Eaton Boosts 2024 Guidance As Electrical And Aerospace Sectors Excel

Eaton Corporation plc ETN on Tuesday reported a first-quarter FY24 net sales growth of 8% Y/Y to $5.94 billion, beating the consensus of $5.91 billion.

Organic growth of 8% Y/Y was at the high end of guidance in the quarter.

Sales by segments: Electrical Americas $2.7 billion (+17% Y/Y), Electrical Global $1.5 billion (flat Y/Y), Aerospace $871 million (+9% Y/Y), Vehicle $724 million (-2% Y/Y) and eMobility $158 million (+7% Y/Y).

Eaton reported strong growth in the Electrical sector backlog, up 27% with a book-to-bill ratio of 1.2, and the Aerospace backlog, up 11% with a book-to-bill ratio of 1.1.

Total segment operating profit margin expanded by 340 bps Y/Y to 23.1%.

Eaton’s operating cash flow in the quarter was $475 million, up 42% Y/Y, and free cash flow was $292 million (+40% Y/Y).

Adjusted EPS improved 28% Y/Y to $2.40, beating the consensus of $2.29.

Craig Arnold, Eaton chairman and chief executive officer said,  “Growth drivers like increased project activity tied to megatrends, reindustrialization and infrastructure spending continue to drive demand for Eaton’s solutions across our markets, and we remain very confident in our teams’ ability to execute on our increased targets for the year.” 

“We capitalized on strong growth in our business to start the year, resulting in strong order growth in Electrical and Aerospace and first quarter record segment margins.”

Related: Eaton Is Poised To Benefit From ‘Ongoing Electrical Super-Cycle,’ Says Bullish Analyst

Q2 FY24 Outlook: The company expected Adjusted EPS of $2.52-$2.62 versus $2.50 consensus, organic revenue growth of 6.5%-8.5%, and segment operating margins of 22.4%-22.8%.

FY24 Guidance, raised: Eaton increased adjusted EPS to $10.20-$10.60 (from $9.95-$10.35 prior) vs. $10.25 estimate, organic revenue growth to 7%-9% (from 6.5%-8.5%) and segment operating margins to 22.8%-23.2% (from 22.4%-22.8%).

Investors can gain exposure to the stock via First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund GRID and Neuberger Berman ETF Trust Neuberger Berman Carbon Transition Infrastructure ETF NBCT.

Price Action: ETN shares are down 1.4% at $321.93 at last check Tuesday.

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