01—Abstract
Summary
Summary of the 8-K filed February 3, 2026. Cited figures are marked; the original filing is the authoritative source.
Eaton reported record fourth-quarter 2025 results, with sales of $7.1 billiona (up 13%, 9% organic), a record segment margin of 24.9%, GAAP diluted EPS of $2.91 (up 19%), and record adjusted EPS of $3.33 (up 18%).
For full year 2025, sales reached a record $27.4 billionb (up 10%, 8% organic), GAAP EPS was $10.45 (up 10%), and adjusted EPS was $12.07 (up 12%). Operating cash flow was $2.0 billion in the quarter and free cash flow was $1.6 billion, both quarterly records. Full-year free cash flow of $3.6 billion grew only 1%, and Q4 interest expense rose to $70 million from $42 million, reflecting higher debt after recent acquisitions.
Demand indicators were strong. Electrical Americas orders on a twelve-month rolling basis rose 16%c organically, with backlog up 31% year over year, driven by data center demand. Aerospace orders rose 11% and backlog rose 16%.
Book-to-bill was 1.1 across the Electrical and Aerospace businesses. The Vehicle and eMobility segments declined, with Vehicle sales down 9% and eMobility down 15%, which supports management's plan to spin off the Mobility business by the end of Q1 2027. For 2026, Eaton guided to GAAP EPS of $11.57 to $12.07d and adjusted EPS of $13.00 to $13.50, implying roughly 10% adjusted growth at the midpoint, with organic growth of 7% to 9% and segment margins of 24.6% to 25.0%.
Q1 2026 adjusted EPS is guided to $2.65 to $2.85. Pending items include the $9.5 billion Boyd Thermal acquisition, expected to close in Q2 2026, and the $1.55 billion Ultra PCS acquisition, which closed January 23, 2026. Note that the filing header lists a February 3, 2026 filing date, while the attached press release is dated February 26, 2026; investors should confirm the filing date against EDGAR.
02—Key points
Key Highlights
- Q4 2025 sales of $7.1B were a record, up 13% (9% organic), and segment margins of 24.9% were a Q4 record, above the high end of guidance.
- Adjusted EPS of $3.33 in Q4 (up 18%) and $12.07 for FY2025 (up 12%) were records; GAAP diluted EPS was $2.91 in Q4 and $10.45 for the year.
- Electrical Americas orders rose 16% organically on a rolling twelve-month basis, with backlog up 31% year over year; Aerospace backlog rose 16%, supporting multi-year visibility.
- Full-year 2026 guidance calls for adjusted EPS of $13.00 to $13.50 (about 10% growth at midpoint) and organic growth of 7% to 9%.
- Free cash flow was $1.6B in Q4 (up 17%) but only $3.6B for FY2025 (up 1%), with capex rising to $919M from $808M.
- Pending $9.5B Boyd Thermal acquisition (expected Q2 2026) and planned Mobility spin-off (by end of Q1 2027) are major portfolio and capital-allocation events.
- Vehicle (-9%) and eMobility (-15%) sales declined in Q4, and the Mobility segments carry much of the restructuring activity, a key factor behind the planned separation.
03—Questions
Frequently Asked Questions
What is driving Eaton's growth outlook for 2026?
Management cites data center demand, digitalization and AI, reindustrialization, infrastructure spending, and aerospace growth. Electrical Americas orders are up 16% on a twelve-month rolling basis, and backlog is up 29% in the Electrical sector and 16% in Aerospace. Guidance calls for 7% to 9% organic growth in 2026.
How much of the 2026 EPS guidance comes from acquisitions versus the core business?
The filing does not break out acquisition contribution to EPS guidance. Ultra PCS (closed January 2026, $1.55B) will be reported in Aerospace, and Boyd Thermal ($9.5B, expected to close in Q2 2026) is not yet closed. The guidance excludes the per-share impact of intangible amortization ($1.01), restructuring ($0.23), and acquisition charges ($0.19), so GAAP EPS of $11.57 to $12.07 is the more conservative measure.
Why did free cash flow grow so little in 2025 despite strong earnings?
Full-year operating cash flow rose 3% to $4.5B, while capital expenditures increased to $919M from $808M, leaving free cash flow up only 1% to $3.6B. Management attributes this partly to key capacity investments. Q4 free cash flow grew 17%, but full-year growth remained modest.
What is the Mobility spin-off and why is Eaton pursuing it?
Eaton announced on January 26, 2026 its intention to spin off the Vehicle and eMobility segments into a separate public company, targeted for completion by the end of Q1 2027 and intended to be tax-free to shareholders. Both segments declined in Q4 2025 (Vehicle -9%, eMobility -15%), and the filing does not explicitly state the strategic rationale beyond the planned separation.
Are there risks to the strong backlog and margin trajectory?
Risks include supply chain disruption, input cost inflation, customer concentration in data centers, and integration risk from large acquisitions such as Boyd Thermal. Interest expense rose sharply to $70M in Q4 from $42M, and the Fibrebond retention awards and the restructuring program (total estimated charges of $475M, completing in 2026) will weigh on near-term reported results.
04—Continue