What is the source of the $438 million distribution?

The $438 million distribution is from Emerson Electric's retained subordinated interest in its former network power business, which was rebranded as Vertiv. This interest was contingent upon the equity holders first receiving a threshold return on their investment, which has now been met.

How does this distribution affect Emerson's earnings guidance?

The distribution has led Emerson to increase its GAAP EPS guidance. For fiscal year 2022, GAAP EPS guidance was raised by $0.58 to a new range of $4.79 to $4.94. For the first quarter of fiscal year 2022, GAAP EPS guidance was also raised by $0.58 to a new range of $1.43 to $1.47. Importantly, this distribution does not impact the company's Adjusted EPS guidance.

What is the total potential future benefit from this retained interest?

Emerson could potentially receive approximately $600 million in total pre-tax distributions through periodic payments over the next two years, inclusive of the $438 million already received. However, the exact amount and timing of these remaining distributions are not guaranteed and depend on when and at what price the equity holders sell their Vertiv shares.

EMR 8-K: Regulation FD — Nov 15, 2021

Summary

Emerson Electric Co. (EMR) announced a significant financial event on November 15, 2021, related to its retained interest in its former network power business, now known as Vertiv. The company received a pre-tax distribution of approximately $438 million. This inflow has led Emerson to raise its fiscal year 2022 and first quarter 2022 GAAP Earnings Per Share (EPS) guidance. The total expected pre-tax proceeds from this retained interest could reach up to $600 million over the next two years, though the exact amount and timing are contingent on the future sale of Vertiv shares.

Key Highlights

1Received a $438 million pre-tax distribution from its retained interest in the former network power business (Vertiv).
2Increased fiscal year 2022 GAAP EPS guidance by $0.58 per share.
3Raised first quarter 2022 GAAP EPS guidance by $0.58 per share.
4The distribution is a result of equity holders achieving a threshold return on their investment.
5Potential for additional distributions of up to approximately $600 million pre-tax over the next two years.
6Future distributions are contingent on the timing and sale price of Vertiv shares by equity holders.
7This distribution does not impact Adjusted EPS guidance.

EMERSON ELECTRIC CO 8-K Report, Regulation FD Disclosure (Nov 15, 2021)

Summary

Key Highlights

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