- First quarter earnings per share of $2.04 and adjusted
earnings per share of $2.40, both up 28% over 2023 and first
quarter records
- First quarter record segment margins of 23.1%, 340 basis
points above the first quarter of 2023
- 8% organic sales growth, at the high end of guidance, and
strong backlog growth of 27% in Electrical and 11% in
Aerospace
- Raised full year 2024 organic sales, segment margin,
earnings per share and adjusted earnings per share
guidance
Intelligent power management company Eaton Corporation plc
(NYSE:ETN) today announced that earnings per share were $2.04 for
the first quarter of 2024, a first quarter record and up 28% over
the first quarter of 2023. Excluding charges of $0.21 per share
related to intangible amortization, $0.12 per share related to a
multi-year restructuring program, and $0.03 per share related to
acquisitions and divestitures, adjusted earnings per share of $2.40
were also a first quarter record and up 28% over the first quarter
of 2023.
Sales in the quarter were $5.9 billion, a first quarter record
and up 8% from the first quarter of 2023, driven entirely by
organic sales growth.
Segment margins were 23.1%, a first quarter record and a
340-basis point improvement over the first quarter of 2023.
Operating cash flow was $475 million and free cash flow was $292
million, up 42% and 40%, respectively, over the same period in
2023.
Craig Arnold, Eaton chairman and chief executive officer, said,
“Growth drivers like increased project activity tied to megatrends,
reindustrialization and infrastructure spending continue to drive
demand for Eaton’s solutions across our markets, and we remain very
confident in our teams' ability to execute on our increased targets
for the year. We capitalized on strong growth in our business to
start the year, resulting in strong order growth in Electrical and
Aerospace and first quarter record segment margins."
Guidance
For the full year 2024, the company is raising:
- Organic growth guidance from 6.5-8.5% to 7-9%
- Segment margin guidance from 22.4-22.8% to 22.8-23.2%
- Earnings per share guidance to between $8.95 and $9.35, up 14%
at the midpoint over the prior year
- Adjusted earnings per share guidance to between $10.20 and
$10.60, up 14% at the midpoint over the prior year.
For the second quarter of 2024, the company anticipates:
- Organic growth of 6.5-8.5%
- Segment margins of 22.4-22.8%
- Earnings per share between $2.19 and $2.29
- Adjusted earnings per share between $2.52 and $2.62.
Business Segment Results
Sales for the Electrical Americas segment were a record $2.7
billion, up 17% from the first quarter of 2023, driven entirely by
organic sales growth. Operating profits were a record $785 million,
up 50% over the first quarter of 2023. Operating margins in the
quarter were a record 29.2%, up 630 basis points over the first
quarter of 2023.
The twelve-month rolling average of orders in the first quarter
was up 8% organically, with particular strength in the data center
market. Backlog at the end of March remained at record levels, up
31% organically over March 2023.
Sales for the Electrical Global segment were $1.5 billion, flat
to the first quarter of 2023. Organic sales were up 1%, which was
offset by 1% from negative currency translation. Operating profits
were $274 million and operating margins in the quarter were
18.3%.
The twelve-month rolling average of orders in the first quarter
was up 4% organically, with particular strength in the data center
and utility markets. Backlog at the end of March was up 12%
organically over March 2023.
On a rolling twelve-month basis, the book-to-bill ratio for the
Electrical businesses remained strong at 1.2.
Aerospace segment sales were a first quarter record $871
million, up 9% from the first quarter of 2023, driven entirely by
organic sales growth. Operating profits were $201 million, a first
quarter record and up 12% from the first quarter of 2023. Operating
margins in the quarter were 23.1%, a first quarter record and up 60
basis points over the first quarter of 2023.
The twelve-month rolling average of orders in the first quarter
was up 2% organically, with particular strength in commercial OEM,
commercial aftermarket and defense aftermarket. The backlog at the
end of March was up 11% over March 2023. On a rolling twelve-month
basis, the book-to-bill ratio for the Aerospace segment remained
strong at 1.1.
The Vehicle segment posted sales of $724 million, down 2% from
the first quarter of 2023. Organic sales were down 3%, which was
partially offset by 1% from favorable foreign exchange. Operating
profits were $116 million, up 8% over the first quarter of 2023.
