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ABB Ltd reported better-than-expected fourth-quarter 2022 results. Earnings beat estimates by 53.9% and revenues beat the same by 3.3%.
Adjusted earnings came in at 60 cents per share, beating the Zacks Consensus Estimate of 39 cents. Our estimate for fourth-quarter adjusted earnings was 37 cents. The bottom line increased 76.5% on a year-over-year basis.
Top-Line Details
ABB’s fourth-quarter revenues totaled $7,824 million, up 3% from the year-ago quarter’s figure. The upside can be attributed to higher revenues across most of its segments and robust price execution. On a comparable basis, revenues grew 16%. The top line beat the consensus estimate of $7,576 million. Our estimate for net sales in the reported quarter was $7,687.1 million.
In the reported quarter, total orders were $7,620 million, decreasing 8% year over year. The metric rose 2% on a comparable basis, supported by strength across ABB’s businesses. While exiting the fourth quarter, its order backlog was $19,867 million, up 20% year over year.
Segmental Details
ABB reports revenues under four segments as discussed below:
Electrification: Revenues totaled $3,663 million, increasing 6% year over year supported by the flow business and strong price execution. Our estimate for segmental revenues was $3,658.7 million. Orders were down 2% year over year to 3,565 million.
Process Automation: Revenues were $1,551 million, decreasing 14% year over year due to portfolio changes caused by the spin-off of Accelleron. Our estimate for segmental revenues was $1,657.5 million. Orders decreased 8% to $1,746 million.
Motion: Revenues amounted to $1,845 million, up 6% from the year-ago quarter’s number driven by continued strong volume recovery, in both the short cycle and the systems-related business from backlog execution. Our estimate for segmental revenues was $1,823.8 million. Orders declined 11% to $1,649 million.
Robotics & Discrete Automation: Revenues were $891 million, increasing 12% year over year due to continued improvement in access to components resulting in volume release. Our estimate for segmental revenues was $813.2 million. Orders declined 27% to $798 million.
In the reported quarter, ABB’s total cost of sales was $5,166 million, almost flat compared with the year-ago quarter. The same represented 66% of the fourth-quarter revenues compared with 68.3% in the year-ago period. The gross margin was 34%, up from 31.7% reported in the year-ago quarter.
Selling, general and administrative expenses decreased 4.1% to $1,299 million.
Operational (EBITA) in the quarter increased 16% to $1,146 million. Operational EBITA margin grew 170 basis points to 14.8%.
Balance Sheet and Cash Flow
Exiting fourth-quarter 2022, ABB had cash and cash equivalents of $4,156 million, compared with $4,159 million recorded in 2021. Long-term debt was $5,143 million, higher than $4,177 million at the end of 2021.
In 2022, net cash from operating activities totaled $1,287 million compared with $3,330 million in the year-ago period.
In 2022, ABB paid out dividends worth $1,698 million compared with $1,726 million in the year-ago period.
Outlook
For the first quarter of 2023, ABB anticipates double-digit comparable revenue growth.
For 2023, ABB expects comparable revenue growth of more than 5% and to further achieve the long-term target of an operational EBITA margin of at least 15%.
Zacks Rank & Other Stocks to Consider
ABB currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
AIT’s earnings estimates have increased 6.5% for fiscal 2023 (ending June 2023) in the past 60 days. Shares of Applied Industrial have risen 42.6% in the past six months.
Allegion plc (ALLE - Free Report) presently sports a Zacks Rank of 1. ALLE’s earnings surprise in the last four quarters was 8.8%, on average.
In the past 60 days, Allegion’s earnings estimates have remained steady for 2022. The stock has gained 17.9% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 12.5%, on average.
In the past 60 days, Valmont’s earnings estimates have increased by a penny. The stock has rallied 19.3% in the past six months.
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ABB Q4 Earnings Surpass Estimates, Revenues Rise 3% Y/Y
ABB Ltd reported better-than-expected fourth-quarter 2022 results. Earnings beat estimates by 53.9% and revenues beat the same by 3.3%.
