Eaton Corporation, Plc · NYSE:ETN

Eaton — Q3 2024 Earnings Presentation

25 slides from Eaton's earnings presentation, Oct 31, 2024

  1. Slide 1: Third Quarter 2024 Earnings Release

    Third Quarter 2024 Earnings Release Craig Arnold & Olivier Leonetti | October 31, 2024 © 2024 Eaton. All rights reserved. 1

  2. 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 2024 adjusted earnings per share, organic revenue and organic revenue growth, and

  3. Slide 3: Highlights

    Highlights Record adjusted earnings per share of $2.84, up 15% versus 3Q23. Record segment margins of 24.3%, up 70 bps versus 3Q23. Order acceleration to 16% in Electrical Americas and 6% in Aerospace on a rolling 12-month basis. Electrical Americas and Aerospace backlog up 26% and 14% in 3Q24 with

  4. Slide 4: Key drivers of Eaton's long term growth outlook

    Key drivers of Eaton’s long term growth outlook Key Markets Commercial & Data Residential Legacy Megatrends Institutional Center Industrial Buildings Utility Aerospace e-Mobility Vehicle Electrification Energy Transition Digitalization Infrastructure Spending Reindustrialization Green Regulations ©

  5. Slide 5: Mega project announcements continue to accelerate

    Mega project announcements continue to accelerate 3Q’24 totals exceed $175B on 49 projects, up 48% over 2Q’24 $1.6T Backlog up 30% YoY, reaching nearly ~$1.8T and 2025 targeted starts set to hit another record high in cumulative Megaproject announcements have accelerated in North America the past 6

  6. Slide 6: We now expect incremental capacity investments of $1.5B

    We now expect incremental capacity investments of $1.5B… End markets Commercial & Data Industrial Residential Utility Product Families Institutional Center Facilities Buildings Transformers Panelboards, switchboards, and assemblies UPS Breakers …allowing us the flexibility to shift production across

  7. Slide 7: Residential end markets shaped by electrification, energy transition, and new codes

    Residential end markets are being shaped by increased electrification, energy transition, and new codes and standards Key Drivers: Residential End Market - Indexed Growth Americas Resi Market • More stringent safety requirements and regulations that mandate energy efficiency • Age of existing housin

  8. Slide 8: Our Home as a Grid approach

    Our Home as a Grid approach effectively manages the growing need for energy production and consumption… Home Energy Management Software Increasing number of Smart Load Generating clean electricity electrical loads and sources Center with renewables Heat pumps, electric water heaters, Solar PV, batte

  9. Slide 9: Collaboration with Tesla for home energy storage deployments

    …and we recently launched a collaboration with Tesla to streamline new and retrofit home energy storage deployments Eaton’s AbleEdge suite provides intelligent load management for North American home energy storage and solar installations, a market growing at 30% each year Tesla’s Powerwall will sup

  10. Slide 10: Financial Summary

    Financial Summary (M) 3Q ‘24 3Q ‘23 V ‘23 Sales $6,345 $5,880 8% Segment Operating Profit 1,544 1,386 11% Segment Operating Margin 24.3% 23.6% 70 bps Adjusted Earnings 1,132 994 14% Adjusted EPS $2.84 $2.47 15% $6,345M Q3 Record Quarterly Sales Sales Growth: Organic 8% $1,544M Record Quarterly Segme

  11. Slide 11: Electrical Americas Segment

    Electrical Americas Segment (M) 3Q ‘24 3Q ‘23 V ‘23 Sales $2,963 $2,594 14% Operating Profit 892 719 24% Operating Margin 30.1% 27.7% 240 bps Record sales, operating profit and margin. Sales Growth: Order acceleration, up 16% on a rolling 12-month basis. Organic 14% Acquisition -- Backlog up 26% yea

  12. Slide 12: Electrical Global Segment

    Electrical Global Segment (M) 3Q ‘24 3Q ‘23 V ‘23 Sales $1,573 $1,503 5% Operating Profit 294 328 (10)% Operating Margin 18.7% 21.8% (310)bps Orders up 6% on a rolling 12-month basis. Sales Growth: Backlog up 19% year-over-year. Organic 4% Forex 1% Book-to-bill ratio of 1.1 on a rolling 12-month bas

  13. Slide 13: Aerospace Segment

    Aerospace Segment (M) 3Q ‘24 3Q ‘23 V ‘23 Sales $946 $867 9% Operating Profit 230 209 10% Operating Margin 24.4% 24.1% 30 bps Record operating profit and Q3 record sales. Sales Growth: Backlog up 14% year-over-year. Organic 8% Forex 1% Book-to-bill ratio of 1.1 on a rolling 12-month basis. Total 9%

