(Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) | ||||||||||||||||
(Address of principal executive offices) | (Zip Code) |
(Registrant's telephone number, including area code) | |||||||||||||||||||||||||||||||||||
Not applicable | |||||||||||||||||||||||||||||||||||
(Former name, former address and former fiscal year if changed since last report) | |||||||||||||||||||||||||||||||||||
Securities registered pursuant to Section 12(b) of the Act: | |||||||||||||||||||||||||||||||||||
Title of each class | Trading Symbol | Name of each exchange on which registered | |||||||||||||||||||||||||||||||||
☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |||||||||||||||||||
Smaller reporting company | Emerging growth company | (Do not check if a smaller reporting company) |
TABLE OF CONTENTS | |||||
Three months ended March 31 | |||||||||||
(In millions except for per share data) | 2024 | 2023 | |||||||||
Net sales | $ | $ | |||||||||
Cost of products sold | |||||||||||
Selling and administrative expense | |||||||||||
Research and development expense | |||||||||||
Interest expense - net | |||||||||||
Other income - net | ( | ( | |||||||||
Income before income taxes | |||||||||||
Income tax expense | |||||||||||
Net income | |||||||||||
Less net income for noncontrolling interests | ( | ( | |||||||||
Net income attributable to Eaton ordinary shareholders | $ | $ | |||||||||
Net income per share attributable to Eaton ordinary shareholders | |||||||||||
Diluted | $ | $ | |||||||||
Basic | |||||||||||
Weighted-average number of ordinary shares outstanding | |||||||||||
Diluted | |||||||||||
Basic | |||||||||||
Cash dividends declared per ordinary share | $ | $ |
Three months ended March 31 | |||||||||||
(In millions) | 2024 | 2023 | |||||||||
Net income | $ | $ | |||||||||
Less net income for noncontrolling interests | ( | ( | |||||||||
Net income attributable to Eaton ordinary shareholders | |||||||||||
Other comprehensive income (loss), net of tax | |||||||||||
Currency translation and related hedging instruments | ( | ||||||||||
Pensions and other postretirement benefits | ( | ||||||||||
Cash flow hedges | ( | ||||||||||
Other comprehensive income (loss) attributable to Eaton ordinary shareholders | ( | ||||||||||
Total comprehensive income attributable to Eaton ordinary shareholders | $ | $ |
(In millions) | March 31, 2024 | December 31, 2023 | |||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash | $ | $ | |||||||||
Short-term investments | |||||||||||
Accounts receivable - net | |||||||||||
Inventory | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment | |||||||||||
Land and buildings | |||||||||||
Machinery and equipment | |||||||||||
Gross property, plant and equipment | |||||||||||
Accumulated depreciation | ( | ( | |||||||||
Net property, plant and equipment | |||||||||||
Other noncurrent assets | |||||||||||
Goodwill | |||||||||||
Other intangible assets | |||||||||||
Operating lease assets | |||||||||||
Deferred income taxes | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and shareholders’ equity | |||||||||||
Current liabilities | |||||||||||
Short-term debt | $ | $ | |||||||||
Current portion of long-term debt | |||||||||||
Accounts payable | |||||||||||
Accrued compensation | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Noncurrent liabilities | |||||||||||
Long-term debt | |||||||||||
Pension liabilities | |||||||||||
Other postretirement benefits liabilities | |||||||||||
Operating lease liabilities | |||||||||||
Deferred income taxes | |||||||||||
Other noncurrent liabilities | |||||||||||
Total noncurrent liabilities | |||||||||||
Shareholders’ equity | |||||||||||
Ordinary shares ( | |||||||||||
Capital in excess of par value | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Shares held in trust | ( | ( | |||||||||
Total Eaton shareholders’ equity | |||||||||||
Noncontrolling interests | |||||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ |
Three months ended March 31 | |||||||||||
(In millions) | 2024 | 2023 | |||||||||
Operating activities | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile to net cash provided by operating activities | |||||||||||
Depreciation and amortization | |||||||||||
Deferred income taxes | |||||||||||
Pension and other postretirement benefits expense | |||||||||||
Contributions to pension plans | ( | ( | |||||||||
Contributions to other postretirement benefits plans | ( | ( | |||||||||
Changes in working capital | ( | ( | |||||||||
Other - net | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Investing activities | |||||||||||
Capital expenditures for property, plant and equipment | ( | ( | |||||||||
Proceeds from sales of property, plant and equipment | |||||||||||
Sales (purchases) of short-term investments - net | ( | ||||||||||
Proceeds from settlement of currency exchange contracts not designated as hedges - net | |||||||||||
Other - net | ( | ( | |||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
Financing activities | |||||||||||
Proceeds from borrowings | |||||||||||
Payments on borrowings | ( | ( | |||||||||
Short-term debt, net | ( | ( | |||||||||
Cash dividends paid | ( | ( | |||||||||
Exercise of employee stock options | |||||||||||
Repurchase of shares | ( | ||||||||||
Employee taxes paid from shares withheld | ( | ( | |||||||||
Other - net | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
Effect of currency on cash | |||||||||||
Total decrease in cash | ( | ( | |||||||||
Cash at the beginning of the period | |||||||||||
Cash at the end of the period | $ | $ |
Three months ended March 31 | |||||||||||
(In millions) | 2024 | 2023 | |||||||||
Electrical Americas | |||||||||||
Products | $ | $ | |||||||||
Systems | |||||||||||
Total | $ | $ | |||||||||
Electrical Global | |||||||||||
Products | $ | $ | |||||||||
Systems | |||||||||||
Total | $ | $ | |||||||||
Aerospace | |||||||||||
Original Equipment Manufacturers | $ | $ | |||||||||
Aftermarket | |||||||||||
Industrial and Other | |||||||||||
Total | $ | $ | |||||||||
Vehicle | |||||||||||
Commercial | $ | $ | |||||||||
Passenger and Light Duty | |||||||||||
Total | $ | $ | |||||||||
eMobility | $ | $ | |||||||||
Total net sales | $ | $ |
(In millions) | Deferred Revenue | ||||
Balance at January 1, 2024 | $ | ||||
Customer deposits and billings | |||||
Revenue recognized in the period | ( | ||||
Translation | ( | ||||
Balance at March 31, 2024 | $ |
(In millions) | Deferred Revenue | ||||
Balance at January 1, 2023 | $ | ||||
Customer deposits and billings | |||||
Revenue recognized in the period | ( | ||||
Translation | |||||
Balance at March 31, 2023 | $ |
(In millions) | March 31, 2024 | December 31, 2023 | |||||||||
Raw materials | $ | $ | |||||||||
Work-in-process | |||||||||||
Finished goods | |||||||||||
Total inventory | $ | $ |
(In millions) | January 1, 2024 | Translation | March 31, 2024 | ||||||||||||||
Electrical Americas | $ | $ | ( | $ | |||||||||||||
Electrical Global | ( | ||||||||||||||||
Aerospace | ( | ||||||||||||||||
Vehicle | ( | ||||||||||||||||
eMobility | |||||||||||||||||
Total | $ | $ | ( | $ |
(In millions) | SCF Obligations | ||||
Balance at January 1, 2024 | $ | ||||
Invoices confirmed during the period | |||||
Invoices paid during the period | ( | ||||
Balance at March 31, 2024 | $ |
(In millions) | SCF Obligations | ||||
Balance at January 1, 2023 | $ | ||||
Invoices confirmed during the period | |||||
Invoices paid during the period | ( | ||||
Translation | |||||
Balance at March 31, 2023 | $ |
United States pension benefit expense | Non-United States pension benefit expense | ||||||||||||||||||||||
Three months ended March 31 | |||||||||||||||||||||||
(In millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
Service cost | $ | $ | $ | $ | |||||||||||||||||||
Interest cost | |||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||
