10-QPeriod: Q1 FY2026

Eaton Corp plc Quarterly Report for Q1 Ended Mar 31, 2026

Filed May 5, 2026For Securities:ETN

Summary

Eaton Corp plc (ETN) reported a net income of $866 million for the three months ended March 31, 2026, a decrease from $964 million in the prior year period. Diluted earnings per share also declined to $2.22 from $2.45. This decrease in profitability was primarily driven by higher interest expenses and intangible asset amortization, alongside increased acquisition and restructuring charges. Despite the lower net income, the company demonstrated robust top-line growth, with net sales increasing by 17% to $7.45 billion, largely fueled by significant acquisitions including Boyd Thermal and Ultra PCS Limited, as well as organic growth across its Electrical Americas, Electrical Global, and Aerospace segments. The company also announced its intention to spin off its Mobility business, expected to be completed by the end of Q1 2027, which is intended to be tax-free to shareholders.

Financial Highlights

52 data points
Beta

Revenue

$7.45B

35.6% Gross Margin

Net Income

$868.00M

11.6% Net Margin

EPS (Diluted)

$2.22

Total Assets

$55.09B

Cash & Equivalents

$565.00M

Free Cash Flow

$314.00M

Financial Statements
Beta
Revenue$7.45B
Cost of Revenue$4.80B
Gross Profit$2.65B
R&D Expenses$211.00M
SG&A Expenses$1.27B
Net Income$868.00M
EPS (Basic)$2.23
EPS (Diluted)$2.22
Shares Outstanding (Basic)388.20M
Shares Outstanding (Diluted)389.20M

Key Highlights

  • 1Net sales grew 17% year-over-year to $7.45 billion, driven by a combination of organic growth (10%) and significant acquisitions (4%).
  • 2Net income attributable to Eaton ordinary shareholders decreased by 10% to $866 million, with diluted EPS falling to $2.22 from $2.45.
  • 3Significant acquisitions were completed, including Boyd Thermal for $9.55 billion and Ultra PCS Limited for $1.53 billion, substantially increasing the company's asset base and goodwill.
  • 4The company plans to spin off its Mobility business, aiming for completion by the end of the first quarter of 2027, which is expected to be tax-free to shareholders.
  • 5Gross profit margin declined from 38.4% to 35.6%, attributed to a 400 basis point increase in commodity and wage inflation.
  • 6Total corporate expenses increased by 69% to $583 million, primarily due to higher acquisition and divestiture costs, interest expense, and intangible asset amortization.
  • 7The company substantially increased its debt financing in Q1 2026, issuing $8.5 billion in U.S. notes and €1.2 billion in Euro notes to fund its acquisitions.

Frequently Asked Questions

The decrease in net income was primarily driven by higher interest expense (up from $33 million to $106 million), increased intangible asset amortization expense (up from $106 million to $140 million), and higher acquisition integration, divestiture charges, and transaction costs ($109 million in Q1 2026 vs. $10 million in Q1 2025). These factors, combined with a lower gross profit margin due to inflation, more than offset the strong top-line growth.

Eaton completed several substantial acquisitions in the first quarter of 2026, including Boyd Thermal ($9.55 billion) and Ultra PCS Limited ($1.53 billion). These acquisitions significantly increased goodwill by $5.74 billion and other intangible assets by $6.2 billion, leading to a substantial increase in total assets from $41.25 billion at the end of 2025 to $55.09 billion at the end of Q1 2026. The company also issued $8.5 billion in U.S. notes and €1.2 billion in Euro notes to finance these transactions.

While the filing doesn't explicitly detail the strategic rationale, the decision to spin off the Mobility business into an independent company suggests Eaton aims to focus its resources on its core intelligent power management solutions, particularly in electrical and aerospace markets, and unlock value for shareholders by allowing the Mobility business to pursue its own strategic direction and growth opportunities.

Inflation, particularly from commodity and wage increases, has significantly impacted Eaton's profitability. The company reported a 400 basis point decline in gross profit margin due to these factors. This inflation was most pronounced in the Electrical Americas segment, contributing to a 480 basis point decline in operating margin, and also impacted the Electrical Global, Aerospace, and Mobility segments.