ETN 10-K & 10-Q changes, risk factors and insider trading
Eaton Corp plc · NYSE · Misc Industrial & Commercial Machinery & Equipment · CIK 1551182 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We are subject to risks relating to acquisitions, joint ventures and investments, and risks relating to the integration of acquired companies.”
New heading “Our operations depend on production facilities throughout the world, which subjects them to varying degrees of risk of disrupted production.”
New heading “Significant inflation or shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers, could continue to adversely impact our results of operations.”
New heading “We rely on suppliers to provide raw materials, components, and services.”
New heading “Risks and uncertainties related to the development and use of artificial intelligence may present business, compliance and reputational risks.”
New heading “Our ability to identify, attract, develop, engage, and retain qualified employees could affect our ability to execute our strategy.”
New heading “We may not complete the anticipated spin-off or complete it within the time frame we anticipate or at all; the spin-off may present difficulties that could have an adverse effect on us; costs associated with the spin-off may be higher than anticipated; we may not realize some or all of the expected benefits of the spin-off.”
New heading “Volatility of end markets that we serve could materially and adversely affect our business, financial condition and results of operations.”
New heading “We are exposed to geopolitical, economic and other risks that arise from uncertainty in worldwide and regional economic conditions.”
New heading “Operating globally subjects us to risks and events beyond our control in countries where we operate.”
New heading “As a provider of products to the U.S. government, we are subject to certain rules, regulations, audits and investigations and enhanced compliance risks.”
Removed heading “Eaton's operations depend on production facilities throughout the world, which subjects them to varying degrees of risk of disrupted production.”
Removed heading “Eaton uses a variety of raw materials, components and services in its businesses, and significant inflation could increase operating costs that may not be fully recouped in product pricing.”
Removed heading “Significant shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers could continue to adversely impact our results of operations.”
Removed heading “Volatility of end markets that Eaton serves.”
Removed heading “Eaton's global operations subject it to economic risk as Eaton's results of operations may be adversely affected by changes in government legislation, regulations and policies, or currency fluctuations.”
Largest changes
“Operating globally subjects Eaton to various risks, including, but not limited to, economic and political instability, including war or armed conflict, changes in government policies, expropriation, nationalization, and other political, economic, or social developments; complex and continually changing government laws, regulations and policies; increased tariffs, trade barriers, trade agreements, and other restrictions on international trade; trade laws and trade treaties that impact our effective tax rate; …”see in full comparison
“Our global business is sensitive to macroeconomic conditions. Macroeconomic downturns may have an adverse effect on our business, results of operations and financial condition, as well as our distributors, customers and suppliers, and on activity in many of the industries and markets we serve. …”see in full comparison
“Doing business with the U.S. government subjects us to risks such as dependence on the level of government spending and compliance with and changes in governmental acquisition regulations and other requirements. Contracts relating to the sale of products to the U.S. government parties may impose terms or provisions that are not typical in commercially negotiated transactions and, in some instances, could impose added costs on our business. …”see in full comparison
“Recent technological advances in artificial intelligence (AI) and machine-learning technology have presented opportunities for us to drive internal efficiencies in our business operations, but they also pose risks to us. If we fail to keep pace with rapidly evolving technological developments in AI, our competitive position and business results may suffer, particularly if our competitors more effectively use AI to drive their business efficiencies or create new or enhanced products or services that we are unable to compete against on cost, quality or other attributes. …”see in full comparison
“As a provider of products to the U.S. government, we are subject to certain rules, regulations, audits and investigations and enhanced compliance risks.”see in full comparison
“Significant inflation or shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers, could continue to adversely impact our results of operations.”see in full comparison
Full comparison: every changed paragraph (62)
We are subject to risks relating to acquisitions, joint ventures and investments, and risks relating to the integration of acquired companies.
As part of our strategy, we pursue strategic transactions, including but not limited to acquisitions, joint ventures, and investments. Acquisitions and investments may involve significant cash expenditures, debt incurrences, equity issuances, operating losses and expenses, in addition to integration challenges whether foreseen or unforeseen, which may be dilutive to earnings and unfavorably impact cash flow. Acquisitions also involve numerous other risks, including: the diversion of management attention to integration matters; difficulties in integrating operations and systems; challenges in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures; difficulties in assimilating employees and in attracting and retaining key personnel; challenges in keeping existing customers and obtaining new customers; difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects; contingent liabilities (including contingent tax liabilities and earn-out obligations) that are larger than expected; and potential unknown liabilities, adverse consequences and unforeseen increased expenses associated with acquired companies. Financial success of a strategic transaction requires balancing both short- and long-term inputs driven by internal and external factors difficult to fully identify prior to transaction consummation. Transactional challenges post-closing could materially and adversely impact our business, financial condition and results of operations.
Our operations depend on production facilities throughout the world, which subjects them to varying degrees of risk of disrupted production.
Eaton manages businesses with manufacturing facilities worldwide. Our manufacturing facilities and operations could be disrupted by a natural disaster, labor strike, war, geopolitical instability and/or conflict, political unrest, terrorist activity, economic upheaval, or public health concerns. Any such disruption could cause delays in production and shipment of products and the loss of sales and customers, and insurance proceeds may not adequately compensate for losses.
Significant inflation or shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers, could continue to adversely impact our results of operations.
We have been affected by supply chain disruptions and related inflationary pressures. Labor shortages persist broadly in select markets, and shortages of certain raw materials have continued to affect the prices that our businesses are charged, particularly commodities. Some of our suppliers have experienced the same conditions and, in response, have continued to increase their prices in response to increases in their costs of raw materials, energy, and/or labor. While we strive to recoup these increased costs through our pricing, product modifications or other mediating responses, if we are unable to do so without compromising the competitive position of our products and services, our results could continue to be impacted by this trend. Further, should these trends continue or worsen, the impact could have a material adverse impact on our operating results.
We rely on suppliers to provide raw materials, components, and services.
Our business requires that we buy raw materials, components, and services from third parties. Supplier relationships have in the past been and could in the future be interrupted or terminated. Our reliance on suppliers involves certain risks, including:
•shortages of commodities, components, or other materials, which could adversely affect our manufacturing efficiencies and ability to make timely delivery of our products, solutions, and services;
•changes in the cost of these purchases due to inflation, exchange rate fluctuations, taxes, tariffs, commodity market volatility, or other factors that affect our suppliers;
•poor quality or insecure supply chain, which could adversely affect the reliability and reputation of our products, solutions, and services;
•climate impacts, severe weather events, or natural and other disasters that impact our suppliers;
•sanctions, embargoes, and other trade restrictions that may affect our ability to purchase commodities, components, or other materials from various suppliers; and
•intellectual property risks such as challenges to ownership of rights or alleged infringement by suppliers.
Any of these uncertainties could adversely impact our financial results and ability to compete. We also maintain single-source supplier relationships because either alternative sources are not available, or the relationship is advantageous due to certain considerations, such as performance, quality, support, delivery, capacity, or price. Unavailability of, or delivery delays for, single-source components or products could adversely affect our ability to manufacture or ship the related products in a timely manner. The effect of unavailability or delivery delays would be more severe if associated with our higher volume and more profitable products. Even where substitute sources of supply are available, qualifying alternative suppliers and establishing reliable supplies could cost more or result in delays and loss of sales.
We may rely on third-party suppliers for the components used in our products, and we may rely on third-party manufacturers to manufacture certain of our assemblies and finished products. Our results of operations, financial position, and cash flows could be adversely affected if such third parties lack sufficient quality control or if there are significant changes in their financial or business condition. If these third parties fail to deliver quality products, parts, and components on time and at reasonable prices, we could have difficulties fulfilling our orders, sales and profits could decline, and our commercial reputation could be damaged.
Risks and uncertainties related to the development and use of artificial intelligence may present business, compliance and reputational risks.
Recent technological advances in artificial intelligence (AI) and machine-learning technology have presented opportunities for us to drive internal efficiencies in our business operations, but they also pose risks to us. If we fail to keep pace with rapidly evolving technological developments in AI, our competitive position and business results may suffer, particularly if our competitors more effectively use AI to drive their business efficiencies or create new or enhanced products or services that we are unable to compete against on cost, quality or other attributes. However, the introduction of AI technologies, particularly generative AI, into internal processes and/or new and existing offerings may result in new or expanded risks and liabilities, including due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality or security risks, as well as other factors that could adversely affect our business, reputation, and financial results. Furthermore, any confidential information that is disclosed to a third-party generative AI platform could be leaked or disclosed to others, which could result in loss or theft of intellectual property, as well as subject us to risks related to intellectual property infringement or misappropriation, data privacy and cybersecurity. Moreover, the use of AI may give rise to risks related to harmful content, accuracy, and bias, which could expose us to risks related to inaccuracies or errors in the output of such technologies. The rapidly evolving legal and regulatory environment relating to AI, in the United States and globally, could also impact Eaton’s implementation of AI technology, and increase compliance costs and the risk of non-compliance.
