[November 07, 2017] |
|
Emerson Reports Full Year and Fourth Quarter 2017 Results
Emerson (NYSE: EMR) today reported results for the fourth quarter and
fiscal year ended September 30, 2017.
Fiscal year net sales of $15.3 billion increased 5 percent, with
underlying sales up 1 percent excluding slightly unfavorable currency
and an impact from acquisitions of 4 percent. Underlying sales turned
positive in the second half of the fiscal year reflecting strengthening
global economic conditions, stabilizing oil prices and improving
industrial and emerging market demand. The Company exited the fiscal
year with September trailing three month underlying orders up 11
percent, which were in line with expectations communicated by management
in May 2017.
Pretax margin of 15.3 percent and EBIT margin of 16.4 percent decreased
70 and 80 basis points, respectively, due to dilution from the Valves &
Controls acquisition. Excluding Valves & Controls, EBIT margin of 17.9
percent increased 70 basis points. Earnings per share from continuing
operations increased 4 percent to $2.54. Excluding a ($0.10) impact from
Valves & Controls first year acquisition accounting charges, adjusted
earnings per share from continuing operations were $2.64, up 8 percent
compared with the prior year.
Operating cash flow from continuing operations was $2.7 billion and free
cash flow from continuing operations exceeded $2.2 billion, reflecting
135 percent conversion of net earnings from continuing operations, or
130 percent excluding Valves & Controls first year acquisition
accounting charges. As a percent of net sales, free cash flow from
continuing operations was a record-high 14.5 percent.
"Fiscal 2017 was an important year for Emerson as we successfully
completed the strategic portfolio repositioning announced over two years
ago, and our global management teams executed extremely well to deliver
strong earnings and cash flow against difficult market conditions," said
Chairman and Chief Executive Officer David N. Farr. "We are invigorated
as we enter fiscal 2018. Emerson is now wholly aligned around our two
business platforms, which gives our teams clear direction and an
unwavering focus on serving our customers and profitably building these
world class businesses through organic and inorganic opportunities."
Fourth Quarter Results
Net sales in the fourth quarter were up 13 percent, with underlying
sales up 3 percent excluding favorable currency of 1 percent and an
impact from acquisitions of 9 percent. The hurricanes that hit Texas and
Florida moderately reduced the fourth quarter sales of both business
platforms, and the Company expects to recover these sales over the next
twelve months as damaged areas rebuild. Automation Solutions underlying
sales growth continued to trend positively in the quarter, driven by
improving conditions in energy related, hybrid and general industrial
markets. Growth in Commercial & Residential Solutions moderated somewhat
due primarily to the impact of cooler weather and hurricanes in the
U.S., however favorable trends continued in construction markets in
North America and in refrigeration and air conditioning markets in Asia
and Europe.
Pretax margin of 15.5 percent and EBIT margin of 16.3 percent decreased
170 and 210 basis points, respectively. Excluding Valves & Controls,
EBIT margin of 19.7 percent increased 130 basis points driven primarily
by flow through of restructuring savings and lower restructuring spend.
Earnings per share from continuing operations were $0.77, up 4 percent
compared with the prior year, and were $0.83, up 12 percent excluding a
($0.06) impact from Valves & Controls first year acquisition accounting
charges related to inventory and backlog amortization.
Fourth Quarter Business Platform Results
Automation Solutions net sales increased 18 percent in the
quarter, with underlying sales up 3 percent excluding favorable currency
of 1 percent and an impact from acquisitions of 14 percent. September
trailing three month underlying orders were up 15 percent, reflecting
broad-based momentum across end markets and regions. The opportunity
funnel of large projects has continued to grow, and the Company expects
to have increasingly better visibility on project timing as our
customers' capital budgets firm up in the first calendar quarter of 2018.
North American underlying sales were up 10 percent led by energy, life
sciences and chemical markets. Demand in oil and gas markets was driven
by strong maintenance and plant turnaround activity, continued upstream
investment by shale customers and midstream upgrades and infrastructure
build-out. In the U.S., short-cycle MRO business remained strong, and
the mix of business continued to shift to mid-sized projects focused on
upgrading, optimizing or expanding existing facilities. Asia underlying
sales were up 2 percent as China was up 8 percent supported by strong
demand in process automation markets and robust demand in discrete
markets. Europe was up 2 percent and Latin America was down 18 percent.
