Eaton, Appleton, Hoffman, Littelfuse Earnings Reports

Earlier in the week we covered distributor quarterly earnings and now we’ll cover some manufacturers – Eaton, Emerson, Pentair (Hoffman & Erico) and Littelfuse.

Eaton

From their slide presentation:

• Overall organic sales, company-wide, down 4%, which isn’t as meaningful for ElectricalTrends readers as you’re more interested in their Electrical Products Segment which was flat.  Bookings overall were down 2% due to weakness in “Americas”.  Their Electrical Systems and Services Segment was down 5%, again with Americas down 2%
• 2016 “unfolding as expected”

From their analyst call:

• For the Electrical Product Segment, weakness was in the industrial market, expected to be down mid-single digit by end of the year.
• Saw strength in the US residential housing market in the 5-7% range
• Saw growth in the lighting market, mid single digits (which compares with Hubbell Lighting and lags Acuity)
  • Would perform better without harsh and hazardous and safety lighting in Eaton number.
  • LED penetration for Eaton’s lighting business is approaching 70%. (Distributors should consider this as a benchmark for their business – are you keeping pace?)
• Saw decline in bookings in Q2 and don’t expect a reversal for remainder of the year.
• Crouse Hinds is in the Electrical Systems and Services Segment, which is being significantly impacted by oil / gas market.  No indications that the market has turned with little expected.
  • Expect Eaton’s harsh & hazardous business to be down about 15% this year.
  • Industrial projects expected to continue to be down.
  • Light commercial an area of strength. (construction market)

And given WESCO’s performance, it would be interesting to know what percent WESCO represents of Eaton’s electrical sales. With WESCO challenged on the industrial segment, it may infer that Eaton is doing much better with independent distributors and CED.

Littelfuse … from their earnings call with a focus on electrical

• As many know, almost 50% of Littelfuse’s business is in the electronic space. In this area they specialize in “small” fuses and have a fuse called “Nano”.  Through their electronic group they are having exposure to the Internet of Things and have been designed into some products.
• Littelfuse also has some LED outdoor street lighting involvement (a small business) and a similar size in the indoor LED lighting space.
• Littelfuse, as a company, appears to specialize, and succeed, in the custom-design space in their electronics business.
• Industrial (electrical) fuse business was down slightly in Q2 with the North American market being soft.  The industrial segment is only about 10% of sales.
• Fuse business is strong in the solar market, which slowed in Q2.
• Having success with their arc-flash relay product
• About 40% of the business is in the automotive fuse segment.

Emerson – Appleton is in Emerson’s Industrial Automation Group

From the 10-Q

• Sales for Industrial Automation Group were down $107 million with the decline attributed to global oil / gas customers and lower industrial capital spending (drives in this segment were up a little, all others were down.)
• Sales were down 9% on volume, 13% in the US

Pentair … from their earnings report, with the focus on Hoffman / Erico (Pentair Technical Solutions)

• Integration of ERICO meeting company expectations (and synergy expectations). (Question – is it meeting distributor and manufacturer rep expectations?)
• Technical Solutions revenue was flat, meeting expectations, in Q2
• 34% positive growth in Pentair Technical Solutions due to Erico
• Core sales in enclosures down 5%, but starting to see some stabilization … or are comps easier (how is your enclosure business? Most of Hoffman is industrial, however, we are hearing that they are seeking to be more aggressive in the commercial space … increasing distribution to gain shelf space.)
• 75% of ERICO’s business is in the commercial market
• Not expecting much MRO to assist Hoffman in Q3 / rest of year

Unfortunately you see a trend …

• industrial is down, but seems to be flattening with most declines flat to -5%
• June was a tough industrial month for manufacturers
• Commercial is fair
• The second half outlook is for more of the same
• Every continues to comment on oil and gas

And, in reading the reports, it seems as if all focus on the negative.

How was your Q2? Or what are you seeing for Q3?