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# Emerson Electric Co. (NYSE: EMR) — Narrative, FY2026 Q3 Emerson's fiscal year ends September 30. This narrative covers the fiscal year ended September 30, 2025 and the third quarter of fiscal 2026, the quarter ended June 30, 2026. Sources: Annual Report on Form 10-K for the fiscal year ended September 30, 2025 (accession 0000032604-25-000087); Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (accession 0000032604-26-000043); and Current Reports on Form 8-K dated August 4, 2026 (accession 0000032604-26-000042), May 5, 2026 (accession 0000032604-26-000034), February 13, 2026 (accession 0000032604-26-000022), February 6, 2026 (accession 0000032604-26-000017), November 20, 2025 (accession 0000032604-25-000094) and November 14, 2025 (accession 0000032604-25-000091). --- ## Business Emerson is a global automation company. It sells the instruments, valves, control systems and industrial software that process, hybrid and discrete manufacturers use to run their plants — measuring pressure, temperature, flow and composition; regulating the movement of liquids and gases; executing control logic; and optimizing production with modeling and simulation software. Its customers are chemical, power and renewables, energy, life sciences, metals and mining, food and beverage, pulp and paper, automotive, medical, packaging and semiconductor producers, plus the professional trades served by its tools business. Revenue is overwhelmingly product- and software-license based, sold largely through a direct sales force, supplemented by independent representatives and, to a lesser extent, distributors buying for resale. In fiscal 2025 the company sold $18.0 billion, split by destination into the Americas at 51 percent, Asia, Middle East & Africa at 30 percent (China, 10 percent) and Europe at 19 percent; international sales including U.S. exports were 59 percent of the total. Emerson had approximately 71,000 employees and roughly 120 manufacturing locations at September 30, 2025 — about 35 in the United States and 85 outside it, primarily in Europe and Asia. It was incorporated in Missouri in 1890 and is headquartered in St. Louis. **How it is organized today.** On November 20, 2025 Emerson announced that, with its portfolio transformation complete, it had revised its management organization and updated its reportable segments. Effective in fiscal 2026 the company reports **five segments in three groupings**, and prior-period amounts have been reclassified to match. The former Discrete Automation segment was dissolved and its pieces distributed across three of the surviving segments. (The FY2025 10-K still describes the prior six-segment, two-group structure; the descriptions below follow the current one, from the November 20, 2025 8-K and Note 15 of the Q3 FY2026 10-Q, with product and brand detail drawn from the 10-K.) **Software & Systems group** - *Control Systems & Software* — automation systems, intelligent software and industrial AI. Distributed control systems, safety instrumented systems, SCADA, application software, digital twins, asset performance management and cybersecurity, sold mainly to process and hybrid manufacturers. Brands include DeltaV and Ovation control systems and AspenTech's asset optimization software, which lets industrial manufacturers design, operate and maintain their operations for maximum performance. The segment now also includes programmable automation controllers moved over from the former Discrete Automation segment. - *Test & Measurement* — the former National Instruments business, now carrying the NI brand: software-connected automated test and measurement systems, modular instrumentation, data acquisition and control solutions and general-purpose development software, used to bring products to market faster and at lower cost. **Intelligent Devices group** - *Sensors* (formerly described as Measurement & Analytical) — intelligent instrumentation measuring pressure, temperature, level, flow, acoustics, corrosion, pH, conductivity, water quality, toxic gases and flame, feeding data to control systems and automation software. Brands include Rosemount, Micro Motion and Flexim. - *Final Control* — control, isolation, shutoff, pressure relief and pressure safety valves, digital valve controllers, actuators and regulators. Brands include Fisher, ASCO, Bettis, Anderson Greenwood, Crosby, Keystone, KTM and Vanessa. The segment now also includes the fluid & motion control business from the former Discrete Automation segment — solenoid and pneumatic valves, valve position indicators, cylinders, air preparation equipment and electric linear motion. **Safety & Productivity** - Tools and connected equipment for mechanical, electrical and plumbing professionals: pipe wrenches and cutters, threading and roll-grooving equipment, battery hydraulic press and crimping tools, drain cleaners, sewer inspection cameras and locating equipment, conduit benders, cable pulling equipment, water jetters and vacuums. Brands include RIDGID, Greenlee, Klauke and ProTeam. Recently expanded to include the electrical equipment and materials joining businesses from the former Discrete Automation segment. **How the portfolio got here.