Group 1: Overall Industry Performance - The revenue and profit margins of power equipment companies continue to grow, with most companies having a substantial backlog of orders [1] - New order growth is slowing down, with Siemens Energy's new orders increasing by 24% year-on-year, while GEV's new orders declined by 32% due to high base effects and project cancellations [1][3] - Companies like Eaton and Mitsubishi Electric are experiencing a decline in new orders, but their base orders remain strong [1] Group 2: Data Center Demand - Eaton's data center orders in the U.S. have surged by 55%, supported by acquisitions of modular power shell manufacturers and solid-state transformer technology companies [2] - Schneider's data center sales and potential demand have also seen double-digit growth, contributing to overall positive sentiment in the data center sector [2] - GEV anticipates that the accelerating demand for data centers will support the growth of its electrification business throughout the year [2] Group 3: Gas Turbine Orders - GEV's gas turbine new orders have nearly doubled year-on-year, with total backlog capacity reaching 55 GW, expected to hit 60 GW by year-end [3] - Siemens Energy's new orders also grew by 17% year-on-year, with approximately 3 GW of new orders coming from data centers [3] - Both GEV and Siemens Energy are experiencing rising prices for gas turbines, with backlogs amounting to 3-4 times their 2024 revenue [3] Group 4: Long-term Outlook - The overseas electrical equipment market is expected to maintain a high level of prosperity, driven by AI data centers and infrastructure upgrades in Europe and the U.S. [4] - Companies are strategically positioning themselves to capitalize on the growing demand for data centers and the need for equipment upgrades as renewable energy penetration increases [4]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: U.S. Machinery and Electricals - **Focus**: Impact of recent policy changes by the Trump Administration on various sub-sectors including electricals, construction, agriculture, and trucks [1][11] Core Insights and Arguments 1. Policy Impact on Renewables - The Trump Administration's policies are de-prioritizing renewables, negatively impacting companies like Quanta (PWR) which derives 30% of sales from this sector [2][49] - The OBBBA cuts tax credits for renewables, shortening the eligibility timeframe from 2032 to 2027, leading to a projected slowdown in construction activity post-2025 [16][54] - Construction costs are rising due to stricter domestic content requirements and tariffs, which could drive renewables to ex-growth from 2025-2030 [2][18] 2. Construction Sector Stimulus - The reinstatement of 100% bonus depreciation for qualified property under the OBBBA is expected to stimulate construction activity, unlocking nearly $90 billion in additional non-residential construction spending, a 7% increase compared to 2024 levels [3][67] - This change is anticipated to benefit construction OEMs such as OSK, URI, ETN, CAT, TRMB, HUBB, DE, and J [3][12] 3. Agriculture Equipment Demand - Changes in biofuels policy, including a 75% increase in biomass-based diesel production mandated by the EPA, could lead to a 10% increase in agricultural equipment demand [4][84] - The extension of clean fuel tax credits from 2027 to 2029 and increased subsidies for biofuels are expected to positively impact companies like Deere, AGCO, and CNH [4][101] 4. Truck OEM Competitive Landscape - The Section 232 investigation into commercial vehicle manufacturing is likely to favor U.S.-based manufacturers like PACCAR (PCAR) by reversing the current tariff structure that disadvantages U.S. manufacturers [5][104] - Current tariffs create a cost disadvantage for U.S. truck manufacturers, as they face higher costs due to imported components [107][110] Additional Important Insights - The overall economic reorientation towards investment rather than consumption is expected to benefit the machinery and electrical sectors [13] - The anticipated slowdown in renewable energy construction does not imply a complete decline, as electricity demand continues to grow at a CAGR of 1.5-2% [28][40] - Historical context indicates that previous cuts to renewable tax credits led to significant underperformance in the sector, suggesting potential risks ahead [46] - The bonus depreciation changes are expected to lead to mid-single-digit earnings growth for companies like Oshkosh, Eaton, and United Rentals [79][82] Company Ratings and Price Targets - **Outperform Ratings**: Trimble (TP $99), Jacobs (TP $163), PACCAR (TP $118), Eaton (TP $410), Hubbell (TP $511) [7][8] - **Market-Perform Ratings**: AGCO (TP $118), Caterpillar (TP $447), Deere (TP $548), Cummins (TP $385), United Rentals (TP $885), Titan America (TP $15), Oshkosh (TP $132), Quanta (TP $410) [7][8] This summary encapsulates the key points discussed in the conference call, highlighting the implications of policy changes on various sectors and companies within the U.S. Machinery and Electricals industry.

