ST. LOUIS--(BUSINESS WIRE)--Emerson (NYSE: EMR) today reported results for the third fiscal quarter ended June 30, 2020 and announced updated guidance for the full year.
Third quarter GAAP net sales were down 16 percent and underlying sales were down 15 percent excluding unfavorable currency of 1 percent. Revenue declines were in-line with management expectations, as COVID-19 negatively affected nearly all end markets and geographies throughout the quarter. The company continued to see particular weakness in North American markets while China grew by 3 percent. Third quarter trailing three-month underlying orders were down 19 percent, reflective of customers across industrial, commercial and residential markets cutting costs and budgets in response to COVID-19 related operating restrictions and a general drop in economic activity.
Third quarter gross profit margin of 41.3 percent was down 140 basis points from 42.7 percent due to manufacturing plant deleverage. Pretax margin of 11.7 percent and EBIT margin of 12.9 percent were down 470 basis points and 440 basis points, respectively. Adjusted EBIT margin, which excludes restructuring and related charges, was 15.3 percent for the quarter, down 240 basis points, reflecting deleverage, foreign exchange losses, and the effect of a higher stock price, which was mitigated by aggressive cost reductions and favorable price cost.
GAAP earnings per share was $0.67 and adjusted earnings per share, which excludes restructuring and related charges, was $0.80 and exceeded management’s guidance of $0.56 to $0.64. These results reflected the benefits of aggressive restructuring and cost control actions, and a lower effective tax rate than expected in the quarter.
Operating cash flow was $842 million, down $104 million or 11 percent for the quarter. Year-to-date operating cash flow was $1.85 billion, up $52 million or 3 percent. Free cash flow was $738 million, down $87 million or 11 percent, resulting in free cash flow conversion of 181 percent in the quarter. Year-to-date free cash flow was $1.53 billion, up $118 million or 8 percent.
"Like many organizations, Emerson has been forced to rapidly adapt to the COVID-19 reality during the quarter, and I'm extremely proud of how the team rose to the challenge," said Emerson Chairman and Chief Executive Officer David N. Farr. "Amidst all of the shifting dynamics and uncertainties, we remained steadfast in our primary focus of keeping employees safe and healthy, and serving customers in their essential industries with the vital technologies and services they rely upon. I want to personally thank our entire Emerson organization, and especially our front-line employees serving essential industries, for their diligence, professionalism, and unwavering commitment to supporting our customers and one another in this rapidly evolving and challenging environment. I also want to thank my fellow Office of the Chief Executive team members who remained in our offices every day throughout the third quarter to lead the company through these particularly challenging and ever-changing past 125 days.
"While sales results were in-line with expectations, profitability for the third quarter came in well above expectations, primarily driven by our ongoing aggressive cost actions and as Emerson remained at work around the world. Overall orders and revenue declines were in-line with management expectations, as most end markets were heavily impacted by COVID-19. Geographically, North America was down 20 percent and remains the key near-term challenge from a demand perspective. Cash flow in the quarter was strong, and we have provided updated guidance for the year as markets begin to stabilize and reopen, and our aggressive cost actions deliver significant savings."
Business Platform Results
Automation Solutions net sales decreased 14 percent, with underlying sales down 13 percent excluding unfavorable currency of 1 percent. In the Americas, underlying sales were down 19 percent, with North America down 20 percent, reflecting continued broad-based industrial weakness. Europe underlying sales were down 8 percent as both Western and Eastern European markets showed early signs of stabilizing. Asia, Middle East & Africa underlying sales dropped 6 percent, as solid growth in China of 9 percent was more than offset by weakness in the rest of Asia and the Middle East. Longer cycle businesses of final control and systems saw declines of high-single and mid-single digits respectively, while the shorter cycle instrumentation business had a sharper decline.
June trailing three-month underlying orders were down 19 percent, reflecting weakness across most end markets, with the exception of life sciences and medical. Geographically, the Americas dropped sharply, down 28 percent, while Europe declined by 12 percent. Asia, Middle East & Africa showed the most modest decline, down 9 percent. China orders were up 1 percent as the economy reopened. Backlog was unchanged from last quarter at approximately $5.1 billion.
