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EMR Emerson Electric

Participants
Pete Lilly Director, IR
David Farr Chairman & CEO
James Froedge EVP, Commercial & Residential Solutions Business
Lal Karsanbhai Executive President, Emerson Automation Solutions
Jeffrey Sprague Vertical Research Partners
Joshua Pokrzywinski Morgan Stanley
Gautam Khanna Cowen and Company
Charles Tusa JPMorgan Chase & Co.
Andrew Obin Bank of America Merrill Lynch
Andrew Kaplowitz Citigroup
Julian Mitchell Barclays Bank
Joseph Ritchie Goldman Sachs Group
Call transcript
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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Emerson's Fourth Quarter and Full Investor Conference Call. [Operator Instructions]. This conference is being recorded today, November 3, 2020. to outlook may the for responses including forward-looking year. and company's the the commentary your contain questions statements, Emerson's remainder of materially annual report Information results Form XX-K is could that with on at from the filed vary SEC. available recent on today those most cause Emerson's as discussed factors to actual Director to at Emerson. Relations like now over would Investor the conference to of our I turn host, Pete Lilly, Please go ahead.

Pete Lilly

Executive everyone Conference Officer; Jamie Residential is Fourth Frank Emerson's Emerson Financial safe Vice of Thank our you, Dellaquila, President Call. and Year Solutions; Solutions. Karsanbhai, I Automation President President I XXXX & everyone, Froedge, hope and David Officer; and Today, and healthy. of Senior Quarter Commercial Executive Earnings by Farr, Chief New staying Full and Executive to joined welcoming and Chief welcome, am Chairman Executive Lal Emerson

to of value everyone available cover in encourage for challenges overarching on I and has technologies future in and growth website. solutions key slide is slide. Starting our usual, follow with the continued to COVID-XX, presentation, the which invest creation. along As Emerson Despite the

management. are welcome OSI Inc. grid leading provider to We of software-based excited for advanced Emerson family, technology the to a

in Additionally, Group Emerson, we software-based solutions. to also analytics HMI, a welcome and leader SCADA Progea

We later important we in will also will acquisitions be other strategic the XXXX -- also review call.

forefront on social national of briefly Now remain within many please available accomplishments turn emerson.com. and reviews important the realms. website, and Emerson conversation. highlight quarter, to Emerson's Social the the to governance Many to Corporate report, the of international like Similar and in Slide is at our topics X. This I'd aspirations of Responsibility which environmental, these last detail document

and for partner digital advance share our Emerson core, individual optimization customers enabler very and and at across a our sustainability the that own very role everyone believe you as movement. and turn so. chance and Emerson monitoring, own we and we efficiency resource CSR journey. with year. as for also be the I strives aligns will our control, progress solvers the had a customer embark responsibility goals problem this and with well the of yet their me broad management they the critical Fundamentally, valued discussion, do not read a purpose on if base. quarter to report to role Please strategies to and Slide fiscal to takes have our measurement, of the some encourage As seriously sustainability review broader highlights our X,

safety steadfast outperform key our to to our emerge customers in employees, and remains control cost communities. from COVID-XX continuity, we Business as customers commitment industries, our for health thematic in positioning and Emerson and our First, critical disciplined remain priorities. serving

stable, and remain Next, we supply ensure that safe hard work continue to chains our and operations productive. localized to

critical highlight X million finished and on X-month to of in we executed the aggressive the over Despite previously diversity demand quarter, given adjusted cash business Turning totaled line ongoing expected. management It a full approximately driven in XX% market the earnings but orders was adjusted and $X.XX we totaled X% look adopted a demand a and very decremental all platform restructuring year. with turned at and deliver of the Overall, restructuring to and for X% challenging year, business earnings uncertainty conversion the balance $XXX Residential flow of trailing operational in squarely & to as now but orders the for positive than strong $XXX finish organization million. the enabling and portfolio positive EBITDA. outcome. to sharply important ending were basis. Solutions able sales to representing for $X.XX actions, towards growth to the Savings in We Emerson turn strong, and to to up million the COVID-related and XXX% in $XX expect turn environment. per XXXX, quarter August. earlier guidance a is which in was by net of in reset marketplace flow continues in to year manage uncertainty quarter quarter this stability actions performance. conservative and expect that And stabilizing both able margins has the balance challenges, strong sales cost our The well a our on growth the Commercial will full given sales Cash view year-over-year. in -- actions platform was cost the QX. share

Slide to X% of year. respectively. underlying. towards Commercial summarizes & Both guidance turn Residential down underlying expectations profitability addition the to finished sales slightly $XXX net end the COVID-XX-related X%, reset restructuring of for down and which X, their actions. aggressive cost actions Despite came at and ongoing range please Now of to the of EPS platforms higher the above the results X% both measures, with ranges ahead at of well in $X.XX was finished slightly growth executed and Solutions $X.XX, control guidance on $X.XX sales, Adjusted restructuring million. above guidance lower in

cash with flow was performance for operating strong above and the finishing guidance. Finally, flow free cash both year

X. Turning to Slide

year EPS EPS year The $X.XX Tax, items. partially full with $X.XX, briefly $X.XX. mitigated XXXX repurchase for efforts. which share were operational COVID-XX at per added exchange, totaling in broadly interest and by headwinds $X.XX. will left we cost-containment headwinds foreign bridge from restructuring for and adjusted the adjusted operational offset This adjusted other Starting and $X.XX, earnings of pension share. subtract We

X%, net quarter. adjusted review with $X.XX X, Slide down down to while of results sales we X%. GAAP of EPS Turning up was underlying was the sales the X% of down EPS $X.XX will were X%. finishing Total

underlying of flow orders orders quarter trailing billion. billion $X.XX while X% up in up operating Automation were sales Residential X-month $X.XX with was cash sales Cash down trailing were over improvement year orders and showed X-month cash Solutions and company & both underlying underlying last were XX%, $X.XX XX%. billion were consolidated for underlying down X%. performance were Commercial operating down Importantly, X%, and $X.XX respectively. the and cash from sales and free Full Solutions prior flow of strong of free X% flow billion the flow cash year, flow and quarter.

initiating in company restructuring its the continued Lastly, $XX million and the built aggressive plan, cost-reset of upon total a actions of quarter.

EPS. quarter see of attracted items tax that Most from mitigated fully to effects, Beginning and Overall, consensus at exchange somewhat deleverage will X, interest. bridge and Slide the of offset you cost-control was items share other EPS quarter repurchase XXXX adjusted pension, $X.XX, importantly, can $X.XX operational fourth $X.XX, total foreign of of Turning $X.XX. adjusted with we estimates. a This was via actions. above finished by $X.XX we nonoperational

Moving to Slide XX.

we We gross mix points of and will review quarter. as XXX partially a were unfavorable XX.X% Starting to the margin, basis cost. offset saw price P&L reduction favorable with in the deleverage by

a XXX increased as XXX points of EBIT aggressive margins, XX declined effect. actions through. as respectively, SG&A points sales related took restructuring the Adjusted cost-control by and cost-containment basis basis also basis reflecting and and points, costs, actions Importantly, percent EBITDA which flowing exclude adjusted

approximately note, dropped decline rate Of tax of our the approximately by efforts. adjusted X% subsidiary Lastly, X%. decline of quarter, ahead this overall foreign EPS reorganization of effective was driven revenue

geography. Slide underlying sales at XX, by will we to Turning look

down with XX%. Americas North also market the steepest quarter, the continued to show the XX%, the American declines, For down

Asia. East we Middle sciences, Europe food than & X%, beverage more Asia, by and by down and Africa most residential, other and strength markets. in down Here, weakness driven saw life was markets was slightly Southeast medical in in offset growth end

deleverage the the segment basis finished me to XX.X%, performance. total the was XX Americas Total XX, execution quarter. decreased XX% down segment margin Total sales cost-control basis X increased the areas to modest a strong world in adjusted reflecting Meanwhile, we Slide aggressive XX limited will adjusted and measures other Please segment earnings join to as declined. adjusted business more XX% XX.X%. points pretax and For year, each with points operational down discuss EBITDA X%. EBIT on

environment. X%. XXX% cash of earnings. cash strong of of billion cash As previously billion year-over-year represented was the Free flow free flow $X.XX conversion and challenging $X.XX Operating net increased both performance QX by cash flow highlighted, given flow

on aggressive XX platforms. to the underlying declines were the profitability which to $XXX Decremental basis for life and beverage end EBIT East actions Solutions limited reflecting Turning declines, Middle medical markets. stagnant EBITDA. EBITDA totaled actions saw and XX points, $XX America full and XX%, million The sciences, the will orders the Africa adjusted platform a & to year. food most but delivered the reflecting broad-based driven review offset trends. XX, X-month down underlying in XX% down Adjusted by points demand steepest challenging across down quarter again brought positive finished as very Restructuring Meanwhile, XX%. down and held Automation for million sales Southeast business total the taking demand margins cost stabilizing Slide basis North down in adjusted markets the XX% were were at Trailing environment. platform, by by effect. margins to again, respectively, we Asia. were Asia, slightly India slightly and was over

the converted of balance million ending platform billion. leaving an Lastly, $X.X $XXX approximately backlog, of

challenged Middle modest at & Turning while the were declines Americas East and to in underlying Residential Commercial quarter. The XX. Africa XX%. down down X%, had was X% each & Solutions Asia, more sales Slide Europe of

