Eaton Reports Mixed Q3 Results, Cuts FY21 Organic Growth Outlook

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Eaton Corp PLC ETN reported third-quarter net sales growth of 8.8% year-over-year to $4.92 billion, missing the consensus of $5.02 billion.
The sales increase consisted of 8% growth in organic sales, 7% growth from acquisitions, and 1% from favorable currency translation.
Sales by segments: Electrical Americas $1.85 billion (+9.1% Y/Y), Electrical Global $1.42 billion (+18.8% Y/Y), Hydraulics $179 million (-59.2% Y/Y), Aerospace $745 million (+37.9% Y/Y), Vehicle $640 million (+11.7% Y/Y) and eMobility $84 million (+6% Y/Y).
Adjusted EPS improved 30% Y/Y to $1.75, beating the consensus of $1.73.
The segment operating profit increased by 22.9% Y/Y to $978 million, and the margin expanded by 228 bps to 19.8%.
Eaton generated an adjusted operating cash flow of $750 million and adjusted free cash flow of $610 million in the quarter.
“We had a record third quarter, driven by strong operational performance despite supply constraints that impacted our organic sales growth. Still, we saw encouraging signs, including robust order growth of 17% on a rolling 12-month basis and record backlogs up more than 50% in our combined Electrical Americas and Electrical Global segments,” commented Craig Arnold, Eaton chairman, and CEO.
Q4 Outlook: Eaton expects adjusted EPS of $1.68 - $1.78, versus the consensus of $1.74.
FY21 Outlook: Eaton expects organic growth of 9-11% (previous estimate 11-13%), Operating margin of 18.6% - 19%, and an Adjusted EPS of $6.59 – $6.69.
Price Action: ETN shares are trading lower by 0.82% at $163 during the premarket session on Tuesday.