Summary
Emerson Electric Co. (EMR) filed an 8-K on December 17, 2020, providing an update on its trailing three-month orders as of November 2020. The report indicates a mixed performance across its business segments. While the Commercial & Residential Solutions segment showed robust order growth, driven by demand for residential products, the Automation Solutions segment continued to face headwinds, primarily due to project delays and cancellations impacting the KOB1 business, though day-to-day KOB3 business and some KOB2 business showed improvement. Overall, total Emerson orders showed a modest decline but with improving trends, particularly in the Commercial & Residential segment. The company also provided an outlook for upcoming investor events, including a Q1 2021 earnings call and an Annual Investor Conference. Investors should note the divergent performance between the two core segments. The strength in Commercial & Residential Solutions offers a positive offset to the challenges in Automation Solutions, which remains sensitive to project cycles and the broader economic environment. The company's commentary highlights improving customer site access and strength in specific end markets for Automation Solutions, alongside consistent residential demand for the other segment. The upcoming investor events will be crucial for further insights into the company's strategic direction and performance outlook, especially in light of ongoing global economic uncertainties.
Key Highlights
- 1Emerson Electric reported a 4% decline in total trailing three-month orders (ending November 2020) compared to the prior year, with underlying orders down 5%.
- 2The Commercial & Residential Solutions segment demonstrated strong order growth, up 16% (14% underlying), driven by demand for residential products like HVACR and smart home technologies.
- 3The Automation Solutions segment experienced an order decline of 13% (14% underlying), impacted by project delays and cancellations, though day-to-day business (KOB3) and emerging KOB2 business showed improvement.
- 4Geographically, North America was significantly impacted, with orders down 22% overall, but specific markets like power, life sciences, and food & beverage showed relative strength for Automation Solutions.
- 5Asia showed mixed results, with China up 5% for Automation Solutions, but other regions within Asia offset this strength.
- 6Emerson provided an updated schedule for upcoming investor communications, including a Q1 2021 earnings call on February 2, 2021, and an Annual Investor Conference on February 16, 2021.
- 7Orders for Automation Solutions excluded Open Systems International (OSI) Inc., which is showing strong momentum in advanced grid management and renewables integration.