Latest news with #PauloRuiz
CNBC
6 days ago
- Business
- CNBC
We're upgrading Eaton as shares of the industrial AI winner fall on earnings
Electrical equipment supplier Eaton , whose products are essential to AI data centers, on Tuesday reported a solid second quarter and raised its full-year outlook. Nevertheless, the stock tumbled in response because the positive results fell short of the sky-high bar that Wall Street had set. Adjusted earnings per share for the second quarter ended in June rose 8% from the year-ago period to $2.95, beating the LSEG compiled analyst consensus estimate by three cents. Revenue rose 10% to $7.03 billion, beating the LSEG compiled analyst consensus estimate of $6.9 billion. Organic sales grew 8%, exceeding the Bloomberg estimate for a 7.5% increase. Shares of Club name fell more than 6% on Tuesday in reaction to the small beat and raise. With the stock's excessive optimism finally washed out, we're taking a more opportunistic stance on Eaton. Based on the updated spending plans of American tech giants and everything we heard from Eaton on Tuesday, it's clear the AI buildout isn't slowing down. ETN YTD mountain Eaton's year-to-date stock performance. Bottom line Eaton entered earnings season with lofty expectations because beats and raises have become the norm for this power management company with heavy ties to attractive end markets like data centers, utilities and aerospace. The quarter was mostly clean, but the market took issue with two things looking ahead. First was the third-quarter outlook, which was not better than the consensus expectation. The second issue was its 2025 profit guidance. Even though Eaton raised the midpoint of its full-year adjusted earnings per share outlook, management shaved a little off the top end, citing "some lingering macro uncertainties and also tariff question marks." Still, Eaton has a very bright future. If you dig deeper into its full-year guide, it implies a strong uplift in the fourth quarter. Sometimes it's right for investors to question a pick up later in the year beyond normal seasonality, but Eaton is a special situation. By the fourth quarter, Eaton should see more benefits from previous capacity investments, which will allow it to ship more product. "We have around a dozen projects that are ongoing. Six of them, the construction is done," CEO Paulo Ruiz explained on the earnings call, his first since taking over for Craig Arnold in June. Some of those capacity investments are for transformers, switchgear, and other data center-focused electrical equipment that are in short supply. Eaton Why we own it: Eaton has exposure to several important megatrends like electrification, energy transition, and infrastructure spending. It is also a player in generative AI, where data centers use its power management solutions and electrical equipment to keep up with the heightened demand for more computing power. We see a long runway for growth. Competitors : Parker-Hannifin , DuPont and Honeywell Most recent buy : April 3, 2025 Initiated : Nov. 15, 2023 We also found the conference call to be quite bullish, with management focusing on how it is playing offense through investing in growth. For example, the executive team outlined the strategic rationale behind its two recent acquisitions — a double-digit grower in aerospace and another that improves its power distribution services for data centers. Ruiz also talked up important partnerships with Club name Nvidia and Siemens Energy , which makes the supply-constrained gas turbines used to generate electricity. Given the strong growth that lies ahead coupled with a stock that has pulled back more than 7% from its record close on July 28 — we sold some shares stock into that strength — we want to get more constructive on Eaton at these levels. We are increasing our price target to $400 from $375 and upgrading our rating on the stock to a buy-equivalent 1. Quarterly Commentary Eaton's Electrical Americas segment — covering electrical and industrial components, as well as various power products — delivered a "triple beat," with better-than-expected revenue, profit, and segment margins. On a 12-month basis, orders increased 2% and accelerated from a 4% decline reported in the first quarter. One reason why orders were so robust was the strength in the data center end market, where orders increased about 55% year over year and grew sequentially by more than 20%. Eaton believes it is picking up share in this fast-growing area based on this strong performance. Management also noted particular strength from multi-tenant data center customers. Eaton increased its presence in this market through its recent $1.4 billion acquisition of Fibrebond. Electrical Americas' backlog was also up 17% year over year to $11.4 billion, providing a solid visibility into future growth. Plus, there's still plenty of momentum in mega project announcements, which management says gives them a "multi-year runway" of growth. Electrical Global also reported a triple beat across sales, segment profit, and segment margins, which were a record. Driving the unit's 7% organic growth was strength in the data center and machine original equipment manufacturer (OEM) end markets. Orders fell 1% on a 12-month rolling basis, but the backlog increased 1% versus last year. Aerospace was only a double beat. Sales and segment profit were both better than expected. Margins, however, did not expand as much as anticipated. Still, it was a pretty good number all around with growth in every end market. Orders increased 10% on a rolling 12-month basis, and the backlog was up 16% year over year and 3% sequentially. Guidance Eaton raised its full-year outlook for organic growth and segment operating margins, as well as the midpoint of its adjusted EPS forecast. It now expects organic growth of 8.5% to 9.5%, reflecting an increase of one percentage point at the low end of the prior range. Margins are expected to be 24.1% to 24.5%, an increase from the prior view of 24% to 24.4%. Adjusted EPS is expected to be in the range of $11.97 to $12.17. This new midpoint of $12.07 is up from the prior midpoint of $12.00 and is slightly above the consensus of $12.03. However, the high end of the outlook was lowered in this revised guide. Despite the improved full-year view, the third quarter outlook was a little light. Organic growth is projected to be in the range of 8% to 9%, which is below the Bloomberg consensus estimate of 9.17%. Segment margins are expected to be 24.1% to 24.5%. Adjusted EPS is expected to be in the range of $3.01 to $3.07, which is a miss versus the $3.09 consensus estimate. Although the stock may be selling off due to the light third-quarter outlook and the lowered top end of the 2025 EPS guidance, analysts at Morgan Stanley wrote on Tuesday that it implies a stronger-than-expected fourth quarter. That might be the better number to focus on because Morgan Stanley says it's a sign that the business has a positive trajectory into 2026. (Jim Cramer's Charitable Trust is long ETN and NVDA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Yahoo
