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]

Core Insights - Eaton reported $7.03 billion in revenue for the quarter ended June 2025, marking a year-over-year increase of 10.7% and an EPS of $2.95 compared to $2.73 a year ago, with revenue exceeding the Zacks Consensus Estimate by 1.45% [1] Financial Performance - Revenue breakdown by segment includes: - eMobility: $182 million, -3.7% year-over-year, below the estimate of $191.13 million [4] - Aerospace: $1.08 billion, +13.1% year-over-year, above the estimate of $1.03 billion [4] - Vehicle: $663 million, -8.3% year-over-year, below the estimate of $674.75 million [4] - Electrical Global: $1.75 billion, +9.2% year-over-year, above the estimate of $1.7 billion [4] - Electrical Americas: $3.35 billion, +16.4% year-over-year, above the estimate of $3.31 billion [4] Segment Operating Profit - Segment operating profit (loss) details: - Aerospace: $240 million, slightly above the estimate of $239.31 million [4] - Vehicle: $113 million, above the estimate of $108.81 million [4] - Electrical Global: $353 million, above the estimate of $327.71 million [4] - Electrical Americas: $987 million, above the estimate of $975.36 million [4] - eMobility: -$10 million, worse than the estimate of -$1.03 million [4] Stock Performance - Eaton's shares have returned +7.3% over the past month, outperforming the Zacks S&P 500 composite's +1% change, with a current Zacks Rank of 3 (Hold) indicating potential performance in line with the broader market [3]

Eaton, which belongs to the Zacks Manufacturing - Electronics industry, posted revenues of $7.03 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.45%. This compares to year-ago revenues of $6.35 billion. The company has topped consensus revenue estimates two times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on t ...

