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Jun 30, 2020
Eaton Q2 2020 Earnings Report
Eaton's second quarter earnings were impacted by the COVID-19 pandemic and divestitures, but the company managed to post better-than-expected financial results and strong cash flow due to cost control measures.
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
Revenue by Segment
Electrical Americas Revenue
CapyFin.comElectrical Global Revenue
CapyFin.comAerospace Revenue
CapyFin.comVehicle Revenue
CapyFin.comeMobility Revenue
CapyFin.com 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