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ABB Q2 Earnings and Revenues Miss Estimates, Orders Rise Y/Y
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ABB Ltd reported weaker-than-expected second-quarter 2022 results, wherein earnings missed estimates by 33.3%, while revenues fell shy of the same by 7.7%.
Adjusted earnings came in at 20 cents per share, lagging the Zacks Consensus Estimate of 30 cents. The bottom line decreased 47% on a year-over-year basis.
Top-Line Details
ABB’s second-quarter revenues totaled $7,251 million, down 3% from the year-ago quarter’s figure. The downside can be attributed to lower revenues across most of its segments. On a comparable basis, revenues grew 6%. The top line missed the consensus estimate of $7,857 million.
In the reported quarter, total orders were $8,807 million, increasing 10% year over year. The metric rose 20% on a comparable basis, supported by strength across ABB’s businesses. While exiting the second quarter, its order backlog was $19,477 million, up 26% year over year.
Segmental Details
ABB reports revenues under four segments as discussed below:
Electrification: Revenues totaled $3,531 million, increasing 4% year over year. Orders were up 9% year over year to $4,037 million, driven by strength across most end-markets.
Process Automation: Revenues were $1,529 million, decreasing 1% year over year. Orders increased 17% to $1,819 million, driven by strong demand across marine, and mining & metal end-markets.
Motion: Revenues amounted to $1,626 million, down 12% from the year-ago quarter’s number. Orders expanded 7% to $2,079 million on account of robust demand for motors, drive and service offerings across all end markets.
Robotics & Discrete Automation: Revenues were $732 million, decreasing 12% year over year. Orders grew 15% to $1,109 million. Orders improved across automotive, supported by a strong development in EV investments in China and the general industry as well.
Operational EBITA Margin
In the reported quarter, ABB’s total cost of sales increased 0.4% year over year to $4,961 million. The same represented 68.4% of the second-quarter revenues compared with 66.3% a year ago. Gross margin was 31.6%, down from 33.7% reported in the year-ago quarter.
Selling, general and administrative expenses increased 0.2% to $1,317 million.
Operational (EBITA) in the quarter increased 2% to $1,136 million. Operational EBITA margin grew 50 basis points to 15.5%.
Exiting second-quarter 2022, ABB had cash and cash equivalents of $2,412 million, down from $5,216 million recorded in the previous quarter. Long-term debt was $5,086 million, lower than $6,171 million at the end of the previous quarter.
In the first six months of 2022, net cash used in operating activities totaled $191 million compared with $1,206 million provided in the year-ago period.
In the first half of 2022, ABB paid out dividends worth $1,698 million compared with $1,726 million in the year-ago period.
Outlook
Management expects support from a solid order backlog and positive momentum in the market.
For the September quarter, ABB anticipates double-digit comparable revenue growth. Management expects the Operational EBITA margin to improve sequentially, excluding the 60-bps positive impact from special items in the second quarter.
For 2022, ABB expects to benefit from strong market momentum and a solid order backlog. The Operational EBITA margin is expected to witness a steady margin improvement of a minimum 15%, thus inching toward the target set for 2023.
Zacks Rank & Stocks to Consider
ABB currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the industrial products sector are discussed below:
GEF’s earnings estimates have increased 17.8% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 11.9% in the past six months.
Titan International, Inc. presently flaunts a Zacks Rank of 1. Its earnings surprise in the last four quarters was 56.4%, on average.
In the past 60 days, TWI’s earnings estimates have increased 43.3% for 2022. The stock has surged 59.9% in the past six months.
RBC Bearings Incorporated presently has a Zacks Rank #2 (Buy). ROLL’s earnings surprise in the last four quarters was 3.4%, on average.
In the past 60 days, the stock’s earnings estimates have increased 5.9% for fiscal 2023 (ending March 2023). The stock has rallied 14.4% in the past six months.
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ABB Q2 Earnings and Revenues Miss Estimates, Orders Rise Y/Y
ABB Ltd reported weaker-than-expected second-quarter 2022 results, wherein earnings missed estimates by 33.3%, while revenues fell shy of the same by 7.7%.
