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Emerson Electric Co. (EMR - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) adjusted earnings of $1.22 per share, which beat the Zacks Consensus Estimate of $1.04. The bottom line increased 56.4% from the year-ago quarter's level.
Emerson’s net sales of $4.1 billion beat the consensus estimate of $3.9 billion. The top line increased 22.1% year over year, driven by solid segmental performance. The underlying sales were up 10% as well.
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 were $2.8 billion, up 11% year over year. Our estimate for segmental revenues was $2.6 billion. The segment consists of four subgroups, namely Final Control, Measurement & Analytical, Discrete Automation and Safety & Productivity.
Final Control’s revenues increased to $940 million from $862 million in the first quarter of fiscal 2024. Measurement & Analytical generated revenues of $947 million, up from $749 million reported in the year-ago period. Discrete Automation’s revenues totaled $613 million compared with $618 million reported in the year-ago quarter. Safety & Productivity’s revenues increased to $322 million from $310 million in the year-ago quarter.
The Software and Control Automation Solutions segment generated net sales of $1.31 billion in the fiscal first quarter, up 3% year over year. Our estimate for segmental revenues was $1.28 billion. The segment consists of three subgroups, namely Control Systems & Software, AspenTech and Test & Measurement.
Control Systems & Software reported revenues of $675 million compared with $606 million reported in the year-ago quarter. AspenTech generated net sales of $257 million, up 6% year over year. Test & Measurement reported revenues of $382 million in the fiscal first quarter.
Emerson Electric Co. Price, Consensus and EPS Surprise
In the quarter under review, Emerson's cost of sales increased 25.6% year over year to $2.2 billion. The pretax earnings margin in the quarter was 3.4% compared with 12.5% in the year-ago period. Adjusted EBITA margin was 23.4% compared with 19.7% in the year-ago quarter. Selling, general and administrative expenses increased 24% to $1.3 billion.
Balance Sheet and Cash Flow
Exiting first-quarter fiscal 2024, Emerson had cash and cash equivalents of $2.1 billion compared with $8.1 billion at the end of fiscal 2023 (ended September 2023). Long-term debt was $7.63 billion compared with $7.61 billion at the end of fiscal 2023. In the first three months of fiscal 2024, the company did not make any payment for long-term debt.
In the same period, the company generated net cash of $415 million from operating activities, reflecting a decrease of 0.7% from the year-ago period. Capital expenditure was $77 million, up from $59 million in the year-ago period.
For the second quarter of fiscal 2024 (ending March 2024), Emerson anticipates year-over-year net sales growth of 12.5-14.5% and underlying sales growth of 3.5-5.5%.
EMR anticipates earnings per share of 68-72 cents for the second quarter of fiscal 2024. Adjusted earnings per share are anticipated to be $1.22-$1.26 per share. The midpoint of the guided range — $1.24 — lies below the Zacks Consensus Estimate of earnings of $1.25 per share
Fiscal 2024 Outlook Up
Emerson has raised its sales outlook for fiscal 2024. The company now anticipates net sales growth of 14.5-17% year over year in fiscal 2024 compared with 13-15.5% expected before. Underlying sales are expected to rise 4.5-6.5% in the fiscal year compared with 4-6% anticipated earlier.
EMR anticipates earnings per share of $2.80 -$2.95 for fiscal 2024 compared with $3.82-$4.02 expected earlier. Adjusted earnings per share are estimated to be in the range of $5.30-$5.45 compared with $5.15-$5.35 expected earlier. The Zacks Consensus Estimate for the same is pegged at $5.29. The company expects operating cash flow to be in the band of $3.0-$3.1 billion for fiscal 2024. Free cash flow is anticipated to be in the $2.6-$2.7 billion range for the same period.
Performance of Other Industrial Companies
Tetra Tech, Inc. (TTEK - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) adjusted earnings of $1.40 per share, which surpassed the Zacks Consensus Estimate of $1.35. The bottom line surged 4.5% year over year, driven by strong momentum in each of its segments.
In the fiscal first quarter, Tetra Tech generated adjusted revenues of $1.2 billion, indicating a year-over-year increase of 37.3%. Adjusted net revenues (adjusted revenues minus subcontractor costs) were $1.0 billion, up 37.8% year over year. Tetra Tech’s revenues exceeded the consensus estimate of $974 million.
A. O. Smith Corporation’s (AOS - Free Report) fourth-quarter 2023 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 96 cents. The bottom line jumped 13% year over year, driven by the continued strong demand for residential water heaters in North America.
Net sales of $988.1 million narrowly missed the consensus estimate of $989 million. However, the top line increased 5.6% year over year.
Illinois Tool Works Inc. (ITW - Free Report) reported fourth-quarter 2023 adjusted earnings of $2.42 per share, which surpassed the Zacks Consensus Estimate of $2.40. Earnings increased 3.4% year over year.
The company’s revenues of $3.98 billion missed the consensus estimate of $4.01 billion. The top line inched up 0.3% year over year due to a favorable foreign currency translation of 1.2%. However, organic sales decreased 0.5% and divestitures reduced revenues by 0.4%.
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Emerson (EMR) Q1 Earnings Beat Estimates, Revenues Rise Y/Y
Emerson Electric Co. (EMR - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) adjusted earnings of $1.22 per share, which beat the Zacks Consensus Estimate of $1.04. The bottom line increased 56.4% from the year-ago quarter's level.
