• | Fourth quarter net sales of $5.0 billion increased 2 percent; underlying sales up 3 percent |
• | Fourth quarter EPS of $1.16 and full year $3.71 included discrete tax benefits of $0.09 and $0.14, respectively |
• | Fourth quarter operating cash flow of $1.2 billion, up 18 percent |
• | Full year operating cash flow of $3.0 billion; Free cash flow of $2.4 billion, net earnings conversion of 105 percent |
• | Returned $2.5 billion to shareholders, over 80 percent of full year operating cash flow, through dividends and share repurchases |
• | Dividends as a percent of free cash flow improved by 4 points to 50 percent in 2019 |
• | Completed 63 consecutive years of increased dividends per share and plan to announce a 4-cent increase for 2020 |
2019 GAAP EPS | $3.71 | |
Less: Discrete tax benefits | (0.14) | |
Add: Restructuring charges | 0.12 | |
2019 Adjusted EPS | $3.69 | |
2020 Adjusted EPS Range | $3.48 to $3.72 |
Sales Growth Guidance | EPS and Cash Flow Guidance | |||
Net Sales Growth | (3%) – 1% | Adjusted EPS | $3.60 +/- $0.12 | |
Automation Solutions | (2%) to 2% | Tax Rate | ~23% | |
Commercial & Residential Solutions | (5%) to (1%) | Operating Cash Flow | ~$3.1B | |
Underlying Sales Growth | (2%) – 2% | Free Cash Flow | ~$2.5B | |
Automation Solutions | (1%) to 3% | Capital Expenditures | ~$600M | |
Commercial & Residential Solutions | (3%) to 1% | Share Repurchases | $1.5B |
Table 1 | |||||||||
EMERSON AND SUBSIDIARIES | |||||||||
CONSOLIDATED OPERATING RESULTS | |||||||||
(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED) | |||||||||
Quarter Ended Sept 30 | Percent | ||||||||
2018 | 2019 | Change | |||||||
Net sales | $4,888 | $4,971 | 2% | ||||||
Costs and expenses: | |||||||||
Cost of sales | 2,829 | 2,843 | |||||||
SG&A expenses | 1,181 | 1,109 | |||||||
Other deductions, net | 94 | 153 | |||||||
Interest expense, net | 46 | 40 | |||||||
Earnings before income taxes | 738 | 826 | 12% | ||||||
Income taxes | 116 | 102 | |||||||
Net earnings | 622 | 724 | |||||||
Less: Noncontrolling interests in earnings of subsidiaries | 5 | 7 | |||||||
Net earnings common stockholders | $617 | $717 | 16% | ||||||
Diluted avg. shares outstanding | 631.9 | 617.5 | |||||||
Diluted earnings per share common share | $0.97 | $1.16 | 20% | ||||||
Quarter Ended Sept 30 | |||||||||
2018 | 2019 | ||||||||
Other deductions, net | |||||||||
Amortization of intangibles | $57 | $61 | |||||||
Restructuring costs | 27 | 55 | |||||||
Other | 10 | 37 | |||||||
Total | $94 | $153 |
Table 2 | |||||||||
EMERSON AND SUBSIDIARIES | |||||||||
CONSOLIDATED OPERATING RESULTS | |||||||||
(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED) | |||||||||
12 Months Ended Sept 30 | Percent | ||||||||
2018 | 2019 | Change | |||||||
Net sales | $17,408 | $18,372 | 6% | ||||||
Costs and expenses: | |||||||||
Cost of sales | 9,976 | 10,557 | |||||||
SG&A expenses | 4,269 | 4,457 | |||||||
Other deductions, net | 337 | 325 | |||||||
Interest expense, net | 159 | 174 | |||||||
Earnings before income taxes | 2,667 | 2,859 | 7% | ||||||
Income taxes | 443 | 531 | |||||||
Net earnings | 2,224 | 2,328 | |||||||
Less: Noncontrolling interests in earnings of subsidiaries | 21 | 22 | |||||||
Net earnings common stockholders | $2,203 | $2,306 | 5% | ||||||
Diluted avg. shares outstanding | 635.3 | 620.6 | |||||||
Diluted earnings per common share | $3.46 | $3.71 | 7% | ||||||
12 Months Ended Sept 30 | |||||||||
2018 | 2019 | ||||||||
Other deductions, net | |||||||||
Amortization of intangibles | $211 | $238 | |||||||
Restructuring costs | 65 | 95 | |||||||