Adjusted earnings came in at 20 cents per share, lagging the Zacks Consensus Estimate of 30 cents. The bottom line decreased 47% on a year-over-year basis.
Top-Line Details
ABB’s second-quarter revenues totaled $7,251 million, down 3% from the year-ago quarter’s figure. The downside can be attributed to lower revenues across most of its segments. On a comparable basis, revenues grew 6%. The top line missed the consensus estimate of $7,857 million.
In the reported quarter, total orders were $8,807 million, increasing 10% year over year. The metric rose 20% on a comparable basis, supported by strength across ABB’s businesses. While exiting the second quarter, its order backlog was $19,477 million, up 26% year over year.
Segmental Details
ABB reports revenues under four segments as discussed below:
Electrification: Revenues totaled $3,531 million, increasing 4% year over year. Orders were up 9% year over year to $4,037 million, driven by strength across most end-markets.
Process Automation: Revenues were $1,529 million, decreasing 1% year over year. Orders increased 17% to $1,819 million, driven by strong demand across marine, and mining & metal end-markets.
Motion: Revenues amounted to $1,626 million, down 12% from the year-ago quarter’s number. Orders expanded 7% to $2,079 million on account of robust demand for motors, drive and service offerings across all end markets.
Robotics & Discrete Automation: Revenues were $732 million, decreasing 12% year over year. Orders grew 15% to $1,109 million. Orders improved across automotive, supported by a strong development in EV investments in China and the general industry as well.
Operational EBITA Margin
In the reported quarter, ABB’s total cost of sales increased 0.4% year over year to $4,961 million. The same represented 68.4% of the second-quarter revenues compared with 66.3% a year ago. Gross margin was 31.6%, down from 33.7% reported in the year-ago quarter.
Selling, general and administrative expenses increased 0.2% to $1,317 million.
Operational (EBITA) in the quarter increased 2% to $1,136 million. Operational EBITA margin grew 50 basis points to 15.5%.
ABB Ltd Price and Consensus
ABB Ltd price-consensus-chart | ABB Ltd Quote
Balance Sheet and Cash Flow
Exiting second-quarter 2022, ABB had cash and cash equivalents of $2,412 million, down from $5,216 million recorded in the previous quarter. Long-term debt was $5,086 million, lower than $6,171 million at the end of the previous quarter.
In the first six months of 2022, net cash used in operating activities totaled $191 million compared with $1,206 million provided in the year-ago period.
In the first half of 2022, ABB paid out dividends worth $1,698 million compared with $1,726 million in the year-ago period.
Outlook
Management expects support from a solid order backlog and positive momentum in the market.
For the September quarter, ABB anticipates double-digit comparable revenue growth. Management expects the Operational EBITA margin to improve sequentially, excluding the 60-bps positive impact from special items in the second quarter.
For 2022, ABB expects to benefit from strong market momentum and a solid order backlog. The Operational EBITA margin is expected to witness a steady margin improvement of a minimum 15%, thus inching toward the target set for 2023.
Zacks Rank & Stocks to Consider
ABB currently carries a Zacks Rank #3 (Hold). Some better-ranked companies from the industrial products sector are discussed below:
Greif, Inc. (GEF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). GEF delivered a trailing four-quarter earnings surprise of 22.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
GEF’s earnings estimates have increased 17.8% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 11.9% in the past six months.
Titan International, Inc. presently flaunts a Zacks Rank of 1. Its earnings surprise in the last four quarters was 56.4%, on average.
In the past 60 days, TWI’s earnings estimates have increased 43.3% for 2022. The stock has surged 59.9% in the past six months.
RBC Bearings Incorporated presently has a Zacks Rank #2 (Buy). ROLL’s earnings surprise in the last four quarters was 3.4%, on average.
In the past 60 days, the stock’s earnings estimates have increased 5.9% for fiscal 2023 (ending March 2023). The stock has rallied 14.4% in the past six months.