** Emerson describes portfolio management as integral to its growth and value creation strategy, and the past three years reshaped the company into a narrower, higher-growth, higher-margin automation franchise: - **AspenTech buy-in** — on March 12, 2025 Emerson completed the purchase of the AspenTech common stock it did not already own for approximately $7.2 billion, making AspenTech a wholly owned subsidiary reporting into Control Systems & Software. Emerson incurred fees of $76 million ($65 million after tax) and paid $76 million to settle AspenTech share-based awards; AspenTech separately incurred $127 million ($113 million after tax) of deal-related fees. AspenTech's results, formerly a separate segment, are now consolidated into Control Systems & Software for all periods presented. - **National Instruments** — acquired October 11, 2023 at an equity value of $8.2 billion; NI had revenues of approximately $1.7 billion and pretax earnings of approximately $170 million for the twelve months ended September 30, 2023. It is now Test & Measurement. - **Open Grid Systems Limited** — acquired by AspenTech on November 15, 2024 for a total purchase price of $46 million net of cash; a network model management technology provider. - **Flexim and Afag** — acquired in 2023 for $715 million net of cash. - **Climate Technologies / Copeland** — on May 31, 2023 Emerson sold a majority stake in Climate Technologies to private equity funds managed by Blackstone in a $14.0 billion transaction, recognizing a pretax gain of approximately $10.6 billion (approximately $8.4 billion after tax) and retaining a 40 percent non-controlling interest in the standalone business, Copeland. In August 2024 it sold that 40 percent interest to Blackstone funds for $1.5 billion and the related note receivable to Copeland for $1.9 billion. - **InSinkErator** — divested to Whirlpool Corporation on October 31, 2022 for $3.0 billion, producing a pretax gain of approximately $2.8 billion (approximately $2.1 billion after tax). - **Metran** — Emerson's Russia-based manufacturing subsidiary, divested March 31, 2023; a pretax loss of $47 million was recognized on the exit of Russian operations, which had historically represented approximately 2.0 percent of consolidated annual sales. **Other business characteristics.** Spending on R&D, engineering expense and customer-funded engineering and development was 8.1 percent of sales in both fiscal 2025 and fiscal 2024, up from 6.9 percent in 2023. Estimated consolidated order backlog was $8.6 billion at September 30, 2025 against $8.4 billion a year earlier (Intelligent Devices $4,499 million; Software and Control $4,130 million, on the then-current segment structure), with approximately 75 percent expected to convert to revenue within twelve months. Principal raw materials are steel, cast iron, electronics, rare earth metals, aluminum and brass, with plastics and petroleum-based chemicals to a lesser extent; Emerson seeks multiple sources for each to avoid dependence on any one supplier. Management does not regard any segment as dependent on a single patent, trademark or license. Emerson maintains a cybersecurity risk management program overseen by the Audit Committee and the Board, run by a Chief Information Security Officer who briefs the Audit Committee quarterly; the company states that to date no cybersecurity threat or incident has materially affected its business, strategy, results or financial condition. *(Business section from the FY2025 10-K, accession 0000032604-25-000087, with the current segment structure from the November 20, 2025 8-K, accession 0000032604-25-000094, and Note 15 of the Q3 FY2026 10-Q, accession 0000032604-26-000043.)* --- ## Risk factors Condensed from Item 1A of the FY2025 10-K (accession 0000032604-25-000087). Emerson groups its risks into business and operational, industry and general economic, and legal and regulatory. **Business and operational** - *Competition.