If Eatonwe isare unable to protect itsour information technology infrastructure against service interruptions, data corruption, cyberbased attacks or network security breaches, product or service offerings could be compromised or operations could be disrupted or data confidentiality impaired.
Eaton relies on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes and activities, including procurement, manufacturing, distribution, invoicing and collection. Some of this information may be stored in the cloud or on networks not managed by Eaton.us. Additionally, many of our products and services include, and we utilize and rely onon, third-party service-providersservice-providers, whose products include integrated software and information technology that collects data or connects to external and internal systems. Because of this, cybersecurity threats pose a material risk to our business operations.
As a result of our worldwide operations, we are subject to laws and regulations, including data protection/privacy and cybersecurity laws and regulations, in many jurisdictions. In addition, we operate in an environment in which there are different and potentially conflicting data privacy laws in effect in the various U.S. states and foreign jurisdictions in which we operateoperate, and we must understand and comply with each law and standard in each of these jurisdictions. For example, the Global Data Protection Regulation (GDPR) prefers that we manage personal data in the E.U. and may impose fines of up to four percent of our global revenue in the event of certain violations.
Eaton’sOur customers, including governmental agencies, are increasingly requiring cybersecurity protections and mandating cybersecurity standardsstandards, which may result in additional operating or production costs. Our cybersecurity program aligns with well-known industry-wide security control frameworks. Despite these efforts, cybersecurity incidents could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information and the disruption of business operations. The potential consequences of a material cybersecurity incident include theft of intellectual property, disruption of operations, reputational damage, adverse health and safety consequences, the loss or misuse of confidential information, product failure, as well as exposure to fines, legal claims or enforcement actions.
The effects of climate change, including weatherWeather disruptions and regulatory/regulatory, market reactions,and social reactions to them create uncertainties that could negatively impact our business.
Extreme weather events may create physical risks to our operating locations and supply chains, as well as to our suppliers’ and customers’ operations. Operational, environmental and social regulations may pose stringent obligations on our operations, which could impact our financial results and adversely affect our ability to conduct normal business operations. Those events could also change customer and market demands, and we may not be able to move quickly enough to meet such demands or meet all of the varying demands from different geographic regions, markets and business sector, which could negatively affect our business, results of operations, and financial condition.
Our ability to identify, attract, develop, engage, and retain qualified employees could affect our ability to execute our strategy.
The market for employees and leaders with certain skills and experiences is very competitive. Our continued success depends, in part, on our ability to identify, attract, develop, engage, and retain qualified candidates with the requisite education, background, technical skills, industry knowledge, and experience. Failure to attract, develop, engage, and retain qualified employees, difficulty in recruiting new employees, perceived or actual erosion of our culture, or inadequate resources to train, integrate, and retain qualified employees, could impair our ability to execute our business strategy and could adversely affect our business, results of operations, and financial condition.
In addition, the nature of our business requires us to maintain a labor force that is sufficiently large enough to support our manufacturing operations to meet customer demand, as well as provide on-site services and project support for our customers. We have in the past experienced, and could in the future experience, shortages for skilled or unskilled labor, which has in the past and could in the future negatively impact our growth and results of operations.
We may not complete the anticipated spin-off or complete it within the time frame we anticipate or at all; the spin-off may present difficulties that could have an adverse effect on us; costs associated with the spin-off may be higher than anticipated; we may not realize some or all of the expected benefits of the spin-off.
On January 26, 2026, we announced our intention to spin-off our Mobility business, which consists of the legacy Vehicle and eMobility segments, by the end of the first quarter of 2027, subject to the satisfaction of customary legal and regulatory requirements and approvals. The failure to satisfy all the required conditions could delay the completion of the spin-off for a significant period of time or prevent it from occurring at all. Spin-offs are complex in nature, and unanticipated developments or changes, including changes in law, the macroeconomic environment and market conditions or regulatory or political conditions may affect our ability to complete the anticipated spin-off as currently expected, within the anticipated time frame or at all. Any changes to the spin-off or delay in completing it could cause us not to realize some or all of the expected benefits, or realize them on a different timeline than expected. In addition, the terms and conditions of the required regulatory authorizations and consents that are granted, if any, may impose requirements, limitations or costs, or place restrictions on the conduct of the Mobility business, as an independent company, and may materially delay the completion of the spin-off. Whether or not the spin-off is completed, our business may face material challenges in connection with this transaction, including, without limitation: the diversion of management’s attention from ongoing business concerns; attracting and retaining key management and other employees; retaining existing, or attracting new, business and operational relationships; foreseen and unforeseen dis-synergy costs, costs of restructuring transactions (including taxes) and other significant costs and expenses; and potential negative reactions from the financial markets if we fail to complete the spin-off as currently expected, within the anticipated time frame or at all. Although we intend for the spin-off to be tax-free to our stockholders for U.S. federal income tax purposes, there can be no assurance that the spin-off will so qualify. Any of these factors could have a material adverse effect on our business, financial condition and our stock price.
Global increases in greenhouse gas emissions are linked to climate change, and there is a growing consensus that dramatic emissions reductions are needed to avoid severe climate impacts. Extreme weather events linked to climate change, including hurricanes, flooding, wildfires, and high heat/water scarcity, may create physical risks to Eaton’s operating locations and supply chains, as well as to Eaton's customers' operations. While Eaton is working to make its own operations carbon neutral by 2030, external factors could cause increases in these extreme weather events, political instability, and workforce migration, ultimately increasing Eaton’s cost of doing business.
Regulatory reactions to climate change may pose more stringent obligations on Eaton’s operations and change customer demands. While Eaton is already gearing its portfolio towards products that will reduce carbon and combat climate change, there is a risk that Eaton may not innovate quickly enough to meet changing regulatory or market demands. Increasing demands for metals as the world electrifies may lead to scarcity and increased costs, as may uncertainty over carbon taxes and grid stability during a renewables transition. Despite these uncertainties, we believe Eaton is well positioned to capitalize on secular trends and market opportunities arising from these risks.
Eaton's operations depend on production facilities throughout the world, which subjects them to varying degrees of risk of disrupted production.
Eaton manages businesses with manufacturing facilities worldwide. Our manufacturing facilities and operations could be disrupted by a natural disaster, labor strike, war, geopolitical instability and/or conflict, political unrest, terrorist activity, economic upheaval, or public health concerns (for example, COVID-19). Any such disruption could cause delays in production and shipment of products and the loss of sales and customers, and insurance proceeds may not adequately compensate for losses.
Eaton uses a variety of raw materials, components and services in its businesses, and significant inflation could increase operating costs that may not be fully recouped in product pricing.
Eaton's major requirements for raw materials are described above in Item 1 Raw Materials. Global shortages have continued to affect the prices Eaton's businesses are charged for raw materials, particularly commodities. Further, Eaton has been impacted by logistics and wage inflation. If this trend continues and we are unable to address it with price increases, product modifications or other adjustments, our competitive position may be impacted, which could have a material adverse impact on operating results.
Further, some of our suppliers of component parts have increased their prices in response to increased costs of raw materials that they use to manufacture component parts. Should this trend continue or become more prevalent, it could adversely affect our operating results.
Significant shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers could continue to adversely impact our results of operations.
Eaton has been affected by supply chain disruptions and unexpected shortages of raw materials in the future could impact our results. Further, labor shortages persist broadly in select markets. Some of our suppliers have experienced the same conditions and in response, have continued to increase their prices in response to increases in their costs of raw materials, energy and/or labor. While we strive to recoup these increased costs through our pricing or other mediating responses, if we are unable to do so without compromising the competitive position of our products and services, our results could continue to be impacted by this trend. Further, should these trends continue or worsen, the impact could have a material adverse impact on our operating results.
Volatility of end markets that Eaton serves.
Eaton's segment revenues, operating results, and profitability have varied in the past and may vary from quarter to quarter in the future. Profitability can be negatively impacted by macroeconomic conditions and volatility in the end markets that Eaton serves. We have undertaken measures to reduce the impact of this volatility through diversification of the markets we serve and expansion of the geographic regions in which we operate. Future downturns in any of the markets could adversely affect revenues, operating results, and profitability.
Our products and services support cutting edgeinnovative technology and mega trends, including, for example, data centers. These markets have experienced and may continue to experience the abrupt introduction of disruptive technologies, which may, in turn, negatively impact our end markets. Additionally, equity markets in this space may be volatile, and may not react rationally to newly introduced products, thus impacting our stock price.
Volatility of end markets that we serve could materially and adversely affect our business, financial condition and results of operations.
Eaton's segment revenues, operating results, and profitability have varied in the past and may vary from quarter to quarter in the future. Profitability can be negatively impacted by macroeconomic conditions, newly competitive market players, and volatility in the end markets that we serve. We have undertaken measures to reduce the impact of this volatility through diversification of the markets we serve and expansion of the geographic regions in which we operate. Future downturns in any of the markets could adversely affect revenues, operating results, and profitability.
Eaton'sOur operating results depend in part on continued successful research, development, and marketing of new and/or improved products and services, and there can be no assurance that Eatonwe will continue to successfully introduce new products and services or maintain its present market positions.
