Emerson Reports Second Quarter 2022 Results

Photo credit: Pixabay

Emerson reported results on May 4 for its second fiscal quarter ended March 31, 2022. March trailing three-month underlying orders were up 13%, as demand continued to be strong across both platforms. Second quarter net sales were up 8% and underlying ales were up 10%. By geography, the Americas grew 14%, Europe grew 2% and Asia, Middle East and Africa grew 7%. China grew 11%.

Second quarter pretax margin of 16.9% was up 30 basis points. Adjusted EBITA margin, which excludes restructuring, first year purchase accounting charges, transaction costs and intangibles amortization expense, was 20.2%, up 20 basis points.

Earnings Per Share were $1.13 for the quarter, up 22%. Adjusted earnings per share, which excludes restructuring, first year purchase accounting charges, transaction and AspenTech pre-closing costs and intangibles amortization expense, were $1.29, up 21%. Earnings in the quarter benefited from leverage, continued savings from effective cost management and favorable mix despite the ongoing supply chain headwinds and inflationary pressures.

Operating cash flow was $442 million for the quarter, down 45%, and free cash flow was $333 million, down 53%. Cash flow results reflected mainly higher inventory due to supply chain constraints.

“Emerson continues to execute through a dynamic and challenging environment. In the second quarter, we delivered solid margins and drove 10% underlying sales growth and over 20% adjusted EPS growth. Our performance was indicative of strong end market demand and successful navigation through supply chain constraints and inflationary pressures,” said Emerson president and CEO Lal Karsanbhai. “Despite ongoing uncertainty, our strong performance gives us confidence to increase our 2022 full year outlook.

“Today, Emerson is also announcing our decision to exit our Russia business and, as part of this exit, we are exploring strategic options to divest Metran, our Russia-based manufacturing subsidiary,” Karsanbhai continued. “We are committed to an orderly transfer of these assets and will support our employees through this process.”

AUTOMATION SOLUTIONS

March trailing three-month underlying orders were up 17% driven by strong demand in all business groups and world areas. Backlog increased $400 million compared to the prior quarter to $6.4 billion.

Net sales increased 5% in the quarter, with underlying sales up 7%. The Americas were up 13%, Europe was down 3% and Asia, Middle East & Africa was up 6%. China was up 17%.

Segment EBIT margin increased 210 basis points to 18.9% and Adjusted Segment EBITA margin, which excludes restructuring and intangibles amortization expense, increased 170 basis points to 21.5%. Favorable profitability was driven by increased volume, leverage, continued cost management and mix despite increased costs due to inflationary pressures.