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Mar 31, 2020
Emerson Q2 2020 Earnings Report
Emerson's Q2 2020 results were reported, with sales impacted by COVID-19 and updated full-year guidance announced.
Key Takeaways
Emerson reported a 9% decrease in net sales to $4.2 billion due to the COVID-19 pandemic, while adjusted EPS was $0.89, exceeding management's guidance. The company updated its full-year sales and EPS guidance to reflect the weaker demand environment.
Net sales decreased by 9 percent, with underlying sales down 7 percent due to COVID-19 impacts.
GAAP EPS was $0.84, flat year-over-year, while adjusted EPS was $0.89, surpassing guidance.
Operating cash flow was strong at $588 million, up 10 percent, and free cash flow was $477 million, up 15 percent.
Full-year sales and EPS guidance were updated to reflect the weaker demand environment.
Emerson
Emerson
Forward Guidance
Management updated the fiscal year 2020 outlook to reflect the changing demand environment associated with COVID-19 and the concurrent unfolding energy market dynamics. GAAP earnings per share guidance is $2.62 to $2.82. Adjusted earnings per share guidance, which excludes restructuring actions and related costs, is $3.00 to $3.20.
Positive Outlook
- Aggressive cost containment actions
- Reduced stock compensation
- Other non-operating items
- Total restructuring actions for the year are now expected to be approximately $280 million
- There is no change in the dividend plan
Challenges Ahead
- Continued significant demand deterioration in the third quarter
- Demand remaining negative through the first half of 2021
- Oil prices stabilize in the $20-$30 range during that time period
- Net Sales Growth (11%) - (9%)
- Automation Solutions (10%) - (8%)