Summary
Emerson Electric Co. reported its financial results for the fiscal second quarter ending March 31, 2020, a period significantly impacted by the global COVID-19 pandemic and a sharp decline in oil prices. Net sales for the quarter decreased by 9% to $4.2 billion, driven by a 7% decline in underlying sales due to lower volume across most end markets and geographies, exacerbated by the pandemic. Despite the revenue contraction, net earnings attributable to common stockholders saw a slight decrease of 1% to $517 million, resulting in diluted earnings per share remaining flat at $0.84 year-over-year. This resilience in earnings was partly attributed to lower stock compensation expenses and favorable foreign currency transactions, which offset the negative impacts of reduced demand and increased restructuring costs. Looking at the first six months of the fiscal year, net sales declined by 5% to $8.3 billion, and net earnings attributable to common stockholders fell by 14% to $843 million, with diluted EPS down 13% to $1.37. The company has taken proactive steps to manage liquidity and financial condition in response to the uncertain economic environment, including increasing cash holdings, reducing capital expenditures, and suspending share repurchases. Emerson provided a cautious outlook for the remainder of fiscal year 2020, forecasting continued demand deterioration and anticipating a challenging recovery period.
Financial Highlights
52 data points| Revenue | $4.16B |
| Cost of Revenue | $2.41B |
| Gross Profit | $1.75B |
| SG&A Expenses | $983.00M |
| Net Income | $517.00M |
| EPS (Basic) | $0.85 |
| EPS (Diluted) | $0.84 |
| Shares Outstanding (Basic) | 607.40M |
| Shares Outstanding (Diluted) | 611.00M |
Key Highlights
- 1Net sales for Q2 fiscal 2020 decreased 9% to $4.16 billion, reflecting a 7% decrease in underlying sales due to the impact of COVID-19 and lower oil prices.
- 2Net earnings attributable to common stockholders for Q2 fiscal 2020 were $517 million, a decrease of 1% from the prior year, while diluted EPS remained flat at $0.84.
- 3For the six months ended March 31, 2020, net sales decreased 5% to $8.31 billion, and net earnings attributable to common stockholders fell 14% to $843 million.
- 4The Automation Solutions segment experienced a 10% decrease in sales in Q2 fiscal 2020, heavily impacted by weakness in oil and gas end markets and the effects of COVID-19.
- 5The Commercial & Residential Solutions segment saw a 7% decrease in sales in Q2 fiscal 2020, with Climate Technologies and Tools & Home Products segments both affected by weakening demand.
- 6The company ended the quarter with a stronger cash position, with cash and equivalents increasing to $2.58 billion from $1.49 billion at the start of the fiscal year, partly in response to COVID-19 uncertainty.
- 7Emerson provided a subdued outlook for the remainder of fiscal year 2020, projecting net sales to be down 9-11% and EPS between $2.62 and $2.82, reflecting ongoing economic uncertainty.