As and trailing box turned in driven previously the demand. big mentioned, retail residential X-month sharply quarter, X% finishing orders market by up

year. XX million, XX, up profitability. basis effective restructuring we quarter, brought the points, million respectively, the continued on which the reflecting basis were focus and for introduce turn points quarter EBIT For Slide will margins first figure actions to Please EBITDA totaled total adjusted the and up guidance. and to XXX $XX $XX Adjusted

and growth stabilizing X% more $X.XX, by $X.XX be offset minus underlying X% be sciences, medical as and are discrete market plus process, We $X.XX. EPS commercial that EPS to adjusted or GAAP than down in sales residential, and expected other and respectively, challenging range but will beverage underlying markets. down to and food the life expect is

margin XX of EBITDA XX% introduces our adjusted the full expect XX.X%. We with EBIT in range guidance to XX.X% to framework. Slide XX.X% year adjusted to be XXXX margin

for learn has governments companies, XXXX, to a outlook with conservative be to the but the that and and We demand virus improving gradually management COVID will year continue live and progresses. assume First, continue as uncertainty. environment in the and communities operate the given macroeconomic stabilizing as challenging ongoing

to development and also year. fiscal there with be will that progress the during We vaccine assume steady distribution regard

Solutions no and a plus prices range X%. to year range. those Solutions, of Residential expected $XX between flat X% Automation a restructuring & of down now XXXX there $XX With chain in Automation to million Lastly, $XXX sales major with from assumptions underlying the expect Commercial we operational in is the disruptions X% down Solutions over range Expected are to we Commercial to and to be remain or approximately coming total & is $XXX X%, X% in mind, Residential in while totals coming $XX balance and Solutions, assume from the coming corporate. supply X%. down that oil expected grow with million million from

cash amount acquisitions $X.X the while International, of opportunity on acquisition of resume billion billion. Emerson which in $X.X in funding capital operating optionality closed of arise. October excludes allocation announced of approximately fiscal the $XXX in Systems resulting $X expect at in target the for free come cash previously intends concurrently million, should to million to billion, repurchases the flow approximately Open X, We maintaining This $XXX share XXXX. flow year further to XXXX spending of

to return to minus in to while minus later while or expected Automation year. is expected we EPS return be expect $X.XX, as the to we management XXXX. forecasted share overall year. plan fully remain third $X.XX. dividend plus EPS is than consecutive to our is Commercial to expected of program Residential to in be to GAAP & quarter $X.XX, originally earlier is per to this adjusted Within growth Solutions our expected, increase to April XXXX, or committed XXth $X.XX, Solutions plus growth the growth in dividend framework, revenue and Additionally, return for of expected

Total from quarter. the XXXX over million. that total higher to return positive some costs up acquisition. price summary. costs $XXX million spend from a tailwind increase yields of savings pension Slide XXXX million approximately company please we for year. spend savings shown the in review COVID-related some price delayed now stock These of $XXX in back incremental to restructuring restructuring XXXX $XX automation changes Slide reset Lastly, million as conditions turn hand we start we spend to be XX, in savings business restructuring Mr. Solutions We less the the expect restructuring half. many XXXX, in and updated will XX, approximately million, in markets, the to in note, to savings amortization now restructuring program $XXX This And within as Please million. last will long-term the OSI and encounter in business year. the are normalize, of the and to include Also to we a overall back Automation be reset come expect to will still I of $XXX annualized profitability COVID-related Farr. costs resulting $XXX do costs now in of XXXX David in to of are the and expect the Due increasing and the headwinds turn call conditions expected COVID-related over normalize from slowly exceed recovery

David Farr

very Jamie, very to the much. here. you And welcome Pete. group you Thank Thank much,

James Froedge

David. Thanks,

David Farr

did Lal. this fiscal orders fiscal Emerson has support commitment the second. for team And want challenge. continued for forecast, And I'll truly this about them the Frank, we call investor a special the as clearly want been engagement to But do the you know, our this know return and is job I unusual over thank -- to you team And as done. a as offices, produced easy our global risen of customers. we I you very from appreciate for our today. talk their and that everything for year. underlying starting you've all in our for from it. the your the do, back quarter everybody and a XX I and world, everything work we us out last the X I thank the and I I very, in thank you leadership to first, to thank for world, the want our as we to years, safety, reengage as customers, in much. opened to and members but did. you successful over to obviously, I company. all fellow to not March back welcome And But and be thank the community employees, it's and employees company, this manufacturing to joining product thanks and shareholders new continue this the months total and shareholder that and want make did and employees, I plants into got a got to we think want year acquisitions year Chart but to our you all appreciate throughout for we you was

to the delivered you employees. our fellow and rose And and shareholders to the our the challenge. communities You customers,

sales, know, in flow. XXXX we exceptional and As profit margins, year was earnings cash an

increase. our XXX% earnings, our Our to free was to close It's cash flow year this XXth dividend conversion year.

Our dividend free cash XX.X%. flow came in at

the way return that returned Solutions to we've more as billion This repurchase. to XXXX. cut this not I about. a a made, we year, political going But think something the improvement, underlying right many dividend did investments our to And the $X.X talked confidence we that worked are growth in what lot half Residential I like internally increase in As a at will capital returned Automation grow to same cash that outperform shareholders Pete in business you this and back year back our we about, our our to the marketplace position this will Commercial share allocation cash our I XXXX, we get show in XX% get the to in cash and confidence and shareholders to now time our we right new strongly of ratio. well, environment we've We in feel is to free standpoint, returning in capital investments through second this. kept how be way year, know, flow that flow & returning we to to strong many we've and we of over repositioning in investment Solutions dividend major we'll generation, make think in very, the given see margin now. into we dividend did business and shareholders. in back able got the companies Clearly, we billion to cost very shareholders have acquisitions. did company, a our important going not We through in that's shareholders confidence very the by made the do do, an our the from $X that of products, back And the our company when under uncertain

we April, We the quarter. forecast a 'XX we for the actually and gave in We you them went beat delivered. that. Very As XXXX. and out few quarters, of sat did year half know, that companies as here for first through

We Commercial growth, are throughout on to coming from And leveraging. based that by X returned those Residential on restructuring XXXX. really margins quarters the to XXXX market's well They're Their ahead, margins. & Great expand back. and Solutions see. group. and the Commercial And Residential ready are tremendous they're grow & performance to all went doing the

most be cash XX when continue stronger. and that of But quite you of the mostly to this is -- half the higher doing have down XXXX, things margins drive the decision the of improved for his team, increase half in first the first and improved that they in the even to confidence year, Auto August, the the year growth We not believe strong the us, is we to that That are in also they've going though to but the in tough balance second is still business in of look half back easy feel some importantly, I will in first but momentum we're the underlying to that we probably quarters sales behind the things been believe out at half to do But and ahead over XX in to the The made flow of feel growth year cycle cycle, second that delivering stronger. Lal they all company year. half of laid X.X will year. the The return. increase, I -- last and has all months. quite Solutions, will deliver. profitability return in sheet strongly the restructuring

cost Our margin out in the on go $X track XXXX the the self-help. then approximately for in of before, laid the restructuring, February aggressive new sales had the than shareholders make done. things peak through. this and But we've actions, plan We're before hard do company stronger customers, lower had hard our are work investments to for pandemic, said work to to the the recession we billion cost deliver have we back and on hard actions despite in work being we product to we our obviously,

