With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

World's Most Admired Companies

Industries included in the sector are electrical equipment and industrial machinery.

Fortune Sector Leaders: Industrials

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 200 companies on this list are transforming industries from the inside out.

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

This year’s Fortune 500 marks the 67th running of the list.

Founded in 1890, the longstanding electric company makes its mark on the industry by producing a wide range of commercial and industrial electrical products, from climate technologies to home goods.

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-176-Emerson-Electric

This St. Louis-based manufacturer of valves, analytical instruments, and process controls systems was founded in 1890.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

Fortune Global 500

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Key Financials (last Fiscal Year)

Revenues ($M)

Profits ($M)

Assets ($M)

Total Stockholder Equity ($M)

Profit Ratios

Profit as % of Revenues

Profits as % of Assets

Profits as % of Stockholder Equity

Sector

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

Previous Industry Rank

Overall Score

Innovation

People Management

Use of Corporate Assets

Social Responsibility

Quality of Management

Financial Soundness

Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

Culture rank

Process rank

Product rank

Years on list

Previous rank

Earnings Per Share (last Fiscal Year)

Earnings Per Share ($)

EPS % Change (from prior fiscal year)

EPS % Change (5 year annual rate)

EPS % Change (10 year annual rate)

Total Return

Total Return to Investors (last year)

Total Return to Investors (5 year, annualized)

Total Return to Investors (10 year, annualized)

Emerson Electric provides automation systems, sensors, and software for various industries, including energy, manufacturing, and utilities. Founded in 1890, the company employs about 73,000 people and operates in over 170 countries. In 2024, it sold its remaining stake in its Copeland climate business to Blackstone to sharpen its focus on automation and sustainability.

Q3 2026

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Emerson Electric (EMR): Company Profile, Stock Price, News, Rankings

legacy

Emerson Electric

emerson electric

Greetings and welcome to the Emerson fourth quarter and full year 2025 earnings call. At this time, all participants are in a listen only mode. A Question and Answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Star 0 on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Colleen Mettler, Vice President, Investor Relations. Thank you. You may begin.

Good morning and thank you for joining Emerson's fourth quarter and full year 2025 earnings conference call. This morning I am joined by President and Chief Executive Officer Lal Karsanbhai, Chief Financial Officer Michael Baughman, and Chief Operating Officer Ram Krishnan. As always, I encourage everyone to follow along with the slide presentation which is available on our website. Please turn to slide 2. This presentation may include forward looking statements which contain a degree of business risk and uncertainty. Please take time to read the Safe Harbor statement and note on the non-GAAP measures. Before we begin the presentation, I would like to highlight our upcoming 2025 investor conference. On November 20th, we are looking forward to presenting on our transformed company, our global automation leader set to deliver a differentiated value creation framework.

We will discuss the drivers of our 4-7% organic growth framework, detail our plans for additional margin expansion and outline our capital allocation priorities. Additional information about this event is now available on our website. I will now pass the call over to Emerson's President and CEO Lal Karsanbhai for his opening remarks.

Thank you Colleen. Good morning. 2025 marked the 135th anniversary of our company. The Emerson Electric Manufacturing Company was established in St. Louis, Missouri in 1890. The development of a reliable electric motor was the vision of two Scotland-born brothers, Charles and Alexander Meston, made possible by the financial backing of John Wesley Emerson, a former Union Army officer, judge and lawyer. Throughout nearly a century and a half of economic cycles, the Great Depression, two world wars, significant technology innovations and a handful of iconic industrial leaders who navigated uncertain waters, our company completed 2025 stronger than ever. We have transformed. We have momentum in our markets, we have great people and we are optimistic about our future. Thank you to the 70,000 Emerson employees around the world, to our management team, our Board of Directors and our investors.

For your trust, I am honored to work alongside each and every one of you in our value creation journey. Please turn to slide 3. Emerson continues to see resilient demand as customers invest in automation technologies to drive digital transformation and enhance efficiency, reliability, and safety in their operations. Underlying orders grew 6% in the fourth quarter driven by sustained demand in our growth verticals and accelerating orders. Growth in test and measurement up 27% and exceeding our expectations. We had a robust finish to the quarter and I will discuss more details on demand on the next slide. 2023 was another solid year for Emerson. Underlying sales in the fourth quarter were up 4%. Execution was strong in the quarter with adjusted segment EBITDA margin of 27.5% up 1.3 percentage points. We delivered $1.62 adjusted earnings per share in the quarter at the top end of our guide.

