Emerson Electric Company · NYSE:EMR

Emerson Electric — Q4 2008 Earnings Presentation

18 slides from Emerson Electric's earnings presentation, Nov 4, 2008

  1. Slide 1: Fourth Quarter 2008 Earnings Conference Call

    Fourth Quarter 2008 Earnings Conference Call November 4, 2008 Safe Harbor Statement Our commentary and responses to your questions may contain forward-looking statements, including our outlook for the remainder of the year, and Emerson undertakes no obligation to update any such statements to reflec

  2. Slide 2: Fourth Quarter 2008 Highlights

    Fourth Quarter 2008 Highlights  Fourth quarter sales up 11% to $6.7 billion with increases in four out of five business segments – Strong underlying* sales growth of 7%, led by Process Management, Network Power and Industrial Automation – Emerging markets continued to benefit growth  Operating pro

  3. Slide 3: Emerson Fourth Quarter Results

    Emerson Fourth Quarter Results ($Mil excl. EPS) 2007 2008 Sales $6,028 $6,696  Up 11% • Increases in 4 of 5 business segments • Process Mgmt. up +13%, Network Power up +19%, Industrial Automation up +14% • Underlying* up 7%; FX +2 pts; Acq/Div +2 pts Operating Profit* $1,013 $1,174  Up 16% OP%* 16

  4. Slide 4: Underlying Sales Analysis Fourth Quarter & Fiscal 2008 Results

    Underlying Sales Analysis Fourth Quarter & Fiscal 2008 Results 4Q 2008 Fiscal Year 2008 United States 1% 3% Europe 6% 3% Asia 17% 17% Latin America 25% 18% Canada 14% 8% Middle East/Africa 14% 17% Total International 13% 10% Underlying Sales* +7% +7% Currency +2 pts +4 pts Acquisitions / Divestiture

  5. Slide 5: Emerson Fourth Quarter Detail

    Emerson Fourth Quarter Detail ($Mil) 2007 2008  Up 10% Gross Profit $2,248 $2,474 Improvement from cost GP% 37.3% 37.0% containment programs and volume leverage SG&A% 20.5% 19.5% Lower incentive share expense Operating Profit* $1,013 $1,174  Up 16% OP%* 16.8% 17.5% - Other Deductions, Net $60 $1

  6. Slide 6: Emerson's Restructuring is Pay As We Go – Continuous Process

    Emerson’s Restructuring is Pay As We Go – Continuous Process  Emerson restructures continuously throughout the business cycle  Ongoing restructuring efforts support geographic expansion and best cost country programs to improve profitability  Restructuring actions accelerated throughout 2008, as

  7. Slide 7: Fourth Quarter Cash Flow & Balance Sheet

    Fourth Quarter Cash Flow & Balance Sheet ($Mil) 2007 2008 Operating Cash Flow $1,242 $1,295  Up 4% in 4th Qtr Capital Expenditures ($261) ($253) Free Cash Flow* $981 $1,042  Up 6% in 4th Qtr  151% FCF/Net Earnings* conversion in Q4 Cash Flow/Total Debt 79.9% 72.9%  Strong Balance Sheet Inventori

  8. Slide 8: Liquidity Position Remains Strong and Flexible

    Liquidity Position Remains Strong and Flexible  Emerson has had continuous access to the commercial paper markets  High short-term credit rating (A1/P1)  Able to place paper with 30-day duration or longer at normal Emerson rates  Liquidity  Emerson has a $2.8B backup credit line expiring April

  9. Slide 9: Business Segment Earnings Fourth Quarter Results

    Business Segment Earnings Fourth Quarter Results ($Mil) 2007 2008 Business Segment EBIT* $1,023 $1,086  Up 6%  Impacted by $22M restructuring Margin 16.6% 15.8% increase, $22M appliance control business impairment charge and dilutive impact of acquisitions Diff. In Accounting Methods $54 $60  Up