Eaton’s success depends in part on our ability to anticipate and offer products and services that appeal to the changing needs and preferences of our customers in the various markets we serve. Developing new products and service offerings requires high levels of innovation, and the development process is often lengthy and costly. If we are not able to anticipate, identify, develop, and market products that respond to changes in customer preferences and emerging technological and broader industry trends, including the adoption and integration of artificial intelligence, demand for our products could decline.
The success of new and improved products and services depends on their initial and continued acceptance by our customers. Even after introduction, new or enhanced products may not satisfy customer preferences and product failures may cause customers to reject our products. Our businesses are affected, to varying degrees, by technological changes and corresponding shifts in customer demand, which could result in unpredictable product transitions or shortened life cycles. We may experience difficulties or delays in the research, development, production, or marketing of new products and services which may prevent us from recouping or realizing a return on the investments required to bring new products and services to market. Our positions may also be impacted by new entrants into our product or regional markets.
We are exposed to geopolitical, economic and other risks that arise from uncertainty in worldwide and regional economic conditions.
Our global business is sensitive to macroeconomic conditions. Macroeconomic downturns may have an adverse effect on our business, results of operations and financial condition, as well as our distributors, customers and suppliers, and on activity in many of the industries and markets we serve. Among the economic factors that may have such an effect are disruptions in financial markets; adverse changes in the availability and cost of capital; economic downturns; military conflicts; wars; terrorism; pandemics, epidemics and public health emergencies; political changes and trends; tariffs and retaliatory counter measures; monetary policies; interest rates; inflation and deflation; recessions; commodity prices; currency volatility or exchange control; and ability to expatriate earnings.
We cannot predict changes in worldwide or regional macroeconomic conditions, as such conditions are highly volatile and beyond our control. In addition, our responses to mitigate the impact of these conditions, such as potential price increases, could negatively impact our market share or relationships with distributors or customers. Furthermore, if these conditions deteriorate or remain at depressed levels for extended periods, our business, results of operations and financial condition could be materially adversely affected.
Operating globally subjects us to risks and events beyond our control in countries where we operate.
Operating globally subjects Eaton to various risks, including, but not limited to, economic and political instability, including war or armed conflict, changes in government policies, expropriation, nationalization, and other political, economic, or social developments; complex and continually changing government laws, regulations and policies; increased tariffs, trade barriers, trade agreements, and other restrictions on international trade; trade laws and trade treaties that impact our effective tax rate; supply chain disruptions, including, as a result of natural disasters, transportation disruptions, and geopolitical events; currency fluctuations, which can affect the value of our foreign currency revenues, expenses, and cash flows; inadequate intellectual property protections in foreign jurisdictions that could result in the unauthorized use or infringement of our intellectual property; adverse consumer sentiment for non-local products; and local labor market conditions. The occurrence of one or more of these events has, from time to time, impacted, and may in the future impact, our business in a variety of ways, including reducing demand for our products, increasing costs, limiting our ability to operate in certain jurisdictions, disrupting our ability to deliver products to customers on time and at competitive prices, subjecting us to fines, penalties, and sanctions, harming our competitive position, devaluation of assets, and impacting our financials.
Eaton's global operations subject it to economic risk as Eaton's results of operations may be adversely affected by changes in government legislation, regulations and policies, or currency fluctuations.
Operating globally subjects Eaton to changes in government regulations and policies in a large number of jurisdictions around the world, including, but not limited to, those related to tariffs and trade barriers, investments, property ownership rights, taxation, data privacy, and exchange controls. Changes in the relative values of currencies occur from time to time and could affect Eaton's operating results. While we monitor exchange rate exposures and attempt to reduce these exposures through hedging activities, these risks could adversely affect our operating results.
Changes in countries' trade policypolicies globally, including imposition of sanctions or tariffs, may have a material adverse impact on our business and results of operations.
Changes globally in various countries’ trade policies, including tariffs and duties, maycan materially increase costs for goods imported into the United StatesStates, andwhich could potentiallycan lead to broader cost pressures even for goods that are not imported. If Eaton is unable to take mitigating actions, it could negatively impact product margins and our financial performance. Additionally, potential price increases or other mitigating efforts could negatively impact market share or otherwise increase the risk of customer disputes, giving rise to possible cash flow impacts. Furthermore, globally evolving trade policies may lead to abrupt or unpredictable changes in tariffs, quotas, duties or trade agreements, potential violations or litigation, which may disrupt our supply chain and/or lead to an increase in costs. Such policies could make it more difficult or costly for us to export our products to those countries, therefore negatively impacting our financial performance.
EatonWe may beare subject to risks relating to changes in itsour tax rates, changes in global tax laws and regulations, or exposure to additional income tax liabilities.
Eaton is subject to income taxes in many jurisdictions around the world. Income tax liabilities are subject to the allocation of income among various tax jurisdictions. Our effective tax rate could be affected materially by changes in the mix among earnings in countries with differing statutory tax rates, changes in the valuation allowance of deferred tax assets, or changes in tax legislation, regulations, and policies. The amount of income taxes paid is subject to ongoing audits and litigation by tax authorities in the countries in which we operate. IfThe theseultimate auditsoutcome of any such audit and/or litigation cannot be predicted with certainty given the complex nature of tax controversies. Should the ultimate outcome of any such audit and/or litigation result in assessments different from amounts reserved, futurefinal resolution may have a material adverse impact on the Company’s consolidated financial results may include material unfavorable adjustments to our tax liabilities.statements.
As a provider of products to the U.S. government, we are subject to certain rules, regulations, audits and investigations and enhanced compliance risks.
Doing business with the U.S. government subjects us to risks such as dependence on the level of government spending and compliance with and changes in governmental acquisition regulations and other requirements. Contracts relating to the sale of products to the U.S. government parties may impose terms or provisions that are not typical in commercially negotiated transactions and, in some instances, could impose added costs on our business. We are subject to audits and investigations of our business practices and compliance with government acquisition regulations, and any findings of wrongdoing could result in fines and penalties or termination of contracts or debarment from bidding on contracts, which could negatively impact our results of operations.
EatonWe may be unable to adequately protect itsour intellectual property rights, which could affect our ability to compete.
Management's Discussion & Analysis (MD&A)
Largest changes
“The following factors could cause actual results to differ materially from those in the forward-looking statements: the impact of acquisitions, joint ventures, and investments and the integration of acquired entities; disruptions by natural disasters, labor strikes, wars, geopolitical instability and/or conflict, political unrest, terrorist activity, economic upheaval, or public health concerns that impact our production facilities; significant inflation or shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers; …”see in full comparison
“This Form 10-K Report contains forward-looking statements concerning litigation, expected capital deployment, expected capital expenditures, future dividend payments, anticipated share repurchases, certain pension assumptions, and expected restructuring program charges and benefits. These statements may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to Eaton, based on current beliefs of management as well as assumptions made by, and information currently available to, management. …”see in full comparison
“This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of federal securities laws. …”see in full comparison
“The material factors affecting the increase in Total corporate expense in 2025 were higher Other expense - net, Interest expense - net, and Intangible asset amortization expense, partially offset by lower Restructuring program charges. The increase in Other expense - net is primarily due to higher acquisition and divestiture costs and tax litigation charges. The material factor affecting the increase in Total corporate expense in 2024 was higher Restructuring program charges.”see in full comparison
The annual goodwill impairment test was performed using a qualitative analysis in 2025, except for the eMobility reporting unit which used a quantitative analysis in 2025. The annual goodwill impairment test was performed using a quantitative analysis in 2024, except for the Vehicle and eMobility reporting units which used a qualitative analysis in 2024.see in full comparisonThe annual goodwill impairment test was performed using a qualitative analysis in 2023, except for the Vehicle reporting unit which used a quantitative analysis in 2023.A qualitative analysis is performed by assessing certain trends and factors, including projected market outlook and growth rates, forecasted and actual sales and operating profit margins, discount rates, industry data, and other relevant qualitative factors. These trends and factors are compared to, and based on, the assumptions used in the most recent quantitative analysis performed for each reporting unit. The results of the qualitative analyses did not indicate a need to perform quantitative analysis.
•Employee incentive compensation expense related to the acquisition of Resilient of $10 million Acquisition integration, divestiture charges and transaction costs in 2024 and 2023 are primarily related to acquisitions completed prior to 2023,see in full comparisonincludingand include other charges and income to acquire and exit businesses, and the reduction in fair value of contingent future consideration from the Green Motion SA acquisition. Costs in 2023and 2022alsoincludedinclude certain indemnity claims associated with the sale of 50% interest in the commercial vehicle automated transmission business in 2017.Costs in 2022 also included charges of $29 million presented in Other income - net on the Consolidated Statements of Income related to the decision in the second quarter of 2022 to exit the Company's business operations in Russia. These charges consisted primarily of write-downs of accounts receivable, inventory and other assets, and accruals for severance. These charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income - net. In Business Segment Information in Note 19, the charges were included in Other expense - net.