Middle East/Africa was down 11 percent, but order rates have turned
positive. Margin decreased 30 basis points to 16.9 percent compared with
the prior year. Excluding the dilutive impact of the Valves & Controls
acquisition, margin increased 300 basis points to 20.2 percent, driven
by restructuring benefits, lower restructuring spend, leverage on higher
sales and favorable material costs. Going forward, continued strong
demand for MRO and mid-sized projects together with increasing momentum
in international markets provides support for solid underlying growth in
fiscal 2018.
Commercial & Residential Solutions fourth quarter net sales
increased 4 percent and underlying sales increased 3 percent excluding
favorable currency of 1 percent. September trailing three month
underlying orders were up 5 percent. Underlying sales in North America
were down 1 percent as both HVAC and refrigeration markets were affected
by cooler weather compared with the prior year and the disruption from
hurricanes that hit Texas and Florida. Asia grew 14 percent, driven by
both continued favorable demand in China as well as strong demand across
the region in refrigeration and air conditioning markets. Europe was up
4 percent, Latin America was down 5 percent and Middle East/Africa was
up over 20 percent. Margin decreased 110 basis points to 23.5 percent
compared with the prior year, including the results of the declining
ClosetMaid business which drove 50 basis points of margin dilution in
the quarter. The ClosetMaid divestiture closed early in the first
quarter of fiscal 2018. Consistent with management's expectations,
material cost pressure moderated compared with the third quarter. Mix
was unfavorable, as the North America compressor replacement business
slowed compared to the prior year due to cooler weather and recent
hurricanes. In fiscal 2018, global demand is expected to remain
favorable in air conditioning, refrigeration and construction markets,
supporting moderate underlying growth.
2018 Outlook
In fiscal 2018, the Company expects oil and gas prices to remain stable
in a range favorable for energy related markets, while growth in air
conditioning, refrigeration and global construction markets is expected
to continue. Automation Solutions net sales are expected to be up 14 to
16 percent, with underlying sales up 5 to 7 percent excluding an impact
from acquisitions and currency translation of 9 percent. Commercial &
Residential Solutions net sales are expected to be down 1 percent to up
1 percent and underlying sales are expected to be up 3 to 5 percent
excluding the impact of the ClosetMaid divestiture and currency
translation of 4 percent.
Total Emerson net sales are expected to be up 8 to 10 percent, with
underlying sales up 4 to 6 percent excluding a 4 percent impact from
acquisitions, divestitures and currency translation. Reported (GAAP) net
earnings per share are expected to be $2.66 to $2.86. Adjusted net
earnings per share are expected to be $2.75 to $2.95, excluding a
($0.03) impact from Valves & Controls first year acquisition accounting
charges related to inventory and backlog amortization, and a ($0.06)
impact from a tax-related loss on the divestiture of the ClosetMaid
business, which occurred early in the first quarter of fiscal 2018. As a
result of the divestiture, the first quarter tax rate is expected to be
approximately 40 percent.
"Market conditions began trending favorably for Emerson in the second
half of 2017, and we expect 2018 to continue that trajectory," said
Farr. "With a strong foundation for growth and increasing momentum in
global markets, I look forward to seeing our teams deliver results for
our shareholders - strong cash flow and adjusted net earnings per share
of $2.75 to $2.95."
Upcoming Investor Events
Today, beginning at 3:00 p.m. Eastern Time, Emerson management will
discuss the fourth quarter and fiscal year 2017 results during an
investor conference call. Access to a live webcast of the discussion
will be available at www.emerson.com/financial
at the time of the call. A replay of the conference call will remain
available for 90 days.
Forward-Looking and Cautionary Statements
Statements in this press release that are not strictly historical may be
"forward-looking" statements, which involve risks and uncertainties, and
Emerson undertakes no obligation to update any such statements to
reflect later developments. These risks and uncertainties include
economic and currency conditions, market demand, pricing, protection of
intellectual property, and competitive and technological factors, among
others, as set forth in the Company's most recent Annual Report on Form
10-K and subsequent reports filed with the SEC.
