Summary
Eaton Corp plc (ETN) reported a significant increase in net sales for the second quarter and the first six months of 2013, driven primarily by the acquisition of Cooper Industries plc in late 2012. While net sales surged by 38% in the quarter and 36% year-to-date, net income attributable to shareholders also grew (29% and 26%, respectively). However, diluted earnings per share (EPS) saw a decrease of 7% in the quarter and 10% year-to-date. This EPS decline is attributed to the increased number of shares outstanding post-acquisition and purchase price accounting charges. The company has realigned its reporting segments to reflect the integration of Cooper, creating broader Electrical Products and Electrical Systems and Services segments. The performance across segments varied, with Electrical Products and Electrical Systems and Services showing substantial sales growth due to the acquisition, while Hydraulics experienced flat sales and a decline in operating profit. The Aerospace segment showed modest growth, and the Vehicle segment experienced a decrease in net sales and operating profit. Eaton's financial position remains solid, supported by strong operating cash flow, which increased significantly in the first half of 2013. The company also benefited from the proceeds of selling its stake in Apex Tool Group, LLC. Management expresses confidence in the company's liquidity to meet future operating needs.
Financial Highlights
50 data points| Revenue | $5.60B |
| Cost of Revenue | $3.87B |
| Gross Profit | $1.73B |
| R&D Expenses | $161.00M |
| SG&A Expenses | $960.00M |
| Operating Income | $842.00M |
| Net Income | $497.00M |
| EPS (Basic) | $1.04 |
| EPS (Diluted) | $1.04 |
| Shares Outstanding (Basic) | 473.40M |
| Shares Outstanding (Diluted) | 476.30M |
Key Highlights
- 1Net sales significantly increased by 38% for Q2 2013 and 36% for the first six months of 2013, largely due to the Cooper Industries acquisition.
- 2Net income attributable to Eaton ordinary shareholders rose by 29% in Q2 2013 and 26% year-to-date, reflecting increased sales and a lower effective tax rate.
- 3Diluted Earnings Per Share (EPS) decreased by 7% in Q2 2013 and 10% year-to-date, primarily due to a higher share count from the Cooper acquisition and associated accounting adjustments.
- 4The company realigned its business segments, consolidating legacy Eaton and Cooper electrical businesses into 'Electrical Products' and 'Electrical Systems and Services'.
- 5Operating profit for the Electrical Products and Electrical Systems and Services segments saw substantial increases, driven by the acquisition.
- 6The Hydraulics segment experienced flat net sales and a decline in operating profit, with core sales decreasing due to lower demand.
- 7Operating cash flow improved significantly, up by $338 million for the first six months of 2013 compared to the prior year, supported by higher net income and proceeds from the sale of Apex Tool Group.