Key Takeaways:
- Q2 adjusted EPS hit a record $3.15, up 7 percent, on sales of $8.5 billion.
- Eaton raised full-year organic growth guidance to 11-13 percent.
- Mobility separation with Dana via Reverse Morris Trust set for Q1 2027.
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Eaton raises guidance as Q2 adjusted EPS hits record $3.15
Eaton reported Q2 adjusted EPS of $3.15, a record, on sales of $8.5 billion that rose 21 percent from a year earlier.
"Eaton accelerated its momentum in the second quarter and delivered record sales and solid earnings from strong organic growth," Chief Executive Officer Paulo Ruiz said.
Organic sales rose 14 percent, above the high end of guidance, with acquisitions adding 7 percent. Adjusted EPS climbed 7 percent from $2.95, while GAAP EPS fell 16 percent to $2.11 on $407 million of after-tax acquisition, divestiture, restructuring and amortization charges. Segment margin was 23.1 percent, down 80 basis points from a year earlier but above the guided range.
Eaton raised full-year organic growth guidance to 11-13 percent and reaffirmed adjusted EPS of $13.40 to $13.60, up 12 percent at the midpoint. The company also agreed to separate its Mobility business through a Reverse Morris Trust transaction with Dana, expected to close in the first quarter of 2027.
Electrical Americas sales rose 18 percent organically to $3.95 billion, with operating margin up 190 basis points sequentially to 27.5 percent. Electrical Global sales climbed 44 percent to $2.52 billion, including a 25 percent contribution from Boyd Thermal in its first full quarter after the $9.55 billion acquisition. Aerospace sales rose 13 percent to $1.22 billion, and Mobility posted a 2 percent organic decline to $841 million.
Twelve-month rolling average orders rose 41 percent in Electrical Americas, 33 percent in Electrical Global and 17 percent in Aerospace. Total backlog climbed 33 percent, 103 percent and 28 percent, respectively, with book-to-bill at 1.2 across the Electrical and Aerospace segments.
Free cash flow rose 22 percent to $874 million, and operating cash flow increased 23 percent to $1.13 billion. Total debt more than doubled to $20.6 billion from $9.9 billion at the end of 2025 after the Boyd Thermal and $1.53 billion Ultra PCS acquisitions.
The higher guidance points to sustained demand across data centers and broader electrification. Investors will watch the Q3 margin step-up to 24.6-25.0 percent and the Mobility separation, which is expected to close in the first quarter of 2027.
This article is for informational purposes only and does not constitute investment advice.
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