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 1
|
EMERSON AND SUBSIDIARIES
|
CONSOLIDATED OPERATING RESULTS
|
(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30
|
|
Percent
|
|
|
2016
|
|
2017
|
|
Change
|
|
|
|
|
|
|
|
Net sales
|
|
$3,932
|
|
|
$4,435
|
|
|
13%
|
Costs and expenses:
|
|
|
|
|
|
|
Cost of sales
|
|
2,219
|
|
|
2,631
|
|
|
|
SG&A expenses
|
|
855
|
|
|
997
|
|
|
|
Other deductions, net
|
|
135
|
|
|
83
|
|
|
|
Interest expense, net
|
|
49
|
|
|
39
|
|
|
|
Earnings from continuing operations before income taxes
|
|
674
|
|
|
685
|
|
|
2%
|
Income taxes
|
|
188
|
|
|
183
|
|
|
|
Earnings from continuing operations
|
|
486
|
|
|
502
|
|
|
3%
|
Discontinued operations, net of tax
|
|
(41
|
)
|
|
8
|
|
|
|
Net earnings
|
|
445
|
|
|
510
|
|
|
|
Less: Noncontrolling interests in earnings of subsidiaries
|
|
7
|
|
|
6
|
|
|
|
Net earnings common stockholders
|
|
$438
|
|
|
$504
|
|
|
15%
|
|
|
|
|
|
|
|
Diluted avg. shares outstanding
|
|
645.1
|
|
|
640.5
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share common stockholders
|
|
|
|
|
|
|
Earnings from continuing operations
|
|
$0.74
|
|
|
$0.77
|
|
|
4%
|
Discontinued operations
|
|
($0.06
|
)
|
|
$0.01
|
|
|
|
Diluted earnings per common share
|
|
$0.68
|
|
|
$0.78
|
|
|
15%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30
|
|
|
|
|
2016
|
|
2017
|
|
|
Other deductions, net
|
|
|
|
|
|
|
Amortization of intangibles
|
|
$18
|
|
|
$52
|
|
|
|
Restructuring costs
|
|
65
|
|
|
33
|
|
|
|
Other
|
|
52
|
|
|
(2
|
)
|
|
|
Total
|
|
$135
|
|
|
$83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 2
|
EMERSON AND SUBSIDIARIES
|
CONSOLIDATED OPERATING RESULTS
|
(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED)
|
|
|
|
|
|
|
|
|
|
Year Ended September 30
|
|
Percent
|
|
|
2016
|
|
2017
|
|
Change
|
|
|
|
|
|
|
|
Net sales
|
|
$14,522
|
|
|
$15,264
|
|
|
5%
|
Costs and expenses:
|
|
|
|
|
|
|
Cost of sales
|
|
8,260
|
|
|
8,860
|
|
|
|
SG&A expenses
|
|
3,464
|
|
|
3,618
|
|
|
|
Other deductions, net
|
|
294
|
|
|
286
|
|
|
|
Interest expense, net
|
|
188
|
|
|
165
|
|
|
|
Earnings from continuing operations before income taxes
|
|
2,316
|
|
|
2,335
|
|
|
1%
|
Income taxes
|
|
697
|
|
|
660
|
|
|
|
Earnings from continuing operations
|
|
1,619
|
|
|
1,675
|
|
|
3%
|
Discontinued operations, net of tax
|
|
45
|
|
|
(125
|
)
|
|
|
Net earnings
|
|
1,664
|
|
|
1,550
|
|
|
|
Less: Noncontrolling interests in earnings of subsidiaries
|
|
29
|
|
|
32
|
|
|
|
Net earnings common stockholders
|
|
$1,635
|
|
|
$1,518
|
|
|
(7)%
|
|
|
|
|
|
|
|
Diluted avg. shares outstanding
|
|
646.8
|
|
|
643.4
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share common stockholders
|
|
|
|
|
|
|
Earnings from continuing operations
|
|
$2.45
|
|
|
$2.54
|
|
|
4%
|
Discontinued operations
|
|
$0.07
|
|
|
($0.19
|
)
|
|
|
Diluted earnings per common share
|
|
$2.52
|
|
|
$2.35
|
|
|
(7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30
|
|
|
|
|
2016
|
|
2017
|
|
|
Other deductions, net
|
|
|
|
|
|
|
Amortization of intangibles
