Tuesday, May 3, 2016

CMI & EMR Earnings

Today we received earnings from two of our industrial picks - Cummins and Emerson Electric.

Cummins(CMI) reported Q1 EPS of $1.87 per share on revenues of $4.3 billion down 9% from last year. The company re-affirmed its EBIT guidance of 11.6%-12.2% of sales and sales down 5-9% from last year. The shares hit a high of $120 today. Here is what COO Rich Freeland had to say.

“Our results for the first quarter reflect solid execution of our cost reduction plans in the face of very challenging market conditions,” said Rich Freeland Chief Operating Officer. “Benefits from restructuring actions, material cost reduction projects and lower warranty costs all helped to mitigate the impact of lower sales.”

Emerson Electric(EMR) reported Q2 EPS of $0.57 per share on revenues of $4.9 billion down 9% from last year. The company re-affirmed it's guidance of $3.05-$3.25 per share. The shares have traded down slightly most the day. Here is what CEO David Farr had to say. 

"While pressure from global economic conditions continued, our second quarter results reflected varying levels of incremental improvement in our businesses," said Chairman and Chief Executive Officer David N. Farr. "The restructuring efforts we initiated last February are generating the margin improvement we expected, while at the same time trailing three-month underlying order rates improved sequentially throughout the quarter. Conditions in our oil and gas and industrial served markets will remain challenging, but order trends in our other markets are expected to strengthen in the second half of the fiscal year. As a result, the Company continues to expect better second half performance in terms of both profitability and underlying sales as our restructuring actions take hold."

"In April, we took another important step in our strategic portfolio repositioning plan by filing the Vertiv Form 10 for the Network Power spinoff," Farr continued. "While working diligently on the spin process, we continue to discuss the potential sale of the Network Power business with interested parties. In addition, the sale process for the motors and drives and power generation businesses is well underway. There is still much work to be done to complete our repositioning strategy, but we remain committed to substantially completing these actions by the end of the fiscal year in order to position both Emerson and Vertiv for growth and to drive shareholder value."

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