Operating margins in the quarter were 16.0%, up 150 basis points
over the first quarter of 2023.
eMobility segment sales were a first quarter record $158
million, up 7% over the first quarter of 2023, driven entirely by
organic sales growth. The segment recorded an operating loss of $4
million, reflecting the timing of program start-up costs to support
future volume growth.
Eaton is an intelligent power management company dedicated to
protecting the environment and improving the quality of life for
people everywhere. We make products for the data center, utility,
industrial, commercial, machine building, residential, aerospace
and mobility markets. We are guided by our commitment to do
business right, to operate sustainably and to help our customers
manage power ─ today and well into the future. By capitalizing on
the global growth trends of electrification and digitalization,
we’re accelerating the planet’s transition to renewable energy
sources, helping to solve the world’s most urgent power management
challenges, and building a more sustainable society for people
today and generations to come.
Eaton was founded in 1911 and has been listed on the New York
Stock Exchange for more than a century. We reported revenues of
$23.2 billion in 2023 and serve customers in more than 160
countries. For more information, visit www.eaton.com. Follow us on
LinkedIn.
Notice of conference call: Eaton’s conference call to discuss
its first quarter results is available to all interested parties
today as a live audio webcast at 11 a.m. United States Eastern time
via a link on Eaton’s home page. This news release can be accessed
under its headline on the home page. Also available on the website
before the call will be a presentation on first quarter results,
which will be covered during the call.
This news release contains forward-looking statements concerning
second quarter and full year 2024 earnings per share, adjusted
earnings per share, segment margins and organic sales growth, as
well as anticipated multi-year restructuring program charges and
savings. These statements should be used with caution and are
subject to various risks and uncertainties, many of which are
outside the company’s control. The following factors could cause
actual results to differ materially from those in the
forward-looking statements: a global pandemic such as COVID-19;
geopolitical tensions or war, unanticipated changes in the markets
for the company’s business segments; unanticipated downturns in
business relationships with customers or their purchases from us;
competitive pressures on sales and pricing; supply chain
disruptions, unanticipated changes in the cost of material, labor,
and other production costs, or unexpected costs that cannot be
recouped in product pricing; the introduction of competing
technologies; unexpected technical or marketing difficulties;
unexpected claims, charges, litigation or dispute resolutions;
strikes or other labor unrest at Eaton or at our customers or
suppliers; natural disasters; the performance of recent
acquisitions; unanticipated difficulties completing or integrating
acquisitions; new laws and governmental regulations; interest rate
changes; changes in tax laws or tax regulations; stock market and
currency fluctuations; and unanticipated deterioration of economic
and financial conditions in the United States and around the world.
We do not assume any obligation to update these forward-looking
statements.
Financial Results
The company’s comparative financial results for the three months
ended March 31, 2024, are available on the company’s website,
www.eaton.com.
EATON CORPORATION plc
CONSOLIDATED STATEMENTS OF
INCOME
Three months ended March 31
(In millions except for per share
data)
2024
2023
Net sales
$
5,943
$
5,483
Cost of products sold
3,725
3,599
Selling and administrative expense
1,025
904
Research and development expense
189
179
Interest expense - net
30
50
Other income - net
(26
)
(11
)
Income before income taxes
1,001
762
Income tax expense
179
123
Net income
822
639
Less net income for noncontrolling
interests
(1
)
(1
)
Net income attributable to Eaton
ordinary shareholders
$
821
$
638
Net income per share attributable to
Eaton ordinary shareholders
Diluted
$
2.04
$
1.59
Basic
2.05
1.60
Weighted-average number of ordinary
shares outstanding
Diluted
401.9
400.5
Basic
399.9
398.5
Reconciliation of net income
attributable to Eaton ordinary shareholders to adjusted
earnings
Net income attributable to Eaton ordinary
shareholders
$
821
$
638
Excluding acquisition and divestiture
charges, after-tax
13
11
Excluding restructuring program charges,
after-tax
49
8
Excluding intangible asset amortization
expense, after-tax
84
97
Adjusted earnings
$
966
$
753
Net income per share attributable to Eaton
ordinary shareholders - diluted
$
2.04
$
1.59
Excluding per share impact of acquisition
and divestiture charges, after-tax
0.03
0.03
Excluding per share impact of
restructuring program charges, after-tax
0.12
0.02
Excluding per share impact of intangible
asset amortization expense, after-tax
0.21
0.24
Adjusted earnings per ordinary
share
$
2.40
$
1.88
See accompanying notes.
