Eaton Corporation, Plc · NYSE:ETN

Eaton — Q4 2023 Earnings Presentation

24 slides from Eaton's earnings presentation, Feb 1, 2024

1. Slide 1: Fourth Quarter 2023 Earnings Release

   Fourth Quarter 2023 Earnings Release Craig Arnold & Tom Okray | February 1, 2024 © 2024 Eaton. All rights reserved. © 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 first quarter 2024 adjusted earnings per share, organic revenue growth and segment operating mar

3. Slide 3: Highlights

   Highlights Adjusted earnings per share of $2.55 in Q4, up 24% versus 4Q22, and $9.12 for the full year 2023, up 20% versus 2022, are both all-time records. Q4 record segment margins of 22.8%, up 200 bps versus 4Q22 with incremental margins of 42%. Electrical and Aerospace backlog up 15% and 13%, res

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 © 2024 E

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

   Reindustrialization – momentum continues with mega project announcements o 2023 North America mega project announcements, up $415B from $933B 2022, Q4 up $81B from Q3 in cumulative ~3X o 55% of projects are related to North America normal federal government incentives mega projects (IRA, IIJA, CHIPS

6. Slide 6: Surge in mega projects additive to growth over next 5 years

   Surge in mega projects additive to growth over next 5 years EV Battery Semiconductor Healthcare (in months) Announcement to 0 to 12 0 to 12 0 to 42 Negotiation Announcement to 12 to 18 12 to 24 42 to 44 Order Announcement to 18 to 54 24 to 60 44 to 81 Shipment Won $1B+ of orders that we expect to re

7. Slide 7: 2023 Financial Highlights

   2023 Financial Highlights Original Guidance Actual Adjusted EPS $8.04 – $8.44 $9.12 Organic Revenue 7 – 9% 12% Segment Operating Margins 20.7% – 21.1% 22.0% Free Cash Flow $2.6B – $3.0B $2.9B All-time record full year results in 2023 including segment margins and adjusted EPS © 2024 Eaton. All right

8. Slide 8: Financial Summary

   Financial Summary (M) 4Q '23 4Q '22 V '22 Sales $5,967 $5,384 11% Segment Operating Profit 1,360 1,117 22% Segment Operating Margin 22.8% 20.8% 200 bps Adjusted Earnings 1,024 825 24% Adjusted EPS $2.55 $2.06 24% $5,967M All-Time Quarterly Record Sales Sales Growth: Organic 10% $1,360M Q4 Quarterly

9. Slide 9: Electrical Americas Segment

   Electrical Americas Segment (M) 4Q '23 4Q '22 V '22 Sales $2,672 $2,296 16% Operating Profit 763 545 40% Operating Margin 28.5% 23.7% 480 bps Sales Growth:  Backlog up 18% year-over-year. Organic 16%  Book-to-bill ratio of 1.2 on rolling 12-month basis. Forex --  All-time record sales, operating

10. Slide 10: Electrical Global Segment

    Electrical Global Segment 4Q '23 4Q '22 V '22 (M) Sales $1,512 $1,430 6% Operating Profit 284 268 6% Operating Margin 18.8% 18.7% 10 bps Sales Growth:  Orders up 1% on a rolling 12-month basis at high levels with Organic 4% strength driven by data center and utility markets. Forex 2%  Q4 record sa

11. Slide 11: Aerospace Segment

    Aerospace Segment (M) 4Q '23 4Q '22 V '22 Sales $895 $812 10% Operating Profit 200 199 1% Operating Margin 22.4% 24.5% (210) bps Sales Growth:  Orders up 7% on a rolling 12-month basis with particular strength in commercial aftermarket, commercial OEM & defense Organic 8% aftermarket. Forex 2%  Ba

12. Slide 12: Vehicle Segment

    Vehicle Segment (M) 4Q '23 4Q '22 V '22 Sales $723 $707 2% Operating Profit 129 107 21% Operating Margin 17.9% 15.2% 270 bps Sales Growth: Organic --  Margin expansion of 270bps from H1 to H2, demonstrating Forex 2% operational improvements. Total 2% © 2024 Eaton. All rights reserved. 12

