Business Context and Reporting Period
This Form 8-K filing by Emerson Electric Co. is dated October 24, 2011, and serves as a Regulation FD disclosure regarding trailing three-month order trends ending September 2011. The report covers the company's performance across five business segments: Process Management, Industrial Automation, Network Power, Climate Technologies, and Tools and Storage.
Key Financial Metrics and Order Trends
The filing provides percentage changes in underlying orders for the trailing three-month period compared to the prior year, rather than absolute revenue or profit figures.
- Total Emerson: Underlying orders grew between 0% and +5% in September 2011, following +10% to +15% growth in July and August.
- Process Management: Orders ranged from 0% to +5% in September. Backlog is at record levels, up approximately $400 million from the prior year.
- Industrial Automation: Orders ranged from +5% to +10% in September.
- Network Power: Orders ranged from 0% to +5% in September.
- Climate Technologies: Orders ranged from -5% to 0% in September.
- Tools and Storage: Orders ranged from +5% to +10% in September.
The filing does not provide specific values for revenue, net income, cash flow, margins, debt, or liquidity.
Material Changes and Drivers
Order trends moderated in the trailing three-month period due to currency exchange rates and prior year comparisons.
- Currency Impact: Currency fluctuations deducted approximately 3 percentage points from the total company's underlying order growth rate. Excluding currency, growth exceeded 5%.
- Process Management: Currency changes deducted approximately 13 percentage points. A large booking (Petrobras Comperj project) in September 2010 negatively affected year-over-year comparisons by approximately 5%.
- Industrial Automation: Currency added 3 percentage points. Strength in power generating alternators and ultrasonic welding was offset by weakness in electrical drives.
- Network Power: Currency deducted approximately 1 percentage point. Weakness in embedded computing and energy systems offset strength in Asia and North American UPS/cooling.
- Climate Technologies: Currency added 3 percentage points. Weakness persisted in U.S. and European residential/commercial markets.
Outlook, Risks, and Contingencies
Upcoming Events: Emerson will issue fourth quarter and fiscal year 2011 results on November 1, 2011, followed by an investor conference call.
Risks and Contingencies:
- Thailand Flooding: Massive flooding in Thailand has damaged areas where Emerson sources electrical and electronic components for Process Management products. The company is executing contingency plans to minimize supply disruptions.
- Forward-Looking Statements: Risks include economic and currency conditions, market demand, pricing, and competitive factors.
Investor Verification Checklist
- Verify the impact of Thailand flooding on supply chains and potential revenue delays in the Process Management segment.
- Confirm the magnitude of the currency headwind (approx. 3 percentage points) in the upcoming Q4 earnings report.
- Review the specific backlog value and composition, noting the $400 million increase in Process Management.
- Monitor the November 1, 2011, earnings release for full fiscal year 2011 financial results, as this 8-K contains only order trend percentages.