Emerson Electric Reports Q3 Sales Growth Of 7%, Raises FY22 EPS Guidance

Emerson Electric Reports Q3 Sales Growth Of 7%, Raises FY22 EPS Guidance
  • Emerson Electric Co EMR reported third-quarter FY22 net sales growth of 7% year-over-year to $5 billion, missing the consensus of $5.12 billion. Underlying sales were up 7%.
  • June trailing three-month underlying orders were up 10%.
  • Net sales by geography: Americas were up 14%, Europe was flat, and Asia, Middle East & Africa was down 1%. China was down 6%, primarily due to COVID-19 lockdowns.
  • Adjusted EPS improved 16% Y/Y to $1.38, beating the consensus of $1.30.
  • Related: Emerson Sells InSinkErator Business To Whirlpool For $3B
  • The pretax margin was 23.9%, up 720 bps. Adjusted EBITA margin was 22.8%, up by 270 bps.
  • Automation Solutions orders were up 13%, and the backlog increased by $100 million compared to the prior quarter to $6.2 billion. Net sales were flat in the quarter, with underlying sales up 4%. Adjusted segment EBITA margin increased 70 bps to 21%.
  • Commercial & Residential Solution's underlying orders were up 5% Y/Y, and the backlog decreased by $100 million to $1.3 billion. Net sales increased 8% Y/Y, with underlying sales up 13%. Adjusted segment EBITA margin fell 50 bps to 22%.
  • AspenTech net sales were $239 million, and the adjusted segment EBITA margin was 53.8%.                       
  • EMR's cash provided by operating activities year-to-date totaled $1.71 billion, compared to $2.72 billion a year ago. It held cash and equivalents of $2.53 billion as of June 30, 2022.
  • FY22 Outlook: Emerson Electric expects net sales growth of 7% - 8% (prior expectation 8% - 10%), with underlying sales growth of 9% - 10% (prior 9% - 11%).
  • It expects an adjusted EPS of $5.05 - $5.15 (prior $4.95 - $5.10) versus the consensus of $5.05. Operating Cash Flow of $3 billion (prior $3.6 billion) and FCF of $2.5 billion (prior $3 billion).
  • Price Action: EMR shares are trading lower by 3.39% at $86.98 on the last check Tuesday.

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