Discontinued Operations and Disposal Groups

3 Months Ended

Dec. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

In October 2022, the Board of Directors approved the Company's announced agreement to sell 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 will receive upfront, pre-tax cash proceeds of approximately $9.5 billion and a note of $2.25 billion at close (which will accrue 5 percent interest payable in kind by capitalizing interest), while retaining a 45 percent non-controlling interest 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 transaction is expected to close in the first half of calendar year 2023, subject to regulatory approvals and customary closing conditions.

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 $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 months ended December 31, 2022 and 2021 and were as follows:

	Climate Technologies				ISE and TOD				Total
	Three Months Ended December 31,				Three Months Ended December 31,			Three Months Ended December 31,
		2021		2022		2021	2022		2021	2022
Net sales		$	1,079	1,064		238	49		1,317	1,113
Cost of sales		762		702		148	29		910	731
SG&A		127		142		35	8		162	150
Gain on sale of business		—		—		—	(2,780)		—	(2,780)
Other deductions, net		6		32		6	12		12	44
Earnings (Loss) before income taxes		184		188		49	2,780		233	2,968
Income taxes		39		313		45	653		84	966
Earnings (Loss), net of tax		$	145	(125)		4	2,127		149	2,002

Climate Technologies' results for the three months ended December 31, 2022 include lower expense of $27 due to ceasing depreciation and amortization upon the held-for-sale classification. Other deductions, net for Climate Technologies included $27 of transaction-related costs for the three months ended December 31, 2022. Income taxes for the three months ended December 31, 2022 included approximately $275 for Climate Technologies subsidiary restructurings 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 December 31, 2022 and September 30, 2022 are summarized as follows:

	Climate Technologies				ISE			Total
		Sept. 30,		Dec. 31,		Sept. 30,	Dec. 31,		Sept. 30,	Dec. 31,
Assets		2022		2022		2022	2022		2022	2022
Receivables		$	747	608		68	—		815	608
Inventories		449		541		81	—		530	541
Other current assets		49		60		4	—		53	60
Property, plant & equipment, net		1,122		1,093		141	—		1,263	1,093
Goodwill		716		720		2	—		718	720
Other noncurrent assets		265		350		12	—		277	350
Total assets held-for-sale		$	3,348	3,372		308	—		3,656	3,372
Liabilities
Accounts payable		$	752	733		60	—		812	733
Other current liabilities		475		467		61	—		536	467
Deferred taxes and other      noncurrent liabilities		154		151		13	—		167	151
Total liabilities held-for-sale		$	1,381	1,351		134	—		1,515	1,351

Net cash from operating and investing activities for Climate Technologies, InSinkErator and Therm-O-Disc for the three months ended December 31, 2022 and 2021 were as follows:

	Climate Technologies				ISE and TOD				Total
	Three Months Ended December 31,				Three Months Ended December 31,			Three Months Ended December 31,
		2021		2022		2021	2022		2021	2022
Cash from operating activities		$	132	205		14	(89)		146	116
Cash from investing activities		$	(35)	(43)		(9)	2,996		(44)	2,953

Cash from operating activities reflects the payment of ISE transaction fees and unfavorable working capital. Cash from investing activities for the three months ended December 31, 2022 reflects the proceeds of $3.0 billion related to the InSinkErator divestiture.