Summary
Emerson Electric Co. (EMR) reported its financial results for the period ending March 31, 2017, showcasing a company undergoing significant strategic repositioning. While net sales remained largely flat year-over-year for the quarter, the company saw improved earnings from continuing operations, driven by the Commercial & Residential Solutions segment. However, significant impacts from discontinued operations, primarily the sales of its network power systems and power generation, motors and drives businesses, led to a notable decline in reported net earnings and EPS. The company's balance sheet reflects the substantial cash inflows from these divestitures, leading to improved working capital and a significantly lower debt-to-capital ratio. Management is focused on integrating recent acquisitions, such as Pentair's valves & controls business, and expects continued improvement in its Automation Solutions segment in the latter half of the fiscal year. Investors should note the divergence between the performance of continuing operations and the reported net results due to the substantial divestiture activities.
Financial Highlights
52 data points| Revenue | $3.57B |
| Cost of Revenue | $2.02B |
| Gross Profit | $1.56B |
| SG&A Expenses | $868.00M |
| Operating Income | $376.00M |
| Net Income | $292.00M |
| EPS (Basic) | $0.45 |
| EPS (Diluted) | $0.45 |
| Shares Outstanding (Basic) | 643.60M |
| Shares Outstanding (Diluted) | 644.80M |
Key Highlights
- 1Net sales for the second quarter were flat year-over-year at $3.57 billion, while the six-month sales decreased by 2% to $6.79 billion, reflecting ongoing portfolio transformation.
- 2Earnings from continuing operations common stockholders increased by 2% to $376 million for the quarter and 10% to $740 million for the six months, driven by improved performance in Commercial & Residential Solutions.
- 3Net earnings common stockholders saw a significant decrease of 21% to $292 million for the quarter and 16% to $601 million for the six months, heavily impacted by losses from discontinued operations.
- 4The company completed the sale of its network power systems business for $4 billion and its power generation, motors and drives business for $1.2 billion, which are now reported as discontinued operations.
- 5Balance sheet improvements include a substantial increase in cash and equivalents to $5.04 billion and a significant reduction in the total debt-to-total capital ratio to 33.7% from 46.7%, largely due to proceeds from divestitures.
- 6The company completed the acquisition of Pentair's valves & controls business for $3.15 billion on April 28, 2017, which is expected to complement its Automation Solutions segment.
- 7Full-year fiscal 2017 guidance projects net sales to be approximately flat, with underlying sales up 1% and earnings per share from continuing operations expected between $2.55 and $2.65.