8-KRegulation FD

EMERSON ELECTRIC CO 8-K Report, Regulation FD Disclosure (Feb 28, 2020)

Filed February 28, 2020For Securities:EMR

Summary

This 8-K filing from Emerson Electric Co. (EMR) provides an update on the estimated financial impact of the coronavirus (COVID-19) outbreak on the company's second-quarter fiscal year 2020 sales. Initially estimated at $75 million to $100 million in negative impact, Emerson now projects a hit of at least $100 million to $150 million to Q2 sales. While the company expects to recover approximately half of this amount within the fiscal year, this recovery is contingent on the duration of the outbreak and the eventual easing of its effects. The filing also details operational status in China, noting that while most key facilities are operational with significant production capacity restored, supply chain and logistics continue to face challenges.

Key Highlights

  • 1Emerson now expects the coronavirus to negatively impact Q2 FY2020 sales by $100 million to $150 million, an increase from previous estimates.
  • 2Approximately 50% of the projected Q2 sales impact is anticipated to be recovered within the current fiscal year, subject to the pandemic's duration.
  • 3All key Emerson facilities in China are operational, with ~85% of production capacity available on average.
  • 4Over 95% of Emerson's supply chain has restarted production, though at ~57% average capacity.
  • 5Logistics in China remain a challenge, with material moving at ~75% of normal rates and experiencing increased transit times and costs.
  • 6Emerson will report its Q2 FY2020 results on May 5, 2020, with a conference call and webcast.
  • 7The company reiterates forward-looking statements include risks and uncertainties, notably the impact of the coronavirus.

Frequently Asked Questions

Emerson now estimates the negative impact on second-quarter fiscal year 2020 sales to be at least $100 million to $150 million. This is an upward revision from their previous estimate of $75 million to $100 million.

The company expects to recover approximately half of the projected sales impact within the current fiscal year. However, this recovery is dependent on how long the coronavirus situation endures.

All key Emerson facilities in China are operational, with an average of 85% of production capacity available. The majority of its supply chain (over 95%) has also restarted production, operating at approximately 57% average capacity. Logistics, however, continue to be a challenge, with material movement at about 75% of normal rates and experiencing delays and higher costs.

Emerson is scheduled to report its second-quarter 2020 results prior to market open on Tuesday, May 5, 2020. The company will hold an investor conference call and webcast to discuss the results on the same day.