Business Context and Reporting Period
This Form 8-K Current Report from Emerson Electric Co. is dated May 22, 2007. The filing provides Regulation FD disclosure regarding order trends for the trailing three-month period ending in April 2007 and reaffirms fiscal year 2007 guidance.
Key Financial Metrics
The filing focuses on order growth percentages rather than GAAP financial results for the period.
- Total Emerson Order Growth: +10% for the three months ended April 2007 (trailing 3-month average versus prior year).
- Currency Impact: Favorable exchange rates contributed nearly 4 percentage points to the order increase.
- Segment Order Growth (Trailing 3-Month Average vs. Prior Year):
- Process Management: +10% to +15%
- Industrial Automation: +10% to +15%
- Network Power: +5% to +10%
- Climate Technologies: +10% to +15%
- Appliance and Tools: +0% to +5%
- Revenue, Profit, Cash Flow, Debt, and Liquidity: The filing text does not provide specific values for these metrics.
Material Changes Versus Prior Period
Order growth accelerated to a positive 10% for the three months ended in April, an increase from the +5% to +10% range reported for the three months ended in March. Key drivers for the change include:
- Currency: A weaker dollar significantly boosted order growth.
- Process Management: Maintained double-digit growth driven by global energy markets, specifically in Europe, Asia, and the Middle East.
- Industrial Automation: Remained at high levels, led by power generating alternators, electrical distribution, and electronic drives.
- Network Power: Growth increased, led by UPS, precision cooling, and China power systems.
- Climate Technologies: Continued positive trend with moderate U.S. improvement and strength in Europe and Asia.
- Appliance and Tools: Growth remained in the 0% to 5% range; strong tools business growth offset softness in storage and appliance businesses.
Guidance, Outlook, and Risks
Guidance Reaffirmation: On May 23, 2007, CEO David N. Farr reaffirmed the Company's fiscal year 2007 guidance:
- Sales Growth: Expected in the range of 9% to 11%.
- Earnings Per Share (EPS): Expected in the range of $2.50 to $2.60.
Risks and Uncertainties: The filing includes standard forward-looking statement disclaimers. Risks include economic and currency conditions, market demand, pricing, and competitive and technological factors.
Investor Verification Checklist
- Verify the specific sales and EPS figures for the fiscal year 2007 in the upcoming earnings release to confirm the 9-11% sales growth and $2.50-$2.60 EPS guidance.
- Monitor the impact of currency exchange rates on future order growth, as 4 percentage points of recent growth were attributed to the weaker dollar.
- Review the performance of the Appliance and Tools segment to determine if the offset between tools growth and storage/appliance softness persists.
- Check the Investor Relations section of the company website for the presentation slides from the May 23, 2007, Electrical Products Group Conference.