For the full year, underlying sales grew 3% slightly below expectations as Europe and China book to ship were softer than initially expected. Emerson delivered strong profitability with adjusted earnings per share of $6, up 9%, and free cash flow of $3.24 billion, up 12% year over year. Annual contract value of our software grew 10% year over year and ended the year at $1.56 billion. For fiscal 2026, we are guiding sales growth of 5.5% with underlying sales growth of approximately 4% supported by sustained investment in our growth verticals and robust performance in test and measurement. We expect to deliver adjusted segment EBITDA margin of approximately 28% and adjusted earnings per share of $6.35-$6.55 reflecting strong operational execution. ACV is projected to grow 10% plus as customers further invest to advance their digital transformation ambitions.

We plan to return approximately $2.2 billion of capital to shareholders, $1 billion in share repurchases and $1.2 billion in dividends, including a 5% dividend per share increase. Please turn to Slide 4. Emerson delivered 6% underlying orders growth in the fourth quarter, marking our third consecutive quarter of mid single digit growth. This reflects the same momentum across key geographies and we are seeing broad based strength in North America, India and the Middle East and Africa. However, demand in Europe and China continues to be soft. MRO spend across our $155 billion installed base remains resilient, supporting a healthy pace of business led by strength in North America. The capital cycle remains constructive and large. Project bookings in Power, LNG, Life Sciences and Aerospace and Defense contributed to a better than expected finish this September.

Momentum in power continues to build and orders in our Ovation business were up 18% in the quarter and 30% in the year, driven by greenfield projects and modernizations. Custom measurement orders were up 27% in the fourth quarter with robust growth in all regions led by Semiconductor, Aerospace and Defense, and the broad-based portfolio business. Please turn to slide 5. Emerson continues to see success in our growth platforms. Our technology, leadership, and ability to deliver differentiated solutions are enabling us to capture large-scale opportunities and drive sustainable growth, and I'd like to highlight a few key wins from the quarter that supported our 6% orders growth. First, I will highlight two projects in power demonstrating strong adoption of our Ovation 4.0 distributed control system. In August we talked about Ovation winning two greenfield combined cycle plants with Entergy.

Ovation 4.0 has now been selected by Entergy to automate three more power generation facilities. Entergy today provides electricity to 3 million customers and the five facilities will provide approximately 3.1 gigawatts of generation capacity. In another win, Ovation 4.0 was chosen to replace the existing excitation system at the Doel Nuclear Power Station in Belgium, unifying the control systems across the site. Doel provides around 15% of the country's electricity and Emerson will help ensure the delivery of safe and clean baseload power. Next, Emerson is excited to announce its support to Bechtel Energy and Woodside Energy in the automation of the Woodside Louisiana LNG project. The liquefaction and export terminal in Calcasieu Parish is a premier LNG project designed for safe, reliable and efficient operations delivering LNG to global markets.

This development can produce 16.5 million tons per annum with a permitted expansion capacity of up to 27.6 million tons per annum. Emerson is proud to be chosen as a key automation partner for Bechtel Energy. Last, Emerson was selected as the automation provider for three manufacturing facilities being built in Indianapolis by a large US-based life science customer. A major step forward in their near shoring initiatives and in advancing innovation and efficiency. Emerson will provide our leading DeltaV control systems and software portfolio to enable reliable, scalable and data-driven automation. Through this collaboration, Emerson will deploy state-of-the-art DeltaV technologies designed to accelerate the time to market of next generation weight management drugs, enhance production performance and ensure regulatory compliance.

These wins reinforce our position as a global automation leader and demonstrate the strength of our portfolio in addressing the challenges our customers face today. Our continued success is driven in part by our industry leading innovation and we are consistently investing to advance our technology including investing 8% of sales in 2025. In the fourth quarter we launched two AI powered applications to unlock productivity and workflow automation. First we launched Guardian Virtual Advisor to enhance our DeltaV lifecycle management software. This solution combines Emerson's deep domain expertise and decades of data with conversational AI to help customers quickly resolve issues, optimize system performance and reduce downtime, currently available for DeltaV. We are innovating it to expand across Emerson's automation platforms to support smarter decisions and operational excellence across the plant lifecycle.

