Emerson Electric (EMR) Q2 2026 earnings summary

Executive summary

• Q2 2026 underlying orders grew 5%, led by Software & Systems and strong demand in North America and India, despite a 1 point impact from the Middle East conflict.

• Underlying sales growth was 0.5%, below expectations, while net sales rose 3% to $4.56B; adjusted EPS increased 4% to $1.54, near the top end of guidance.

• Adjusted segment EBITDA/EBITA margin reached 27.6%, exceeding expectations; annual contract value (ACV) of software grew 9% year-over-year to $1.64B.

• Growth verticals, including power, LNG, life sciences, and aerospace, were up 22% year-over-year, with a project funnel growing to $11.2B.

• Management expects a strong second half of fiscal 2026, supported by robust backlog and orders momentum.

Financial highlights

• Q2 net sales were $4.56B (+3% YoY); adjusted segment EBITA margin was 27.6%, with price contributing 3.5 points to growth.

• Backlog ended at $8.2B, up 9% year-over-year; book-to-bill ratio was 1.07.

• Adjusted EPS grew 4% year-over-year to $1.54; Q2 cash flow was $694M with a 15% margin.

• GAAP net earnings attributable to common stockholders were $618M, up 27% year-over-year.

• Operating cash flow for Q2 was $779M, down 6% year-over-year; free cash flow was $694M.

Outlook and guidance

• Full-year 2026 net sales growth expected at ~4.5%, with underlying growth of ~3% and a 1.5% FX tailwind.

• Adjusted segment EBITDA/EBITA margin expected at ~28%; adjusted EPS guidance raised to $6.45–$6.55.

• Q3 2026 adjusted EPS expected at $1.65–$1.70; free cash flow for the year expected at $3.5–$3.6B.

• Capital return plan includes ~$2.2B to shareholders via ~$1B share repurchases and ~$1.2B dividends.

• U.S. outlook raised to high single digits; China outlook lowered to mid-single-digit decline.