  14. Slide 14: Vehicle Segment

    Vehicle Segment (M) 3Q ‘24 3Q ‘23 V ‘23 Sales $696 $753 (7)% Operating Profit 135 131 3% Operating Margin 19.4% 17.4% 200 bps Strong operational performance producing Sales Growth: higher profit on lower sales year-over-year. Organic (6)% Forex (1)% Total (7)% © 2024 Eaton. All rights reserved. 14

  15. Slide 15: eMobility Segment

    eMobility Segment (M) 3Q ‘24 3Q ‘23 V ‘23 Sales $167 $163 2% Operating Profit / (Loss) (7) (0) -- Operating Margin (4.4)% (0)% (440) bps Sales Growth: Organic 1% Forex 1% Total 2% © 2024 Eaton. All rights reserved. 15

  16. Slide 16: Electrical and Aerospace backlogs remain robust and growing

    Electrical and Aerospace backlogs remain robust and growing Electrical Sector Historical Backlog Aerospace Segment Historical Backlog ($ blns) ($ blns) $14.00 $8.00 $12.00 $11.8 $7.00 $6.00 $10.00 $5.00 $8.00 $4.00 $3.7 $6.00 $3.00 $4.00 $2.8 $1.4 $2.00 $2.00 $1.00 $0.00 $0.00 Q4 '19 Q4 '20 Q4 '21 Q

  17. Slide 17: 2024 Organic Growth and Operating Margin Guidance

    2024 Organic Growth and Operating Margin Guidance Organic Growth Guidance Operating Margin Guidance Segment Electrical Americas 13 – 14% 29.4 – 29.8% Electrical Global 2.5 – 4.5% 18.5 – 18.9% Aerospace 8.5 – 10.5% 22.8 – 23.2% Vehicle (3) – (5)% 17.8 – 18.2% eMobility 5 – 7% (1) – 1% Eaton 8 – 9% 23

  18. Slide 18: 2024 Guidance

    2024 Guidance 4th Quarter Outlook 2024 FY Outlook Adjusted Earnings Per Share $2.78 – $2.84 $10.75 – $10.81 Organic Revenue 6.0 – 7.0% 8 – 9% Segment Operating Margins 23.6 – 24.0% 23.5 – 23.9% Operating Cash Flow N/A $4.2B – $4.4B Free Cash Flow N/A $3.4B – $3.6B Share Repurchases N/A $2.5B © 2024

  19. Slide 19: End market growth assumptions – 2025 Initial Assumptions

    Eaton’s end market growth assumptions – 2025 Initial Assumptions % of Total % of Total Eaton Sales Eaton Sales Data Centers & Distributed IT 17% Commercial Aerospace 9% Utility 11% Electric Vehicles 3% Industrial Facilities 12% Defense Aerospace 6% Commercial & Institutional 20% ICE Light Vehicles 4

  20. Slide 20: Initial Thoughts on 2025

    Initial Thoughts on 2025 Expect overall market growth of ~6 – 8% Incremental contribution margin of ~30 – 35% on organic growth Interest, Pension and Other Corporate expenses ~20c headwind and Tax Rate estimated at ~18% Multi-year restructuring program ~$50M costs and ~$75M savings Capital spending

  21. Slide 21: Summary

    Summary Robust project activity tied to megatrends continues • Reindustrialization, data centers markets and infrastructure spending were strong contributors We delivered a strong third quarter of financial results • Record sales, segment operating margin, adjusted earnings and adjusted EPS Continue

  22. Slide 22: © 2024 Eaton. All rights reserved.

    © 2024 Eaton. All rights reserved. 22

  23. Slide 23: Appendix

    Appendix © 2024 Eaton. All rights reserved. 23

  24. Slide 24: 2024 Guidance – Additional Modeling Assumptions

    2024 Guidance – Additional Modeling Assumptions 4th Quarter Outlook 2024 FY Outlook Currency Translation ~$20M ~$0 Corporate Expenses ~$5M more than 4Q23 $720M Tax Rate on Adjusted Earnings 17 – 18% 17 – 18% Capex N/A $800M © 2024 Eaton. All rights reserved. 24

  25. Slide 25: © 2024 Eaton. All rights reserved.

    © 2024 Eaton. All rights reserved. 25

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