We Yes, problems have virus there. But in of we'll today. is going we on COVID election have confidence out Who have going vaccine. an us. knows still have a XXXX. Yes, Yes, happen? to ahead we what's we still have confidence

employees, to a that world, the special stood Emerson team, period. the the our in We our it the have talked, today very by as Live, we company to move more as pandemic in can middle St. business to live COVID the feel and into get some employees clearly, Louis return got making We much XXXX. I in go to thank shareholders employees I normal that go want we feel good feel OCE the and Louis, go go live again, into stronger more a that good going Emerson I to was than a into I together, we confidence back that me But make cash the very what as Saturday out Clearly, the Night in the we position XXXX. before not environment. to call we around XXXX happen. Live back them charts, corporate was we'll challenges. into of for this environment into but we leadership St. is when through April But time from about want I live happen

you Lal's As some some in we right-hand down?" corner. to for saw get is continue business came laid we Well, as said, in be back Commercial a going the here. KOB we about were out out we X are that dots to you of to going people now did, XX, Obviously, & right and chart coming sideways America, upper Residential top Chart We've that. of back lines, KOB "How wait XX, talking X. strong. He'll laid lot

to world we for is and XXXX, the bit the Lal's will line, recovered see is talked & primarily just pretty in company. that the in happens various this other to go we has return in this the what from bit Again, how month. would ahead America, April because pieces the second well line half of midst turnaround for depending be go line except sit second total doing orders the a in quarter, that of pretty little we North laid KOB a thought. and in about behind the we Commercial Residential, than recovery quarter for as company into business standpoint. parts a here change little we COVID, But will the deeper we're we on as today, growth not of How in well first He we by any a of this as we're the didn't trend Lal. But he have out X on forecast trend we of we move seeing yet -- but is think quarter, As be how have forward total each the total orders trend around, trend the we to to XXXX. on --

XX. go If you forward to Chart

now. laid forecast we Here's right the out

X%. X%. quarter, I it'll quarter close be year, the fourth to growth X.X% the we're X% to in delivering after looking to underlying the first hope On down down be somewhere this the in

we hope can saw that a will X% as As we then comment think Lal drew the second better the impact that some out the October. lines the how they quarter, of flow now, the that difference we in growth But 'XX. to October. The how clearly in Jamie I for we and control rest I go have move continue somewhere how at world. uncertainty quarter. go election. -- we X%. little profitability and But year we'll and will last into have only into I and bit We'll underlying on of we feel This down own is also get third same can will the the the the into uncertainty to you and saw clearly we'll in positives go in better as as we the of be our get COVID We comment the and right hope destiny look April. we improvement confident fourth cash of move is October, we

are easy my hats restructuring. your very this team, over how on this but And know talk to I team to look we phone see go to doing. do you he to the in in what as you've turn guys what that to what Many is it hard Auto start think off Lal, through you're work. done. and momentum want people it this whole to I'm restructure what not to but don't now -- business, the the how it's is right take the will hats shifting off for you, I Lal to got and As going about the Solutions and I important proud quarter. sees, at you know I

So it's your mic.

Lal Karsanbhai

grateful in as the was described, on year and for David, It's extraordinary you, this that and efforts few humbled said. meaningful It words. if delivered. as business. those I all you XXXX. team by may, Thank for you. words, of proud, Thank you the very A so an I'm results us Very all the and

in into The in when second And first acceleration half, second the of David, was of we reset that in the see not we the we as year talked, weaker half we the we as half than back April in orders expected XXXX did expected latter QX. plan.

tremendous job, a that the I'll million did year, had meeting and half secondly, of identifying that and medical team call the thirdly, $XXX executing backlog converting made; the over being X second of segment $XXX science here: million commitment growing first programs; out the fronts the our in life However, restructuring through well diversification to participation gains as business; of business, by we fourthly, vaccine value acquisition then committed working and transformation medical PPE on through as software development our and development. in and therapeutics, the in in sales very lastly, that's year, including the stay journey digital elements through manufacturing; and very, the our across diligently internal

billion So annual EBITDA tremendous $X.X sales. EBITDA on quarterly work leverage deliver down across the adjusted business XX% XX% almost to just leverage and adjusted

So on great work the year.

of out the prior 'XX. to the additional half here. we laid to the year turning Now half turning first as positive in We do expect second X challenging quarters the plan in

X the So in we leading business. key indicators are watching

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gone we've sites. first the this customer in to of through Number So two, the fiscal. as that's presence manpower see month encouraging

go an KOB to North then and see our we we into an If in you a further and through very most as will XX% core weather then fix half of now moved bell rate Pete of business That's is a and recall, at X but level from And sign KOB ultimate we presence. encouraging environment in X the today, August the as lastly, activity. again, acceleration this in of second about had mid-XXs business the importantly, America. That's back KOB the break into as of moving spending pointed market there of And in through X perhaps talked short-cycle need out, be the manpower the the quarter year. October. stable into it's

the Let's to across this platform. over performed grew left of turn There to represented year $XXX Page on then calendar extremely Life million are X want specific sales highlight the the XXXX. I over sciences in XXXX. XX. segments on chart XX% that well

We in a been the position both have position over that and has organic with DCS industry in the DeltaV, science time acquisitions. invested through life leading investment

top DeltaV We companies. driven X,XXX across have the two X,XXX installed has industry, pharmaceutical been over by XX including in areas COVID. systems the predominantly The in growth

instead two driven to predominant second we XX% secondly, been And of and then welding over The therapy manufacturing, of, our the the and patient devices business, regulators and chart clean are assemble the oxygen of for vaccine production, very our where middle in valves In in by glue therapeutics, around applications: example, grew is is fuels XXX for mask first the lastly been efforts but ventilators medical renewable XXXX the masks; has treatment. use XX machines has which where world. vaccine ultrasonic development businesses. engaged part and important underway for we and and

have to really cells predominantly hydrogen applications for gas the reach We we our are a neutrality portfolio the know-how application to secondly, of as grew well as for aimed at we the and well-positioned number field capitalize here: biomethane in key fuel well industries; X areas year have oil trend. and this the on -- mobility and one, positioned segment. this macro power and clean process technology and There long-haul biofuels, growing that carbon customers are XX% enabling core

X wanted to we We made and year. And from production significant very to particularly significant we encouraging, XX. turn chain to I and the very that through in So role distribution highlight have to value investments a hydrogen Page that utilization. here, play

diversifying think our to increasing about continue expanding portfolio. our acquisitive and markets, really our -- industry software our and be We served

to our equity American we investment. as as the inmation, So drive investments, strengthen X completed and market end strategy acquisitions described. as OSI I support and in diversification well and made Governor, fourth Progea XXXX, a four portfolio The

you growth Our renewables, grid optimization. controls by continued control with an acquired in lastly, cloud and then the had is a And hybrid assets driven HMI Progea discrete want on of really Electric. which complements native And the business. provide diversification power PLC that industry turbine lastly, company data focuses funnel. to and we transformation we segments. from inmation And lake, the and It that element on critical update is in hydro project General and is German-based, then an bought our I for OT success our digital next-generation a

today valued since did not last $X the funnel from David, at XXXX. as went through months. the down of in that last we when the That's billion. funnel time period look is And the So $X.X we this reviewed at we billion X April

have Saudi bring as the we the to total million well $XXX out bookings the So significant for booked April approximately the of bookings to funnel in $XXX the funnel Arabia in from since Arctic LNG. XXXX, as million

highlight We've jobs wave. to matter a wave. wave I investment community length at the LNG the this with X have to like about this spoken of set would committed As that the fact, of -- through been

there available bid dollars to next year additional date, the of and to XX% the over be automation won or have so. We are million $XXX an

jobs a Final automation tremendous has So of job across the single in to business businesses, take to the but particularly that the date. hat I'll Control X all my off one participated every

to into and There was that's there. that been biggest crude shifted million funnel. of from that had job value into removed That's job Saudi 'XX single we've been has The just million. great chemical about cancellation have is out. of about from 'XX $XXX the And projects -- beyond. then $XXX moved So a $XXX a about million

the into generation on I'll globalization So projects that's project are the occurred. $XXX And in segment. of gas particularly, These funnel. then additions average, concentrated in is thing say and smaller the last power million

David Farr

to going the of the cost a margins Lal over the major I we going though still the are effort Jamie, to things made year. have, want improvement and peak the the to margin in say for they're of One, the thank for made even struggle on half team first investments. back But and that couple to drive restructuring turn just reductions get sales them they they XXXX driving want up, right Before margins it -- in to sure to also higher here. I to

we did to acquisitions that we meetings, As make long-term the investments. strengthen the the as talks Emerson will or sure face-to-face make they about this talked we the that we have did time, And value for we sure company. and had the in next-generation made we saw, we diversification to had monies future standpoint be We where some need the that we same make reviews, and many, right wanted to at continue sustainability to technologies. our WebExes jeopardize of franchises for as sure not very growth within you and unique, places from think made new that They've core products, long-term right creation got hand site the many Emerson.

