Adjusted EPS: $2.40 for the quarter, a 28% increase from the previous year, well above the guidance range.
Sales Record: $5.9 billion in sales, marking an 8% increase both in total and organically.
Operating Profit: Grew by 27%, with segment margin expanding by 340 basis points to 23.1%.
Cash Flow: Operating cash flow of $475 million, up 42% year-over-year, and free cash flow of $292 million, up 40% from the prior year.
Electrical Americas Segment: Posted organic sales growth of 17%, with operating margin reaching a record 29.2%.
Electrical Global Segment: Reported flat year-over-year results, with organic growth up 1%, offset by FX headwinds.
Aerospace Segment: Saw a 9% organic growth, with operating margin increasing to 23.1%.
Vehicle Segment: Experienced a 2% decrease in total revenue and a 3% organic decline.
E-Mobility Business: Reported a 7% increase in sales on an organic basis.
Future Guidance
2024 Organic Growth: Expected to be between 7% and 9%, an increase from previous estimates.
2024 Segment Margins: Anticipated to improve by 40 basis points to 23%.
Adjusted EPS for 2024: Projected to be between $10.20 and $10.60, indicating a 14% growth over the prior year.
Q2 Expectations: Organic growth forecasted between 6.5% and 8.5%, with adjusted EPS between $2.52 and $2.62.
Trends, Market Conditions, Sentiment
Key growth drivers: Identified include infrastructure spending, reindustrialization, and utility and data center markets, with six secular growth trends affecting their businesses for years to come.
Mega Projects: Over $1 trillion in announced mega projects, with Eaton winning $1 billion in orders from these and active negotiations for another $1.4 billion.
Data Center Market: Experiencing robust growth, especially with the demand for AI data centers, leading to a revised market growth rate expectation to 25% compounded annually from 2022 to 2025.
Labor Market Concerns: Recognized labor as a potential bottleneck for future projects but noted construction industry labor growth is outpacing the broader economy.
Notable Quotes
Craig Arnold on Earnings: “We’ve delivered another strong quarter this year… well above our guidance range, our record for the quarter, and up 28% from the prior year.”
On Market Positioning: “We continue to think Eaton is uniquely positioned in most of our businesses and are expected to see an acceleration in market-driven growth opportunities for years to come.”
On Adjusting Guidance: “Given our Q1 results, we’re raising our guidance for organic growth, segment margins, and adjusted EPS for the year.”
On Future Prospects: “Our expectations are high, and that’s exactly where they should be… Eaton will deliver higher growth, higher margins, and consistent earnings growth for years to come.”