Full comparison: every changed paragraph (71)
Eaton Corporation plc (Eaton or the Company) is an intelligent power management company dedicated to protecting the environment and improving the quality of life for people everywhere. We make products for the data center, utility, industrial, commercial, machine building, residential, aerospace and mobility markets. We are capitalizing on the megatrends of the energyelectrification, transition, electrification,digitalization, and digitalization. Thethe reindustrialization of and growth of megaprojects in North America and increased global infrastructure spendingspending, focusedall onof clean energy programswhich are expanding our end markets and positioning Eaton for growth for years to come. We are strengthening our participation across the entire electrical power value chain and benefiting from momentum in the data center and utility end markets as well as a growth cycle in the commercial aerospace and defense markets. We are guided by our commitment to operate sustainably and with the highest ethical standards. Our work is accelerating the planet’s transition to renewable energy sources, helping to solve the world’s most urgent power management challenges,challenges and building a more sustainable society for people today and for future generations.
Founded in 1911, Eaton has continuously evolved to meet the changing and expanding needs of our stakeholders. With revenues of nearly $25$27.4 billion in 2024,2025, the Company serves customers in more than 160180 countries.
During the first quarter of 2026, Eaton re-segmented certain reportable operating segments due to a reorganization of the Company's businesses. The new reportable segment is Mobility, which consists of the legacy Vehicle and eMobility segments. Financial information for this new reportable segment has not been provided as the re-segmentation occurred subsequent to the year ended December 31, 2025. The Company expects to provide financial information for this new reportable segment in the Quarterly Report on Form 10-Q for the period ended March 31, 2026.
The Company continues to actively manage its portfolio of businesses to deliver on its strategic objectives. The Company is focused on deploying its capital toward businesses that provide opportunities for above-market growth, strong returns, and align with secular trends and its power management strategies. Over the past three years,years and continuing in 2026, Eaton continuedcompleted toseveral selectively add businessestransactions to strengthen its portfolio.
On November 2, 2025, Eaton signed an agreement to acquire Boyd Thermal, a U.S. based global leader in thermal components, systems, and ruggedized solutions for data center, aerospace and other end-markets. Boyd Thermal employs more than 5,000 people with manufacturing sites across North America, Asia, and Europe. Under the terms of the agreement, Eaton will pay $9.5 billion for Boyd Thermal. The transaction is subject to customary closing conditions and regulatory approvals and is expected to close in the second quarter of 2026.
On January 26, 2026, Eaton announced its intention to pursue a spin-off of its Mobility business, which consists of its legacy Vehicle and eMobility operating segments, into an independent, publicly traded company. Eaton expects to complete the anticipated spin-off by the end of the first quarter of 2027, subject to customary legal and regulatory requirements and approvals, including final approval of the Company’s Board of Directors and effectiveness of a Form 10 registration statement filed with the Securities and Exchange Commission. The planned spin-off is expected to be completed in a manner that is tax-free to Eaton ordinary shareholders for U.S. federal income tax purposes.
Acquisition integration, divestiture charges and transaction costs in 2025 are primarily related to the following:
•The acquisitions of Fibrebond Corporation, Resilient Power Systems Inc., Ultra PCS Limited, and Exertherm, the expected acquisition of Boyd Thermal, transactions completed prior to 2023, and other charges to acquire and exit businesses.
•Employee transaction and retention award compensation expense related to the acquisition of Fibrebond of $82 million
•Employee incentive compensation expense related to the acquisition of Resilient of $10 million Acquisition integration, divestiture charges and transaction costs in 2024 and 2023 are primarily related to acquisitions completed prior to 2023, includingand include other charges and income to acquire and exit businesses, and the reduction in fair value of contingent future consideration from the Green Motion SA acquisition. Costs in 2023 and 2022 also includedinclude certain indemnity claims associated with the sale of 50% interest in the commercial vehicle automated transmission business in 2017. Costs in 2022 also included charges of $29 million presented in Other income - net on the Consolidated Statements of Income related to the decision in the second quarter of 2022 to exit the Company's business operations in Russia. These charges consisted primarily of write-downs of accounts receivable, inventory and other assets, and accruals for severance. These charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income - net. In Business Segment Information in Note 19, the charges were included in Other expense - net.
Charges in 2025, 2024, and 2023 were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other expense (income) - net. In Business Segment Information in Note 18, the charges were included in Other expense - net.
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. RestructuringSince the inception of the program, the Company has incurred charges incurredof under$335 this program were $202 million in 2024.million. This restructuring program is expected to be completed in 2026 and is expected to incur additional expenses related to workforce reductions of $183$102 million and plant closing and other costs of $90$38 million, resulting in total estimated charges of $475 million for the entire program. The Company expects mature year benefits of $375 million when the multi-year program is fully implemented.
2025: Organic sales increased 8% in 2025 due to strength in data center end-markets in the Electrical Americas and Electrical Global business segments, strength in machine OEM and residential end-markets in the Electrical Global business segment, and broad-based strength across all markets in the Aerospace business segment, partially offset by weakness in industrial end-markets in the Electrical Americas and Electrical Global business segments, weakness in the North American truck and light vehicle markets in the Vehicle business segment, and weakness in the North American region in the eMobility business segment.
2023: Organic sales increased 12% in 2023 due to strength in commercial & institutional, utility, industrial, and data center end-markets in the Electrical Americas and Electrical Global business segments, strength in sales to commercial OEM and aftermarket in the Aerospace business segment, strength in the North American, European, and Asia Pacific regions in the Vehicle business segment, and the ramp up of key programs in the eMobility business segment due to robust demand for electric vehicles.
2025: Gross profit margin decreased from 38.2% in 2024 to 37.6% in 2025. Material factors affecting this decrease were a 280 basis point decline from higher commodity and wage inflation and a 50 basis point decline from higher acquisition and divestiture charges, partially offset by a 260 basis point increase from higher sales.
2023: Gross profit margin increased from 33.2% in 2022 to 36.4% in 2023 primarily due to higher sales volumes and net price realization, partially offset by higher costs to support growth initiatives in the Electrical Americas and Aerospace business segments, unfavorable product mix in the Electrical Global, Aerospace, and eMobility business segments, and operating inefficiencies in the Electrical Global and Vehicle business segments.
During 2024,2025, income tax expense of $768$841 million was recognized (an effective tax rate of 16.8%17.1%) compared to income tax expense of $768 million in 2024 (an effective tax rate of 16.8%) and income tax expense of $604 million in 2023 (an effective tax rate of 15.8%). andThe income tax expense of $445 millionincrease in 2022 (anthe effective tax rate from 16.8% in 2024 to 17.1% in 2025 was primarily due to greater levels of 15.3%).income earned in higher tax jurisdictions. The increase in the effective tax rate from 15.8% in 2023 to 16.8% in 2024 was due to greater levels of income earned in higher tax jurisdictions, partially offset by a larger impact from the excess tax benefits recognized for employee share-based payments and the reduction of valuation allowances on foreign tax attributes. The increase in the effective tax rate from 15.3% in 2022 to 15.8% in 2023 was due to greater levels of income earned in higher tax jurisdictions, partially offset by the reduction of valuation allowances on foreign tax attributes.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law in the United States. The OBBBA extends and modifies certain provisions of the 2017 Tax Cuts and Jobs Act and has multiple effective dates, with some provisions beginning in 2025. The OBBBA did not have a material impact on the Company’s consolidated financial statements in 2025. The Company will continue to assess the impact of OBBBA and does not expect the OBBBA to have a material impact on its effective tax rate in future periods.
•Organic change in backlog: Percentage change in backlog, excluding (1) the impact of foreign currency, acquisitions(2) divestitures, and divestitures(3) firm orders in place prior to closing of business acquisitions
•Organic change in customer orders: Percentage change in firm customer orders on a trailing twelve month basis, excluding (1) the impact of foreign currency, acquisitions(2) divestitures, and divestitures(3) firm orders in place prior to closing of business acquisitions
The increase in organic sales in 2025 was due to strength in data center end-markets, partially offset by weakness in industrial end-markets. The increase in organic sales in 2024 was due to strength in data center and commercial & institutional end-markets, partially offset by weakness in residential end-markets. The increase in organic sales in 2023 reflects strength in commercial & institutional, utility, industrial, machine OEM, and data center end-markets.
The operating margin decreased from 30.2% in 2024 to 29.9% in 2025. Material factors affecting this decrease were a 380 basis point decline from higher commodity and wage inflation and a 70 basis point decline from higher costs to support growth initiatives, partially offset by a 380 basis point increase from higher sales. The operating margin increased from 26.5% in 2023 to 30.2% in 2024. Material factors affecting this increase were a 560 basis point increase from higher sales and a 150 basis point increase from operating efficiencies, partially offset by a 190 basis point decline from higher costs to support growth initiatives and a 130 basis point decline from higher commodity and wage inflation. The operating margin increased from 22.5% in 2022 to 26.5% in 2023 primarily due to higher sales volumes and net price realization, partially offset by higher costs to support growth initiatives, and higher gains from the sale of non-production facilities in 2022.