Emerson’s net sales of $4.1 billion beat the consensus estimate of $3.9 billion. The top line increased 22.1% year over year, driven by solid segmental performance. The underlying sales were up 10% as well.
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 were $2.8 billion, up 11% year over year. Our estimate for segmental revenues was $2.6 billion. The segment consists of four subgroups, namely Final Control, Measurement & Analytical, Discrete Automation and Safety & Productivity.
Final Control’s revenues increased to $940 million from $862 million in the first quarter of fiscal 2024. Measurement & Analytical generated revenues of $947 million, up from $749 million reported in the year-ago period. Discrete Automation’s revenues totaled $613 million compared with $618 million reported in the year-ago quarter. Safety & Productivity’s revenues increased to $322 million from $310 million in the year-ago quarter.
The Software and Control Automation Solutions segment generated net sales of $1.31 billion in the fiscal first quarter, up 3% year over year. Our estimate for segmental revenues was $1.28 billion. The segment consists of three subgroups, namely Control Systems & Software, AspenTech and Test & Measurement.
Control Systems & Software reported revenues of $675 million compared with $606 million reported in the year-ago quarter. AspenTech generated net sales of $257 million, up 6% year over year. Test & Measurement reported revenues of $382 million in the fiscal first quarter.
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 25.6% year over year to $2.2 billion. The pretax earnings margin in the quarter was 3.4% compared with 12.5% in the year-ago period. Adjusted EBITA margin was 23.4% compared with 19.7% in the year-ago quarter. Selling, general and administrative expenses increased 24% to $1.3 billion.
Balance Sheet and Cash Flow
Exiting first-quarter fiscal 2024, Emerson had cash and cash equivalents of $2.1 billion compared with $8.1 billion at the end of fiscal 2023 (ended September 2023). Long-term debt was $7.63 billion compared with $7.61 billion at the end of fiscal 2023. In the first three months of fiscal 2024, the company did not make any payment for long-term debt.
In the same period, the company generated net cash of $415 million from operating activities, reflecting a decrease of 0.7% from the year-ago period. Capital expenditure was $77 million, up from $59 million in the year-ago period.
EMR, carrying a Zacks Rank #3 (Hold), paid out dividends of $300 million and repurchased common stocks worth $175 million in the same period. You can see the complete list of today’s Zacks #1 Rank stocks here.
Q2 Fiscal 2024 Outlook
For the second quarter of fiscal 2024 (ending March 2024), Emerson anticipates year-over-year net sales growth of 12.5-14.5% and underlying sales growth of 3.5-5.5%.
EMR anticipates earnings per share of 68-72 cents for the second quarter of fiscal 2024. Adjusted earnings per share are anticipated to be $1.22-$1.26 per share. The midpoint of the guided range — $1.24 — lies below the Zacks Consensus Estimate of earnings of $1.25 per share
Fiscal 2024 Outlook Up
Emerson has raised its sales outlook for fiscal 2024. The company now anticipates net sales growth of 14.5-17% year over year in fiscal 2024 compared with 13-15.5% expected before. Underlying sales are expected to rise 4.5-6.5% in the fiscal year compared with 4-6% anticipated earlier.
EMR anticipates earnings per share of $2.80 -$2.95 for fiscal 2024 compared with $3.82-$4.02 expected earlier. Adjusted earnings per share are estimated to be in the range of $5.30-$5.45 compared with $5.15-$5.35 expected earlier. The Zacks Consensus Estimate for the same is pegged at $5.29. The company expects operating cash flow to be in the band of $3.0-$3.1 billion for fiscal 2024. Free cash flow is anticipated to be in the $2.6-$2.7 billion range for the same period.
Performance of Other Industrial Companies
Tetra Tech, Inc. (TTEK - Free Report) reported first-quarter fiscal 2024 (ended Dec 31, 2023) adjusted earnings of $1.40 per share, which surpassed the Zacks Consensus Estimate of $1.35. The bottom line surged 4.5% year over year, driven by strong momentum in each of its segments.
In the fiscal first quarter, Tetra Tech generated adjusted revenues of $1.2 billion, indicating a year-over-year increase of 37.3%. Adjusted net revenues (adjusted revenues minus subcontractor costs) were $1.0 billion, up 37.8% year over year. Tetra Tech’s revenues exceeded the consensus estimate of $974 million.
A. O. Smith Corporation’s (AOS - Free Report) fourth-quarter 2023 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 96 cents. The bottom line jumped 13% year over year, driven by the continued strong demand for residential water heaters in North America.
Net sales of $988.1 million narrowly missed the consensus estimate of $989 million. However, the top line increased 5.6% year over year.
Illinois Tool Works Inc. (ITW - Free Report) reported fourth-quarter 2023 adjusted earnings of $2.42 per share, which surpassed the Zacks Consensus Estimate of $2.40. Earnings increased 3.4% year over year.
The company’s revenues of $3.98 billion missed the consensus estimate of $4.01 billion. The top line inched up 0.3% year over year due to a favorable foreign currency translation of 1.2%. However, organic sales decreased 0.5% and divestitures reduced revenues by 0.4%.