemsUnderlying sales growth was 11%. | $1,644 million | – | 11% |
| SensorsUnderlying sales growth was 7%. | $1,091 million | – | 8% |
| Final ControlUnderlying sales growth was 3%. | $1,586 million | – | 4% |
| Intelligent DevicesUnderlying sales growth was 5%. | $2,677 million | – | 6% |
| Safety & ProductivityUnderlying sales growth was 2%. | $552 million | – | 3% |
2026 Q4 and 2026 outlook
- RevenueNet Sales Growth: ~5% (2026 Q4); ~5% (2026)
- NoteUnderlying Sales Growth: ~5% (2026 Q4); ~3.5% (2026)
- NoteEarnings Per Share: ~$1.45 (2026 Q4); ~$4.89 (2026)
- NoteAmortization of intangibles: ~$0.34 (2026 Q4); ~$1.39 (2026)
- NoteRestructuring and related costs: ~$0.03 (2026 Q4); ~$0.24 (2026)
- NoteAcquisition/divestiture fees and related costs: ~$0.01 (2026 Q4); ~$0.09 (2026)
- NoteDiscrete taxes: ~$0.02 (2026 Q4); ~$0.05 (2026)
- NoteIEEPA tariff refunds: - (2026 Q4); ~($0.11) (2026)
- NoteAdjusted Earnings Per Share: ~$1.85 (2026 Q4); ~$6.55 (2026)
- NoteOperating Cash Flow: ~$4.1B (2026)
- NoteFree Cash Flow: ~$3.6B (2026)
Capital returns
- Quarterly cash dividend of $0.555 per share of common stock payable September 10, 2026 to stockholders of record on August 14, 2026.
- The 2026 outlook assumes returning ~$2.2B through ~$1B share repurchases and ~$1.2B of dividends.
- Nine months ended June 30, 2026 dividends paid were $935 million.
- Nine months ended June 30, 2026 purchases of common stock were $898 million.
What drove it
- Underlying orders increased 7%, led by Software & Systems and broad-based growth in North America and Asia.
- Software & Systems sales increased 11%, including 23% growth in Test & Measurement.
- Intelligent Devices sales increased 6%, with Sensors up 8%, Final Control up 4%, and Safety & Productivity up 3%.
- Third-quarter sales growth by geography was 8% in the Americas and 8% in Asia, Middle East & Africa.
Concerns
- Third-quarter sales growth in Europe was (1)%.
- The conflict in the Middle East remains fluid.
- The company identified economic and currency conditions, market demand, pricing, cybersecurity, tariffs, competitive and technological factors, and inflation among risks and uncertainties.
- The 2026 outlook includes ~($0.11) of IEEPA tariff refunds.
What to watch
- Whether the 2026 Q4 outlook of ~5% net sales growth and ~5% underlying sales growth is delivered.
- Whether adjusted earnings per share reaches ~$1.85 in 2026 Q4 and ~$6.55 in 2026.
- Whether fiscal 2026 operating cash flow and free cash flow reach ~$4.1B and ~$3.6B, respectively.
- Demand trends in Software & Systems, North America and Asia, and whether Europe returns to growth.
- Execution of the outlook assumption to return ~$2.2B through ~$1B share repurchases and ~$1.2B of dividends.
Balance sheet and cash flow
- Cash and equivalents were $2,180 million at June 30, 2026, compared with $1,544 million at September 30, 2025.
- Short-term borrowings and current maturities of long-term debt were $5,587 million at June 30, 2026, compared with $4,797 million at September 30, 2025.
- Long-term debt was $7,526 million at June 30, 2026, compared with $8,319 million at September 30, 2025.
- Total assets were $42,208 million at June 30, 2026, compared with $41,964 million at September 30, 2025.
- Nine months ended June 30, 2026 cash provided by operating activities was $2,902 million, compared with $2,088 million.
- Nine months ended June 30, 2026 capital expenditures were $284 million, compared with $263 million.
- Nine months ended June 30, 2026 cash used in investing activities was $322 million, compared with $393 million.
- Nine months ended June 30, 2026 cash used in financing activities was $1,920 million, compared with $3,019 million.
- Ending cash and equivalents were $2,180 million, compared with $2,219 million.
Analysis
Emerson reported a strong third quarter ended June 30, 2026. Net sales were $4,873 million, up 7%, while underlying sales increased 6% and underlying orders increased 7%. Management identified Software & Systems and broad-based growth in North America and Asia as demand drivers. Sales growth was strongest in Test & Measurement at 23% and Software & Systems at 11%, while Europe sales growth was (1)%.
Profitability improved materially. Pretax earnings were $916 million and pretax earnings margin was 18.8%, compared with $734 million and 16.1%. Adjusted segment EBITA increased to $1,387 million from $1,232 million, and adjusted segment EBITA margin expanded to 28.5% from 27.1%. GAAP earnings per share from continuing operations were $1.28, while adjusted earnings per share were $1.71.
Cash generation also improved in the quarter, with operating cash flow of $1,425 million and free cash flow of $1,323 million. For the nine months ended June 30, 2026, cash provided by operating activities was $2,902 million and capital expenditures were $284 million. Cash and equivalents were $2,180 million at June 30, 2026. The company expects to pivot capital allocation toward shareholder returns, with its fiscal 2026 outlook assuming ~$2.2B returned through ~$1B of share repurchases and ~$1.2B of dividends.
Management raised fiscal 2026 guidance. The company expects ~5% net sales growth and ~3.5% underlying sales growth for 2026, adjusted earnings per share of ~$6.55, operating cash flow of ~$4.1B, and free cash flow of ~$3.6B. For 2026 Q4, the outlook calls for ~5% net sales growth, ~5% underlying sales growth, earnings per share of ~$1.45, and adjusted earnings per share of ~$1.85.
The principal reported areas requiring attention are Europe, where third-quarter sales declined (1)%, the fluid Middle East conflict, and the impact of tariffs. The full-year outlook includes ~($0.11) of IEEPA tariff refunds. Delivery against the Q4 growth, EPS, cash-flow, and capital-return framework will determine whether the third-quarter operating momentum is sustained through fiscal year-end.
Management, verbatim
Emerson had an outstanding third quarter with sales, margin expansion, earnings and cash flow all exceeding expectations.
Lal Karsanbhai, President and Chief Executive Officer
Demand was robust, with underlying orders up 7%, led by Software & Systems and broad-based growth in North America and Asia.
Lal Karsanbhai, President and Chief Executive Officer
We are raising our full year guidance, reflecting our strong third quarter performance and healthy demand.
Lal Karsanbhai, President and Chief Executive Officer
Not in the filing
stated, not guessed- Prior-quarter comparisons for reported quarterly metrics.
- Gross profit and gross margin.
- GAAP operating income and operating margin.
- Non-GAAP net income.
- Quarterly capital expenditures.
- A separate quarterly balance-sheet debt total.
- Guidance for gross margin, operating expenses, and tax rate.
- Previous-release outlook for comparison with actual results.
- Complete continuation of the segment earnings table beyond the truncated filing text.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.