We also introduced Aspen Tech Subsurface Intelligence, a cloud-native AI-powered platform that accelerates decision-making for seismic interpretation. This AI platform automates workflows and improves collaboration across disciplines to help customers optimize production and reduce operational silos. Please turn to slide 6. Emerson executed well in a fluid macroeconomic environment and continues to deliver excellent operational performance. Growth reflected sustained momentum in North America, India, and the Middle East and Africa, offset by persistent softness in Europe and China. LNG, Power, and Life Sciences continued to attract significant investment globally and collectively were up 11% year over year. Sales in Test and Measurement accelerated sharply as we exited the year, up 12% in the fourth quarter with broad-based strength. Our Test and Measurement business continues to gain market share driven by innovation and channel optimization. MRO for the company represented 65% of sales.

Emerson achieved annual records for both gross profit margin of 52.8% and adjusted segment EBITDA margin of 27.6%. Margin expansion was driven by strong price cost, higher mix of software and the benefit of cost reductions in synergy realization offsetting a 20 basis point impact of.

We made meaningful progress integrating Aspen Tech, realizing $50 million of synergies 2025 and now plan to achieve $100 million in run rate synergies by the end of 2026, two years ahead of plan. Earlier this year we completed all the actions to achieve our commitment of $200 million of run rate synergies for test and measurement. Adjusted earnings per share of $6 was consistent with our guidance. Finally, we generated $3.24 billion in free cash flow, exceeding our August guidance of $3.2 billion and in line with our initial guidance as we offset approximately $200 million of acquisition related headwinds. Our 2025 performance underscores our commitment to operating results and positions us well for to continue investing in growth and returning capital to shareholders. Emerson's alignment with secular trends, leading technology and improving orders momentum reinforce our confidence in our 2026 plans.

I will now turn the call over to Michael Baughman to discuss our 2025 results in more detail and expectations for 2026.

Thanks Lal and good morning everybody. Please turn to slide 7 for a more in depth look at our 2025 financial results. Underlying sales growth was 3%. Growth was led by software and control which grew 5% and intelligent devices grew 2%. Our process and hybrid businesses were up 4% and were resilient throughout 2025. Our discrete businesses finished the year up slightly at 1% with lingering weakness in automotive and factory automation, while our discrete businesses accelerated through the year year over year. Volume was down and represented about a 1 point headwind to Emerson sales growth. Pricing contributed 2.5 points to growth.

Underlying growth was 5% in the Americas and 3% in Asia and the Middle East and Africa while Europe was down 2%. Our backlog ended the year at $7.4 billion. Backlog was up 3% year over year due to second half orders growth of 5% which positions us well for 2026. Adjusted segment EBITDA margin of 27.6% exceeded expectations and was up 100 and 60 basis points year over year. Fifty basis points of this expansion was due to a favorable software contract renewal year in 2025 and the remaining 110 basis points of improvement came from positive price cost, the benefit of cost reductions and synergies from the test and measurement and Aspen Tech acquisitions which more than offset inflation and tariffs. Adjusted EPS came in at $6, a 9% increase year over year and I will provide more details on the next slide.

2025 free cash flow exceeded our expectations.

The free cash flow growth was driven by higher earnings and improved working capital efficiency which helped offset approximately $200 million of transaction related costs. Our 2025 free cash flow margin was 18%, up 140 basis points from the prior year. Overall, these results underscore the strength of our portfolio, the resilience of our end markets and our ability to execute in a dynamic macro environment. Please turn to slide 8 where I will bridge 2025 adjusted EPS from the prior year. Operations delivered $0.62 of incremental EPS in 2025, which included a $0.15 benefit from higher software renewals in the year. Excluding this benefit, solid execution from operations contributed $0.47, reflecting continued margin expansion, segment mix and synergy realization from Test and measurement and AspenTech. Nonoperating items were an $0.11 headwind due primarily to pension of $0.09 and stock based compensation of $0.02.

Please turn to slide 9 where I will discuss our 2026 sales outlook by region. The resilient demand environment we are seeing informs our view for 2026 underlying sales. The Americas, India, and the Middle East and Africa are expected to remain strong drivers of growth in 2026 with muted demand in Europe and China. The Middle East and Africa is planned to grow high single digits supported by a healthy capital cycle and significant greenfield investments. The Americas are projected to be up mid single digits driven by sustained strength in our growth verticals and MRO.