team, and phenomenal So a job. Lal your

to the I now Sharp you. start and call, up it say And and first your got Bob mean, for open you So Jamie, hate got to just keep set plants growing. growth, a you've I

hands. a growing in got your tiger You've

So here -- it it. about is, talk let me let's

James Froedge

operational it's we tremendous our in Yes. Lal to I that to the depth working place, of back working profitability see investments grow go terms these COVID structures we things. a both was the technology. And in team see as and that number of of the through capabilities great invest two a you'll here in Asia, going come we improved as with through business, impact, our improving as can and so were put and of combination think in our transforming they charts, we also those have but I forward, the

sales fourth in XX, Chart product growth strength in saw driven many the across North to of residential in at America lines a Looking XXXX return our quarter we the of by underlying markets.

improve the and orders our unfolded. X.X% represent XX% numbers. as We typically portion beyond businesses we sales -- is order across between X-month demand be will a far the double-digit in segments by our given being provided by October home September home residential restocking and sales that. improvement. largest is finalize quarter of improvement were also experienced markets the sequential quarter, globally across Inventory driven Residential America in growth XX% providing mix as to the of and additional opportunities Trailing to North

think for first X% positioned sales to underlying very growth X% in quarter. well So the we're I

technologies and We late than overall will QX. to inventory out And A/C level believe rebuild in could right given see percentage start potentially and Second continue year the the European activities occurring lower third Europe, America in second is little group fiscal the quarter into we to strength, outlook think, growth trends. a we in QX seasonal slightly restocking as quarter, bit. And the North quarter. Asia now broader the returning for throughout on heating growth growth growth track is early QX return or the businesses to portfolio A/C

sales, inventory on enabled strong residential our Chart QX growth. improvement, A/C to Looking Home restocking home operational capabilities North and America XX.

to And help The RXXXB. will new see industry A/C technology refrigerants residential on including up will these go Our line KX efficiency line compressor in this QX meet opportunities. greater won percent North us to prepare be customers' in product multiple you XX-plus This allowed Expo have capitalize been the AHR which with heavily than growth commercial with growth standards, as residential We've on America recently 'XX and that also ability refrigerant DOE to into January space support lower-GWP and Award. will the investing product the strong chart the execute RXX will types, Innovation the effect downturn partnerships serve an such XX% XXXX. during markets. alone. and

of platform. chart, see side the can right the On Sensi the you

recognized Sensi platform industry. in been the analytics and continues Our has sensing and to thermostat outperform

on the lots Additionally, of of way next couple over the years. we features exciting have

excited unfolding. about space we're that is So very how

these as have businesses, opportunity new as our XX. in features, we on these wet/dry performance. spaces. XX%. position created Chart but and QX InSinkErator us see vac businesses Not an only the combined to functions the were lines chart, QX on And as even growth Moving product stronger expect in you market and in investments a sales up well well conditions for improved performance can

for our to vac has unique next a the competitor created our us level. Additionally, the market in to wet/dry main opportunity SharkVac take leadership

and and serve in in putting that appropriate working accelerate help are We very investments the needs industry the closely growth. with we're to space, channel our

bottom of haven't the half commercial technology second chart, to the although new the improvement returned of momentum year-over-year our quarterly provide and matched half spaces the sequential at with growth, Looking the in industrial year. investments into

multiple launched examples you chart, the can that we On in fiscal XXXX. see products of

really insulated Chart driven market safely visibility their in the remote allowing combined the launching very in focus cleaning unique in work focused the cable keeping remote and feature growth The product battery you users products, targeted drive camera these our live strong partnering them many ability procedure. it Electrical a In next-gen really heat than a protect and in productivity of cutter year-over-year cutting will and products. So lines making has and help awarded Award with on up cycles Contractors new sales with orders. National on manage technology increases Association be on product improve compression On to helped subsidy essentially provides can to from product to shown the side normally to our shown, and in pumps needed time safer help experience, stayed RIDGID cases, greater our the away line accidentally pipe was renewable that chart, our user that the a enhancements this can The well the which cutting category a level of normal us decarbonization spaces very us by inspection. productive. the decarbonization and from by tool the control, inspection In the for tool shown jobs FlexShaft innovative X,XXX free. increase right Showstopper tool a features more ways the our them to Multiyear can expected see to battery Xx allows XX, XXXX growth and accelerating new cycles with see and trends in gas served a policies. is natural continue European for unlock volts, to it and during innovation tools team requires, pitch provide and the see service industry. worker the you as hydraulic pipe such customers' service

team, on rates. into But markets and to to ease intense I really Lal sustainable on those kind want am needs. more this, our I'll I in focus how But to, proud them said, safety, as growth their maintaining to market growth wrap driven focus nonresidential second to markets a the see half and we safety, because hand serve margin our areas, did to return return things With residential customers' excellence say improving Just back -- markets, by residential Pete. as while had up, with people's half those our Dave and operational by products conditions, you so current of enhanced first that safety, of the that growth given they do we solid so can customers' of proud all improvement. this that, I'd as all growth I'm those same fueled they it say David, the innovation

David Farr

in And investments major We that. and knew XXXX is are you want Thank Bob, very innovation, I I the plants. and right that you they They across that's going. the they we keep first but work and to And pretty of within exciting. In we other their second will They same product return restructuring. none. they the for to do. industries The the new a producing half have organization have of think the them much, He to XXXX on really to residential issue it's growth commercial half easy XXXX. to into time, don't of markets running the to marketplace. several growth. that plants have COVID, At running increased major new portfolio return key The major are record start kept and done. Jamie. levels, competitor got we return, in But They disappear returning. second -- have the is out. the growing know COVID, XXXX to full of for Again, not now have at got the exactly will midst when. structure and the their business they'll have thank

So them high marks. the this. give team They I ready got executed. And for

go comments want to just Q&A, here. make of couple Before a to I

pandemic just I the a drove, drive increasing across margins as challenge, rose all, we with resulting called of and CEO, less in Emerson people But then down this we to massive started think, never team a around And to out than year I'll tough launched that a We XXth we sales First restructuring year. was this Then thought. COVID-XX to effort have happen company the year forget. world. a the XXXX thing my with recession activism. massive,

we XXXX. cash minimization increased very earnings drove of than people thought. Our a strong decreasing was flow, And the less

tougher of to what in flow to we'll I get people off But a positive. a thank and to ready the that of, As had deliver can final hand ahead CEO Some team, And as the into get of a everyone want we over this very earnings we cash turn me our his base little to XXXX lot confidence of into drive We've as in I year." -- think going we Mr. going year and line year, XXXX have we to we say, I and and "Well, back bit move to -- margins as the be growth, do half a Knight tough improve leadership XXXX better plans top to we're heck next second my Well, XXXX?" a but the us early a come you XXXX. make that got that for that leadership and got us. are to improved XXXX. But next flow, I CEO, are team earnings Emerson sales, over for cash very support. think and and strong to we've of

for mic So the we'll with Q&A. open that,

So have let us it.

Operator

Instructions]. [Operator

question Research. first Vertical Our comes from Sprague from Jeff

Jeffrey Sprague

years back Austin. meet to position. you Jamie. Glad luck the Good in the Congrats chance to they've had a new in few

James Froedge

you seeing to again forward Look soon. Jeff. Thanks,

Jeffrey Sprague

impending than right? think, you've all while, Dave, that of sort to a going Well, of your have to you're better whether for some nothing there, I comments stay made some I around just absolutely. us thing. I you explicit signaling but speculating guess, pretty do been retirement longer and mean, Yes,

And really, -- naming So of timing question might is, period how transition my out? this the though, kind play of What's question successor? how first a be? does there your long

David Farr

CEO, would basically decision. Board in successor I Chairman, late say name that as I Dave we many around. of sometime the can one of transition. Board of -- would does XXXX, very I'm member the We man But Farr, old hear. little the just it's okay. From will up half the he next in a second I as XXXX. need In Chairman mean communicating, standpoint, Board. obviously my my be so I the even to will People mean there be opinion, that's

said they in, think hear and can but hear us, yes, I came They -- us. Someone they thought so. I can't

maybe I you think said, at yours. to out me if how people me." happen will keys open. fight what I my They I'm couple "It's the team throw need Give bats always of Maybe what so think rally keys how a but probably know I open will and couple around. I of me old is to I'll here. chest him in to me here." fight know And and My strong. that of my recessions, farts -- don't He always need is COVID, monkeys like me and did call of I say, management a so announced. -- the is out is And to "I'm all a got And that threw door Mr. Emerson for is I house ask questions. Knight

need not a They big don't So I'm it'll guys bam-bam. quick, transition. The be be will ready. Dave. believer And in

looks will Jeff. it likely how now. most name Board and And in where I it so the now, still, say But I That's late with charge in it is I'm sometime right right would that's XXXX.