6 days ago
- Business
- Yahoo
Eaton shares tumble as Q3 guidance falls short of expectations
-- Intelligent power management company Eaton Corporation plc (NYSE:ETN) reported second-quarter adjusted earnings per share of $2.95, beating analyst estimates of $2.93, while revenue reached a record $7.03 billion, exceeding the consensus estimate of $6.91 billion. Despite the beat, shares tumbled 6.4% as the company's third-quarter guidance disappointed investors. The company posted 8% organic sales growth for the quarter, at the high end of its guidance range. Revenue increased 11% compared to the same quarter last year, with 8% from organic growth, 2% from acquisitions, and 1% from positive currency translation. Segment margins reached a second-quarter record of 23.9%. Eaton's third-quarter guidance of $3.01-$3.07 adjusted EPS fell short of analyst expectations of $3.10, likely driving the significant stock decline. For the full year 2025, the company expects adjusted earnings per share between $11.97 and $12.17, representing 12% growth at the midpoint compared to 2024, and in line with the consensus estimate of $12.04. "I'm proud to share Eaton's strong second quarter results, reflecting our team's commitment to leading and executing on our strategy to become the world's premier power management company," said Paulo Ruiz, Eaton's chief executive officer. "We see sustained demand in the acceleration of orders and increase in our backlog, powering our organic growth." The Electrical Americas segment led growth with record sales of $3.4 billion, up 16% YoY, while Aerospace segment sales reached a record $1.1 billion, up 13%. Both segments showed strong backlog growth, with Electrical Americas up 17% and Aerospace up 16% compared to June 2024. For the full year, Eaton forecasts organic growth of 8.5-9.5% with segment margins between 24.1% and 24.5%. Related articles Eaton shares tumble as Q3 guidance falls short of expectations Clients buying into summer rally, bracing for later pullback, says BofA's Hartnett Apollo economist warns: AI bubble now bigger than 1990s tech mania Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Business Wire
6 days ago
- Business
- Business Wire
Eaton Reports Record Second Quarter 2025 Results, with Strong Organic Growth, Accelerating Orders and Backlog Growth
DUBLIN--(BUSINESS WIRE)--Intelligent power management company Eaton Corporation plc (NYSE:ETN) today announced that second quarter 2025 earnings per share were $2.51, a second quarter record and up 1% over the second quarter of 2024. Excluding charges of $0.25 per share related to intangible amortization, $0.14 per share related to acquisitions and divestitures, and $0.05 per share related to a multi-year restructuring program, adjusted earnings per share of $2.95 were a quarterly record and up 8% over the second quarter of 2024. Sales in the quarter were $7.0 billion, a quarterly record and up 11% from the second quarter of 2024. The sales increase consisted of 8% growth in organic sales, 2% growth from acquisitions, and 1% from positive currency translation. Segment margins were 23.9%, a second quarter record and a 20-basis point improvement over the second quarter of 2024. Operating cash flow was $918 million and free cash flow was $716 million. Paulo Ruiz, Eaton chief executive officer, said, 'I'm proud to share Eaton's strong second quarter results, reflecting our team's commitment to leading and executing on our strategy to become the world's premier power management company. We see sustained demand in the acceleration of orders and increase in our backlog, powering our organic growth. We continue this momentum by investing for growth in technology, acquisitions and partnerships in fast-growing, high-margin markets. We are confident in our strategy and remain well positioned to capitalize on megatrends including digitalization, electrification, reindustrialization and increased defense spending.' Guidance For the full year 2025, the company anticipates: Organic growth of 8.5-9.5% Segment margins of 24.1-24.5% Earnings per share between $10.41 and $10.61, up 11% at the midpoint over the prior year Adjusted earnings per share between $11.97 and $12.17, up 12% at the midpoint over the prior year For the third quarter of 2025, the company anticipates: Organic growth of 8-9% Segment margins of 24.1-24.5% Earnings per share between $2.58 and $2.64 Adjusted earnings per share between $3.01 and $3.07 Business Segment Results Sales for the Electrical Americas segment were a record $3.4 billion, up 16% from the second quarter of 2024. The sales increase consisted of 12% growth in organic sales and 5% growth from acquisitions, which was partially offset by 1% from negative currency translation. Operating profits were a record $987 million, up 15% over the second quarter of 2024, and operating margins in the quarter were 29.5%. The twelve-month rolling average of orders in the second quarter was up 2% organically. Backlog at the end of June remained strong and was up 17% over June 2024. Sales for the Electrical Global segment were a quarterly record $1.8 billion, up 9% from the second quarter of 2024. Organic sales were up 7%, and positive currency translation added 2%. Operating profits were a quarterly record $353 million, up 16% over the second quarter of 2024. Operating margins of 20.1% were a second quarter record, up 110 basis points over the second quarter of 2024. The twelve-month rolling average of orders in the second quarter was down 1% organically. Backlog at the end of June was