Forward-looking statements and non-GAAP financial information This presentation or the comments we make on our call today contain forward-looking statements concerning, among other matters, full year and first quarter 2025 adjusted earnings per share, organic revenue growth and segment operating margins; full year 2025 operating cash flow, free cash flow, and anticipated share repurchases; and assumptions about the impact on the foregoing of currency translation, tax rate and corporate expenses. These state ...

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Core Insights - Eaton Corporation (ETN) reported fourth-quarter 2024 earnings of $2.83 per share, exceeding the Zacks Consensus Estimate by 0.7% and reflecting an 11% year-over-year increase, aligning with the upper end of the guidance range of $2.78-$2.84 [1][10] Financial Performance - GAAP earnings for the quarter were $2.45 per share, a 4.3% increase from $2.25 in the same quarter last year, with a difference attributed to charges for intangible assets amortization, restructuring, and gains from acquisitions [2] - Total quarterly revenues were $6.24 billion, missing the Zacks Consensus Estimate of $6.35 billion by 1.7%, but showing a 4.6% year-over-year growth driven by organic sales growth, partially offset by Hurricane Helene, labor strikes, and negative currency translation [3] Segment Performance - Electrical Americas reported sales of $2.9 billion, up 9% year over year, with operating profit increasing 20% to $918 million [4] - Electrical Global's sales were $1.6 billion, a 4% increase year over year, with operating profit down 2.5% to $277 million [4] - Aerospace sales reached $971 million, up 9% year over year, with operating profit increasing 11% to $222 million [5] - Vehicle segment sales were $647 million, down 10% year over year, with operating profit decreasing 5.4% to $122 million [5] - eMobility segment sales were $147 million, down 10.9% year over year, but operating profit improved to $3 million from a loss of $16 million in the previous year [6] Expense and Financial Update - Selling and administrative expenses rose 4.9% year over year to $1.003 billion, while research and development expenses remained stable at $201 million [7] - Interest expenses increased significantly by 55.5% year over year to $42 million [7] - As of December 31, 2024, cash was $555 million, up from $488 million a year earlier, while long-term debt rose 2.8% to $8.47 billion [8] Guidance - For the first quarter of 2025, earnings are expected in the range of $2.65-$2.75 per share, with organic growth anticipated between 5.5-7.5% [10] - Adjusted earnings per share for 2025 are projected to be between $11.8-$12.20, indicating an 11% increase at the midpoint from the previous year, with organic sales growth expected in the range of 7-9% [11]

Core Insights - Eaton reported $6.24 billion in revenue for Q4 2024, a year-over-year increase of 4.6%, with an EPS of $2.83 compared to $2.55 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $6.35 billion by 1.73%, while the EPS exceeded the consensus estimate of $2.81 by 0.71% [1] Financial Performance - Net Sales in eMobility were $147 million, below the average estimate of $160.96 million, reflecting a year-over-year decline of 10.9% [4] - Aerospace net sales reached $971 million, slightly above the estimated $961.90 million, marking an 8.5% increase year-over-year [4] - Vehicle net sales were $647 million, below the estimated $682.91 million, representing a 10.5% decline year-over-year [4] - Electrical Global net sales were $1.57 billion, matching the average estimate, with a year-over-year increase of 3.8% [4] - Electrical Americas net sales were $2.91 billion, below the estimated $2.98 billion, but showed an 8.7% increase year-over-year [4] Segment Operating Profit - Aerospace segment operating profit was $222 million, slightly below the average estimate of $223.48 million [4] - Vehicle segment operating profit was $122 million, below the average estimate of $127.08 million [4] - Electrical Global segment operating profit was $277 million, compared to the average estimate of $288.62 million [4] - Electrical Americas segment operating profit was $918 million, exceeding the average estimate of $880.27 million [4] - eMobility segment operating profit was $3 million, slightly below the average estimate of $3.97 million [4] Stock Performance - Eaton's shares returned -1.5% over the past month, while the Zacks S&P 500 composite increased by 2.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Company Performance - Eaton reported quarterly earnings of $2.83 per share, exceeding the Zacks Consensus Estimate of $2.81 per share, and up from $2.55 per share a year ago, representing an earnings surprise of 0.71% [1] - The company posted revenues of $6.24 billion for the quarter ended December 2024, which was below the Zacks Consensus Estimate by 1.73%, and an increase from $5.97 billion year-over-year [2] - Over the last four quarters, Eaton has surpassed consensus EPS estimates four times but has only topped consensus revenue estimates once [2] Stock Outlook - The immediate price movement of Eaton's stock will largely depend on management's commentary during the earnings call and the sustainability of earnings expectations [3][4] - Eaton shares have declined approximately 1.4% since the beginning of the year, while the S&P 500 has gained 3.2% [3] Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $2.73 on revenues of $6.34 billion, and for the current fiscal year, it is $12.03 on revenues of $26.76 billion [7] - The estimate revisions trend for Eaton is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Manufacturing - Electronics industry, to which Eaton belongs, is currently ranked in the bottom 34% of over 250 Zacks industries, suggesting potential challenges ahead [8] - The performance of Eaton's stock may also be influenced by the overall outlook for the industry [8]

