Eaton Corp PLC (ETN) Q2 2025 Earnings Call Highlights: Record Revenue and Raised Guidance Amid …

  • Adjusted Earnings Per Share (EPS): Increased by 8% to $2.95.

  • Revenue: Record quarterly revenue of $7 billion.

  • Organic Sales Growth: 8% for the quarter.

  • Segment Margins: Expanded by 20 basis points to 23.9%.

  • Electrical Americas Organic Sales Growth: 12% driven by data centers and commercial markets.

  • Electrical Americas Operating Margin: 29.5%, down 40 basis points due to tariffs and growth costs.

  • Electrical Global Organic Growth: 7% with a 2% FX tailwind.

  • Electrical Global Operating Margin: 20.1%, up 110 basis points.

  • Aerospace Organic Sales Growth: 11% with strong defense and commercial aftermarket performance.

  • Aerospace Operating Margin: Expanded by 70 basis points to 22.2%.

  • Vehicle Segment Decline: 8% decline due to North America truck market weakness.

  • Vehicle Segment Margin: 17%, up from 15.5% in Q1.

  • eMobility Revenue Decrease: 4% decrease with a $10 million operating loss.

  • Book-to-Bill Ratio: Increased to 1.1 for combined segments.

  • Backlog Growth: Electrical Americas backlog grew 17% year-over-year.

  • Guidance for Organic Growth: Raised to 8.5% to 9.5% for the year.

  • Adjusted EPS Guidance for 2025: Raised to $11.97 to $12.70, representing 12% growth at the midpoint.

Release Date: August 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

  • Eaton Corp PLC (NYSE:ETN) reported an 8% increase in adjusted earnings per share compared to Q2 2024, showcasing strong financial performance.

  • The company achieved record quarterly revenue of $7 billion, driven by 8% organic sales growth.

  • Eaton Corp PLC (NYSE:ETN) raised its 2025 guidance for organic growth and adjusted EPS, reflecting confidence in future performance.

  • The Electrical Americas segment experienced a significant 12% organic sales growth, with data centers showing a 50% increase.

  • Strategic acquisitions, such as Ultra PCS and Resilient Power Systems, are expected to strengthen Eaton’s position in high-growth markets like aerospace and data centers.

  • The Vehicle segment experienced an 8% decline in both total and organic sales, primarily due to weaknesses in the North America truck market.

  • The eMobility business saw a 4% revenue decrease, with a $10 million operating loss, indicating challenges in this segment.

  • Despite strong overall performance, the Electrical Global segment’s orders were down 1% on a rolling 12-month basis.

  • The company faces ongoing challenges in the residential market, which remains one of the smaller and weaker parts of the business.

  • Eaton Corp PLC (NYSE:ETN) is experiencing margin pressures due to higher costs associated with growth initiatives and tariffs.

Q: Can you provide an update on the orders and backlog for Electrical Americas and Global? A: Paulo Sternadt, CEO, noted that orders showed strong momentum, particularly in Electrical Americas, with a much stronger negotiation pipeline. This trend is expected to continue into Q3. The backlog is also expected to remain robust, with a book-to-bill ratio higher than 1 for the year.

Q: Are you gaining market share in Electrical Americas, and in which end markets? A: Paulo Sternadt, CEO, confirmed market share gains in North America across several end markets. The data center business grew by 50%, outpacing the market growth estimated at low 30s year-over-year. Additional capacity coming online in the second half is expected to further support this trend.

Q: What is the strategy for data centers, particularly regarding acquisitions like Fibrebond and Resilient Power Systems? A: Paulo Sternadt, CEO, explained that Eaton has a comprehensive strategy for both gray and white space in data centers. The acquisition of Fibrebond addresses speed of construction and higher returns on capital, while Resilient Power Systems enhances Eaton’s capabilities in high-power AI center designs and EV charging. Partnerships with Siemens Energy and NVIDIA further strengthen Eaton’s position in this market.

Q: How is the capacity expansion impacting Electrical Americas’ growth, and what are the expectations for the second half of the year? A: Paulo Sternadt, CEO, stated that the biggest contributor to growth in Electrical Americas is the new capacity coming online in the second half. This expansion supports sequential growth and aligns with the company’s strategic investments to meet increasing demand.

Q: Can you discuss the impact of new capacity on margins and operating leverage? A: Olivier Leonetti, CFO, mentioned that ramping up new facilities in Electrical Americas is currently creating some inefficiencies, which are expected to normalize over time. This will lead to improved operating leverage and better results as the new capacity is fully utilized.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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