Emerson Electric Co. (NYSE:EMR) Q4 2023 Earnings Call Transcript

Lal Karsanbhai: Yeah, no, we certainly expect MRO in the 60% range for 2024, Andy. You’re absolutely right. It’s the most pricing elastic portion of our business. It’s typically replaced like for like within processes. And so we feel we have a great understanding of where the $150 billion of install base is located and we have specific programs across our service organizations and selling organizations to ensure that we mine that and that we keep that product evergreen. So I feel good about that, but in that 60% range, I think would be the right expectation.

Andy Kaplowitz: Appreciate it guys.

Lal Karsanbhai: Thanks, Andy.

Operator: The next question comes from Tommy Moll with Stephens. Please go ahead.

Tommy Moll: Good morning and thank you for taking my questions.

Lal Karsanbhai: Hi, Tommy.

Tommy Moll: Well I wanted to start with a follow-up on discrete. You’ve called out the weakness there previously. Obviously it’s been front and center today. So I’m just curious, were there incremental pockets of weakness you picked up through the last quarter and then as you look through to the second half of the coming fiscal year where you expect a return to growth, is the visibility there more just a comps issue or are there some green shoots in terms of the real underlying demand that you can call out at this point?

Lal Karsanbhai: No. So a couple of things. What we’re experiencing through the quarter or we have experienced through the quarter is demand-driven weakness. As Ram accurately portrayed, it’s not as the stocking element. As a matter of fact, a very small percentage of our business runs through stocking distributors in the discrete side. But nevertheless, it’s demand that we really focus on, and it’s global weakness across the key markets. Now having said that, the comparables do get easier as we get into the second half. We’re not counting on underlying demand conditions in the discrete market significantly improving in the second half. What we’re benefiting from is obviously the [competitors] (ph) for us.

Tommy Moll: Makes sense. And then if I look at the consolidated outlook you’ve provided for the first quarter and then the full year, you’re starting the year in the high single-digit range, full year in the mid-single-digit range. So there’s some deceleration implied there. Is there some conservatism around there, just given the issues you’ve called out on the discrete side? Are there comp items that you would point out for us?

Lal Karsanbhai: There’s nothing extraordinary other than we’ve got to be cautious on the discrete cycle.

Tommy Moll: Great. We appreciate the insight, and I’ll turn it back.

Lal Karsanbhai: Thanks, Tommy.

Operator: This concludes our question-and-answer session. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.