Executive Summary

Record Q2 with revenues $7.028B (+11% YoY), diluted EPS $2.51 (+1% YoY) and adjusted EPS $2.95 (+8% YoY); segment margins at 23.9% at the high end of guidance .
Versus estimates, EPS modestly beat and revenue was above consensus; EBITDA was slightly below consensus. Drivers included 8% organic growth, acquisitions (+2%) and currency (+1%), with strong data center and aerospace momentum; vehicle and eMobility were headwinds .
FY25 guidance raised on organic growth (8.5–9.5%) and margins (24.1–24.5%); adjusted EPS to $11.97–$12.17. Q3 guidance: EPS $2.58–$2.64, adjusted EPS $3.01–$3.07 .
Orders/backlog strengthened: EA orders TTM +2% (ex-large lumpiness), EA backlog +17%; Aerospace orders TTM +10%, backlog +16%; total book-to-bill for Electrical + Aerospace at 1.1, supporting trajectory and capacity additions into 2H25 .
Stock reaction catalysts: continued data center share gains and capacity ramp, guidance improvements, and accretive portfolio moves (Ultra PCS, Resilient Power Systems); dividend declared $1.04 per share for Aug 22, 2025 .

What Went Well and What Went Wrong

What Went Well

Electrical Americas delivered record sales $3.350B (+16% YoY) and operating profit $987M; margin 29.5%. EA orders TTM inflected to +2%, backlog +17% YoY; management affirmed book-to-bill >1 for the year .
Aerospace posted record sales $1.080B (+13% YoY), operating profit $240M and margin 22.2%; orders TTM +10%, backlog +16%, book-to-bill 1.1 .
Management emphasized capacity additions and market share gains in North America, particularly in data centers: “we estimate the market to be around the low 30s year over year,” while “the business grew at 50%” and share gains beyond data centers (utilities, OEMs) .

What Went Wrong

Vehicle segment declined: sales $663M (-8% YoY), margins 17.0% (better sequentially), reflecting North America truck weakness .
eMobility sales $182M (-4% YoY), operating loss of $10M; organic sales -7% offset partly by FX +3% .
EA margins face ~100 bps headwind from ramping six facilities; tariffs are being offset dollar-for-dollar but create phasing/timing issues for price recovery, affecting near-term margin cadence .

Financial Results

Headline Results vs Prior Quarters

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($USD Billions)	$6.240	$6.377	$7.028
Diluted EPS ($)	$2.45	$2.45	$2.51
Adjusted EPS ($)	$2.83	$2.72	$2.95
Segment Margin (%)	24.7%	23.9%	23.9%

YoY Snapshot (Q2 2025 vs Q2 2024)

Metric	Q2 2024	Q2 2025
Revenue ($USD Billions)	$6.350	$7.028
Diluted EPS ($)	$2.48	$2.51
Adjusted EPS ($)	$2.73	$2.95
Segment Margin (%)	23.7% (implied; +20 bps YoY)	23.9%

Segment Breakdown (Q2 2025)

Segment	Sales ($USD Billions)	Operating Profit ($USD Millions)	Operating Margin (%)
Electrical Americas	$3.350	$987	29.5%
Electrical Global	$1.753	$353	20.1%
Aerospace	$1.080	$240	22.2%
Vehicle	$0.663	$113	17.0%
eMobility	$0.182	-$10	n/a

KPIs (Q2 2025)

KPI	Electrical Americas	Electrical Global	Aerospace	Total Electrical + Aerospace
Orders TTM (Organic)	+2%	-1%	+10%	—
Backlog YoY	+17%	+1%	+16%	Book-to-bill 1.1

Cash Flow and Balance Sheet (Quarterly)

Metric	Q4 2024	Q1 2025	Q2 2025
Operating Cash Flow ($USD Millions)	$1,597	$238	$918
Free Cash Flow ($USD Millions)	$1,342	$91	$716
Cash & Equivalents ($USD Millions)	$555	$1,777	$398
Total Assets ($USD Millions)	$38,381	$39,206	$40,507
Total Equity ($USD Millions)	$18,531	$18,547	$18,647

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Organic Growth (%)	FY 2025	7.5–9.5 (Q1 guide)	8.5–9.5	Raised lower bound
Segment Margins (%)	FY 2025	24.0–24.4 (Q1 guide)	24.1–24.5	Raised
EPS ($)	FY 2025	10.29–10.69 (Q1 guide)	10.41–10.61	Slightly raised vs Q1 (below initial Q4 guide 10.60–11.00 )
Adjusted EPS ($)	FY 2025	11.80–12.20 (Q1 guide)	11.97–12.17	Raised
EPS ($)	Q3 2025	—	2.58–2.64	New
Adjusted EPS ($)	Q3 2025	—	3.01–3.07	New
Dividend ($/share)	Q3 2025	—	$1.04 payable Aug 22, 2025	Declared