Other | 61 | (8 | ) | ||||||
Total | $337 | $325 |
Table 3 | |||||||
EMERSON AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(DOLLARS IN MILLIONS, UNAUDITED) | |||||||
Quarter Ended Sept 30 | |||||||
2018 | 2019 | ||||||
Assets | |||||||
Cash and equivalents | $1,093 | $1,494 | |||||
Receivables, net | 3,023 | 2,985 | |||||
Inventories | 1,813 | 1,880 | |||||
Other current assets | 690 | 780 | |||||
Total current assets | 6,619 | 7,139 | |||||
Property, plant & equipment, net | 3,562 | 3,642 | |||||
Goodwill | 6,455 | 6,536 | |||||
Other intangible assets | 2,751 | 2,615 | |||||
Other | 1,003 | 565 | |||||
Total assets | $20,390 | $20,497 | |||||
Liabilities and equity | |||||||
Short-term borrowings and current | |||||||
maturities of long-term debt | $1,623 | $1,444 | |||||
Accounts payable | 1,943 | 1,874 | |||||
Accrued expenses | 2,598 | 2,658 | |||||
Total current liabilities | 6,164 | 5,976 | |||||
Long-term debt | 3,137 | 4,277 | |||||
Other liabilities | 2,099 | 1,971 | |||||
Total equity | 8,990 | 8,273 | |||||
Total liabilities and equity | $20,390 | $20,497 |
Table 4 | ||||||
EMERSON AND SUBSIDIARIES | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
(DOLLARS IN MILLIONS, UNAUDITED) | ||||||
12 Months Ended Sept 30 | ||||||
2018 | 2019 | |||||
Operating activities | ||||||
Net earnings | $2,224 | $2,328 | ||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||
Depreciation and amortization | 758 | 822 | ||||
Changes in operating working capital | (83 | ) | (150 | ) | ||
Other, net | (7 | ) | 6 | |||
Net cash provided by operating activities | 2,892 | 3,006 | ||||
Investing activities | ||||||
Capital expenditures | (617 | ) | (594 | ) | ||
Purchases of businesses, net of cash and equivalents acquired | (2,203 | ) | (469 | ) | ||
Divestitures of businesses | 201 | 14 | ||||
Other, net | (101 | ) | (125 | ) | ||
Cash used in investing activities | (2,720 | ) | (1,174 | ) | ||
Financing activities | ||||||
Net increase (decrease) in short-term borrowings | 343 | (6 | ) | |||
Proceeds from long-term debt | — | 1,691 | ||||
Payments of long-term debt | (241 | ) | (656 | ) | ||
Dividends paid | (1,229 | ) | (1,209 | ) | ||
Purchases of common stock | (1,000 | ) | (1,250 | ) | ||
Other, net | 35 | 39 | ||||
Cash used in financing activities | (2,092 | ) | (1,391 | ) | ||
Effect of exchange rate changes on cash and equivalents | (49 | ) | (40 | ) | ||
Increase (decrease) in cash and equivalents | (1,969 | ) | 401 | |||
Beginning cash and equivalents | 3,062 | 1,093 | ||||
Ending cash and equivalents | $1,093 | $1,494 | ||||
Table 5 | |||||||
EMERSON AND SUBSIDIARIES | |||||||
SEGMENT SALES AND EARNINGS | |||||||
(DOLLARS IN MILLIONS, UNAUDITED) | |||||||
Quarter Ended Sept 30 | |||||||
2018 | 2019 | ||||||
Sales | |||||||
Automation Solutions | $3,228 | $3,368 | |||||
Climate Technologies | 1,168 | 1,142 | |||||
Tools & Home Products | 487 | 466 | |||||
Commercial & Residential Solutions | 1,655 | 1,608 | |||||
Eliminations | 5 | (5 | ) | ||||
Net sales | $4,888 | $4,971 | |||||
Earnings | |||||||
Automation Solutions | $570 | $619 | |||||
Climate Technologies | 260 | 233 | |||||
Tools & Home Products | 104 | 102 | |||||
Commercial & Residential Solutions | 364 | 335 | |||||
Stock Compensation | (72 | ) | (37 | ) | |||
Pension and postretirement benefits | 17 | 27 | |||||
Corporate and other | (95 | ) | (78 | ) | |||
Interest expense, net | (46 | ) | (40 | ) | |||
Earnings before income taxes | $738 | $826 | |||||
Restructuring costs | |||||||
Automation Solutions | $15 | $39 | |||||
Climate Technologies | 9 | 12 | |||||
Tools & Home Products | 3 | 2 | |||||
Commercial & Residential Solutions | 12 | 14 | |||||
Corporate | — | 2 | |||||
Total | $27 | $55 | |||||
Depreciation and Amortization | |||||||
Automation Solutions | $132 | $142 | |||||
Climate Technologies | 43 | 44 | |||||
Tools & Home Products | 16 | 17 | |||||
Commercial & Residential Solutions | 59 | 61 | |||||
Corporate | 10 | 10 | |||||
Total | $201 | $213 |
Table 6 | |||||||
EMERSON AND SUBSIDIARIES | |||||||
SEGMENT SALES AND EARNINGS | |||||||
(DOLLARS IN MILLIONS, UNAUDITED) | |||||||
12 Months Ended Sept 30 | |||||||
2018 | 2019 | ||||||
Sales | |||||||
Automation Solutions | $11,441 | $12,202 | |||||
Climate Technologies | 4,454 | 4,313 | |||||
Tools & Home Products | 1,528 | 1,856 | |||||
Commercial & Residential Solutions | 5,982 | 6,169 | |||||
Eliminations | (15 | ) | 1 | ||||
Net sales | $17,408 | $18,372 | |||||
Earnings | |||||||
Automation Solutions | $1,886 | $1,947 | |||||
Climate Technologies | 972 | 883 | |||||
Tools & Home Products | 380 | 388 | |||||
Commercial & Residential Solutions | 1,352 | 1,271 | |||||
Stock Compensation | (216 | ) | (120 | ) | |||
Pension and postretirement benefits | 79 | 108 | |||||
Corporate and other | (275 | ) | (173 | ) | |||
Interest expense, net | (159 | ) | (174 | ) | |||
Earnings before income taxes | $2,667 | $2,859 | |||||
Restructuring costs | |||||||
Automation Solutions | $41 | $65 | |||||
Climate Technologies | 20 | 20 | |||||
Tools & Home Products | 3 | 7 | |||||
Commercial & Residential Solutions | 23 | 27 | |||||
Corporate | 1 | 3 | |||||
Total | $65 | $95 | |||||
Depreciation and Amortization | |||||||
Automation Solutions | $488 | $535 | |||||
Climate Technologies | 171 | 176 | |||||
Tools & Home Products | 44 | 71 | |||||
Commercial & Residential Solutions | 215 | 247 | |||||
Corporate | 55 | 40 | |||||
Total | $758 | $822 |
Reconciliations of Non-GAAP Financial Measures & Other | Table 7 | |||||||||||||||
Reconciliations of Non-GAAP measures (denoted by *) with the most directly comparable GAAP measure (dollars in millions, except per share amounts): | ||||||||||||||||
FY 2019 Underlying Sales Change | Auto Solns | Comm & Res Solns | ||||||||||||||
Reported (GAAP) | 7 | % | 3 | % | ||||||||||||
(Favorable) / Unfavorable FX | 2 | % | 1 | % | ||||||||||||
Acquisitions/Divestitures | (4 | )% | (5 | )% | ||||||||||||
Underlying* | 5 | % | (1 | )% | ||||||||||||
Q4 2019 Underlying Sales Change | Auto Solns | Comm & Res Solns | Emerson | |||||||||||||
Reported (GAAP) | 4 | % | (3 | )% | 2 | % | ||||||||||
(Favorable) / Unfavorable FX | 2 | % | 1 | % | 2 | % | ||||||||||
Acquisitions/Divestitures | (1 | )% | — | % | (1 | )% | ||||||||||
Underlying* | 5 | % | (2 | )% | 3 | % | ||||||||||
FY 2020E Underlying Sales Change | Auto Solns | Comm & Res Solns | Emerson | |||||||||||||
Reported (GAAP) | (2)% - 2% | (5)% - (1)% | (3)% - 1% | |||||||||||||
(Favorable) / Unfavorable FX | ~ 1% | ~ 1% | ~ 1% | |||||||||||||
Acquisitions/Divestitures | ~ - % | ~ 1% | ~ - % | |||||||||||||
Underlying* | (1)% - 3% | (3)% - 1% | (2)% - 2% | |||||||||||||
Earnings Per Share | Q4 FY18 | Q4 FY19 | Change | |||||||||||||
Earnings per share (GAAP) | $ | 0.97 | $ | 1.16 | 20 | % | ||||||||||
Discrete tax benefits | (0.08 | ) | (0.09 | ) | — | % | ||||||||||
Earnings per share excluding discrete tax benefits* | $ | 0.89 | $ | 1.07 | 20 | % | ||||||||||
EBIT Margin | Q4 FY18 | Q4 FY19 | Change | |||||||||||||
Pretax margin (GAAP) | 15.1 | % | 16.6 | % | 150 bps | |||||||||||
Interest expense, net | 0.9 | % | 0.8 | % | (10) bps | |||||||||||
Earnings before interest and taxes margin* | 16.0 | % | 17.4 | % | 140 bps | |||||||||||
Business Segment EBIT | Q4 FY18 | Q4 FY19 | Change | |||||||||||||
Pretax margin (GAAP) | 15.1 | % | 16.6 | % | 150 bps | |||||||||||
Corp. items & interest expense, net % of sales | 4.0 | % | 2.6 | % | (140) bps | |||||||||||
Business segment EBIT margin* | 19.1 | % | 19.2 | % | 10 bps | |||||||||||
Restructuring charges | 0.6 | % | 1.0 | % | 40 bps | |||||||||||
Business segment EBIT margin excluding restructuring* | 19.7 | % | 20.2 | % | 50 bps | |||||||||||
Q4 2019 Automation Solutions Segment EBIT Margin | Q4 FY18 | Q4 FY19 | Change | |||||||||||||
Automation Solutions Segment EBIT margin (GAAP) | 17.7 | % | 18.4 | % | 70 bps | |||||||||||
Restructuring charges | 0.4 | % | 1.1 | % | 70 bps | |||||||||||
Automation Solutions Segment EBIT margin, excluding | 18.1 | % | 19.5 | % | 140 bps | |||||||||||
restructuring* | ||||||||||||||||
- more - |
Automation Solutions Segment EBIT Margin | FY18 | FY19 | Change | ||||||||||||
Automation Solutions Segment EBIT margin (GAAP) | 16.5 | % | 16.0 | % | (50) bps | ||||||||||
Restructuring and acquisitions impact | 0.3 | % | 1.3 | % | 100 bps | ||||||||||
Automation Solutions Segment EBIT margin, excluding | 16.8 | % | 17.3 | % | 50 bps | ||||||||||
restructuring and acquisitions* | |||||||||||||||
Q4 2019 Commercial & Residential EBIT Margin | Q4 FY18 | Q4 FY19 | Change | ||||||||||||
Commercial & Residential EBIT margin (GAAP) | 22.0 | % | 20.8 | % | (120) bps | ||||||||||
Restructuring charges | 0.7 | % | 0.8 | % | 10 bps | ||||||||||
Commercial & Residential EBIT margin, excluding | 22.7 | % | 21.6 | % | (110) bps | ||||||||||
restructuring* | |||||||||||||||
Commercial & Residential EBIT Margin | FY18 | FY19 | Change | ||||||||||||
Commercial & Residential EBIT margin (GAAP) | 22.6 | % | 20.6 | % | (200) bps | ||||||||||
Restructuring and Tools & Test acquisition impact | 0.4 | % | 1.3 | % | 90 bps | ||||||||||
Commercial & Residential EBIT margin, excluding | 23.0 | % | 21.9 | % | (110) bps | ||||||||||
restructuring and Tools & Test acquisition* | |||||||||||||||
Q4 Cash Flow | Q4 FY18 | Q4 FY19 | Change | ||||||||||||
Operating cash flow (GAAP) | $ | 1,024 | $ | 1,204 | 18 | % | |||||||||
Capital expenditures | (303 | ) | (199 | ) | 22 | % | |||||||||
Free cash flow* | $ | 721 | $ | 1,005 | 40 | % | |||||||||
Cash Flows | FY18 | FY19 | Change | ||||||||||||
Operating cash flow (GAAP) | $ | 2,892 | $ | 3,006 | 4 | % | |||||||||
Capital expenditures | (617 | ) | (594 | ) | 2 | % | |||||||||
Free cash flow* | $ | 2,275 | $ | 2,412 | 6 | % | |||||||||
FY 2020E Cash Flow | FY 2020E | ||||||||||||||
Operating cash flow (GAAP) | $ | 3,100 | |||||||||||||
Capital expenditures | ~ (600) | ||||||||||||||
Free cash flow* | $ | 2,500 | |||||||||||||
Cash Flow to Net Earnings Conversion | FY19 | ||||||||||||||
Operating cash flow to net earnings (GAAP) | 130 | % | |||||||||||||
Capital expenditures | (25 | )% | |||||||||||||
Free cash flow to net earnings* | 105 | % | |||||||||||||
Dividend to Free Cash Flow | FY18 | FY19 | Change | ||||||||||||
Dividends to operating cash flow (GAAP) | 43 | % | 40 | % | (3 | )% | |||||||||
Capital expenditures | 11 | % | 10 | % | (1 | )% | |||||||||
Dividends to free cash flow* | 54 | % | 50 | % | (4 | )% | |||||||||
Note: Underlying sales and orders exclude the impact of acquisitions, divestitures and currency translation. | |||||||||||||||
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