13. Slide 13: eMobility Segment

    eMobility Segment 4Q '23 4Q '22 V '22 (M) Sales $165 $139 19% Operating Profit (Loss) (16) (2) (700)% Operating Margin (9.4)% (1.3)% (810) bps Sales Growth: Organic 18%  2023 wins of more than $1B of mature year revenues. Forex 1% Total 19% © 2024 Eaton. All rights reserved. 13

14. Slide 14: 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) $9.5 $3.2 $1.4 $2.8 Q4:'19 Q4:'20 Q4:'21 Q4:'22 Q3:'23 Q4:'23 Q4:'19 Q4:'20 Q4:'21 Q4:'22 Q3:'23 Q4:'23 Strong backlog provides tremendous visibilit

15. Slide 15: Our negotiations pipeline continues to show accelerating growth

    Our negotiations pipeline continues to show accelerating growth $6.2B $4.8B $2.4 B 2019 2022 2023 Electrical Americas negotiation pipeline © 2024 Eaton. All rights reserved. 15

16. Slide 16: Eaton's end market growth assumptions – 2024 Assumptions

    Eaton’s end market growth assumptions – 2024 Assumptions Electrical Sector % of Total Eaton Sales Industrial Sector % of Total Eaton Sales 2023 FY 2023 FY Data Centers & Distributed IT 14% Commercial Aerospace 9% Utility 11% Electric Vehicles 3% Industrial Facilities 12% Defense Aerospace 6% Commerc

17. Slide 17: New multi-year restructuring program to begin in 2024

    Extensive opportunities to enhance operations despite record performance New multi-year restructuring program to begin in 2024 Program will accelerate efficiency opportunities in our operations and global support teams Designed to reduce structural costs through consolidation, increased shared servi

18. Slide 18: 2024 Organic Growth and Operating Margin Guidance

    2024 Organic Growth and Operating Margin Guidance Segment Organic Growth Guidance Operating Margin Guidance Electrical Americas 9 – 11% 26.8 – 27.2% Electrical Global 2.5 – 4.5% 19.4 – 19.8% Aerospace 9 – 11% 23.3 – 23.7% Vehicle (4) – 0% 16.3 – 16.7% eMobility 25 – 35% 1 – 2% Eaton 6.5 – 8.5% 22.4

19. Slide 19: 2024 Guidance

    2024 Guidance 1st Quarter Outlook 2024 FY Outlook Adjusted Earnings Per Share $2.21 – $2.31 $9.95 – $10.35 Organic Revenue 6 – 8% 6.5 – 8.5% Segment Operating Margins 21.3% – 21.7% 22.4 – 22.8% Operating Cash Flow N/A $4.0B – $4.4B Free Cash Flow N/A $3.2B – $3.6B Share Repurchases N/A $1.5B to $2.5

20. Slide 20: Summary

    Summary Eaton’s unique positioning has resulted in differentiated performance. Achieved record financial performance in 2023, further supporting our expectation for structurally higher growth with higher margins. Large project announcements tied to megatrends, reindustrialization and infrastructure

21. Slide 21: © 2024 Eaton. All rights reserved.

    © 2024 Eaton. All rights reserved. 21

22. Slide 22: Appendix

    Appendix © 2024 Eaton. All rights reserved. 22

23. Slide 23: 2024 Guidance – Additional Modeling Assumptions

    2024 Guidance – Additional Modeling Assumptions 1st Quarter Outlook 2024 FY Outlook Currency Translation ~$0 ~$0 Corporate Expenses ($10M) to ($20M) below 1Q23 $700M Tax Rate on Adjusted Earnings 17.5% – 18.5% 17% – 18% Capex N/A $800M © 2024 Eaton. All rights reserved. 23

24. Slide 24: © 2024 Eaton. All rights reserved.

    © 2024 Eaton. All rights reserved. 24

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