Jeffrey Sprague

follow-up, and you for a pass miss that is just I baton. question too, when I'll day comes. a definitely We'll Yes. had the Lal,

David Farr

between in die then, okay, and don't I okay? assuming now Just Jeff,

Jeffrey Sprague

KOB can total have the X, safe. to No, do X customers with wondering, other visibility actually set look the or everything I we some at, on you too, level a clear. us, you I'm mix though, mean, And so just begin you Yes. please in on percent have turn? as of this said terms Lal, What KOB -- dialogue crystal XXXX? correct? that may just of pretty was Stay On for when was don't. base the indicators you

Lal Karsanbhai

Jeff. Yes. you. Thank

flat hasn't expect for We'll right So to still actually sales now. reason we're XX% now, of right X, the from close KOB I XXXX. be crunching XXXX. what And was that, numbers. the That's That that in we it is the the year, and in in business, that and significant half drop-off the a instrumentation short-cycle had discrete impacted come particularly latter reason consequently The to it side we expected QX. of up.

So through That's to the it at to way it right XXXX. flattish think now, Jeff. sits

is turnaround indicator of relevant others. didn't The X in occurred prior of call a the on at indicators, We earnings in to obviously shutdowns. activity terms Now KOB talked shutdown and sites. occur. the spring of They a us there summer very couple of are what activity about

valves the of will reschedule actively fall, more be seen we tend instrumentation working have now. activity into and We and upgrades systems-driven you acted -- than those right tell that now. to I they

So whether focused really upgrades other or they're things, on. that's cybersecurity what various it's

seen So instrument device, uplift drive tremendous in yet we a haven't orders. in core valve new will uplift what

ultimately, and activity. So site. it in Jeff, as talked, I one be last, very a watch mention to what of the that's past, be on terms important carefully, And got But we're getting you will Jeff, that it's will I just back telltale demand-driven. sign to to those carefully. numbers in stress another I And is customer watching and the then

You've demand products that an got underlying acceleration. see end in versus back the to David? come

David Farr

us. us, about Thanks. but people the -- couldn't We in WebEx hear hear we're what internally, can the people on talking who just dialed

Pete Lilly

can't. They

David Farr

was it was down off. I because him retiring cut They stepping think told all year. Jeff with I I next and

Jeffrey Sprague

yes. blew up You website, the

David Farr

are God." saying got XX this I website. people my blew the up we "God, finally of like, years." said, rid They guy after Celebrations, "Oh

Operator

next from he Stanley. Morgan Our speaker and Josh is is Pokrzywinski,

Joshua Pokrzywinski

how that just Auto what the for in questions recently at just to trying here first, of been working I of square of some is and Sol me. guess, you the September not guys that And job you couple the backlog. trending seen we've A for looking considering a they've months, better with 'XX. and said the orders did last guess, that few of fiscal away I also outlook down part more mix

backlog missing the less it little the need for understand a support a really outlook year, sales into hit I It doesn't like it? chart and I to pick what And jive we are am in to it. order any seems quite to there, underlying What still in little with cadence carrying watch if you on? I see but right. milestones orders should mushy, obviously, up need that would to that really that? the So

David Farr

two new not watching and early give Lal. we're substance now. we X. cents, some North what But to we're seeing America, we on I'll life -- I'll the expert, planned still that my you until the give U.S.A. two some my of and And is for not are we're and But get that calendar return into anything -- is and turnaround cents expecting right to year. KOB

So And then is in what we're half those of in us in, seeing unfolding expect second we coming some of to aftermarket in additional start investments happen going We'll going allowing bit KOB start investments growth some to year. X the have little the sideways. will a U.S.A. the and

and if don't if KOB all his X, see this X start in to will be we're something we we and get seeing happen. will a problem into that continue KOB turnaround when happens, we'll you March, be April it The So we problem for to watching, communicate Lal business. and any about February,

give on But coming wait the the of start to as will feel in. first we little this the that and -- he the as customers particular the why comm, confident the right it a chosen see It -- turn. before. But thing to bit we now. So for year the the way as look we at the in been try for half we second I in is here quarter say that year. on We've this to spending probably of as restructuring thing to first do additional that's has that's half some protection capital

don't why and feel? the go Lal, give expert. you You're So you ahead what

Lal Karsanbhai

No, I an expert. think you're

stable through said that it been October. $XX drop-off expected $XX a changed. And a has it. see between day see $XX It bookings. very million did in at October. in running to We October, not stayed We've and We You in a not well, million day million actually David.

David Farr

good. That's

Lal Karsanbhai

is is which good. Which good,

Asia, in predominantly set orders and after I the absolutely there KOB displacement We've power activities America destiny. are say as life there and goals, own will David, worked X aggressive the really competitive chemical opportunities very telling of working are can cycle now and to product right. new in going our the our in we very we business. our as industry then come environment, North that you're also pace Europe, medical that sales are elements segment out the where watch see But So that that business those We've short-cycle the control and got early we in. to

David Farr

we'll orders out any obviously, we a a that million those I that dialogue. the to we importantly, will not analysts you what day Josh, to So plants right know, company are now. commit issues. do, most shareholders sign. and spend North What as put what the in. plants And we'll will to continue there, on sell-side now a dialogue in he number that's that start facilities good daily spending That for the and safety right watch. we'll That's the And also, the fact money. do, day-to-day, and order Lal or puts X. or now to is out out just here, the America population, see good put you the means come a quality to what That's And are they'll they're ready, KOB They and money XX% have getting we got we're that's a operate getting thing have watching. the $XX

that's So Josh. watching, we're what

Lal Karsanbhai

a... perhaps it's And

Joshua Pokrzywinski

That's helpful.

Lal Karsanbhai

inviting anecdotal, Customers business Sorry, of in particular in out. I'll weeks. but couple us actually it line are a that Josh. Houston sites, throw Perhaps into

that's activity pick So see we up. encouraging, as again,

Joshua Pokrzywinski

Yes.

next over be frame baked some X their into that in and on time that that's X the follow-up. you in quick Just both much that of mentioned how than restocking heard want guide but more embedded the a not next restocked? numbers, of whatever the quarters, what presumably sense might say to Jamie is or comments. Any I Lal

David Farr

So of of -- yes, will only side, early I'll stages the the way the side have But business. Jamie's hybrid inventories down. let restocking he's discrete Jamie in that answer been have be the taken watching restocking that. and because on the mostly Lal

the the base demand came customer into liquidate the now because COVID, up, behind -- on biggest when we So went going inventory curve. Jamie his has restocking and he's

So why don't you do your...

James Froedge

it's CEOs right, have to taken retailers, levels. -- about took Big give you the of but bit little a answer, happened right that's levels there. them those spaces it's a tell public about Yes, box I what historic so nothing. were mean, almost to these down hard Dave. I hate down little low in very now because been They their comments

Our did thing. the same A/C industry

know is noise how to chasing long real improvement system cycle is So sales. going there's as what And a people now -- that we inventories. There's they of lot the are chase to don't home demand have you home by in right and restock last.

tell you if it's have you So sudden, could ask be and restocking to hit I early time how of if running. hot summer. the get going the it right peak into of the up real we're because caught much a this keep a A/C and all run season, you the is think third catch could up, versus you By demand quarter, demand, now to too seeing right cycle to the now, you folks,

How things. not does challenges have sure industry? similar yet. we're seeing we're So SharkVac supplying Okay, long the

get have year, first will we'll So quarter clearer calendar I quarter more more the as first get of to unknowns. there's And of it the little calendar of -- clarity part a us. we into think lot a

David Farr

now right CEO and XX company -- being as Dave's my the So in XX Jamie's capacity adding in years Josh, business right we're is expertise we're looking is what from at years from this now.