  10. Slide 10: Process Management Fourth Quarter Results

    Process Management Fourth Quarter Results ($Mil) 2007 2008 Sales $1,665 $1,888  Up 13% – Underlying* +12%; FX +2 pts; Div/Acq. -1 pt. • U.S. up 9%, Asia up 23%, Europe up 8%, Middle East/Africa up 5% – Strength across the segment EBIT $341 $416  Up 22% Margin 20.5% 22.0% – Cost reduction programs

  11. Slide 11: Industrial Automation Fourth Quarter Results

    Industrial Automation Fourth Quarter Results ($Mil) 2007 2008 Sales $1,123 $1,280  Up 14% – Underlying* up 9%; FX +5 pts • U.S. up 11%, Europe up 4%, Asia up 22% – Strong sales performance in the power generating alternator, fluid automation and materials joining businesses EBIT $187 $199  Up 6% M

  12. Slide 12: Network Power Fourth Quarter Results

    Network Power Fourth Quarter Results ($Mil) 2007 2008 Sales $1,438 $1,714  Up 19% – Underlying* up 9%; Acq +8 pts; FX +2 pts • U.S. flat, Asia up 19%, Europe up 2% – Strong growth across the power systems businesses EBIT $204 $215  Up 6% Margin 14.2% 12.6% – Margin down 160 basis points – Acquisit

  13. Slide 13: Climate Technologies Fourth Quarter Results

    Climate Technologies Fourth Quarter Results ($Mil) 2007 2008 Sales $938 $1,013  Up 8% – Underlying* up 5%; FX +3 pts • U.S. up 3%, Europe up 13%, Asia down 3% – Europe growth driven by the increase in heat pump compressor sales EBIT $133 $138  Up 3% Margin 14.2% 13.6% – Margin down 60 basis points

  14. Slide 14: Appliance and Tools Fourth Quarter Results

    Appliance and Tools Fourth Quarter Results ($Mil) 2007 2008 Sales $1,013 $975  Down 4% – Underlying* down 3%; Divestiture -2 pts; FX +1 pt • U.S. down 6%, Europe down 4%, Asia up 26% EBIT $158 $118  Down 25% Margin 15.6% 12.1% – Margin decrease of 350 basis points – $22M charge in appliance contro

  15. Slide 15: Emerson Fiscal Year 2008 Results

    Emerson Fiscal Year 2008 Results ($Mil excl. EPS) 2007 2008 Sales $22,131 $24,807  Up 12% • Underlying* up 7%, Emerging Markets 30% of total sales, International 54% of total sales Operating Profit* $3,496 $4,082  Up 17% OP%* 15.8% 16.5% • Volume leverage and cost reductions drive margin improveme

  16. Slide 16: Fiscal Year 2009 Guidance: Very Uncertain and Challenging Global Economics

    Fiscal Year 2009 Guidance: Very Uncertain and Challenging Global Economics in 2009 Delta 2007-08 2008 2009 Forecast (11/4/08) Sales +12% $24.8B $23.5 to $25.5B Operating Margin* +70 basis 16.5% 16.0 – 16.6% points EPS (continuing operations) +17% $3.11 $2.80 to $3.20 Operating Cash Flow 9% $3.3B $3.

  17. Slide 17: Summary

    Summary  Emerson delivered an outstanding fiscal year 2008, and our businesses and financial position remain very strong as we finished this record year  Emerson is well positioned as we move into an uncertain fiscal year 2009 – Strong global footprint – International sales 54% of total business –

  18. Slide 18: Reconciliation of Non-GAAP Financial Measures

    Emerson Business Summary Reconciliation of Non-GAAP Financial Measures Fiscal 2008 Operating Profit FY 2007 FY 2008 % Change Underlying Sales * 7% Net Sales $ 22,131 $ 24,807 12% Foreign Currency Translation 4 pts Cost of Sales 14,066 15,668 Acquisitions/Divestitures 1 pt SG&A Expense 4,569 5,057 Ne

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