* Markets are highly competitive and potentially volatile; Emerson competes on product performance, quality, service and price. Some competitors have substantially greater sales, assets and financial resources. Competitive pressure could hit prices, demand, margins or market share. Certain businesses also depend on independent sales representatives and distributors, and the sale, financial instability or defection of one of those channel partners could weaken Emerson's position. - *Product development and technological change.* Businesses are affected by varying degrees of technological change — artificial intelligence and machine learning among them — producing unpredictable product transitions, shortened life cycles and a premium on being first to market. Emerson may fail to recoup R&D investment. It also flags the risk of not positioning for adoption of battery storage, industrial hydrogen, mobility and power generation, enhanced grid demand management, carbon capture and sequestration, or advanced nuclear power. - *Intellectual property.* Patents, trademarks, copyrights and trade secrets may be challenged, infringed, invalidated or circumvented, or misappropriated through unauthorized system access, employee theft or industrial espionage. - *Acquisitions and divestitures.* Deals require favorable environments and domestic and foreign regulatory approvals. As a result of the AspenTech, NI and Climate Technologies transactions Emerson explicitly notes it now has **a narrower business focused on higher-growth markets, and may encounter more volatility and be more vulnerable to changing market conditions.** Integration, separation and the timing and degree of anticipated benefits are all uncertain. - *Raw materials.* Shortages or price increases in steel, cast iron, electronics, rare earth metals, aluminum, brass, plastics and petroleum-based chemicals could raise operating costs and hurt competitive position; hedging may not fully mitigate. - *Global production footprint.* A majority of manufacturing facilities are outside the United States and emerging-market sales represent over one-third of total sales. Facilities are exposed to weather and natural disaster (including climate change effects), labor strife, war (Russia-Ukraine and other global conflicts), political unrest, terrorism, epidemics, nationalization and host-country legal and political upheaval. - *Capital markets access.* Investing, acquiring and refinancing maturing debt all require access to capital markets and bank credit lines for short-term borrowings; volatility raises the cost of commercial paper and other debt or could close off access entirely. Customers, suppliers or financial institutions losing that access would also hurt Emerson. - *Key personnel.* Success depends in part on the skills, experience and industry knowledge of management and key employees. - *Security and data privacy.* IT networks are exposed to failures, outages, terrorism, natural disaster, employee error or malfeasance, server and cloud-provider breaches, and cyberattacks ranging to advanced persistent threats. Emerson expects cyberattack risk to increase as AI capabilities improve and are used both to find vulnerabilities and to build attacks, with additional exposure from its own and its vendors' AI use. Breaches could mean theft of trade secrets, disclosure of confidential data, litigation, penalties under privacy laws and reputational damage; compliance with privacy and data-localization regimes increases operational complexity. - *Product failure.* Products and services incorporate complex, leading-edge hardware and software integrated into process, hybrid and discrete manufacturing environments, so the impact of a catastrophic product failure could be significant. Cybersecurity incidents aimed at embedded software could generate third-party damage claims, a risk enhanced by the increasingly connected nature of the products. - *Artificial intelligence.* AI use raises accuracy, IP infringement, data privacy and cybersecurity risks; competitors may adopt AI faster or better; and the regulatory landscape is rapidly evolving with potentially prohibitive requirements. **Industry and general economic** - *Trade policy, tariffs and currency.