Is forecasted to be up low single digits led by robust growth in India and momentum in Southeast Asia and Japan offsetting a flat China. Europe is expected to be flat year over year. We expect growth to come from the trends that are benefiting the power, LNG, life sciences, semiconductor, and aerospace and defense markets which comprise approximately $6 billion of our $11.1 billion large project funnel. Power, including nuclear, is projected to see robust growth as electrification, modernization of the grid, and data center trends drive substantial investment. Energy security and self-reliance as well as energy transition commitments are supporting global LNG projects. Life sciences growth is projected to continue across greenfield projects and capacity expansions to meet demand for biologics and GLP1s. Semiconductor is also expected to perform well in 2026 with expansions in North America driven by near shoring investments and government incentives.

Lastly, Aerospace and Defense is set to benefit from investments in new space projects and increased government spending commitments. Please turn to Slide 10 for an overview of our 2026 guidance. For the full year we expect sales to be up approximately 5.5% with underlying sales up approximately 4%, supported by healthy pace of business, meaningful growth in test and measurements and approximately 2.5 points from price. We project Europe and China to remain weak year over year. Growth is also negatively impacted by about a point due to a software contract renewal dynamic which I will discuss in more detail on the next slide. Full year Adjusted Segment EBITDA margin is expected to be approximately 28% reflecting strong execution and continued margin expansion. Tax rate is modeled at 21.5%.

For the full year we are guiding adjusted earnings per share of $6.35-$6.55 and free cash flow of $3.5-$3.6 billion. Turning to the first quarter, sales growth is expected to be 4% with underlying sales growth of 2%. Adjusted segment EBITDA margin is guided to be approximately 27% and we expect to deliver adjusted earnings per share of approximately $1.40 in the first quarter. Please turn to Slide 11 for additional details on 2026 guidance.

Minutes to provide further granularity on sales growth and to explain some dynamics affecting margins and EPS growth rates. Our testing measurement segment is planned to have high single digit growth in both the first half and full year, while the control systems and software segment is expected to be down low single digits in the first half due to a $110 million headwind from a lower value of software contracts up for renewal in 2026. This headwind is projected to be $120 million for the full year. The underlying health of our software businesses remains robust, with ACV expected to grow 10% plus in 2026, but having fewer contracts up for renewal adversely affects GAAP revenues. This accounting dynamic does not affect cash flows and reverses through 2027 and 2028 when we expect to see tailwinds from renewals.

The Intelligent Devices Business Group is projected to grow 3% in the first half and 4% for the full year, with sustained strength in MRO across core verticals. Second half growth is supported by backlog phasing and the timing of project shipments. Overall, Emerson expects to grow approximately 2% in the first half and 4% for the full year. Excluding the impact of software contract renewals, Emerson's growth rate is approximately 4% in the first half, 6% for the second half and 5% for the full year. Please turn to Slide 12 for additional detail on adjusted segment EBITDA margin and EPS guidance. Our Q1 adjusted earnings per share guidance of approximately $1.40 reflects strong operational execution despite a softer sales growth quarter and a tough comparison to Q1 2025.

We expect EPS contributions from operations of about $0.05 and nonoperating items of approximately $0.04, offsetting a $0.07 impact from the software contract renewal dynamic just discussed. As a reminder, Q1 2025 adjusted EPS of $1.38 included the benefit of several dynamics such as discretionary cost containment and favorable project closeouts in control systems and software. It is also important to note that lower volume from renewals impacts Emerson's adjusted segment EBITDA margin by approximately 80 basis points in the quarter for the full year. The renewal dynamic reduces adjusted EPS by approximately $0.15 and adjusted segment EBITDA margin by approximately 40 basis points. Operations is expected to generate about $0.50 of incremental EPS in 2026 with approximately 80 basis points of margin expansion from positive price cost and the continued benefit of synergy realization from AspenTech and test and measurement.

Please turn to slide 13 for a few comments on cash flow and capital allocation in 2026. As mentioned earlier, we are expecting free cash flow of $3.5 billion-$3.6 billion in 2026, representing approximately 10% growth which will come from higher earnings and working capital efficiency during the portfolio transformation. Our capital allocation was weighted towards M&A. Increasing the dividend has been a priority for the last 69 years, but the annual increases to dividend per share were minimal during the transformation. Now that the transformation is complete in 2026, we plan to raise our full year dividend per share $0.11, or approximately 5%, which is a significant increase compared to prior years. This raise marks the beginning of our 70th consecutive year of increasing dividends and underscores that long standing commitment.