Adjusted earnings came in at 60 cents per share, beating the Zacks Consensus Estimate of 39 cents. Our estimate for fourth-quarter adjusted earnings was 37 cents. The bottom line increased 76.5% on a year-over-year basis.
Top-Line Details
ABB’s fourth-quarter revenues totaled $7,824 million, up 3% from the year-ago quarter’s figure. The upside can be attributed to higher revenues across most of its segments and robust price execution. On a comparable basis, revenues grew 16%. The top line beat the consensus estimate of $7,576 million. Our estimate for net sales in the reported quarter was $7,687.1 million.
In the reported quarter, total orders were $7,620 million, decreasing 8% year over year. The metric rose 2% on a comparable basis, supported by strength across ABB’s businesses. While exiting the fourth quarter, its order backlog was $19,867 million, up 20% year over year.
Segmental Details
ABB reports revenues under four segments as discussed below:
Electrification: Revenues totaled $3,663 million, increasing 6% year over year supported by the flow business and strong price execution. Our estimate for segmental revenues was $3,658.7 million. Orders were down 2% year over year to 3,565 million.
Process Automation: Revenues were $1,551 million, decreasing 14% year over year due to portfolio changes caused by the spin-off of Accelleron. Our estimate for segmental revenues was $1,657.5 million. Orders decreased 8% to $1,746 million.
Motion: Revenues amounted to $1,845 million, up 6% from the year-ago quarter’s number driven by continued strong volume recovery, in both the short cycle and the systems-related business from backlog execution. Our estimate for segmental revenues was $1,823.8 million. Orders declined 11% to $1,649 million.
Robotics & Discrete Automation: Revenues were $891 million, increasing 12% year over year due to continued improvement in access to components resulting in volume release. Our estimate for segmental revenues was $813.2 million. Orders declined 27% to $798 million.
ABB Ltd Price, Consensus and EPS Surprise
ABB Ltd price-consensus-eps-surprise-chart | ABB Ltd Quote
Operational EBITA Margin
In the reported quarter, ABB’s total cost of sales was $5,166 million, almost flat compared with the year-ago quarter. The same represented 66% of the fourth-quarter revenues compared with 68.3% in the year-ago period. The gross margin was 34%, up from 31.7% reported in the year-ago quarter.
Selling, general and administrative expenses decreased 4.1% to $1,299 million.
Operational (EBITA) in the quarter increased 16% to $1,146 million. Operational EBITA margin grew 170 basis points to 14.8%.
Balance Sheet and Cash Flow
Exiting fourth-quarter 2022, ABB had cash and cash equivalents of $4,156 million, compared with $4,159 million recorded in 2021. Long-term debt was $5,143 million, higher than $4,177 million at the end of 2021.
In 2022, net cash from operating activities totaled $1,287 million compared with $3,330 million in the year-ago period.
In 2022, ABB paid out dividends worth $1,698 million compared with $1,726 million in the year-ago period.
Outlook
For the first quarter of 2023, ABB anticipates double-digit comparable revenue growth.
For 2023, ABB expects comparable revenue growth of more than 5% and to further achieve the long-term target of an operational EBITA margin of at least 15%.
Zacks Rank & Other Stocks to Consider
ABB currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy) and a trailing four-quarter earnings surprise of 20.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
AIT’s earnings estimates have increased 6.5% for fiscal 2023 (ending June 2023) in the past 60 days. Shares of Applied Industrial have risen 42.6% in the past six months.
Allegion plc (ALLE - Free Report) presently sports a Zacks Rank of 1. ALLE’s earnings surprise in the last four quarters was 8.8%, on average.
In the past 60 days, Allegion’s earnings estimates have remained steady for 2022. The stock has gained 17.9% in the past six months.
Valmont Industries, Inc. (VMI - Free Report) presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 12.5%, on average.
In the past 60 days, Valmont’s earnings estimates have increased by a penny. The stock has rallied 19.3% in the past six months.