[Eaton Second Quarter 2025 Performance Overview](index=1&type=section&id=Eaton%20Second%20Quarter%202025%20Performance%20Overview) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Highlights) Eaton achieved record Q2 2025 sales of $7.0 billion, 11% higher year-over-year, with record adjusted EPS of $2.95 and 23.9% segment margins Q2 2025 Key Financial Metrics | Metric | Q2 2025 Value | Change vs Q2 2024 | | :--- | :--- | :--- | | **Sales** | $7.0 billion | +11% | | Organic Sales Growth | 8% | N/A | | **GAAP EPS** | $2.51 | +1% | | **Adjusted EPS** | $2.95 | +8% | | **Segment Margins** | 23.9% | +20 bps | | **Operating Cash Flow** | $918 million | N/A | | **Free Cash Flow** | $716 million | N/A | [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Paulo Ruiz noted sustained demand, accelerating orders, and backlog growth, driven by strategic investments in high-margin markets and megatrends - Management sees sustained demand reflected in accelerating orders and backlog growth, powering organic growth[6](index=6&type=chunk) - The company is capitalizing on megatrends including digitalization, electrification, reindustrialization, and increased defense spending through investments in technology, acquisitions, and partnerships[6](index=6&type=chunk) [Financial Guidance](index=1&type=section&id=Financial%20Guidance) [Full Year 2025 Guidance](index=1&type=section&id=Full%20Year%202025%20Guidance) Eaton raised full-year 2025 guidance, projecting 8.5-9.5% organic growth, adjusted EPS of $11.97-$12.17, and segment margins of 24.1-24.5% Full Year 2025 Guidance | Metric | Guidance Range/Value | Midpoint YoY Growth | | :--- | :--- | :--- | | Organic Growth | 8.5% - 9.5% | N/A | | Segment Margins | 24.1% - 24.5% | N/A | | GAAP EPS | $10.41 - $10.61 | +11% | | Adjusted EPS | $11.97 - $12.17 | +12% | - The company highlights strong year-over-year backlog growth of **15% in Electrical** and **16% in Aerospace**, supporting the positive outlook[7](index=7&type=chunk) [Third Quarter 2025 Guidance](index=3&type=section&id=Third%20Quarter%202025%20Guidance) For Q3 2025, Eaton anticipates 8-9% organic growth, 24.1-24.5% segment margins, and adjusted EPS between $3.01 and $3.07 Third Quarter 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Organic Growth | 8% - 9% | | Segment Margins | 24.1% - 24.5% | | GAAP EPS | $2.58 - $2.64 | | Adjusted EPS | $3.01 - $3.07 | [Business Segment Performance](index=3&type=section&id=Business%20Segment%20Performance) [Electrical Americas](index=3&type=section&id=Electrical%20Americas) Electrical Americas achieved record sales of $3.4 billion, up 16% year-over-year, with 29.5% operating margins and 17% backlog growth Electrical Americas Q2 2025 Performance | Metric | Value | YoY Change | | :--- | :--- | :--- | | Sales | $3.4 billion | +16% | | Organic Sales Growth | 12% | N/A | | Operating Profits | $987 million | +15% | | Operating Margins | 29.5% | N/A | | Backlog Growth | 17% | N/A | [Electrical Global](index=3&type=section&id=Electrical%20Global) Electrical Global reported record sales of $1.8 billion, up 9% year-over-year, with operating margins expanding to a record 20.1% and profit growing 16% Electrical Global Q2 2025 Performance | Metric | Value | YoY Change | | :--- | :--- | :--- | | Sales | $1.8 billion | +9% | | Organic Sales Growth | 7% | N/A | | Operating Profits | $353 million | +16% | | Operating Margins | 20.1% | +110 bps | | Backlog Growth | 1% | N/A | [Aerospace](index=3&type=section&id=Aerospace) Aerospace delivered record sales of $1.1 billion, up 13% year-over-year, with operating profit rising 17% and margins improving to 22.2% Aerospace Q2 2025 Performance | Metric | Value | YoY Change | | :--- | :--- | :--- | | Sales | $1.1 billion | +13% | | Organic Sales Growth | 11% | N/A | | Operating Profits | $240 million | +17% | | Operating Margins | 22.2% | +70 bps | | Backlog Growth | 16% | N/A | [Vehicle and eMobility](index=3&type=section&id=Vehicle%20and%20eMobility) Vehicle segment sales declined 8% to $663 million, while eMobility sales decreased 4% to $182 million, resulting in an operating loss of $10 million - Vehicle segment sales were **$663 million**, down **8%** year-over-year, entirely from organic sales decline[14](index=14&type=chunk) - eMobility segment sales were **$182 million**, down **4%** year-over-year, and the segment recorded an operating loss of **$10 million**[15](index=15&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Q2 2025 net sales increased to $7.03 billion, but net income attributable to Eaton slightly decreased to $982 million, while adjusted earnings rose to $1.16 billion Q2 Income Statement Highlights (In millions, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Sales | $7,028 | $6,350 | | Income before income taxes | $1,186 | $1,195 | | Net income attributable to Eaton | $982 | $993 | | Diluted EPS | $2.51 | $2.48 | | Adjusted Earnings | $1,155 | $1,096 | | Adjusted EPS | $2.95 | $2.73 | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets grew to $40.5 billion, and total liabilities increased to $21.9 billion, with total equity remaining stable at $18.6 billion Balance Sheet Summary (In millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $11,897 | $11,801 | | Total assets | $40,507 | $38,381 | | Total current liabilities | $9,594 | $7,857 | | Total liabilities | $21,859 | $19,851 | | Total equity | $18,647 | $18,531 | [Notes to Financials](index=8&type=section&id=Notes%20to%20Financials) [Acquisitions and Divestitures](index=9&type=section&id=Acquisitions%20and%20Divestitures) Eaton strategically acquired Fibrebond for $1.45 billion and agreed to acquire Ultra PCS for $1.55 billion and Resilient Power Systems to expand its portfolio - Acquired Fibrebond Corporation on April 1, 2025, for **$1.45 billion** to strengthen its position in modular power enclosures for data centers and other markets. Fibrebond is reported within the Electrical Americas segment[30](index=30&type=chunk) - Signed an agreement to acquire Ultra PCS Limited for **$1.55 billion**, a UK-based provider of electronic controls and solutions for the aerospace industry. The transaction is expected to close in the first half of 2026 and will be part of the Aerospace segment[32](index=32&type=chunk) - Agreed to acquire Resilient Power Systems Inc., a developer of solid-state transformer technology, for an initial **$55 million** plus potential future consideration. This acquisition will be integrated into the Electrical Americas segment[33](index=33&type=chunk) [Restructuring Program](index=11&type=section&id=Restructuring%20Program) Eaton's multi-year restructuring program, initiated in Q1 2024, targets $475 million in charges and $375 million in benefits by 2026, with $24 million incurred in Q2 2025 - The multi-year restructuring program, started in Q1 2024, is expected to incur total charges of **$475 million** and deliver mature year benefits of **$375 million** upon completion in 2026[35](index=35&type=chunk) Restructuring Charges by Segment (Q2 2025, In millions) | Segment | Q2 2025 Charges | | :--- | :--- | | Electrical Americas | $9 | | Electrical Global | $5 | | Vehicle | $2 | | eMobility | $2 | | Corporate | $6 | | **Total** | **$24** |

