Eaton Reports Record Second Quarter 2022 Results

DUBLIN, Ireland … Power management company Eaton Corporation plc (NYSE:ETN) today announced that earnings per share were $1.50 for the second quarter of 2022. Excluding charges of $0.24 per share related to intangible amortization, $0.11 per share related to acquisitions and divestitures, and $0.02 per share related to a multi-year restructuring program, adjusted earnings per share of $1.87 were a quarterly record and up 9% over the second quarter of 2021.

 

Sales in the second quarter of 2022 were $5.2 billion, flat to the second quarter of 2021. Organic sales were up 11% and acquisitions added 2%, which was offset by 11% from the divestiture of the Hydraulics business and 2% from negative currency translation.

 

Second quarter segment margins were 20.1%, a quarterly record and above the high end of the guidance. This represents a 150-basis point improvement over the second quarter of 2021. Operating cash flow in the second quarter of 2022 was $340 million and free cash flow was $201 million.

 

Craig Arnold, Eaton chairman and chief executive officer, said, “We had another record quarter amid the external challenges of today’s environment. Robust order growth in Electrical and Aerospace demonstrates continuing strong demand. This performance validates our active portfolio management strategy aimed at capitalizing on secular growth drivers and maintaining resilience amid potential economic weakness. I want to thank our dedicated teams for their strong execution.”

 

For the full year 2022, the company is raising its organic growth guidance from 9-11% to 11-13% and raising adjusted earnings per share to between $7.36 and $7.76. For the third quarter of 2022, the company anticipates organic growth of 13-15% and adjusted earnings per share of between $1.95 and $2.05.

 

Sales for the Electrical Americas segment were $2.1 billion, up 15% from the second quarter of 2021. Organic sales were up 16%, partially offset by negative currency translation of 1%. Operating profits were $495 million, up 26% over the second quarter of 2021. Operating margins in the quarter were 23.2%, up 190 basis points over the second quarter of 2021.

 

The twelve-month rolling average of orders remained strong in the second quarter and was up 29% organically, with strength across all end markets. Backlog at the end of June remained strong and was a record, up 89% organically over June 2021.

 

Sales for the Electrical Global segment were $1.5 billion, up 5% over the second quarter of 2021. Organic sales were up 12%, partially offset by negative currency translation of 7%. Operating profits were $282 million, up 9% over the second quarter of 2021. Operating margins in the quarter were 18.9%, up 60 basis points over the second quarter of 2021.

 

The twelve-month rolling average of orders in this segment also remained strong in the second quarter and was up 19% organically, driven by strength across all end markets. At the end of June, backlog was also strong, up 38% organically over June 2021.

 

Aerospace segment sales were $742 million, up 19% from the second quarter of 2021. Organic sales were up 10% and the acquisition of Mission Systems added 12%, which was partially offset by 3% negative currency translation. Operating profits were $163 million, up 24% from the second quarter of 2021. Operating margins in the quarter were 21.9%, up 90 basis points over the second quarter of 2021.

 

The twelve-month rolling average of orders continued to be strong in the second quarter and was up 19% organically, driven by strength in commercial OEM and commercial aftermarket. Backlog at the end of June was up 12% organically over June 2021.

 

The Vehicle segment posted sales of $708 million, up 5% from the second quarter of 2021. Organic sales were up 7%, partially offset by 2% from negative currency translation. Operating profits were $108 million and operating margins in the quarter were 15.3%.

 

eMobility segment sales were $136 million, up 55% over the second quarter of 2021. Organic sales were up 11% and the acquisition of Royal Power Solutions added 46%, which was partially offset by 2% negative currency translation. The segment recorded an operating loss of $2 million, reflecting continued investment in research and development and start-up costs associated with new program wins. Operating margins improved 530 basis points, driven by higher volumes and the impact of the Royal Power Solutions acquisition.

 

Eaton is an intelligent power management company dedicated to improving the quality of life and protecting the environment for people everywhere. 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 accelerating the planet’s transition to renewable energy, helping to solve the world’s most urgent power management challenges, and doing what’s best for our stakeholders and all of society.

 

Founded in 1911, Eaton has been listed on the NYSE for nearly a century. We reported revenues of $19.6 billion in 2021 and serve customers in more than 170 countries. For more information, visit www.eaton.com. Follow us on Twitter and LinkedIn.

Notice of conference call: Eaton’s conference call to discuss its second quarter results is available to all interested parties as a live audio webcast today 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 prior to 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 the third quarter and full year 2022 adjusted earnings per share and organic sales growth, as well as anticipated restructuring program charges. 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: the course of the COVID-19 pandemic globally and government actions related thereto; 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; 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.

 

The company’s comparative financial results for the three months ended June 30, 2022, are available here.

 

Contact: Jennifer Tolhurst, Media Relations, +1 (440) 523-4006