Eaton Notches Records in Strong Q3 Period
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Power management company Eaton Corp. grew net income and revenue in the third quarter as adjusted earnings per share reached an all-time record along with segment margins.
“We had a record third quarter, driven by strong operational performance despite supply constraints that impacted our organic sales growth. Still, we saw encouraging signs, including robust order growth of 17% on a rolling 12-month basis and record backlogs up more than 50% in our combined Electrical Americas and Electrical Global segments,” Craig Arnold, Eaton chairman and CEO, said in a release.
“Our segment margins in the third quarter were 19.9%, an all-time record and above the high end of our guidance. This represents a 230-basis point improvement over the third quarter of 2020,” he added.
For the period ended Sept. 30, Eaton reported net income rose to $630 million, or $1.57 per diluted share, compared with $447 million, $1.11, a year earlier.
Excluding income of 13 cents per share related to acquisitions and divestitures and charges of 25 cents per share related to intangible amortization and 6 cents per share related to a multiyear restructuring program, adjusted earnings per share were an all-time record of $1.75, up 30% over the third quarter of 2020, the Dublin-based company reported.
Revenue was $4.9 billion compared with $4.5 billion in the 2020 period.
Its vehicle segment posted revenue of $640 million compared with $573 million a year earlier. Organic sales in the segment were up 11% and positive currency translation added 1%, the company reported. Operating profits were $115 million, up 44% compared with the third quarter of 2020. Operating margins in the quarter were 18%, up 400 basis points over the third quarter of 2020.
Its smallest business unit, eMobility, increased revenue to $84 million compared with $79 million a year earlier, driven by organic sales growth of 6%. The segment recorded an operating loss of $8 million reflecting continued investment in research and development and ramp-up costs associated with new program wins.
Sales for the Electrical Americas segment, its largest, were $1.9 billion, up 9% compared with the third quarter of 2020. Operating profits were $402 million, up 7% compared with the 2020 period. Operating margins of 21.7% were down 50 basis points from the third quarter of 2020, driven by commodity and logistics pressures.
While quarterly sales were constrained by supply availability, order activity remained robust with the twelve-month rolling average of orders in the third quarter up 17%, with particular strength in residential and data center markets, Eaton noted.
Eaton described its mission as providing sustainable solutions that help customers effectively manage electrical, hydraulic and mechanical power. It sells products in more than 175 countries, and has 85,000 employees.
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