Group 1: Overall Earnings Season Insights - The 2025 Q2 earnings cycle is winding down with most S&P 500 companies reporting results, showcasing resilience and strong overall growth alongside positive revisions for Q3 [1][7] - Companies such as Apple, Eaton, and DoorDash achieved quarterly records, contributing to the positive sentiment in the earnings season [1][7] Group 2: Eaton Highlights - Eaton, an intelligent power management company, reported a record-breaking quarter with adjusted EPS of $2.95, reflecting an 8% year-over-year increase [4] - Organic sales for Eaton grew by 8% compared to the previous year, with segment margins reaching a Q2 record of 23.9% [4] - The company has a strong dividend growth rate of 7.5% over five years and has consistently paid dividends since 1923 [6] Group 3: Apple Highlights - Apple reported strong quarterly results, achieving records in sales, iPhone revenue, and EPS, with Services revenue reaching an all-time high of $27.4 billion [9][13] - The installed base of active devices for Apple also hit a new record, and the company generated free cash flow of $24.4 billion during the period [13] - Apple's shares are trading at a forward 12-month earnings multiple of 29.3X, reflecting a 30% premium relative to the S&P 500 [14] Group 4: DoorDash Highlights - DoorDash shares surged over 50% in 2025, with quarterly results showing records in Total Orders, Marketplace GOV, and revenue [16] - Total Orders increased by 20% year-over-year, and sales rose by 25%, with adjusted EBITDA climbing 52% to $655 million [16] - The company noted high levels of consumer engagement in the U.S., indicating strong consumer spending on delivery services [19]

Market Overview - The Data Center Power Management Market was valued at USD 22.0 billion in 2024 and is projected to reach USD 40.1 billion by 2032, with a CAGR of 7.80% from 2025 to 2032 [1][5]. Growth Drivers - The market is experiencing transformative growth driven by increasing global data consumption, energy-efficient infrastructure services, and the expansion of cloud and hyperscale data centers [2]. - Intelligent power solutions that integrate with renewable energy sources to monitor real-time power consumption are preferred by organizations to reduce operational costs and carbon footprints [2]. Regional Insights - In the U.S., the market was valued at USD 5.9 billion in 2024 and is expected to grow to USD 10.6 billion by 2032, reflecting a CAGR of 7.57% [3]. - North America accounted for 35% of global revenue in 2024, supported by advanced digital infrastructure and early adoption of cloud technologies [12]. - The Asia-Pacific region is anticipated to grow the fastest, driven by significant investments in digital infrastructure and government-led renewable energy initiatives [13]. Market Segmentation By Component - The hardware segment held the largest market share at 48% in 2024, driven by essential components like Uninterruptible Power Supply (UPS) systems and Power Distribution Units (PDUs) [6]. - The services segment is expected to register the fastest CAGR during the forecast period due to the increasing complexity of data center environments [7]. By Data Center Type - Hyperscale data centers led the market with a 26% revenue share in 2024, essential for handling large data workloads and supporting cloud services [8]. - Edge data centers are projected to witness the highest CAGR, driven by the demand for low-latency processing and real-time analytics [9]. By Industry - The IT & Telecom sector held the largest share in 2024, fueled by the demand for cloud computing and the expansion of 5G networks [10]. - The retail sector is expected to record the fastest CAGR, driven by the growth of e-commerce and the need for robust IT infrastructure [11]. Key Players - Major players in the market include Schneider Electric, Eaton Corporation, ABB Ltd., Vertiv Holdings Co., Siemens AG, Delta Electronics, Huawei Technologies, Rittal GmbH & Co. KG, Tripp Lite, and Legrand SA [4]. Recent Developments - Schneider Electric launched the Galaxy VXL, a compact UPS for AI workloads, and partnered with NVIDIA for a liquid-cooled AI cluster design [16]. - Vertiv introduced the MegaMod CoolChip, a modular data center solution that reduces deployment time by up to 50% [16].