The increase in organic sales in 2025 was due to strength in data center, machine OEM, and residential end-markets, partially offset by weakness in industrial end-markets. Additionally, the increase in organic sales in 2025 was due to strength in the Asia Pacific and European regions and in the Global Energy Infrastructure Solutions (GEIS) business. The increase in organic sales in 2024 was due to strength in data center and utility end-markets, partially offset by weakness in residential end-markets. Additionally, the increase in organic sales in 2024 was due to strength in the Asia Pacific and European regions. The increase in organic sales in 2023 was primarily due to strength in commercial & institutional, industrial, utility, and data center end-markets.
The operating margin increased from 18.4% in 2024 to 19.4% in 2025. Material factors affecting this increase were a 270 basis point increase from higher sales, partially offset by a 230 basis point decline from higher commodity and wage inflation. The operating margin decreased from 19.3% in 2023 to 18.4% in 2024. Material factors affecting this decrease were a 150 basis point decline from higher wage inflation, a 70 basis point decline from the sale of a non-production facility in the third quarter of 2023, a 60 basis point decline from higher support costs, and a 50 basis point decline from unfavorable product mix, partially offset by a 140 basis point increase from operating efficiencies and a 90 basis point increase from higher sales. The operating margin decreased from 19.4% in 2022 to 19.3% in 2023 primarily due to operating inefficiencies from ongoing supply chain constraints and unfavorable product mix, partially offset by higher sales volumes and net price realization, and a net gain on the sale of a non-production facility in 2023.
The increase in organic sales in 2025 was due to broad-based strength across all markets, with particular strength in military aftermarket. The increase in organic sales in 2024 was due to strength in commercial OEM, commercial aftermarket, and military OEM.
The increase in organic sales in 2024 was due to strength in commercial OEM, commercial aftermarket, and military OEM. The increase in organic sales in 2023 was primarily due to broad-based strength across all markets with particular strength in commercial OEM and aftermarket.
The operating margin increased from 23.0% in 2024 to 23.9% in 2025. Material factors affecting this increase were a 540 basis point increase from higher sales, partially offset by a 260 basis point decline from higher commodity and wage inflation, a 70 basis point decline from operating inefficiencies, a 60 basis point decline from higher costs to support growth initiatives, and a 60 basis point decline from the sale of a production facility in the first quarter of 2024. The operating margin increased from 22.9% in 2023 to 23.0% in 2024. Material factors affecting the operating margin were a 470 basis point increase from higher sales and a 70 basis point increase from the sale of a production facility in the first quarter of 2024, partially offset by a 280 basis point decline from higher commodity and wage inflation, a 180 basis point decline from higher costs to support growth initiatives, and a 70 basis point decline from unfavorable product mix. The operating margin decreased from 23.2% in 2022 to 22.9% in 2023 primarily due to commodity and wage inflation, unfavorable product mix, and higher costs to support growth initiatives, partially offset by higher sales volumes including inflationary pricing recovery.
The decrease in organic sales in 2025 was due to weakness in the North American truck and light vehicle markets. The decrease in organic sales in 2024 was due to weakness in the North American and European regions, partially offset by strength in the South American region.
The decrease in organic sales in 2024 was due to weakness in the North American and European regions, partially offset by strength in the South American region. The increase in organic sales in 2023 was primarily due to strength in the North American, European, and Asia Pacific regions, partially offset by weakness in the South American truck, bus and agriculture markets.
The operating margin decreased from 18.0% in 2024 to 16.7% in 2025. Material factors affecting this decrease were a 250 basis point decline from higher commodity and wage inflation and a 60 basis point decline from lower sales, partially offset by a 190 basis point increase from operating efficiencies. The operating margin increased from 16.3% in 2023 to 18.0% in 2024. Material factors affecting this increase were a 190 basis point increase from operating efficiencies and a 60 basis point increase from the sale of a non-production facility in the second quarter of 2024, partially offset by a 70 basis point decrease from lower income from investments in associate companies. The operating margin increased from 16.0% in 2022 to 16.3% in 2023 primarily due to higher sales volumes including net price realization, partially offset by operating inefficiencies.
The decrease in organic sales in 2025 was due to weakness in the North American region. Despite OEM delays in electric vehicle rollouts due to weaker than expected customer demand, organic sales increased in 2024 due to strength in the European region, partially offset by weakness in the North American region. The increase in organic sales in 2023 reflects the ramp up of key programs due to robust demand for electric vehicles in the North American and European markets.
The operating margin decreased from negative 1.0% in 2024 to negative 2.3% in 2025. Material factors affecting this decrease were a 270 basis point decline from unfavorable product mix, a 240 basis point decline from higher commodity inflation, and a 240 basis point decline from the sale of non-production facilities in the second quarter of 2024, partially offset by a 360 basis point increase from the reimbursement of research and development and support costs by a customer and a 290 basis point increase from operating efficiencies. The operating margin increased from negative 3.2% in 2023 to negative 1.0% in 2024. Material factors affecting this increase were a 510 basis point increase from operating efficiencies, a 350 basis point increase from higher sales, and a 220 basis point increase from the sale of a non-production facilityfacilities in the second quarter of 2024, partially offset by a 320 basis point decline from higher costs to support growth initiatives, a 300 basis point decline from unfavorable product mix, and a 220 basis point decline from higher commodity and wage inflation. The operating margin decreased from negative 1.6% in 2022 to negative 3.2% in 2023 primarily due to commodity and wage inflation, manufacturing start-up costs associated with new electric vehicle programs, and unfavorable product mix, partially offset by higher sales volumes including inflationary pricing recovery.
The material factors affecting the increase in Total corporate expense in 2025 were higher Other expense - net, Interest expense - net, and Intangible asset amortization expense, partially offset by lower Restructuring program charges. The increase in Other expense - net is primarily due to higher acquisition and divestiture costs and tax litigation charges. The material factor affecting the increase in Total corporate expense in 2024 was higher Restructuring program charges.
The material factor affecting the increase in Total corporate expense in 2024 was higher Restructuring program charges. The decrease in corporate expense in 2023 was primarily due to lower Intangible asset amortization expense, partially offset by higher Restructuring program charges.
On May 21,9, 2024,2025, a subsidiary of Eaton issued Euro denominated notes (20242025 Euro Notes) with a face value of €1,000 million ($1,084 million), in accordance with Regulation S promulgated under the Securities Act of 1933, as amended. The 2024 Euro Notes are comprised of 2 tranchesamount of €500 million each,($564 whichmillion). The 2025 Euro Notes mature in 2031 and 2036,2035 with interest payable annually at a respective rate of 3.601%3.625% andper 3.802%.annum. The issuer received proceeds totaling €995494 million ($1,079$558 million) from the 2025 Euro Notes issuance, net of financing costs.costs and discounts. The 20242025 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 20242025 Euro Notes contain customary optional redemption and par call provisions. The 20242025 Euro Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 20242025 Euro Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the respective termsterm of the 20242025 Euro Notes. The 20242025 Euro Notes are subject to customary non-financial covenants.
Also on May 9, 2025, the same subsidiary of Eaton issued senior notes (2025 Notes) with a face amount of $500 million. The 2025 Notes mature in 2030 with interest payable semi-annually at a rate of 4.45% per annum. The issuer received proceeds totaling $495 million from the 2025 Notes issuance, net of financing costs and discounts. The 2025 Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2025 Notes contain customary optional redemption and par call provisions. The 2025 Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2025 Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the term of the 2025 Notes. The 2025 Notes are subject to customary non-financial covenants.
On September 30,29, 2024,2025, thea Companysubsidiary of Eaton entered into a new $3,000 million five-year revolving credit agreement that will expire on September 27, 2030 (New Revolving Credit Agreement), which replaced its existingthe $500 million 364-day revolving credit facilityagreement with a new $500 million 364-day revolving credit facility that will expire ondated September 29,30, 2025.2024 The Company also has aand $2,500 million five-year revolving credit facilityagreement that will expire ondated October 1,3, 2027.2022. The revolvingNew creditRevolving facilitiesCredit totalingAgreement $3,000 million areis used to support commercial paper borrowings and areis fully and unconditionally guaranteed by Eaton and certain of its direct and indirect subsidiaries on an unsubordinated, unsecured basis. There were no borrowings outstanding under Eaton’sthe revolvingNew creditRevolving facilitiesCredit Agreement at December 31, 2024.2025. The Company maintains access to the commercial paper markets through its $3,000 million commercial paper program, of which none was outstanding on December 31, 2024.2025. InOn additionFebruary to6, 2026, a subsidiary of Eaton exercised a $1,000 million upsize of the existing $3,000 million five-year revolving credit facilities,agreement, increasing the total facility size to $4,000 million. The upsize was executed under the New Revolving Credit Agreement, and the facility’s maturity date remains unchanged at September 27, 2030. Also on February 6, 2026, the Company alsoincreased hadits availablecommercial linespaper ofprogram creditfrom of $938$3,000 million fromto various$4,000 banks primarily for the issuance of letters of credit, of which there was $420 million outstanding at December 31, 2024.million.