Amortization | |||||||||||||||||||||||
( | ( | ||||||||||||||||||||||
Settlements | |||||||||||||||||||||||
Total expense | $ | $ | $ | $ | |||||||||||||||||||
Ordinary shares | Capital in excess of par value | Retained earnings | Accumulated other comprehensive loss | Shares held in trust | Total Eaton shareholders' equity | Noncontrolling interests | Total equity | ||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | Shares | Dollars | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends paid and accrued | — | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares under equity-based compensation plans | — | ( | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
Repurchase of shares | ( | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Ordinary shares | Capital in excess of par value | Retained earnings | Accumulated other comprehensive loss | Shares held in trust | Total Eaton shareholders' equity | Noncontrolling interests | Total equity | ||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | Shares | Dollars | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends paid and accrued | — | — | — | ( | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of shares under equity-based compensation plans | — | ( | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
Changes in noncontrolling interest of consolidated subsidiaries - net | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
(In millions) | Currency translation and related hedging instruments | Pensions and other postretirement benefits | Cash flow hedges | Total | |||||||||||||||||||
Balance at January 1, 2024 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||||||||
Amounts reclassified from Accumulated other comprehensive loss (income) | ( | ( | ( | ||||||||||||||||||||
Net current-period Other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
Balance at March 31, 2024 | $ | ( | $ | ( | $ | $ | ( |
(In millions) | Three months ended March 31, 2024 | Consolidated Statements of Income classification | ||||||||||||
Gains and (losses) on net investment hedges (amount excluded from effectiveness testing) | ||||||||||||||
Currency exchange contracts | $ | Interest expense - net | ||||||||||||
Tax expense | ||||||||||||||
Total, net of tax | ||||||||||||||
Amortization of defined benefits pensions and other postretirement benefits items | ||||||||||||||
Actuarial loss and prior service cost | ( | 1 | ||||||||||||
Tax benefit | ||||||||||||||
Total, net of tax | ( | |||||||||||||
Gains and (losses) on cash flow hedges | ||||||||||||||
Floating-to-fixed interest rate swaps | Interest expense - net | |||||||||||||
Currency exchange contracts | Net sales and Cost of products sold | |||||||||||||
Commodity contracts | ( | Cost of products sold | ||||||||||||
Tax expense | ( | |||||||||||||
Total, net of tax | ||||||||||||||
Total reclassifications for the period | $ |
Three months ended March 31 | |||||||||||
(In millions except for per share data) | 2024 | 2023 | |||||||||
Net income attributable to Eaton ordinary shareholders | $ | $ | |||||||||
Weighted-average number of ordinary shares outstanding - diluted | |||||||||||
Less dilutive effect of equity-based compensation | |||||||||||
Weighted-average number of ordinary shares outstanding - basic | |||||||||||
Net income per share attributable to Eaton ordinary shareholders | |||||||||||
Diluted | $ | $ | |||||||||
Basic |
(In millions) | Total | Quoted prices in active markets for identical assets (Level 1) | Other observable inputs (Level 2) | Unobservable inputs (Level 3) | |||||||||||||||||||
March 31, 2024 | |||||||||||||||||||||||
Cash | $ | $ | $ | $ | |||||||||||||||||||
Short-term investments | |||||||||||||||||||||||
Net derivative contracts | |||||||||||||||||||||||
Contingent future payments from acquisition of Green Motion | ( | ( | |||||||||||||||||||||
December 31, 2023 | |||||||||||||||||||||||
Cash | $ | $ | $ | $ | |||||||||||||||||||
Short-term investments | |||||||||||||||||||||||
Net derivative contracts | |||||||||||||||||||||||
Contingent future payments from acquisition of Green Motion | ( | ( |
(In millions) | Notional amount | Other current assets | Other noncurrent assets | Other current liabilities | Other noncurrent liabilities | Type of hedge | Term | ||||||||||||||||||||||||||||||||||
March 31, 2024 | |||||||||||||||||||||||||||||||||||||||||
Derivatives designated as hedges | |||||||||||||||||||||||||||||||||||||||||
Forward starting floating-to-fixed interest rate swaps | $ | $ | $ | $ | $ | Cash flow | |||||||||||||||||||||||||||||||||||
Currency exchange contracts | Cash flow | ||||||||||||||||||||||||||||||||||||||||
Commodity contracts | Cash flow | ||||||||||||||||||||||||||||||||||||||||
Currency exchange contracts | Net investment | ||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Derivatives not designated as hedges | |||||||||||||||||||||||||||||||||||||||||
Currency exchange contracts | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||
Derivatives designated as hedges | |||||||||||||||||||||||||||||||||||||||||
Forward starting floating-to-fixed interest rate swaps | $ | $ | $ | $ | $ | Cash flow | |||||||||||||||||||||||||||||||||||
Currency exchange contracts | Cash flow | ||||||||||||||||||||||||||||||||||||||||
Commodity contracts | Cash flow | ||||||||||||||||||||||||||||||||||||||||
Currency exchange contracts | Net investment | ||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
Derivatives not designated as hedges | |||||||||||||||||||||||||||||||||||||||||
Currency exchange contracts | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Commodity | March 31, 2024 | Term | ||||||||||||||||||
Aluminum | Millions of pounds | |||||||||||||||||||
Copper | Millions of pounds | |||||||||||||||||||
Gold | Troy ounces | |||||||||||||||||||
Silver | Troy ounces |
(In millions) | Carrying amount of the hedged assets (liabilities) | Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities)1 | |||||||||||||||||||||
Location on Consolidated Balance Sheets | March 31, 2024 | December 31, 2023 | March 31, 2024 | December 31, 2023 | |||||||||||||||||||
Long-term debt | $ | ( | $ | ( | $ | ( | $ | ( |
Three months ended March 31, 2024 | |||||||||||||||||
(In millions) | Net Sales | Cost of products sold | Interest expense - net | ||||||||||||||
Amounts from Consolidated Statements of Income | $ | $ | $ | ||||||||||||||
Gain (loss) on derivatives designated as cash flow hedges | |||||||||||||||||
Forward starting floating-to-fixed interest rate swaps | |||||||||||||||||
Hedged item | $ | $ | $ | ( | |||||||||||||
Derivative designated as hedging instrument | |||||||||||||||||
Currency exchange contracts | |||||||||||||||||
Hedged item | $ | ( | $ | ( | $ | ||||||||||||
Derivative designated as hedging instrument | |||||||||||||||||
Commodity contracts | |||||||||||||||||
Hedged item | $ | $ | $ | ||||||||||||||
Derivative designated as hedging instrument | ( | ||||||||||||||||
Three months ended March 31, 2023 | |||||||||||||||||
(In millions) | Net Sales | Cost of products sold | Interest expense - net | ||||||||||||||
Amounts from Consolidated Statements of Income | $ | $ | $ | ||||||||||||||
Gain (loss) on derivatives designated as cash flow hedges | |||||||||||||||||
Forward starting floating-to-fixed interest rate swaps | |||||||||||||||||
Hedged item | $ | $ | $ | ( | |||||||||||||
Derivative designated as hedging instrument | |||||||||||||||||
Currency exchange contracts | |||||||||||||||||
Hedged item | $ | $ | ( | $ | |||||||||||||
Derivative designated as hedging instrument | ( | ||||||||||||||||
Gain (loss) recognized in Consolidated Statements of Income | Consolidated Statements of Income classification | ||||||||||||||||
Three months ended March 31 | |||||||||||||||||
