Emerson Electric Company · NYSE:EMR
Emerson Electric — Q2 2021 Earnings Presentation
27 slides from Emerson Electric's earnings presentation, May 5, 2021
Slide 1: Emerson Q2 Earnings Conference Call
Emerson Q2 Earnings Conference Call May 5, 2021 Emerson’s DeltaV control platform, installed at over 3000 life science facilities worldwide, helps customers ensure quality, compliance, and optimize research andConfidential Emerson production of critical medicines and vaccines. .
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements in this presentation and our commentary and responses to questions 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 develop
Slide 3: Emerson's latest ESG report will be published in June
Emerson’s latest ESG report will be published in June, highlighting our goals, momentum, and references to multiple global standards 3 3
Slide 4: Emerson Global User Exchange Virtual Series expanded customer engagement
The Emerson Global User Exchange Virtual Series has expanded our engagement with customers on key digital and sustainability topics Attendees Roadmaps & Presentations Keynotes & Case Studies Expanding Customer Engagement Addressing Industry Dynamics Users Sharing Best Practice With Users 12,000+ 130
Slide 5: Q2 Performance and Updated Guidance
Q2 Performance and Updated Guidance
Slide 6: Q2 2021 results - Strong operating performance as end markets recover
Q2 2021 results - Strong operating performance as end markets recover and cost reset savings flow through 2020 EPS 2021 • Orders and sales continue to improve, reflecting recovery of end markets: GAAP $0.84 11% $0.93 underlying sales* up 2% - ahead of expectations, orders up 4% - near top end of gui
Slide 7: Q2 2020 to Q2 2021 adjusted EPS bridge
Q2 2020 to Q2 2021 adjusted EPS bridge - Strong operational performance partially offset by other headwinds $0.14 $0.01 $0.97 ($0.11) Share Repurchase $0.89 $0.04 Operations Pension $0.01, Stock Tax $0.01, FX Comp ($0.12) ($0.01), Other $0.04 Q2 ’20 Q2 ’21 ADJ EPS* ADJ EPS* ($0.07) $0.15 Non-Operati
Slide 8: Second quarter P&L summary
Second quarter P&L summary ($M, EXCEPT EPS) 2020 2021 Change Sales $4,162 $4,431 6% Underlying sales of 2%* Gross profit $1,750 $1,862 Primarily driven by business mix % of sales 42.1% 42.0% (10) bps SG&A expense ($983) ($1,054) 7% Ongoing cost reset actions largely offset by 230 bps unfavorable imp
Slide 9: Earnings & cash flow
Earnings & cash flow ($M) 2020 2021 Change Adjusted Segment EBIT* $736 $847 15% Volume leverage and cost reset benefits drove strong margin expansion, despite material cost headwinds in Commercial & Residential % of sales* 17.6% 19.1% 150 bps Solutions Stock compensation $38 ($61) ($99) Negative imp
Slide 10: Q2 2021 Emerson Automation Solutions
Q2 2021 Emerson Automation Solutions UNDERLYING SALES CHANGE VS. PY REPORTED NET SALES Americas (12%) 3% Europe 6% Asia, Middle East & Africa 9% $2,709M $2,793M Automation Solutions (2%) Underlying Sales* (2%) FX Impact 3 Pts 15.5% Adj EBIT%* 17.3% Acq Impact 2 Pts Reported Net Sales 3% 20.6% Adj EB
Slide 11: Q2 2021 Emerson Commercial & Residential Solutions
Q2 2021 Emerson Commercial & Residential Solutions UNDERLYING SALES CHANGE VS. PY REPORTED NET SALES Americas 8% 13% Europe 9% Asia, Middle East & Africa 24% $1,645M $1,458M Commercial & Residential Solutions 11% Underlying Sales* 11% FX Impact 2 Pts 21.6% Adj EBIT%* 22.0% Acq Impact - Reported Net
Slide 12: Updated 2021 guidance
Updated 2021 guidance Feb 16th, 2021 May 5, 2021 Net Sales Growth 4% – 8% 6% – 9% Acquisition 1 pt 1 pt FX 3 pts 2 pts Updated Profit Items: Underlying Sales* Growth flat – 4% 3% – 6% Automation Solutions (3%) – 1% (1%) – 1% • Unfavorable Price-cost Commercial & Residential Sols. 8% – 10% 12% – 14%
