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Emerson (EMR) Q1 Earnings Miss, Soar Y/Y on Higher Revenues
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Emerson Electric Co. (EMR - Free Report) reported first-quarter fiscal 2023 (ended Dec 31, 2023) adjusted earnings of 78 cents per share, which missed the Zacks Consensus Estimate as well as our estimate of 88 cents. The bottom line declined by double digits in the reported quarter.
Emerson’s net sales of $3,373 million, missed the Zacks Consensus Estimate of $3,467 million. This compares with our estimate of $3,472.5 million. The top line increased 7% year over year. The underlying sales were up 6%.
Segmental Details
Effective from the fiscal first quarter of 2023, the company started reporting under two segments namely Intelligent Devices and Software and Control Automation Solutions.
The Intelligent Devices segments’ net sales came in at $2,539 million, increasing 0.7% year over year. The segment consists of four subgroups, namely Final Control, Measurement & Analytical, Discrete Automation and Safety & Productivity. Final Control revenues increased to $862 million from $817 million. Measurement & Analytical generated revenues of $749 million, up from $737 million. Discrete Automation revenue totaled $618 million compared with $617 million reported in the year-ago quarter. Safety & Productivity decreased to $310 million from $351 million.
Software and Control Automation Solutions generated net sales of $ 849 million in the fiscal first quarter, up 30.2% year over year. The segment consists of two subgroups namely Control Systems & Software, & AspenTech. Control Systems & Software reported revenues of $606 million in the quarter. AspenTech generated net sales of $243 million.
Emerson Electric Co. Price, Consensus and EPS Surprise
In the quarter under review, Emerson's cost of sales increased 0.7% year over year to $1,753 million. The pretax margin in the quarter was 12.5% compared with 29.8% in the year-ago period. Adjusted EBITA margin came in at 19.7% compared with 20.1% in the year-ago quarter. Selling, general and administrative expenses increased 21.3% to $1,030 million.
Balance Sheet and Cash Flow
Exiting first-quarter fiscal 2023, Emerson had cash and cash equivalents of $2,271 million compared with $4,726 million in the year-ago quarter. Long-term debt was $8,159 million compared with $8,718 million in the year-ago period. In the first three months of fiscal 2023, the company repaid debts of $9 million.
In the first three months of fiscal 2023, the company generated net cash of $418 million from operating activities, reflecting a decrease of 20.1% from the year-ago period. Capital expenditure was $59 million, down from $73 million in the year-ago period.
In the first three months of fiscal 2023, the company paid out dividends of $306 million and repurchased common stocks worth $2000 million.
Fiscal 2023 Outlook
After the Climate Technologies divestiture, the company's 2023 continuing operations will reflect the 45% common equity ownership in the income, or loss, of Climate Technologies.
Emerson anticipates net sales growth of 8-10% year over year in fiscal 2023 compared with 7-9% predicted earlier. Underlying sales are expected to rise 6.5-8.5% in the year.
EMR anticipates earnings per share of $3.55-$3.70 for fiscal 2023 compared with $3.51-$3.66 expected earlier. Adjusted earnings per share are estimated to be $4.00–$4.15 per share.
For the fiscal second quarter of 2023, Emerson anticipates net sales growth of 10.5-12.5% and Underlying Sales Growth of 8-10%, year over year. Adjusted EPS is anticipated to be 95 cents - $1.00 per share.
Zacks Rank & Other Stocks to Consider
EMR currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
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Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 20.1%, on average.
AIT’s earnings estimates have increased 10.9% for fiscal 2023 (ending June 2023) in the past 60 days. Shares of Applied Industrial have risen 41.2% in the past six months.
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In the past 60 days, Valmont’s earnings estimates have increased by a penny. The stock has rallied 17.6% in the past six months.
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Emerson (EMR) Q1 Earnings Miss, Soar Y/Y on Higher Revenues
Emerson Electric Co. (EMR - Free Report) reported first-quarter fiscal 2023 (ended Dec 31, 2023) adjusted earnings of 78 cents per share, which missed the Zacks Consensus Estimate as well as our estimate of 88 cents. The bottom line declined by double digits in the reported quarter.