(In millions) | 2024 | 2023 | |||||||||||||||
Gain (loss) on derivatives not designated as hedges | |||||||||||||||||
Currency exchange contracts | $ | $ | Interest expense - net | ||||||||||||||
Total | $ | $ |
Gain (loss) recognized in other comprehensive income (loss) | Location of gain (loss) reclassified from Accumulated other comprehensive loss | Gain (loss) reclassified from Accumulated other comprehensive loss | |||||||||||||||||||||||||||
Three months ended March 31 | Three months ended March 31 | ||||||||||||||||||||||||||||
(In millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||
Derivatives designated as cash flow hedges | |||||||||||||||||||||||||||||
Forward starting floating-to-fixed interest rate swaps | $ | $ | Interest expense - net | $ | $ | ||||||||||||||||||||||||
Currency exchange contracts | Net sales and Cost of products sold | ||||||||||||||||||||||||||||
Commodity contracts | Cost of products sold | ( | |||||||||||||||||||||||||||
Derivatives designated as net investment hedges | |||||||||||||||||||||||||||||
Currency exchange contracts | |||||||||||||||||||||||||||||
Effective portion | ( | Gain (loss) on sale of business | |||||||||||||||||||||||||||
Amount excluded from effectiveness testing | Interest expense - net | ||||||||||||||||||||||||||||
Non-derivative designated as net investment hedges | |||||||||||||||||||||||||||||
Foreign currency denominated debt | ( | Gain (loss) on sale of business | |||||||||||||||||||||||||||
Total | $ | $ | ( | $ | $ |
Three months ended March 31 | |||||||||||
(In millions except for per share data) | 2024 | 2023 | |||||||||
Workforce reductions | $ | $ | |||||||||
Plant closing and other | |||||||||||
Total before income taxes | |||||||||||
Income tax benefit | |||||||||||
Total after income taxes | $ | $ | |||||||||
Per ordinary share - diluted | $ | $ |
Three months ended March 31 | |||||||||||
(In millions) | 2024 | 2023 | |||||||||
Electrical Americas | $ | $ | |||||||||
Electrical Global | |||||||||||
Aerospace | |||||||||||
Vehicle | |||||||||||
Corporate | |||||||||||
Total | $ | $ |
(In millions) | Workforce reductions | Plant closing and other | Total | ||||||||||||||
Balance at January 1, 2024 | $ | $ | $ | ||||||||||||||
Liability recognized, net | |||||||||||||||||
Payments, utilization and translation | ( | ( | ( | ||||||||||||||
Balance at March 31, 2024 | $ | $ | $ |
Three months ended March 31 | |||||||||||
(In millions) | 2024 | 2023 | |||||||||
Net sales | |||||||||||
Electrical Americas | $ | $ | |||||||||
Electrical Global | |||||||||||
Aerospace | |||||||||||
Vehicle | |||||||||||
eMobility | |||||||||||
Total net sales | $ | $ | |||||||||
Segment operating profit (loss) | |||||||||||
Electrical Americas | $ | $ | |||||||||
Electrical Global | |||||||||||
Aerospace | |||||||||||
Vehicle | |||||||||||
eMobility | ( | ( | |||||||||
Total segment operating profit | |||||||||||
Corporate | |||||||||||
Intangible asset amortization expense | ( | ( | |||||||||
Interest expense - net | ( | ( | |||||||||
Pension and other postretirement benefits income | |||||||||||
Restructuring program charges | ( | ( | |||||||||
Other expense - net | ( | ( | |||||||||
Income before income taxes | |||||||||||
Income tax expense | |||||||||||
Net income | |||||||||||
Less net income for noncontrolling interests | ( | ( | |||||||||
Net income attributable to Eaton ordinary shareholders | $ | $ |
Three months ended March 31 | |||||||||||
(In millions except for per share data) | 2024 | 2023 | |||||||||
Acquisition integration, divestiture charges and transaction costs | $ | 17 | $ | 13 | |||||||
Income tax benefit | 4 | 3 | |||||||||
Total after income taxes | $ | 13 | $ | 11 | |||||||
Per ordinary share - diluted | $ | 0.03 | $ | 0.03 |
Three months ended March 31 | |||||||||||
(In millions except for per share data) | 2024 | 2023 | |||||||||
Intangible asset amortization expense | $ | 106 | $ | 124 | |||||||
Income tax benefit | 23 | 27 | |||||||||
Total after income taxes | $ | 84 | $ | 97 | |||||||
Per ordinary share - diluted | $ | 0.21 | $ | 0.24 |
Three months ended March 31 | Increase (decrease) | ||||||||||||||||
(In millions except for per share data) | 2024 | 2023 | |||||||||||||||
Net sales | $ | 5,943 | $ | 5,483 | 8 | % | |||||||||||
Gross profit | 2,218 | 1,884 | 18 | % | |||||||||||||
Percent of net sales | 37.3 | % | 34.4 | % | |||||||||||||
Income before income taxes | 1,001 | 762 | 31 | % | |||||||||||||
Net income | 822 | 639 | 29 | % | |||||||||||||
Less net income for noncontrolling interests | (1) | (1) | |||||||||||||||
Net income attributable to Eaton ordinary shareholders | 821 | 638 | 29 | % | |||||||||||||
Excluding acquisition and divestiture charges, after-tax | 13 | 11 | |||||||||||||||
Excluding restructuring program charges, after-tax | 49 | 8 | |||||||||||||||
Excluding intangible asset amortization expense, after-tax | 84 | 97 | |||||||||||||||
Adjusted earnings | $ | 966 | $ | 753 | 28 | % | |||||||||||
Net income per share attributable to Eaton ordinary shareholders - diluted | $ | 2.04 | $ | 1.59 | 28 | % | |||||||||||
Excluding per share impact of acquisition and divestiture charges, after-tax | 0.03 | 0.03 | |||||||||||||||
Excluding per share impact of restructuring program charges, after-tax | 0.12 | 0.02 | |||||||||||||||
Excluding per share impact of intangible asset amortization expense, after-tax | 0.21 | 0.24 | |||||||||||||||
Adjusted earnings per ordinary share | $ | 2.40 | $ | 1.88 | 28 | % |
Three months ended | |||||||||||
(In millions except for per share data) | Dollars | Per share | |||||||||
March 31, 2023 | $ | 638 | $ | 1.59 | |||||||
Business segment results of operations | |||||||||||
Operational performance | 254 | 0.61 | |||||||||
Foreign currency | (13) | (0.03) | |||||||||
Corporate | |||||||||||
Intangible asset amortization expense | 13 | 0.03 | |||||||||
Restructuring program charges | (41) | (0.10) | |||||||||
Acquisition and divestiture charges | (2) | — | |||||||||
Other corporate items | (10) | (0.02) | |||||||||
Tax rate impact | (18) | (0.04) | |||||||||
March 31, 2024 | $ | 821 | $ | 2.04 |
Three months ended March 31 | Increase (decrease) | ||||||||||||||||
(In millions) | 2024 | 2023 | |||||||||||||||
Net sales | $ | 2,690 | $ | 2,294 | 17 | % | |||||||||||
Operating profit | $ | 785 | $ | 525 | 50 | % | |||||||||||
Operating margin | 29.2 | % | 22.9 | % | |||||||||||||
Three months ended March 31 | Increase (decrease) | ||||||||||||||||
(In millions) | 2024 | 2023 | |||||||||||||||
Net sales | $ | 1,500 | $ | 1,500 | — | % | |||||||||||
Operating profit | $ | 274 | $ | 274 | — | % | |||||||||||
Operating margin | 18.3 | % | 18.3 | % | |||||||||||||
Changes in Net sales are summarized as follows: | Three months ended March 31, 2024 | ||||
Organic growth | 1 | % | |||
Foreign currency | (1) | % | |||
Total increase in Net sales | — | % |
Three months ended March 31 | Increase (decrease) | ||||||||||||||||
(In millions) | 2024 | 2023 | |||||||||||||||
Net sales | $ | 871 | $ | 803 | 9 | % | |||||||||||
Operating profit | $ | 201 | $ | 180 | 12 | % | |||||||||||
Operating margin | 23.1 | % | 22.5 | % | |||||||||||||
Three months ended March 31 | Increase (decrease) | ||||||||||||||||
(In millions) | 2024 | 2023 | |||||||||||||||
Net sales | $ | 724 | $ | 739 | (2) | % | |||||||||||
Operating profit | $ | 116 | $ | 107 | 8 | % | |||||||||||
Operating margin | 16.0 | % | 14.5 | % |
Changes in Net sales are summarized as follows: | Three months ended March 31, 2024 | ||||
Organic growth | (3) | % | |||
Foreign currency | 1 | % | |||
Total increase in Net sales | (2) | % |
Three months ended March 31 | Increase (decrease) | ||||||||||||||||
(In millions) | 2024 | 2023 | |||||||||||||||
Net sales | $ | 158 | $ | 147 | 7 | % | |||||||||||
Operating loss | $ | (4) | $ | (4) | — | % | |||||||||||