Non-GAAP adjustments (Q2): $0.25 intangible amortization, $0.14 acquisition/divestiture, $0.05 restructuring; adjusted EPS reconciliation disclosed .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
AI/data centers	Q4: Backlog now ~7 years of build at 2024 rates; negotiations and orders accelerating . Q1: EA pipeline up 18%; data center sales grew “very strong double-digit” above prior 45% cited; long-term agreements, modular solutions (Fibrebond), market share gains .	EA orders/book-to-bill >1; strong visibility; capacity adds driving 2H acceleration; market share gains; data center business growth around 50% YoY; Fiberbond run-rate increasing; acquisitive backlog additive .	Strengthening with capacity ramp; share gains and portfolio accretion.
Supply chain/lead times	Q4: Internal supply chain normalized vs post-COVID; labor constraints remain industry bottleneck .	Ramping six EA facilities; start-up inefficiencies temporarily pressure margins; lead times improving but above historical .	Improving execution; near-term margin headwinds from ramp.
Tariffs/macro	Q4/Q1: Playbook to offset tariffs via cost, supply chain actions, pricing; guidance embeds tariff assumptions; price realization timing affects H1/H2 EPS mix .	Dollar-for-dollar offset ongoing; ~100 bps EA margin headwind currently; Q2 phasing lag in price recovery .	Managed headwind; neutral dollars, timing friction.
Product performance	Q4/Q1: Utilities high single-digit growth; EA margins strong; Aerospace OE/AM growth solid; Vehicle softness; eMobility program delays .	EA +16% sales; EG +9%; Aerospace +13%; Vehicle -8%; eMobility -4% with loss .	Mixed: strength in Electrical/Aerospace; Vehicle/eMobility drag.
Regional trends	Q1: APAC and EMEA double-digit organic in EG, OEM orders up ~30% sequentially .	EG orders TTM -1% but backlog +1% YoY; continued EMEA/APAC support .	Stabilizing; backlog supports 2H.
Regulatory/legal	Q1: Tariff assumptions detailed in release; resilience strategy (local-for-local) .	Dividend declared; acquisitions (Ultra PCS; Resilient Power Systems) advancing strategic positioning .	Positive strategic actions.
R&D/technology	Data center modularization (NordicEPOD, Fibrebond), Siemens Energy alliance for on-site power; enabling higher power density .	Ultra PCS expands aerospace electronics; Resilient adds solid-state transformers with data center applications .	Portfolio moving up-tech, accretive margins.

Management Commentary

“We see sustained demand in the acceleration of orders and increase in our backlog…investing for growth in technology, acquisitions and partnerships in fast-growing, high-margin markets” (CEO) .
“We are ramping up six different facilities in Electrical America…we see about one point of margin headwind in Electrical America today” (CEO and CFO) .
“Electrical Americas…market share gains in North America…data center business grew at 50% where we estimate the market to be around the low 30s” (CEO) .
“Fiberbond…we increased the outlook…performing at high level…Fiberbond brings other $1,200,000,000 on top of [organic backlog]” (CEO, CFO) .
Aerospace: “Operating margin expanded by 70 basis points to 22.2%…orders increased 10%…backlog increase 16% year over year” (CFO) .

Q&A Highlights

Data center momentum and share gains: management cited outsized growth vs market; modular, capacity adds in 2H support sequential acceleration; long-term agreements underpin visibility .
Fiberbond integration: stronger-than-anticipated run-rate and ~$1.2B acquisitive backlog contribution on top of organic backlog; blurred lines with EA go-to-market .
Tariffs and pricing: dollar-for-dollar offsets via cost actions, supply chain and pricing; Q2 timing lag impacts margins and EPS phasing .
Capacity ramp costs: ~100 bps EA margin headwind while six facilities ramp; normalization expected as plants mature .
Orders trajectory: EA backlog +17% YoY; electrical sector TTM orders turned positive; book-to-bill >1 .

Estimates Context

Metric	Consensus (Q2 2025)	Actual (Q2 2025)	Beat/Miss
EPS ($)	2.922*	2.95	+$0.03*
Revenue ($USD Billions)	$6.913*	$7.028	+$0.114B*
EBITDA ($USD Billions)	$1.578*	$1.566*	-$0.012B*

Values with asterisks were retrieved from S&P Global. EPS/revenue beats reflect broad-based electrical strength and aerospace growth; modest EBITDA miss consistent with ramp/start-up inefficiencies and tariff timing .

Key Takeaways for Investors

Eaton delivered a quality beat on EPS and revenue with record Q2 results; Electrical and Aerospace momentum offset Vehicle/eMobility weakness .
Guidance improved for FY25 organic growth, margins, and adjusted EPS; Q3 guide supports sequential earnings progression amid capacity ramps .
Data center remains the primary growth engine with share gains and accelerating pipeline; Fiberbond integration and Siemens Energy alliance deepen content per MW and speed-to-market .
Near-term margin headwinds (~100 bps EA) from capacity start-up and tariff phasing are transitory; pricing and operational normalization should support margin trajectory in 2H25 .
Orders/backlog strength (book-to-bill ~1.1) provides visibility; Aerospace backlog and Ultra PCS acquisition position segment for sustained margin and growth improvement .
Dividend continuity ($1.04 August payment) and balance sheet capacity support ongoing bolt-ons (Resilient Power Systems) and strategic investments .
Actionable: favor pullbacks tied to transitory margin headwinds; monitor EA capacity ramp execution, tariff pass-through, and data center order cadence for estimate revisions in EPS and margin mix .

Eaton Corp plc (ETN)·Q2 2025 Earnings Summary