up 1% over June 2024. On a rolling twelve-month basis, the book-to-bill ratio for the Electrical businesses remained greater than 1.0. Aerospace segment sales were a record $1.1 billion, up 13% from the second quarter of 2024. Organic sales were up 11%, and positive currency translation added 2%. Operating profits were a quarterly record $240 million, up 17% over the second quarter of 2024. Operating margins in the quarter were 22.2%, up 70 basis points over the second quarter of 2024. The twelve-month rolling average of orders in the second quarter was up 10% organically. The backlog at the end of June was up 16% over June 2024. On a rolling twelve-month basis, the book-to-bill ratio for the Aerospace segment remained strong at 1.1. The Vehicle segment posted sales of $663 million, down 8% from the second quarter of 2024, driven entirely by organic sales decline. Operating profits were $113 million and operating margins in the quarter were 17.0%. eMobility segment sales were $182 million, down 4% from the second quarter of 2024. Organic sales declined 7%, which was partially offset by 3% from positive currency translation. The segment recorded an operating loss of $10 million. Eaton is an intelligent power management company dedicated to protecting the environment and improving the quality of life for people everywhere. We make products for the data center, utility, industrial, commercial, machine building, residential, aerospace and mobility markets. We are guided by our commitment to do business right, to operate sustainably and to help our customers manage power ─ today and well into the future. By capitalizing on the global growth trends of electrification and digitalization, we're helping to solve the world's most urgent power management challenges and building a more sustainable society for people today and generations to come. Founded in 1911, Eaton has continuously evolved to meet the changing and expanding needs of our stakeholders. With revenues of nearly $25 billion in 2024, the company serves customers in more than 160 countries. For more information, visit Follow us on LinkedIn. Notice of conference call: Eaton's conference call to discuss its second quarter results is available to all interested parties today as a live audio webcast at 11 a.m. United States Eastern time via a link on Eaton's home page. This news release can be accessed under its headline on the home page. Also available on the website before the call will be a presentation on second quarter results, which will be covered during the call. This news release contains forward-looking statements concerning third quarter and full year 2025 earnings per share, adjusted earnings per share, organic growth and segment margins; anticipated capital deployment; as well as anticipated multi-year restructuring program charges and savings. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside the company's control. The following factors could cause actual results to differ materially from those in the forward-looking statements: a global pandemic; geopolitical tensions or war, unanticipated changes in the markets for the company's business segments; unanticipated downturns in business relationships with customers or their purchases from us; competitive pressures on sales and pricing; supply chain disruptions, unanticipated changes in the cost of material, labor, and other production costs, or unexpected costs that cannot be recouped in product pricing; the introduction of competing technologies; unexpected technical or marketing difficulties; unexpected claims, charges, litigation or dispute resolutions; strikes or other labor unrest at Eaton or at our customers or suppliers; natural disasters; the performance of recent acquisitions; unanticipated difficulties completing or integrating acquisitions; new laws and governmental regulations; interest rate changes; changes in tax laws or tax regulations; stock market and currency fluctuations; and unanticipated deterioration of economic and financial conditions in the United States and around the world. We do not assume any obligation to update these forward-looking statements. Financial Results The company's comparative financial results for the three months ended June 30, 2025, are available on the company's website, EATON CORPORATION plc CONSOLIDATED STATEMENTS OF INCOME Three months ended June 30 Six months ended June 30 (In millions except for per share data) 2025 2024 2025 2024 Net sales $ 7,028 $ 6,350 $ 13,404 $ 12,293 Cost of products sold 4,431 3,940 8,361 7,665 Selling and administrative expense 1,149 1,021 2,197 2,046 Research and development expense 192 196 390 385 Interest expense - net 71 29 103 59 Other income - net (1 ) (32 ) (10 ) (58 ) Income before income taxes 1,186 1,195 2,363 2,195 Income tax expense 203 201 415 379 Net income 982 994 1,947 1,816 Less net income for noncontrolling interests (1 ) (1 ) (2 ) (2 ) Net income attributable to Eaton ordinary shareholders $ 982 $ 993 $ 1,945 $ 1,814 Net income per share attributable to Eaton ordinary shareholders Diluted $ 2.51 $ 2.48 $ 4.96 $ 4.52 Basic 2.52 2.49 4.97 4.54 Weighted-average number of ordinary shares outstanding Diluted 391.4 401.0 392.5 401.5 Basic 390.3 399.2 391.2 399.6 Reconciliation of net income attributable to Eaton ordinary shareholders to adjusted earnings Net income attributable to Eaton ordinary shareholders $ 982 $ 993 $ 1,945 $ 1,814 Excluding acquisition and divestiture charges, after-tax 54 8 61 20 Excluding restructuring program charges, after-tax 18 12 33 61 Excluding intangible asset amortization expense, after-tax 101 83 185 167 Adjusted earnings $ 1,155 $ 1,096 $ 2,225 $ 2,062 Net income per share attributable to Eaton ordinary shareholders - diluted $ 2.51 $ 2.48 $ 4.96 $ 4.52 Excluding per share impact of acquisition and divestiture charges, after-tax 0.14 0.02 0.16 0.05 Excluding per share impact of restructuring program charges, after-tax 0.05 0.03 0.08 0.15 Excluding per share impact of intangible asset amortization expense, after-tax 0.25 0.20 0.47 0.42 Adjusted earnings per ordinary share $ 2.95 $ 2.73 $ 5.67 $ 5.14 See accompanying notes. Expand EATON CORPORATION plc BUSINESS SEGMENT INFORMATION Three months ended June 30 Six months ended June 30 (In millions) 2025 2024 2025 2024 Net sales Electrical Americas $ 3,350 $ 2,877 $ 6,360 $ 5,567 Electrical Global 1,753 1,606 3,362 3,105 Aerospace 1,080 955 2,059 1,826 Vehicle 663 723 1,280 1,447 eMobility 182 189 343 348 Total net sales $ 7,028 $ 6,350 $ 13,404 $ 12,293 Segment operating profit (loss) Electrical Americas $ 987 $ 859 $ 1,891 $ 1,644 Electrical Global 353 305 653 578 Aerospace 240 206 466 407 Vehicle 113 130 209 246 eMobility (10 ) 2 (15 ) (2 ) Total segment operating profit 1,682 1,502 3,204 2,873 Corporate Intangible asset amortization expense (129 ) (106 ) (235 ) (212 ) Interest expense - net (71 ) (29 ) (103 ) (59 ) Pension and other postretirement benefits income 5 9 10 20 Restructuring program charges (24 ) (15 ) (42 ) (78 ) Other expense - net (277 ) (166 ) (471 ) (349 ) Income before income taxes 1,186 1,195 2,363 2,195 Income tax expense 203 201 415 379 Net income 982 994 1,947 1,816 Less net income for noncontrolling interests (1 ) (1 ) (2 ) (2 ) Net income attributable to Eaton ordinary shareholders $ 982 $ 993 $ 1,945 $ 1,814 See accompanying notes. Expand EATON CORPORATION plc CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) June 30, 2025 December 31, 2024 Assets Current assets Cash $ 398 $ 555 Short-term investments 186 1,525 Accounts receivable - net 5,486 4,619 Inventory 4,581 4,227 Prepaid expenses and other current assets 1,246 874 Total current assets 11,897 11,801 Property, plant and equipment 4,032 3,729 Other noncurrent assets Goodwill 15,790 14,713 Other intangible assets 5,227 4,658 Operating lease assets 709 806 Deferred income taxes 621 609 Other assets 2,230 2,066 Total assets $ 40,507 $ 38,381 Liabilities and shareholders' equity Current liabilities Short-term debt $ 1,111 $ — Current portion of long-term debt 1,134 674 Accounts payable 3,762 3,678 Accrued compensation 529 670 Other current liabilities 3,058 2,835 Total current liabilities 9,594 7,857 Noncurrent liabilities Long-term debt 8,751 8,478 Pension liabilities 758 741 Other postretirement benefits liabilities 161 164 Operating lease liabilities 587 669 Deferred income taxes 280 275 Other noncurrent liabilities 1,728 1,667 Total noncurrent liabilities 12,265 11,994 Shareholders' equity Eaton shareholders' equity 18,606 18,488 Noncontrolling interests 41 43 Total equity 18,647 18,531 Total liabilities and equity $ 40,507 $ 38,381 See accompanying notes. Expand EATON CORPORATION plc NOTES TO THE SECOND QUARTER 2025 EARNINGS RELEASE Amounts are in millions of dollars unless indicated otherwise (per share data assume dilution). Columns and rows may not add and the sum of components may not equal total amounts reported due to rounding. Note 1. NON-GAAP FINANCIAL INFORMATION This earnings release includes certain non-GAAP financial measures. These financial measures include adjusted earnings, adjusted earnings per ordinary share, and free cash flow, each of which differs from the most directly comparable measure calculated in accordance with generally accepted accounting principles (GAAP). A reconciliation of each of these financial measures to the most directly comparable GAAP measure is included in this earnings release. Management believes that these financial measures are useful to investors because they provide additional meaningful financial information that should be considered when assessing our business performance and trends, and they allow investors to more easily compare Eaton Corporation plc's (Eaton or the Company) financial performance period to period. Management uses this information in monitoring and evaluating the on-going performance of Eaton and each business segment. The Company's third quarter and full year net income per ordinary share and adjusted earnings per ordinary share guidance for 2025 is as follows: Three months ended September 30, 2025 Year ended December 31, 2025 Net income per share attributable to Eaton ordinary shareholders - diluted $2.58 - $2.64 $10.41 - $10.61 Excluding per share impact of acquisition and divestiture charges, after tax 0.06 0.26 Excluding per share impact of restructuring program charges, after tax 0.11 0.31 Excluding per share impact of intangible asset amortization expense, after tax 0.26 0.99 Adjusted earnings per ordinary share $3.01 - $3.07 $11.97 - $12.17 Expand A reconciliation of net income attributable to Eaton ordinary shareholders per share to adjusted earnings per ordinary share is as follows: Year ended December 31, 2024 Net income per share attributable to Eaton ordinary shareholders - diluted $ 9.50 Excluding per share impact of acquisition and divestiture charges, after tax 0.06 Excluding per share impact of restructuring program charges, after tax 0.40 Excluding per share impact of intangible asset amortization expense, after tax 0.84 Adjusted earnings per ordinary share $ 10.80 Expand A reconciliation of operating cash flow to free cash flow is as follows: (In millions) Three months ended June 30, 2025 Operating cash flow $ 918 Capital expenditures for property, plant and equipment (202 ) Free cash flow $ 716 Expand Note 2. ACQUISITIONS OF BUSINESSES Acquisition of Exertherm On May 20, 2024, Eaton acquired Exertherm, a U.K.-based provider of thermal monitoring solutions for electrical equipment. Exertherm is reported within the Electrical Americas business segment. Acquisition of a 49% stake in NordicEPOD AS On May 31, 2024, Eaton acquired a 49 percent stake in NordicEPOD AS, which designs and assembles standardized power modules for data centers in the Nordic region. Eaton accounts for this investment on the equity method of accounting and it is reported within the Electrical Global business segment. Acquisition of Fibrebond Corporation On April 1, 2025, Eaton acquired Fibrebond Corporation (Fibrebond) for $1.45 billion, net of cash acquired. Fibrebond is a U.S. based designer and builder of pre-integrated modular power enclosures for data center, industrial, utility and communications customers. Fibrebond had sales of approximately $378 million for the twelve months ended February 28, 2025, and is reported within the Electrical Americas business segment. As part of the acquisition, Eaton assumed $240 million of employee transaction and retention awards. Awards vest in six equal annual installments starting in the second quarter of 2025, subject to continued employment with Eaton. Forfeited employee awards are paid to former