|
|
$84
|
|
|
$136
|
|
|
|
Restructuring costs
|
|
96
|
|
|
78
|
|
|
|
Other
|
|
114
|
|
|
72
|
|
|
|
Total
|
|
$294
|
|
|
$286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3
|
EMERSON AND SUBSIDIARIES
|
CONSOLIDATED BALANCE SHEETS
|
(DOLLARS IN MILLIONS, UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30
|
|
|
|
|
2016
|
|
|
2017
|
Assets
|
|
|
|
|
|
|
|
Cash and equivalents
|
|
|
|
$3,182
|
|
|
|
$3,062
|
Receivables, net
|
|
|
|
2,701
|
|
|
|
3,072
|
Inventories
|
|
|
|
1,208
|
|
|
|
1,696
|
Other current assets
|
|
|
|
669
|
|
|
|
349
|
Current assets held-for-sale
|
|
|
|
2,200
|
|
|
|
73
|
Total current assets
|
|
|
|
9,960
|
|
|
|
8,252
|
Property, plant & equipment, net
|
|
|
|
2,931
|
|
|
|
3,321
|
Goodwill
|
|
|
|
3,909
|
|
|
|
5,316
|
Other intangible assets
|
|
|
|
902
|
|
|
|
1,890
|
Other
|
|
|
|
200
|
|
|
|
634
|
Noncurrent assets held-for-sale
|
|
|
|
3,830
|
|
|
|
176
|
Total assets
|
|
|
|
$21,732
|
|
|
|
$19,589
|
|
|
|
|
|
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
|
Short-term borrowings and current maturities of long-term debt
|
|
|
|
$2,584
|
|
|
|
$862
|
Accounts payable
|
|
|
|
1,517
|
|
|
|
1,776
|
Accrued expenses
|
|
|
|
2,126
|
|
|
|
2,286
|
Income taxes
|
|
|
|
180
|
|
|
|
65
|
Current liabilities held-for-sale
|
|
|
|
1,601
|
|
|
|
56
|
Total current liabilities
|
|
|
|
8,008
|
|
|
|
5,045
|
Long-term debt
|
|
|
|
4,051
|
|
|
|
3,794
|
Other liabilities
|
|
|
|
1,729
|
|
|
|
1,975
|
Noncurrent liabilities held-for-sale
|
|
|
|
326
|
|
|
|
5
|
Total equity
|
|
|
|
7,618
|
|
|
|
8,770
|
Total liabilities and equity
|
|
|
|
$21,732
|
|
|
|
$19,589
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 4
|
|
EMERSON AND SUBSIDIARIES
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
(DOLLARS IN MILLIONS, UNAUDITED)
|
|
|
|
|
|
|
|
|
Year Ended September 30
|
|
|
2016
|
|
2017
|
|
Operating activities
|
|
|
|
|
Net earnings
|
$
|
1,664
|
|
$
|
1,550
|
|
(Earnings) Loss from discontinued operations, net of tax
|
|
(45
|
)
|
|
125
|
|
Adjustments to reconcile net earnings to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
568
|
|
|
636
|
|
Changes in operating working capital
|
|
93
|
|
|
160
|
|
Pension funding
|
|
(66
|
)
|
|
(45
|
)
|
Other, net
|
|
285
|
|
|
264
|
|
Cash from continuing operations
|
|
2,499
|
|
|
2,690
|
|
Cash from discontinued operations
|
|
382
|
|
|
(778
|
)
|
Cash provided by operating activities
|
|
2,881
|
|
|
1,912
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
Capital expenditures
|
|
(447
|
)
|
|
(476
|
)
|
Purchases of businesses, net of cash and equivalents acquired
|
|
(132
|
)
|
|
(2,990
|
)
|
Divestiture of business
|
|
-
|
|
|
39
|
|
Other, net
|
|
30
|
|
|
(106
|
)
|
Cash from continuing operations
|
|
(549
|
)
|
|
(3,533
|
)
|
Cash from discontinued operations
|
|
(77
|
)
|
|
5,047
|
|
Cash provided by (used in) investing activities
|
|
(626
|
)
|
|
1,514
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
Net increase (decrease) in short-term borrowings
|
|
56
|
|
|
(1,725
|
)
|
