Business Context and Reporting Period
Emerson Electric Co. filed a Form 8-K on May 4, 2010, to report its second-quarter 2010 results of operations and financial condition. The filing includes a press release (Exhibit 99.1) detailing quarterly performance and Regulation FD disclosures regarding order trends.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. It references the existence of a press release containing these figures but does not reproduce the data within the 8-K body. The document highlights the use of non-GAAP financial measures, including business segment EBIT, EBIT margin, and consolidated earnings from continuing operations before interest and income taxes, to evaluate performance excluding specific corporate items.
Material Changes and Order Trends
While specific financial results are not listed, the filing provides detailed trailing three-month underlying order trends (excluding currency) compared to the prior year:
- Total Emerson: Orders increased 10% to 15% in March 2010, with currency positively impacting orders by 4 percentage points. Backlog increased as orders exceeded sales for the quarter.
- Process Management: Order trends turned positive, up 10% in March, driven by improvements in oil and gas and nuclear end markets.
- Industrial Automation: Trends turned positive across all businesses, with double-digit growth in electrical drives, power transmission, and fluid power.
- Network Power: Embedded power orders remained strong; energy systems orders were up moderately, though Asia orders softened.
- Climate Technologies: Strong trends across all businesses, particularly in Asia and North American air-conditioning, with double-digit strengthening in commercial end markets.
- Appliance and Tools: Growth remained in the 0% to 5% range, with strength in tools offset by weakness in storage businesses.
Management Commentary and Outlook
Management noted that underlying order trends excluding currency are now positive for all five business segments. The filing mentions that non-GAAP measures are useful for evaluating results by excluding corporate items related to a strong increase in the company's stock price and a one-year overlap of two stock compensation programs. Senior management scheduled an investor conference call for May 4, 2010, and upcoming presentations at the 2010 Electrical Products Group Conference and the Sanford C. Bernstein Strategic Decisions Conference.
Investor Verification Checklist
- Verify specific Q2 2010 revenue, net income, and earnings per share figures in the attached Exhibit 99.1 press release.
- Confirm the reconciliation between GAAP and non-GAAP financial measures, specifically regarding stock compensation and corporate items.
- Review the detailed backlog figures to quantify the increase mentioned in the order trends.
- Assess the impact of currency fluctuations on the reported 10-15% order growth.