Segment EBIT margin decreased 3.7 points to 12.0 percent, driven by deleverage and mix. Adjusted segment EBIT margin, which excludes restructuring and related costs, decreased 120 basis points to 15.1 percent while adjusted segment EBITDA margin decreased 30 basis points, to 20.4 percent. Total restructuring in the quarter was $80 million, and totals $192 million year-to-date.
Commercial & Residential Solutions net sales decreased 20 percent with underlying sales down 19 percent excluding unfavorable currency of 1 percent. Underlying sales in the Americas were down 20 percent, reflecting a broad-based decline, particularly in commercial end markets. Europe was down 12 percent as air conditioning weakness more than offset demand in heat pump markets. Finally, Asia, Middle East & Africa was down 18 percent, with China down 9 percent.
Order rates varied dramatically during the quarter, from down 35 percent in April year-over-year, to positive 1 percent in June. June trailing three-month underlying orders were down 19 percent, as the OEM and distribution-based businesses saw significant declines in business activity. Businesses more exposed to big box and do-it-yourself retail performed better but were still negative in the quarter. Geographically, North America dropped by 19 percent as commercial and professional tools markets were particularly weak. Asia orders declined by 20 percent, while China was down 7 percent. Europe dropped by 12 percent, as general weakness was somewhat offset by residential heat pump demand.
Segment EBIT margin decreased 3.3 points to 19.1 percent driven by deleverage. Adjusted segment EBIT margin, which excludes restructuring and related costs, decreased 270 basis points to 20.0 percent, and adjusted segment EBITDA margin dropped 160 basis points to 24.7 percent. Total restructuring in the quarter was $12 million, with a total of $31 million year-to-date.
2020 Outlook
Management has updated the full year 2020 outlook to reflect the dynamic demand environment associated with global economic reopening and the stronger cost savings impacts. GAAP earnings per share guidance is $2.80 to $2.95. Adjusted earnings per share guidance, which excludes restructuring actions and related costs, is $3.20 to $3.35, compared to prior guidance of $3.00 to $3.20. This increase primarily reflects the aggressive restructuring reset actions and COVID-19 related cost containment actions positively impacting profitability. Total restructuring actions for the year are now expected to be approximately $300 million, an increase of $20 million from the previous guidance. Share repurchases remain suspended, and total approximately $950 million. There is no change in the dividend outlook. Lastly, capital expenditures remain unchanged at $550 million.
The following table presents the updated 2020 guidance framework:
Sales Growth Guidance |
|
EPS and Cash Flow Guidance |
||||
|
|
|
GAAP EPS |
$2.80 - $2.95 |
||
Net Sales Growth |
(10%) - (9%) |
|
Adjusted EPS |
$3.20 - $3.35 |
||
Automation Solutions |
(10%) - (8%) |
|
Tax Rate |
~20% |
||
Commercial & Residential Solutions |
(11%) - (9%) |
|
Operating Cash Flow |
~$2.8B |
||
Underlying Sales Growth |
(9%) - (7.5%) |
|
Free Cash Flow |
~$2.25B |
||
Automation Solutions |
(9%) - (7%) |
|
Capital Expenditures |
~$550M |
||
Commercial & Residential Solutions |
(10%) - (8%) |
|
Share Repurchases |
~$950M |
||
This updated guidance assumes, among other items, a continued challenging but steadily improving demand environment in the fourth quarter. We still expect revenue to return to growth in either the second or third quarter of 2021. The updated guidance also assumes no major operational or supply chain disruptions. Lastly, the guidance assumes no changes in discrete tax items and assumes oil prices remain in the approximately $35 to $45 range during that time period.
"As the fiscal year rapidly comes to a close and economies continue to reopen, we remain laser focused on driving long-term value creation for all of our stakeholders - customers, employees, communities, and shareholders," Farr concluded. "I firmly believe that we will emerge from this pandemic a stronger, leaner, and more agile organization, poised to partner with our customers and capitalize on the macro trends accelerated by COVID-19: automation, efficiency, digitization, and emissions measurement and management. The challenging repositioning work we are engaged in now positions Emerson for long-term outperformance as the world's economies emerge from this historic COVID-19 chapter."
