Financial Data and Key Metrics Changes - The company reported adjusted earnings per share (EPS) of $3.07, an increase of 8% year-over-year, and segment margins reached a record 25%, up 70 basis points from the previous year [6][21][24] - Quarterly revenue was $7 billion, with organic growth of 7%, driven by strength in aerospace and Electrical Americas [20][21] - The backlog grew by $2 billion, or 20%, to $12 billion, providing strong visibility for future growth [22][89] Business Line Data and Key Metrics Changes - **Electrical Americas**: Organic sales growth of 9%, primarily driven by data centers, which saw a 40% increase. Operating margin was 30.3%, up 20 basis points year-over-year [21][22] - **Electrical Global**: Total growth of 10%, with organic growth of 8%. Operating margin increased to 19.1%, up 40 basis points from the prior year [22][23] - **Aerospace**: Organic sales growth of 13%, with operating margin expanding by 150 basis points to 25.9%. Orders increased by 11% on a rolling 12-month basis [24] - **Vehicle Segment**: Experienced a decline of 9% on an organic basis, primarily due to weaknesses in the North American truck and light vehicle markets [25] - **E-Mobility**: Revenue decreased by 20% on an organic basis, with an operating loss of $9 million in the quarter [25] Market Data and Key Metrics Changes - Orders in Latin America accelerated by 7% on a rolling 12-month basis, with a backlog growth of 20% year-over-year [5][16] - The global Liquid Cooling market is expected to grow around 35% annually through 2028, driven by increasing power demands from AI chips [12][70] Company Strategy and Development Direction - The company is focused on a strategy with three pillars: lead, invest, and execute for growth, aiming to capitalize on key megatrends [8][29] - The acquisition of Boyd's thermal business is aligned with the strategy to invest for growth, particularly in the high-growth Liquid Cooling market [9][70] - The company aims to enhance its data center portfolio, providing comprehensive solutions from power distribution to cooling systems [13][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained growth due to strong demand across various sectors, particularly in data centers and aerospace [5][6] - The company reaffirmed its 2025 guidance, expecting continued order acceleration and strong backlog growth [26][89] - Management highlighted the importance of integrating power and cooling technologies to meet evolving customer needs in data centers [70][72] Other Important Information - The company is experiencing unprecedented demand, reflected in continued order acceleration and growing backlogs [28][29] - The outlook for Q4 includes EPS guidance of $3.23-$3.43, representing 18% year-over-year growth, with organic growth projected at 10%-12% [27][28] Q&A Session Summary Question: Outlook for Electrical Americas LTM orders - Management remains bullish about order growth in Q4, supported by strong momentum and a growing negotiations pipeline [36][37] Question: Quarterly orders estimation for Electrical Americas - Management indicated that external estimates are in the ballpark, leaning towards the higher end of expectations for quarterly orders [39][40] Question: Data center sales per MW expectations - The company expects to reach close to $3 million per MW at the high end of the guide with the recent acquisitions enhancing their portfolio [53][57] Question: Factors affecting organic revenue growth in Electrical Americas - Slower residential sales and some order delays impacted Q3 performance, but management is confident in catching up in Q4 [58][60] Question: Drivers of aerospace performance and margins - Aerospace is on track to meet long-term margin goals, driven by historical wins in defense platforms and operational improvements [94][96]

Eaton (NYSE:ETN) Q3 2025 Earnings Call November 04, 2025 11:00 AM ET Company ParticipantsPaulo Ruiz - CEOAndrew Kaplowitz - Managing Director of Equity ResearchNigel Coe - Managing Director of Equity ResearchJoseph Ritchie - Managing Director of Equity ResearchAndrew Obin - Managing Director of Equity ResearchDeane Dray - Managing Director of Equity ResearchOlivier Leonetti - EVP and CFOScott Davis - Founding PartnerStephen Tusa - Managing Director of Equity ResearchJeffrey Sprague - Managing Partner of Equ ...

Financial Data and Key Metrics Changes - The company reported quarterly revenue of $7 billion, with adjusted earnings per share (EPS) increasing by 8% year-over-year to $3.07, which is at the high end of the guidance range [20][25] - Segment margins reached a record 25%, up 70 basis points year-over-year [5][20] - Organic growth for the quarter was 7%, driven by strength in aerospace and Electrical Americas, partially offset by weakness in short-cycle markets [20] Business Line Data and Key Metrics Changes - Electrical Americas segment achieved organic sales growth of 9%, primarily driven by data centers, which saw a 40% increase [20][21] - Aerospace segment reported organic sales growth of 13%, with operating margin expanding by 150 basis points to 25.9% [23] - Vehicle segment experienced a decline of 9% on an organic basis, primarily due to weaknesses in the North America truck and light vehicle markets [24] Market Data and Key Metrics Changes - Orders in Latin America accelerated by 7% on a rolling 12-month basis, with a backlog growth of 20% year-over-year [4] - EMEA orders increased by over 30%, driven by data center orders, including sizable orders in the Middle East [22] - The global liquid cooling market is expected to grow around 35% annually through 2028, driven by demand for high-performance AI chips [11][45] Company Strategy and Development Direction - The company outlined a strategy with three pillars: lead, invest, and execute for growth, focusing on capitalizing on key megatrends [6] - The acquisition of Boyd's thermal business aligns with the strategy to invest for growth, particularly in the data center market [7][15] - The company aims to provide comprehensive solutions for data centers, integrating power distribution and cooling technologies [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained growth due to strong demand indicators and a robust backlog [5][17] - The company reaffirmed its 2025 guidance, expecting continued order acceleration and strong visibility into future growth [25][27] - Management highlighted the importance of integrating various systems to enhance technical performance and rapid deployments in data centers [14] Other Important Information - The company is targeting a 100 basis point margin expansion for 2025, with a long-term growth target of 6%-9% CAGR through 2030 [18][26] - The Boyd acquisition is expected to generate $1.7 billion in sales next year at an adjusted EBITDA margin of 25% [7][49] Q&A Session Summary Question: Outlook for Electrical Americas LTM orders - Management remains bullish about orders growth in Q4, supported by strong project tracking and a growing negotiations pipeline [29][30] Question: Impact of AI data centers on sales per megawatt - The company expects to reach close to $3 million per megawatt at the high end of the guide with the addition of Boyd [34][38] Question: Drivers of aerospace performance and margins - Aerospace is on track to meet 2030 margin commitments, with historical wins in defense platforms and ongoing improvements in manufacturing efficiency [59][61]

Financial Performance - Eaton reported record adjusted earnings per share of $3.07 in Q3 2025, an increase of 8% compared to Q3 2024[5] - The company's segment margins reached a quarterly record of 25.0%, up 70 bps from Q3 2024[5] - Sales for Q3 2025 were $6.988 billion, a 10% increase over Q3 2024, with organic growth contributing 7%[28] - Eaton reaffirms its 2025 full-year adjusted earnings per share outlook of $11.97 to $12.17 and organic growth of 8.5% to 9.5%[6, 40] Acquisition and Market Growth - Eaton signed an agreement to acquire Boyd Thermal, a leader in liquid cooling solutions, with estimated 2026 sales of $1.7 billion and an adjusted EBITDA margin of approximately 25%[6, 10] - The data center liquid cooling market is projected to grow at approximately 35% annually through 2028, reaching over $6 billion[12] Segment Performance - Electrical Americas segment sales increased by 15% to $3.410 billion in Q3 2025, with organic growth of 9%[29, 31] - Aerospace segment sales increased by 14% to $1.079 billion in Q3 2025, with organic growth of 13%[33] - Vehicle segment sales decreased by 8% to $639 million in Q3 2025, with organic decline of 9%[34, 35] - eMobility segment sales decreased by 19% to $136 million in Q3 2025, with organic decline of 20%[36]

Core Insights - Eaton reported quarterly earnings of $3.07 per share, exceeding the Zacks Consensus Estimate of $3.06 per share, and up from $2.84 per share a year ago, representing an earnings surprise of +0.33% [1] - The company posted revenues of $6.99 billion for the quarter ended September 2025, which was below the Zacks Consensus Estimate by 0.98%, but an increase from $6.35 billion year-over-year [2] - Eaton's stock has gained approximately 16.5% since the beginning of the year, matching the S&P 500's performance [3] Earnings Outlook - The future performance of Eaton's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is $3.36 on revenues of $7.11 billion, and for the current fiscal year, it is $12.08 on revenues of $27.57 billion [7] Industry Context - The Manufacturing - Electronics industry, to which Eaton belongs, is currently ranked in the top 17% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8] - The correlation between near-term stock movements and earnings estimate revisions suggests that tracking these revisions can provide insights into stock performance [5]

Segment margins were 25.0%, a quarterly record and a 70-basis point improvement over the third quarter of 2024. Exhibit 99 Eaton Reports Record Third Quarter 2025 Results, with Accelerating Orders and Continued Backlog Growth DUBLIN — November 4, 2025 — Intelligent power management company Eaton Corporation plc (NYSE:ETN) today announced that third quarter 2025 earnings per share were $2.59. Excluding charges of $0.11 per share related to acquisitions and divestitures, $0.26 per share related to intangible ...