During the transformation, we consistently completed base share repurchases of $400 million-$500 million per year. 2023 and 2025 were significantly higher because we allocated a portion of proceeds from divestitures to share repurchase for 2026. We intend to return approximately $1 billion to shareholders through share repurchase, which we have planned to be ratable throughout the year. We previously communicated our intention to pay down approximately $1 billion of debt in 2026. That is still the plan and reflects our commitment to maintaining our strong A2A credit ratings. We ended 2025 with a net debt to adjusted EBITDA ratio of 2.3 times and expect to end 2026 at approximately 2 times. With that, we will now turn the call over to the operator for Q and A.

Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To allow for as many questions as possible, we ask that you each keep to one question and one follow up. Thank you. Our first question comes from the line of Deane Dray with RBC Capital Markets. Please proceed with your question.

Maybe just start with some clarification on the software renewal. Is this an accounting change that was impacting the guide here, or is it really like the timing of what your contracts are up for renewal? And then related, you called out a benefit in your 2025 bridge of $0.15. Is that related to this, or is that separate because you are expecting to recoup this in 2027 and 2028 that you called out? Thanks.

Yeah, I'll start with the second half first, which is to say your understanding is correct. Thanks for the question on this contract renewal issue. It's an important dynamic that I want to make sure everyone understands. We have a portfolio of multi year term license contracts that have renewal dates over several years. Each year there are so many that are up for renewal. This year we had more than normal that were up for renewal. That's what drove the $120 million increase that we're calling out on the bridges. Next year we revert to something more normal. It represents about a $120 million headwind in 2026. It is an accounting dynamic. Remember, since these are multi year term licenses, you recognize multi years of the revenue at the time that you execute the renewal. That revenue recognition pattern is one.

Contract value is so important, because ACV has the effect of smoothing out that accounting dynamic. The other important reason to measure ACV is that it more closely approximates the cash that we can expect out of that portfolio in the next 12 months. As ACV grows, the cash flows grow. You have it right. That is the item that we're talking about. It's not a change in our accounting, it's not a change in the accounting rules. It's just an accounting dynamic that exists in revenue recognition for these multi year term license contracts.

That's really helpful. Just to make sure I heard it correctly, there's no impact on free cash flow. Is that correct?

That is absolutely correct. You made another point that I would like to reiterate, which is that this is a dynamic that will reverse in 2027 and 2028 relatively ratably over those two years.

Great. And then just as a follow up on the test and measurement, this was above expectations in terms of orders. You called out some of the verticals. Is there anything else in terms of have you really turned the corner here? Because this was an expectation that you would start to see this and you did highlight some share gains, but just any other color on the dynamics of that business would be helpful.

No, Dean, there's significant momentum certainly across the three categories that I described, Semiconductors, aerospace and defense, which has been relatively robust over the last two years to begin with. The most encouraging has been the broad based portfolio business. That's where the multitude of tens of thousands of customers sit. It touches just about every industry macro that you can name. Seeing that resilience in that business and the return to growth there gives us, in broad based geography, the confidence that momentum continues and that our guide on test, the measurement for 2026 is solid.

Thank you. Our next question comes from line of Andrew Obin with Bank of America. Please proceed with your question.

Yes, good morning, this is David Ridley-Lane on for Andrew Obin. Just a quick numbers question. Can we get the orders growth process and hybrid discrete and safety and productivity in the quarter, and any color that you could give on how first quarter orders are shaping up?

I think from an orders perspective, process hybrid orders to your point, I mean they stayed resilient at mid single digits, discrete recovered too, driven by test and measurement which exposed in the discrete markets into a high single digit and weights to that 6% orders growth that we reported. S and P orders remained flat to low single digits in the quarter and we expect good momentum to carry through into the first quarter of this year.

You know, in fiscal 2025, excluding this timing dynamic which I completely understand is driven by ASC 606 and was a long-standing driver of how Aspen Tech results were reported. Excluding that impact, you had CoreOps of 110 basis points margin expansion in fiscal 2025. You're guiding for 80 basis points in fiscal 2026. It would seem like you have faster revenue growth, less tariff impact, further Aspen synergies. Are there any offsets to consider thinking. About for margins in 2026?

No, I don't think so. You've got it right. As we look ahead, you know, we've got the drag of the renewals, that's about 40 basis points. We've got some synergies and the operations continue to drive about 60 basis points which is what the operations have been driving for really the last two years right in that 50-60 basis points range. And that's the margin expansion that we consistently talk about driven by the Emerson management process and what we expect to continue into the future.