Upcoming Investor Events
Today, beginning at 2 p.m. Eastern Time, Emerson management will discuss the third quarter 2020 results during an investor conference call. Participants can access a live webcast available at www.emerson.com/financial at the time of the call. A replay of the call will remain available for 90 days. Conference call slides will be posted in advance of the call on the company website.
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 the scope, duration and ultimate impact of the COVID-19 pandemic as well as economic and currency conditions, market demand, including related to the pandemic and oil and gas price declines and volatility, pricing, protection of intellectual property, cybersecurity, tariffs, 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.
(tables attached)
|
|
|
|
|
Table 1 |
||
EMERSON AND SUBSIDIARIES |
|||||||
CONSOLIDATED OPERATING RESULTS |
|||||||
(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED) |
|||||||
|
|
|
|
|
|
||
|
Quarter Ended June 30 |
|
Percent |
||||
|
2019 |
|
2020 |
|
Change |
||
|
|
|
|
|
|
||
Net sales |
$4,684 |
|
|
$3,914 |
|
|
(16)% |
Costs and expenses: |
|
|
|
|
|
||
Cost of sales |
2,683 |
|
|
2,296 |
|
|
|
SG&A expenses |
1,126 |
|
|
934 |
|
|
|
Other deductions, net |
65 |
|
|
181 |
|
|
|
Interest expense, net |
43 |
|
|
45 |
|
|
|
Earnings before income taxes |
767 |
|
|
458 |
|
|
(40)% |
Income taxes |
155 |
|
|
51 |
|
|
|
Net earnings |
612 |
|
|
407 |
|
|
|
Less: Noncontrolling interests in earnings of subsidiaries |
8 |
|
|
8 |
|
|
|
Net earnings common stockholders |
$604 |
|
|
$399 |
|
|
(34)% |
|
|
|
|
|
|
||
Diluted avg. shares outstanding |
619.0 |
|
|
600.0 |
|
|
|
|
|
|
|
|
|
||
Diluted earnings per share common share |
$0.97 |
|
|
$0.67 |
|
|
(31)% |
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
Quarter Ended June 30 |
|
|
||||
|
2019 |
|
2020 |
|
|
||
Other deductions, net |
|
|
|
|
|
||
Amortization of intangibles |
$60 |
|
|
$60 |
|
|
|
Restructuring costs |
20 |
|
|
88 |
|
|
|
Other |
(15 |
) |
|
33 |
|
|
|
Total |
$65 |
|
|
$181 |
|
|
|
|
|
|
|
|
Table 2 |
||
EMERSON AND SUBSIDIARIES |
|||||||
CONSOLIDATED OPERATING RESULTS |
|||||||
(AMOUNTS IN MILLIONS EXCEPT PER SHARE, UNAUDITED) |
|||||||
|
|
|
|
|
|
||
|
Nine Months Ended June 30 |
|
Percent |
||||
|
2019 |
|
2020 |
|
Change |
||
|
|
|
|
|
|
||
Net sales |
$13,401 |
|
|
$12,227 |
|
|
(9)% |
Costs and expenses: |
|
|
|
|
|
||
Cost of sales |
7,714 |
|
|
7,100 |
|
|
|
SG&A expenses |
3,348 |
|
|
3,040 |
|
|
|
Other deductions, net |
172 |
|
|
401 |
|
|
|
Interest expense, net |
134 |
|
|
116 |
|
|
|
Earnings before income taxes |
2,033 |
|
|
1,570 |
|
|
(23)% |
Income taxes |
429 |
|
|
310 |
|
|
|
Net earnings |
1,604 |
|
|
1,260 |
|
|
|
Less: Noncontrolling interests in earnings of subsidiaries |
15 |
|
|
18 |
|
|
|
Net earnings common stockholders |
$1,589 |
|
|
$1,242 |
|
|
(22)% |
|
|
|
|
|
|
||
Diluted avg. shares outstanding |
621.6 |
|
|
608.4 |
|
|
|
|
|
|
|
|
|
||