Fibrebond shareholders annually. Eaton recognizes compensation expense for the awards over the requisite service period and any employee forfeitures owed to former Fibrebond shareholders are expensed immediately in Other income - net. During the second quarter of 2025, compensation expense of $34 million, $11 million and $2 million were included in Costs of products sold, Selling and administrative expense, and Other income - net, respectively. Agreement to Acquire Ultra PCS Limited On June 16, 2025, Eaton signed an agreement to acquire Ultra PCS Limited (Ultra PCS), which is headquartered in the United Kingdom with operations in the U.K. and the United States. Ultra PCS produces electronic controls, sensing, stores ejection and data processing solutions, enabling mission success for global aerospace customers in the air and on the ground. Under the terms of the agreement, Eaton will pay $1.55 billion for Ultra PCS. The transaction is subject to customary closing conditions and regulatory approvals and is expected to close in the first half of 2026. Ultra PCS will be reported within the Aerospace business segment. Agreement to Acquire Resilient Power Systems Inc. On July 11, 2025, Eaton signed an agreement to acquire Resilient Power Systems Inc., a leading North American developer and manufacturer of innovative energy solutions, including solid-state transformer-based technology. Under the terms of the agreement, Eaton will pay $55 million of cash at closing and contingent future consideration and other payments that could reach $95 million based on 2025 through 2028 revenue performance, achievement of technology-based milestones, and in certain cases subject to management's continued employment with Eaton. The transaction is subject to customary closing conditions and is expected to close in the third quarter of 2025. Resilient Power Systems Inc. will be reported within the Electrical Americas business segment. Note 3. ACQUISITION AND DIVESTITURE CHARGES Eaton incurs integration charges and transaction costs to acquire and integrate businesses, and transaction, separation and other costs to divest and exit businesses. Eaton also recognizes gains and losses on the sale of businesses. A summary of these Corporate items is as follows: Three months ended June 30 Six months ended June 30 (In millions except for per share data) 2025 2024 2025 2024 Acquisition integration, divestiture charges and transaction costs $ 70 $ 10 $ 80 $ 27 Income tax benefit 16 3 19 7 Total after income taxes $ 54 $ 8 $ 61 $ 20 Per ordinary share - diluted $ 0.14 $ 0.02 $ 0.16 $ 0.05 Expand Acquisition integration, divestiture charges and transaction costs in 2025 are primarily related to the acquisitions of Fibrebond and Exertherm, transactions completed prior to 2023, and other charges to acquire and exit businesses. Costs in 2025 include $47 million of employee transaction and retention award compensation expense related to the acquisition of Fibrebond. Acquisition integration, divestiture charges and transaction costs in 2024 are primarily related to acquisitions completed prior to 2023, and include other charges and income to acquire and exit businesses. These charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income - net. In Business Segment Information, the charges were included in Other expense - net. Note 4. RESTRUCTURING CHARGES During the first quarter of 2024, Eaton implemented a multi-year restructuring program to accelerate opportunities to optimize its operations and global support structure. These actions will better align the Company's functions to support anticipated growth and drive greater effectiveness throughout the Company. Since the inception of the program, the Company has incurred charges of $244 million. This restructuring program is expected to be completed in 2026 and is expected to incur additional expenses related to workforce reductions of $164 million and plant closing and other costs of $67 million, resulting in total estimated charges of $475 million for the entire program. The Company expects mature year benefits of $375 million when the multi-year program is fully implemented. A summary of restructuring program charges is as follows: Three months ended June 30 Six months ended June 30 (In millions except for per share data) 2025 2024 2025 2024 Workforce reductions $ 7 $ 9 $ 19 $ 68 Plant closing and other 17 7 23 11 Total before income taxes 24 15 42 78 Income tax benefit 5 3 9 18 Total after income taxes $ 18 $ 12 $ 33 $ 61 Per ordinary share - diluted $ 0.05 $ 0.03 $ 0.08 $ 0.15 Expand Restructuring program charges related to the following segments: Three months ended June 30 Six months ended June 30 (In millions) 2025 2024 2025 2024 Electrical Americas $ 9 $ 1 $ 10 $ 8 Electrical Global 5 4 19 27 Aerospace — — — 8 Vehicle 2 4 4 27 eMobility 2 — 2 — Corporate 6 7 7 7 Total $ 24 $ 15 $ 42 $ 78 Expand These restructuring program charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income - net, as appropriate. In Business Segment Information, these restructuring program charges are treated as Corporate items. Note 5. INTANGIBLE ASSET AMORTIZATION EXPENSE Intangible asset amortization expense is as follows: Three months ended June 30 Six months ended June 30 (In millions except for per share data) 2025 2024 2025 2024 Intangible asset amortization expense $ 129 $ 106 $ 235 $ 212 Income tax benefit 28 23 50 45 Total after income taxes $ 101 $ 83 $ 185 $ 167 Per ordinary share - diluted $ 0.25 $ 0.20 $ 0.47 $ 0.42 Expand
CNBC
06-05-2025
- Business
- CNBC
Industrial name with AI ties makes a key move to boost its growing data center business
