Discontinued Operations and Disposal Groups

9 Months Ended

Jun. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONSOn May 31, 2023, the Company completed the previously announced sale of a majority stake in its Climate Technologies business (which constitutes the former Climate Technologies segment, excluding Therm-O-Disc which was divested earlier in fiscal 2022) to private equity funds managed by Blackstone in a $14.0 billion transaction. Emerson received upfront, pre-tax cash proceeds of approximately $9.7 billion (an increase of $0.2 billion from when the transaction was announced due to Blackstone's decision to purchase an additional 5 percent of the common equity) and a note receivable with a face value of $2.25 billion (which will accrue 5 percent interest payable in kind by capitalizing interest), while retaining a 40 percent non-controlling common equity interest (down from 45 percent when the transaction was announced) in a new standalone joint venture between Emerson and Blackstone. The Climate Technologies business, which includes the Copeland compressor business and the entire portfolio of products and services across all residential and commercial HVAC and refrigeration end-markets, had fiscal 2022 net sales of approximately $5.0 billion and pretax earnings of $1.0 billion. The Company recognized a pretax gain of approximately $10.6 billion (approximately $8.4 billion after-tax including tax expense recognized in prior quarters related to subsidiary restructurings). The new standalone business is named Copeland. See Note 10 for further details.

On October 31, 2022, the Company completed the divestiture of its InSinkErator business, which manufactures food waste disposers, to Whirlpool Corporation for $3.0 billion. This business had net sales of $630 and pretax earnings of $152 in fiscal 2022. The Company recognized a pretax gain of approximately $2.8 billion (approximately $2.1 billion after-tax) in the first quarter of fiscal 2023.

On May 31, 2022 the Company completed the divestiture of its Therm-O-Disc sensing and protection technologies business to an affiliate of One Rock Capital Partners, LLC. The Company recognized a pretax gain of $486 ($429 after-tax) in the third fiscal quarter of 2022.

The financial results of Climate Technologies, InSinkErator ("ISE") and Therm-O-Disc ("TOD") (through the completion of the divestitures), are reported as discontinued operations for the three and nine months ended June 30, 2023 and 2022 and were as follows:

	Climate Technologies				ISE and TOD				Total
	Three Months Ended June 30,				Three Months Ended June 30,			Three Months Ended June 30,
		2022		2023		2022	2023		2022	2023
Net sales		$	1,325	847		215	—		1,540	847
Cost of sales		892		516		137	—		1,029	516
SG&A		129		122		29	—		158	122
Gain on sale of business		—		(10,576)		—	—		—	(10,576)
Other deductions, net		14		8		(478)	—		(464)	8
Earnings before income taxes		290		10,777		527	—		817	10,777
Income taxes		63		2,014		57	—		120	2,014
Earnings, net of tax		$	227	8,763		470	—		697	8,763
	Climate Technologies				ISE and TOD				Total
	Nine Months Ended June 30,				Nine Months Ended June 30,			Nine Months Ended June 30,
		2022		2023		2022	2023		2022	2023
Net sales		$	3,659	3,156		698	49		4,357	3,205
Cost of sales		2,520		2,000		443	29		2,963	2,029
SG&A		383		391		98	8		481	399
Gain on sale of business		—		(10,576)		—	(2,783)		—	(13,359)
Other deductions, net		26		75		(465)	12		(439)	87
Earnings before income taxes		730		11,266		622	2,783		1,352	14,049
Income taxes		158		2,366		102	653		260	3,019
Earnings, net of tax		$	572	8,900		520	2,130		1,092	11,030

Climate Technologies' results for the three and nine months ended June 30, 2023 include lower expense of $26 and $96, respectively, due to ceasing depreciation and amortization upon the held-for-sale classification. Other deductions, net for Climate Technologies included $57 of transaction-related costs for the nine months ended June 30, 2023. Income taxes for the nine months ended June 30, 2023 included approximately $2.2 billion for the gain on the Copeland transaction and subsidiary restructurings in prior quarters, and approximately $660 related to the gain on the InSinkErator divestiture.

The aggregate carrying amounts of the major classes of assets and liabilities classified as held-for-sale as of June 30, 2023 and September 30, 2022 are summarized as follows:

	Climate Technologies				ISE			Total
		Sept. 30,		June 30,		Sept. 30,	June 30,		Sept. 30,	June 30,
Assets		2022		2023		2022	2023		2022	2023
Receivables		$	747	—		68	—		815	—
Inventories		449		—		81	—		530	—
Other current assets		49		—		4	—		53	—
Property, plant & equipment, net		1,122		—		141	—		1,263	—
Goodwill		716		—		2	—		718	—
Other noncurrent assets		265		—		12	—		277	—
Total assets held-for-sale		$	3,348	—		308	—		3,656	—
Liabilities
Accounts payable		$	752	—		60	—		812	—
Other current liabilities		475		—		61	—		536	—
Deferred taxes and other      noncurrent liabilities		154		—		13	—		167	—
Total liabilities held-for-sale		$	1,381	—		134	—		1,515	—

Net cash from operating and investing activities for Climate Technologies, InSinkErator and Therm-O-Disc for the nine months ended June 30, 2023 and 2022 were as follows:

	Climate Technologies				ISE and TOD				Total
	Nine Months Ended June 30,				Nine Months Ended June 30,			Nine Months Ended June 30,
		2022		2023		2022	2023		2022	2023
Cash from operating activities		$	486	156		(16)	(595)		470	(439)
Cash from investing activities		$	(112)	9,430		551	3,055		439	12,485

Cash from operating activities for the nine months ended June 30, 2023 reflects approximately $750 of income taxes paid related to the gain on the InSinkErator divestiture and the Climate Technologies subsidiary restructurings and the impact from transaction fees. Cash from investing activities for the nine months ended June 30, 2023 reflects the proceeds of approximately $9.7 billion related to the Copeland transaction and approximately $3.0 billion related to the InSinkErator divestiture.