Slide 13: Trailing three month underlying orders vs. prior year
Emerson trailing three month underlying orders vs. prior year – Expect continued demand improvement in H2 Jan Feb Mar 25% Emerson Automation Solutions (12%) (9%) (5%) 20% Emerson Commercial & Residential Solutions 16% 14% 21% Emerson (3%) (2%) 4% 15% 10% 5% 0% (5%) (10%) (15%) (20%) (25%) Orders dat
Slide 14: Emerson Underlying sales growth outlook
Emerson Underlying sales growth outlook 2018: 8% 2019: 3% 2020: (8%) 2021E: 3% – 6% $17.4B $18.4B $16.8B ~$18.1B 10% 7% - 11% 8% 8% 8% 7% 5% 4.5% 4% 3% H2E 2% 2% flat 0% (2%) (5)% (7%) (10)% (9%) (15)% (15%) (20)% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3E Q4E Note: 2018-2020 sales dollars are re
Slide 15: Emerson Automation Solutions Underlying sales growth outlook
Emerson Automation Solutions Underlying sales growth outlook 2018: 10% 2019: 5% 2020: (8%) 2021E: (1%) – 1% $11.4B $12.2B $11.2B ~$11.6B 15% 12% 10% 10% 9% 9% 7% 7% 4% - 8% 5% 5% 3% 1% H2E 0% (2%) (5)% (10)% (8%) (9%) (11%) (15)% (13%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3E Q4E Note: 2018-202
Slide 16: Automation Solutions H2 expected to sequentially improve
Automation Solutions H2 expected to sequentially improve as world areas continue recovery from the COVID induced recession Global H1: (5%) H2E: 4% ‒ 8% Americas Asia, Middle East & Africa H1: (16%) H2E: 8% ‒ 12% H1: 5% H2E: 1% ‒ 5% • Book-and-ship short cycle businesses benefitting from modest recov
Slide 17: Commercial & Residential Solutions Underlying sales growth outlook
Emerson Commercial & Residential Solutions Underlying sales growth outlook 2018: 4% 2019: (1%) 2020: (7%) 2021E: 12% – 14% $6.0B $6.2B $5.6B ~$6.5B 15% 13% - 16% 12% 11% 10% 5% 5% H2E 5% 4% 2% flat 0% (1%) (1%) (1%) (2%) (5)% (3%) (5%) (10)% (15)% (20)% (19%) (25)% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 18: Commercial & Residential Solutions H2 balanced strength across world areas
Commercial & Residential Solutions H2 should have balanced strength across world areas as commercial and industrial markets gain momentum Global H1: 11% H2E: 13% - 16% Americas Asia, Middle East & Africa H1: 15% H2E: 13% - 16% H1: 11% H2E: 12% - 15% • China and MEA are the key contributors to • Ongo
Slide 19: Q&A
Q&A § EMERSON
Slide 20: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Comm & Res Q2 2021 Underlying Sales Change Auto Solns Solns Emerson Reported (GAAP) 3% 13% 6% (Favorabl
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) EBIT Q2 FY20 Q2 FY21 Change Pretax earnings (GAAP) $ 689 $ 737 7% Interest expense, net 36 38 -% Earnin
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Q2 Earnings Per Share Q2 FY20 Q2 FY21 Change Earnings per share (GAAP) $ 0.84 $ 0.93 11% Restructuring
Slide 23: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Business Segment EBIT Margin Q2 FY20 Q2 FY21 Change Pretax margin (GAAP) 16.6% 16.6% - bps Corp. items
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Automation Solutions Segment EBIT Margin Q2 FY20 Q2 FY21 Change Automation Solutions Segment EBIT margi
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Cash Flow to Net Earnings Conversion Q2 FY21 Operating cash flow conversion (GAAP) 142% Capital expendi
Slide 26: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Automation Solutions FY 2018 Underlying Sales Q1 Q2 Q3 Q4 FY18 Sales (GAAP) 31% 31% 18% 11% 21% FX / Ac
Slide 27: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures This information reconciles non-GAAP measures (denoted with a *) with the most directly comparable GAAP measure. (dollars in millions, except per share amounts) Commercial & Residential Solutions FY 2018 Underlying Sales Q1 Q2 Q3 Q4 FY18 Sales (GAAP) -% 2% (1)% 7%
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