Eaton Q1 Profit Rises 19.7% as It Eyes Megaprojects
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Profits at Eaton Corp. rose 19.7% in the first quarter of 2023 on sales growth that beat company expectations.
In the first three months of 2023, the Dublin-based company’s net income totaled $638 million, or diluted earnings per share of $1.59, compared with a $533 million profit, $1.33, in the year-ago period, it said May 2.
Eaton’s adjusted first-quarter earnings of $1.88 per share beat the consensus estimate of $1.78 per share, according to Zacks Equity Research.
The company’s sales in the most recent quarter totaled $5.5 billion, up 13% compared with the first quarter of 2022, it said.
Eaton’s vehicle segment posted sales of $739 million in the first three months of 2023, up 10% compared with the first quarter of 2022, it said, adding that organic sales rose 11% year-over-year. The company’s Americas operations in the segment saw “very strong growth,” Chief Financial Officer Thomas Okray said during a quarterly earnings call.
However, the segment’s operating profits for the most recent quarter came in at $107 million, down 5% compared with the year-ago period, and its quarterly operating margin fell to 14.5% from 16.8% a year earlier, a company presentation showed.
Eaton’s eMobility segment saw record sales of $147 million, up 17% compared with the first quarter of 2022. Organic sales were up 18%.
For the second quarter of 2023, the company anticipates organic growth of 10-12% and adjusted earnings per share of between $2.04 and $2.14.
And for the full year 2023, the company increased its organic growth guidance from 7-9% to 9-11%.
Megatrends including electrification, re-industrialization, plus infrastructure spending such as the Inflation Reduction Act and Infrastructure Investment and Jobs Act have changed the long-term growth outlook for the company, Eaton said.
During the company’s earnings call, CEO Craig Arnold observed that North American megaprojects — which Eaton classifies as those with a capital budget in excess of $1 billion — were being announced at three times the historical rate, totaling up to $600 billion over the past three years.
He added that billions of dollars more in projects were in the pipeline.
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