Dover , an American industrial company founded more than 70 years ago, is strengthening its foothold in a fast-growing market shaping the future of computing. The news Illinois-based Dover on Monday announced an agreement to pay more than $622 million in cash to acquire Sikora — a German firm whose technology supports the build-out of data centers. The deal, expected to close in the second quarter, gives Club name Dover a business that has experienced a double-digit organic growth rate over the last three years. Essentially, Sikora makes specialized systems that measure different parameters in the cables that go into energy-intensive data centers, which have become increasingly important as more companies adopt artificial intelligence and need ever-increasing computing power to run these heavy workloads. Sikora will soon become a part of Dover's pumps and process solutions segment, which includes Dover's thermal connectors for the liquid cooling of data centers. Big picture The announcement follows promising signs about continued data center spending. Eaton , a maker of power management solutions for AI data centers, posted a solid quarter on Friday. During the post-earnings conference call, incoming CEO Paulo Ruiz held Eaton's growth rate steady for its data center business despite macroeconomic uncertainty from President Donald Trump 's tariffs. Ruiz referred to the big tech companies that reported earnings in late April, which included portfolio names Meta Platforms , Amazon , and Microsoft, saying, "all the calls we have had this week, all the hyperscalers have confirmed the level of [capital expenditures]. So, we believe that this 15% [compound annual growth rate] for data centers is still intact." The data center market accounts for 17% of Eaton's overall revenue, which was $6.38 billion in the first quarter. Before that, Dover also had upbeat things to say about its data center exposed business when it reported first-quarter earnings last month. Management forecasted that 20% of Dover's portfolio will grow double digits in aggregate for 2025, in part, citing "strong demand" for its liquid cooling applications in AI data centers. Dover's Q1 revenue totaled $1.87 billion. Unlike Eaton, Dover does not break out its sales based on end market. Bottom line The Sikora deal is a small one for Dover, which has a $23.48 billion market capitalization, but we're happy to see it. "It's not a sexy or fancy business, but that's what Dover is. It's a collection of these niche businesses that are driving better margins and growth," Jeff Marks, the Investing Club's director of portfolio analysis, said Tuesday. "That's what they look to acquire." Sikora did nearly $114 million in sales last year. Even after the Sikora purchase, Dover will still have plenty of cash, which Jeff and Jim Cramer touted as a reason to favor Dover. Case in point: Dover ended Q1 with $2.8 billion of liquid assets — over 50% of that was excess cash. The Club sees two options: "They still have a lot of dry power and excess cash available to either look for more deal-making or maybe we see a step up in the buyback," said Jeff. DOV YTD mountain Dover YTD We continue to own this stock because of its industrial turnaround story with exposure to key mega trends. Not only the data center buildout to support AI computing, but also electrification more broadly. Dover's business in the biopharma industry is also another attractive area. We last added to our Dover position on April 9 at around $150 per share in an extremely oversold market. it was a discipline buy. The trade was shortly before President Trump froze "reciprocal" tariffs at 10% on U.S. trading partners, excluding China. On that news, the overall market surged higher, and Dover jumped 9.7% to roughly $166 apiece that day. Shares of Dover slipped Tuesday but still traded above $171 each. For the Club, we have Dover stock at a buy-equivalent 1 rating and a $210 per share price target. (Jim Cramer's Charitable Trust is long DOV, ETN, META, MSFT, AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. Dover Corp.'s Steam-Thru SIP connectors in use in a biopharmaceutical setting. Dover , an American industrial company founded more than 70 years ago, is strengthening its foothold in a fast-growing market shaping the future of computing.
Business Wire
02-05-2025
- Business
- Business Wire
Eaton Reports Record First Quarter 2025 Results, with Accelerating Organic Growth; Raises Full-Year Organic Growth Guidance
DUBLIN--(BUSINESS WIRE)--Intelligent power management company Eaton Corporation plc (NYSE:ETN) today announced that first quarter 2025 earnings per share were $2.45, a first quarter record and up 20% over the first quarter of 2024. Excluding charges of $0.21 per share related to intangible amortization, $0.04 per share related to a multi-year restructuring program, and $0.02 per share related to acquisitions and divestitures, adjusted earnings per share of $2.72 were a first quarter record and up 13% over the first quarter of 2024. Sales in the quarter were $6.4 billion, a quarterly record and up 7% from the first quarter of 2024. Organic sales were up 9%, which was partially offset by 2% from negative currency translation. Segment margins were 23.9%, a first quarter record and an 80-basis point improvement over the first quarter of 2024. Operating cash flow was $238 million and free cash flow was $91 million. Paulo Ruiz, Eaton president and chief operating officer, said, 'We're pleased with our performance in the quarter, which reflects our team's high standards and focus on delivering on our commitments. Demand in our end markets continues to drive strong organic growth. As we look ahead, we're confident, even amid broader macroeconomic volatility, we're prepared to meet that demand with a proven strategy to invest in our businesses, drive operational excellence and continue our path of growth." Guidance For the full year 2025, the company anticipates: Organic growth of 7.5-9.5% Segment margins of 24.0-24.4% Earnings per share between $10.29 and $10.69, up 10% at the midpoint over the prior year Adjusted earnings per share between $11.80 and $12.20, up 11% at the midpoint over the prior year For the second quarter of 2025, the company anticipates: Organic growth of 6-8% Segment margins of 23.5-23.9% Earnings per share between $2.35 and $2.45 Adjusted earnings per share between $2.85 and $2.95 Business Segment Results Sales for the Electrical Americas segment were a record $3.0 billion, up 12% from the first quarter of 2024. Organic sales were up 13%, which was partially offset by 1% from negative currency translation. Operating profits were a first quarter record $904 million, up 15% over the first quarter of 2024. Operating margins were a first quarter record 30.0%, up 80 basis points over the first quarter of 2024. The twelve-month rolling average of orders in the first quarter was down 4% organically and up 4% on a rolling 12-month basis, excluding one large multi-year data center order in the first