I pick think Jamie have I window we that to here from those guys Bob that the we and And opportunity. a -- his some have think mean, is I innovation and team up Jamie unique a phenomenal. unique are share. inherited

right in a with now, because Lal's that to do get running getting cost we the -- be At capacity the into in some we're massive moved and point structure, he's is levels, more at we're done adding out. around interested doesn't we're we're better adding got So this trying business peak to time the moving capacity same that time. position want restructuring have some capacity. at Jamie he now, Right is he's to of capacity where -- in

this Jamie's will get on paid and assuming online to betting business COVID. be relative go, So in right of restocking or go the we'll happens some But better continue that better year. nothing we're we things in get the with business business the half we're into we now election then capacity Jamie's to the will second the happens and as because think will crazy adding

James Froedge

would I assess especially is as comment first right for half first our being orders. add we you at look now, other prudent those only are The sales, as we that outlook though, quarter,

just unfolding, good. see want we know give exact the So I that to the but numbers, don't orders they're as

of double-digit we restocking. quarters said, that's a October is number. I some As Again, know

the forecast at so in prudent And we're put being this we what into time. sales

David Farr

But we our to we'll keep you okay? with or know things as are forward we go vehicle That's worse, the better go informed -- as let think you order. guys

Operator

Next Cowen. question comes from Khanna Gautam at

Gautam Khanna

more and help not to again, is the trend with your as the and with to hear ahead time Emerson My challenge. because that be question is from just react like, that moves oil sources customers. exposure in more a that trend maybe we the how world alternative going business look and position fuel on secular of how to It's at and and you is investors gas this the and cyclical

perspectives how going little talk might structural company side change to of you bit what on If it. the could be and on about your a emerge just other a is the

David Farr

Yes. I be a Gautam. sales, And if mean to is total down of it as change, our a structural XX%, XX% year's at as total a we're definitely look you going company. this to sales percent

especially an to important are in is aftermarket make we supplier, As primarily acquisitions, KOB we X oil in major we X, invest probably as very our you industry, business. the XX%. and which supplier, look KOB a gas a continue if still technologies, to closer other It's in

be hydro, it OSI So in and next-generation but -- investment it make renewables, hydrogen, in more be continuing power. it made to be the investments this in about we're we'll talk in February, we'll we what the the do,

other we're we're doing or to we to do off this uses continue to and continue because to very to We'll in going technologies. say, -- energy sell around and we sensors not oil use continue industry. to use invest it's industries. to DeltaV think we'll other or investments similar you pressure the We that in can we're But other I what power to or the serve segment something At from time, lot a not to a of technologies same going replace are see, okay, gas. whatever that. But we'll of make going what you're continue

we'll continue about medical renewable are we're As doing in today innovation doing field in -- fields, to sensing Board do that. the the to we the other field the also talk and the and

balanced walk percentage downwards. it. as believe spike Don't to we're -- investments So in a have going we look to We're fundamentally will still we make show going, and from more but as the -- continue away those where smaller back Board have they move we'll the be that can smaller. a to not it will and we to grow, us come it, -- continue allow to Emerson is to make pieces of portfolio. investments the continue pie We'll of to continue

now time, the we'll I and impact and continue the think been make making At this way overestimating people transition. make to we'll much same as the time are several we gas make We've for to this last years, some we this over investments. company have oil and transition those way overestimating how it. in continue

going where we that away that. now. have today. are a feel oil strong hard a very, February, working think I So standpoint, we people management people understand not on that we'll in team invest we very try we're with a as from of to are we cash understand that a to so But good presence gas. going to our very renewable customers with have you the have have Board, we walk We're and from very cow diversify, as that from share to continue business standpoint I right but We'll and in to to segment

will to you've Unless in to because be of that of more and I less have to have gas It and that around doesn't also way, back. be look a the impact like consolidate. double good growing, California. happening meantime, that it and And news and most the from still that industry. That's as KOB But if is of is of XX, business think people is So don't XX, consolidation be got to and aftermarket. of see we're now player, And but player. any by mean -- less what growing. I going to X still it, investments be years, but us help for oil short for people continuing continue will a forecast the think diversify. term, this want to to the the source you the on good the right lights. standpoint is I down unless it's the We'll make invest will and still go the want come in Got gas you primary energy, XX you at it's to next oil of overestimate

Operator

comes question Steve JPMorgan. next Our Tusa from from

Charles Tusa

more say, Speaking dogs a or to tailwinds of jumping mechanically. calculate just whatever kind targets over I used you of bit

it's a some have bit other whether of and buyback. these tailwind, do restructuring a You things, of

X anything that kind I of So mix CR&S a got bit costs should of a is on aware little of I is temporary already is we the some be outperform. platform these mean there of back, kind but KOB know EPS flat number, revenues, flat a tax in you coming headwind, that down. higher-margin should of?

of of that? be these in the guys some price little anything whatever cost. or mix of is you top get So negative back anything us like on revenue that's kind converting kind there You've Anything of mix would in given you that the from holding tailwinds?

David Farr

No.

mean strong for had our very the year. I half Steve. shareholders, of very, we forth a Okay, to what try second we put

know per our I our cash much our margins, flow earnings You mean better. that. share, is

that can my -- world. percent somewhat call particular about investments mix I and in say what I coming -- we're Lal the KOB the -- the X, business in if in you a that only that's flow, I year, return global would concerns bad have this back in being happens know COVID of in plans about don't we about The what a XX-plus happening. our you're conservative margin GP profitable without and is things uncertain our the tell business. is us would to right But and forth things that at One half struggle, comes forecast he'll now of what instrumentation worried America, in right. put election, to all we I his North happens first that most

it struggling are the a helpful, He's XX%-plus cost additional all margin has when GP actions. these you're very reductions right. term. taken So but short in But business

forecast They're we laid one's higher Zorro if our Both can we out I sure make have X.X leverage, and that upside foundation little younger. get dogs want jump think right but -- little to our than for volume, I now. bit any because a that there, is them do that only a I they're -- can two X.X. of one's

jump jump can than higher little jump can a they So They higher. dad can now.

see the around that North flow, start pretty issue do headwind X we around, we turn on will key for America. the is think the KOB mix If business I instrumentation Lal's So is well. and especially us only seeing

thing point what flow the internally he's business conservative deleverage don't really is the it we'll got America North is to But going time. this is carefully in XX% we're as very XXXX got because does. at in hard I As about instrumentation in That If North see he's care X. deleverage be around it doesn't, KOB -- turn now, it -- down a only targeting this pretty forecast. watching this and and tough minimums not to a he's he he's have bare will to right

that's really we're cautious only So the about, thing Steve.

right. you're So

Charles Tusa

it. what Yes. I way maybe stupid of down. like look guess to But kind I at your sales too just of is are this -- a

David Farr

never I'd you call Steve. you call never stupid, I'd stupid.

Charles Tusa

down. is underlying Your

toughest the first your for have You year be to your in going quarter, comp yet the calling adjusted And EPS you're flat. is be flat. to then

of the EPS kind flat of comp, I toughest on -- if kind is of like you're to the why EPS just like it like be that's it the you're with at So your and for of starting year basis. flat first struggle rest going an quarter kind revenue just

David Farr

think crazy to in earlier There's as just I around it the not said make to we about here. I -- Josh trying the sure want that so timing, I'm uncertainty too in much talking signs. be

now KOB Our want gave and KOB there that a and those the around U.S.A. is we X of leverage biggest eyes. the uncertainty of start the until really to out did a us lot not X, whites seeing forecast I U.S.A. put right

I why bit a And we're if you so Steve. little that's being cautious, mean go...

Charles Tusa

one... then And Okay.

David Farr

Go ahead.

Charles Tusa

of first one And Congrats, then Jamie. -- for sorry, all.

that Second American seen of the more just your a now? North particular I are there will very obviously -- coming is all, on all resi why of HVAC? mean resi, all -- that now Is the what guys report, not strong. resi numbers we've a catch-up

restocking Is serve there season In fact, on bit Lennox, out not as you just me as kind may up that ridiculously. not kind next? little for is strange missed customer a Carrier particular guys that that much. there guys channel what as may HVAC, bit serve first big up be whatever you saw a out resi a have talk and Like, to the maybe as now a much, second you fill to component or third going a next this in of it's the there. in catch-up in the Maybe this of you supplier next quarter would catch-up or it could into of about spring. or the opposed having a this the is, kind just year you third of kind year of

James Froedge

June, Yes. strong September. Look, back July, the A/C orders been going into especially have August,

than been quite very do. question. during upon customers our these a guys and are differential based to we've out, thing, believe, to with this isn't us are you We sharing it's have our there's customers we this what rates, mix contrary we're between know, do brand-new timing -- that well help reporting what Steve, industry and sales recovery. out, asked So doing different a very, your the and our our to the okay? As when order they Actually, rates

a everyone's side, holes. But I are operations. Now asked we've competitors fill to we're some and done think nice maybe with overall, the there being on operations uncertainties the than job, better

of So maybe think if it's what question implies. opposite of I kind anything, the the

months. following So we've see X we've next going strong seen and We not with now orders sales And customers. along. strong major lost any the right track orders months few into X,

David Farr

function up don't any just always to think And will rate same trying a a always lag I seeing our underlying it's with is rates -- them We'll them little from the growth there. problems their not keep now. I see of as growth but the them of we little a right lag bit. We're bit, standpoint components.

