Eaton Q4 Profit Jumps 31% on Record Revenue

Component Manufacturer to Begin Another Multiyear Restructuring; Eyes Up to 35% eMobility Unit Revenue Growth in 2024
Eaton HQ Dublin
Eaton headquarters in Dublin. (Eaton Corp.)

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Profit at Eaton Corp. jumped 31% year-over-year in the fourth quarter of 2023, powered by higher revenue at both its largest and smallest reporting units — Electrical Americas and eMobility.

The electrical, aerospace and automotive component manufacturer posted net income of $947 million, or $2.35 per diluted share, in the fourth quarter of 2023 compared with $722 million, or $1.80 per diluted share, in the year-ago period.

Dublin-based Eaton posted adjusted earnings per share of $2.55, beating analyst expectations. Consensus analyst expectations for adjusted EPS came in at $2.47, according to Zacks Investment Research.

Eaton also topped quarterly consensus analyst expectations for revenue of $5.91 billion. The company’s sales in the most recent three-month period totaled $5.967 billion, a record, and up 11% from $5.384 billion in the fourth quarter of 2022, driven by 10% organic sales growth, it said.

Revenue for the Electrical Americas segment totaled a record $2.672 billion in Q4, up 16% compared with $2.296 billion in the same period a year earlier. The division’s operating margin in the quarter was a record 28.5% compared with 23.7% in the year-ago period, Eaton said.

Eaton’s Vehicle division posted sales of $723 million in Q4, up 2% compared with $707 million a year earlier, based entirely on favorable foreign exchange rates, the company said.

However, the unit’s operating profit totaled $129 million, up 21% compared with $107 million in the same period a year earlier. The division’s operating margin in Q4 was 17.9%, compared with 15.2% a year earlier.

Sales at the eMobility unit totaled a record $165 million, up 19% compared with $139 million in Q4 2022, largely on the back of 18% organic sales growth.

In 2024, Eaton expects its eMobility unit to post organic growth of between 25% and 35%. “We remain very encouraged by the prospects of the eMobility segment,” outgoing Chief Financial Officer Thomas Okray told analysts on a Feb. 1 conference call.

The Vehicle and eMobility units report separate financial results but were combined under one banner in August 2023 as the Mobility Group.

Eaton — whose Vehicle and eMobility units manufacture clutches, brakes and transmission systems, among other things — posted net income of $3.223 billion for the full-year 2023, an increase of 30.8% compared with 2022’s $2.465 billion.

For the full year 2023, sales totaled a record $23.2 billion, up 12% from 2022, driven entirely by organic sales growth, it said.

Craig Arnold


“With our strong performance in 2023, we’ve continued to deliver on our commitments,” CEO Craig Arnold said in a statement accompanying the results.

“And we’re not finished yet — we’re investing to position the company for ongoing growth and performance over the long term,” Arnold said. “That’s why we’re announcing a $375 million multiyear restructuring program, which we expect to deliver $325 million of mature year benefits.”

“We’re confident with these proactive steps — growing the company while also reducing costs — we’ll be able to generate strong shareholder returns for years to come,” he said.

Eaton’s latest restructuring follows another that only just finished in Q4 after starting in the second quarter of 2020.

The latest restructuring is set to see an increase in shared services across divisions, greater digitization and reduced redundancies, the company’s top executive said during the analyst conference call.


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In response to an analyst question about whether the timing of the restructuring was counterintuitive, Arnold noted that school of thought had a point as the company’s cash reserves continued to grow, saying: “We spent a lot of time figuring out if it made sense.”

“We haven’t done many mergers over the past couple of years,” he said. “So, we have more bandwidth today to take on these projects. … There is no better time for these projects.”

“It is riskier if we didn’t do it,” added Okray. “We can lean forward at a time of strength.”

Analysts on the call congratulated the executives on the results, while also lauding the outgoing Okray.

Melius Research Founding Partner Scott Davis said in a Feb. 1 research note that: “Eaton is hardly a hidden gem, arguably the opposite (we love it, but now everyone else does too …), but growth and revisions continue to differentiate not only vs. industrial peers but also a wider set of [comparisons].”

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“Results overall have been exceptional. EPS was up 20% in ’23 — 2x where our broader multi-Industry coverage will shake out — after 14% growth in ’22, and compares to a far more mediocre history in cycles past,” wrote Davis, adding: “Note as well that Eaton has achieved that growth without any meaningful M&A tailwinds that have contributed to outsized results at best-in-class peers such as Parker-Hannifin.”

However, analysts are also eyeing divisions of the company that are not the best performers, including its legacy internal combustion engine truck operations within the Vehicle unit.

“[Eaton] is not perfect — we would ideally see more aggressive use of the [balance sheet] and more tangible progress in the money-losing eMobility business. And perhaps [Eaton] will find its way out of some of the less exciting parts of the portfolio including the legacy ICE auto and truck assets,” wrote Davis.