Core Insights - The article discusses the challenges and opportunities presented by the rapid growth of AI technology, particularly in relation to energy supply and management [1][2] - It highlights the systemic challenges faced by the energy sector due to the exponential demand for computing power and the limitations of traditional energy supply [2][3][4] Group 1: Systemic Challenges in Energy Supply - The first challenge is the mismatch between the explosive demand for computing power and the slow expansion of traditional energy supply, leading to a significant supply-demand gap [2][3] - The second challenge involves the conflict between the increasing total energy consumption and the integration of renewable energy sources, as AI's continuous power requirements clash with the intermittent nature of green energy [3][4] - The third challenge is the architectural mismatch between traditional power grids and the fluctuating demands of AI workloads, which can lead to substantial losses if not managed properly [3][4] Group 2: Innovative Solutions Proposed by Eaton - Eaton proposes a "Software-Defined Power" strategy, which aims to transform energy management from a passive cost center into an active asset that can be intelligently managed and optimized [4][5] - The company emphasizes the importance of advanced algorithms and AI capabilities in creating a more flexible and intelligent power infrastructure [5][6] Group 3: Eaton's Technological Offerings - Eaton's first key product is the Power Cube, a modular power solution that allows for rapid deployment and significant reductions in on-site construction time, meeting the urgent needs of AI data centers [7][8] - The second key product is the 9395XR UPS, designed for large data centers, which boasts high efficiency and low operational costs, making it suitable for AI applications [8][9] - Additionally, Eaton introduces a mid-voltage energy router that enhances the overall power architecture by integrating various energy sources and improving efficiency [9][10] Group 4: Strategic Importance of the Greater Bay Area - Eaton views China, particularly the Greater Bay Area, as a core market for its global strategy, with significant investments in R&D and manufacturing facilities [11][12] - The company has established its global data center power infrastructure and solutions R&D center in Shenzhen, benefiting from the region's favorable policies and strong manufacturing base [12][13] Group 5: Alignment with China's Economic Development - Eaton's initiatives align with China's focus on "new quality productivity," particularly in AI and digital economy sectors, providing essential support for sustainable development [13]

Core Insights - Eaton Corporation (ETN) reported Q2 2025 earnings of $2.95 per share, exceeding the Zacks Consensus Estimate by 1.03% and reflecting an 8.05% year-over-year increase, driven by improved organic sales volumes and sustained demand [1][9] - Total revenues for Q2 reached $7.02 billion, surpassing the Zacks Consensus Estimate of $6.92 billion by 1.4%, with a year-over-year increase of 10.7% attributed to an 8% rise in organic sales, a 2% contribution from acquisitions, and a 1% boost from favorable currency translation [3][9] Financial Performance - GAAP earnings for the quarter were $2.51 per share, a 1.2% increase from $2.48 in the previous year, with differences attributed to charges related to intangible assets, restructuring, and acquisitions [2] - Selling and administrative expenses rose to $1.14 billion, up 12.5% year over year, while research and development expenses decreased by 2% to $192 million [8] Segment Performance - Electrical Americas reported sales of $3.4 billion, a 16% year-over-year increase, with operating profit at $987 million, up 15% [4] - Electrical Global's sales reached $1.8 billion, up 9% year over year, with operating profit of $353 million, reflecting a 16% increase [5] - Aerospace segment sales were $1.1 billion, up 13% year over year, with operating profit at $240 million, a 17% increase [6] - Vehicle segment sales declined to $663 million, down 8% year over year, with operating profit decreasing by 13% to $113 million [6] - eMobility segment sales were $182 million, down 4% year over year, with an operating loss of $10 million [7] Guidance and Outlook - For Q3 2025, Eaton expects earnings in the range of $2.58-$2.64 per share and anticipates organic growth of 8-9% [12] - The company projects adjusted earnings per share for 2025 to be between $11.97-$12.17, indicating a 12% increase at the midpoint from the previous year, with organic sales growth expected in the range of 8.5-9.5% [12] Backlog and Financial Position - Eaton's backlog increased by 17% in Electrical Americas, 16% in Aerospace, and 1% in Electrical Global on a rolling 12-month basis [10] - As of June 30, 2025, the company's cash decreased to $0.39 billion from $0.55 billion at the end of 2024, while long-term debt rose to $8.75 billion from $8.47 billion [11]

PART I — FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Eaton reported net sales of **$13.4 billion** and net income of **$1.95 billion** for H1 2025, with total assets reaching **$40.5 billion** and operating cash flow decreasing to **$1.16 billion** [Note 2. Acquisitions of Businesses](index=10&type=section&id=Note%202.%20ACQUISITIONS%20OF%20BUSINESSES) Eaton strategically acquired Fibrebond Corporation for **$1.45 billion** to enhance its Electrical Americas segment and has agreements to acquire Ultra PCS for **$1.55 billion** and Resilient Power Systems Inc - Acquired Fibrebond Corporation for **$1.45 billion**, a designer of modular power enclosures for data centers, reported within the Electrical Americas segment[23](index=23&type=chunk) Preliminary Purchase Price Allocation for Fibrebond (April 1, 2025) | (In millions) | Amount | | :--- | :--- | | Total identifiable net assets | $878 | | Goodwill | $572 | | **Total consideration, net of cash received** | **$1,450** | - Announced agreements to acquire Ultra PCS for **$1.55 billion** (Aerospace segment) and Resilient Power Systems Inc (Electrical Americas segment)[28](index=28&type=chunk)[29](index=29&type=chunk) [Note 3. Revenue Recognition](index=12&type=section&id=Note%203.%20REVENUE%20RECOGNITION) Total net sales reached **$13.4 billion** in H1 2025, with Electrical Americas contributing **$6.36 billion**, and a **$17.5 billion** order backlog as of June 30, 2025 Net Sales by Business Segment (Six Months Ended June 30, in millions) | (In millions) | 2025 | 2024 | | :--- | :--- | :--- | | Electrical Americas | $6,360 | $5,567 | | Electrical Global | $3,362 | $3,105 | | Aerospace | $2,059 | $1,826 | | Vehicle | $1,280 | $1,447 | | eMobility | $343 | $348 | | **Total net sales** | **$13,404** | **$12,293** | - Total order backlog was approximately **$17.5 billion** at June 30, 2025, with **70%** expected for delivery in the next twelve months[34](index=34&type=chunk) [Note 8. Debt](index=15&type=section&id=Note%208.%20DEBT) In May 2025, Eaton issued **€500 million** of 3.625% Euro Notes due 2035 and **$500 million** of 4.45% Senior Notes due 2030 to raise capital - On May 9, 2025, issued **€500 million** (**$564 million**) of 3.625% Euro Notes due 2035[42](index=42&type=chunk) - On the same date, issued **$500 million** of 4.45% Senior Notes due 2030[43](index=43&type=chunk) [Note 12. Shareholders' Equity](index=18&type=section&id=Note%2012.%20EATON%20SHAREHOLDERS'%20EQUITY) Eaton repurchased **4.2 million** shares for **$1.306 billion** in H1 2025 under a renewed **$9.0 billion** three-year share repurchase program - The Board of Directors renewed the share repurchase program on February 27, 2025, authorizing up to **$9.0 billion** in repurchases over a three-year period[53](index=53&type=chunk) Share Repurchase Activity | Period | Shares Repurchased (millions) | Total Cost (millions) | | :--- | :--- | :--- | | **Q2 2025** | 2.3 | $698 | | **H1 2025** | 4.2 | $1,306 | | **Q2 2024** | 1.9 | $600 | | **H1 2024** | 2.3 | $738 | [Note 15. Restructuring Charges](index=27&type=section&id=Note%2015.