Emerson Q1 2020 Earnings Report
Key Takeaways
Emerson reported flat net sales of $4.2 billion in the first quarter of 2020. Adjusted EPS was $0.67, in line with management's guidance. The company initiated $97 million of restructuring actions and delivered operating cash flow of $424 million and free cash flow of $310 million.
Net sales were flat at $4.2 billion; underlying sales were also flat.
GAAP EPS was $0.53; adjusted EPS of $0.67 was in-line with guidance.
Operating cash flow increased to $424 million, and free cash flow rose to $310 million.
The company initiated $97 million of restructuring actions during the quarter.
Emerson
Emerson
Emerson Revenue by Segment
Forward Guidance
Management has updated the fiscal year 2020 outlook to reflect the expected costs and benefits of full year restructuring plans. Adjusted earnings per share, which excludes approximately $215 million of planned restructuring actions and $13 million of related costs for the year, is $3.55 to $3.80 compared to prior guidance of $3.48 to $3.72.
Positive Outlook
- Full year 2020 sales guidance reiterated.
- Full year EPS guidance updated for planned restructuring actions and associated benefits.
- Adjusted earnings per share guidance raised due to expected savings from restructuring actions.
- Board of Directors has largely completed its review of operational, capital allocation and portfolio initiatives.
- Teams have worked hard to initiate nearly $100 million of restructuring in the quarter.
Challenges Ahead
- Challenging economic environment expected for the remainder of fiscal 2020.
- Broad-based corporate focus on cost cutting is expected.
- The U.S. presidential election is expected to pressure industrial markets.
- Tensions in the Middle East are expected to pressure industrial markets.
- Underlying sales and orders were somewhat below expectations due to slower North American upstream investment activity and a decline in global discrete demand.
Revenue & Expenses
Visualization of income flow from segment revenue to net income