Business Context and Reporting Period
This Form 8-K is a current report filed by Emerson Electric Co. on May 17, 2011, pursuant to Regulation FD. The filing provides a summary of underlying orders for the trailing three-month period ending April 2011, comparing performance against the prior year.
Key Financial Metrics
The filing focuses on order trends rather than GAAP financial results such as revenue, profit, or cash flow. Key order metrics for the trailing three-month average versus the prior year are as follows:
- Total Emerson Orders: Increased between +10% and +15%.
- Orders Excluding Currency: Moderated to approximately +8% (a two-point drop from the previous month).
- Currency Impact: Positively impacted total orders by 5 percentage points.
- Segment Performance:
- Process Management: >+20% (Currency impact: +11 percentage points).
- Industrial Automation: >+20%.
- Climate Technologies: 0% to +5%.
- Tools and Storage: +5%.
- Network Power: +5%.
The filing text does not provide clear values for revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes Versus Prior Period
Order growth excluding currency moderated to approximately 8% in the trailing three-month period, dropping two percentage points from the prior month due to tougher year-over-year comparisons. While Process Management and Industrial Automation continued to show strong growth (>+20%), Network Power and Climate Technologies faced challenges in specific regions or sub-segments due to difficult prior-year comparisons and fiscal tightening in China.
Outlook, Risks, and Management Commentary
Management commentary indicates that order trends remain solid, driven by strength in global capital goods end markets. However, comparisons are expected to become more difficult going forward. Specific segment notes include:
- Process Management: Project wins continued globally, though growth is starting to moderate from very high levels.
- Network Power: Modest growth resumed in Asia, though embedded computing and power businesses remained slightly negative.
- Climate Technologies: U.S. residential growth moderated as channel inventory replenishment ramped up previously; orders in Asia declined.
- Tools and Storage: Growth in professional tools and commercial storage was partially offset by weakness in residential storage and wet/dry vacuums.
Risks: Forward-looking statements are subject to risks including economic and currency conditions, market demand, pricing, and competitive factors.
Upcoming Events: CEO David N. Farr is scheduled to present at the 2011 Electrical Products Group Conference on May 18, 2011, and the Sanford C. Bernstein Strategic Decisions Conference on June 2, 2011.
Investor Verification Checklist
- Verify the specific impact of currency exchange rates on future quarters given the 5 percentage point positive impact noted.
- Monitor the moderation in Process Management order growth as comparisons become more difficult.
- Assess the impact of fiscal tightening in China on Climate Technologies and Network Power segments.
- Review the upcoming presentation slides posted on the Investor Relations website for detailed guidance.
- Confirm the trajectory of the "embedded computing and power" businesses within Network Power, which remained negative.