EMR · 10-Q · 2026Q2 · Full report

Gross Margin Drivers

EMERSON ELECTRIC CO · 2026-08-04 · Importance 57 · Surprise 50

Nine-month gross profit increased $388 million to $7.4 billion, and gross margin expanded 0.4 percentage points to 53.6%. The improvement reflected favorable price less net material inflation and $82 million of IEEPA tariff refunds, partly offset by software-renewal timing. Third-quarter gross margin increased 1.9 percentage points to 54.5%, primarily because the company recorded the $82 million tariff refund in cost of sales. The tariff refund contributed $0.11 to third-quarter earnings per share, while additional potential refunds were not recognized.

Key facts

• Q3 FY2026 cost of sales: $2,218, an increase of $58 compared with 2025. source
• Nine months cost of sales: $6,393, an increase of $232 compared with 2025; gross margin 53.6 percent, increased 0.4 percentage points. source
• Q3 FY2026 gross margin: 54.5 percent, increased 1.9 percentage points versus prior year. source
• Gross margin increased primarily due to the tariff refunds discussed above. source