Payments of long-term debt
|
|
(254
|
)
|
|
(254
|
)
|
Dividends paid
|
|
(1,227
|
)
|
|
(1,239
|
)
|
Purchases of common stock
|
|
(601
|
)
|
|
(400
|
)
|
Other, net
|
|
(19
|
)
|
|
27
|
|
Cash used in financing activities
|
|
(2,045
|
)
|
|
(3,591
|
)
|
|
|
|
|
|
Effect of exchange rate changes on cash and equivalents
|
|
(82
|
)
|
|
45
|
|
Increase (decrease) in cash and equivalents
|
|
128
|
|
|
(120
|
)
|
Beginning cash and equivalents
|
|
3,054
|
|
|
3,182
|
|
Ending cash and equivalents
|
$
|
3,182
|
|
$
|
3,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 5
|
EMERSON AND SUBSIDIARIES
|
SEGMENT SALES AND EARNINGS
|
(DOLLARS IN MILLIONS, UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30
|
|
|
|
|
2016
|
|
|
2017
|
Sales
|
|
|
|
|
|
|
|
Automation Solutions
|
|
|
|
$2,445
|
|
|
|
$2,894
|
|
|
|
|
|
|
|
|
|
Climate Technologies
|
|
|
|
1,064
|
|
|
|
1,108
|
|
Tools & Home Products
|
|
|
|
425
|
|
|
|
435
|
|
Commercial & Residential Solutions
|
|
|
|
1,489
|
|
|
|
1,543
|
|
|
|
|
|
|
|
|
|
Eliminations
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
Net sales
|
|
|
|
$3,932
|
|
|
|
$4,435
|
|
|
|
|
|
|
|
|
|
Earnings
|
|
|
|
|
|
|
|
Automation Solutions
|
|
|
|
$419
|
|
|
|
$490
|
|
|
|
|
|
|
|
|
|
Climate Technologies
|
|
|
|
256
|
|
|
|
260
|
|
Tools & Home Products
|
|
|
|
110
|
|
|
|
102
|
|
Commercial & Residential Solutions
|
|
|
|
366
|
|
|
|
362
|
|
|
|
|
|
|
|
|
|
Differences in accounting methods
|
|
|
|
51
|
|
|
|
42
|
|
Corporate and other
|
|
|
|
(113
|
)
|
|
|
(170
|
)
|
Interest expense, net
|
|
|
|
(49
|
)
|
|
|
(39
|
)
|
Earnings before income taxes
|
|
|
|
$674
|
|
|
|
$685
|
|
|
|
|
|
|
|
|
|
Restructuring costs
|
|
|
|
|
|
|
|
Automation Solutions
|
|
|
|
$58
|
|
|
|
$28
|
|
|
|
|
|
|
|
|
|
Climate Technologies
|
|
|
|
1
|
|
|
|
2
|
|
Tools & Home Products
|
|
|
|
-
|
|
|
|
1
|
|
Commercial & Residential Solutions
|
|
|
|
1
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
6
|
|
|
|
2
|
|
Total
|
|
|
|
$65
|
|
|
|
$33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 6
|
EMERSON AND SUBSIDIARIES
|
SEGMENT SALES AND EARNINGS
|
(DOLLARS IN MILLIONS, UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30
|
|
|
|
|
2016
|
|
|
2017
|
Sales
|
|
|
|
|
|
|
|
Automation Solutions
|
|
|
|
$8,977
|
|
|
|
$9,418
|
|
|
|
|
|
|
|
|
|
Climate Technologies
|
|
|
|
3,944
|
|
|
|
4,212
|
|
Tools & Home Products
|
|
|
|
1,611
|
|
|
|
1,645
|
|
Commercial & Residential Solutions
|
|
|
|
5,555
|
|
|
|
5,857
|
|
|
|
|
|
|
|
|
|
Eliminations
|
|
|
|
(10
|
)
|
|
|
(11
|
)
|
Net sales
|
|
|
|
$14,522
|
|
|
|
$15,264
|
|
|
|
|
|
|
|
|
|
Earnings
|
|
|
|
|
|
|
|
Automation Solutions
|
|
|
|
$1,456
|
|
|
|
$1,522
|
|
|
|
|
|
|
|
|
|
Climate Technologies
|
|
|
|
902
|
|
|
|
975
|
|
Tools & Home Products
|
|
|
|
384
|
|
|
|
383
|
|
Commercial & Residential Solutions
|
|
|
|
1,286
|
|
|
|
1,358
|
|
|
|
|
|
|
|
|
|
Differences in accounting methods
|
|
|
|
189
|
|
|
|
148
|
|
Corporate and other
|
|
|
|
(427
|
)
|
|
|
(528
|
)
|
Interest expense, net
|
|
|
|
(188
|
)
|
|
|
(165
|
)
