Emerson Electric (EMR) Tops Q1 EPS by 15c, Revenues Beat; Offers FY21 EPS Guidance Above Consensus

Emerson Electric (NYSE: EMR) reported Q1 EPS of $0.83, $0.15 better than the analyst estimate of $0.68. Revenue for the quarter came in at $4.2 billion versus the consensus estimate of $3.97 billion.

• First quarter GAAP net sales of $4.2 billion were flat from the year prior; underlying sales were down 2 percent, which was ahead of management's November guidance.
• First quarter GAAP EPS was $0.74, up 40 percent from the year prior; adjusted EPS, which excludes restructuring and first year purchase accounting charges and fees, was $0.83, up 24 percent.
• Strong operating cash flow of $808 million in the quarter, up 90 percent; Free cash flow was $686 million, up 121 percent.
• Restructuring and related actions of $69 million were initiated in the quarter, continuing aggressive execution of the comprehensive cost reset program to return the company to record adjusted EBIT margins.

“Emerson’s leadership team and global operations remain steadfastly focused on safely serving customers and protecting business continuity in essential industries including life sciences, power, food and beverage, home comfort, energy, and water,” said Emerson Chairman and CEO David N. Farr. “Our dedicated team across the globe continues to make me proud as they work tirelessly to help our customers navigate ongoing industry and macroeconomic turbulence. As more COVID-19 vaccines are approved and begin to be distributed, we remain optimistic for some stabilization in the second half of the year. In the meantime, we will continue to operate nimbly and safely to serve our customers in vital industries.

“Orders and sales continued their upward trajectory in the quarter, and operating results exceeded expectations. These factors enabled us to deliver strong profitability, earnings and cash flow, driven by our ongoing robust cost containment and restructuring actions, as well as improvement in some of our end markets. As the broader macroeconomic outlook continues to stabilize, we are well-positioned with a more agile, lean, and technology-centric organization going forward.”

GUIDANCE:

Emerson Electric sees FY2021 EPS of $3.60-$3.80, versus the consensus of $3.51.

As macroeconomic uncertainties related to COVID-19 begin to slowly wane, we continue to expect a slow-but-steady improvement in industrial demand over the course of 2021 as more vaccines become available and distribution methods mature. We also expect that residential demand for many of our markets around the world will remain robust through the year.

Within this framework, we now expect underlying revenue to be positive for the full year. However, due to the delayed recovery timeline in many key automation markets, especially in North America, we remain committed to our plan of total company restructuring spend of approximately $200 million for the full year. Lastly, the updated guidance assumes no major operational or supply chain disruptions and oil prices in the $45 to $55 range for the remainder of the year.

“Looking ahead to the remainder of the fiscal year, we will continue to invest in core technologies, software solutions, and other capabilities that strengthen our position in attractive and growing marketplaces, including alternative fuels, renewable energy, power transmission and distribution, and life sciences, among others,” Farr said. “Digital transformation and ESG initiatives continue to gain momentum among many of our industrial customers, and these portfolio enhancements and development efforts will enable us to help more customers not only adapt, but truly excel in their new operating realities post-pandemic.”

For earnings history and earnings-related data on Emerson Electric (EMR) click here.

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