What were the main drivers of Emerson Electric's sales growth in the nine months ended June 30, 2006?

Sales growth was driven by a combination of factors: a 13% increase in underlying sales stemming from higher volume (9%), market penetration gains (3%), and price increases (1%). Additionally, acquisitions contributed significantly with a nearly 4% increase in sales. Growth was robust across all five business segments, with particular strength in Network Power, Process Management, and Industrial Automation, supported by favorable economic conditions.

How did the company's acquisitions impact its financial performance during this period?

Acquisitions were a significant contributor to growth, particularly in the Network Power segment with the additions of Artesyn Technologies and Knürr AG. These acquisitions, along with others like Bristol Babcock in Process Management, contributed approximately $485 million to net sales in the first nine months of fiscal 2006, fueling segment expansion and overall company revenue growth.

What is the company's outlook for the remainder of fiscal year 2006?

Emerson Electric provided a positive outlook, expecting full-year sales to be approximately $20 billion. Earnings per share for fiscal 2006 are projected to be in the range of $4.33 to $4.38. The company also anticipates operating cash flow of $2.5 billion and capital expenditures of $0.6 billion.

How has Emerson Electric managed its financial position and capital structure?

The company's financial position remains strong. The ratio of total debt to total capital decreased to 33.7%, and the interest coverage ratio improved significantly to 12.6 times due to higher earnings. Emerson also secured a new $2.8 billion five-year revolving credit facility in April 2006 to support general corporate purposes and continues its share repurchase program, having bought back 3.7 million shares in the third quarter of fiscal 2006.

EMR 10-Q Quarterly Report Q3 FY2006 — Revenue, Net Income, EPS

Summary

Emerson Electric Co. reported strong financial results for the nine months ended June 30, 2006, with net sales increasing by 15% to $14.6 billion and net earnings rising by 31% to $1.3 billion. This growth was driven by broad-based strength across all five business segments, favorable economic conditions, and strategic acquisitions, particularly in the Network Power segment. The company's financial position remains robust, with a decrease in total debt to total capital and a significant increase in interest coverage ratio. Key drivers for the period included a substantial increase in underlying sales driven by volume, market penetration, and price increases, alongside significant contributions from acquisitions. The company is actively managing its capital structure, demonstrated by its revolving credit facility and ongoing share repurchase programs. Management provided an optimistic outlook, projecting full-year sales of approximately $20 billion and earnings per share between $4.33 and $4.38, indicating continued confidence in its growth trajectory and operational efficiency.

Key Highlights

1Net sales for the nine months ended June 30, 2006, increased 15% to $14.6 billion, with broad-based growth across all business segments.
2Net earnings grew by 31% to $1.3 billion for the nine-month period, reflecting strong operational performance and strategic initiatives.
3The Network Power segment experienced significant sales growth of 30%, driven by strong demand and acquisitions, contributing substantially to overall results.
4Acquisitions played a key role, with contributions from new businesses like Artesyn Technologies and Knürr AG bolstering segment performance, particularly in Network Power.
5The company reported a strong financial position, with total debt to total capital decreasing to 33.7% and an improved interest coverage ratio of 12.6 times.
6Free cash flow for the first nine months increased by 18% to $1.13 billion, demonstrating effective cash generation.
7Emerson Electric raised its full-year fiscal 2006 outlook, expecting sales of approximately $20 billion and earnings per share in the range of $4.33 to $4.38.

EMERSON ELECTRIC CO Quarterly Report for Q3 Ended Jun 30, 2006

Summary

Key Highlights

Frequently Asked Questions