Thank you. Our next question comes from line of Andrew Kaplowitz with Citigroup. Please proceed with your question.

Michael, just digging a little bit more into that first half versus second half organic guide for 2026. The software growth mechanics are what they are. You also talked about the timing of shipments and how they support the second half growth. Are you expecting any sort of larger project order recovery and or change, for instance, you know, in process markets to get you there? Or is it really just you have the visibility already, you know, in the backlog and pipeline and everything? Just talk about the visibility there.

Yeah, Andrew, Ram here. Yes, we absolutely have the visibility and the momentum that we had in terms of orders in the second half phases that backlog into the second half of 2026. That's point number one. Secondly, if you take out the software renewal dynamic, as Michael explained, the first half growth is 4%, the second half growth is 6% for an overall growth of 5% minus the software renewal dynamic, which is the core growth you've got to look at. That sequential growth second half to first half versus that is about 11%, which is what we executed this year, albeit with a better backlog facing going into the second half of next year. We feel relatively comfortable around the second half first half guide.

The software renewal dynamic is what shows up as the 2 and 6, but in reality it's 4 and 6 for weighted average 5 through the year.

Thanks for that Ram. There's obviously a lot of excitement about how our markets, you gave us the data up almost 20% in orders in Q4, innovation, 30% for the year. Maybe you can give us a little more color on what you're expecting for 2026. Obviously there's particular focus on nuclear. You guys have pretty good share there. Maybe you can remind us of that. You know, order growth was a little bit lower in Q4 than for the year. Do you expect acceleration in 2026.

In that end market? Andrew, Lal here. Certainly we're excited about what we're seeing broadly, not just across generating capacity, but transmission, distribution investments, which as you know, impacts our Aspen business. We expect to continue to see investments across combined cycle in the United States, coal and nuclear in China, and nuclear prop based across Eastern Europe and the U.K. I think the underlying dynamics of demand, driven of course by data centers and by the age of the capacity that's in place today, should give us a good, and we project a very good three- to five-year run in this segment of the business at high single digits to low double digits growth.

Thank you. Our next question comes from the line of Steve Tusa with JPMorgan. Please proceed with your question.

Just wanted to clarify. Is the first quarter the first?

Quarter orders should kind of sustain this.

6% type of momentum that you saw in the 4Q.

Just on the bridges, you know, hard a bit to parse out the software impact, but I think you have $0.50 of ops for the year, which I think is probably, I don't know, a 45%-50% kind of core incremental.

Am I getting into the right ballpark there?

In the first quarter you only have $0.05. Is there a reason why those incrementals?

Kind of putting the software impact aside. 

Yeah. I think your leverage expectation is about right when you look at the core. That way when you look at first quarter, it's really this dynamic of last year being as strong as it was with that discretionary cost and some of the project closeouts and EBITDA margin that quarter believe was 28% and so it's sort of a comparison dynamic. Yeah.

Steve, yeah, we leveraged at 265% in the Q1 of 2025 and it just puts us in a, it's just a tough comparison. Not just even if you take out the software renewal dynamic, it's a tough comparison for our base operations, just given the dynamics mindset.

Thank you. Our next question comes from the line of Julian Mitchell with Barclays. Please proceed with your question.

Hi, good morning. I just wanted to follow up a little bit more on the trends in test and measurement and discrete automation. I think in test and measurement you're guiding still for high single digit growth later in the year despite the sort of pretty tough comp there. Maybe help us understand the visibility on that business and then in the discrete world. Any updates on some of the different end market trends, please?

Yeah. Hi Julian. I'll start and I'll have Ram add some color as well. Most certainly we have high degree of confidence in what we are seeing in three of the four test and measurement markets, aerospace and defense, semiconductor, and then the broad based portfolio business. However, and this leads over into your discrete question, the automotive business continues to be very weak. We're continuing to see weakness in the packaging machine making business which is very Western Europe dependent, Italy, Germany, and of course impacted in China and the US as well. That segment of what has been a traditional discrete market is in the flat to low single digit range and you've got test and measurement in that high range. That brings up all broad discrete orders. Ram.

Yeah, you said it. I think from a geographic cut on the test and measurement side, very, very strong Asia driven by semiconductor portfolio, a very, very strong North America driven by aerospace and defense semiconductors and portfolio business. Europe is probably our most muted region because that is where we have a disproportionate exposure to automotive and the EV side, though the aerospace and defense piece in Europe as well as the portfolio business is strong. In the core discrete business, as Lal described, North America is probably the market where we have good low to mid single digit growth in the core discrete business. Europe and China remain weak in the factory automation and automotive space as Lal described.