Diluted earnings per share common share |
$2.55 |
|
|
$2.04 |
|
|
(20)% |
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
Nine Months Ended June 30 |
|
|
||||
|
2019 |
|
2020 |
|
|
||
Other deductions, net |
|
|
|
|
|
||
Amortization of intangibles |
$177 |
|
|
$178 |
|
|
|
Restructuring costs |
40 |
|
|
216 |
|
|
|
Special advisory fees |
— |
|
|
13 |
|
|
|
Other |
(45 |
) |
|
(6 |
) |
|
|
Total |
$172 |
|
|
$401 |
|
|
|
|
|
|
Table 3 |
||
EMERSON AND SUBSIDIARIES |
|||||
CONSOLIDATED BALANCE SHEETS |
|||||
(DOLLARS IN MILLIONS, UNAUDITED) |
|||||
|
|
|
|
||
|
Quarter Ended June 30 |
||||
|
2019 |
|
2020 |
||
Assets |
|
|
|
||
Cash and equivalents |
$1,603 |
|
|
$2,450 |
|
Receivables, net |
2,901 |
|
|
2,512 |
|
Inventories |
2,061 |
|
|
2,102 |
|
Other current assets |
785 |
|
|
815 |
|
Total current assets |
7,350 |
|
|
7,879 |
|
Property, plant & equipment, net |
3,614 |
|
|
3,565 |
|
Goodwill |
6,544 |
|
|
6,624 |
|
Other intangible assets |
2,691 |
|
|
2,488 |
|
Other |
1,118 |
|
|
1,174 |
|
Total assets |
$21,317 |
|
|
$21,730 |
|
|
|
|
|
||
Liabilities and equity |
|
|
|
||
Short-term borrowings and current maturities of long-term debt |
$1,877 |
|
|
$1,725 |
|
Accounts payable |
1,785 |
|
|
1,426 |
|
Accrued expenses |
2,556 |
|
|
2,834 |
|
Total current liabilities |
6,218 |
|
|
5,985 |
|
Long-term debt |
4,336 |
|
|
5,500 |
|
Other liabilities |
1,959 |
|
|
2,367 |
|
Total equity |
8,804 |
|
|
7,878 |
|
Total liabilities and equity |
$21,317 |
|
|
$21,730 |
|
|
|
Table 4 |
||||
EMERSON AND SUBSIDIARIES |
||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||
(DOLLARS IN MILLIONS, UNAUDITED) |
||||||
|
|
|
||||
|
Nine Months Ended June 30 |
|||||
|
2019 |
2020 |
||||
Operating activities |
|
|
||||
Net earnings |
$1,604 |
|
$1,260 |
|
||
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
||||
Depreciation and amortization |
609 |
|
631 |
|
||
Stock compensation |
83 |
|
69 |
|
||
Pension expense |
(1 |
) |
50 |
|
||
Changes in operating working capital |
(352 |
) |
(86 |
) |
||
Other, net |
(141 |
) |
(70 |
) |
||
Cash provided by operating activities |
1,802 |
|
1,854 |
|
||
|
|
|
||||
Investing activities |
|
|
||||
Capital expenditures |
(395 |
) |
(329 |
) |
||
Purchases of businesses, net of cash and equivalents acquired |
(385 |
) |
(114 |
) |
||
Divestitures of businesses |
10 |
|
— |
|
||
Other, net |
(91 |
) |
(65 |
) |
||
Cash used in investing activities |
(861 |
) |
(508 |
) |
||
|
|
|
||||
Financing activities |
|
|
||||
Net increase in short-term borrowings |
427 |
|
269 |
|
||
Proceeds from short-term borrowings greater than three months |
— |
|
546 |
|
||
Payments of short-term borrowings greater than three months |
— |
|
(340 |
) |
||
Proceeds from long-term debt |
1,691 |
|
1,488 |
|
||
Payments of long-term debt |
(655 |
) |
(502 |
) |
||
Dividends paid |
(909 |
) |
(910 |
) |
||
Purchases of common stock |
(1,000 |
) |
(942 |
) |
||
Other, net |
21 |
|
28 |
|
||
Cash used in financing activities |
(425 |
) |
(363 |
) |
||
|
|
|
