Eaton Q2 2020 Earnings Report
Key Takeaways
Eaton Corporation reported earnings per share of $0.13 and adjusted earnings per share of $0.70 for the second quarter of 2020. Sales were $3.9 billion, a 30% decrease compared to the second quarter of 2019. The company is implementing a multi-year restructuring program to address market weakness, with expected mature year benefits of $200 million by 2023.
Earnings per share were $0.13, and adjusted earnings per share were $0.70, excluding charges related to acquisitions, divestitures, and restructuring.
Sales were $3.9 billion, down 30% from the second quarter of 2019, with organic sales down 22%.
A multi-year restructuring program is being implemented to deal with market weakness, expected to cost $280 million.
Free cash flow was $667 million, and the company reaffirmed its full-year free cash flow guidance of $2.3 billion to $2.7 billion.
Eaton
Eaton
Eaton Revenue by Segment
Forward Guidance
Eaton reaffirmed its full year 2020 free cash flow guidance of between $2.3 billion and $2.7 billion.
Positive Outlook
- Full year 2020 free cash flow guidance reaffirmed at $2.3 billion to $2.7 billion.
- Residential and utility end markets showed strong order growth in June.
- Customer plants have reopened, and demand is returning in the vehicle segment.
- Backlog at the end of June grew 11% organically over June 2019 in Electrical Americas.
- Since launching eMobility segment in 2018, won programs whose mature year annual sales total approximately $500 million.
Challenges Ahead
- Several markets are expected to take some time to recover.
- Commercial aerospace, oil and gas, NAFTA Class 8 trucks, and North American/European light vehicles are facing weakness.
- Hydraulics segment orders decreased 33.7% from the second quarter of 2019.
- Aerospace segment backlog at the end of June was down 5% organically compared to June 2019.
- Organic sales were down 22 percent.
Revenue & Expenses
Visualization of income flow from segment revenue to net income