Summary
Emerson Electric Co. reported strong financial performance for the nine months and third quarter ended June 30, 2011, showing significant growth in net sales and earnings compared to the prior year. Net sales increased by 16% year-over-year for both periods, driven by a 12% increase in underlying sales and contributions from acquisitions and favorable foreign currency translation. Earnings from continuing operations common stockholders saw substantial growth of 22% for the nine months and 18% for the third quarter. The company's financial condition remains robust, with improved working capital, a strong current ratio, and a healthy interest coverage ratio. The company highlighted positive trends across most of its business segments, particularly Process Management and Industrial Automation, which experienced robust sales and earnings growth. However, the Network Power segment faced challenges, with earnings declining due to market weakness in China, unfavorable product mix, and increased amortization costs from recent acquisitions. Despite these segment-specific headwinds, Emerson maintains a positive outlook, forecasting diluted earnings per share between $3.20 and $3.30 for fiscal year 2011.
Financial Highlights
53 data points| Revenue | $6.29B |
| Cost of Revenue | $3.79B |
| Gross Profit | $2.50B |
| SG&A Expenses | $1.36B |
| Operating Income | $683.00M |
| Net Income | $683.00M |
| EPS (Basic) | $0.91 |
| EPS (Diluted) | $0.90 |
| Shares Outstanding (Basic) | 748.70M |
| Shares Outstanding (Diluted) | 753.30M |
Key Highlights
- 1Net sales for the nine months ended June 30, 2011, increased by 16% to $17.7 billion, driven by a 12% rise in underlying sales and contributions from acquisitions and currency effects.
- 2Diluted Earnings Per Share (EPS) from continuing operations for the nine months increased by 22% to $2.26, indicating strong profitability growth.
- 3The company reported a significant improvement in its Interest Coverage Ratio, increasing to 14.3X for the nine months of 2011 from 10.7X in the prior year, signaling enhanced ability to service debt.
- 4Gross margin remained stable at 39.4% for the nine months, despite higher materials costs, showcasing effective pricing strategies and volume leverage.
- 5The Process Management and Industrial Automation segments were key growth drivers, with sales up 15% and 25% respectively for the nine months, and earnings increasing significantly by 24% and 56%.
- 6The Network Power segment experienced a 7% decline in earnings for the nine months due to challenges in the China market and increased amortization costs from acquisitions, despite a 20% sales increase.
- 7Emerson generated $1,978 million in operating cash flow for the nine months, though this was a slight decrease from the prior year, attributed to increased investment in working capital.