Emerson Electric (EMR) +5.99%
Emerson posted fiscal first-quarter profits that beat analysts’ projections and predicted 2009 profit in line with estimates.
Underlying sales (which exclude acquisitions, divestitures and foreign currency translation) were essentially flat. Declining sales in the U.S. were offset by strong international and emerging markets sales that increased 7 percent and 10 percent, respectively.
Technology leadership continues to drive global sales in the company’s Process Management were strong, with underlying sales growth in the U.S. of 10 percent and international growth of 16 percent. The company made special mention of its multiple awards for technologies including a first-place award for Wireless Infrastructure.
The company said that cost reduction initiatives and restructuring benefits mitigated deterioration of the operating profit margin in a challenging environment of increased commodity inflation and volume deleverage.
Emerson’s cash flow to total debt provision remains strong at 60 percent, allowing for continued investment in the business and support of the dividend. The company is targeting a strong year in free cash flow at 11 to 11.5 percent of sales for fiscal year 2009.
“We’re positioning Emerson for a strong breakout when the global economy recovers,” CEO David Farr said. “Our ability to generate cash demonstrates the underlying strength of the business and enables us to fund growth, both organic and through acquisitions.
Hologic (HOLX) +6.93%
Hologic reported fiscal first-quarter revenues increased 16 percent from the same period a year ago.
The company attributed the increase primarily to the inclusion of 13 weeks of revenue from the diagnostics, surgical and MammoSite product lines acquired in the merger with Cytyc. Also contributing to the increase in revenues was a 34 percent increase in service and other revenues primarily related to their Selenia full field digital mammography units sold.
Hologic reiterated full-year guidance, which was lowered on Jan. 12 to reflect that hospitals are responding to tightening access to capital by restricting capital expenditures, implementing tight spending controls and reducing personnel.
The company has three new products submitted to the FDA for approval that could significantly enhance revenues; however, Hologic could not estimate with any certainty if or when they may begin to market these products in the U.S.
United Parcel Service (UPS) +6.08%
UPS fourth-quarter earnings declined, but topped analysts’ expectations.
In response to the “severe decline in economic activity,” UPS has consolidated operating districts, reduced air segments and eliminated some package handling operations. The company also announced it is freezing management salaries and suspending the match for its 401(k) plans.
Revenue per piece growth was constrained by a lower average weight per package and a continuing shift away from premium products and services. These trends, along with lower volumes, more than offset the benefits from reduced fuel cost and competitive wins.
During the quarter, UPS expanded its presence in China by opening a new hub in Shanghai, the first hub constructed by a U.S. carrier in that country. In addition, UPS began building a new intra-Asian hub in Shenzhen (expected to open in 2010) to expedite service within the region.
UPS ended 2008 in a strong financial position with $1 billion in cash on their balance sheet after repurchasing 53.6 million shares for $3.6 billion and paying $2.22 billion in dividends with declared dividends up 7 percent. The company’s free cash flow remained solid at $5.7 billion.
Northrop Grumman (NOC) +4.23%
Northrop reported a fourth-quarter loss on a $3.1 billion goodwill write-down, but its 2009 forecast came in above expectations.
The aerospace, electronics and information systems company turned record results in 2008, with $33.9 billion in sales and $2.4 billion in free cash flow. In addition, the company’s total backlog grew 23 percent to a record $78 billion, representing a book-to-build ratio of 143 percent.
Sales rose at all of Northrop’s business segments except shipbuilding, which posted a decline of 3.4 percent. During the quarter, the U.S. Navy awarded Northrop and its partner, General Dynamics, a $14 billion contract for eight more Virginia-class submarines over the next ten years.
Northrop also noted newly elected President Barack Obama doesn’t look to be scaling back defense spending anytime soon.
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Peter Lazaroff, Junior Analyst
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