Eaton Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Third quarter 2026 net sales reached a record $8.947 billion, a 28% increase from $6.988 billion in the third quarter of 2025.
• Organic sales growth was 19%, driven by 8% growth from acquisitions and 1% growth from foreign exchange.
• Diluted earnings per share (EPS) were $2.77, compared to $2.59 in the prior year period.
• Adjusted diluted EPS was a record $3.68, excluding $0.62 per share for intangible amortization, $0.30 per share for acquisition/divestiture charges, and $0.01 per share income from a multi-year restructuring program.
• Segment margins reached a record 25.3%, up 30 basis points from the third quarter of 2025 and above the high end of guidance.
• Operating cash flow was $1.31 billion, and free cash flow was $1.03 billion for the quarter.
• Net income attributable to Eaton ordinary shareholders was $1.078 billion for the quarter, compared to $1.010 billion in the prior year.
• Total backlog grew 46% year-over-year in the Electrical segment and 33% in the Aerospace segment.
• Twelve-month rolling average organic orders increased 39% in Electrical Americas, 51% in Electrical Global, and 20% in Aerospace.

Guidance and Future Outlook:

• Full year 2026 organic growth guidance raised to 13-15%.
• Full year 2026 segment margins guidance set at 24.1-24.5%.
• Full year 2026 earnings per share guidance set at $10.39 to $10.49.
• Full year 2026 adjusted earnings per share guidance set at $13.70 to $13.80.
• Fourth quarter 2026 organic growth guidance set at 13-15%.
• Fourth quarter 2026 segment margins guidance set at 25.4-25.8%.
• Fourth quarter 2026 earnings per share guidance set at $3.28 to $3.38.
• Fourth quarter 2026 adjusted earnings per share guidance set at $4.05 to $4.15.

Business Segments and Product Lines:

• Electrical Americas: Sales reached a record $4.172 billion, up 22% organically; operating profits were $1.243 billion (up 20%); operating margins were 29.8%, up 230 basis points sequentially.
• Electrical Global: Sales reached a record $2.727 billion, up 58% from the prior year (27% organic, 31% from Boyd Thermal acquisition); operating profits were $576 million (up 75%); operating margins were 21.1%, up 200 basis points.
• Aerospace: Sales reached a record $1.196 billion, up 11% (6% organic, 5% from Ultra PCS acquisition); operating profits were $298 million (up 6%); operating margins were 24.9%, down 100 basis points.
• Mobility: Sales were $852 million, up 9% organically; operating profits were $146 million (up 39%); operating margins were 17.2%, up 370 basis points.
• The book-to-bill ratio for Electrical businesses remained strong at 1.2 on a rolling twelve-month basis.
• The book-to-bill ratio for the Aerospace segment remained strong at 1.2 on a rolling twelve-month basis.

Market and Competitive Landscape:

• Demand remained robust across key end markets including data center, utility, industrial, commercial, institutional, machine building, residential, aerospace, and mobility.
• Broad end-market strength drove record order dollars across all segments.
• Eaton is capitalizing on global growth trends of electrification and digitalization.

Risks and Challenges:

• Forward-looking statements are subject to risks including acquisition integration, geopolitical instability, labor strikes, wars, and natural disasters.
• Risks include inflation, raw material shortages, supply chain reliance, cybersecurity attacks, and regulatory changes.
• Specific risks include the ability to complete the separation of the Mobility business via a Reverse Morris Trust transaction and potential impacts from technology disruptions or end market volatility.

Management Commentary and Tone:

• CEO Paulo Ruiz stated that strong performance reflects focus, discipline, and capacity expansion to meet accelerating customer demand.
• Management expressed confidence in the remainder of the year, citing record orders, expanding backlog, and strong momentum in Electrical businesses.
• The company emphasized its position to help customers deliver on critical power infrastructure investments.

Other Key Points:

• Acquisition of COL Group: Eaton announced an agreement to acquire COL Group for €810 million ($921 million) to expand European power distribution capabilities for data center and utility markets; expected to close in Q1 2027.
• Planned Separation of Mobility Business: Eaton entered into definitive agreements with Dana Incorporated to separate the Mobility business via a Reverse Morris Trust transaction, expected to close in the first four months of 2027. Eaton shareholders are expected to own 50.1% of the combined company.
• Recent Acquisitions: The company completed the acquisitions of Boyd Thermal ($9.55 billion), Ultra PCS ($1.53 billion), Fibrebond ($1.43 billion), and Resilient Power Systems ($86 million) during the reporting period or prior year.
• Investment in SPAN: Eaton invested $75 million in January 2026 for an approximate 7% stake in SPAN, a manufacturer of smart panel and power controls technology.
• Restructuring Program: A multi-year restructuring program is expected to incur total estimated charges of $430 million, with mature year benefits of $415 million.
• Acquisition Charges: Acquisition integration, divestiture charges, and transaction costs totaled $128 million ($116 million after tax) in the third quarter of 2026.
• Intangible Amortization: Intangible asset amortization expense was $314 million ($242 million after tax) in the third quarter of 2026.