* Emerson sells, manufactures, engineers and purchases globally across mature and emerging markets. Changes in trade terms, restrictions, tariffs, taxes, protection measures and retaliatory countermeasures could hurt results. The 10-K states directly that recent changes in U.S. trade policy — the application or increase of tariffs and subsequent retaliatory measures — have created a dynamic environment and that there is no assurance Emerson can mitigate the full impact on its costs, demand, supply chain or the global economy. Currency swings have affected operating results and hedging may not offset them. - *Recession and end-market downturns.* Operations have historically been exposed to significant volatility from general economic conditions and end-market downturns, which could depress sales, trigger goodwill or long-lived asset impairment charges, and force more extensive and costlier restructuring — workforce reductions, facility consolidations, centralization — whose benefits may be delayed or never realized. **Legal and regulatory** - *Tax.* Emerson is taxed in the U.S. and numerous non-U.S. jurisdictions. Its effective rate, cash flows and results can move with the geographic mix of earnings, local law changes and the multiple overlapping regimes implementing the OECD global minimum tax. Returns are regularly audited and disputes could adjust tax liabilities. - *Improper conduct.* Exposure to the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar laws, with operations in many parts of the world that have experienced government corruption; internal controls may not always prevent improper conduct by employees, agents or business partners. - *Litigation and environmental.* Emerson is party to proceedings involving intellectual property, commercial transactions, government contracts, the integration of emerging technologies including AI, M&A, employment, benefit plans, antitrust, anti-corruption, accounting, import and export, health and safety, product liability including asbestos, and environmental matters. It could incur substantial cleanup or damage costs under environmental laws, and notes a continuing lack of consistent climate-change legislation and standards. Sustainability goals depend on technologies not yet commercially available and on the efforts of suppliers and others; failing or being perceived to fail to meet them could bring reputational damage, enforcement actions and private litigation. **Related contingency disclosure.** Emerson engages an outside expert for an actuarial estimate of expected costs to resolve all pending and future asbestos claims including defense costs, plus related insurance receivables; the asbestos reserve is recorded undiscounted and is based on projected claims through 2065. At September 30, 2025 there were no known contingent liabilities management believed would be material to the financial statements, nor any material commitments outside the normal course of business. At June 30, 2026 the balance sheet carried $119 million of asbestos litigation liability in Other liabilities and $50 million of asbestos-related insurance receivables in Other assets. --- ## MD&A — fiscal year ended September 30, 2025 From Item 7 of the FY2025 10-K (accession 0000032604-25-000087). Dollars in millions except per-share amounts unless noted. **Top line.** Net sales were $18.0 billion, up $0.5 billion or 3 percent. Underlying sales — excluding currency translation, acquisitions and divestitures — were also up 3 percent, on 2.5 percent higher price and 0.5 percent higher volume. Underlying sales rose 5 percent in the U.S. and 1 percent internationally. International destination sales including U.S. exports rose 1 percent to $10.6 billion, with U.S. exports of $1.4 billion up 5 percent; underlying, Asia, Middle East & Africa was up 3 percent (China down 4 percent) and Canada up 7 percent, while Europe fell 2 percent and Latin America was flat. Origin sales by international subsidiaries totaled $9.4 billion, up 1 percent. **Margins and costs.** Cost of sales fell $110 to $8,497. Gross profit was $9,519 against $8,885, and gross margin rose 2.0 percentage points to 52.8 percent — the prior year had carried $231 of acquisition-related inventory step-up amortization worth roughly 1.3 points of margin, and favorable price less net material inflation added to the gain. SG&A of $5,103 was down $39, falling 1.1 points to 28.3 percent of sales on cost-reduction savings concentrated at Test & Measurement and AspenTech. Other deductions, net of $1,245 were down $189: intangibles amortization fell $193 (the prior year included $136 of backlog amortization tied to Test & Measurement) and restructuring fell $92, partly offset by $118 higher acquisition/divestiture fees and related costs. Interest expense, net was $237 against $175 in 2024 and $34 in 2023, the increase reflecting higher debt to support the AspenTech transaction. **Earnings.