10-KPeriod: FY2015

EMERSON ELECTRIC CO Annual Report, Year Ended Sep 30, 2015

Filed November 18, 2015For Securities:EMR

Summary

Emerson Electric Co.'s 2015 10-K filing reveals a company undergoing significant strategic repositioning. The company announced plans to spin off its Network Power systems business, a move aimed at streamlining its portfolio and enhancing growth potential. This strategic shift is coupled with exploring alternatives for its power generation and motors, drives, and residential storage businesses, indicating a focused effort to refine its core offerings. Financially, the company demonstrated resilience despite a decrease in net sales for the fiscal year ended September 29, 2015, compared to prior years. However, earnings from continuing operations saw a substantial increase, driven in part by gains from divestitures. This highlights the immediate positive impact of its portfolio adjustments on profitability. Investors should monitor the execution and success of these significant strategic transactions, as they are expected to reshape the company's future structure and market position.

Financial Highlights

57 data points
Beta

Revenue

$16.25B

43.1% Gross Margin

Net Income

$2.71B

16.7% Net Margin

EPS (Diluted)

$3.99

Total Assets

$22.09B

Cash & Equivalents

$3.05B

Free Cash Flow

$1.94B

Financial Statements
Beta
Revenue$16.25B
Cost of Revenue$9.24B
Gross Profit$7.01B
R&D Expenses$336.00M
SG&A Expenses$3.73B
Operating Income$2.52B
Net Income$2.71B
EPS (Basic)$4.01
EPS (Diluted)$3.99
Shares Outstanding (Basic)673.30M
Shares Outstanding (Diluted)676.50M

Key Highlights

  • 1Emerson announced a strategic plan to spin off its Network Power systems business, signaling a major portfolio restructuring.
  • 2The company is exploring strategic alternatives, including potential sales, for its power generation and motors, drives, and residential storage businesses.
  • 3Net sales decreased to $22,304 million in 2015 from $24,537 million in 2014, reflecting the ongoing divestiture activities.
  • 4Earnings from continuing operations increased significantly to $2,710 million in 2015, up from $2,147 million in 2014, partly due to gains from divestitures.
  • 5The Process Management segment was the largest contributor to sales in 2015, accounting for 37% of the total.
  • 6The United States and Canada represented the largest geographic market, with 48% of total sales in 2015.
  • 7Consolidated order backlog decreased to $5,986 million in 2015 from $6,714 million in 2014, influenced by business divestitures.

Frequently Asked Questions

Emerson is undertaking a significant strategic repositioning. The most prominent initiative is the planned spin-off of its Network Power systems business. Additionally, the company is exploring strategic alternatives, such as potential sales, for its power generation and motors, drives, and residential storage businesses. These actions are designed to streamline the company's portfolio, enhance growth potential, and accelerate value creation for shareholders.

In the fiscal year ended September 29, 2015, Emerson Electric Co. experienced a decrease in net sales, reporting $22,304 million compared to $24,537 million in the previous year. However, earnings from continuing operations showed a substantial increase, reaching $2,710 million, up from $2,147 million in 2014. This improvement in earnings was partly attributed to gains from divestitures of businesses.

Emerson Electric operates through five main business segments: Process Management, Industrial Automation, Network Power, Climate Technologies, and Commercial & Residential Solutions. The Process Management segment was the largest contributor to sales in 2015, representing 37% of the total revenue.

The company acknowledges several risks related to its strategic transactions, including the potential for delays in completion, failure to achieve expected terms or costs, and the possibility that the transactions may not be completed at all. Even if completed, there's a risk that the intended strategic and financial benefits may not be realized. Furthermore, the resulting smaller, less diversified companies might be more vulnerable to market conditions, and there's a potential loss of synergies between the separated businesses.