EATON CORPORATION plc
BUSINESS SEGMENT INFORMATION
Three months ended March 31
(In millions)
2024
2023
Net sales
Electrical Americas
$
2,690
$
2,294
Electrical Global
1,500
1,500
Aerospace
871
803
Vehicle
724
739
eMobility
158
147
Total net sales
$
5,943
$
5,483
Segment operating profit (loss)
Electrical Americas
$
785
$
525
Electrical Global
274
274
Aerospace
201
180
Vehicle
116
107
eMobility
(4
)
(4
)
Total segment operating profit
1,371
1,082
Corporate
Intangible asset amortization expense
(106
)
(124
)
Interest expense - net
(30
)
(50
)
Pension and other postretirement benefits
income
12
11
Restructuring program charges
(63
)
(10
)
Other expense - net
(184
)
(148
)
Income before income taxes
1,001
762
Income tax expense
179
123
Net income
822
639
Less net income for noncontrolling
interests
(1
)
(1
)
Net income attributable to Eaton
ordinary shareholders
$
821
$
638
See accompanying notes.
EATON CORPORATION plc
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In millions)
March 31, 2024
December 31, 2023
Assets
Current assets
Cash
$
473
$
488
Short-term investments
1,969
2,121
Accounts receivable - net
4,674
4,475
Inventory
3,868
3,739
Prepaid expenses and other current
assets
870
851
Total current assets
11,853
11,675
Property, plant and equipment - net
3,558
3,530
Other noncurrent assets
Goodwill
14,877
14,977
Other intangible assets
4,975
5,091
Operating lease assets
722
648
Deferred income taxes
481
458
Other assets
2,070
2,052
Total assets
$
38,535
$
38,432
Liabilities and shareholders’
equity
Current liabilities
Short-term debt
$
1
$
8
Current portion of long-term debt
994
1,017
Accounts payable
3,400
3,365
Accrued compensation
492
676
Other current liabilities
2,726
2,680
Total current liabilities
7,613
7,747
Noncurrent liabilities
Long-term debt
8,192
8,244
Pension liabilities
730
768
Other postretirement benefits
liabilities
177
180
Operating lease liabilities
601
533
Deferred income taxes
419
402
Other noncurrent liabilities
1,478
1,489
Total noncurrent liabilities
11,597
11,616
Shareholders’ equity
Eaton shareholders’ equity
19,292
19,036
Noncontrolling interests
34
33
Total equity
19,326
19,069
Total liabilities and equity
$
38,535
$
38,432
See accompanying notes.
EATON CORPORATION plc NOTES TO THE FIRST QUARTER 2024
EARNINGS RELEASE
Amounts are in millions of dollars unless indicated otherwise
(per share data assume dilution). Columns and rows may not add and
the sum of components may not equal total amounts reported due to
rounding.
Note 1. NON-GAAP FINANCIAL INFORMATION
This earnings release includes certain non-GAAP financial
measures. These financial measures include adjusted earnings,
adjusted earnings per ordinary share, and free cash flow, each of
which differs from the most directly comparable measure calculated
in accordance with generally accepted accounting principles (GAAP).
A reconciliation of each of these financial measures to the most
directly comparable GAAP measure is included in this earnings
release. Management believes that these financial measures are
useful to investors because they provide additional meaningful
financial information that should be considered when assessing our
business performance and trends, and they allow investors to more
easily compare Eaton Corporation plc's (Eaton or the Company)
financial performance period to period. Management uses this
information in monitoring and evaluating the on-going performance
of Eaton and each business segment.