James Froedge

Yes. I at... you mean look

Charles Tusa

are what one. then, did Who mention? exited that, or that was somebody Who Bristol? about Is that exited talking -- somebody it? some You And like on on you competitor you said that's somebody on is was you last side? mentioned Is market. -- not the Dave, that just the there. Or one the the side, something HVAC quick automation

David Farr

is went player. ShopBack. bankrupt. ShopBack the #X ShopBack And

Charles Tusa

to have I'll that right. All to ShopBack. my Oh, add list. watch

right. All Okay. Awesome.

David Farr

had half. industry, me you but that I It's the We supplier the your business list, here literally let think add say. have to probably half Well, private back, next, a industry. major we probably some Asia, back in it's company, I It's -- now, it's in and it the -- can't the so to they shutdown would plants down going had the a shut X come to their it's that they've other have days. pick XX and act Vietnam up next window for of they and before over their say, They months the get together. States right watch United been

we nail for And want there. year. the what us That's -- so this hit the we to play the better, will opportunity unique Lal's we uncertainty North in as picks careful the right That's I head here. things that's be as We're you game want But And there, see to getting back America, now. business a with Steve. whole out leverage. very up

Operator

question next Bank Andrew of America. from comes Our from Obin

Andrew Obin

question oil gas. and A on

is in seen dividend. headlines, you your protect think for customers did But change talk to CapEx and have, -- gas. question about about So of oil example, reducing its structural the sort as I Exxon we've

change the And their does back, going forward they're change term? they're on what you change this, long the it for forward? thinking dramatically? going initiative? particular, do it What clearly, about have no in How it on right, if top-quartile is world said, spend money they going I thinking going mean differently. conversation, what have to mix spend just efficiency? So growth more they it as did the if does And there about Does I

David Farr

It's but to mix. shot a the think going I change Lal's there, take in. it I'll -- is to going change. the

safety things they're how fact productivity, fields You're to new thing, and will years more good not than going going from be all to those new many, see to play. to good for a resources the for out installed a other of us lot more it, energy What do for is base. deal It's efficiency, which get be with going different there that us. to out more any of figure many won't an

from good huge that to -- all which us, around and significant be quality going more be issue, mix. spend become are once a upgrades things that's that we'll will start have happen And profitability strongest And oil far KOB going to type why project. should we'll be and the us But to that investments. So know, more installed and to the that start But over shrink the money. be the the that's good safety and for they're we our you gas for continue I investments all It's think X around spending pretty couple base. will for that they to support really going and industry changing to productivity you're industry. the a mining they the have big for see dividends be and to global -- us ball jump your that made in years, by is because as last of strongest, service going organization not as of of we've world to what's pay the relative

field hearing now? So I way the guys in Lal, are right what the it. you see that's your from

Lal Karsanbhai

Yes.

X right, there, I add David. that's just think to And things Andrew.

Methane and are The investments source continue, anyone believe Exxon, be that the first to around seeing investments power be world. globalization combined continue or is we're of the the it and will executing industry energy in in generation still Shell those I still natural gas. for on around a we viable cycle,

to not the oil and important gas across purely board. that's note an it's So that

that very those we customer drive little The are and a safety, operations the investments we information customers and which forward. in then reliability, technology fall technology And our for more be opportunity A is second viable. out Andrew, change efforts in But for these to of spend. to flush are our sustainability for broad February highlight. business, the of will digital that decarbonization mix of set continue detail see earlier is smart go to we'll within -- bit continue talked lot driving our the an applicability the those for lastly, the about within that's a still in very applications, you us efforts and

David Farr

Yes.

pretty that's gas to digitalization Lal's because our and big the more it's a oil going all their that's are heavy us where business. business carbon profile strength. engaging and with And how use. they're a Harris sensor right and customers So technology works. now try It's of That's a to Stuart reduce to business benefit -- on and

have that long the good still as have So definitely happens, and sales, over we'll shift better we'll pretty profitability term.

think position XX we're been doing that and it I now. like over going and as our digitalization benefit is through, to it's last company, I presence a years. that our the relative us a but all we going to everything we've have given And the right So hand shift

Andrew Obin

Solutions. question Residential a Got you. Commercial follow-up just & on And

down, on it bit China? more happening, China. it else? Asia color specifically? just of in what's given what the and maybe & Africa in Is East Middle Is recovery China surprising you little are something a And pace specifically seeing

David Farr

Jamie. ahead, Go

James Froedge

foodservice, in it's At hotels think are And across Well, I as restaurants But in industries you food still participate I industries Asia. still and are heavily we of hospitality a that retail. X.X China far too maybe signs is corner. those Asia. say look, positive away. large quarters and a some what parts that But soon there like servicing this impacted we've it's to industries and October, quarter, pretty turned were point, in see the as there think

some business Therm-O-Disc very our been we growth -- got out good. we've back come China appliances has although some our -- that's of our like serve the in of So

We've we're some where still is So some food But strong. a the cold there's food in cold some tough strength the retail, of pockets good especially side. -- hospitality the -- residential and seen chain around tough, market. service

results October China. in results promising. and We positive However, Asia had again, were

see the so too tell, sustainable radar early on we'll if And but some a just that's here. blip signs. if it's to or But positive

David Farr

residential. East our and Asia the Middle we in -- as Andrew, was you So thrust commercial, know, around all not

this what And markets that, and new back stuffed markets -- the we hard to down, think he this and continue year. probably so comp. before think money going struggle nicely until a with They'll an I as COVID time products that. But ever more in Asia. and -- But movement those make channel a who Jamie He so us go have relative back Hughes, that. to have forward been pretty there. to came But And it she back to but the hurt a around people, year. we I'm start Obviously, easier will bounced so the me Susan I importantly ran new over follows technologies get end come Lal of the China spend have develop And if watching people there. for on. Southeast hard seeing is will him, you situation. good of pretty start and bouncing you're gets been we it's tough back.

Lal Karsanbhai

to work from got She it.

David Farr

work got to from fantastic. it? She That's

than Asia more back up. XXXX I'm I was optimistic Jamie think it signs in I picking last for So see year. about

Lal Karsanbhai

Yes, It's the full second just positive. extraordinarily it mean is to should I accelerate the of be more a in what starts half. really we're year outlooking good year. for growth kind the

David Farr

But for like of disappointing it's come was back been us. didn't it disappointing. I would say the 'XX It do. second always half

Operator

or Our Andy from from next comes Citibank Citigroup. question from Kaplowitz --

Andrew Kaplowitz

a about It's program. you've cost savings. So $XXX of big talked million annualized

it might tenure. the I done your be think in biggest you've

So it maybe in -- put just about perspective us. talk for can you

than talk you billion sales. $X think set of get decrementals around I faster if and your And already than conservatism that KOB to did coming But especially 'XX, reaching we if Steve's despite does turn, about regarding FY for question you you Lal's business back targets KOB think margin So incrementals. X? better see still X less does is answered I incrementals, historical

David Farr

I'll answer be step won't he that around, or question but I better right away. down. might It's

So is his focused on wants get doing mean one. -- I it, that his back was honest, I too. do he that answer they've mean to to very to organization at not first And organization half. the whole through cutting. he's step I to easy time, be He same margins. an he but mean gone to up, pain, that. wants much peak be to it, wants the

conference good the as we to we'll presented So update updated face-to-face. and but of the largest planning is, on WebEx, time, you'll We we -- -- leverage our XXX XXX this didn't the back comes but haven't then with week the very are get last to is them the room I margin in peak had you. the for the think key Board. We XXX in people, yes, it conference planning issue number, number. the where answer restructuring I conference And our you group it plan. talked live

the time we businesses you repositioning, the the repositioned the look about 'XX, back most the important also want next get we're we margins. going we're resources, next a next thing I we're in would margin we're how done historical of all about we would put say, not those reset people largest. 'XX, charts that globalized we company, strong of our go period there, the the had 'XX, in largest you going that we what what -- to the here, perspective there. the whole very of where after, have trying It's have. broke company, industries that from if back We're been XXXX, plans for generation. asking. as to with have we that I be facilities, we're as to resetting Now putting where type back, year questions the been at And out think we And the this we're would doing run-off putting back, the the it's But

so restructuring both doing, customer where want said, & he's It's Lal massive number. doing, I online the been that's the where that's Residential not work a it's what that's okay, base, that that do be? to online why side And it has of lot and Jamie of Commercial the business but a a it's at, it's type and such has been of been, go? does work that the go? where And that lot I moving. Where the looking so why technologies, And does

and to I think we're -- had a of back that and what is way -- reset we all did company and continues And Emerson, 'XX base different as XXXX, hell the got in not be do they run structure to to doing way company run. set as I it's services industries, think do think the easy like all a then different through this the a trying for Lal for everybody transform. we to those resetting debate right that I are we these the now. trying with peak but Jamie some set that and margins. do I up lifting, to so customer "Why guys And different you've finish that's It's are it because are And that's what think to when heavy 'XX this different way?" a good go saying,