|
Earnings before income taxes
|
|
|
|
$2,316
|
|
|
|
$2,335
|
|
|
|
|
|
|
|
|
|
Restructuring costs
|
|
|
|
|
|
|
|
Automation Solutions
|
|
|
|
$80
|
|
|
|
$63
|
|
|
|
|
|
|
|
|
|
Climate Technologies
|
|
|
|
5
|
|
|
|
10
|
|
Tools & Home Products
|
|
|
|
2
|
|
|
|
2
|
|
Commercial & Residential Solutions
|
|
|
|
7
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
|
|
9
|
|
|
|
3
|
|
Total
|
|
|
|
$96
|
|
|
|
$78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 7
|
Reconciliations of Non-GAAP Financial Measures & Other
|
|
Reconciliations of Non-GAAP measures (denoted by *) with the most
directly comparable GAAP measure (dollars in millions, except per
share amounts):
|
|
|
|
|
|
|
|
|
|
|
Underlying Sales Change
|
|
FY17
|
|
|
|
|
Reported (GAAP)
|
|
|
5
|
%
|
|
|
|
|
(Favorable) / Unfavorable FX
|
|
-
|
%
|
|
|
|
|
Acquisitions
|
|
(4
|
)%
|
|
|
|
|
Underlying*
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2017 Underlying Sales Change
|
|
Auto Solns
|
|
Comm & Res
Solns
|
|
Emerson
|
Reported (GAAP)
|
|
|
18
|
%
|
|
4
|
%
|
|
13
|
%
|
(Favorable) / Unfavorable FX
|
|
(1
|
)%
|
|
(1
|
)%
|
|
(1
|
)%
|
Acquisitions
|
|
(14
|
)%
|
|
-
|
%
|
|
(9
|
)%
|
Underlying*
|
|
3
|
%
|
|
3
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
FY18E Underlying Sales Change
|
|
Auto Solns
|
|
Comm & Res Solns
|
|
Emerson
|
Reported (GAAP)
|
|
|
14 - 16%
|
|
(1) - 1%
|
|
8 - 10%
|
Acquisitions / Divestitures
|
|
~ (8)%
|
|
~ 5%
|
|
~ (3)%
|
(Favorable) / Unfavorable FX
|
|
|
~ (1)%
|
|
~ (1)%
|
|
~ (1)%
|
Underlying*
|
|
|
5 - 7%
|
|
3 - 5%
|
|
4 - 6%
|
|
|
|
|
|
|
|
Earnings Per Share
|
|
FY16
|
|
FY17
|
|
Change
|
Earnings per share from continuing operations (GAAP)
|
|
$
|
2.45
|
|
|
$
|
2.54
|
|
|
4
|
%
|
Valves & Controls first year acquisition accounting charges
|
|
-
|
|
|
0.10
|
|
|
4
|
%
|
Earnings per share from continuing operations, excluding Valves &
Controls first year acquisition accounting charges*
|
|
$
|
2.45
|
|
|
$
|
2.64
|
|
|
8
|
%
|
|
|
|
|
|
|
|
Q4 Earnings Per Share
|
|
Q4 FY16
|
|
Q4 FY17
|
|
Change
|
Earnings per share from continuing operations (GAAP)
|
|
$
|
0.74
|
|
|
$
|
0.77
|
|
|
4
|
%
|
Valves & Controls first year acquisition accounting charges
|
|
-
|
|
|
0.06
|
|
|
8
|
%
|
Earnings per share from continuing operations, excluding Valves &
Controls first year acquisition accounting charges*
|
|
$
|
0.74
|
|
|
$
|
0.83
|
|
|
12
|
%
|
|
|
|
|
|
|
|
Earnings Per Share
|
|
FY18E
|
|
|
|
|
Earnings per share from continuing operations (GAAP)
|
|
$2.66 - $2.86
|
|
|
|
|
Valves & Controls first year acquisition accounting charges
|
|
~ $0.03
|
|
|
|
|
Loss on ClosetMaid divestiture
|
|
~ $0.06
|
|
|
|
|
Earnings per share from continuing operations, excluding Valves &
Controls first year acquisition accounting charges & loss on
ClosetMaid divestiture*
|
|
$2.75 - $2.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations Margins
|
|
FY16
|
|
FY17
|
|
Change
|
Pretax margin (GAAP)
|
|
16.0
|
%
|
|
15.3
|
%
|
|
(70) bps
|
Interest expense, net
|
|
1.2
|
%
|
|
1.1
