10-KPeriod: FY2018

Eaton Corp plc Annual Report, Year Ended Dec 31, 2018

Filed February 27, 2019For Securities:ETN

Summary

Eaton Corporation plc (ETN) reported $21.6 billion in net sales for the fiscal year ending December 30, 2018. As a global power management company, Eaton provides energy-efficient solutions across electrical, hydraulic, and mechanical power sectors. The company operates in 59 countries, serving customers in over 175 countries, with a diverse business model encompassing Electrical Products, Electrical Systems and Services, Hydraulics, Aerospace, Vehicle, and eMobility segments. Key risks highlighted include the volatility of end markets, the success of new product development and innovation, the ability to attract and retain qualified personnel, and potential disruptions to global operations from geopolitical events or natural disasters. The company also faces risks related to information technology security, currency fluctuations, and changes in tax legislation. Eaton actively manages its supply chain and inventory, noting no significant raw material availability constraints in 2018.

Financial Highlights

56 data points
Beta

Revenue

$21.61B

32.8% Gross Margin

Net Income

$2.15B

9.9% Net Margin

EPS (Diluted)

$4.91

Total Assets

$31.09B

Cash & Equivalents

$283.00M

Free Cash Flow

$2.09B

Financial Statements
Beta
Revenue$21.61B
Cost of Revenue$14.51B
Gross Profit$7.10B
R&D Expenses$584.00M
SG&A Expenses$3.55B
Operating Income$3.63B
Net Income$2.15B
EPS (Basic)$4.93
EPS (Diluted)$4.91
Shares Outstanding (Basic)434.30M
Shares Outstanding (Diluted)436.90M

Key Highlights

  • 1Eaton generated $21.6 billion in net sales for the fiscal year 2018.
  • 2The company operates globally with approximately 99,000 employees in 59 countries.
  • 3Eaton's business is diversified across six key segments: Electrical Products, Electrical Systems and Services, Hydraulics, Aerospace, Vehicle, and eMobility.
  • 4Key risks identified include market volatility, product innovation challenges, talent retention, operational disruptions, cybersecurity threats, and currency fluctuations.
  • 5The company experienced no significant raw material availability constraints in 2018.
  • 6Eaton repurchased approximately 9.8 million ordinary shares in the fourth quarter of 2018 for $700 million.
  • 7During Q4 2018, Eaton had minimal sales to Iran, generating approximately $0.93 million in revenue and $0.31 million in net profit, and has decided not to pursue future sales to Iran.

Frequently Asked Questions

Eaton's business is divided into six segments: Electrical Products, Electrical Systems and Services, Hydraulics, Aerospace, Vehicle, and eMobility. These segments contribute to the company's overall net sales, which reached $21.6 billion in 2018, by providing power management solutions to diverse industries such as construction, agriculture, aerospace, and automotive.

Eaton faces several risks, including the cyclical nature of the end markets it serves, the need for continuous innovation and successful introduction of new products, retaining key executives and skilled employees, potential disruptions to its global manufacturing operations, cybersecurity threats to its IT infrastructure, and the impact of currency fluctuations and changing government regulations on its international business.

Eaton manages its raw material requirements by purchasing from numerous suppliers and maintaining appropriate inventory levels. In 2018, the company reported no difficulties in obtaining its necessary raw materials and did not experience any availability constraints, indicating a well-managed supply chain.

In the fourth quarter of 2018, certain of Eaton's non-U.S. subsidiaries made sales to customers in Iran, generating approximately $0.93 million in revenue. Eaton has since decided not to pursue any future orders for sales to Iran.