Emerson's fiscal Q3 2026 sales rose 7% (6% underlying) to $4.87B and diluted EPS rose to $1.28 from $1.04, helped by an $82M tariff refund; adjusted EPS of $1.71 (+13%) beat guidance and full-year guidance was raised.
Revenue
$4.9B
+7.0% YoY
Net income
$718M
+22.5% YoY
Diluted EPS
$1.28
+23.1% YoY
Operating margin
18.8%
Overview
Emerson's fiscal third quarter of 2026 (the three months to June 30, 2026 — Emerson's fiscal year ends in September) was its strongest quarter of the year so far. Net sales rose 7% to $4.87 billion, and underlying sales — growth after stripping out currency swings and acquisitions or divestitures, so it shows how much more the existing business actually sold — rose 6%, split evenly between 3 points of higher volume and 3 points of higher prices. That is a sharp step up from the 0.5% underlying growth Emerson reported in fiscal Q2.
Profit grew faster than sales. Net earnings for common stockholders rose 23% to $718 million and diluted earnings per share (EPS) rose to $1.28 from $1.04. Part of that jump, though, is a one-off: Emerson received $82 million of refunds on tariffs it had paid, after the U.S. Supreme Court ruled in February 2026 that the International Emergency Economic Powers Act (IEEPA) does not authorize tariffs. Emerson booked the refund as lower cost of sales, and it is worth $0.11 per share. Management's adjusted EPS, which removes the refund along with acquisition-related amortization and restructuring costs, rose 13% to $1.71 — above the $1.65–$1.70 range management had guided to in May. On the back of the quarter, Emerson raised its full-year outlook.
Key metrics
Metric
Fiscal Q3 2026
Fiscal Q3 2025
YoY Change
Net sales
$4,873M
$4,553M
+7.0%
Underlying sales growth
+6%
—
—
Underlying orders growth (excl. AspenTech)¹
+7%
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¹ From Emerson's August 4, 2026 earnings release (8-K Exhibit 99.1); all other figures from the 10-Q. ² Emerson's income statement has no separate operating-income line, so pretax earnings from continuing operations as a share of sales is used as the margin measure here. Percentage changes are computed from the reported dollar figures; Emerson's own rounded figures are 23% (net earnings), 24% (continuing-operations EPS) and 13% (adjusted EPS).
Takeaway: The underlying quarter was genuinely good — 6% organic growth, 7% order growth and adjusted EPS above guidance — but the headline profit jump overstates it. Take out the $82 million tariff refund and the gross-margin improvement shrinks from 1.9 points to roughly 0.2 points, and GAAP EPS growth falls from 24% to about 14% (our arithmetic: $1.28 minus the $0.11 refund, versus $1.03). The real sources of earnings growth this quarter were higher volume and cost cuts, not a step-change in pricing power.
What drove the quarter
The tariff refund flatters gross margin. Gross margin — the share of revenue left after the direct cost of making the products — rose 1.9 points to 54.5%, and the 10-Q says this was "primarily due to the tariff refunds." The $82 million refund alone is about 1.7 points of Q3 sales. Emerson has not recognized any further IEEPA refunds, saying their timing and amount "remain uncertain," so it should not be expected to repeat in Q4 (the Q4 guidance has no refund line).
Operating costs grew slower than sales. Selling, general and administrative (SG&A) expenses rose 6% to $1,343 million, slightly slower than sales, taking SG&A down to 27.6% of sales from 27.8%; the filing credits leverage on higher sales and savings from cost-cutting. Restructuring and related costs more than doubled to $99 million from $41 million (Final Control alone booked $48 million), which held back GAAP segment earnings. Emerson now expects about $185 million of restructuring spending for the full fiscal year.
Lower interest, slightly higher tax rate. Net interest expense fell to $85 million from $95 million. The effective tax rate edged up to 22% from 21%; the filing says the 2025 federal tax law (the "One Big Beautiful Bill Act") added about 1 point by reducing a deduction on foreign-derived income, and expects the law to slightly help the rate from fiscal 2027.
Geography. Underlying sales rose 10% in the U.S. and 4% internationally. The Americas were up 8%, Asia, Middle East & Africa up 8% (China down 3%), and Europe down 1%.
Segment performance
Emerson reorganized its reporting at the start of fiscal 2026 into three business groups with five segments; prior-year numbers have been restated to match. Segment earnings are earnings before interest and tax. Adjusted EBITA is Emerson's preferred profit measure: segment earnings with amortization of acquired intangibles (an accounting charge left over from past acquisitions) and restructuring costs added back.
Segment
Q3 FY26 sales
YoY reported
YoY underlying
Q3 FY26 adj. EBITA margin
Q3 FY25 adj. EBITA margin
Control Systems & Software
$1,199M
+7%
+7%
32.6%
35.2%
Test & Measurement
$445M
+23%
+23%
29.6%
22.4%
Software & Systems
$1,644M
+11%
+11%
31.8%
32.1%
Sensors
$1,091M
+8%
+7%
29.7%
25.6%³
Final Control
$1,586M
+4%
+3%
26.7%
25.6%³
Intelligent Devices
$2,677M
+6%
+5%
27.9%
25.5%
Safety & Productivity
$552M
+3%
+2%
21.2%
20.4%
³ Our calculation from the 10-Q's prior-year segment earnings, amortization and restructuring figures; all other margins as reported by Emerson.
