Emerson's Q1 Meets Estimate
Emerson Electric Company (EMR) announced first-quarter 2013 results before the market opened today, reporting earnings per share of 62 cents, in line with the Zacks Consensus Estimate. Earnings per share surged up 24% year over year.
The company delivered an impressive earnings performance despite the prevailing uncertain economic environment.
Total Revenue
Total revenue in the quarter increased by 5% year over year to $5.6 billion. Divestiture and currency translations negatively affected growth by 1%. Sales growth in the US sales increased by 6%, in Asia by 6% and declined by 2% in Europe.
Segment Results
Process Management sales were up by 24% during the quarter, led by a rise in investment in the energy sector globally and Climate Technologies sales increased by 2%. This was the first time in six quarters that the Climate Technologies segment witnessed an increase in revenue, resulting from strong growth in Asia and improvement in the US.
However, sales in all other three segments declined during the quarter. Industrial Automation sales declined 7%, Network Power sales by 2% and Commercial & Residential Solutions sales by 1%.
Income and Expenses
Earnings before taxes for the quarter were $673 million compared with $553 million in the prior-year quarter. Selling and general expense was $1.39 billion compared with $1.35 billion in the prior-year quarter.
Balance Sheet
Cash and Cash equivalents were $2.53 billion at the end of the quarter with long-term debt of $3.54 billion and shareholders equity of $10.17 billion compared with $2.08 billion, $4.04 billion and $10.36 billion, respectively.
Capital expenditure of the company amounted to $115 million, down from the prior amount of $15 million. Free cash flow in the quarter was $439 million, up 115% year over year.
Outlook
Emerson expects its sales to increase by 2% to 5% in 2013 while earnings per share are expected to be in the range of $3.53 to $3.63.
The company expects to see an improvement in the market conditions as it moves ahead, especially in the emerging markets. The market conditions have stabilized, which resulted in an increase in order trends.
Emerson is well-positioned to benefit from the long-term global trends of infrastructure spending and improved energy efficiency. Many of Emerson's products are key components for building the infrastructure such as data centers, manufacturing plants and office buildings. Emerging markets account for nearly one-third of the total sales and this trend is expected to be a significant source of growth in the upcoming quarter.
However, substantial sales in the international market are subject to economic risks. Results of operations are affected by foreign currency fluctuations.
Emerson Electric Company is a diversified global manufacturing and technology company. It offers a wide range of products and services in the areas of process management, climate technologies, network power, storage solutions, professional tools, appliance solutions, motor technologies, and industrial automation.
Emerson currently has a Zacks #3 Rank (Hold). Its close rivals such as Interdigital Inc. (IDCC), Juniper Networks (JNPR) and Clean Energy Fuels Inc. (CLNE) all have a Zacks Rank #2 (Buy).
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