|
%
|
|
(10) bps
|
Earnings before interest and taxes margin*
|
|
17.2
|
%
|
|
16.4
|
%
|
|
(80) bps
|
Valves & Controls impact
|
|
-
|
%
|
|
1.5
|
%
|
|
150 bps
|
Earnings before interest and taxes margin excluding Valves &
Controls*
|
|
17.2
|
%
|
|
17.9
|
%
|
|
70 bps
|
|
|
|
|
|
|
|
Q4 Continuing Operations Margins
|
|
Q4 FY16
|
|
Q4 FY17
|
|
Change
|
Pretax margin (GAAP)
|
|
17.2
|
%
|
|
15.5
|
%
|
|
(170) bps
|
Interest expense, net
|
|
1.2
|
%
|
|
0.8
|
%
|
|
(40) bps
|
Earnings before interest and taxes margin*
|
|
18.4
|
%
|
|
16.3
|
%
|
|
(210) bps
|
Valves & Controls impact
|
|
-
|
%
|
|
3.4
|
%
|
|
340 bps
|
Earnings before interest and taxes margin excluding Valves &
Controls*
|
|
18.4
|
%
|
|
19.7
|
%
|
|
130 bps
|
|
|
Automation Solutions Segment EBIT Margin
|
|
Q4 FY16
|
|
Q4 FY17
|
|
Change
|
Automation Solutions Segment EBIT margin (GAAP)
|
|
17.2
|
%
|
|
16.9
|
%
|
|
(30) bps
|
Valves & Controls impact
|
|
-
|
%
|
|
3.3
|
%
|
|
330 bps
|
Automation Solutions Segment EBIT margin excluding Valves &
Controls*
|
|
17.2
|
%
|
|
20.2
|
%
|
|
300 bps
|
|
|
|
|
|
|
|
|
|
|
Commercial & Residential EBIT Margin
|
|
Q4 FY16
|
|
Q4 FY17
|
|
Change
|
Commercial & Residential EBIT margin (GAAP)
|
|
24.6
|
%
|
|
23.5
|
%
|
|
(110) bps
|
ClosetMaid impact
|
|
0.7
|
%
|
|
1.2
|
%
|
|
50 bps
|
Commercial & Residential EBIT margin excluding ClosetMaid*
|
|
25.3
|
%
|
|
24.7
|
%
|
|
(60) bps
|
|
|
Cash Flow From Continuing Operations
|
|
FY17
|
|
% of Sales
|
|
Dividends % of
Cash Flow
|
Operating cash flow from continuing operations (GAAP)
|
|
$
|
2,690
|
|
a
|
17.6
|
%
|
|
46
|
%
|
Capital expenditures
|
|
(476
|
)
|
|
(3.1
|
)%
|
|
10
|
%
|
Free cash flow from continuing operations*
|
|
$
|
2,214
|
|
b
|
14.5
|
%
|
|
56
|
%
|
|
|
|
|
|
|
|
|
|
|
Net Earnings From Continuing Operations
|
|
FY17
|
|
|
|
|
Net earnings from continuing operations (GAAP)
|
|
$
|
1,643
|
|
c
|
|
|
|
Valves & Controls first year acq. accounting charges, after tax
|
|
65
|
|
|
|
|
|
Net earnings from continuing operations, excluding Valves &
Controls first year acquisition accounting charges*
|
|
$
|
1,708
|
|
d
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of Cash Flow to Net Earnings Conversion
|
|
FY17
|
|
|
|
|
Operating cash from continuing operations to net earnings from
continuing operations
|
|
164
|
%
|
a ÷ c
|
|
|
|
Capital expenditures
|
|
(29
|
)%
|
|
|
|
|
Free cash flow from continuing operations to net earnings from
continuing operations
|
|
135
|
%
|
b ÷ c
|
|
|
|
Valves & Controls first year acquisition accounting charges
|
|
(5
|
)%
|
|
|
|
|
Free cash flow from continuing operations to net earnings from
continuing operations, excluding Valves & Controls first year
acquisition accounting charges
|
|
130
|
%
|
b ÷ d
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Underlying sales and orders exclude the impact of
acquisitions, divestitures and currency translation.
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20171107005873/en/
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