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ABB Q1 Earnings and Revenues Miss Estimates, Orders Rise Y/Y
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ABB Ltd reported weaker-than-expected first-quarter 2022 results, wherein earnings missed estimates by 8.8%, while revenues fell shy of the same by 5.1%.
Adjusted earnings came in at 31 cents per share, lagging the Zacks Consensus Estimate of 34 cents. The bottom line recorded an increase of 24% on a year-over-year basis.
Top-Line Details
ABB’s first-quarter revenues totaled $6,965 million, up 1% from the year-ago quarter’s figure. The upside can be attributed to revenue growth across most of its segments. On a comparable basis, revenues grew 7%. The top line missed the consensus estimate of $7,338 million.
In the reported quarter, total orders were $9,373 million, increasing 21% year over year. The metric rose 28% on a comparable basis, supported by strength across ABB’s businesses. Exiting the first quarter, order backlog was $18,901 million, up 28% year over year.
Segmental Details
ABB reports revenues under four segments as discussed below:
Electrification: Revenues totaled $3,327 million, increasing 6% year over year. Orders were up 25% year over year to $4,397 million, driven by strength across the end-markets.
Process Automation: Revenues were $1,506 million, increasing 7% year over year. Orders inched up 2% to $1,692 million, driven by strong demand across marine, and mining & metal end-markets. Also, orders improved in the service business.
Motion: Revenues amounted to $1,572 million, down 6% from the year-ago quarter’s number. Orders expanded 15% to $2,202 million on account of ramped-up customer activity across the business segments.
Robotics & Discrete Automation: Revenues were $730 million, decreasing 14% year over year. Orders grew 56% to $1,308 million. Orders improved across machine automation, the general industry as well as automotive and service robotic industries.
In the reported quarter, ABB’s total cost of sales increased 1.1% year over year to $4,684 million. The same represented 67.3% of the first-quarter revenues compared with 67.1% a year ago. Gross margin was 32.7%, down from 32.9% reported in the year-ago quarter.
Selling, general and administrative expenses decreased 1.9% to $1,239 million.
Operational earnings before interest, taxes and amortization (EBITA) in the quarter increased 4% to $997 million. Operational EBITA margin grew 50 basis points to 14.3%.
Balance Sheet and Cash Flow
Exiting first-quarter 2022, ABB had cash and cash equivalents of $5,216 million, up from $4,159 million recorded in the previous quarter. Long-term debt was $6,171 million, higher than $4,177 million at the end of the previous quarter.
In the first three months of 2022, net cash used in operating activities totalled $573 million compared with $543 million provided in the year-ago quarter.
In the first three months of 2022, ABB paid out dividends worth $889 million compared with $844 million in the year-ago period. In the same period, ABB purchased a treasury stock worth $1,561 million compared with $1,386 million in the year-ago quarter.
Outlook
For the second quarter of 2022, ABB expects the underlying market activity to be stable. Management expects support from a solid order backlog and a positive momentum in the market.
For the June quarter, ABB anticipates revenues to be seasonally higher on a sequential basis (in absolute terms). Management expects the Operational EBITA margin to be stable or marginally up in the second quarter, sequentially.
For 2022, ABB expects to benefit from a strong market momentum and a solid order backlog.
Zacks Rank & Stocks to Consider
ABB currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the Zacks Industrial Products sector are discussed below.
In the past 60 days, earnings estimates for NDSN have increased 1.1% for fiscal 2022 (ending October 2022). The stock has declined 10.8% in the past six months.
Donaldson Company, Inc. (DCI - Free Report) presently carries a Zacks Rank of 2. DCI delivered a trailing four-quarter earnings surprise of 4.2%, on average.
Earnings estimates for DCI have increased 0.7% for fiscal 2022 (ending July 2022) in the past 60 days. Its shares have decreased 12% in the past six months.
Ferguson plc (FERG - Free Report) is presently Zacks #2 Ranked. FERG’s earnings surprise in the last four quarters was 14.2%, on average.
In the past 60 days, earnings estimates for FERG have increased 7% for fiscal 2022 (ending July 2022). The stock has declined 7.4% in the past six months.
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ABB Q1 Earnings and Revenues Miss Estimates, Orders Rise Y/Y
ABB Ltd reported weaker-than-expected first-quarter 2022 results, wherein earnings missed estimates by 8.8%, while revenues fell shy of the same by 5.1%.