The Company's second quarter and full year adjusted earnings
guidance for 2024 is as follows:
Three months ended June 30,
2024
Year ended December 31, 2024
Net income per share attributable to Eaton
ordinary shareholders - diluted
$2.19 - $2.29
$8.95 - $9.35
Excluding per share impact of acquisition
and divestiture charges, after tax
0.02
0.09
Excluding per share impact of
restructuring program charges, after tax
0.10
0.33
Excluding per share impact of intangible
asset amortization expense, after tax
0.21
0.83
Adjusted earnings per ordinary share
$2.52 - $2.62
$10.20 - $10.60
A reconciliation of net income attributable to Eaton ordinary
shareholders per share to adjusted earnings per ordinary share is
as follows:
Year ended
December 31, 2023
Net income per share attributable to Eaton
ordinary shareholders - diluted
$
8.02
Excluding per share impact of acquisition
and divestiture charges, after tax
0.10
Excluding per share impact of
restructuring program charges, after tax
0.11
Excluding per share impact of intangible
asset amortization expense, after tax
0.89
Adjusted earnings per ordinary share
$
9.12
A reconciliation of operating cash flow to free cash flow is as
follows:
Three months ended March 31
(In millions)
2024
2023
Operating cash flow
$
475
$
335
Capital expenditures for property, plant
and equipment
(183
)
(126
)
Free cash flow
$
292
$
209
Note 2. ACQUISITION AND DIVESTITURE CHARGES
Eaton incurs integration charges and transaction costs to
acquire and integrate businesses, and transaction, separation and
other costs to divest and exit businesses. Eaton also recognizes
gains and losses on the sale of businesses. A summary of these
Corporate items is as follows:
Three months ended March 31
(In millions except for per share
data)
2024
2023
Acquisition integration, divestiture
charges and transaction costs
$
17
$
13
Income tax benefit
4
3
Total after income taxes
$
13
$
11
Per ordinary share - diluted
$
0.03
$
0.03
Acquisition integration, divestiture charges and transaction
costs in 2024 and 2023 are primarily related to acquisitions
completed prior to 2023, including other charges and income to
acquire and exit businesses. These charges were included in Cost of
products sold, Selling and administrative expense, Research and
development expense, or Other income - net. In Business Segment
Information, the charges were included in Other expense - net.
Note 3. RESTRUCTURING CHARGES
In the second quarter of 2020, Eaton initiated a multi-year
restructuring program to reduce its cost structure and gain
efficiencies in its business segments and at corporate in order to
initially respond to declining market conditions brought on by the
COVID-19 pandemic. Since the inception of the program, the Company
incurred expenses of $199 million for workforce reductions and $184
million for plant closing and other costs, resulting in total
charges of $382 million through December 31, 2023. This multi-year
restructuring program was substantially complete at the end of
2023, with final payments expected to be made in 2024.
During the first quarter of 2024, Eaton implemented a new
multi-year restructuring program to accelerate opportunities to
optimize its operations and global support structure. These actions
will better align the Company's functions to support anticipated
growth and drive greater effectiveness throughout the Company.
Restructuring charges incurred under this program were $63 million
in the first quarter of 2024. This restructuring program is
expected to be completed in 2026 and is expected to incur
additional expenses related to workforce reductions of $216 million
and plant closing and other costs of $96 million, resulting in
total estimated charges of $375 million for the entire program. The
Company expects mature year benefits of $325 million when the
multi-year program is fully implemented.
A summary of restructuring program charges is as follows:
Three months ended March 31
(In millions except for per share
data)
2024
2023
Workforce reductions
$
59
$
2
Plant closing and other
4
7
Total before income taxes
63
10
Income tax benefit
14
2
Total after income taxes
$
49
$
8
Per ordinary share - diluted
$
0.12
$
0.02
Restructuring program charges related to the following
segments:
Three months ended March 31
(In millions)
2024
2023
Electrical Americas
$
7
$
2
Electrical Global
24
3
Aerospace
8
1
Vehicle
24
2
Corporate
—
1
Total charges
$
63
$
10
These restructuring program charges were included in Cost of
products sold, Selling and administrative expense, Research and
development expense, or Other income – net, as appropriate. In
Business Segment Information, these restructuring program charges
are treated as Corporate items.
Note 4. INTANGIBLE ASSET AMORTIZATION EXPENSE
Intangible asset amortization expense is as follows:
Three months ended March 31
(In millions except for per share
data)
2024
2023
Intangible asset amortization expense
$
106
$
124
Income tax benefit
23
27
Total after income taxes
$
84
$
97
Per ordinary share - diluted
$
0.21
$
0.24
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240429133706/en/
Eaton Corporation plc Jennifer Tolhurst Media Relations +1 (440)
523-4006 jennifertolhurst@eaton.com
Yan Jin Investor Relations +1 (440) 523-7558
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