%20RESTRUCTURING%20CHARGES) Eaton's multi-year restructuring program, initiated in Q1 2024, incurred **$42 million** in H1 2025, with total estimated charges of **$475 million** by 2026 - A multi-year restructuring program started in Q1 2024 is expected to be completed in 2026 with total estimated charges of **$475 million**[71](index=71&type=chunk) Restructuring Program Charges (Before Tax, in millions) | (In millions) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Charges** | **$24** | **$15** | **$42** | **$78** | [Note 16. Business Segment Information](index=28&type=section&id=Note%2016.%20BUSINESS%20SEGMENT%20INFORMATION) Total segment operating profit increased to **$3.2 billion** in H1 2025, with Electrical Americas contributing **$1.89 billion** and eMobility reporting an operating loss of **$15 million** Segment Operating Profit (Six Months Ended June 30, in millions) | (In millions) | 2025 | 2024 | | :--- | :--- | :--- | | Electrical Americas | $1,891 | $1,644 | | Electrical Global | $653 | $578 | | Aerospace | $466 | $407 | | Vehicle | $209 | $246 | | eMobility | ($15) | ($2) | | **Total segment operating profit** | **$3,204** | **$2,873** | Consolidated Statements of Income Highlights | (In millions except for per share data) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | **Net sales** | $13,404 | $12,293 | | **Income before income taxes** | $2,363 | $2,195 | | **Net income attributable to Eaton ordinary shareholders** | $1,945 | $1,814 | | **Diluted EPS** | $4.96 | $4.52 | Consolidated Balance Sheet Highlights | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash & Short-term investments | $584 | $2,080 | | Goodwill | $15,790 | $14,713 | | **Total assets** | **$40,507** | **$38,381** | | Total debt (Short-term + Long-term) | $10,996 | $9,152 | | **Total equity** | **$18,647** | **$18,531** | Condensed Consolidated Statements of Cash Flows Highlights | (In millions) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$1,156** | **$1,421** | | Net cash used in investing activities | ($490) | ($511) | | Net cash used in financing activities | ($697) | ($839) | | Total decrease in cash | ($157) | $52 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Q2 2025 net sales grew **11%** to **$7.0 billion** with **8%** organic growth, driven by energy transition and digitalization megatrends, while adjusted EPS increased **8%** to **$2.95** [Company Overview and Portfolio Changes](index=31&type=section&id=Company%20Overview%20and%20Portfolio%20Changes) Eaton capitalizes on electrification and digitalization megatrends, strategically expanding its portfolio through acquisitions like Fibrebond, Exertherm, Ultra PCS, and Resilient Power Systems Inc - The company is capitalizing on megatrends of energy transition, electrification, and digitalization, with a focus on data center, utility, industrial, commercial, aerospace, and mobility markets[79](index=79&type=chunk) - Recent portfolio additions include Fibrebond Corporation (data center enclosures), Exertherm (thermal monitoring), and a stake in NordicEPOD AS (data center power modules)[82](index=82&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Q2 2025 net sales increased **11%** to **$7.0 billion** with **8%** organic growth, while adjusted EPS grew **8%** to **$2.95** despite a slight decline in net income Q2 2025 vs Q2 2024 Consolidated Financial Results | (In millions except for per share data) | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **Net sales** | $7,028 | $6,350 | 11% | | **Net income attributable to shareholders** | $982 | $993 | (1)% | | **Adjusted earnings** | $1,155 | $1,096 | 5% | | **Diluted EPS** | $2.51 | $2.48 | 1% | | **Adjusted EPS** | $2.95 | $2.73 | 8% | Changes in Net Sales (Q2 2025) | Component | Contribution | | :--- | :--- | | Organic growth | 8% | | Acquisitions of businesses | 2% | | Foreign currency | 1% | | **Total increase in Net sales** | **11%** | [Business Segment Results of Operations](index=35&type=section&id=Business%20Segment%20Results%20of%20Operations) Q2 2025 saw strong sales growth in Electrical Americas (**16%**), Electrical Global (**9%**), and Aerospace (**13%**), while Vehicle sales declined **8%** and eMobility reported an operating loss Q2 2025 Segment Performance vs Q2 2024 | Segment | Net Sales ($M) | % Change | Operating Profit ($M) | % Change | | :--- | :--- | :--- | :--- | :--- | | **Electrical Americas** | $3,350 | 16% | $987 | 15% | | **Electrical Global** | $1,753 | 9% | $353 | 16% | | **Aerospace** | $1,080 | 13% | $240 | 17% | | **Vehicle** | $663 | (8)% | $113 | (13)% | | **eMobility** | $182 | (4)% | ($10) | (600)% | - Strong demand from data center end-markets was a key growth driver for both the Electrical Americas and Electrical Global segments[98](index=98&type=chunk)[102](index=102&type=chunk) - The Vehicle segment's performance was negatively impacted by weakness in the North American truck market[109](index=109&type=chunk) [Liquidity, Capital Resources, and Financial Condition](index=40&type=section&id=Liquidity,%20Capital%20Resources,%20and%20Financial%20Condition) Eaton maintains strong liquidity with **$3.0 billion** in credit facilities, issued over **$1 billion** in new debt, and used **$1.45 billion** for acquisitions and **$1.31 billion** for share repurchases in H1 2025 - Maintains **$3.0 billion** in revolving credit facilities to support its **$3.0 billion** commercial paper program, of which **$1.11 billion** was outstanding at June 30, 2025[118](index=118&type=chunk) Cash Flow Summary (Six Months Ended June 30, in millions) | (In millions) | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash from operating activities** | **$1,156** | **$1,421** | | Net cash used in investing activities | ($490) | ($511) | | Net cash used in financing activities | ($697) | ($839) | - Major uses of cash in H1 2025 included **$1.45 billion** for acquisitions, **$1.31 billion** for share repurchases, and **$818 million** for dividends[120](index=120&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) No material changes in market risk exposures have occurred since December 31, 2024 - There have been no material changes in exposures to market risk since December 31, 2024[142](index=142&type=chunk) [Controls and Procedures](index=45&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting in Q2 2025 - Management, including the CEO and CFO, concluded that Eaton's disclosure controls and procedures were effective as of June 30, 2025[143](index=143&type=chunk) - There were no changes in internal control over financial reporting during Q2 2025 that had a material effect[145](index=145&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=45&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Information regarding current legal proceedings is detailed in Note 10 of the condensed consolidated financial statements - Information regarding the Company's current legal proceedings is presented in Note 10 of the Notes to the condensed consolidated financial statements[147](index=147&type=chunk) [Risk Factors](index=45&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes have occurred in the risk factors previously described in the 2024 Form 10-K - There have been no material changes from the risk factors described in the 2024 Form 10-K[148](index=148&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) In Q2 2025, Eaton repurchased **2.3 million** ordinary shares for **$698 million**, with **$8.1 billion** remaining under the authorized program Share Repurchases in Q2 2025 | Month | Shares Purchased | Average Price Paid | Total Cost (millions) | | :--- | :--- | :--- | :--- | | April | 529,612 | $271.38 | ~$144 | | May | 1,356,649 | $307.41 | ~$417 | | June | 411,777 | $333.51 | ~$137 | | **Total** | **2,298,038** | **$303.79** | **$698** | [Other Information](index=45&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No director or officer adopted, amended, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - During Q2 2025, no director or officer of the Company adopted, amended or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement"[150](index=150&type=chunk) [Exhibits](index=46&type=section&id=ITEM%206.%20EXHIBITS) This section provides a comprehensive list of all exhibits filed with the Form 10-Q, including corporate governance, debt, and certification documents