Operating margin | (2.7) | % | (2.7) | % | |||||||||||||
Three months ended March 31 | Increase (decrease) | ||||||||||||||||
(In millions) | 2024 | 2023 | |||||||||||||||
Intangible asset amortization expense | $ | 106 | $ | 124 | (15) | % | |||||||||||
Interest expense - net | 30 | 50 | (40) | % | |||||||||||||
Pension and other postretirement benefits income | (12) | (11) | 9 | % | |||||||||||||
Restructuring program charges | 63 | 10 | 530 | % | |||||||||||||
Other expense - net | 184 | 148 | 24 | % | |||||||||||||
Total corporate expense | $ | 371 | $ | 320 | 16 | % |
Three months ended March 31 | Change from 2023 | ||||||||||||||||
(In millions) | 2024 | 2023 | |||||||||||||||
Net cash provided by operating activities | $ | 475 | $ | 335 | $ | 140 | |||||||||||
Net cash provided by (used in) investing activities | 33 | (124) | 156 | ||||||||||||||
Net cash used in financing activities | (536) | (281) | (255) | ||||||||||||||
Effect of currency on cash | 13 | 11 | 2 | ||||||||||||||
Total decrease in cash | $ | (15) | $ | (59) |
(In millions) | March 31, 2024 | December 31, 2023 | |||||||||
Current assets | $ | 4,991 | $ | 5,006 | |||||||
Noncurrent assets | 13,026 | 13,004 | |||||||||
Current liabilities | 3,768 | 3,927 | |||||||||
Noncurrent liabilities | 9,975 | 10,012 | |||||||||
Amounts due to subsidiaries that are non-issuers and non-guarantors - net | 8,682 | 8,178 | |||||||||
(In millions) | Three months ended March 31, 2024 | ||||||||||
Net sales | $ | 3,484 | |||||||||
Sales to subsidiaries that are non-issuers and non-guarantors | 280 | ||||||||||
Cost of products sold | 2,585 | ||||||||||
Expense from subsidiaries that are non-issuers and non-guarantors - net | 109 | ||||||||||
Net income | 220 |
Month | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) | ||||||||||||||||||||||
January | — | $ | — | — | $ | 4,714 | ||||||||||||||||||||
February | 451,586 | $ | 283.45 | 451,586 | $ | 4,586 | ||||||||||||||||||||
March | 36,098 | $ | 289.78 | 36,098 | $ | 4,576 | ||||||||||||||||||||
Total | 487,684 | $ | 283.92 | 487,684 |
3 (i) | |||||||||||
3 (ii) | |||||||||||
4.1 | |||||||||||
4.2 | |||||||||||
4.3 | |||||||||||
4.4 | |||||||||||
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4.11 | Pursuant to Regulation S-K Item 601(b)(4), Eaton agrees to furnish to the SEC, upon request, a copy of the instruments defining the rights of holders of its long-term debt other than those set forth in Exhibits (4.2 - 4.10) hereto | ||||||||||
10.1 | |||||||||||
10.2 | 364-Day Revolving Credit Agreement, dated as of October 2, 2023, among Eaton Corporation, the guarantors from time to time party thereto, the several lenders from time to time parties thereto, Citibank, N.A., as Administrative Agent, Citibank, N.A., JPMorgan Chase Bank, N.A. and BofA Securities, Inc., as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent and Bank of America, N.A. as documentation agent. | ||||||||||
31.1 | |||||||||||
31.2 | |||||||||||
32.1 | |||||||||||
32.2 | |||||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. * | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document * | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document * | ||||||||||
101.DEF | XBRL Taxonomy Extension Label Definition Document * | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document * | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document * | ||||||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
* | Submitted electronically herewith. |
EATON CORPORATION plc | ||||||||||||||
Registrant | ||||||||||||||
Date: | April 30, 2024 | By: | /s/ Olivier Leonetti | |||||||||||
Olivier Leonetti | ||||||||||||||
Principal Financial Officer | ||||||||||||||
(On behalf of the registrant and as Principal Financial Officer) |
Date: | April 30, 2024 | /s/ Craig Arnold | |||||||||
Craig Arnold | |||||||||||
Principal Executive Officer |
Date: | April 30, 2024 | /s/ Olivier Leonetti | |||||||||
Olivier Leonetti | |||||||||||
Principal Financial Officer |
Date: | April 30, 2024 | /s/ Craig Arnold | |||||||||
Craig Arnold | |||||||||||
Principal Executive Officer |
Date: | April 30, 2024 | /s/ Olivier Leonetti | |||||||||
Olivier Leonetti | |||||||||||
Principal Financial Officer |
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Income Statement [Abstract] | ||
Net sales | $ 5,943 | $ 5,483 |
Cost of products sold | 3,725 | 3,599 |
Selling and administrative expense | 1,025 | 904 |
Research and development expense | 189 | 179 |
Interest expense - net | 30 | 50 |
Other income - net | (26) | (11) |
Income before income taxes | 1,001 | 762 |
Income tax expense | 179 | 123 |
Net income | 822 | 639 |
Less net income for noncontrolling interests | (1) | (1) |
Net income attributable to Eaton ordinary shareholders | $ 821 | $ 638 |
Net income per share attributable to Eaton ordinary shareholders | ||
Diluted (USD per share) | $ 2.04 | $ 1.59 |
Basic (USD per share) | $ 2.05 | $ 1.60 |
Weighted-average number of ordinary shares outstanding | ||
Diluted (in shares) | 401.9 | 400.5 |
Basic (in shares) | 399.9 | 398.5 |
Cash dividends declared per ordinary share (USD per share) | $ 0.94 | $ 0.86 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 822 | $ 639 |
Less net income for noncontrolling interests | (1) | (1) |
Net income attributable to Eaton ordinary shareholders | 821 | 638 |
Other comprehensive income (loss), net of tax | ||
Currency translation and related hedging instruments | (53) | 119 |
Pensions and other postretirement benefits | 17 | (2) |
Cash flow hedges | (4) | 15 |
Other comprehensive income (loss) attributable to Eaton ordinary shareholders | (40) | 132 |
Total comprehensive income attributable to Eaton ordinary shareholders | $ 781 | $ 770 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares shares in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Ordinary shares outstanding (in shares) | 399.8 | 399.4 |
BASIS OF PRESENTATION |
3 Months Ended |
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Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Eaton Corporation plc (Eaton or the Company) have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles (US GAAP) for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are necessary for a fair presentation of the condensed consolidated financial statements for the interim periods. This Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in Eaton’s 2023 Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission. Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07). This accounting standard requires additional segment disclosures on an annual and interim basis, including significant segment expenses that are regularly provided to the chief operating decision maker. The standard does not change how operating segments and reportable segments are determined. ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023 and interim reporting periods beginning after December 15, 2024. The standard is required to be applied retrospectively to all periods presented in the consolidated financial statements. Eaton plans to adopt the standard for the year ended December 31, 2024. The Company is evaluating the impact of ASU 2023-07 and expects the standard will only impact its segment disclosures with no material impact to the consolidated financial statements. In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09). This accounting standard requires disaggregated income tax disclosures on an annual basis, including information on the Company’s effective income tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, and may be applied prospectively or retrospectively. The Company is evaluating the impact of ASU 2023-09 and expects the standard will only impact its income taxes disclosures with no material impact to the consolidated financial statements.
