Business Context and Reporting Period
This Form 8-K is a current report filed by Emerson Electric Co. on June 23, 2011, pursuant to Regulation FD. The filing provides a summary of trailing three-month order trends for the period ending May 2011, comparing performance against the prior year.
Key Financial Metrics
The filing focuses on order growth rates rather than GAAP financial results (revenue, profit, cash flow). Specific financial metrics such as revenue, margins, debt, and liquidity are not provided in this document.
| Segment | Trailing 3-Month Order Growth (May 2011) |
|---|---|
| Process Management | >+20% |
| Industrial Automation | >+20% |
| Network Power | +5% to +10% |
| Climate Technologies | 0% to +5% |
| Tools and Storage | +5% |
| Total Emerson | +15% |
Currency Impact: Currency exchange rates positively impacted total orders by approximately 7 percentage points. Process Management saw a 14 percentage point positive impact, while Industrial Automation saw a 7 percentage point impact.
Material Changes and Segment Performance
- Process Management: Order growth remained strong, driven by oil and gas end market demand and MRO activity. Growth is moderating from very high levels.
- Industrial Automation: Trends remained solid, led by global capital goods markets and strong orders in power generating alternators. Growth is moderating from high prior-year levels.
- Network Power: Orders improved to the 5-10% range. Growth in Asia was double-digit. The embedded power business turned slightly positive, and uninterruptible power supply rates remained solid.
- Climate Technologies: Growth was led by global refrigeration (industrial and transportation). This was partially offset by a decline in temperature controls. U.S. residential markets slowed due to inventory builds and cooler weather.
- Tools and Storage: Orders remained consistent with the prior month, led by non-residential construction-related businesses.
Guidance, Outlook, and Risks
Outlook: Management expects order trends excluding currency to stay in the 7 to 10 percent range for the balance of 2011. Comparisons are expected to become increasingly challenging over the coming months.
Upcoming Events: Third quarter 2011 results are scheduled for release on August 2, 2011, followed by an investor conference call at 2:00 p.m. EDT.
Risks: Forward-looking statements are subject to risks including economic and currency conditions, market demand, pricing, and competitive/technological factors.
Investor Verification Checklist
- Verify the distinction between reported order growth (including currency) and the management guidance for organic growth (excluding currency) of 7-10%.
- Monitor the "increasingly challenging" prior-year comparisons mentioned for the remainder of 2011.
- Review the upcoming Q3 2011 earnings release on August 2, 2011, for actual revenue and profit figures, as this 8-K contains only order data.
- Assess the impact of the 7 percentage point currency tailwind on future quarters if exchange rates normalize.