Business Context and Reporting Period
This Form 8-K filing by Emerson Electric Co. is dated April 27, 2011. The report provides Regulation FD disclosure regarding the company's order trends for the trailing three-month period ending March 2011, comparing performance against the prior year.
Key Financial Metrics and Order Trends
The filing focuses on GAAP underlying orders (percent change, trailing 3-month average versus prior year) rather than revenue or profit figures. Currency exchange rates positively impacted total orders by 3 percentage points.
| Segment | Jan '11 | Feb '11 | Mar '11 |
|---|---|---|---|
| Process Management | >+20% | >+20% | >+20% |
| Industrial Automation | >+20% | >+20% | >+20% |
| Network Power | -5% to 0% | -5% to 0% | 0% |
| Climate Technologies | +15% | +5% to +10% | +5% to +10% |
| Tools and Storage | +5% | +5% to +10% | +5% to +10% |
| Total Emerson | +15% | +10% to +15% | +10% to +15% |
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes and Segment Commentary
- Total Orders: Trailing three-month orders excluding currency moderated to approximately 10%, dropping two points from the previous month. Management notes that comparisons will continue to get tougher moving forward.
- Process Management: Project and MRO orders remained strong globally due to recovering capital goods end markets. Growth is moderating from very high levels. Currency positively impacted orders by 10 percentage points.
- Industrial Automation: Order growth remained strong, driven by global infrastructure investments and power generation demand.
- Network Power: Trends improved to flat in the trailing three-month period. Declines in Asia and embedded computing/power businesses have begun to moderate. Uninterruptible power supply orders remained solid outside of Asia.
- Climate Technologies: Growth continued in North American residential and refrigeration businesses, partially offset by declines in Asia and temperature controls. Asia faces difficult prior-year comparisons due to previous stimulus program benefits.
- Tools and Storage: Trailing three-month orders remained consistent with the prior month, led by non-residential construction-related businesses.
Outlook, Risks, and Upcoming Events
Upcoming Events:
- May 3, 2011: Second quarter 2011 results release and investor conference call at 2:00 p.m. EDT.
- May 18, 2011: 2011 Electrical Products Group Conference in Longboat Key, Florida (Presenter: David N. Farr).
- June 2, 2011: Sanford C. Bernstein Strategic Decisions Conference in New York City (Presenter: David N. Farr).
Risks and Uncertainties: Forward-looking statements are subject to risks including economic and currency conditions, market demand, pricing, and competitive and technological factors.
Investor Verification Checklist
- Verify the specific revenue and earnings figures for Q2 2011 when released on May 3, 2011.
- Monitor the impact of currency exchange rates on future order growth, given the 3% positive impact noted in this period.
- Assess the sustainability of order growth in Process Management and Industrial Automation as comparisons become more difficult.
- Review the recovery trajectory of the Network Power segment, particularly in the Asia region.
- Confirm the extent of the moderation in Climate Technologies orders in Asia versus growth in North America.