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INVESTMENT IN ASSOCIATE COMPANY |
3 Months Ended |
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Mar. 31, 2024 | |
Business Combination and Asset Acquisition [Abstract] | |
INVESTMENT IN ASSOCIATE COMPANY | INVESTMENT IN ASSOCIATE COMPANY Acquisition of a 49% stake in Jiangsu Ryan Electrical Co. Ltd. On April 23, 2023, Eaton acquired a 49 percent stake in Jiangsu Ryan Electrical Co. Ltd., a manufacturer of power distribution and sub-transmission transformers in China. Eaton accounts for this investment on the equity method of accounting and is reported within the Electrical Global business segment.
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REVENUE RECOGNITION |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGNITION | REVENUE RECOGNITION Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. Sales are measured at the amount of consideration the Company expects to be paid in exchange for these products or services. The following table provides disaggregated sales by lines of businesses, geographic destination, market channel or end market, as applicable, for the Company's operating segments:
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (revenue recognized exceeds amount billed to the customer), and deferred revenue (advance payments and billings in excess of revenue recognized). Accounts receivable from customers were $4,170 million and $3,966 million at March 31, 2024 and December 31, 2023, respectively. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Unbilled receivables were $301 million and $289 million at March 31, 2024 and December 31, 2023, respectively, and are recorded in Prepaid expenses and other current assets. The increase in unbilled receivables reflects higher revenue recognized from increased business activity in 2024. Changes in the deferred revenue liabilities are as follows:
Deferred revenue liabilities of $651 million and $610 million as of March 31, 2024 and December 31, 2023, respectively, were included in Other current liabilities with the remaining balance presented in Other noncurrent liabilities. A significant portion of open orders placed with Eaton are by original equipment manufacturers or distributors. These open orders are not considered firm as they have been historically subject to releases by customers. In measuring backlog of unsatisfied or partially satisfied obligations, only the amount of orders to which customers are firmly committed are included. Using this criterion, total backlog at March 31, 2024 was approximately $15 billion. At March 31, 2024, approximately 79% of this backlog is targeted for delivery to customers in the next twelve months and the rest thereafter.
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CREDIT LOSSES FOR RECEIVABLES |
3 Months Ended |
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Mar. 31, 2024 | |
Credit Loss [Abstract] | |
CREDIT LOSSES FOR RECEIVABLES | CREDIT LOSSES FOR RECEIVABLES Receivables are exposed to credit risk based on the customers’ ability to pay which is influenced by, among other factors, their financial liquidity position. Eaton’s receivables are generally short-term in nature with a majority outstanding less than 90 days. Eaton performs ongoing credit evaluation of its customers and maintains sufficient allowances for potential credit losses. The Company evaluates the collectability of its receivables based on the length of time the receivable is past due, and any anticipated future write-off based on historic experience adjusted for market conditions. The Company's segments, supported by our global credit department, perform the credit evaluation and monitoring process to estimate and manage credit risk. The process includes an evaluation of credit losses for both the overall segment receivable and specific customer balances. The process also includes review of customer financial information and credit ratings, approval and monitoring of customer credit limits, and an assessment of market conditions. The Company may also require prepayment from customers to mitigate credit risk. Receivable balances are written off against an allowance for credit losses after a final determination of collectability has been made. Accounts receivable are net of an allowance for credit losses of $39 million and $38 million at March 31, 2024 and December 31, 2023, respectively. The change in the allowance for credit losses includes expense and net write-offs, none of which are significant.
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INVENTORY |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY | INVENTORY Inventory is carried at lower of cost or net realizable value. The components of inventory are as follows:
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GOODWILL |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL | GOODWILL Changes in the carrying amount of goodwill by segment are as follows:
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SUPPLY CHAIN FINANCE PROGRAM |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLY CHAIN FINANCE PROGRAM | SUPPLY CHAIN FINANCE PROGRAM The Company negotiates payment terms directly with its suppliers for the purchase of goods and services. In addition, a third-party financial institution offers a voluntary supply chain finance (SCF) program that enables certain of the Company’s suppliers, at the supplier’s sole discretion, to sell receivables due from the Company to the financial institution on terms directly negotiated with the financial institution. If a supplier elects to participate in the SCF program, the supplier decides which invoices are sold to the financial institution and the Company has no economic interest in a supplier’s decision to sell an invoice. Payments by the Company to participating suppliers are paid to the financial institution on the invoice due date, regardless of whether an individual invoice is sold by the supplier to the financial institution. The amounts due to the financial institution for suppliers that participate in the SCF program are included in on the Consolidated Balance Sheets, and the associated payments are included in operating activities on the Condensed Consolidated Statements of Cash Flows. The changes in SCF obligations are as follows:
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RETIREMENT BENEFITS PLANS |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RETIREMENT BENEFITS PLANS | RETIREMENT BENEFITS PLANS The components of retirement benefits expense are as follows:
The components of retirement benefits expense other than service costs are included in Other income - net. During 2020, the Company announced it was freezing its United States pension plans for its non-union employees. The freeze was effective January 1, 2021 for non-union U.S. employees whose retirement benefit was determined under a cash balance formula and is effective January 1, 2026 for non-union U.S. employees whose retirement benefit is determined under a final average pay formula.
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LEGAL CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
LEGAL CONTINGENCIES | LEGAL CONTINGENCIES Eaton is subject to a broad range of claims, administrative and legal proceedings such as lawsuits that relate to contractual allegations and indemnity claims, tax audits, patent infringement, personal injuries, antitrust matters, and employment-related matters. Eaton is also subject to legal claims from historic products which may have contained asbestos. Insurance may cover some of the costs associated with these claims and proceedings. Although it is not possible to predict with certainty the outcome or cost of these matters, the Company believes they will not have a material adverse effect on the condensed consolidated financial statements.