On February 6, 2026, a subsidiary of Eaton entered into a senior unsecured delayed-draw term loan facility (Term Credit Agreement) in an aggregate principal amount of up to $8,000 million. The proceeds of the Term Credit Agreement, if drawn, will be used solely by the Company to finance a portion of the expected acquisition of Boyd Thermal. The Term Credit Agreement will mature and be payable in full on December 31, 2026 unless the Term Credit Agreement is terminated earlier pursuant to its terms. The Term Credit Agreement is fully and unconditionally guaranteed by Eaton and certain of its direct and indirect subsidiaries on an unsubordinated, unsecured basis. The Company has not drawn on the Term Credit Agreement.
In addition to the revolving credit facility, the Company also had available lines of credit of $872 million from various banks primarily for the issuance of letters of credit, of which there was $350 million outstanding at December 31, 2025.
Over the course of a year, cash, short-term investments, and short-term debt may fluctuate in order to manage global liquidity. As of December 31, 20242025 and 2023,2024, Eaton had cash of $555$622 million and $488$555 million, short-term investments of $1,525$181 million and $2,121$1,525 million, respectively, with $1 million short-term debt as of December 31, 2025 and no short-term debt as of December 31, 2024 and $8 million as of December 31, 2023.2024. Eaton has investment grade credit ratings from the two major rating agencies as reflected in the following ratings assigned to its debt:
Eaton believes it has the operating flexibility, cash flow, cash and short-term investment balances, availability under the existing revolving credit facilities,facility, and access to capital markets in excess of the liquidity necessary to meet future operating needs of the business, fund capital expenditures and acquisitions of businesses, as well as scheduled payments of long-term debt.debt, for at least the next 12 months and the foreseeable future thereafter.
On April 1, 2025, the Company paid $1.43 billion, net of cash acquired, to acquire Fibrebond Corporation. On August 6, 2025, the Company acquired Resilient Power Systems Inc. for $86 million, including $55 million of cash paid at closing and an initial estimate of $31 million for the fair value of contingent future consideration. In addition, on January 23, 2026, the Company paid $1.53 billion, net of cash acquired, to acquire Ultra PCS Limited and the Company expects to close the acquisition of Boyd Thermal in the second quarter of 2026 for $9.5 billion.
Eaton’s credit facilities and indentures governing certain long-term debt contain various covenants, the violation of which would limit or preclude the use of the credit facilities for future borrowings, or might accelerate the maturity of the related outstanding borrowings covered by the indentures. At Eaton’s present credit rating level, the most restrictive financial covenant provides that the ratio of secured debt (or lease payments due under a sale and leaseback transaction) to adjusted consolidated net worth (or consolidated net tangible assets, in each case as defined in the relevant credit agreement or indenture) may not exceed 10%. Eaton's actual ratios are substantially below the required threshold. In addition, Eaton wasis in compliance with each of its debt covenants for all periods presented.
Net cash provided by operating activities increased by $145 million in 2025 compared to 2024. The material factor affecting this increase was higher net income of $292 million.
Net cash provided by operating activities increased by $1,091 million in 2023 compared to 2022 primarily due to lower investment in working capital and higher net income in 2023.
Net cash used in investing activities increased by $830 million in 2025 compared to 2024. Material factors affecting this increase were an increase in cash paid for business acquisitions to $1,490 million in 2025 from $50 million in 2024, and an increase in capital expenditures for property, plant and equipment to $919 million in 2025 from $808 million in 2024, partially offset by sales of short-term investments to $1,339 million in 2025 from $575 million in 2024.
Net cash used in investing activities increased by $1,375 million in 2023 compared to 2022. The increase in the use of cash was primarily driven by an increase in net purchases of short-term investments to $1,861 million in 2023 from $19 million in 2022, and an increase in capital expenditures for property, plant and equipment to $757 million in 2023 from $598 million in 2022, partially offset by no cash paid for business acquisitions in 2023 compared to cash paid of $610 million in 2022.
Net cash used in financing activities decreased by $763 million in 2025 compared to 2024. Material factors affecting this decrease were a decrease in repurchase of shares to $1,862 million in 2025 from $2,492 million in 2024, and a decrease in payments on borrowings to $717 million in 2025 from $1,015 million in 2024, partially offset by an increase in cash dividends paid to $1,626 million in 2025 from $1,500 million in 2024.
Net cash used in financing activities decreased by $469 million in 2023 compared to 2022. The decrease in the use of cash was primarily due to lower payments on borrowings of $19 million in 2023 compared to $2,012 million in 2022, and no repurchase of shares in 2023 compared to repurchase of shares of $286 million in 2022, partially offset by net payments of short-term debt of $311 million in 2023 compared to net proceeds of short-term debt of $317 million in 2022 and lower proceeds from borrowings of $818 million in 2023 compared to $1,995 million in 2022.
Capital expenditures were $808$919 million, $757$808 million, and $598$757 million in 2025, 2024, 2023, and 2022,2023, respectively. The Company plans to increase capital expenditures over the next several years to expand production capacity across various markets to support anticipated growth. As a result, Eaton expects approximately $900$1.1 millionbillion in capital expenditures in 2025.2026.
Cash dividend payments were $1,626 million, $1,500 million, and $1,379 million andin $1,299 million in2025, 2024, 2023, and 2022,2023, respectively. On February 27,26, 2025,2026, Eaton's Board of Directors declared a quarterly dividend of $1.04$1.10 per ordinary share, ana 11%6% increase over the dividend paid in the fourth quarter of 2024.2025. The dividend is payable on March 28,27, 20252026 to shareholders of record on March 10, 2025.2026. Payment of quarterly dividends in the future depends upon the Company’s ability to generate net income and operating cash flows, among other factors, and is subject to declaration by the Eaton Board of Directors. The Company intends to continue to pay quarterly dividends in 2025.2026.
On February 23, 2022, the Board of Directors adopted a share repurchase program for repurchases of ordinary shares up to $5.0 billion to be made during the three-year period commencing on that date (2022 Program). On February 27, 2025, the Board of Directors renewed the 2022 Program by providing authority for up to $9.0 billion in repurchases to be made during the three-year period commencing on that date (2025 Program). Under the 2025 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 2025 and 2024, 5.7 million and 7.8 million ordinary shares were repurchased under the 2025 or 2022 Programs in the open market at a total cost of $1.9 billion and $2.5 billion, respectively. During 2023, no ordinary shares were repurchased. At December 31, 2025, there is $7,597 million still available for share repurchase under the 2025 Program. The Company does not intend to pursue share repurchases in 2026 due to the expected acquisition of Boyd Thermal in the second quarter of 2026.
On February 23, 2022, the Board of Directors adopted a share repurchase program for repurchases of ordinary shares up to $5.0 billion 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 2024 and 2022, 7.8 million and 2.0 million ordinary shares were repurchased under the 2022 Program in the open market at a total cost of $2.5 billion and $286 million, respectively. During 2023, no ordinary shares were repurchased. During 2022, 2.0 million ordinary shares were repurchased under the 2022 Program in the open market at a total cost of $286 million. The Company will continue to pursue share repurchases in 2025 depending on market conditions and capital levels. On February 27, 2025, the Board of Directors renewed the 2022 Program by providing authority for up to $9.0 billion in repurchases to be made during the three-year period commencing on that date (2025 Program).
The Company paid cash of $50$1,490 million and $610$50 million in 2025 and 2024, respectively, to acquire businesses in 2024 and 2022, respectively.businesses. There were no business acquisitions in 2023. The Company paid cash of $70$16 million, $68$70 million, and $42$68 million in 2025, 2024, and 2023, respectively, for investments in associate companies in 2024, 2023, and 2022, respectively.companies. The Company will continue to focus on deploying its capital toward businesses that provide opportunities for higher growth and strong returns, and align with secular trends and its power management strategies.
The Company manages a number of short-term and long-term debt instruments, including commercial paper. At December 31, 2024,2025, the Company had no Short-term debt,debt of $1 million, Current portion of long-term debt of $674$1,136 million, and Long-term debt of $8,478$8,758 million. The Company believes it has the operating flexibility, cash flow, and access to capital markets to meet scheduled payments of long-term debt. For additional information on financing transactions and debt see Note 9.
During 2024,2025, the fair value of plan assets in the Company’s employee pension plans decreasedincreased $244$198 million to $3,993$4,191 million at December 31, 2024.2025. The decreaseincrease in plan assets was primarily due to benefithigher paymentsthan expected return on plan assets, contributions, and negativethe impact of positive currency translation exceeding contributions and asset performance.translation. At December 31, 2024,2025, the net unfunded position of $570$497 million in pension liabilities consisted of $574$587 million in plans that have no funding requirements and $227$166 million in plans that require funding, offset by $231$256 million in plans that are overfunded.
