Slide 1: Fourth Quarter 2022 Earnings Release
Fourth Quarter 2022 Earnings Release Craig Arnold & Tom Okray | February 8, 2023 © 2022 Eaton. All rights reserved. 1
Slide 2: Forward-looking statements and non-GAAP financial information
Forward-looking statements and non-GAAP financial information This presentation or the comments we make on our call today contain forward-looking statements concerning, among other matters, full year and fourth quarter 2022 adjusted earnings per share, organic revenue growth, segment operating margi
Slide 3: Highlights
Highlights Adjusted earnings per share of $2.06 in Q4 up 20% versus 4Q21 and $7.57 for the full year 2022 up 14% versus 2021 are both all-time records. Sales of $5.4B up 12%, with organic revenue growth of 15%. Record segment margins of 20.8% in 4Q22, up 150 bps versus 4Q21 with incremental margins
Slide 4: 2022 Financial Highlights
2022 Financial Highlights Original Guidance Guidance as of Q3 Actual Organic Revenue 7 – 9% 11 – 13% 13% Segment Margins 19.9 – 20.3% 20.0 – 20.4% 20.2% Adjusted EPS $7.30 – $7.70 $7.51 – $7.61 $7.57 Free Cash Flow $2.35B – $2.55B $2.35B – $2.55B $1.94B © 2022 Eaton. All rights reserved. 4
Slide 5: Over the past decade we have fundamentally changed the company
Over the past decade we have fundamentally changed the company… 2022 Profit 2012 Profit Improved performance ~640 bps expansion in segment margin Vehicle and eMobility Disciplined capital allocation Vehicle ~$13B invested in capex and R&D and Electrical eMobility Americas ~$20B invested in acquisiti
Slide 6: Delivered strong and differentiated total shareholder returns
…which has delivered strong and differentiated total shareholder returns 3-year TSR 5-year TSR 7-year TSR 25% 25% 25% Annualized TSR Annualized TSR Annualized TSR (1) 0% 0% 0% Eaton Peer XLI S&P 500 Eaton S&P 500 Peer XLI Eaton Peer S&P 500 XLI Median Median Median Source: Capital IQ © 2022 Eaton. A
Slide 7: Transformation has positioned ETN in sweet spot of megatrends
Transformation has positioned ETN in sweet spot of megatrends shaping the global economy… Sustainability: Climate change, energy efficiency and increasing regulations require new solutions Electrification & Energy Transition: Increase in global electricity demand, adoption of renewables and changing
Slide 8: Supported by unprecedented government stimulus globally
…supported by unprecedented government stimulus globally to advance energy transition and sustainability Impacting end markets representing more than 50% of Eaton revenues including: Transportation Water, Wastewater EVCI Grid Mod Buildings Residential Airports, Ports, Rail Education, Healthcare, Aff
Slide 9: Financial Summary
Financial Summary (M) 4Q ‘22 4Q ‘21 V ‘21 Sales $5,384 $4,798 12% Segment Operating Profit 1,117 926 21% Segment Operating Margin 20.8% 19.3% 150 bps Adjusted Earnings 825 691 19% Adjusted EPS $2.06 $1.72 20% $2.06 All-time Record Adjusted earnings per share Sales Growth: Organic 15% Acquisition 1%
Slide 10: Electrical Americas Segment
Electrical Americas Segment (M) 4Q ‘22 4Q ‘21 V ‘21 Sales $2,296 $1,917 20% Operating Profit 545 368 48% Operating Margin 23.7% 19.2% 450 bps Orders up 34% on a rolling 12-month basis with growth remaining Sales Growth: at high levels and strength driven by data center, utility and industrial mark
Slide 11: Electrical Global Segment
Electrical Global Segment 4Q ‘22 4Q ‘21 V ‘21 (M) Sales $1,430 $1,424 --- Operating Profit 268 277 (3)% Operating Margin 18.7% 19.5% 80 bps Sales Growth: Orders up 11% on a rolling 12-month basis with particular strength Organic 8% in data center and commercial markets Forex (7)% Backlog growth
Slide 12: Aerospace Segment
Aerospace Segment (M) 4Q ‘22 4Q ‘21 V ‘21 Sales $812 $759 7% Operating Profit 199 189 5% Operating Margin 24.5% 24.9% 40 bps Sales Growth: Order growth accelerated from +22% in Q3 to +24% in Q4 on a rolling 12-month basis driven by strength in commercial and military markets, including aftermarket
Slide 13: Vehicle Segment
Vehicle Segment (M) 4Q ‘22 4Q ‘21 V ‘21 Sales $707 $610 16% Operating Profit 107 100 7% Operating Margin 15.2% 16.4% (120) bps Sales Growth: Organic growth driven by strength in North America auto and truck, along with South America vehicle markets Organic 18% Secured wins in new and sustainable
Slide 14: eMobility Segment
eMobility Segment 4Q ‘22 4Q ‘21 V ‘21 (M) Sales $139 $88 58% Operating Profit (Loss) (2) (8) NM Operating Margin (1.3)% (9.1)% 780 bps Sales Growth: Over $1.4B in wins since eMobility was launched in 2018 Organic 17% Won new $400M program starting in 2024 with European customer Acquisition 44% b
Slide 15: Adding working capital but improving our efficiency
Adding working capital but improving our efficiency © 2022 Eaton. All rights reserved. 15
Slide 16: 2023 Organic Growth and Operating Margin Guidance
2023 Organic Growth and Operating Margin Guidance Segment Organic Growth Guidance Operating Margin Guidance Electrical Americas 8 – 10% 23.1% – 23.5% Electrical Global 4 – 6% 19.5% – 19.9% Aerospace 8 – 10% 23.7% – 24.1% Vehicle 3 – 5% 16.3% – 16.7% eMobility 30 – 40% 2.0% - 4.0% Eaton 7 – 9% 20.7%
Slide 17: 2023 Guidance
2023 Guidance 2023 Full Year Outlook Adjusted Earnings Per Share $8.04 – $8.44 Organic Revenue 7 – 9% Currency Translation ($100)M – ($200)M Segment Operating Margins 20.7% – 21.1% Corporate Expenses $700M Tax Rate on Adjusted Earnings 16% – 17% Operating Cash Flow $3.2B – $3.6B Free Cash Flow $2.6B
Slide 18: 2023 Eaton End Market Assumptions
2023 Eaton End Market Assumptions Electrical Sector Industrial Sector % of Total Eaton Sales % of Total Eaton Sales 2022 FY 2022 FY Data Centers & Distributed IT 14% Electric Vehicles 3% Industrial Facilities 12% Commercial Aerospace 9% Utility 10% ICE Light Vehicles 6% Commercial & Institutional *
Slide 19: Summary
Summary Portfolio transformation positions Eaton for differentiated results across economic cycles. Achieved record financial performance in 2022 and realizing benefits from secular growth tailwinds. Record backlogs and solid orders provides unparalleled visibility for 2023. Record earnings results
Slide 20: © 2022 Eaton. All rights reserved.
© 2022 Eaton. All rights reserved. 20
Slide 21: Appendix
APPENDIX © 2022 Eaton. All rights reserved. 21
Slide 22: © 2022 Eaton. All rights reserved.
© 2022 Eaton. All rights reserved. 22
Slide 23: © 2022 Eaton. All rights reserved.
© 2022 Eaton. All rights reserved. 23