Company Overview - Eaton Corporation plc is a multinational power management company that provides electrical, hydraulic, and mechanical power solutions for various industrial and commercial applications [2] - The company focuses on smart power management, helping customers utilize power more efficiently and sustainably [3] Financial Performance - Eaton reported impressive Q1 2025 results, with revenue increasing by 7.3% to $6.38 billion and a 9% organic growth rate, driven by strength in the Electrical and Aerospace segments [4] - Adjusted EPS climbed 13% to a record $2.72, with segment margins reaching 23.9% [4] - The company has elevated its full-year guidance, anticipating 7.5–9.5% organic growth and adjusted EPS of $11.80–12.20 [4] - Over the past twelve months, Eaton generated $25 billion in revenue, with operating profits of $4.8 billion and net income of $3.9 billion [4] Market Expectations - Analysts forecast adjusted earnings of $2.92 per share on revenue of $6.91 billion for the upcoming second-quarter earnings announcement on August 5, 2025 [3] - This forecast indicates a 7% increase in earnings year-over-year and a 9% rise in sales compared to the previous year's figures of $2.73 per share and $6.35 billion in revenue [3] Historical Performance Trends - Historically, Eaton's stock has exceeded performance expectations following earnings releases, rising 58% of the time with a median one-day increase of 3.6% and a maximum observed surge of 8% [3] - Over the past five years, there have been 19 earnings data points collected, with positive one-day returns occurring approximately 58% of the time [6] - The median of the 11 positive returns was 3.6%, while the median of the 8 negative returns was -1.6% [6] Trading Strategies - Event-driven traders can leverage historical patterns for competitive advantage, whether by positioning before earnings or reacting to movements post-release [5] - A strategy involving the correlation between short-term and medium-term returns following earnings can be effective, particularly if the 1D and 5D returns show strong correlation [7]

Core Viewpoint - Eaton Corporation (ETN) is anticipated to show improvements in both revenue and earnings for Q2 2025, with a prior earnings surprise of 0.74% in Q1 [1]. Group 1: Q2 Earnings Expectations - The Zacks Consensus Estimate for ETN's revenues is $6.93 billion, reflecting a 9.09% increase year-over-year [2]. - The consensus estimate for earnings per share (EPS) is $2.92, indicating a 6.96% increase from the previous year [2]. Group 2: Factors Driving Q2 Performance - Ongoing investments in research and development are enhancing product quality and fostering new solutions, which is expected to drive earnings growth with organic revenue growth projected at 6-8% [3]. - Growth is being fueled by electrification, global megatrends, energy transition, and reindustrialization, impacting approximately 75% of Eaton's end markets [4]. - Increased demand from power-intensive AI data centers is creating new opportunities that support earnings [4]. - A broad product portfolio is leading to strong order wins and a growing backlog, which provides a reliable future revenue pipeline [5]. - Share repurchases funded by free cash flow are likely to positively influence Q2 earnings [6]. Group 3: Earnings Prediction Model - The Zacks model indicates a strong likelihood of an earnings beat for Eaton, supported by a positive Earnings ESP of +0.33% and a Zacks Rank of 3 [7].