Eaton Corporation has issued senior notes pursuant to indentures dated April 1, 1994 (the 1994 Indenture), November 20, 2012 (the 2012 Indenture), September 15, 2017 (the 2017 Indenture), and August 23, 2022 (as supplemented by the First and Second Supplemental Indentures of the same date and the Third Supplemental Indenture dated May 18, 2023, the 2022 Indenture). The senior notes of Eaton Corporation are registered under the Securities Act of 1933, as amended (the Registered Senior Notes). Eaton Capital Unlimited Company, a subsidiary of Eaton, is the issuer of fivefour outstanding series of debt securities sold in offshore transactions under Regulation S promulgated under the Securities Act (the Eurobonds) and Registered Senior Notes (as defined below) issued under an indenture dated May 9, 2025 (as supplemented by the First and Second Supplemental Indentures of the same date, the 2025 Indenture). The senior notes issued under the 1994, 2012, 2017, 2022, and 2025 Indentures are registered under the Securities Act of 1933, as amended (the Registered Senior Notes). The Eurobonds and the Registered Senior Notes (together, the Senior Notes) comprise substantially all of Eaton’s long-term indebtedness.
The table set forth in Exhibit 22 filed with the Form 10-K10-Q filed on FebruaryAugust 23,5, 20232025 (10-K10-Q Exhibit 22) and incorporated by reference in this Annual Report on Form 10-K details the primary obligors and guarantors with respect to the guaranteed Registered Senior Notes.
Payment of principal and interest on the Registered Senior Notes is guaranteed, on an unsecured, unsubordinated basis by the subsidiaries of Eaton set forth in the table referenced in the 10-K10-Q Exhibit 22. Each guarantee is full and unconditional, and joint and several. Each guarantor’s guarantee is an unsecured obligation that ranks equally with all its other unsecured and unsubordinated indebtedness. The obligations of each guarantor under its guarantee of the Registered Senior Notes are subject to a customary savings clause or similar provision designed to prevent such guarantee from constituting a fraudulent conveyance or otherwise legally impermissible or voidable obligation.
(a)the consummation of certain types of transactions permitted under the applicable indenture, including one that results in such guarantor ceasing to be a subsidiary; and (b)for Registered Senior Notes issued under the 2022 Indenture,and 2025 Indentures, when such guarantor is a guarantor or issuer of indebtedness in an aggregate outstanding principal amount of less than 25% of our total outstanding indebtedness.
What changed in the latest 10-Q
Risk Factors
New heading “We may not complete the anticipated separation of our Mobility business and its merger with Dana Incorporated or complete the transaction within the timeframe we anticipate or at all; the transaction may present difficulties that could have an adverse effect on us; costs associated with the transaction may be higher than anticipated; we may not realize some or all of the expected benefits of the transaction.”
Largest changes
“We may not complete the anticipated separation of our Mobility business and its merger with Dana Incorporated or complete the transaction within the timeframe we anticipate or at all; the transaction may present difficulties that could have an adverse effect on us; costs associated with the transaction may be higher than anticipated; we may not realize some or all of the expected benefits of the transaction.”see in full comparison
“Whether or not we complete the Transaction, our ongoing businesses may be adversely affected and we may be subject to certain risks and consequences as a result of pursuing the Transaction, including the following: the pursuit of the Transaction may be complex, costly and time-consuming and could divert management’s attention from day-to-day business concerns and divert Eaton’s resources from other strategic opportunities and operational matters; …”see in full comparison
“In addition, Reverse Morris Trust transactions are complex in nature, and unanticipated developments or changes, including changes in law, the macroeconomic environment and market conditions or regulatory or political conditions may affect our ability to complete the Transaction as currently expected, within the anticipated time frame or at all. …”see in full comparison
“On June 10, 2026, we entered into a definitive agreement with Dana Incorporated (Dana) pursuant to which we will separate our Mobility business and combine it with Dana in a Reverse Morris Trust transaction (the Transaction). We currently anticipate that we will close the Transaction in the first quarter of 2027, but satisfying the conditions to the closing of the Transaction (including the receipt of Dana stockholder approval and receipt of required regulatory clearances) may take longer than we expect and there can be no assurance that all such conditions will be satisfied or waived.”see in full comparison
“Item 1A. Risk Factors” in Eaton'ssee in full comparison2025Annual Report on Form 10-K for the fiscal year ended December 31, 2025 includes a discussion of the Company's risk factors. The information below updates the risks relating to the separation of the Mobility business. There have been no material changesfromto the other previously disclosed riskfactors described in the 2025 Form 10-K.factors.
Full comparison: every changed paragraph (5)
“Item 1A. Risk Factors” in Eaton's 2025Annual Report on Form 10-K for the fiscal year ended December 31, 2025 includes a discussion of the Company's risk factors. The information below updates the risks relating to the separation of the Mobility business. There have been no material changes fromto the other previously disclosed risk factors described in the 2025 Form 10-K.factors.
We may not complete the anticipated separation of our Mobility business and its merger with Dana Incorporated or complete the transaction within the timeframe we anticipate or at all; the transaction may present difficulties that could have an adverse effect on us; costs associated with the transaction may be higher than anticipated; we may not realize some or all of the expected benefits of the transaction.
On June 10, 2026, we entered into a definitive agreement with Dana Incorporated (Dana) pursuant to which we will separate our Mobility business and combine it with Dana in a Reverse Morris Trust transaction (the Transaction). We currently anticipate that we will close the Transaction in the first quarter of 2027, but satisfying the conditions to the closing of the Transaction (including the receipt of Dana stockholder approval and receipt of required regulatory clearances) may take longer than we expect and there can be no assurance that all such conditions will be satisfied or waived.
In addition, Reverse Morris Trust transactions are complex in nature, and unanticipated developments or changes, including changes in law, the macroeconomic environment and market conditions or regulatory or political conditions may affect our ability to complete the Transaction as currently expected, within the anticipated time frame or at all. Any changes to the Transaction, delay or failure in completing it could cause us not to realize some or all of the expected benefits, or realize them on a different timeline than expected, which could have a material adverse effect on our business, financial condition, results of operations, cash flows or our stock price.
Whether or not we complete the Transaction, our ongoing businesses may be adversely affected and we may be subject to certain risks and consequences as a result of pursuing the Transaction, including the following: the pursuit of the Transaction may be complex, costly and time-consuming and could divert management’s attention from day-to-day business concerns and divert Eaton’s resources from other strategic opportunities and operational matters; the pendency of the Transaction could have an adverse impact on our ability to attract, retain and motivate key employees and on relationships with existing and prospective customers, suppliers and other third parties; we could be subject to litigation related to the Transaction, which could result in significant costs and expenses; and we may have to delay or forgo business opportunities that may otherwise arise with respect to the Mobility business segment in favor of the Transaction under the terms of the merger agreement entered into with Dana. In addition, although we intend for the transaction to be tax-free to our stockholders for U.S. federal income tax purposes, there can be no assurance that the Transaction will so qualify. Any of these factors could have a material adverse effect on our business, financial condition, results of operations, cash flows or our stock price.
Management's Discussion & Analysis (MD&A)
Largest changes
“There are certain factors that could cause actual results to differ materially from those in the forward-looking statements, including, among others: the impact of acquisitions, joint ventures, and investments and the integration of acquired entities; disruptions by natural disasters, labor strikes, wars, geopolitical instability and/or conflict, political unrest, terrorist activity, economic upheaval, or public health concerns that impact our production facilities; significant inflation or shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers; …”see in full comparison
“The following factors could cause actual results to differ materially from those in the forward-looking statements: the impact of acquisitions, joint ventures, and investments and the integration of acquired entities; disruptions by natural disasters, labor strikes, wars, geopolitical instability and/or conflict, political unrest, terrorist activity, economic upheaval, or public health concerns that impact our production facilities; significant inflation or shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers; …”see in full comparison
“This Form 10-Q Report contains “forward-looking statements” within the meaning of federal securities laws. …”see in full comparison
“This Form 10-Q Report contains “forward-looking statements” within the meaning of federal securities laws. …”see in full comparison
“On February 20, 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA), and thereafter, the Court of International Trade (CIT) ordered the Customs and Border Protection (CBP) to develop a process to refund tariffs imposed under IEEPA. We are evaluating the impact of these developments on our business and financial statements and cannot reasonably estimate the financial impact nor deem such impact probable. …”see in full comparison
“On January 26, 2026, Eaton announced its intention to pursue a spin-off of its Mobility business, which consists of the Mobility business segment, into an independent, publicly traded company. Eaton expects to complete the anticipated spin-off by the end of the first quarter of 2027, subject to customary legal and regulatory requirements and approvals, including final approval of the Company’s Board of Directors and effectiveness of a Form 10 registration statement filed with the Securities and Exchange Commission. …”see in full comparison
Full comparison: every changed paragraph (42)
This Form 10-Q Report contains “forward-looking statements” within the meaning of federal securities laws. These forward-looking statements are based upon management’s current expectations, predictions, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, litigation, expected capital expenditures, future dividend payments, anticipated share repurchases, liquidity, the successful integration of recent acquisitions, the anticipated separation and divestiture of the Mobility business, anticipated capital deployment, and expected restructuring program charges and benefits. These statements may also discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to the Company. These statements are not guarantees of future performance, and actual results may differ materially. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as “aim,” “anticipate,” “believe,” “could,” “develop,” “endeavor,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project” “seek,” “should,” “target,” “will,” “would” or other similar words, phrases or expressions. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside of our control.