Financial Data and Key Metrics Changes - Adjusted earnings per share increased by 8% compared to Q2 2024, reaching $2.95 [6][18] - Organic sales growth for the quarter was 8%, with record quarterly revenue of $7 billion and segment margins expanded by 20 basis points to 23.9% [6][18] - Book to bill ratio for combined segments increased to 1.1, indicating strong demand [8][20] Business Line Data and Key Metrics Changes - **Electrical Americas**: Achieved organic sales growth of 12%, primarily driven by data center strength, which was up about 50% [18][19] - **Electrical Global**: Total growth of 9%, with organic growth of 7% and a 2-point FX tailwind [22] - **Aerospace**: Organic sales growth of 11%, with a strong backlog increase of 16% year over year [25] - **Vehicle Segment**: Experienced a decline of 8% on both total and organic basis, primarily due to weaknesses in the North America truck market [26] Market Data and Key Metrics Changes - Demand in the aerospace business remains strong, with a 10% increase in orders on a rolling twelve-month basis [25] - APAC region posted double-digit organic growth, while EMEA showed mid-single-digit recovery [22] - Major project negotiations pipeline increased by 31% year over year, indicating robust market activity [21] Company Strategy and Development Direction - The company is focusing on three strategic pillars: lead, invest, and execute for growth, aiming to accelerate growth and create sustained shareholder value [9] - Recent acquisitions, such as Ultra PCS and Resilient Power Systems, are aimed at strengthening positions in high-growth markets like aerospace and data centers [11][12] - Partnerships with companies like NVIDIA and Siemens Energy are intended to enhance infrastructure and power distribution capabilities [14][15] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, citing strong order momentum and a robust negotiation pipeline [42][44] - The company raised its guidance for organic growth to a range of 8.5% to 9.5% for the year, reflecting positive market conditions [30][31] - Management noted that while some markets are not growing, the overall outlook remains positive due to strong performance in data centers and defense aerospace [28][29] Other Important Information - The company is investing in AI and ERP systems to enhance operational efficiency and customer interaction [103][105] - There is an expectation of margin improvement as capacity ramps up and inefficiencies are addressed [101][102] Q&A Session Summary Question: What is the expectation for Electrical Americas and global orders? - Management indicated strong visibility into Q3 orders, especially in Electrical Americas, with a backlog expected to remain above one [42][43] Question: Is Electrical Americas gaining market share in the US? - Management confirmed market share gains in North America, particularly in data centers, where growth outpaced market averages [51] Question: Can you recap your data center strategy regarding gray space and white space? - The company emphasized a comprehensive strategy addressing power availability and construction speed, with partnerships and acquisitions enhancing their position [53][56] Question: What is the impact of new capacity on orders? - Management noted that new capacity is expected to strengthen orders, with ongoing investments in FiberBond to meet data center demand [143][144] Question: How is the company managing margin pressures from capacity ramp-up? - Management acknowledged current inefficiencies but expects improved margins as operations normalize and capacity increases [101][102]

Financial Data and Key Metrics Changes - Adjusted earnings per share increased by 8% compared to Q2 2024, reaching $2.95, which is at the high end of the guidance range [6][18] - Organic sales growth for the quarter was 8%, driven by strong performance in Electrical Americas, Aerospace, and Electrical Global [6][18] - Segment margins reached a record high, expanding by 20 basis points to 23.9% [6][18] Business Line Data and Key Metrics Changes - Electrical Americas segment reported organic sales growth of 12%, primarily driven by data center strength, which was up approximately 50% [18][19] - Aerospace segment achieved organic sales growth of 11%, with particular strength in defense and commercial aftermarket [25][26] - Vehicle segment experienced an 8% decline in both total and organic sales, mainly due to weaknesses in the North American truck market [27] Market Data and Key