Emerson Reports Record First-Quarter 2005 Sales Up 10 Percent to $4 Billion; 21 Percent Increase in EPS to $0.70.ST. LOUIS -- Emerson (NYSE NYSE See: New York Stock Exchange : EMR (ElectroMagnetic Radiation) The emanation of energy from everything in the universe. Although the EMR from electrical and electronic devices is typically measured for practical, every-day situations, every object, including humans, emanates energy. ) announced that net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 10 percent to $4 billion in the first quarter of fiscal 2005, ended December December: see month. 31, 2004, with increases in all business segments and double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. sales growth in Process Management, Industrial Automation, and Network Power. Underlying sales were up 5 percent for the quarter, excluding the impact of exchange rates (3 percent) and acquisitions (2 percent). Net earnings for the first quarter increased 22 percent to $297 million, or $0.70 per share. Net earnings in the first quarter of fiscal 2004 were $244 million, or $0.58 per share. "Emerson had a great first quarter and a solid start to fiscal year 2005," said Emerson Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. David N. Farr FARR Find and Run Robot FARR Friedreich Ataxia with Retained Reflexes FARR Forward Area Alerting Radar Receiver FARR Focused Area Risk Reduction (Air Force) FARR Forward Area Refueling and Rearming . "The record first-quarter sales reflect the strength in North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. commercial and industrial markets and solid international growth led by a 15 percent increase in Asia and a 14 percent increase in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . Industrial Automation sales increased in every business and in every major region, with strength in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and Asia. Process Management benefited from an upturn in many of its core markets as it continues to outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. the competition with its leading technology, solutions, and services. "As we discussed in our annual investor meeting last week, our technology investment and leadership are increasing the speed with which we bring new products to market and supporting continued penetration gains across our business platforms. We continue to invest and redeploy re·de·ploy tr.v. re·de·ployed, re·de·ploy·ing, re·de·ploys 1. To move (military forces) from one combat zone to another. 2. assets globally to serve our expanding customer base and penetrate faster-growing international markets. Coupled with the success of our major organic growth initiatives, these actions are driving record sales and higher long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. across the company. "During the first quarter, we maintained high levels of profitability, as benefits from sales volume leverage and our previous restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). actions offset higher material costs and the dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. from the Marconi (Marconi Communications, Warrendale, PA, www.marconi.com) A leading manufacturer of networking equipment. Founded in 1990 as FORE Systems by four Carnegie Mellon University faculty members, the company name was derived from its founders' first names: Francois, Onat, Robert and Eric. acquisition. We expect that our shift to best-cost manufacturing over the past three years, together with our aggressive sourcing initiatives, productivity improvements, and price increases where necessary, will allow us to deliver an overall improvement in operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for fiscal year 2005. "Free cash flow was $169 million for the quarter, compared to $217 million in the prior-year period (operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. was $261 million, compared to $284 million), with the decrease primarily due to the additional working capital necessary to support increased sales, as well as increased capital expenditures, including an expansion in scroll compressor A scroll compressor, also known as scroll pump and scroll vacuum pump, uses two interleaved spiral-like vanes to pump or compress fluids such as liquids and gases. The vane geometry may be involute, archimedean spiral, or hybrid curves. manufacturing capacity. We continue to excel on our operational efficiency and lean manufacturing Lean manufacturing is the production of goods using less of everything compared to mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. initiatives, with the average 'days-in-the-cash-cycle' improving to 74 days in the quarter from 81 days in the prior-year period. "The ratio of net debt to net capital declined to 25.8 percent, versus 33.3 percent in the prior-year period, and the interest coverage ratio was 7.9 times for the first quarter of 2005. Operating cash flow to total debt improved to 52.7 percent, compared to 39.0 percent in the prior-year period. Our strong balance sheet, earnings growth and cash flow performance give us the flexibility to create shareholder value through acquisitions and investments in our core businesses at the same time that we return 50 percent to 60 percent of operating cash flow to shareholders through dividends and share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. . "The acceleration of underlying orders in December compared to the prior-year period is another indication that the pace of business activity remains favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. and the momentum of the global economy continues. The orders reflect strong demand in emerging markets, particularly Asia and Latin America, and solid demand in the United States, while Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). remains slightly positive."We believe this momentum will help drive reported sales growth between 8 percent and 11 percent for fiscal 2005 and allow Emerson to deliver 10 percent to 15 percent earnings per share growth. We also believe that double-digit earnings growth, strong operating cash flow, and continued capital efficiency improvements will continue to drive higher return on total capital in 2005." The fiscal 2005 forecast for earnings growth of 10 percent to 15 percent excludes the tax impact of potentially repatriating foreign earnings under the American Jobs Creation Act. At this time the company has not decided whether, and to what extent, it might repatriate repatriate To bring home assets that are currently held in a foreign country. Domestic corporations are frequently taxed on the profits that they repatriate, a factor inducing the firms to leave overseas the profits earned there. foreign earnings under this Act. Upcoming Investor Events On Tuesday, February 1, 2005, at 2:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. (1:00 p.m. CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. ), Emerson senior management will discuss the first-quarter fiscal 2005 results during an investor conference call. All interested parties may listen to the live conference call via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by going to the Investor Relations Investor relations The process by which the corporation communicates with its investors. area of Emerson's Web site at www.gotoemerson.com/financial and completing a brief registration form. A replay of the conference call will be available for the next three months at the same location on the Web site. Details of upcoming events will be posted as they occur in the Investor Relations Calendar of Events on the corporate Web site. Forward-Looking and Cautionary Statements Statements in this release that are not strictly historical may be "forward-looking" statements, which involve risks and uncertainties. These include economic and currency conditions, market demand, pricing, and competitive and technological factors, among others, as set forth in the company's most recent Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the SEC.