||||
Effect of exchange rate changes on cash and equivalents |
(6 |
) |
(27 |
) |
||
Increase in cash and equivalents |
510 |
|
956 |
|
||
Beginning cash and equivalents |
1,093 |
|
1,494 |
|
||
Ending cash and equivalents |
$1,603 |
|
$2,450 |
|
||
|
|
|
||||
|
|
|
Table 5 |
||
EMERSON AND SUBSIDIARIES |
|||||
SEGMENT SALES AND EARNINGS |
|||||
(DOLLARS IN MILLIONS, UNAUDITED) |
|||||
|
|
|
|
||
|
Quarter Ended June 30 |
||||
|
2019 |
|
2020 |
||
Sales |
|
|
|
||
Automation Solutions |
$3,025 |
|
|
$2,589 |
|
|
|
|
|
||
Climate Technologies |
1,199 |
|
|
970 |
|
Tools & Home Products |
463 |
|
|
357 |
|
Commercial & Residential Solutions |
1,662 |
|
|
1,327 |
|
|
|
|
|
||
Eliminations |
(3 |
) |
|
(2 |
) |
Net sales |
$4,684 |
|
|
$3,914 |
|
|
|
|
|
||
Earnings |
|
|
|
||
Automation Solutions |
$477 |
|
|
$311 |
|
|
|
|
|
||
Climate Technologies |
278 |
|
|
195 |
|
Tools & Home Products |
93 |
|
|
58 |
|
Commercial & Residential Solutions |
371 |
|
|
253 |
|
|
|
|
|
||
Stock compensation |
(31 |
) |
|
(51 |
) |
Unallocated pension and postretirement costs |
27 |
|
|
12 |
|
Corporate and other |
(34 |
) |
|
(22 |
) |
Interest expense, net |
(43 |
) |
|
(45 |
) |
Earnings before income taxes |
$767 |
|
|
$458 |
|
|
|
|
|
||
Restructuring costs |
|
|
|
||
Automation Solutions |
$15 |
|
|
$76 |
|
|
|
|
|
||
Climate Technologies |
4 |
|
|
5 |
|
Tools & Home Products |
1 |
|
|
4 |
|
Commercial & Residential Solutions |
5 |
|
|
9 |
|
|
|
|
|
||
Corporate |
— |
|
|
3 |
|
Total |
$20 |
|
|
$88 |
|
The table above does not include $6 of costs related to restructuring actions that were reported in cost of sales in the third quarter of fiscal 2020. |
|||||
|
|
|
|
||
Depreciation and Amortization |
|
|
|
||
Automation Solutions |
$133 |
|
|
$137 |
|
|
|
|
|
||
Climate Technologies |
42 |
|
|
44 |
|
Tools & Home Products |
18 |
|
|
20 |
|
Commercial & Residential Solutions |
60 |
|
|
64 |
|
|
|
|
|
||
Corporate and other |
10 |
|
|
8 |
|
Total |
$203 |
|
|
$209 |
|
|
|
|
Table 6 |
||
EMERSON AND SUBSIDIARIES |
|||||
SEGMENT SALES AND EARNINGS |
|||||
(DOLLARS IN MILLIONS, UNAUDITED) |
|||||
|
|
|
|
||
|
Nine Months Ended June 30 |
||||
|
2019 |
|
2020 |
||
Sales |
|
|
|
||
Automation Solutions |
$8,834 |
|
|
$8,150 |
|
|
|
|
|
||
Climate Technologies |
3,171 |
|
|
2,869 |
|
Tools & Home Products |
1,390 |
|
|
1,219 |
|
Commercial & Residential Solutions |
4,561 |
|
|
4,088 |
|
|
|
|
|
||
Eliminations |
6 |
|
|
(11 |
) |
Net sales |
$13,401 |
|
|
$12,227 |
|
|
|
|
|
||
Earnings |
|
|
|
||
Automation Solutions |
$1,328 |
|
|
$1,012 |
|
|
|
|
|
||
Climate Technologies |
650 |
|
|
563 |
|
Tools & Home Products |
286 |
|
|
233 |
|
Commercial & Residential Solutions |
936 |
|
|
796 |
|
|
|
|
|
||
Stock compensation |
(83 |
) |
|
(69 |
) |
Unallocated pension and postretirement costs |
81 |
|
|
37 |
|
Corporate and other |
(95 |
) |
|
(90 |
) |
Interest expense, net |
(134 |
) |
|
(116 |
) |
Earnings before income taxes |
$2,033 |
|
|
$1,570 |
|
|
|
|
|
||
Restructuring costs |