Metrics Changes - Electrical Americas backlog grew by 17% year-over-year, reaching an all-time record [7][20] - Orders in Electrical Americas accelerated to a 2% increase on a trailing twelve-month basis, recovering from a 4% decline in the previous quarter [19][20] - APAC region showed double-digit organic growth, while EMEA experienced mid-single-digit growth [23][24] Company Strategy and Development Direction - The company is focusing on a strategy anchored by three pillars: lead, invest, and execute for growth, with a strong emphasis on high-growth and high-margin markets [9][16] - Recent acquisitions, including Ultra PCS and Resilient Power Systems, are aimed at strengthening the company's position in aerospace and data center markets [11][12] - Partnerships with companies like NVIDIA and Siemens Energy are designed to enhance infrastructure capabilities and address power availability challenges for data centers [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong order momentum and negotiation pipeline, particularly in Electrical Americas, which is expected to continue into Q3 [40][41] - The company raised its guidance for organic growth to a range of 8.5% to 9.5% for the year, reflecting positive market conditions [30][31] - Management noted that while some segments like vehicle and e-mobility are facing challenges, overall market positioning remains strong [30][31] Other Important Information - The company is investing in AI and ERP systems to enhance operational efficiency and customer interaction, which is expected to yield long-term benefits [102][104] - The integration of Fiberbond is progressing well, with expectations of increased volume and new business opportunities [76][77] Q&A Session Summary Question: What is the expectation for Electrical Americas and global orders? - Management indicated strong momentum in orders and a robust negotiation pipeline, expecting continued acceleration in Q3 [40][41] Question: Is Electrical Americas gaining market share in the US? - Management confirmed that market data indicates share gains in North America, particularly in data centers [49][50] Question: Can you elaborate on the data center strategy regarding gray space and white space? - The company has a comprehensive strategy addressing power availability and construction speed, with partnerships and acquisitions enhancing their capabilities [51][52] Question: What is the outlook for Electrical Global margins? - Management expressed a cautious but optimistic view, aiming for margin improvements while being prudent in guidance [121][122] Question: How is the capacity coming online impacting orders? - Management noted that the new capacity is expected to strengthen orders and support growth, particularly in the data center segment [144][145]

Financial Performance - Record adjusted earnings per share of $2.95 in Q2 2025, up 8% versus 2Q24, with segment margins of 23.9%, up 20 bps versus 2Q24[4] - Sales reached $7.028 billion in 2Q 2025, an 11% increase compared to $6.350 billion in 2Q 2024[23] - Adjusted earnings increased by 5% from $1.096 billion in 2Q 2024 to $1.155 billion in 2Q 2025[23] Growth and Orders - Organic growth of 8%, driven by 12% growth in Electrical Americas, 11% in Aerospace and 7% in Electrical Global[4] - Electrical Americas data center orders are up approximately 55% and revenue up approximately 50% versus 2Q24[5] - Order acceleration in Electrical Americas up 2% and strong Aerospace growth up 10% on a rolling 12-month basis[4] Segment Performance - Electrical Americas sales increased by 16% to $3.350 billion in 2Q 2025 from $2.877 billion in 2Q 2024[24] - Aerospace sales increased by 13% to $1.080 billion in 2Q 2025 from $955 million in 2Q 2024[29] - Vehicle segment sales decreased by 8% to $663 million in 2Q 2025 from $723 million in 2Q 2024[31] Guidance and Outlook - Raising 2025 guidance for organic growth, segment margin and adjusted EPS at the midpoint[6] - Full year 2025 adjusted earnings per share guidance is $11.97 - $12.17 and organic growth is 8.5% - 9.5%[39] - Full year 2025 free cash flow guidance is $3.7 billion - $4.1 billion and share repurchases are $2.0 billion - $2.4 billion[39]