TABLE 1
EMERSON AND SUBSIDIARIES
CONSOLIDATED OPERATING RESULTS
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
Quarter Ended December 31, Percent
2003 2004 Change
Net sales $3,600 $3,970 10%
Less: Costs and expenses
Cost of sales 2,318 2,558
SG&A expenses 790 872
Other deductions, net 78 52
Interest expense, net 57 54
Earnings before income taxes 357 434 22%
Income taxes 113 137
Net earnings $ 244 $ 297 22%
Diluted earnings per common share $ 0.58 $ 0.70 21%
Quarter Ended December 31,
2003 2004
Other deductions, net
Rationalization of operations $ 33 $ 29
Amortization of intangibles 6 6
Other 39 17
Total $ 78 $ 52
TABLE 2
EMERSON AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
December 31,
2003 2004
Assets
Cash and equivalents $ 1,009 $ 1,485
Receivables, net 2,705 3,027
Inventories 1,647 1,861
Other current assets 619 468
Total current assets 5,980 6,841
Property, plant & equipment, net 2,944 2,955
Goodwill 5,013 5,379
Other 1,770 1,781
$15,707 $16,956
Liabilities and Stockholders' Equity
Short-term borrowings and current
maturities of long-term debt $ 647 $ 1,280
Accounts payable 1,324 1,520
Accrued expenses 1,482 1,748
Income taxes 190 201
Total current liabilities 3,643 4,749
Long-term debt 3,733 2,886
Other liabilities 1,605 1,666
Stockholders' equity 6,726 7,655
$15,707 $16,956
TABLE 3
EMERSON AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(DOLLARS IN MILLIONS)
Quarter Ended December 31,
2003 2004
Operating Activities
Net earnings $ 244 $ 297
Depreciation and amortization 131 137
Changes in operating working capital (127) (203)
Other 36 30
Net cash provided by operating activities 284 261
Investing Activities
Capital expenditures (67) (92)
Purchases of businesses, net of cash
and equivalents acquired - (28)
Other 1 (10)
Net cash used in investing activities (66) (130)
Financing Activities
Net increase in short-term borrowings 226 139
Proceeds from long-term debt 3 2
Principal payments on long-term debt (5) (15)
Dividends paid (169) (175)
Treasury stock, net 11 (10)
Net cash provided by (used in)
financing activities 66 (59)
Effect of exchange rate changes on cash
and equivalents 29 67
Increase in cash and equivalents 313 139
Beginning cash and equivalents 696 1,346
Ending cash and equivalents $1,009 $1,485
TABLE 4
EMERSON AND SUBSIDIARIES
SEGMENT SALES AND EARNINGS
(DOLLARS IN MILLIONS)
Quarter Ended December 31,
2003 2004
Sales
Process Management $ 849 $ 962
Industrial Automation 695 796
Network Power 657 773
Climate Technologies 596 604
Appliance and Tools 901 938
3,698 4,073
Eliminations (98) (103)
Net Sales $3,600 $3,970
Quarter Ended December 31,
2003 2004
Earnings
Process Management $ 90 $ 130
Industrial Automation 86 120
Network Power 70 67
Climate Technologies 80 86
Appliance and Tools 127 119
453 522
Differences in accounting methods 29 33
Corporate and other (68) (67)
Interest expense, net (57) (54)
Earnings before income taxes $ 357 $ 434
Quarter Ended December 31,
2003 2004
Rationalization of operations
Process Management $ 8 $ 5
Industrial Automation 4 4
Network Power 12 12
Climate Technologies 7 2
Appliance and Tools 6 6
Corporate (4) -
Total Emerson $ 33 $ 29
TABLE 5
Reconciliations of Non-GAAP Financial Measures
The following reconciles each non-GAAP measure with the most directly
comparable GAAP measure (dollars in millions):
Percent
2004 2005 Change
First-Quarter Cash Flow
Operating Cash Flow $284 $261 (8%)
Capital Expenditures 67 92
Free Cash Flow (Non-GAAP) $217 $169 (22%)
All amounts above are GAAP financial measures except as noted.
|
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion