Eaton(US:ETN)2025-11-04 17:02Financial 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]