|
|
|
||
Automation Solutions |
$26 |
|
|
$182 |
|
|
|
|
|
||
Climate Technologies |
8 |
|
|
14 |
|
Tools & Home Products |
5 |
|
|
12 |
|
Commercial & Residential Solutions |
13 |
|
|
26 |
|
|
|
|
|
||
Corporate |
1 |
|
|
8 |
|
Total |
$40 |
|
|
$216 |
|
The table above does not include $15 of costs related to restructuring actions that were reported in cost of sales for the nine months ended June 30, 2020. |
|||||
|
|
|
|
||
Depreciation and Amortization |
|
|
|
||
Automation Solutions |
$393 |
|
|
$414 |
|
|
|
|
|
||
Climate Technologies |
132 |
|
|
133 |
|
Tools & Home Products |
54 |
|
|
58 |
|
Commercial & Residential Solutions |
186 |
|
|
191 |
|
|
|
|
|
||
Corporate and other |
30 |
|
|
26 |
|
Total |
$609 |
$631 |
|
||
Reconciliations of Non-GAAP Financial Measures & Other |
|
|
|
Table 7 |
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|
|
|
|
|
|
|
|
||||||||
Reconciliations of Non-GAAP measures (denoted by *) with the most directly comparable GAAP measure (dollars in millions, except per share amounts): |
||||||||||||||||||||
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|
|
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|
|
|
||||||||
Q3 2020 Underlying Sales Change |
Auto Solns |
|
Comm & Res
|
|
Emerson |
|
|
|||||||||||||
Reported (GAAP) |
|
(14 |
)% |
|
(20 |
)% |
|
(16 |
)% |
|
|
|||||||||
(Favorable) / Unfavorable FX |
1 |
% |
|
1 |
% |
|
1 |
% |
|
|
||||||||||
Acquisitions / Divestitures |
— |
% |
|
— |
% |
|
— |
% |
|
|
||||||||||
Underlying* |
(13 |
)% |
|
(19 |
)% |
|
(15 |
)% |
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
FY 2020E Underlying Sales Change |
Auto Solns |
|
Comm & Res
|
|
Emerson |
|
|
|||||||||||||
Reported (GAAP) |
|
(10)% - (8)% |
|
(11)% - (9)% |
|
(10)% - (9)% |
|
|
||||||||||||
(Favorable) / Unfavorable FX |
~ 1% |
|
~ 1% |
|
1% - 1.5% |
|
|
|||||||||||||
Acquisitions / Divestitures |
|
~ -% |
|
~ -% |
|
~ -% |
|
|
||||||||||||
Underlying* |
|
(9)% - (7)% |
|
(10)% - (8)% |
|
(9)% - (7.5)% |
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings Per Share |
|
|
|
|
Q3 FY20E |
|
Q3 FY20 |
|
|
|
|
|||||||||
Earnings per share (GAAP) |
$0.43 - $0.51 |
|
$ |
0.67 |
|
|
|
|
|
|||||||||||
Restructuring and related charges |
~ 0.13 |
|
0.13 |
|
|
|
|
|
||||||||||||
Adjusted earnings per share* |
$0.56 - $0.64 |
|
$ |
0.80 |
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings Per Share |
|
|
|
|
FY2020E
|
|
FY2020E |
|
|
|
|
|||||||||
Earnings per share (GAAP) |
$2.62 - $2.82 |
|
$2.80 - $2.95 |
|
|
|
|
|||||||||||||
Restructuring and related charges |
~ 0.38 |
|
~ 0.40 |
|
|
|
|
|||||||||||||
Adjusted earnings per share* |
$3.00 - $3.20 |
|
$3.20 - $3.35 |
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
EBIT Margin |
Q3 FY19 |
|
Q3 FY20 |
|
Change |
|
|
|||||||||||||
Pretax margin (GAAP) |
16.4 |
% |
|
11.7 |
% |
|
(470) bps |
|
|
|||||||||||
Interest expense, net |
0.9 |
% |
|
1.2 |
% |
|
30 bps |
|
|
|||||||||||
Earnings before interest and taxes margin* |
17.3 |
% |
