Aug 4, 2026 earnings call — Raised guidance after strong quarter and order growth
Emerson raised 2026 adjusted EPS guidance to $6.55 and now expects sales growth of 5%.
Revenue $4.9B (est $4.8B) · EPS $1.71 (est $1.68)
Key quotes
"Underlying orders grew 7% in the third quarter, with broad-based demand across the portfolio as customers are investing in automation to enhance productivity, reliability and resilience in their operations."
"ACV continues to grow on plan, and we still expect ACV growth of 10%-plus in 2026."
"Overall, the impact in Q3 was about a $25 million headwind compared to our February guidance, and we expect the Q4 impact to be similar as supply chains remain complex."
Analyst Q&A 8
Why semiconductors and power grew
Q (Deane Dray · RBC): Analyst asked why semiconductors and power were standout segments and whether growth was market-driven or from Emerson share gains and new products. He also asked about cybersecurity focus and whether it creates an investment opportunity.
A: Management said the markets for both semis and power are very strong and Emerson is gaining participation with fleet modernizations, behind-the-meter data center work, DGM software and new Test & Measurement products. They said cybersecurity spend is driving upgrades in control systems and is an important part of the business going forward.
"Secondly, cybersecurity spend has been a significant driver of upgrades in control systems, both in power generation and in water systems." — Surendralal Karsanbhai (CEO)
Project funnel timing; price and tariffs
Q (Jeffrey Sprague · Vertical): Analyst asked if the project funnel is becoming longer dated and whether conversion timing is changing. He also asked about price versus cost, tariff refunds received, and any tariff headwinds.
A: Management said awards in the quarter were similar to prior quarter at about $400 million and the funnel they track is a 3- to 4-year view with almost 1,000 projects in LNG and power. They said price versus cost is favorable (they are "green on price cost"), they were tracking about 2.5% price for the year, they received $82 million of tariff refunds in the quarter recorded in cost of sales, and tariff refunds were removed from adjusted results but much of that benefit was offset by higher inflation.
"And if we look to the full year, we were tracking to about 2.5% price for the year." — Michael Baughman (CFO)
Ovation lead times; chemicals demand
Q (Scott Davis · Melius): Analyst asked how far out Ovation orders extend now and whether chemicals demand has turned positive.
A: Management said Ovation lead times now reach into the fourth quarter of '27 and into '28, giving long visibility. They said the chemical improvement was specific to Intelligent Devices, led by Final Control, with U.S. and Middle East stronger while China and Europe remain slow.
"That's exactly right, Scott. We're sitting in the fourth quarter of '27, reaching into '28 at this point." — Surendralal Karsanbhai (CEO)
Middle East drag and software renewals
Q (Andrew Obin · BofA): Analyst asked if the Middle East rebuild drag will flip to a tailwind in early fiscal '27 and for color on software ACV growth and renewals.
A: Management said the Middle East situation is uncertain and they plan assuming conditions stay similar through the fourth quarter and possibly into the first quarter of the fiscal year. They said ACV grew 9% and they expect to exit the year at 10-plus percent ACV; renewal dynamics reverse in the fourth quarter and DGM grew 28%, supporting confidence for 2027.
"But right now, as we're planning, I would expect to be realistic that the -- certainly the fourth quarter and perhaps into the first quarter of this -- of our fiscal year, the conditions remain relatively the same." — Surendralal Karsanbhai (CEO)
Power demand: brownfield vs greenfield
Q (Alexander Virgo · Evercore): Analyst asked whether recent power demand is mostly brownfield or if greenfield projects are beginning, and about visibility for Test & Measurement into 2027.
A: Management said power to date has been mostly fleet modernizations, but they are starting to see greenfield capacity (gas-fired in North America), behind-the-meter data center builds, and more greenfield DGM and nuclear opportunities. They said semiconductor order momentum is strong and they remain relatively robust on semiconductors through 2027; Test & Measurement has strong order momentum.
"Power to date, which has been extremely strong, has been mostly fleet modernizations." — Ram Krishnan (COO)
MRO trends and regional outlook
Q (Andrew Kaplowitz · Citi): Analyst asked about the state of MRO spending and whether it is led by North America. He also asked about trends in Europe, China and other regions.
A: Management said MRO rates remain around two-thirds of the business and are steady, with continued replacement spend but some delayed shutdown turnarounds. They said U.S. sales were up 10% in the quarter, Europe was down 1 point but orders were positive, China was slightly better but still mid-single-digit negative, and other Asia (Japan, India, Southeast Asia) was very strong.
"Really, no material change to the MRO rates anywhere that we've observed around that 2/3 of the business level." — Surendralal Karsanbhai (CEO)
China and Intelligent Devices growth
Q (Andrew Buscaglia · BNP Paribas): Analyst asked if China stabilized in the quarter and whether Intelligent Devices can return to higher growth without China. He also asked about through-cycle growth for Software & Systems and upside in an upcycle.
A: Management said Intelligent Devices can return to growth and that its guide is 3% to 6% within the Systems & Software framework (which is 6% to 9%). They said China was about minus 3% but improved sequentially and should continue to recover toward low-single-digit growth into 2027. They also said T&M is currently in an upcycle and can exceed its typical range.
"China, I think minus 3% is better than what we had seen in the first half." — Ram Krishnan (COO)
Funnel greenfield share and Middle East timing
Q (Kenneth Newman · KeyBanc): Analyst asked how much of the project funnel is greenfield versus brownfield and whether pricing differs. He also asked what customers need to see before orders normalize in the Middle East and how quickly orders would come through after that.
A: Management said the bulk of the project funnel (they referenced $12.4 billion) is considered greenfield, while brownfield modernizations are tracked separately; they get better pricing on modernizations than on greenfield and better pricing on MRO than brownfield. On the Middle East, customers are preparing quotes and projects (petrochemical and LNG expansions) and Emerson expects orders would be released relatively quickly once stability returns, but customers need certainty in an agreement to restore trust.
"But most of the $12.4 billion, I would say, venture to say, we look at that as greenfield." — Ram Krishnan (COO)