quarter of 2024. Backlog at the end of March remained strong, up 6% organically over March 2024. Sales for the Electrical Global segment were a quarterly record $1.6 billion, up 7% from the first quarter of 2024. Organic sales were up 9%, which was partially offset by 2% from negative currency translation. Operating profits were a first quarter record $300 million, up 9% over the first quarter of 2024. Operating margins in the quarter were 18.6%, up 30 basis points over the first quarter of 2024. The twelve-month rolling average of orders in the first quarter was flat organically. Backlog at the end of March was up 5% organically over March 2024. On a rolling twelve-month basis, the book-to-bill ratio for the Electrical businesses remained greater than 1.0. Aerospace segment sales were a record $979 million, up 12% from the first quarter of 2024. Organic sales were up 13%, which was partially offset by 1% from negative currency translation. Operating profits were a first quarter record $226 million, up 12% over the first quarter of 2024, and operating margins in the quarter were 23.1%, a first quarter record. The twelve-month rolling average of orders in the first quarter was up 14% organically. The backlog at the end of March was up 16% organically over March 2024. On a rolling twelve-month basis, the book-to-bill ratio for the Aerospace segment remained strong at 1.1. The Vehicle segment posted sales of $617 million, down 15% from the first quarter of 2024, driven by organic sales decline of 11% and negative currency translation of 4%. Operating profits were $96 million and operating margins in the quarter were 15.5%. eMobility segment sales were a first quarter record $162 million, up 2% over the first quarter of 2024. Organic sales were up 3%, which was partially offset by 1% from negative currency translation. The segment recorded an operating loss of $4 million due to launch costs incurred related to new programs expected to ramp up over the upcoming quarters. Eaton is an intelligent power management company dedicated to protecting the environment and improving the quality of life for people everywhere. We make products for the data center, utility, industrial, commercial, machine building, residential, aerospace and mobility markets. We are guided by our commitment to do business right, to operate sustainably and to help our customers manage power ─ today and well into the future. By capitalizing on the global growth trends of electrification and digitalization, we're helping to solve the world's most urgent power management challenges and building a more sustainable society for people today and generations to come. Founded in 1911, Eaton has continuously evolved to meet the changing and expanding needs of our stakeholders. With revenues of nearly $25 billion in 2024, the company serves customers in more than 160 countries. For more information, visit Follow us on LinkedIn. Notice of conference call: Eaton's conference call to discuss its first quarter results is available to all interested parties today as a live audio webcast at 11 a.m. United States Eastern time via a link on Eaton's home page. This news release can be accessed under its headline on the home page. Also available on the website before the call will be a presentation on first quarter results, which will be covered during the call. This news release contains forward-looking statements concerning second quarter and full year 2025 earnings per share, adjusted earnings per share, organic growth and segment margins; as well as anticipated multi-year restructuring program charges and savings. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside the company's control. The following factors could cause actual results to differ materially from those in the forward-looking statements: a global pandemic; geopolitical tensions or war, unanticipated changes in the markets for the company's business segments; unanticipated downturns in business relationships with customers or their purchases from us; competitive pressures on sales and pricing; supply chain disruptions, unanticipated changes in the cost of material, labor, and other production costs, or unexpected costs that cannot be recouped in product pricing; the introduction of competing technologies; unexpected technical or marketing difficulties; unexpected claims, charges, litigation or dispute resolutions; strikes or other labor unrest at Eaton or at our customers or suppliers; natural disasters; the performance of recent acquisitions; unanticipated difficulties completing or integrating acquisitions; new laws and governmental regulations; interest rate changes; changes in tax laws or tax regulations; stock market and currency fluctuations; and unanticipated deterioration of economic and financial conditions in the United States and around the world. We do not assume any obligation to update these forward-looking statements. Our guidance reflects the expected impacts of announced tariff rates as of April 28, 2025, and assumes the current 90-day pause on reciprocal tariffs are maintained through the end of the year. For purposes of this earnings release and accompanying information, tariff rates on April 28, 2025, include, but are not limited to existing Chapter 1-97 tariffs; Section 301 tariffs; IEEPA tariffs (20% China; 25% Mexico and Canada; 0% USMCA); Section 232 Steel, Aluminum and derivative tariffs (25%); Reciprocal tariffs (125% China; 10% Rest of World; and exceptions for Section 232 and Mexico and Canada goods). The company's comparative financial results for the three months ended March 31, 2025, are available on the company's website, EATON CORPORATION plc BUSINESS SEGMENT INFORMATION Three months ended March 31 (In millions) 2025 2024 Net sales Electrical Americas $ 3,010 $ 2,690 Electrical Global 1,610 1,500 Aerospace 979 871 Vehicle 617 724 eMobility 162 158 Total net sales $ 6,377 $ 5,943 Segment operating profit (loss) Electrical Americas $ 904 $ 785 Electrical Global 300 274 Aerospace 226 201 Vehicle 96 116 eMobility (4 ) (4 ) Total segment operating profit 1,522 1,371 Corporate Intangible asset amortization expense (106 ) (106 ) Interest expense - net (33 ) (30 ) Pension and other postretirement benefits income 5 12 Restructuring program charges (18 ) (63 ) Other expense - net (193 ) (184 ) Income