Software & Systems (+11% underlying). Volume did most of the work here (7 points of volume, 4 of price). Test & Measurement — the former National Instruments business Emerson bought in 2023 — was the standout: sales up $85 million, or 23%, on semiconductor and aerospace & defense demand. That swung the segment from a $26 million GAAP loss a year ago to $11 million of earnings, and its adjusted EBITA margin rose from 22.4% to 29.6%. This is the clearest evidence so far that the NI integration is paying off: the business carries about $108 million a quarter of acquisition amortization and still turned a GAAP profit.
Control Systems & Software, which now includes AspenTech (Emerson bought out AspenTech's minority shareholders for about $7.2 billion in March 2025), grew sales 7% on "strong demand in power," but its adjusted EBITA was flat at $391 million versus $393 million, so its margin fell 2.6 points. The filing gives no quarter-specific reason. Over nine months it cites "the timing of software renewals," which cut Software & Systems' underlying growth by about 3 points and its adjusted margin by about 2 points year to date. That is why the group's combined adjusted margin slipped 0.3 points despite Test & Measurement's gains.
Intelligent Devices (+5% underlying). Emerson's largest group grew on 3 points of price and 2 of volume. Sensors (underlying +7%) benefited from power and liquefied natural gas (LNG) projects in the Americas; Final Control (valves and actuators, underlying +3%) grew in Asia, Middle East & Africa and the Americas, also on power. China fell 8%. GAAP earnings rose 9% to $652 million, and adjusted EBITA margin rose 2.4 points to 27.9%. The filing flags a mix headwind from more greenfield project work (equipment for newly built plants, which earns less than replacement parts and upgrades) — worth watching if LNG and power build-outs keep driving growth.
Safety & Productivity (+2% underlying). This is the weak spot: 4 points of price offset by 2 points of lower volume, with Europe down 6%. GAAP earnings fell 10% to $93 million, mainly on $17 million of restructuring; before restructuring and amortization, the adjusted EBITA margin rose 0.8 points to 21.2%.
Orders and backlog
Underlying orders rose 7% (earnings release; this measure excludes AspenTech), which CEO Lal Karsanbhai said was "led by Software & Systems and broad-based growth in North America and Asia." Emerson's backlog of contracted-but-undelivered work was about $9.6 billion at June 30, roughly 75% of which it expects to turn into revenue within 12 months. With orders growing slightly faster than sales, Q4 starts from a healthy position.
Fiscal year to date (nine months to June 30, 2026)
Metric
9M FY26
9M FY25
Change
Net sales
$13,781M
$13,161M
+5%
Underlying sales growth
+3%
—
—
Earnings from continuing ops, common stockholders
$1,941M
$1,650M
+18%
Diluted EPS, continuing operations
$3.45
$2.91
+19%
Adjusted diluted EPS
$4.71
$4.38
+8%
Free cash flow
$2,618M
$2,401M
+9%
The nine-month GAAP comparison is flattered by the prior year's AspenTech buyout costs: acquisition/divestiture fees fell $175 million year over year, and the prior-year tax rate (25% vs. 22% now) carried $49 million of AspenTech-related discrete tax items. Working the other way, net interest expense rose $113 million to $258 million because of the borrowing used to fund the AspenTech buyout. Year to date, underlying volume was held back by about 1.5 points from software-renewal timing and the conflict in the Middle East.
Portfolio changes and discontinued operations
The portfolio reshaping is essentially finished. Discontinued operations contributed nothing this quarter, versus $6 million a year ago; they relate to the former Climate Technologies business (now Copeland), whose majority stake Emerson sold to Blackstone in 2023 and whose remaining 40% stake it sold for $1.5 billion in August 2024. That is why total and continuing-operations earnings are identical this year. The prior year's nine-month operating cash flow was reduced by $585 million of taxes paid on the Copeland stake sale, which explains most of the $814 million rise in total operating cash flow this year. With the AspenTech buyout done, Emerson says it is pivoting capital allocation to returning cash to shareholders: it bought back $357 million of stock in Q3 and $898 million over nine months.
Guidance and outlook
Emerson raised its fiscal 2026 outlook (all figures approximate):
FY2026 guidance
May 5, 2026
August 4, 2026
Net sales growth
~4.5%
~5%
Underlying sales growth
~3%
~3.5%
GAAP EPS
$4.79–$4.89
~$4.89
Adjusted EPS
$6.45–$6.55
~$6.55
Operating cash flow
$4.0–$4.1B
~$4.1B
Free cash flow
$3.5–$3.6B
~$3.6B
For fiscal Q4, Emerson guides to about 5% underlying sales growth and adjusted EPS of about $1.85 (GAAP EPS about $1.45). The raise is modest — effectively a move to the top of the prior ranges — and the GAAP EPS guide of $4.89 now includes the $0.11 tariff refund. Excluding the refund, the implied GAAP figure (about $4.78, our arithmetic) sits just below May's $4.79–$4.89 range, mainly because expected restructuring costs rose to about $0.24 per share from about $0.18.
Our view: The quarter's quality sits in Test & Measurement's recovery and in orders outpacing sales, which together support the ~5% Q4 underlying growth guide. The things to watch are whether software-renewal timing in Control Systems & Software normalizes (its margin fell 2.6 points this quarter), whether the mix drag from greenfield LNG and power projects in Intelligent Devices grows, and whether Safety & Productivity's volume declines continue. Any further IEEPA tariff refunds should be read as one-time items rather than a margin trend.
Source: Emerson Electric Co. Form 10-Q for the quarter ended June 30, 2026 (filed August 4, 2026). Orders, free cash flow, segment-level margins and current guidance are from the company's earnings release of the same date (8-K Exhibit 99.1); prior guidance is from its May 5, 2026 release.