** Pretax earnings from continuing operations of $2,934 rose $914, or 45 percent, with Intelligent Devices up $146 and Software and Control up $545. Income taxes were $696 at a 24 percent effective rate, against 21 percent in 2024 and 22 percent in 2023; discrete tax items of $36 ($0.06 per share) and non-deductible AspenTech fees added roughly 2 points. Net earnings from continuing operations attributable to common stockholders were $2,285, up 41 percent from $1,618, and diluted EPS from continuing operations was $4.03, up 43 percent from $2.82. The prior year had absorbed NI purchase accounting, higher associated restructuring, and a pretax loss of $279 ($217 after tax, $0.38 per share) on the agreement to sell the Copeland note receivable for $1.9 billion. Adjusted diluted EPS from continuing operations was $6.00 against $5.49. Discontinued operations contributed $8 ($0.01 per share) versus $350 ($0.61) in 2024, so net earnings attributable to common stockholders were $2,293 ($4.04 per share) against $1,968 ($3.43). **Segments, on the then-current structure.** Intelligent Devices sales were $12.4 billion, up $239 or 2 percent, with underlying up 2 percent on price; Final Control rose $176 (4 percent) on strength in power end markets, Measurement & Analytical rose $82 (2 percent) on mixed geographies and difficult comparisons, Discrete Automation rose $15 (1 percent), and Safety & Productivity fell $34 (2 percent) on softness in all geographies. Intelligent Devices earnings were $2,953, up $146 or 5 percent, with margin up 0.7 points to 23.8 percent and adjusted EBITA margin up 0.5 points to 25.9 percent. Software and Control sales were $5.7 billion, up $292 or 5 percent, underlying up 5 percent on 2.5 percent higher volume and 2.5 percent higher price; Control Systems & Software rose $270 (7 percent) on strong AspenTech growth, including a favorable contract-renewal timing effect, and demand in process and power, while Test & Measurement rose $22 (2 percent). Software and Control earnings were $827, up $545 or 193 percent, with margin up 9.3 points to 14.5 percent and adjusted EBITA margin up 4.0 points to 31.0 percent. **Cash and capital structure.** Operating cash flow from continuing operations was $3.7 billion, up $359 or 11 percent on higher earnings and favorable working capital changes; free cash flow from continuing operations was $3,245, up 12 percent. Including discontinued operations, total operating cash flow was $3,098, held back by roughly $0.6 billion of income taxes paid on the Copeland equity sale — the same payment that pushed operating working capital to 11.3 percent of sales from 8.0 percent. Net cash paid for acquisitions was $37, against $8,342 in 2024. Total debt rose to $13,116 from $7,687, with commercial paper borrowings at approximately $4.2 billion at year end; in March 2025 Emerson issued €500 of 3.0% notes due 2031, $500 of 5.0% notes due 2035 and €500 of 3.5% notes due 2037. Management acknowledged leverage and debt ratios elevated versus historical levels while expecting to retain investment-grade ratings and to improve the ratios through disciplined capital allocation. Dividends were $1,192 ($2.11 per share) and share repurchases $1,167 (9.3 million shares at an average $125.66). Total assets were $42 billion and stockholders' equity $20 billion. A $3 billion 364-day backup facility entered February 11, 2025 sat alongside a $3.5 billion revolver from February 2023, with no borrowings ever drawn under either. **Retirement plans.** At September 30, 2025 U.S. pension plans were overfunded by $856 in total, roughly 29 percent in excess of the projected benefit obligation, while non-U.S. plans were underfunded by $65. Effective January 1, 2025 Emerson implemented a new profit sharing retirement program for U.S. non-union employees, funded by surplus pension assets, and froze future service accruals in the principal U.S. defined benefit plan after December 31, 2024. --- ## Current quarter — third quarter of fiscal 2026 (quarter ended June 30, 2026) From the Q3 FY2026 10-Q (accession 0000032604-26-000043) and the third-quarter results press release furnished as Exhibit 99.1 to the 8-K dated August 4, 2026 (accession 0000032604-26-000042). Dollars in millions except per-share amounts unless noted. **The quarter.