That's great, thanks very much. My follow up question would be around, I know in the past you'd mentioned some of the project funnel was tied to elements of such as hydrogen, clean fuels, carbon capture and so forth. I suppose domestically in the U.S. the outlook there is worse today because of the subsidy environment changing.

Activity, if you are seeing pushouts there yourselves and if it represents much of your backlog or it was just something that was in the prospective funnel and never really came into the orders or backlog more fully.

Julian, thanks for the question. Nothing impacted in the backlog. These were projects that we've been highlighting.

has been a significant reduction in the outlook of projects in this category on a forward basis. We have adjusted our funnel accordingly. None of it has been impacted in any backlog in the business. To give you perspective, the funnel that we show today at $11.1 billion has approximately a $1.5 billion reduction in S and D projects. We have removed a large number of carbon capture and energy management projects. We retain those customer engagements that are still relevant at that point. That is a very significant reduction in the value of the funnel related to S and D and that is broad based across North America, Europe, and Asia.

Julian, the reason the funnel stays flat is we have seen a significant uptick in power generation, certainly LNG and then continued build out of the funnel in aerospace and defense and certainly life sciences. Overall, the funnel remains flat. To your question, appropriately adjusted for the slowness in sustainability and decarbonization project, mostly in North America, but some in Europe as well.

Thank you. Our next question comes from the line of Nigel Coe with Wolfe Research. Please proceed with your question.

Good morning everyone. I'm going to probably ask a stupid question on the accounting for Aspen Tech, so please bear with me here. Can you just explain why this is a one time issue and just confirm that this is more of a first half 2025 renewal issue comping that as opposed to something this year? That's my main question, and really just maybe just talk about the difference in accounting for renewal versus a new contract and why renewals would have this kind of headwind. Thanks.

Yeah Nigel, it's not necessarily a one time event, it's again just how the renewal dates stack up in the portfolio of these multi year term contracts. When you go into a particular year, there's going to be a number of contracts that are up for renewal and whatever that is, it's sort of the revenue opportunity for that year. We are certainly in fact working a bit to smooth that out. Historically Aspen Tech was not concerned with the wrinkles that happen because of this accounting dynamic. Again, I want to stress it's nothing new and it's not a different accounting. It's just the GAAP that is used on accounting for these contract renewal dynamics.

Nigel Coe here just to add to that. Now, as you rightly pointed out, this dynamic is largely driven by the software renewals within Aspen Tech. One of the initiatives we will continue to drive going forward is to manage the renewals dates as we renew these contracts to smooth them out in a fashion where we do not see these dynamics repeat as we move forward. It is certainly going to be a tailwind in 2027 and 2028 given the reset in 2026, but we want to make sure that going beyond 2028 we do not have another year where we see these renewals build up in a favorable fashion to reverse in the next year. It is an initiative now that we are driving, the integration of Aspen Tech that Vincent Cervelo and the team at Aspen Tech are driving.

No, it was a dumb question, I'm sure. Just thinking about that in the plan, the acceleration within ID from 3.3% to 5% first half, second half, you called out some backlog timing. Clearly with that kind of timing, we're talking here about longer cycle projects. I'm wondering, are these greenfield projects and if you can give any details on some of the M marks just driving that acceleration.

Yeah, Nigel Coe here. Again, I'll reiterate a point that Ram and Michael made earlier. It's important to note that, adjusted for the renewals, the first half to second half ramp is actually consistent with what we executed in 2025, which is a sequentially 11% ramp up. It would be 4% growth in the first half and 6% in the second half of a 5% year. That renewal dynamic, because it is predominantly first half loaded, really impacts and skews that ramp up on the underlying business. To your point, we feel great about the backlog situation. We have good visibility in our intelligent device business to execute this plan that we put forward.

The projects that you referenced that are loaded into the second half that we won in 2H25 are in life sciences, in power, in LNG. Many examples that Lal, you know, had in his script. These are the very same projects, primarily power, LNG, and life sciences, that will phase into 2H26.

Thank you. Our next question comes from the line of Amit Mehrotra with UBS. Please proceed with your question.

Emerson Electric (EMR) Q4 2025 Earnings Call Transcript

Company Participants