Emerson’s net sales of $3,373 million, missed the Zacks Consensus Estimate of $3,467 million. This compares with our estimate of $3,472.5 million. The top line increased 7% year over year. The underlying sales were up 6%.
Segmental Details
Effective from the fiscal first quarter of 2023, the company started reporting under two segments namely Intelligent Devices and Software and Control Automation Solutions.
The Intelligent Devices segments’ net sales came in at $2,539 million, increasing 0.7% year over year. The segment consists of four subgroups, namely Final Control, Measurement & Analytical, Discrete Automation and Safety & Productivity. Final Control revenues increased to $862 million from $817 million. Measurement & Analytical generated revenues of $749 million, up from $737 million. Discrete Automation revenue totaled $618 million compared with $617 million reported in the year-ago quarter. Safety & Productivity decreased to $310 million from $351 million.
Software and Control Automation Solutions generated net sales of $ 849 million in the fiscal first quarter, up 30.2% year over year. The segment consists of two subgroups namely Control Systems & Software, & AspenTech. Control Systems & Software reported revenues of $606 million in the quarter. AspenTech generated net sales of $243 million.
Emerson Electric Co. Price, Consensus and EPS Surprise
Emerson Electric Co. price-consensus-eps-surprise-chart | Emerson Electric Co. Quote
Margin Details
In the quarter under review, Emerson's cost of sales increased 0.7% year over year to $1,753 million. The pretax margin in the quarter was 12.5% compared with 29.8% in the year-ago period. Adjusted EBITA margin came in at 19.7% compared with 20.1% in the year-ago quarter. Selling, general and administrative expenses increased 21.3% to $1,030 million.
Balance Sheet and Cash Flow
Exiting first-quarter fiscal 2023, Emerson had cash and cash equivalents of $2,271 million compared with $4,726 million in the year-ago quarter. Long-term debt was $8,159 million compared with $8,718 million in the year-ago period. In the first three months of fiscal 2023, the company repaid debts of $9 million.
In the first three months of fiscal 2023, the company generated net cash of $418 million from operating activities, reflecting a decrease of 20.1% from the year-ago period. Capital expenditure was $59 million, down from $73 million in the year-ago period.
In the first three months of fiscal 2023, the company paid out dividends of $306 million and repurchased common stocks worth $2000 million.
Fiscal 2023 Outlook
After the Climate Technologies divestiture, the company's 2023 continuing operations will reflect the 45% common equity ownership in the income, or loss, of Climate Technologies.
Emerson anticipates net sales growth of 8-10% year over year in fiscal 2023 compared with 7-9% predicted earlier. Underlying sales are expected to rise 6.5-8.5% in the year.
EMR anticipates earnings per share of $3.55-$3.70 for fiscal 2023 compared with $3.51-$3.66 expected earlier. Adjusted earnings per share are estimated to be $4.00–$4.15 per share.
For the fiscal second quarter of 2023, Emerson anticipates net sales growth of 10.5-12.5% and Underlying Sales Growth of 8-10%, year over year. Adjusted EPS is anticipated to be 95 cents - $1.00 per share.
Zacks Rank & Other Stocks to Consider
EMR currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
Allegion plc (ALLE - Free Report) presently sports a Zacks Rank #1 (Strong Buy). ALLE’s earnings surprise in the last four quarters was 8.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
In the past 60 days, Allegion’s earnings estimates have remained steady for 2022. The stock has gained 21.3% in the past six months.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently carries a Zacks Rank of 2 and a trailing four-quarter earnings surprise of 20.1%, on average.
AIT’s earnings estimates have increased 10.9% for fiscal 2023 (ending June 2023) in the past 60 days. Shares of Applied Industrial have risen 41.2% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 12.5%, on average.
In the past 60 days, Valmont’s earnings estimates have increased by a penny. The stock has rallied 17.6% in the past six months.