Business Context and Reporting Period
Emerson Electric Co. filed a Form 8-K on February 27, 2007, pursuant to Regulation FD. The report provides a summary of GAAP underlying orders for the trailing three-month period ending January 2007, comparing performance against the prior year.
Key Financial Metrics
The filing focuses on order growth percentages rather than revenue, profit, or cash flow figures. The trailing three-month average order growth for Total Emerson was reported in the range of +5% to +10% compared to the prior year.
| Segment | Nov '06 | Dec '06 | Jan '07 |
|---|---|---|---|
| Process Management | +10% | +15% to +20% | +15% |
| Industrial Automation | +15% | +15% | +10% to +15% |
| Network Power | +10% to +15% | +10% to +15% | +5% to +10% |
| Climate Technologies | -10% to -15% | -5% to -10% | -5% to 0% |
| Appliance and Tools | +0% to +5% | +0% to +5% | +0% to +5% |
| Total Emerson | +5% to +10% | +5% to +10% | +5% to +10% |
The filing text does not provide clear values for revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes and Segment Performance
Order growth remained solid, driven by capital goods businesses. Favorable currency exchange rates contributed nearly 3 percentage points to the overall increase.
- Process Management: Orders remained strong due to robust capital spending in global energy markets, specifically in valve, measurement, and systems businesses.
- Industrial Automation: Growth remained at high levels, led by power generating alternator and electronic drives businesses. Performance was strong in Europe and benefited from a weaker dollar.
- Network Power: Order growth moderated to the 5% to 10% range. Strength persisted in uninterruptible power supply (UPS), precision cooling, and China power systems.
- Climate Technologies: Trends remained negative but showed modest improvement. Growth was soft in the United States but strong in Europe and Asia.
- Appliance and Tools: Growth remained in the 0% to 5% range. Strong performance in the tools business offset softness in storage, motors, and appliance businesses.
Outlook and Management Commentary
Management highlighted that order growth is being led by capital goods businesses and favorable currency conditions. No specific financial guidance or forward-looking revenue projections were included in this filing.
Upcoming Investor Event: Emerson scheduled a presentation at the Citigroup Global Industrial Manufacturing Conference on March 7, 2007, in New York City. Edward L. Monser, Chief Operating Officer, was scheduled to present.
Investor Verification Checklist
- Verify the impact of currency exchange rates on future order growth, as it contributed significantly to the current period's performance.
- Monitor the divergence between the strong capital goods segments (Process Management, Industrial Automation) and the softness in Climate Technologies and Appliance/Tools.
- Review the upcoming March 7, 2007, investor presentation for detailed financial results and guidance not contained in this 8-K.
- Confirm whether the "underlying orders" metric aligns with GAAP revenue recognition timelines for the quarter.