Financial Performance - Fourth quarter 2024 earnings per share were $2.45, a record and up 4% from Q4 2023; adjusted earnings per share were $2.83, up 11% from Q4 2023[3][7] - For full year 2024, record earnings per share were $9.50, with adjusted earnings per share of $10.80, up 18% from 2023[7][8] - The company expects 2025 earnings per share to be between $10.60 and $11.00, representing a 14% increase at the midpoint over 2024[7][9] - The diluted earnings per share after restructuring charges was $0.14 for Q4 2024, compared to $0.02 in Q4 2023, with a full-year EPS of $0.40 versus $0.11 in 2023[36] Sales and Revenue - Sales for Q4 2024 reached $6.2 billion, a record and up 5% from Q4 2023; organic sales increased by 6%[4][5] - Total net sales for Q4 2024 reached $6,240 million, a 4.6% increase from $5,967 million in Q4 2023[24] - The Electrical Americas segment reported net sales of $2,905 million in Q4 2024, a 8.7% increase from $2,672 million in Q4 2023[24] - Aerospace segment sales were a record $971 million, up 9% from Q4 2023, with operating profits of $222 million, up 11%[13] - The Vehicle segment reported sales of $647 million, down 10% from Q4 2023, but achieved a record operating margin of 18.8%[16] Cash Flow - Operating cash flow for 2024 was $4.3 billion, up 19% from 2023, and free cash flow was $3.5 billion, up 23% from 2023[8] - Free cash flow for Q4 2024 was $1,342 million, compared to $1,055 million in Q4 2023, marking a 27.3% increase[28] Segment Performance - Electrical Americas segment sales for Q4 2024 were $2.9 billion, up 9% from Q4 2023, with operating profits of $918 million, up 20%[10] - The Aerospace segment achieved a net sales increase of 8.5%, reaching $971 million in Q4 2024 compared to $895 million in Q4 2023[24] - The company reported a total segment operating profit of $1,542 million for Q4 2024, an increase from $1,360 million in Q4 2023, reflecting a 13.4% growth[24] - Segment margins for 2024 were a record 24.0%, a 200-basis point improvement over 2023[6] Backlog and Demand - Backlog at the end of December 2024 was up 29% organically over December 2023, indicating strong demand[11][15] Restructuring and Charges - A new multi-year restructuring program was initiated in Q1 2024, with expected total charges of $475 million and anticipated mature year benefits of $375 million[35] - Restructuring program charges for Q4 2024 totaled $70 million, compared to $11 million in Q4 2023, with total charges for the year reaching $202 million versus $57 million in 2023[36] - Workforce reductions accounted for $42 million in Q4 2024, significantly up from $2 million in Q4 2023, with total workforce-related charges for the year at $120 million compared to $19 million in 2023[36] - The eMobility segment incurred restructuring charges of $22 million in Q4 2024, up from no charges in Q4 2023, with total charges for the year at $25 million compared to $7 million in 2023[36] - The Electrical Global segment reported $18 million in restructuring charges for Q4 2024, compared to $4 million in Q4 2023, with total charges for the year at $88 million versus $26 million in 2023[36] - Corporate restructuring charges amounted to $16 million in Q4 2024, up from $2 million in Q4 2023, with total charges for the year at $29 million compared to $8 million in 2023[36] - The Aerospace segment had restructuring charges of $2 million in both Q4 2024 and Q4 2023, with total charges for the year increasing to $9 million from $5 million in 2023[36] Intangible Assets and Tax Benefits - Intangible asset amortization expense for Q4 2024 was $107 million, consistent with Q4 2023, while total amortization for the year was $425 million, down from $450 million in 2023[37] - The total income tax benefit from intangible asset amortization was $23 million in Q4 2024, leading to an after-tax total of $84 million, slightly up from $83 million in Q4 2023[37] - The income tax benefit related to restructuring charges was $14 million in Q4 2024, leading to a total after-tax charge of $56 million, compared to $9 million and $46 million respectively in Q4 2023[36] Acquisitions - The company acquired a 49% stake in NordicEPOD AS on May 31, 2024, enhancing its capabilities in power modules for data centers[29]