before income taxes 1,177 1,001 Income tax expense 212 179 Net income 965 822 Less net income for noncontrolling interests (1 ) (1 ) Net income attributable to Eaton ordinary shareholders $ 964 $ 821 See accompanying notes. Expand EATON CORPORATION plc (In millions) March 31, 2025 December 31, 2024 Assets Current assets Cash $ 1,777 $ 555 Short-term investments 162 1,525 Accounts receivable - net 5,094 4,619 Inventory 4,392 4,227 Prepaid expenses and other current assets 1,009 874 Total current assets 12,434 11,801 Property, plant and equipment 3,765 3,729 Other noncurrent assets Goodwill 14,851 14,713 Other intangible assets 4,586 4,658 Operating lease assets 813 806 Deferred income taxes 609 609 Other assets 2,148 2,066 Total assets $ 39,206 $ 38,381 Liabilities and shareholders' equity Current liabilities Short-term debt $ 805 $ — Current portion of long-term debt 1,666 674 Accounts payable 3,654 3,678 Accrued compensation 489 670 Other current liabilities 2,908 2,835 Total current liabilities 9,522 7,857 Noncurrent liabilities Long-term debt 7,609 8,478 Pension liabilities 733 741 Other postretirement benefits liabilities 162 164 Operating lease liabilities 669 669 Deferred income taxes 267 275 Other noncurrent liabilities 1,696 1,667 Total noncurrent liabilities 11,136 11,994 Shareholders' equity Eaton shareholders' equity 18,506 18,488 Noncontrolling interests 41 43 Total equity 18,547 18,531 Total liabilities and equity $ 39,206 $ 38,381 See accompanying notes. Expand EATON CORPORATION plc NOTES TO THE FIRST QUARTER 2025 EARNINGS RELEASE Amounts are in millions of dollars unless indicated otherwise (per share data assume dilution). Columns and rows may not add and the sum of components may not equal total amounts reported due to rounding. Note 1. NON-GAAP FINANCIAL INFORMATION This earnings release includes certain non-GAAP financial measures. These financial measures include adjusted earnings, adjusted earnings per ordinary share, and free cash flow, each of which differs from the most directly comparable measure calculated in accordance with generally accepted accounting principles (GAAP). A reconciliation of each of these financial measures to the most directly comparable GAAP measure is included in this earnings release. Management believes that these financial measures are useful to investors because they provide additional meaningful financial information that should be considered when assessing our business performance and trends, and they allow investors to more easily compare Eaton Corporation plc's (Eaton or the Company) financial performance period to period. Management uses this information in monitoring and evaluating the on-going performance of Eaton and each business segment. The Company's second quarter and full year net income per ordinary share and adjusted earnings per ordinary share guidance for 2025 is as follows: A reconciliation of net income attributable to Eaton ordinary shareholders per share to adjusted earnings per ordinary share is as follows: A reconciliation of operating cash flow to free cash flow is as follows: Note 2. ACQUISITIONS OF BUSINESSES Acquisition of Exertherm On May 20, 2024, Eaton acquired Exertherm, a U.K.-based provider of thermal monitoring solutions for electrical equipment. Exertherm is reported within the Electrical Americas business segment. Acquisition of a 49% stake in NordicEPOD AS On May 31, 2024, Eaton acquired a 49 percent stake in NordicEPOD AS, which designs and assembles standardized power modules for data centers in the Nordic region. Eaton accounts for this investment on the equity method of accounting and it is reported within the Electrical Global business segment. Acquisition of Fibrebond Corporation On April 1, 2025, Eaton acquired Fibrebond Corporation (Fibrebond) for $1.45 billion, net of cash acquired. Fibrebond is a U.S. based designer and builder of pre-integrated modular power enclosures for data center, industrial, utility and communications customers. Fibrebond had sales of approximately $378 million for the twelve months ended February 28, 2025 and will be reported within the Electrical Americas business segment. Note 3. ACQUISITION AND DIVESTITURE CHARGES Eaton incurs integration charges and transaction costs to acquire and integrate businesses, and transaction, separation and other costs to divest and exit businesses. Eaton also recognizes gains and losses on the sale of businesses. A summary of these Corporate items is as follows: Acquisition integration, divestiture charges and transaction costs in 2025 are primarily related to the acquisitions of Fibrebond and Exertherm, transactions completed prior to 2023, and other charges to acquire and exit businesses. Acquisition integration, divestiture charges and transaction costs in 2024 are primarily related to acquisitions completed prior to 2023, and include other charges and income to acquire and exit businesses. These charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income - net. In Business Segment Information, the charges were included in Other expense - net. Note 4. RESTRUCTURING CHARGES During the first quarter of 2024, Eaton implemented a multi-year restructuring program to accelerate opportunities to optimize its operations and global support structure. These actions will better align the Company's functions to support anticipated growth and drive greater effectiveness throughout the Company. Since the inception of the program, the Company has incurred charges of $220 million. This restructuring program is expected to be completed in 2026 and is expected to incur additional expenses related to workforce reductions of $171 million and plant closing and other costs of $84 million, resulting in total estimated charges of $475 million for the entire program. The Company expects mature year benefits of $375 million when the multi-year program is fully implemented. A summary of restructuring program charges is as follows: Restructuring program charges related to the following segments: These restructuring program charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income - net, as appropriate. In Business Segment Information, these restructuring program charges are treated as Corporate items. Note 5. INTANGIBLE ASSET AMORTIZATION EXPENSE Intangible asset amortization expense is as follows:
