Emerson Electric Co.’s ( EMR Quick Quote EMR - Free Report) second-quarter fiscal 2021 (ended Mar 31, 2021) adjusted earnings of 97 cents per share beat the Zacks Consensus Estimate of 90 cents. On a year-over-year basis, the bottom line improved 9%. Inside the Headlines
Emerson’s net sales were $4,431 million in the quarter, reflecting an increase of 6% from the year-ago quarter. Underlying sales were up 2%, while acquired assets and currency translation had 1% and 3% of positive impacts on sales, respectively. Also, the top line beat the Zacks Consensus Estimate of $4,358 million.
The company reports net sales under two segments — Automation Solutions and Commercial & Residential Solutions. Fiscal second-quarter segmental results are briefly discussed below: Automation Solutions’ net sales were $2,793 million, increasing 3% year over year. Underlying sales of the segment declined 2%. Commercial & Residential Solutions generated net sales of $1,645 million in the fiscal second quarter, up 13% year over year. Underlying sales were up 11%. Under the segment, Climate Technologies’ sales increased 13.1% to $1,160 million, and that from Tools & Home Products jumped 12.3% to $485 million. Gross Margin
In the quarter under review, Emerson's cost of sales increased 6.5% year over year to $2,569 million. It represented 58% of net sales compared with 57.9% in the year-ago quarter. Gross margin was 42%, down 10 basis points. Selling, general and administrative (SG&A) expenses increased 7.2% to $1,054 million. As a percentage of sales, SG&A expenses were 23.8% compared with 23.6% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting second-quarter fiscal 2021, Emerson had cash and cash equivalents of $2,342 million, down from $2,583 million at the year-ago quarter. Long-term debt balance increased 47% to $5,823 million. During the first six months of fiscal 2021, the company repaid debts of $301 million.
In the first half of fiscal 2021, it generated net cash of $1,615 million from operating activities, reflecting an increase of 59.6% from the year ago period. Capital expenditure was $222 million, down from $225 million. During the first six months of fiscal 2021, the company paid out dividends amounting to $606 million and repurchased shares worth $78 million. Outlook
For fiscal 2021 (ending September 2021), it anticipates net sales growth of 6-9%. Underlying sales are expected to grow in the range of 3-6%.
Adjusted earnings per share are predicted to be $3.90 for fiscal 2021. Emerson expects Automation Solutions’ net sales to grow in the range of 3-5%, while Commercial & Residential Solutions’ net sales are projected to increase 14-16%. Notably, the company anticipates continued improvement in the demand environment in the fiscal third quarter and ahead. Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #3 (Hold).
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