Adjusted earnings came in at 31 cents per share, lagging the Zacks Consensus Estimate of 34 cents. The bottom line recorded an increase of 24% on a year-over-year basis.
Top-Line Details
ABB’s first-quarter revenues totaled $6,965 million, up 1% from the year-ago quarter’s figure. The upside can be attributed to revenue growth across most of its segments. On a comparable basis, revenues grew 7%. The top line missed the consensus estimate of $7,338 million.
In the reported quarter, total orders were $9,373 million, increasing 21% year over year. The metric rose 28% on a comparable basis, supported by strength across ABB’s businesses. Exiting the first quarter, order backlog was $18,901 million, up 28% year over year.
Segmental Details
ABB reports revenues under four segments as discussed below:
Electrification: Revenues totaled $3,327 million, increasing 6% year over year. Orders were up 25% year over year to $4,397 million, driven by strength across the end-markets.
Process Automation: Revenues were $1,506 million, increasing 7% year over year. Orders inched up 2% to $1,692 million, driven by strong demand across marine, and mining & metal end-markets. Also, orders improved in the service business.
Motion: Revenues amounted to $1,572 million, down 6% from the year-ago quarter’s number. Orders expanded 15% to $2,202 million on account of ramped-up customer activity across the business segments.
Robotics & Discrete Automation: Revenues were $730 million, decreasing 14% year over year. Orders grew 56% to $1,308 million. Orders improved across machine automation, the general industry as well as automotive and service robotic industries.
ABB Ltd Price, Consensus and EPS Surprise
ABB Ltd price-consensus-eps-surprise-chart | ABB Ltd Quote
Operational EBITA Margin
In the reported quarter, ABB’s total cost of sales increased 1.1% year over year to $4,684 million. The same represented 67.3% of the first-quarter revenues compared with 67.1% a year ago. Gross margin was 32.7%, down from 32.9% reported in the year-ago quarter.
Selling, general and administrative expenses decreased 1.9% to $1,239 million.
Operational earnings before interest, taxes and amortization (EBITA) in the quarter increased 4% to $997 million. Operational EBITA margin grew 50 basis points to 14.3%.
Balance Sheet and Cash Flow
Exiting first-quarter 2022, ABB had cash and cash equivalents of $5,216 million, up from $4,159 million recorded in the previous quarter. Long-term debt was $6,171 million, higher than $4,177 million at the end of the previous quarter.
In the first three months of 2022, net cash used in operating activities totalled $573 million compared with $543 million provided in the year-ago quarter.
In the first three months of 2022, ABB paid out dividends worth $889 million compared with $844 million in the year-ago period. In the same period, ABB purchased a treasury stock worth $1,561 million compared with $1,386 million in the year-ago quarter.
Outlook
For the second quarter of 2022, ABB expects the underlying market activity to be stable. Management expects support from a solid order backlog and a positive momentum in the market.
For the June quarter, ABB anticipates revenues to be seasonally higher on a sequential basis (in absolute terms). Management expects the Operational EBITA margin to be stable or marginally up in the second quarter, sequentially.
For 2022, ABB expects to benefit from a strong market momentum and a solid order backlog.
Zacks Rank & Stocks to Consider
ABB currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the Zacks Industrial Products sector are discussed below.
Nordson Corporation (NDSN - Free Report) presently has a Zacks Rank #2 (Buy). NDSN earnings surprise in the last four quarters was 9.9%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, earnings estimates for NDSN have increased 1.1% for fiscal 2022 (ending October 2022). The stock has declined 10.8% in the past six months.
Donaldson Company, Inc. (DCI - Free Report) presently carries a Zacks Rank of 2. DCI delivered a trailing four-quarter earnings surprise of 4.2%, on average.
Earnings estimates for DCI have increased 0.7% for fiscal 2022 (ending July 2022) in the past 60 days. Its shares have decreased 12% in the past six months.
Ferguson plc (FERG - Free Report) is presently Zacks #2 Ranked. FERG’s earnings surprise in the last four quarters was 14.2%, on average.
In the past 60 days, earnings estimates for FERG have increased 7% for fiscal 2022 (ending July 2022). The stock has declined 7.4% in the past six months.