Eaton(US:ETN)2021-02-02 22:49Financial Data and Key Metrics Changes - Q4 earnings per share were $1.18 on a GAAP basis and $1.28 on an adjusted basis [9] - Q4 revenues were $4.7 billion, down 5% organically but up 3% compared to Q3 [10] - Operating cash flows were $943 million and free cash flows were $845 million, both exceeding prior-year levels [10] - For 2020, free cash flow reached $2.6 billion, an all-time record for free cash flow to sales at 14.3% [10][25] Business Line Data and Key Metrics Changes - Electrical Americas Segment: Revenues down 18%, with a 1% decline in organic revenues and a 17% decrease due to divestiture of Lighting [12] - Electrical Global Segment: Revenues declined 5%, with a 7% decline in organic revenues, partially offset by 2% positive currency [14] - Hydraulics Segment: Revenues up 2% organically, with a 25% increase in Q4 orders [17] - Aerospace Segment: Revenues declined 13%, down 25% organically, partially offset by a 11% increase from the acquisition of Souriau [19] - Vehicle Segment: Revenues declined 7%, including a 1% organic decline [21] - e-Mobility Segment: Revenues increased 13%, including 11% organic growth [23] Market Data and Key Metrics Changes - Data center orders in Electrical Americas were up double-digit, contributing to a 12% growth in backlog [13] - Orders in Electrical Global declined 6% on a rolling 12-month basis, with strength in data centers and residential markets [15] - The Hydraulics segment saw strong recovery in China and Europe [17] Company Strategy and Development Direction - The company announced acquisitions of Tripp Lite for $1.65 billion and Cobham Mission Systems for $2.8 billion, aimed at enhancing profitability and growth outlook [8][9] - The focus remains on transforming the portfolio towards higher growth and higher margins, with 85% of segment profits coming from Electrical and Aerospace [35] - The company is positioned to capitalize on trends such as energy transition and electrification [34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of COVID-19 on operations but expressed confidence in the recovery and backlog growth [41] - The guidance for 2021 includes organic growth expectations of 4% to 6%, with specific segments expected to perform strongly [27] - The company anticipates strong cash flow and margin improvements, with a target operating margin of 17.8% for 2021 [28][35] Other Important Information - The company launched a $280 million multi-year restructuring program aimed at reducing fixed costs [25] - The new definition of adjusted EPS includes amortization of intangibles, providing a clearer performance measure [29] Q&A Session Summary Question: Order trends in Electrical segment - Management noted that the Electrical Americas business was impacted by COVID-19 and supply chain issues, but residential and data center markets showed strong growth [41][42] Question: Outlook for margins - Management indicated that margins are expected to improve due to restructuring benefits and cost containment measures [43][44] Question: Changes in leadership and strategic direction - Management highlighted that new appointments are aimed at positioning the company to capitalize on major trends like energy transition and connectivity [49][50] Question: e-Mobility customer base - Management clarified that the focus is on technology-driven solutions rather than geographic markets, targeting both light and commercial vehicle markets [52] Question: Performance of acquisitions during the pandemic - Both Tripp Lite and Cobham Mission Systems performed well during the pandemic, with Cobham's military business remaining strong [73]