Core Viewpoint - Eaton Corporation (ETN) is anticipated to show improvements in both revenue and earnings in its upcoming fourth-quarter 2024 results, scheduled for January 31, before market open [1][2]. Revenue and Earnings Estimates - The Zacks Consensus Estimate for ETN's fourth-quarter revenues is $6.35 billion, reflecting a 6.4% increase from the previous year [2]. - The consensus estimate for earnings per share (EPS) is $2.81, indicating a year-over-year growth of 10.2% [2][3]. Earnings History and Surprise - Eaton has consistently beaten the Zacks Consensus Estimate in the last four quarters, with an average surprise of 3.63% [4][5]. Factors Influencing Earnings - Growth in electrification, energy transition, and reindustrialization is driving performance across nearly 75% of ETN's end markets [8]. - The company has seen a substantial increase in its backlog, benefiting from global trends in electrification and digitalization [9]. - The demand for efficient power solutions in the artificial intelligence-driven data center space is expected to positively impact earnings [10]. - Continuous investment in research and development enhances product quality and market reach, contributing to earnings growth [11]. - The broad portfolio of efficient electric solutions for commercial and institutional buildings consistently supports earnings [12]. Valuation and Market Position - Eaton's stock is currently trading at a forward 12-month P/E multiple of 25.67, which is higher than the industry average of 23.97 [13]. - Competitors like Illinois Tool Works (ITW) and Parker-Hannifin (PH) are trading at lower forward P/E multiples of 24.22 and 23.61, respectively [15]. Investment Thesis - Strong demand for products across various segments and ongoing upgrades through R&D are key drivers for Eaton's performance [16]. - The company operates in approximately 175 countries, enhancing revenue streams but also exposing it to geopolitical risks [17]. Conclusion - Rising earnings estimates and an increasing backlog are expected to boost Eaton's performance, making the stock attractive despite its premium valuation [18].

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Eaton (ETN) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended December 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The earnings report, which is expected to be released on January 31, 2025, might help the stock move higher if these key numbers are better than expec ...

Eaton (ETN) ended the recent trading session at $345.19, demonstrating a +0.76% swing from the preceding day's closing price. The stock exceeded the S&P 500, which registered a loss of 0.21% for the day. Elsewhere, the Dow saw a downswing of 0.16%, while the tech-heavy Nasdaq depreciated by 0.89%.The power management company's stock has climbed by 2.23% in the past month, exceeding the Industrial Products sector's loss of 3.88% and the S&P 500's loss of 1.56%.Market participants will be closely following th ...