|
12.9 |
% |
|
(440) bps |
|
|
|||||||||||
Restructuring and related charges |
0.4 |
% |
|
2.4 |
% |
|
200 bps |
|
|
|||||||||||
Adjusted earnings before interest and taxes margin* |
17.7 |
% |
|
15.3 |
% |
|
(240) bps |
|
|
|||||||||||
|
|
|
||||||||||||||||||
Automation Solutions Segment EBIT Margin |
Q3 FY19 |
|
Q3 FY20 |
|
Change |
|
|
|||||||||||||
Automation Solutions Segment EBIT margin (GAAP) |
15.7 |
% |
|
12.0 |
% |
|
(370) bps |
|
|
|||||||||||
Restructuring charges impact |
0.6 |
% |
|
3.1 |
% |
|
250 bps |
|
|
|||||||||||
Automation Solutions Adjusted Segment EBIT margin* |
16.3 |
% |
|
15.1 |
% |
|
(120) bps |
|
|
|||||||||||
Depreciation / amortization |
4.4 |
% |
|
5.3 |
% |
|
90 bps |
|
|
|||||||||||
Automation Solutions Adjusted Segment EBITDA margin* |
20.7 |
% |
|
20.4 |
% |
|
(30) bps |
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial & Residential EBIT Margin |
Q3 FY19 |
|
Q3 FY20 |
|
Change |
|
|
|||||||||||||
Commercial & Residential EBIT margin (GAAP) |
22.4 |
% |
|
19.1 |
% |
|
(330) bps |
|
|
|||||||||||
Restructuring charges impact |
0.3 |
% |
|
0.9 |
% |
|
60 bps |
|
|
|||||||||||
Commercial & Residential Adjusted EBIT margin* |
22.7 |
% |
|
20.0 |
% |
|
(270) bps |
|
|
|||||||||||
Depreciation / amortization |
3.6 |
% |
|
4.7 |
% |
|
110 bps |
|
|
|||||||||||
Commercial & Residential Adjusted EBITDA margin* |
26.3 |
% |
|
24.7 |
% |
|
(160) bps |
|
|
|||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Q3 Cash Flow |
|
|
|
Q3 FY19 |
|
Q3 FY20 |
|
Change |
|
% Change |
||||||||||
Operating cash flow (GAAP) |
|
|
|
$ |
946 |
|
|
$ |
842 |
|
|
$ |
(104 |
) |
|
(11)% |
||||
Capital expenditures |
|
|
|
(121 |
) |
|
(104 |
) |
|
17 |
|
|
—% |
|||||||
Free cash flow* |
|
|
|
$ |
825 |
|
|
$ |
738 |
|
|
$ |
(87 |
) |
|
(11)% |
||||
|
|
|
||||||||||||||||||
Q3 Year-To-Date Cash Flow |
|
|
|
FY 2019 |
|
FY 2020 |
|
Change |
|
% Change |
||||||||||
Operating cash flow (GAAP) |
|
|
|
$ |
1,802 |
|
|
$ |
1,854 |
|
|
$ |
52 |
|
|
3% |
||||
Capital expenditures |
|
|
|
(395 |
) |
|
(329 |
) |
|
66 |
|
|
5% |
|||||||
Free cash flow* |
|
|
|
$ |
1,407 |
|
|
$ |
1,525 |
|
|
$ |
118 |
|
|
8% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
FY 2020E Cash Flow |
FY 2020E |
|
|
|
|
|
|
|||||||||||||
Operating cash flow (GAAP) |
~ $2,800 |
|
|
|
|
|
|
|||||||||||||
Capital expenditures |
~ (550) |
|
|
|
|
|
|
|||||||||||||
Free cash flow* |
~ $2,250 |
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash Flow to Net Earnings Conversion |
Q3 FY20 |
|
|
|
|
|
|
|||||||||||||
Operating cash flow to net earnings (GAAP) |
207 |
% |
|
|
|
|
|
|||||||||||||
Capital expenditures |
(26 |
)% |
|
|
|
|
|
|
||||||||||||
Free cash flow to net earnings* |
181 |
% |
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Note: Underlying sales and orders exclude the impact of acquisitions, divestitures and currency translation. |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
### |
|
|
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