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Emerson Electric Co. (NYSE:EMR)

This company has been moved to the archive! The financial data has not been updated since April 24, 2020.

Common-Size Income Statement

Emerson Electric Co., common-size consolidated income statement

Microsoft Excel
12 months ended: Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015 Sep 30, 2014
Net sales 100.00 100.00 100.00 100.00 100.00 100.00
Cost of sales -57.46 -57.15 -58.05 -56.88 -59.43 -58.60
Gross profit 42.54% 42.85% 41.95% 43.12% 40.57% 41.40%
Selling, general and administrative expenses -24.26 -24.46 -23.70 -23.85 -23.24 -23.29
Gains on divestitures of businesses 0.00 0.00 0.00 0.00 4.66 0.00
Goodwill impairment 0.00 0.00 0.00 0.00 0.00 -2.07
Amortization of intangibles (intellectual property and customer relationships) -1.30 -1.21 -0.89 -0.58 -0.96 -0.92
Restructuring costs -0.52 -0.37 -0.51 -0.66 -0.95 -0.22
Other 0.04 -0.57 -0.47 -0.79 -0.65 -0.46
Other deductions, net -1.77% -2.16% -1.87% -2.02% -2.56% -1.60%
Earnings from continuing operations before interest and income taxes 16.51% 16.23% 16.38% 17.24% 19.42% 14.44%
Interest income 0.15 0.25 0.24 0.19 0.13 0.10
Interest expense -1.09 -1.16 -1.32 -1.48 -0.90 -0.89
Interest expense, net of interest income -0.95% -0.91% -1.08% -1.29% -0.77% -0.79%
Earnings from continuing operations before income taxes 15.56% 15.32% 15.30% 15.95% 18.66% 13.64%
Income taxes -2.89 -2.54 -4.32 -4.80 -6.40 -4.74
Earnings from continuing operations 12.67% 12.78% 10.97% 11.15% 12.25% 8.90%
Discontinued operations, net of tax 0.00 0.00 -0.82 0.31 0.00 0.00
Net earnings 12.67% 12.78% 10.15% 11.46% 12.25% 8.90%
Noncontrolling interests in earnings of subsidiaries -0.12 -0.12 -0.21 -0.20 -0.10 -0.15
Net earnings common stockholders 12.55% 12.66% 9.94% 11.26% 12.15% 8.75%

Based on: 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30), 10-K (reporting date: 2014-09-30).

Analysis of the common-size income statement reveals a general improvement in net profitability over the six-year period from 2014 to 2019, driven primarily by tax efficiencies rather than significant shifts in gross margin.

Gross Profitability and Direct Costs
Gross profit margins remained relatively stable, oscillating within a narrow range between 40.57% and 43.12%. Cost of sales consistently accounted for approximately 57% to 59% of net sales, indicating a consistent relationship between revenue and direct production costs throughout the period.
Operating Expenses and Efficiency
Selling, general, and administrative (SG&A) expenses exhibited a gradual upward trend, increasing from 23.29% of net sales in 2014 to 24.26% in 2019. This suggests a slight increase in overhead costs relative to revenue growth. Operating volatility was noted in 2014 due to a goodwill impairment of 2.07% and in 2015 due to a significant gain on divestitures of 4.66%.
Interest and Taxation Trends
Net interest expenses remained stable, generally fluctuating between 0.77% and 1.29% of net sales. A more pronounced trend is observed in income taxes, which declined from a high of 6.40% in 2015 to 2.89% in 2019. This contraction in the effective tax rate significantly contributed to the growth of the bottom line.
Net Earnings Performance
Net earnings attributable to common stockholders showed an overall positive trajectory, rising from 8.75% of net sales in 2014 to 12.55% in 2019. While an initial spike in 2015 was influenced by divestiture gains, the sustained margin expansion in the final two years of the period reflects improved net efficiency and lower tax obligations.

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