So think... I

Lal Karsanbhai

is. Andrew, way with we internally journey vast I A It's through process. Europe, is can not Asia, taking about We it's think business you purely of about the it opportunity. and know we waste Mexico the platform organization very Eastern well. important interface this we're thinking how realigning element how into an and do he want also interface a to we differently, as our this part cost resetting And costs how as And didn't about structure this really what said our well. heavy out. that's and that of customers the

components thought out. are well very both So

Our month others across has and runs entire tracks very the that with Ram done different and very, manage plan individual to leadership of well we the organization. month XX of across execution been

David Farr

that of I different to will bit there's there mean thinks because that, talking as been different we've what he we Jamie. trying far Automation a be been customer it's much reset Lal's that's There's more as We're from totally Solutions. with as with of a Yes. needs business, but And now. little not Lal's XX, base, customer years reset. about, XX is, know forward XX, this business

James Froedge

Yes.

profile. different it's commercial side, SG&A the On

growing said, comes as be side. did years back, wasn't And so that to over count around XX% out but business there'll we Dave either. a still take we're last facility work we're done And on head of SG&A the there's the 'XX a that the few in doing get that able lot little of because

point, is that serve So our and in of to is how footprint where are, able years. X regionalized how X worth X efficient markets, Lal's work or the footprint footprint, to we'll and to be we do our years' X,

And for going Lal waste we so, opportunity, said, forward. to to dividends and want pay it's our huge didn't business like the going

David Farr

the that's pandemic. everyone I friggin' there in much keep COVID you not of to do easy a telling out recession And thank why because that's middle very

Andrew Kaplowitz

you more And talk Can again, of cash little Very but But and the capital continue. Obviously, I doesn't you as talking mentioned working a flow, get about then bit QX. sort about in about into just thinking you free puts enough, good mean, you're obviously, helpful. CapEx. 'XX? about go talked going conversion takes conversion to of how it probably strong

David Farr

Okay.

record up flow. a and challenging ourselves going XXXX operating at XXXX the cash year cash obviously, So performed We set sales We've fun a in flow half is really free of percent well as of as a we free almost one. very cash be the XX.X%. new second to a because, for set flow in

XX.X%, we bit -- good inventory little The going pretty balance make is in -- a because happen brought on for is I XX.X%. Andrew, we earnings. Andy, what's shape think than it's all-time balance our big customers need standpoint, we're supply of to We sheet. around earnings a that protected chain standpoint channel to record sheet around has us, a to to from progresses, year the probably be we going need other sure the in our issue as got and extra

to of to is capital balance standpoint second going because we're going growing year. to actually from what's half in sheet So working going that the get be bigger a the is happen

we've earnings flow So to very, flow still number the and challenging earnings get good, because back to communicated for the got the this I sheet. free which as out liquidation cash as very drive -- very the is Frank way operating going next have us will cash the to balance is to there, we flow higher and year, year, get lead be to not of cash all people

fact, is go balance sheet going In to the opposite the way.

-- is out lot they're to operating put lot was not one's a This same some we on going of because for to inventory how little of put the but difficulty to capital So to last time, people our of because but the we receivables fun. higher are more year this growing, earnings. growing degree try a working will going at thought on how figure a be they're to a to get bit our have

not So front year, earnings want really to a the to if cash or flow going hard in billion capital we one $X.X been the the We and now side. operating that from And on standpoint work on -- been keep up of It's see the be that, has $X earnings on can we've Frank's side. next everyone got everyone period. or communicating. that beating of working billion to CFO.

Operator

next from Mitchell Our Julian comes Barclays. question from

Julian Mitchell

it two Maybe ones. brief. quick keep just quite I'll

would your one welcome be are Jamie, and forum. around for thoughts what this again operating... So the to But

David Farr

Forum?

Julian Mitchell

Yes.

expect? be margin the virtual big would any up a think just your year? question incremental around business expectation business, China business second And You've of growth. what's Auto 'XX did in I that leverage kind this in in Lal for fiscal through China. in variation -- the finish And How then is the that sales got for What the fiscal perhaps forum, we should mid-single-digit-plus And the the 'XX how operating please? year? Sol?

David Farr

Jamie? Okay,

James Froedge

be, are taking, be throughout we and in around positive those And will XX%. But just north to that it. be the the will all factors. range, year. very we're feel bit on it We've the a exactly of it it continue mean I not going and momentum lost will and cost Yes. what will that actions the -- somewhat other so depend about any little number on mix

we the quarter, feel at we're I pretty right fine. this look and don't good year well, about So say, now that.

not. year, we're for It and it's develops, as in a cycle, year known And Last We've for tougher mine us. quarter, Price our got but so normal very that's the gets around in that. was little the us that. good quarter. first good the we for plans we've knew This it.

extraordinary the of as So at I cycle. this way anything moment don't see the

have We businesses now. profitable right growing

We profitable to the start in that second profitable a very grow have at profit -- businesses other similar profile half.

looks. So right plan the way now, that's the

Lal Karsanbhai

the of downturn aggressively market the in up half. significant -- ended yes, obviously, We So we sales the Julian. second in for China in But very quarter flat China, On second year. destination fiscal XXXX. first recovered had a the year for very the the quarter,

billion-plus tremendous second was and our a of what it there, a but hasn't XX Jamie on will as more $X been the that to flat, because like half work you, teams it or tell encounter have plus felt So business.

'XX, landing Now where plus of looking you plus at I'll there, X give range I'm somewhere now. in to a is X, right

chemical, refining. I offset and I some earlier, by power some challenges as said generation automotive, science, in positives think there's that's life and around

is X, So now. plus plus the where right X working at we're

will may better turn digits. through we single year. I be It as it think low the go

Operator

comes Goldman Ritchie Our Joe from next Sachs. question from

Joseph Ritchie

against especially the Automation and referenced, we're your guys on keep question if bumping hybrid some up I it like just But time look growth within one at discrete since to Solutions, you I'll some So just side. good portfolio, here.

the you you us on life the sciences. the feel have via that medical add and talk growth of some there after place about just a to portfolio especially, Just how you seeing, portfolio bit whether about opportunity? the M&A, little you're do Or to go need or today right whether it's on to in given

David Farr

again, as strategy space. this at perspective, from in like acquisitions, standpoint, our doing diversify help year been a acquirers in went we are We team some hybrid hardware we software time. the and this point to Lal From us more, his this space. through many not add would into We've

to I now we're we're like us his and primary also right team but Bulanda hard. the growth. We And to continue to a have software. drive there. with We it and would to Lal It's list, diversify wish has Mark space shake faster tough bit And do help trying to out. working market acquire a outlooking in it, know the pretty the little

push now, are has that standpoint. from will from and to we I that know acquirer hard Lal a preference that is very space that pretty strong perspective. in very this we continue So right to interested and

So anything add? else you want to

Lal Karsanbhai

there's it I but pharmaceutical this mentioned development including you also well David, earlier, said, that's space, in No, single-use think for bioproductions. ongoing internal devices

relevant well. very that's as So

to it's we'll but that. So combination, that segment, do acquisitive absolutely a in too, and continue

David Farr

investment of now, that more make us. right try of significant for in that lot to and relevant area A more all

to everybody guess, talking. want year as I for out 'XX. up I I apologize, our It's for to into was unusual quite XXXX we for today. everybody an webcast move that, thank joining and webcast XXXX It with want So thank our -- again amazing as lost wrap everybody. we year. WebEx, there an today I attending --

guess... I -- the So

Pete Lilly

will a minutes, the be few but available. For recording

David Farr

that. The recording Unfortunately, available. tells be Mr. will or is something down Farr you like that stepping it

looking into in time, I here. Jamie and here, in want got We on So everyone Frank go team here, we an what in top uncertain to We working about very done and for you got can't got a feel around we at have year. But 'XX XXXX XXXX. want that. based everybody appreciate Lal the and else And here. good for self-help back but change going we're this everybody I thank forward to strong joining, good a to

great looking in making us a for another forward have year and year 'XX. we're to So record

So soon. thank look everybody everybody, seeing and you, forward to

Operator

now This attending for you presentation. Thank conference has concluded. today's

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