Item 7.01.
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Regulation FD Disclosure.
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The following information is furnished pursuant to Regulation FD.
As previously disclosed, Emerson Electric Co. (“Emerson” or the “Company”) sold its network power systems business (rebranded as Vertiv) in 2017 and retained a subordinated interest contingent upon the equity holders first receiving a threshold return on their initial investment. The equity holders have received a return on their investment in excess of the threshold. On November 10, 2021, the Company received a distribution of approximately $438 million on a pretax basis related to this retained interest.
As a result of the distribution, Emerson has increased its fiscal year 2022 and first quarter 2022 GAAP EPS guidance by $0.58 solely to reflect this distribution. Prior GAAP EPS guidance for fiscal year 2022 was $4.21 to $4.36 and is now $4.79 to $4.94. Prior GAAP EPS guidance for the first quarter 2022 was $0.85 to $0.89 and is now $1.43 to $1.47. The distribution has no impact on the Company’s Adjusted EPS guidance, which remains at $4.82 to $4.97 for fiscal year 2022 (excluding a $0.19 per share impact from restructuring actions, a $0.42 per share impact from amortization of intangibles, and a $0.58 gain from the distribution referenced above) and $0.98 to $1.02 for the first quarter 2022 (excluding a $0.03 per share impact from restructuring actions, a $0.10 per share impact from amortization of intangibles, and a $0.58 gain from the distribution referenced above). Further details on fiscal year 2022 are provided in the Company’s Annual Report on Form 10-K for its fiscal year ended September 30, 2021, which is expected to be filed with the Securities and Exchange Commission on November 15, 2021. All fiscal year and first quarter 2022 numbers are approximate.
Through the retained interest, the Company could receive approximately $600 million, inclusive of the $438 million received, on a pretax basis through periodic distributions over the next two years. However, the remaining distributions are contingent on the timing and price at which Vertiv shares are sold by the equity holders and therefore, there can be no assurance as to the amount or timing of the remaining distributions to the Company.
Forward-Looking and Cautionary Statements
Statements in this Current Report on Form 8-K that are not strictly historical may be “forward-looking” statements, which involve risks and uncertainties, and Emerson undertakes no obligation to update any such statements to reflect later developments. These risks and uncertainties include the Company’s ability to successfully complete on the terms and conditions contemplated, and the financial impact of, the proposed AspenTech transaction, the scope, duration and ultimate impact of the COVID-19 pandemic as well as economic and currency conditions, market demand, including related to the pandemic and oil and gas price declines and volatility, pricing, protection of intellectual property, cybersecurity, tariffs, competitive and technological factors, among others, as set forth in the Company’s most recent Annual Report on Form 10-K and subsequent reports filed with the SEC.