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INCOME TAXES |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The effective income tax rate for the first quarter of 2024 was expense of 17.9% compared to expense of 16.1% for the first quarter of 2023. The increase in the effective tax rate in the first quarter of 2024 was primarily due to greater levels of income in higher tax jurisdictions, partially offset by a larger impact from the excess tax benefits recognized for employee share-based payments in the quarter. Brazil Tax Years 2005-2012 The Company has two Brazilian tax cases primarily relating to the amortization of certain goodwill generated from the acquisition of third-party businesses and corporate reorganizations. One case involves tax years 2005-2008 (Case 1), and the other involves tax years 2009-2012 (Case 2). Case 2 is proceeding on a more accelerated timeline than Case 1. For Case 2, the Company received a tax assessment in 2014 that included interest and penalties. In November 2019, the Company received an unfavorable result at the final tax administrative appeals level, resulting in an alleged tax deficiency of $27 million plus $118 million of interest and penalties (translated at the March 31, 2024 exchange rate). The Company is challenging this assessment in the judicial system and, on April 18, 2022, received an unfavorable decision at the first judicial level. On April 27, 2022, the Company filed a motion for clarification relating to that decision. On May 20, 2022, the court largely upheld its prior decision without further clarification. On June 9, 2022, the Company filed its notice of appeal to the second level court. The Company intends to continue its challenge of this assessment in the judicial system. As previously disclosed for Case 1, the Company received a separate tax assessment alleging a tax deficiency of $33 million plus $120 million of interest and penalties (translated at the March 31, 2024 exchange rate), which the Company is challenging in the judicial system. On April 4, 2024, the court published a favorable decision resulting in a reduction to the Case 1 assessment for the goodwill generated from the acquisition of a third-party business. In the same decision, the court confirmed the cancellation of an additional 75% penalty imposed by the tax authorities. As a result of the favorable decision, the alleged tax deficiency was reduced to $32 million plus $98 million of interest and penalties (translated at the March 31, 2024 exchange rate). The remainder of Case 1 is still pending resolution at the first judicial level. Both cases are expected to take several years to resolve through the Brazilian judicial system and require provision of certain assets as security for the alleged deficiencies. As of March 31, 2024, the Company pledged Brazilian real estate assets with net book value of $20 million and provided additional security in the form of bank secured bonds and insurance bonds totaling $136 million and a cash deposit of $26 million (translated at the March 31, 2024 exchange rate). The Company believes that the final resolution of both of the assessments will not have a material impact on its condensed consolidated financial statements. The ultimate outcome of these matters cannot be predicted with certainty given the complex nature of tax controversies. Should the ultimate outcome of these matters deviate from our reasonable expectations, they may have a material adverse impact on the Company’s condensed consolidated financial statements. However, Eaton believes that its interpretations of tax laws and application of tax laws to its facts are correct.
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EATON SHAREHOLDERS' EQUITY |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EATON SHAREHOLDERS' EQUITY | EATON SHAREHOLDERS' EQUITY The changes in Shareholders’ equity are as follows:
On February 27, 2019, the Board of Directors adopted a share repurchase program for share repurchases up to $5.0 billion of ordinary shares (2019 Program). On February 23, 2022, the Board renewed the 2019 Program by providing authority for up to $5.0 billion in repurchases to be made during the three-year period commencing on that date (2022 Program). Under the 2022 Program, the ordinary shares are expected to be repurchased over time, depending on market conditions, the market price of ordinary shares, capital levels, and other considerations. During the three months ended March 31, 2024, 0.5 million ordinary shares were repurchased under the 2022 program in the open market at a total cost of $138 million. During the three months ended March 31, 2023, no ordinary shares were repurchased. The changes in Accumulated other comprehensive loss are as follows:
The reclassifications out of Accumulated other comprehensive loss are as follows:
1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 8 for additional information about pension and other postretirement benefits items. Net Income Per Share Attributable to Eaton Ordinary Shareholders A summary of the calculation of net income per share attributable to Eaton ordinary shareholders is as follows:
For the first quarter of 2024 and 2023, all stock options were included in the calculation of diluted net income per share attributable to Eaton ordinary shareholders because they were all dilutive.
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FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a fair value hierarchy is established, which categorizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. A summary of financial instruments and contingent consideration recognized at fair value, and the fair value measurements used, is as follows:
Eaton values its financial instruments using an industry standard market approach, in which prices and other relevant information is generated by market transactions involving identical or comparable assets or liabilities. On March 22, 2021, Eaton acquired Green Motion SA, a leading designer and manufacturer of electric vehicle charging hardware and related software based in Switzerland. Green Motion SA was acquired for $106 million, including $49 million of cash paid at closing and an initial estimate of $57 million for the fair value of contingent future consideration based on 2023 and 2024 revenue performance. The fair value of contingent consideration liabilities is estimated by discounting contingent payments expected to be made, and may increase or decrease based on changes in revenue estimates and discount rates, with a maximum possible undiscounted value of $114 million. As of March 31, 2024, the fair value of the contingent future payments has been reduced to $17 million based primarily on lower revenue in 2023 and anticipated reductions in projected 2024 revenue compared to the initial estimates at closing. Other Fair Value Measurements Long-term debt and the current portion of long-term debt had a carrying value of $9,186 million and fair value of $8,678 million at March 31, 2024 compared to $9,261 million and $8,924 million, respectively, at December 31, 2023. The fair value of Eaton's debt instruments was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and is considered a Level 2 fair value measurement.
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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES In the normal course of business, Eaton is exposed to certain risks related to fluctuations in interest rates, currency exchange rates and commodity prices. The Company uses various derivative and non-derivative financial instruments, primarily interest rate swaps, currency forward exchange contracts, currency swaps and commodity contracts to manage risks from these market fluctuations. The instruments used by Eaton are straightforward, non-leveraged instruments. The counterparties to these instruments are financial institutions with strong credit ratings. Eaton maintains control over the size of positions entered into with any one counterparty and regularly monitors the credit rating of these institutions. Such instruments are not purchased and sold for trading purposes. Derivative financial instruments are accounted for at fair value and recognized as assets or liabilities in the Consolidated Balance Sheets. Accounting for the gain or loss resulting from the change in the fair value of the derivative financial instrument depends on whether it has been designated as part of a hedging relationship, is effective and the nature of the hedging activity. Eaton formally documents all relationships between derivative financial instruments accounted for as designated hedges and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transaction. This process includes linking derivative financial instruments to a recognized asset or liability, specific firm commitment, forecasted transaction, or net investment in a foreign operation. These financial instruments can be designated as: •Hedges of the change in the fair value of a recognized fixed-rate asset or liability, or the firm commitment to acquire such an asset or liability (a fair value hedge); for these hedges, the gain or loss from the derivative financial instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in income during the period of change in fair value. •Hedges of the variable cash flows of a recognized variable-rate asset or liability, or the forecasted acquisition of such an asset or liability (a cash flow hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss on the hedged item is included in income. •Hedges of the currency exposure related to a net investment in a foreign operation (a net investment hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss related to the net investment in the foreign operation is included in income. The gain or loss from a derivative financial instrument designated as a hedge is classified in the same line of the Consolidated Statements of Income as the offsetting loss or gain on the hedged item. The cash flows resulting from these financial instruments are classified in operating activities on the Condensed Consolidated Statements of Cash Flows. For derivatives that are not designated as a hedge, any gain or loss is immediately recognized in income. The majority of derivatives used in this manner relate to risks resulting from assets or liabilities denominated in a foreign currency and certain commodity contracts that arise in the normal course of business. Eaton uses currency exchange contracts and certain of its debt denominated in foreign currency to hedge portions of its net investments in foreign operations against foreign currency exposure (net investment hedges). The Company uses the spot rate method to assess hedge effectiveness when currency exchange contracts are used in net investment hedges. Under this method, changes in the spot exchange rate are recognized in Accumulated other comprehensive loss. Changes related to the forward rate are excluded from the hedging relationship and the forward points are amortized to Interest expense - net on a straight-line basis over the term of the contract. The cash flows resulting from these currency exchange contracts are classified in investing activities on the Condensed Consolidated Statements of Cash Flows. Derivative Financial Statement Impacts The fair value of derivative financial instruments recognized in the Consolidated Balance Sheets is as follows:
The currency exchange contracts shown in the table above as derivatives not designated as hedges are primarily contracts entered into to manage currency volatility or exposure on intercompany receivables, payables and loans. While Eaton does not elect hedge accounting treatment for these derivatives, Eaton targets managing 100% of the intercompany balance sheet exposure to minimize the effect of currency volatility related to the movement of goods and services in the normal course of its operations. This activity represents the great majority of these currency exchange contracts. The cash flows resulting from the settlement of these derivatives have been classified in investing activities in the Condensed Consolidated Statements of Cash Flows. Foreign currency denominated debt designated as non-derivative net investment hedging instruments had a carrying value on an after-tax basis of $3,068 million at March 31, 2024 and $3,140 million at December 31, 2023. As of March 31, 2024, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:
The following amounts were recorded on the Consolidated Balance Sheets related to fixed-to-floating interest rate swaps:
1 At March 31, 2024 and December 31, 2023, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $40 million and $42 million, respectively. The impact of cash flow and fair value hedging activities to the Consolidated Statements of Income is as follows:
The impact of derivatives not designated as hedges to the Consolidated Statements of Income is as follows:
The impact of derivative and non-derivative instruments designated as hedges to the Consolidated Statements of Income and Comprehensive Income is as follows:
The pre-tax portion of the fair value of currency exchange contracts designated as net investment hedges included in Accumulated other comprehensive loss were net gains of $19 million at March 31, 2024. The pre-tax portion of the fair value of the forward points included in Accumulated other comprehensive loss were net gains of $3 million at March 31, 2024. At March 31, 2024, a gain of $5 million of estimated unrealized net gains or losses associated with our cash flow hedges were expected to be reclassified to income from Accumulated other comprehensive loss within the next twelve months. These reclassifications relate to our designated foreign currency and commodity hedges that will mature in the next twelve months.
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RESTRUCTURING CHARGES |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RESTRUCTURING CHARGES | RESTRUCTURING CHARGES In the second quarter of 2020, Eaton initiated a multi-year restructuring program to reduce its cost structure and gain efficiencies in its business segments and at corporate in order to initially respond to declining market conditions brought on by the COVID-19 pandemic. Since the inception of the program, the Company incurred expenses of $199 million for workforce reductions and $184 million for plant closing and other costs, resulting in total charges of $382 million through December 31, 2023. This multi-year restructuring program was substantially complete at the end of 2023, with final payments expected to be made in 2024. During the first quarter of 2024, Eaton implemented a new multi-year restructuring program to accelerate opportunities to optimize its operations and global support structure. These actions will better align the Company's functions to support anticipated growth and drive greater effectiveness throughout the Company. Restructuring charges incurred under this program were $63 million in the first quarter of 2024. This restructuring program is expected to be completed in 2026 and is expected to incur additional expenses related to workforce reductions of $216 million and plant closing and other costs of $96 million, resulting in total estimated charges of $375 million for the entire program. A summary of restructuring program charges is as follows:
Restructuring program charges related to the following segments:
A summary of liabilities related to workforce reductions, plant closing, and other associated costs is as follows:
These restructuring program charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income – net, as appropriate. In Business Segment Information, these restructuring program charges are treated as Corporate items. See Note 15 for additional information about business segments.
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BUSINESS SEGMENT INFORMATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS SEGMENT INFORMATION | BUSINESS SEGMENT INFORMATION Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. Eaton's operating segments are Electrical Americas, Electrical Global, Aerospace, Vehicle, and eMobility. Operating profit includes the operating profit from intersegment sales. For additional information regarding Eaton's business segments, see Note 18 to the consolidated financial statements contained in the 2023 Form 10-K.
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BASIS OF PRESENTATION (Policies) |
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Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Eaton Corporation plc (Eaton or the Company) have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles (US GAAP) for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are necessary for a fair presentation of the condensed consolidated financial statements for the interim periods. This Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in Eaton’s 2023 Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission.
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Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07). This accounting standard requires additional segment disclosures on an annual and interim basis, including significant segment expenses that are regularly provided to the chief operating decision maker. The standard does not change how operating segments and reportable segments are determined. ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023 and interim reporting periods beginning after December 15, 2024. The standard is required to be applied retrospectively to all periods presented in the consolidated financial statements. Eaton plans to adopt the standard for the year ended December 31, 2024. The Company is evaluating the impact of ASU 2023-07 and expects the standard will only impact its segment disclosures with no material impact to the consolidated financial statements. In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09). This accounting standard requires disaggregated income tax disclosures on an annual basis, including information on the Company’s effective income tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, and may be applied prospectively or retrospectively. The Company is evaluating the impact of ASU 2023-09 and expects the standard will only impact its income taxes disclosures with no material impact to the consolidated financial statements.
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Revenue Recognition | Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. Sales are measured at the amount of consideration the Company expects to be paid in exchange for these products or services. |
REVENUE RECOGNITION (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Sales | The following table provides disaggregated sales by lines of businesses, geographic destination, market channel or end market, as applicable, for the Company's operating segments:
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Schedule of Changes in Deferred Revenue Liabilities | Changes in the deferred revenue liabilities are as follows:
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INVENTORY (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Inventory | The components of inventory are as follows:
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GOODWILL (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Carrying Amount of Goodwill | Changes in the carrying amount of goodwill by segment are as follows:
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SUPPLY CHAIN FINANCE PROGRAM (Tables) |
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Schedule of changes in SCF obligations | The changes in SCF obligations are as follows:
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RETIREMENT BENEFIT PLANS (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Benefits Expense (Income) | The components of retirement benefits expense are as follows:
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EATON SHAREHOLDERS' EQUITY (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Stockholders Equity | The changes in Shareholders’ equity are as follows:
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Schedule of Changes in Accumulated Other Comprehensive Income (Loss) | The changes in Accumulated other comprehensive loss are as follows:
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Schedule of Reclassifications out of Accumulated Other Comprehensive Income (Loss) | The reclassifications out of Accumulated other comprehensive loss are as follows:
1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 8 for additional information about pension and other postretirement benefits items.
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Schedule of Net Income per Ordinary Share Attributable to Shareholders | A summary of the calculation of net income per share attributable to Eaton ordinary shareholders is as follows:
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FAIR VALUE MEASUREMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Financial Instruments Recognized at Fair Value | A summary of financial instruments and contingent consideration recognized at fair value, and the fair value measurements used, is as follows:
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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Financial Instruments | The fair value of derivative financial instruments recognized in the Consolidated Balance Sheets is as follows:
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Schedule of Notional Amounts of Outstanding Derivative Positions and Commodity Contracts | As of March 31, 2024, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:
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Schedule Of Derivative Instruments Recorded In Balance Sheet | The following amounts were recorded on the Consolidated Balance Sheets related to fixed-to-floating interest rate swaps:
1 At March 31, 2024 and December 31, 2023, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of $40 million and $42 million, respectively.
