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November 1, 2022
DUBLIN – Intelligent power management company Eaton Corporation plc (NYSE:ETN) today announced that earnings per share were $1.52 for the third quarter of 2022. Excluding charges of $0.25 per share related to intangible amortization, $0.21 per share related to acquisitions and divestitures, and $0.04 per share related to a multi-year restructuring program, adjusted earnings per share of $2.02 were a quarterly record and up 15% over the third quarter of 2021.
Sales in the third quarter of 2022 were $5.3 billion, up 8% from the third quarter of 2021. Organic sales were up 15% and acquisitions added 1%, which was partially offset by 4% from the divestiture of the Hydraulics business and 4% from negative currency translation.
Third quarter segment margins were 21.2%, a quarterly record and above the high end of guidance. This represents a 130-basis point improvement over the third quarter of 2021. Operating cash flow in the third quarter of 2022 was $965 million, up 29% over adjusted operating cash flow for the third quarter of 2021, and free cash flow was $830 million, up 36% over adjusted free cash flow in the third quarter of 2021.
Craig Arnold, Eaton chairman and chief executive officer, said, “I’m proud of how we continue to deliver record results across our businesses, driven by strong demand and accelerating organic growth. I want to thank our teams for their efforts in successfully navigating both the challenges and the tailwinds of the current environment. I’m confident in our ability to continue executing our strategy and delivering for our stakeholders.”
The company reaffirms its full year adjusted earnings per share guidance midpoint of $7.56. For the fourth quarter of 2022, the company anticipates organic growth of 13-15% and adjusted earnings per share of between $2.00 and $2.10.
Business Segment Results
Sales for the Electrical Americas segment were $2.2 billion, up 18% from the third quarter of 2021, driven entirely by organic sales growth. Operating profits were $511 million, up 27% over the third quarter of 2021. Operating margins in the quarter were 23.5%, up 180 basis points over the third quarter of 2021.
The twelve-month rolling average of orders accelerated in the third quarter and was up 36% organically, with particular strength in data center, utility and industrial end markets. Backlog at the end of September continued to grow to new record levels, up 97% organically over September 2021.
Sales for the Electrical Global segment were $1.5 billion, up 5% over the third quarter of 2021. Organic sales were up 13%, partially offset by negative currency translation of 8%. Operating profits were $305 million, up 7% over the third quarter of 2021. Operating margins in the quarter were 20.6%, up 50 basis points over the third quarter of 2021.
The twelve-month rolling average of orders also remained strong in the third quarter and was up 14% organically, driven by particular strength in commercial/institutional and industrial end markets. At the end of September, backlog was also strong, up 22% organically over September 2021.
Aerospace segment sales were $768 million, up 3% from the third quarter of 2021. Organic sales were up 8%, partially offset by 5% negative currency translation. Operating profits were a record $185 million, up 13% from the third quarter of 2021. Operating margins in the quarter were 24.0%, up 200 basis points over the third quarter of 2021.
The twelve-month rolling average of orders also accelerated in the third quarter and was up 22% organically, driven by strength in both commercial and military markets. Backlog at the end of September was up 17% organically over September 2021.
The Vehicle segment posted sales of $744 million, up 16% from the third quarter of 2021. Organic sales were up 19%, partially offset by 3% from negative currency translation. Operating profits were $125 million, and operating margins in the quarter were 16.8%.
eMobility segment sales were $137 million, up 63% over the third quarter of 2021. Organic sales were up 17%, and the acquisition of Royal Power Solutions added 49%, which was partially offset by 3% 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 800 basis points, driven by higher organic 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 third 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 third quarter results, which will be covered during the call.
This news release contains forward-looking statements concerning the fourth quarter and full year 2022 adjusted earnings per share, organic sales growth, and anticipated 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: 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.
Financial Results
The company’s comparative financial results for the three months ended September 30, 2022, are available here.
Contact:
Jennifer Tolhurst
Media Relations
+1 (440) 523-4006
jennifertolhurst@eaton.com
Yan Jin
Investor Relations
+1 (440) 523-7558
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