** Net sales were $4,873, up 7 percent from $4,553. Underlying sales were up 6 percent on 3 percent higher volume and 3 percent higher price, with currency translation adding 1 point. Underlying orders — a trailing three-month average excluding currency, significant M&A and AspenTech — were up 7 percent. Underlying sales rose 10 percent in the U.S. and 4 percent internationally: the Americas up 8 percent, Asia, Middle East & Africa up 8 percent (China down 3 percent) and Europe down 1 percent. Chief Executive Lal Karsanbhai described demand as robust, led by Software & Systems and broad-based growth in North America and Asia, while noting that the conflict in the Middle East remains fluid. **Tariff refunds.** In February 2026 the U.S. Supreme Court ruled that the International Emergency Economic Powers Act does not authorize the imposition of tariffs, and on April 20, 2026 U.S. Customs and Border Protection opened an administrative portal for refund claims. During the quarter Emerson filed claims and received tariff refunds of $82 ($0.11 per share), recorded in cost of sales. The timing and amount of any further refunds remain uncertain and no benefit was recognized at June 30, 2026 for additional potential refunds of previously paid IEEPA tariffs. This single item is the principal driver of the quarter's gross-margin expansion and is excluded from adjusted EPS. **Margins and earnings.** Cost of sales was $2,218, up $58, and gross margin of 54.5 percent rose 1.9 points, primarily on the tariff refunds. SG&A of $1,343 rose $77 but fell 0.2 points to 27.6 percent of sales on operating leverage and cost-reduction savings. Other deductions, net were $311, up $13, as restructuring costs rose (to $87 from $37) against lower intangibles amortization ($204 from $219). Interest expense, net was $85, down from $95. Pretax earnings from continuing operations were $916, up $182 or 25 percent, at an 18.8 percent margin, 270 basis points better than the prior year. Income taxes were $198 at a 22 percent effective rate versus $154 and 21 percent, with the One Big Beautiful Bill Act adding about 1 point through a lower foreign-derived intangible income deduction following the change to domestic research and development treatment in fiscal 2026; Emerson expects the OBBBA to slightly benefit the rate from fiscal 2027. Earnings from continuing operations attributable to common stockholders were $718, up 24 percent, and diluted EPS from continuing operations was $1.28 against $1.03; including the year-ago quarter's discontinued operations, total diluted EPS was $1.28 against $1.04. Adjusted diluted EPS was $1.71 against $1.52, up 13 percent. Adjusted total segment EBITA was $1,387 at a 28.5 percent margin, up 140 basis points from $1,232 and 27.1 percent. **Segments (current five-segment structure).** - *Software & Systems* — sales $1,644, up $164 or 11 percent, underlying up 11 percent on 7 percent higher volume and 4 percent higher price. Control Systems & Software sales were $1,199, up 7 percent on strong demand in power; Test & Measurement was $445, up 23 percent on semiconductor and aerospace & defense strength. Underlying sales rose 13 percent in the Americas and 16 percent in Asia, Middle East & Africa (China up 14 percent) while Europe fell 1 percent. Earnings were $296, up 21 percent, with margin up 1.4 points to 18.0 percent on leverage, lower intangibles amortization and cost-reduction savings; adjusted EBITA margin was 31.8 percent, down 0.3 points. Test & Measurement swung to a $11 segment profit from a $26 loss. - *Intelligent Devices* — sales $2,677, up $142 or 6 percent, underlying up 5 percent on 3 percent higher price and 2 percent higher volume. Sensors rose $78 (8 percent) on Americas strength in power and LNG; Final Control rose $64 (4 percent) on Asia, Middle East & Africa and Americas growth, again led by power. Earnings rose $55, or 9 percent, with margin up 0.8 points to 24.3 percent on leverage and favorable price less net material inflation, partly offset by unfavorable mix from increased greenfield project activity and higher restructuring. Adjusted EBITA margin was 27.9 percent, up 2.4 points. - *Safety & Productivity* — sales $552, up $14 or 3 percent, underlying up 2 percent on 4 percent higher price against 2 percent lower volume. The Americas rose 4 percent and Asia, Middle East & Africa 1 percent while Europe fell 6 percent. Earnings fell $10, or 10 percent, with margin down 2.3 points to 16.9 percent on higher restructuring and deleverage on lower volume; adjusted EBITA margin rose 0.8 points to 21.2 percent. **Nine months.** Net sales were $13,781, up 5 percent, with underlying up 3 percent on 3 percent higher price while volume took an approximately 1.5 percent hit from the timing of software renewals and the conflict in the Middle East; currency added 2 points. Gross margin of 53.6 percent rose 0.4 points on favorable price less net material inflation and the $82 of tariff refunds, partly offset by software-renewal timing. SG&A of $3,902 was 28.3 percent of sales, down 0.4 points. Other deductions, net fell $200 to $744, driven by a $175 decline in acquisition/divestiture fees tied to the prior-year AspenTech transaction and the absence of $65 of AspenTech backlog amortization. Interest expense, net rose $113 to $258 on higher short-term borrowings and long-term debt used to fund AspenTech in March 2025. Pretax earnings of $2,484 were up $346. The effective tax rate fell to 22 percent from 25 percent — favorable tax items worth about 2 points, and the absence of $49 ($0.09 per share) of prior-year AspenTech discrete taxes and non-deductible fees worth about 3 points, against the roughly 1-point OBBBA drag. Earnings from continuing operations attributable to common stockholders were $1,941, up 18 percent, with diluted EPS of $3.45 against $2.91 and adjusted diluted EPS of $4.71 against $4.38. By segment for the nine months: Software & Systems sales $4,600 (up 7 percent) and earnings $762 (up $109, or 17 percent, margin up 1.4 points, adjusted EBITA margin 30.8 percent, down 0.9 points including roughly 2 points of software-renewal timing drag); Intelligent Devices sales $7,580 (up 4 percent) and earnings up $71 with margin flat and adjusted EBITA margin up 0.9 points; Safety & Productivity sales $1,601 (up 3 percent) with earnings down $7. **Cash and balance sheet.** Operating cash flow was $1,425 in the quarter, up 34 percent, and free cash flow $1,323, up 36 percent. For the nine months, operating cash flow from continuing operations was $2,902, up $238, and free cash flow $2,618 after $284 of capital expenditures, up $217. Total cash provided by operating activities was $2,902 against $2,088, the improvement reflecting $585 of income taxes paid in the second quarter of fiscal 2025 on the Copeland equity sale that did not recur. Cash used in investing was $322; cash used in financing was $1,920, comprising $898 of share repurchases and $935 of dividends. In the first quarter Emerson repaid €500 of 1.25% euro notes that matured in October 2025. At June 30, 2026 total assets were $42,208, cash $2,180, inventories $2,513, goodwill $18,122, other intangible assets $8,686, short-term borrowings and current maturities $5,587, long-term debt $7,526 and common stockholders' equity $20,379. Operating working capital of $2,290 was up $251 from September 30, 2025 on higher inventory; the current ratio was 0.9, total debt-to-total capital 39.2 percent, net debt-to-net capital 34.9 percent, and the interest coverage ratio 8.2X for the trailing twelve months against 9.6X a year earlier, the decline reflecting higher interest expense. Remaining performance obligations — Emerson's backlog measure in the quarterly report — were approximately $9.6 billion, with roughly 75 percent expected to convert within twelve months. Emerson expects fiscal 2026 restructuring expense and related costs of approximately $185. **Capital returns.** Emerson repurchased 2,543 thousand shares during the quarter at an average $139.21. In November 2025 the Board authorized the purchase of up to 50 million shares, on top of the March 2020 authorization for 60 million; approximately 63.2 million shares remained available at June 30, 2026. Also in November 2025 the Board raised the quarterly dividend to an annualized rate of $2.22 per share. In January 2026 the company's 2025 Employee Stock Purchase Plan commenced, permitting eligible employees to buy discounted stock through payroll deductions, with a maximum of 10 million shares issuable over the plan's term. **Fiscal 2026 outlook, raised.** Alongside the third-quarter results Emerson raised its full-year guidance. Consolidated net sales are expected up approximately 5 percent, with underlying sales up approximately 3.5 percent excluding a 1.5 percent favorable currency impact. Diluted EPS is expected at approximately $4.89 and adjusted EPS at approximately $6.55, the bridge comprising roughly $1.39 of intangibles amortization, $0.24 of restructuring and related costs, $0.09 of acquisition/divestiture fees, $0.05 of discrete taxes and $(0.11) of IEEPA tariff refunds. Operating cash flow is expected at approximately $4.1 billion and free cash flow at approximately $3.6 billion after roughly $0.45 billion of capital spending. The outlook assumes returning approximately $2.2 billion to shareholders — about $1.0 billion of repurchases and about $1.2 billion of dividends. For the fourth quarter specifically, guidance calls for net sales growth of approximately 5 percent, underlying growth of approximately 5 percent, EPS of approximately $1.45 and adjusted EPS of approximately $1.85. For comparison, the outlook issued with the FY2025 10-K in November 2025 called for sales up approximately 5.5 percent, underlying up approximately 4 percent, EPS of $4.73 to $4.93, adjusted EPS of $6.35 to $6.55, operating cash flow of $4.0 to $4.1 billion and free cash flow of $3.5 to $3.6 billion. **Other developments during fiscal 2026.** On February 10, 2026 Emerson entered a $2 billion, 364-day revolving backup credit facility with JPMorgan Chase Bank, N.A. as agent, expiring February 9, 2027, replacing the $3 billion 364-day facility from February 11, 2025 that expired by its terms; it sits alongside the existing $3.5 billion five-year revolver from February 2023. Neither facility has ever been drawn, and there are no outstanding loans or letters of credit under the new one (8-K dated February 13, 2026, accession 0000032604-26-000022). At the annual meeting held February 3, 2026, shareholders elected three directors, approved executive compensation on an advisory basis and ratified KPMG LLP as auditor for fiscal 2026; a proposal to amend the Restated Articles of Incorporation to declassify the Board received 415,208,804 votes for against 5,746,906 opposed but failed because it required 85 percent of outstanding shares (8-K dated February 6, 2026, accession 0000032604-26-000017). On November 13, 2025 the Compensation Committee granted Special Performance-based Awards to President and CEO Lal Karsanbhai and Executive Vice President and Chief Operating Officer Ram Krishnan — 350,000 stock options each, in five tranches of 70,000 at exercise prices of $128.46 (the grant-date close), $160.575, $192.69, $224.805 and $256.92 per share, representing premiums of 25, 50, 75 and 100 percent; each tranche vests pro rata over five years and must be exercised within ten years (8-K dated November 14, 2025, accession 0000032604-25-000091). There has been no significant change in Emerson's market risk exposure during the three and nine months ended June 30, 2026, and management concluded disclosure controls and procedures were effective with no material change in internal control over financial reporting during the quarter. --- ## Subsequent events The Q3 FY2026 10-Q (accession 0000032604-26-000043) contains no subsequent-events note; its fifteen notes run from basis of presentation through business segments without one, and Part II of that report raises no post-period matter. No acquisition, divestiture, financing, borrowing or litigation outcome is disclosed as occurring after June 30, 2026 in that filing. The material post-period items Emerson has disclosed are: - **Quarterly dividend declared, August 4, 2026.** Emerson declared a quarterly cash dividend of $0.555 per share of common stock, payable September 10, 2026 to stockholders of record on August 14, 2026 (8-K dated August 4, 2026, accession 0000032604-26-000042, Exhibit 99.1). This is consistent with the annualized $2.22 per share rate the Board set in November 2025. - **Fiscal 2026 outlook raised, August 4, 2026.** Full-year guidance was increased to approximately 5 percent net sales growth, approximately $4.89 of EPS and approximately $6.55 of adjusted EPS, with operating cash flow of approximately $4.1 billion and free cash flow of approximately $3.6 billion (same 8-K and exhibit). The detail is set out in the current-quarter section above. - **Board addition effective August 3, 2026.** Jennifer G. Newstead joined Emerson's Board of Directors effective August 3, 2026, having been elected by the Board on May 5, 2026, and was appointed to the Compensation Committee and the Corporate Governance and Nominating Committee as of that date. Ms. Newstead is Senior Vice President and General Counsel of Apple and was previously Chief Legal Officer at Meta; the Board determined she is independent. She receives an award of restricted stock units representing a $95,000 pro rata portion of the $190,000 RSU component of the annual non-management director retainer (8-K dated May 5, 2026, accession 0000032604-26-000034, Item 5.02). Emerson's fourth quarter of fiscal 2026 ends September 30, 2026; results for that quarter and the full fiscal year had not been reported as of the filings covered here.