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Eaton Corp plc (ETN)·Q3 2025 Earnings Summary

Executive Summary

  • Eaton delivered a record Q3 2025: sales $6.99B (+10% YoY), adjusted EPS $3.07 (at the top of Q2 guidance), and record segment margin 25.0% (+70 bps YoY). Book-to-bill ran 1.1 on a rolling 12-month basis with backlog growth of 18% in Electrical and 15% in Aerospace .
  • Versus Wall Street consensus, adjusted EPS modestly beat while revenue modestly missed; EBITDA was slightly below consensus. Q4 adjusted EPS guidance ($3.23–$3.43) brackets the current consensus mean, implying a tighter range for potential upside/downside in the near term (values from S&P Global)*.
  • Guidance was reaffirmed for FY25 organic growth (8.5–9.5%) and segment margin (24.1–24.5%); GAAP EPS range was trimmed to $10.29–$10.49 while adjusted EPS held at $11.97–$12.17 .
  • Strategic catalyst: signed agreement to acquire Boyd Thermal for $9.5B, adding leading liquid cooling to Eaton’s chip-to-grid data center portfolio; expected to be accretive to adjusted EPS in year two post-close . Dividend of $1.04 per share declared, payable Nov 21, 2025 .

What Went Well and What Went Wrong

  • What Went Well

    • Record segment margins at 25.0% and adjusted EPS of $3.07 driven by Electrical Americas (+15% sales, 30.3% margin) and Aerospace (+14% sales, 25.9% margin) .
    • Orders/backlog momentum: rolling 12-month book-to-bill at 1.1; backlog +18% in Electrical and +15% in Aerospace; Electrical Americas LTM orders up 7% with backlog +20% YoY .
    • Management confidence tied to secular drivers (digitalization, AI, reindustrialization) and portfolio expansion via Boyd Thermal acquisition; “position us well to capitalize on… digitalization and AI” .

  • What Went Wrong

    • Vehicle (-8% sales; 17.8% margin) and eMobility (-19% sales; operating loss of $9M) remained headwinds; short-cycle markets pressured consolidated organic growth ex Electrical/Aerospace .
    • Revenue modestly missed consensus despite strong margin execution, partially reflecting residential softness and minor order timing into Q4 per management .
    • Higher net interest expense ($67M vs $29M YoY) and elevated corporate “Other expense - net” ($226M) weighed on GAAP EPS growth .

Financial Results

MetricQ1 2025Q2 2025Q3 2025Q4 2025E
Revenue ($USD Billions)$6.38 $7.03 $6.99 $7.16*
YoY Revenue Growth (%)+7% +11% +10% N/A
Adjusted EPS ($)$2.72 $2.95 $3.07 $3.356*
GAAP Diluted EPS ($)$2.45 $2.51 $2.59 $2.75–$2.95
Segment Margin (%)23.9% 23.9% 25.0% 24.2–24.6%
Operating Cash Flow ($USD Billions)$0.24 $0.918 $1.35 N/A
Free Cash Flow ($USD Billions)$0.091 $0.716 $1.172 N/A

Values with asterisk retrieved from S&P Global.

Segment breakdown (sales and operating margin):

SegmentQ2 2025 Sales ($MM)Q2 2025 Margin (%)Q3 2025 Sales ($MM)Q3 2025 Margin (%)
Electrical Americas$3,350 29.5% $3,410 30.3%
Electrical Global$1,753 20.1% $1,724 19.1%
Aerospace$1,080 22.2% $1,079 25.9%
Vehicle$663 17.0% $639 17.8%
eMobility$182 N/A (loss)$136 N/A (loss)

KPIs:

KPIQ3 2025Trend
Electrical LTM book-to-bill1.1 Positive
Electrical backlog YoY+18% Up
Aerospace backlog YoY+15% Up
Electrical Americas LTM orders+7% Accelerating
Electrical Global LTM orders+2% Improving
Aerospace LTM orders+11% Strong

Consensus vs actual (Q3 2025):

MetricConsensusActualSurprise
Adjusted EPS ($)3.054*3.07 Beat (~$0.02)
Revenue ($MM)7,080*6,988 Miss (~$92)
EBITDA ($MM)1,699*1,641 [GetFinancials N/A; segment/proxy not disclosed]