Group 1: Market Overview - Amazon has announced a significant $38 billion computing deal with OpenAI, which will enhance OpenAI's access to computing power using Nvidia GPUs [5][1] - The Federal Reserve is currently evaluating its rate path, with a 69% chance of a rate cut in December being priced in by the markets, despite some Fed officials expressing doubts about further cuts this year [6][4] - The Dow is down approximately 213 points, while the S&P 500 shows a slight gain, indicating a mixed market performance [115][3] Group 2: Economic Indicators - A report highlights slowing income growth for young workers, with real wage gains for those aged 25 to 29 being around 2%, which is significantly impacted by higher inflation [100][102] - The job market is experiencing a low hiring and low firing environment, which is particularly affecting young workers who rely on job switching for career advancement [105][106] - Concerns are raised about the structural shifts in employment due to AI, particularly in the tech sector, which may not align with traditional business cycle dynamics [26][32] Group 3: Federal Reserve Insights - Chicago Fed President Austin Goulby expressed unease about front-loading rate cuts, citing inflation concerns and the need for careful observation of economic indicators [8][12] - Goulby noted that inflation has been above target for over four years, with recent core inflation running at an annualized rate of 3.6% [14][29] - The Fed is balancing its dual mandate of managing inflation while supporting employment, which is currently in tension due to the labor market dynamics [106][113] Group 4: Corporate Developments - Microsoft has signed a data center deal with Iron, a Neocloud provider, continuing the trend of significant investments in AI infrastructure [6][5] - Cisco has received an upgrade from UBS, driven by a multi-year growth cycle fueled by AI infrastructure demand [74] - Core Mining is acquiring New Gold for approximately $7 billion in an all-stock deal, reflecting ongoing consolidation in the mining sector [79]

Core Viewpoint - Eaton, a power management company, is acquiring Boyd Corporation for $9.5 billion, enhancing its position in the data center market [1][4]. Company Summary - Eaton is focused on expanding its footprint in the data center sector through the acquisition of Boyd Corporation, which specializes in thermal cooling solutions [1][3]. - Boyd Corporation's thermal business is crucial for preventing data center overheating, with a significant emphasis on liquid cooling technology [2][4]. Industry Summary - The data center industry is experiencing growth, with liquid cooling becoming increasingly important for next-generation data centers [3][4]. - Boyd Thermal is projected to generate sales of $1.7 billion by 2026, with $1.5 billion coming from liquid cooling solutions, indicating a strong market demand [4].

Core Insights - Eaton is investing $9.5 billion to acquire Boyd Thermal, targeting the rapidly expanding data-center construction sector [1] Company Summary - The acquisition of Boyd Thermal is part of Eaton's strategy to enhance its capabilities in the data-center construction market [1] Industry Summary - The data-center construction business is experiencing significant growth, prompting major investments from companies like Eaton [1]

Group 1: Pfizer's Antitrust Lawsuit - Pfizer has filed a second federal antitrust lawsuit against Metsera and Novo Nordisk, claiming that Novo Nordisk's proposal to acquire Metsera is an "anticompetitive action" aimed at maintaining its dominance in the GLP-1 treatment market [2][3] - The lawsuit alleges that the proposed acquisition, valued at up to $8.5 billion or $9 billion, violates Section 7 of the Clayton Act and Sections 1 and 2 of the Sherman Act [2][3] - Pfizer is seeking remedies including injunctive relief to prevent the deal from proceeding, following its own $7.3 billion proposed acquisition of Metsera, which has received early antitrust clearance from the FTC [3] Group 2: Eaton's Acquisition in AI Data Center Market - Eaton has announced its agreement to acquire Boyd Thermal for $9.5 billion, targeting the growing AI data center market [4] - Boyd Thermal specializes in liquid cooling technology, which is essential for managing heat in advanced AI infrastructure, and is projected to achieve sales of $1.7 billion in 2026 [5] - The acquisition is expected to enhance Eaton's data center portfolio and become accretive to its adjusted earnings in the second year post-closing [5] Group 3: Federal Reserve's Monetary Policy - Federal Reserve Governor Miran has expressed concerns that the current monetary policy is too restrictive, advocating for a series of 50 basis point interest rate cuts to mitigate risks to the labor market [6][7] - Miran highlighted the importance of a forward-looking approach in policy decisions, suggesting that being overly data-dependent can lead to backward-looking policies [7] Group 4: Global Economic Developments - Alphabet has initiated an eight-part US dollar bond sale, indicating ongoing capital market activity from the tech giant [10] - In Germany, auto parts supplier ZF is preparing for furlough measures and has announced plans to cut up to 14,000 jobs by 2028 due to supply chain challenges [11] - In the commodities market, CME Group's gold prices have consolidated below the 20-day simple moving average, currently near $4,095/oz [13]