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Schedule of Impact of Hedging Activities to Consolidated Statement of Income | The impact of cash flow and fair value hedging activities to the Consolidated Statements of Income is as follows:
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Schedule of Amounts Recognized in Net Income | The impact of derivatives not designated as hedges to the Consolidated Statements of Income is as follows:
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Schedule of Amounts Recognized in Accumulated Other Comprehensive Income (Loss) | The impact of derivative and non-derivative instruments designated as hedges to the Consolidated Statements of Income and Comprehensive Income is as follows:
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RESTRUCTURING CHARGES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Program Charges | A summary of restructuring program charges is as follows:
Restructuring program charges related to the following segments:
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Schedule of Liabilities Related to Restructuring | A summary of liabilities related to workforce reductions, plant closing, and other associated costs is as follows:
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BUSINESS SEGMENT INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Business Segment Information |
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INVESTMENT IN ASSOCIATE COMPANY - Narrative (Details) |
Apr. 23, 2023 |
---|---|
Jiangsu Ryan Electrical Co. Ltd. | |
Business Acquisition [Line Items] | |
Ownership interest acquired (as a percent) | 49.00% |
REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Disaggregation of Revenue [Line Items] | ||
Accounts receivables from customers | $ 4,170 | $ 3,966 |
Unbilled receivables | 301 | 289 |
Deferred revenue liabilities, included in other current liabilities | 651 | $ 610 |
Backlog of unsatisfied or partially satisfied obligations | $ 15,000 | |
Backlog expected to be recognized in the next twelve months, percent | 79.00% | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01 | ||
Disaggregation of Revenue [Line Items] | ||
Expected timing of satisfaction | 12 months |
REVENUE RECOGNITION - Changes in Deferred Revenue Liabilities (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Movement in Deferred Revenue [Roll Forward] | ||
Balance at beginning of period | $ 626 | $ 508 |
Customer deposits and billings | 657 | 514 |
Revenue recognized in the period | (612) | (421) |
Translation | (5) | 4 |
Balance at end of period | $ 666 | $ 605 |
CREDIT LOSSES FOR RECEIVABLES - Narrative (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Credit Loss [Abstract] | ||
Allowance for credit losses | $ 39 | $ 38 |
INVENTORY - Summary (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,527 | $ 1,515 |
Work-in-process | 999 | 870 |
Finished goods | 1,341 | 1,354 |
Total inventory | $ 3,868 | $ 3,739 |
GOODWILL (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2024
USD ($)
| |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 14,977 |
Translation | (100) |
Balance at end of period | 14,877 |
Electrical Americas | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 7,415 |
Translation | (8) |
Balance at end of period | 7,407 |
Electrical Global | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 4,038 |
Translation | (73) |
Balance at end of period | 3,965 |
Aerospace | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 2,901 |
Translation | (18) |
Balance at end of period | 2,883 |
Vehicle | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 289 |
Translation | (1) |
Balance at end of period | 288 |
eMobility | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 334 |
Translation | 0 |
Balance at end of period | $ 334 |
SUPPLY CHAIN FINANCE PROGRAM (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Supplier Finance Program, Obligation [Roll Forward] | ||
Balance at beginning period | $ 369 | $ 219 |
Invoices confirmed during the period | 351 | 297 |
Invoices paid during the period | (359) | (234) |
Translation | 1 | |
Balance at ending period | $ 361 | $ 283 |
Supplier Finance Program, Obligation, Statement of Financial Position [Extensible Enumeration] | Accounts Payable, Current |
RETIREMENT BENEFIT PLANS - Retirement Benefits Expense (Income) (Details) - Pension plans - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
UNITED STATES | ||
Retirement benefits plans expense (income) | ||
Service cost | $ 5 | $ 5 |
Interest cost | 33 | 36 |
Expected return on plan assets | (47) | (49) |
Amortization | 2 | 1 |
Total | (7) | (7) |
Settlements | 9 | 9 |
Total expense | 1 | 2 |
Non-United States plans | ||
Retirement benefits plans expense (income) | ||
Service cost | 12 | 11 |
Interest cost | 21 | 21 |
Expected return on plan assets | (33) | (30) |
Amortization | 3 | 1 |
Total | 3 | 3 |
Settlements | 1 | 1 |
Total expense | $ 4 | $ 4 |
EATON SHAREHOLDERS' EQUITY - Narrative (Details) - USD ($) shares in Millions |
3 Months Ended | ||
---|---|---|---|
Feb. 23, 2022 |
Mar. 31, 2024 |
Feb. 27, 2019 |
|
2019 Program | |||
Class of Stock [Line Items] | |||
Share repurchase program, authorized amount | $ 5,000,000,000 | ||
2022 Program | |||
Class of Stock [Line Items] | |||
Share repurchase program, authorized amount | $ 5,000,000,000 | ||
Stock repurchase program, period in force | 3 years | ||
Ordinary shares purchased (in shares) | 0.5 | ||
Stock repurchased | $ 138,000,000 |
EATON SHAREHOLDERS' EQUITY - Calculation of Net Income per Ordinary Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Calculation of net income per ordinary share attributable to ordinary shareholders | ||
Net income attributable to Eaton ordinary shareholders | $ 821 | $ 638 |
Weighted-average number of ordinary shares outstanding - diluted (in shares) | 401.9 | 400.5 |
Less: dilutive effect of equity-based compensation (in shares) | 2.0 | 2.0 |
Weighted-average number of ordinary shares outstanding - basic (in shares) | 399.9 | 398.5 |
Net income per share attributable to Eaton ordinary shareholders | ||
Diluted (USD per share) | $ 2.04 | $ 1.59 |
Basic (USD per share) | $ 2.05 | $ 1.60 |
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Millions |
Mar. 22, 2021 |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|---|
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items] | |||
Contingent consideration | $ 17 | $ 18 | |
Long-term debt and current portion of long term debt, carrying value | 9,186 | 9,261 | |
Long-term debt and current portion of long-term debt, fair value | 8,678 | $ 8,924 | |
Green Motion, SA | |||
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items] | |||
Total consideration to be transferred for acquisition | $ 106 | ||
Cash paid at closing | 49 | ||
Contingent consideration | 57 | $ 17 | |
Fair value of contingent future payments | $ 114 |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Amounts Recorded on Balance Sheet Related to Fixed-to-Floating Interest Rate Swaps (Details) - USD ($) $ in Millions |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Interest Rate Swap | ||
Derivative [Line Items] | ||
Carrying amount of the hedged assets (liabilities) | $ (713) | $ (713) |
Long-term debt | ||
Derivative [Line Items] | ||
Discontinued hedge, cumulative adjustment | 40 | 42 |
Long-term debt | Interest Rate Swap | ||
Derivative [Line Items] | ||
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities) | $ (40) | $ (42) |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES- Impact of Derivatives Not Designated as Hedges (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivatives not designated as hedges | $ 20 | $ 11 |
Currency exchange contracts | Interest expense - net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) on derivatives not designated as hedges | $ 20 | $ 11 |
RESTRUCTURING CHARGES - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 45 Months Ended | |
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 63 | $ 10 | |
Estimated charges | 375 | ||
Workforce reductions | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 59 | 2 | |
Estimated charges | 216 | ||
Plant closing and other | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 4 | $ 7 | |
Estimated charges | $ 96 | ||
COVID-19 | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 382 | ||
COVID-19 | Workforce reductions | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | 199 | ||
COVID-19 | Plant closing and other | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 184 |
RESTRUCTURING CHARGES - Restructuring Program Charges (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Restructuring Cost and Reserve [Line Items] | ||
Total before income taxes | $ 63 | $ 10 |
Income tax benefit | 14 | 2 |
Total after income taxes | $ 49 | $ 8 |
Per ordinary share - diluted (USD per share) | $ 0.12 | $ 0.02 |
Workforce reductions | ||
Restructuring Cost and Reserve [Line Items] | ||
Total before income taxes | $ 59 | $ 2 |
Plant closing and other | ||
Restructuring Cost and Reserve [Line Items] | ||
Total before income taxes | $ 4 | $ 7 |
RESTRUCTURING CHARGES - Restructuring Program Charges Related to Segments (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 63 | $ 10 |
Operating segments | Electrical Americas | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 7 | 2 |
Operating segments | Electrical Global | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 24 | 3 |
Operating segments | Aerospace | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 8 | 1 |
Operating segments | Vehicle | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 24 | 2 |
Corporate | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 0 | $ 1 |
RESTRUCTURING CHARGES - Liabilities Related to Restructuring (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Restructuring Reserve [Roll Forward] | ||
Balance at beginning of period | $ 41 | |
Liability recognized, net | 63 | $ 10 |
Payments, utilization and translation | (18) | |
Balance at end of period | 86 | |
Workforce reductions | ||
Restructuring Reserve [Roll Forward] | ||
Balance at beginning of period | 35 | |
Liability recognized, net | 59 | 2 |
Payments, utilization and translation | (14) | |
Balance at end of period | 80 | |
Plant closing and other | ||
Restructuring Reserve [Roll Forward] | ||
Balance at beginning of period | 6 | |
Liability recognized, net | 4 | $ 7 |
Payments, utilization and translation | (3) | |
Balance at end of period | $ 7 |
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