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Eaton Corporation plc (NYSE: ETN), a leader in intelligent power management, has announced record-breaking results for the third quarter of 2024. The company reported earnings per share (EPS) of $2.53, marking a 14% increase over the same period in 2023. Excluding charges related to intangible amortization, restructuring, and acquisitions, the adjusted EPS reached a record $2.84, reflecting a 15% increase from the previous year.

The company achieved a third-quarter sales record of $6.3 billion, driven by an 8% organic sales growth despite challenges such as Hurricane Helene and labor strikes in the aerospace sector. The segment margins for the quarter were also noteworthy, reaching a record 24.3%, which is a 70-basis point improvement over the third quarter of 2023. Operating cash flow and free cash flow set new records at $1.3 billion and $1.1 billion, respectively, both showing significant increases from the previous year. 

Eaton’s strong performance was bolstered by substantial backlog growth in its Electrical and Aerospace segments, with increases of 25% and 14%, respectively. The company also reported accelerated orders, particularly in the Electrical Americas segment, which saw a 16% increase.

Eaton Beats EPS Expectations in Third Quarter, Revenue in Line

Eaton’s third-quarter performance exceeded market expectations, which had anticipated an EPS of $2.8 and revenue of $6.37 billion. The company surpassed these expectations with an adjusted EPS of $2.84 and revenue of $6.3 billion, demonstrating its ability to navigate external challenges effectively. 

The slight shortfall in revenue compared to expectations can be attributed to the impacts of Hurricane Helene and aerospace industry labor strikes, which collectively resulted in a $50 million sales headwind.The company’s Electrical Americas segment was a standout performer, achieving a record $3.0 billion in sales, up 14% from the previous year, driven entirely by organic growth. 

Operating profits for this segment also reached a record $892 million, a 24% increase over the third quarter of 2023. The Aerospace segment also performed well, with sales reaching a record $946 million, up 9% year-over-year, and operating profits increasing by 10%.

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Eaton Raises Full Year 2024 Guidance

Looking ahead, Eaton has raised its full-year guidance for 2024, reflecting its confidence in continued strong performance. The company now expects segment margins to be between 23.5% and 23.9%, up from the previous range of 23.3% to 23.7%. 

Full-year EPS guidance has been increased to between $9.47 and $9.53, with adjusted EPS expected to be between $10.75 and $10.81, representing an 18% increase at the midpoint over the prior year. For the fourth quarter of 2024, Eaton anticipates organic growth of 6% to 7%, with segment margins ranging from 23.6% to 24.0%. 

The company expects EPS to be between $2.42 and $2.48, with adjusted EPS projected to be between $2.78 and $2.84. Eaton’s CEO, Craig Arnold, expressed confidence in the company’s ability to close the year on a high note and maintain positive momentum into 2025.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.