Eaton Corporation, Plc · NYSE:ETN

Eaton — Q3 2023 Earnings Presentation

24 slides from Eaton's earnings presentation, Oct 31, 2023

  1. Slide 1: Third Quarter 2023 Earnings Release

    Third Quarter 2023 Earnings Release Craig Arnold & Tom Okray | October 31, 2023 © 2023 Eaton. All rights reserved. © 2023 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 2023 adjusted earnings per share, organic revenue growth and segment operating ma

  3. Slide 3: Highlights

    Highlights Q3 adjusted earnings per share of $2.47, up 22% year-over-year and above high end of guidance, and segment operating margin of 23.6%, up 240bps, are both all-time records. Raising 2023 adjusted EPS guidance to a range of $8.95-$9.05, up 19% at midpoint, with increased margins of 21.8% at

  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 Buildings Center Industrial Buildings Utility Aerospace e-Mobility Vehicle Electrification Energy Transition Digitalization Infrastructure Spending Reindustrialization Green Regulations © 2023 E

  5. Slide 5: Reindustrialization – momentum continues with mega project announcements

    Reindustrialization – momentum continues with mega project announcements Cumulative U.S./Canada Mega Project ($1B+) Announcements $900 $859B $800 $700 $600 ~3X Billions of USD $500 in cumulative normal run rate $400 mega projects $300 since Jan. 2021 $200 $100 $0 Downstream/Chemicals Semiconductor P

  6. Slide 6: Data Center market dynamics are continuing to support robust market growth

    Data Center market dynamics are continuing to support robust market growth Key Drivers: Data Centers End Market – Indexed Growth • Continued dramatic growth in the amount of data Global Product Addressable Market being generated • Increased power density requirements driven by compute-heavy loads li

  7. Slide 7: Eaton offers broadest portfolio of Data Center power management solutions

    Eaton offers broadest portfolio of Data Center power management solutions Brightlayer Data Centers software suite and service solutions Uninterruptible power systems Medium- and low-voltage switchgear Low-voltage busway 4 3 Power 2 6 5 distribution units 1 Racks, rack-mounted power distribution unit

  8. Slide 8: Eaton is investing more than $1 billion to support growth

    Eaton is investing more than $1 billion to support growth  Supports expansions or improvements in product lines across end markets, including: Utility: three-phase transformers & voltage regulators, line insultation & protection equipment Data Center, Commercial & Institutional and Industrial: low

  9. Slide 9: Financial Summary

    Financial Summary (M) 3Q '23 3Q '22 V '22 Sales $5,880 $5,313 11% Segment Operating Profit 1,386 1,124 23% Segment Operating Margin 23.6% 21.2% 240 bps Adjusted Earnings 994 807 23% Adjusted EPS $2.47 $2.02 22% $2.47 All-Time Record Adjusted earnings per share Sales Growth: Organic 9% $5,880M All-Ti

  10. Slide 10: Electrical Americas Segment

    Electrical Americas Segment (M) 3Q '23 3Q '22 V '22 Sales $2,594 $2,179 19% Operating Profit 719 511 41% Operating Margin 27.7% 23.5% 420 bps  Orders down 3% on a rolling 12-month basis at high levels with Sales Growth: strength driven by data center, industrial facilities and institutional Organic

  11. Slide 11: Electrical Global Segment

    Electrical Global Segment 3Q '23 3Q '22 V '22 (M) Sales $1,503 $1,486 1% Operating Profit 328 305 8% Operating Margin 21.8% 20.6% 120 bps Sales Growth: Organic --  Orders up 1% on a rolling 12-month basis at high levels with strength driven by data center and utility markets Divestiture (1)%  Q3 r

  12. Slide 12: Aerospace Segment

    Aerospace Segment (M) 3Q '23 3Q '22 V '22 Sales $867 $768 13% Operating Profit 209 185 13% Operating Margin 24.1% 24.0% 10 bps Sales Growth:  Orders up 16% on a rolling 12-month basis with particular strength Organic 10% in commercial and defense OEM markets Forex 3%  Backlog growth of 22%  All-t

