8-KRegulation FD

EMERSON ELECTRIC CO 8-K Report, Regulation FD Disclosure (Jul 23, 2015)

Filed July 23, 2015For Securities:EMR

Summary

This 8-K filing from Emerson Electric Co. (EMR) on July 23, 2015, provides insights into its order trends for the three months ending June 2015, and highlights upcoming investor events. The company experienced a decline in orders across most of its segments, primarily attributed to the significant drop in oil prices, a global slowdown in capital spending, and the strong U.S. dollar impacting currency translation. While the overall picture is one of sluggish global demand, investors should note that underlying order trends have remained relatively consistent over the preceding months. Key business segments like Process Management and Industrial Automation are particularly affected by the oil price slump, though Process Management shows resilience in chemical and power markets. Climate Technologies faced headwinds from inventory adjustments and unfavorable weather, while Network Power saw mixed global demand. The filing also announces Emerson's upcoming third-quarter 2015 earnings release and conference call, providing investors with a clear date to anticipate further financial updates and management commentary.

Key Highlights

  • 1Emerson Electric reported a decline in trailing three-month orders ending June 2015, with total orders down 15% to 10%.
  • 2The primary drivers for the order decline are attributed to lower oil prices, a global slowdown in capital spending, and a strong U.S. dollar (which deducted 5 percentage points through currency translation).
  • 3Underlying orders (excluding currency and M&A) decreased by 9% in June, reflecting consistent but weak market conditions observed over the prior three months.
  • 4Process Management and Industrial Automation segments are significantly impacted by the oil price decline, though Process Management has bright spots in chemical and power markets.
  • 5Climate Technologies orders were affected by pre-built inventory, regulatory changes, and unfavorable weather conditions in key U.S. markets.
  • 6Emerson Electric will report its third quarter 2015 results on Tuesday, August 4, 2015, followed by a conference call.
  • 7The company utilizes non-GAAP financial measures, which should be considered supplemental to GAAP measures.

Frequently Asked Questions

The filing indicates a challenging environment for Emerson's orders in the three months leading up to June 2015. Total orders saw a decline, with significant headwinds from the drop in oil prices, a general global slowdown in capital expenditure, and the strength of the U.S. dollar impacting reported figures through currency translation. While concerning, the underlying order trends have shown relative stability month-over-month, suggesting persistent but not rapidly deteriorating market conditions.

The Process Management and Industrial Automation segments appear to be the most significantly impacted, largely due to their exposure to oil and gas markets which are directly suffering from lower oil prices. Industrial Automation is also facing weakness in European industrial spending. Climate Technologies experienced a decline influenced by inventory digestion and weather, while Network Power saw mixed global demand for data center and telecom infrastructure.

Emerson Electric is scheduled to report its third quarter 2015 results on Tuesday, August 4, 2015. Management will discuss these results during a conference call on the same day at 2:00 P.M. Eastern Time. A webcast and replay will be available on the company's investor relations website.

The filing explicitly mentions three primary external factors: a substantial decrease in oil prices affecting energy-related capital spending, a broader global slowdown in capital investment, and the strength of the U.S. dollar which reduces the value of international sales when translated back to U.S. dollars.