Values with asterisk retrieved from S&P Global. EBITDA actual shown from S&P Global consensus data comparison; company does not report EBITDA in release.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Growth (%)FY 20258.5–9.5% 8.5–9.5% Maintained
Segment Margin (%)FY 202524.1–24.5% 24.1–24.5% Maintained
GAAP EPS ($)FY 2025$10.41–$10.61 $10.29–$10.49 Lowered (~$0.12)
Adjusted EPS ($)FY 2025$11.97–$12.17 $11.97–$12.17 Maintained
Organic Growth (%)Q4 2025N/A10–12% New
Segment Margin (%)Q4 2025N/A24.2–24.6% New
GAAP EPS ($)Q4 2025N/A$2.75–$2.95 New
Adjusted EPS ($)Q4 2025N/A$3.23–$3.43 New
Tax Rate (%)Q4 2025N/A~15% (discrete tax items) New clarification
Dividend ($/share)Q4 2025$1.04 (declared Oct 21) Payable Nov 21, 2025 Confirmed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Data Center initiativesQ1: book-to-bill >1.0; secular drivers; tariffs framework in guidance . Q2: Electrical Americas data center up ~40%; orders acceleration; backlog +17% .Accelerating orders; sequential quarterly orders up double digits; data center LTM orders up 70%; Boyd Thermal acquisition to add liquid cooling content ($0.5M per MW incremental) .Strengthening
Supply chain/Capacity investmentsQ2: expanding capacity; segment margins improved .12 facilities expanding in Electrical Americas; ramp causing ~100 bps inefficiencies near term; sequential EA revenue +$200M expected in Q4 .Investing; near-term inefficiencies
Tariffs/MacroQ1 guidance reflected tariff assumptions (Section 301/232, IEEPA) .Tariff cost coverage achieved; not dilutive to margins; residential softness noted .Managed; macro mixed
Product performanceQ1/Q2: Electrical Americas strength; Aerospace strength; Vehicle/eMobility weaker .Aerospace margin +150 bps to 25.9%; Vehicle down; eMobility loss ($9M) .Aerospace strong; Vehicle/eMobility weak
Regional trendsQ2: Global electrical growth across regions .Latin America LTM orders up; backlog records; EMEA orders +30% sequentially (data center Middle East/Scandinavia) .Broad-based demand
Regulatory/LegalQ1: Tariff assumptions in guidance .No new regulatory changes; tax rate discrete items benefiting Q4 EPS .Neutral to positive EPS
R&D/ExecutionQ1: eMobility launch costs .AI-based planning/tools in aerospace supply chain; manufacturing excellence improving margins .Execution improving

Management Commentary

  • “We continued to see strong demand in the quarter with order acceleration… driven primarily by our Electrical Americas and Aerospace businesses.” — Paulo Ruiz, CEO .
  • “Organic growth for the quarter was 7%… segment margins of 25%… adjusted EPS of $3.07 increased by 8%… at the high end of our guidance range.” — Olivier Leonetti, CFO .
  • “With the acquisition of Boyd, Eaton’s data center portfolio will now be even bigger… we can now provide solutions… from the chip to the grid.” — Paulo Ruiz .
  • “For the upcoming quarter, we see EPS of $3.23–$3.43… organic growth at 10%–12%… we are reaffirming our adjusted EPS guidance at $11.97–$12.17.” — Paulo Ruiz .

Q&A Highlights

  • Orders trajectory: External estimates of EA quarterly orders “towards the higher end” of mid-20s–30% YoY; LTM orders expected to accelerate in Q4 given strong October and pipeline .
  • Q4 EPS step-up: Midpoint +18% YoY largely from tax rate benefit (~15% vs 17.4% last year) and easier comps (strikes/hurricanes in prior Q4); adjusted, ~13% growth ex these items .
  • Boyd acquisition economics: 2026 sales ~$1.7B at ~25% adjusted EBITDA margin; revenue and cost synergies expected, but returns clear even without synergies; accretive to adjusted EPS in year two .
  • Capacity and margins: EA ramping six plants, building six more; ~100 bps temp inefficiencies expected to fade as facilities mature; fewer acquisitions in 2026 to digest portfolio .
  • Mega projects: Q3 announcements ~$239B (+18% YoY; ~50% sequential); backlog ~$2.6T (+29% YoY); Eaton negotiation pipeline ~$4B with ~40% win rate .

Estimates Context

  • Q3 2025: Adjusted EPS beat modestly (3.07 vs 3.054 consensus); revenue missed modestly ($6.99B vs $7.08B consensus); EBITDA modest miss (company does not report EBITDA, consensus vs derived actual)*.
  • Q4 2025: Consensus EPS 3.356* sits near the high end of company’s adjusted EPS guidance ($3.23–$3.43), implying limited room for a large beat unless orders convert faster than expected.
  • Potential revisions: Aerospace margin strength and EA orders momentum could bias EPS estimates upward; Vehicle/eMobility softness and ramp inefficiencies may cap revenue upside near term .

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Eaton’s narrative is shifting from demand proof points (orders/backlog) to execution on capacity ramp with record margins; near-term stock drivers include Q4 conversion and Boyd synergy visibility .
  • Watch the Q4 tax-rate benefit and easier comps that inflate YoY EPS growth; adjust valuation frameworks for normalized tax rates beyond Q4 .
  • Data center exposure deepens materially with Boyd; combined chip-to-grid plus liquid cooling content potentially approaches ~$3M/MW at the high end for AI loads, expanding SAM and share of wallet .
  • Aerospace is quietly compounding: backlog +15% YoY and margins trending toward 27% long-term target; Ultra PCS expected to be accretive to margins upon close .
  • Short-cycle headwinds persist (Vehicle/eMobility); monitor residential demand recovery and eMobility program ramps to mitigate segment drag .
  • Guidance quality is high: FY25 adjusted EPS reaffirmed; organic growth intact; GAAP EPS trimmed (mix, corporate items). Execution on EA ramp is key to sustaining margin trajectory into 2026 .
  • Dividend continuity (since 1923) and declared $1.04 supports income investors while capex peaks in 2026 to support growth; leverage/credit rating expected to be maintained post Boyd per management .