  13. Slide 13: Vehicle Segment

    Vehicle Segment (M) 3Q '23 3Q '22 V '22 Sales $753 $744 1% Operating Profit 131 125 5% Operating Margin 17.4% 16.8% 60 bps Sales Growth:  Margin expansion of 210bps sequentially, demonstrating Organic (1)% operational improvements. Forex 2%  Continued momentum winning program length extensions and

  14. Slide 14: eMobility Segment

    eMobility Segment 3Q '23 3Q '22 V '22 (M) Sales $163 $137 19% Operating Profit (Loss) -- (2) -- Operating Margin 0.0% (1.5)% 150 bps Sales Growth: Organic 19%  2023 YTD wins of more than $1B of mature year revenues. Forex --  Won additional power protection, power distribution and power connection

  15. Slide 15: Electrical and Aerospace backlogs remain robust and growing

    Electrical and Aerospace backlogs remain robust and growing Electrical Sector Historical Backlog $9.4B Aerospace Segment Historical Backlog $3.1B $1.4B $2.8B Q4:'19 Q4:'20 Q4:'21 Q4:'22 Q3:'23 Q4:'19 Q4:'20 Q4:'21 Q4:'22 Q3:'23 Record backlog provides tremendous visibility and confidence in near ter

  16. 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 16.5 – 18.5% 25.6 – 26.0% Electrical Global 4 – 6% 19.0 – 19.4% Aerospace 10 – 12% 23.7 – 24.1% Vehicle 3 – 5% 16.3 – 16.7% eMobility 20 – 30% 0% – 2% Eaton 11 – 12% 21.6 –

  17. Slide 17: 2023 Guidance

    2023 Guidance 4th Quarter Outlook 2023 FY Outlook Prior Guidance Updated Guidance Adjusted Earnings Per Share $2.39 – $2.49 $8.65 – $8.85 $8.95 – $9.05 Organic Revenue 8 – 10% 10 – 12% 11 – 12% Segment Operating Margins 22.3% – 22.7% 21.1% – 21.5% 21.6% – 22.0% Operating Cash Flow N/A $3.2B – $3.6B

  18. Slide 18: 2023 Guidance Progression

    2023 Guidance Progression February May August October Adjusted EPS $8.04 – $8.44 $8.30 – $8.50 $8.65 – $8.85 $8.95 – $9.05 Organic Revenue 7 – 9% 9 – 11% 10 – 12% 11 – 12% Segment Operating Margins 20.7% – 21.1% 20.7% – 21.1% 21.1% – 21.5% 21.6% – 22.0% Operating Cash Flow $3.2B – $3.6B $3.2B – $3.6

  19. Slide 19: Eaton's end market growth assumptions – 2024 Initial Assumptions

    Eaton’s end market growth assumptions – 2024 Initial Assumptions Electrical Sector % of Total Eaton Sales Industrial Sector % of Total Eaton Sales 2022 FY 2022 FY Data Centers & Distributed IT 14% Commercial Aerospace 9% Utility 10% Electric Vehicles 3% Industrial Facilities 12% Defense Aerospace 6%

  20. Slide 20: Summary

    Summary Large project announcements tied to megatrends, reindustrialization and infrastructure spending continued in Q3 and Eaton remains well positioned to win. Third quarter record financial performance demonstrates strong ongoing operating execution to deliver profitable growth. Record backlogs a

  21. Slide 21: © 2023 Eaton. All rights reserved.

    © 2023 Eaton. All rights reserved. 21

  22. Slide 22: Appendix

    Appendix © 2023 Eaton. All rights reserved. 22

  23. Slide 23: 2023 Guidance – Additional Modeling Assumptions

    2023 Guidance – Additional Modeling Assumptions 4th Quarter Outlook 2023 FY Outlook Currency Translation ~$0M ~$0M Corporate Expenses $25M to $35M above 4Q22 $710M Tax Rate on Adjusted Earnings 13% – 14% 16% – 17% Capex N/A ~ $700M Share Repurchases $300M – $600M $300M – $600M © 2023 Eaton. All righ

  24. Slide 24: © 2023 Eaton. All rights reserved.

    © 2023 Eaton. All rights reserved. 24

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