Business Context and Reporting Period
This Form 8-K filing by Emerson Electric Co. is dated December 20, 2013. The report provides Regulation FD disclosure regarding trailing three-month order growth trends through November 2013. The data excludes the embedded computing and power business, 51 percent of which was divested on November 22, 2013.
Key Financial Metrics
The filing focuses on order growth percentages rather than revenue, profit, or cash flow figures. Trailing three-month order growth for Total Emerson remained between 0% and +5% for September, October, and November 2013. Underlying orders growth for the trailing three months was noted to be between 3% and 4%.
| Segment | Sept '13 | Oct '13 | Nov '13 |
|---|---|---|---|
| Process Management | 0 to +5% | 0 to +5% | 0 to +5% |
| Industrial Automation | +5% | 0 to +5% | -5 to 0% |
| Network Power | 0 to +5% | +5% | +5 to +10% |
| Climate Technologies | +5% | +5% | +5% |
| Commercial & Residential Solutions | +5 to +10% | 0 to +5% | 0 to +5% |
| Total Emerson | 0 to +5% | 0 to +5% | 0 to +5% |
The filing text does not provide clear values for revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes and Segment Trends
- Process Management: Orders remained steady, supported by global demand in oil, gas, power, and chemical industries. Strong performance in North America, Asia, and Latin America was partially offset by slower demand in Europe and the Middle East/Africa. Currency translation deducted 1 percentage point.
- Industrial Automation: Orders declined slightly in November due to an uneven global recovery. The power generating alternators business was the weakest, with stalled momentum. Electrical drives and renewable energy businesses were also soft, though growth in electrical distribution, materials joining, and fluid automation offset most of the decrease.
- Network Power: Orders reflected improving trends, led by strong demand for data center and telecommunications infrastructure in Asia and the inbound power business. Growth in Europe slowed but increased slightly, while North American conditions remained soft.
- Climate Technologies: Orders remained consistent with recent trends. Robust demand in global refrigeration markets and a recovery in the European air conditioning business drove moderate growth. Strong orders in China supported low growth in Asia, while North American conditions slowed.
- Commercial & Residential Solutions: Trends reflected continued demand in U.S. residential markets. Growth was led by professional tools and food waste disposers, partially offset by declines in storage businesses.
Guidance, Outlook, and Risks
Management commentary indicates that trailing three-month orders reflect slightly improving macroeconomic conditions and a cautious business investment outlook. Currency translation was negligible overall, though specific segment impacts were noted.
Upcoming Events:
- First quarter 2014 results will be reported on February 4, 2014, with a conference call at 2:00 p.m. ET.
- An annual investor conference is scheduled for February 13, 2014, in Boston.
Risks: The filing includes standard forward-looking statement disclaimers, citing risks related to economic and currency conditions, market demand, pricing, intellectual property protection, and competitive and technological factors.
Investor Verification Checklist
- Verify the impact of the November 22, 2013 divestiture of the embedded computing and power business on future revenue recognition.
- Monitor the specific performance of the power generating alternators and renewable energy businesses within Industrial Automation, which showed weakness.
- Confirm the sustainability of order growth in Network Power driven by Asian data center demand.
- Review the upcoming Q1 2014 earnings report (February 4, 2014) for concrete revenue and profit figures to validate the order trends reported here.
- Assess the impact of currency translation, which deducted 1 percentage point in Process Management, on future earnings.