DUBLIN, Ireland—Eaton Corporation (NYSE:ETN) today announced that earnings per share were $1.10 for the first quarter of 2018, an increase of 15 percent over the first quarter of 2017. Net income was $488 million, up 12 percent over the first quarter of 2017.
Sales in the first quarter of 2018 were $5.3 billion, up 8 percent over the same period in 2017. The sales increase consisted of 6 percent growth in organic sales and 3 percent increase from positive currency translation, partially offset by negative 1 percent from the divestiture in 2017 of our share in a small electrical JV and also the formation of the Eaton Cummins JV.
Craig Arnold, Eaton chairman and chief executive officer, said, “We had a strong first quarter, with revenues above the high end of our guidance range, and earnings per share at the high end of our guidance range. Coming into the quarter, we expected organic sales would be up 4 percent and currency translation would add 1 percent growth. Our organic sales ended up growing 6 percent, and currency translation was a positive 3 percent. The 6 percent organic growth was our highest quarterly rate of growth since the fourth quarter of 2011.
“Our segment margins in the first quarter were 15.2 percent, a record for a first quarter, and above the high end of our guidance,” said Arnold. “This represents an 80 basis point improvement over the first quarter of 2017.
“During the quarter, we established a new reporting segment – – eMobility – – to focus on growth in the vehicle and mobile equipment electrification market,” said Arnold.
“Operating cash flow in the first quarter was $339 million,” said Arnold. “We now expect 2018 earnings per share to be between $5.10 and $5.30, up $0.10 from our prior guidance, representing at the midpoint a 12 percent increase over 2017, excluding the gain on the formation of the Eaton Cummins JV and the income arising from the new tax bill in 2017,” said Arnold. “For the second quarter of 2018, we anticipate earnings per share to be between $1.25 and $1.35.”
Business Segment Results
Sales for the Electrical Products segment were $1.7 billion, up 5 percent over the first quarter of 2017. Organic sales were up 1 percent and currency translation was positive 4 percent. Operating profits were $307 million, up 7 percent over the first quarter of 2017.
“Operating margins in the first quarter were 17.7 percent, 30 basis points over 2017 and a record for a first quarter,” said Arnold. “Orders in the first quarter were down 2 percent from the first quarter of 2017, driven by a decline in our lighting business. Excluding lighting, orders were up 2 percent with particular strength in products going into industrial applications.”
Sales for the Electrical Systems and Services segment were $1.4 billion, up 4 percent over the first quarter of 2017. Organic sales were up 2 percent, currency translation was positive 2 percent, and the sale in 2017 of our stake in a small joint venture reduced sales by 1 percent. Operating profits were $167 million, up 8 percent over the first quarter of 2017.
“Operating margins were 12.1 percent, an improvement of 50 basis points over 2017,” said Arnold. “Orders in the first quarter were up 8 percent over the first quarter of 2017, led by strong growth in the Americas. We continued to see particular strength in large industrial assemblies and in services. With the strong orders we have booked over the last nine months, we expect organic growth in the second quarter to markedly accelerate.”
eMobility segment sales were $77 million, up 22 percent over the first quarter of 2017. Organic sales were up 19 percent and currency translation was positive 3 percent. Operating profits in the first quarter were $11 million, flat to 2017. Operating margins in the quarter were 14.3 percent.
“We’re excited by the prospects for eMobility,” said Arnold. “We’re investing heavily in this segment, and are working on a large number of opportunities as the electric vehicle market continues to accelerate.”
Financial Results
Click here for a pdf of the company’s comparative financial results for the three months ended March 31, 2018.
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