ST. LOUIS - 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.'

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.

Contact:

Dave Baldridge

Tel: +1 314 982 7782

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