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Elsa Peretti Continuous Mini-mini BEAN bracelet, http-equiv="Content-Type" content="texthtml; charset=gb2312"> Emerson Exceeds Estimates

Emerson Exceeds Estimates

 

Emerson Electric Company (EMR) announced earnings from continuing operations of 56 cents for the first quarter of 2010, exceeding the Zacks Consensus Estimate of 42 cents.

Emerson's quarterly net sales dipped 7% to $5 billion from last year's $5.4 billion. Underlying sales in the quarter fell 13%, which excludes a 3% favorable impact each from currency exchange rates and acquisitions.

Business Segment Information

Process Management sales dipped 9% in the quarter, versus their highest first quarter sales in fiscal 2009. Underlying sales decreased 17% against tough comparisons to the prior year period, and exclude a positive 5% impact from acquisitions and a favorable currency impact of 3%. The EIM acquisition in Oct 2009 provided significant entry into the electric valve actuation market segment, , Return to tiffany heart tag charm, with products targeted for energy-related and water and waste industries.

Industrial Automation sales decreased 21% in the quarter against a tough comparison to the prior year quarter in which underlying sales were still growing. Underlying sales decreased 28%, currency added 4% and acquisitions added 3%. In October 2009, Emerson completed the acquisition of SSB Wind Systems, a leading global supplier of electrical pitch control systems for the wind turbine market.

Sales in the Network Power segment slipped 5% in , Elsa peretti wave five-row ring, the first quarter, including an underlying sales decline of 10%, a 3% percent favorable impact from currency and a 2% favorable impact from the Avocent acquisition. Strength continued in Asia, which was up 7% in the quarter, and positive growth resumed in the embedded power business.

Climate Technologies sales growth turned positive, increasing 13% in the quarter. Underlying sales were up 7%, acquisitions added 3% and currency added 3%. Asia and the U.S. led with growth of 52% and 7% respectively.

Appliance and Tools sales fell 5% in the quarter, which included an underlying sales decrease of 7% and a 1% favorable impact each from currency translation and acquisitions. , Return to Tiffany collection oval tag pendant, Sales growth resumed in some of the consumer related businesses.

Balance Sheet and Cash Flow

Emerson's strong operating cash flow of $687 million in the first quarter represented a 115% increase from the same quarter last year, driven primarily by improved asset management and stable margins. Free cash flow (operating cash flow less capital expenditures) was $598 million, up 219% compared to the prior-year quarter, , Tiffany Elsa Peretti charm bracelet, and was 141% of net earnings.

Cash and cash equivalents stood at $1.8 billion with long-term debt at $3.2 billion and shareowners’ equity at $8.6 billion.

Outlook

Emerson expects full year earnings per share in the range of $2.20 to $2.40, which includes the impact of the Avocent acquisition. Currently, the Zacks Consensus Estimate is $2.11. Emerson is projecting a 2% favorable impact from currency translation and a 4% favorable impact from acquisitions resulting in reported sales which are flat to up 3%, or $20.9 to $21.5 billion.

We currently have a Neutral recommendation on Emerson.