There are certain factors that could cause actual results to differ materially from those in the forward-looking statements, including, among others: the impact of acquisitions, joint ventures, and investments and the integration of acquired entities; disruptions by natural disasters, labor strikes, wars, geopolitical instability and/or conflict, political unrest, terrorist activity, economic upheaval, or public health concerns that impact our production facilities; significant inflation or shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers; reliance on suppliers to provide raw materials, components and services; the development and use of artificial intelligence in our business operations, including potential impacts on compliance with law and our reputation; service interruptions, data corruption, loss or impairment, network security and related operational impacts due to cybersecurity attacks; weather disruptions and regulatory, market and social reactions to such disruptions; our ability to identify, attract, develop, engage and retain qualified employees; our ability to complete the anticipated separation of our Mobility business and its merger with Dana or within the anticipated timeframe or at all; stock price and end market impacts due to technology disruptions; volatility of end markets; continued successful research, development and marketing of new or improved products; geopolitical, economic or other risks arising from worldwide or regional economic conditions; the global nature of Eaton’s business and exposure to economic and political instability, including war or armed conflict, changes in governmental laws, regulations and policies; changes in countries’ trade policies, including the imposition of sanctions or tariffs; changes in our tax rates or tax laws and regulations applicable to our business; rules, regulations, audits and investigations and related compliance risks associated with being a governmental contractor; our ability to protect our intellectual property; litigation and environmental regulations impacting our business; and the other risk factors discussed in Part I, Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and other reports filed by the Company with the SEC. We disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.
On January 26, 2026, Eaton announced its intention to separate its Mobility business segment from the rest of Eaton via a spin-off. On June 10, 2026, Eaton entered into definitive agreements with Dana Incorporated (Dana), whereby Eaton will separate the Mobility business and combine it with Dana in a Reverse Morris Trust (RMT) transaction (the separation and merger with and into Dana described below collectively referred to as the Transaction). As part of the Transaction, Eaton will distribute the Mobility business (other than certain assets and liabilities that will be sold directly to Dana in a concurrent asset sale) to Eaton shareholders through an exchange offer (split-off), in which Eaton shareholders will have the opportunity to tender their Eaton shares in exchange for shares of Mobility (USA) Corporation, a wholly owned subsidiary of Eaton (SpinCo), followed, if necessary, by a clean-up pro rata distribution. Immediately thereafter, a direct, wholly owned subsidiary of SpinCo will merge with and into Dana, with Dana surviving as a direct, wholly owned subsidiary of SpinCo. Following completion of the Transaction, Eaton shareholders are expected to own at least 50.1% of the combined company's outstanding shares. Eaton will also receive a cash distribution of approximately $1.1 billion prior to completion of the Transaction, subject to a customary cash and indebtedness adjustment and tax payments to various global jurisdictions and transaction related charges. Eaton expects to use the cash distribution consistent with its capital allocation framework, including repayment of outstanding indebtedness.
The RMT transaction is intended to be tax-free for U.S. federal income tax purposes to Eaton and Eaton’s shareholders and is expected to close in the first quarter of 2027, subject to Dana stockholder approval, regulatory approvals, and customary closing conditions. Until the Transaction closes, the Mobility business segment will continue to operate as a business segment of Eaton and its financial results reported in Eaton’s continuing operations. In the event the Transaction is not consummated, Eaton intends to separate its Mobility business segment in a spin-off.
On January 26, 2026, Eaton announced its intention to pursue a spin-off of its Mobility business, which consists of the Mobility business segment, into an independent, publicly traded company. Eaton expects to complete the anticipated spin-off by the end of the first quarter of 2027, subject to customary legal and regulatory requirements and approvals, including final approval of the Company’s Board of Directors and effectiveness of a Form 10 registration statement filed with the Securities and Exchange Commission. The planned spin-off is expected to be completed in a manner that is tax-free to Eaton ordinary shareholders for U.S. federal income tax purposes.
IEEPA Tariffs
On February 20, 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA), and thereafter, the Court of International Trade (CIT) ordered the Customs and Border Protection (CBP) to develop a process to refund tariffs imposed under IEEPA. We are evaluating the impact of these developments on our business and financial statements and cannot reasonably estimate the financial impact nor deem such impact probable. Some of the factors considered in our evaluation include the uncertainty as to the extent tariffs will be refunded by CBP, what processes will govern such refunds, or if such refunds are fully collectable. No amounts have been recorded in the condensed consolidated financial statements as of March 31, 2026 given the uncertainty regarding the potential refund process.
•The acquisitions of Fibrebond Corporation, Resilient Power Systems Inc., Ultra PCS Limited, Boyd Thermal, and Exertherm, the anticipated spin-offdivestiture of the Mobility business, transactions completed prior to 2023, and other charges to acquire and exit businesses.
•Employee transaction and retention award compensation expense related to the acquisition of Fibrebond of $14$27 million and $39 million in the firstsecond quarter and the first six months of 2026.2026, respectively, and $47 million in the second quarter and the first six months of 2025.
•Employee incentive compensation expense related to the acquisition of Resilient of $11$6 million and $16 million in the firstsecond quarter and first six months of 2026.2026, respectively.
Charges in 2026 and 2025 were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other expense (income) - net. In Business Segment Information in Note 15, the charges were included in Other expense - net.
Additionally, during the second quarter and the first six months of 2026, Eaton incurred $52 million of withholding taxes related to funding the acquisition of Boyd Thermal, which are included in Income tax expense (benefit) in the table above.
Restructuring ProgramsProgram
The increase in organic sales in the firstsecond quarter of 2026 was due to strength in data center and machine OEM end-markets in the Electrical Americas and Electrical Global business segments,segment, broad-based strength in commercial & institutional end-markets in the Electrical Americas business segment, strength in residential end-markets inof the Electrical Global business segment, and strength in military aftermarket, commercial OEM, commercial aftermarket, and commercialmilitary aftermarketOEM in the Aerospace business segment, partially offset by weakness in industrial end-markets in the Electrical Americasresidential and Electrical Global business segments, weakness in utilityindustrial end-markets in the Electrical Americas business segment, and weakness in the North AmericanEuropean region driven by the exit of a low-margin light vehicle business in the Mobility business segment.
The increase in organic sales in the first six months of 2026 was due to strength in data center and machine OEM end-markets in the Electrical Americas and Electrical Global business segments, strength in residential end-markets in the Electrical Global business segment, and strength in commercial OEM, commercial aftermarket, and military aftermarket in the Aerospace business segment, partially offset by weakness in industrial end-markets in the Electrical Americas and Electrical Global business segments, weakness in utility and residential end-markets in the Electrical Americas business segment, and weakness in the North American region driven by the exit of a low-margin light vehicle business and weakness in the European region in the Mobility business segment.
Gross profit margin decreased from 38.4%37.0% in the firstsecond quarter of 2025 to 35.6%33.5% in the firstsecond quarter of 2026. Material factors affecting this decrease were a 400390 basis point decline from higher commodity and wage inflation,inflation and a 150 basis point decline from higher intangible asset amortization, partially offset by an 80 basis point increase from operating efficiencies and a 70160 basis point increase from higher sales.
Gross profit margin decreased from 37.6% in the first six months of 2025 to 34.5% in the first six months of 2026. Material factors affecting this decrease were a 390 basis point decline from higher commodity and wage inflation and a 100 basis point decline from higher intangible asset amortization, partially offset by a 140 basis point increase from higher sales.
The effective income tax rate for the second quarter and first quartersix months of 2026 was expense of 21.6%28.1% and 24.9%, respectively, compared to expense of 18.0%17.2% and 17.6% for the second quarter and first quartersix months of 2025. The increase in the effective tax rate in the second quarter and first quartersix months of 2026 was primarily due to greater levels of income in higher tax jurisdictions and thewithholding facttax thatexpense related to funding the effective tax rate for the first quarteracquisition of 2025Boyd included a reduction in the amount of foreign unrecognized tax benefits.Thermal.
The following is a discussion of Net sales, operating profit (loss) and operating margin by business segment. Additionally, the Company uses the following metrics as indicators of customer demand and future revenue expectations in the Electrical Americas, Electrical Global, and Aerospace business segments. The Company believes these metrics are useful to investors for the same reasons.
The increase in organic sales in the firstsecond quarter of 2026 was due to strength in data center, commercial & institutional,center and machine OEM end-markets, partially offset by weakness in utilityresidential and industrial end-markets. The increase in organic sales in the first six months of 2026 was due to strength in data center and machine OEM end-markets, partially offset by weakness in residential, utility, and industrial end-markets.
The operating margin decreased from 30.0%29.5% in the firstsecond quarter of 2025 to 25.6%27.5% in the firstsecond quarter of 2026. Material factors affecting this decrease were a 480470 basis point decline from higher commodity inflation and a 100 basis point decline from higher costs to support growth initiatives,inflation, partially offset by a 210260 basis point increase from higher sales. The operating margin decreased from 29.7% in the first six months of 2025 to 26.6% in the first six months of 2026. Material factors affecting this decrease were a 470 basis point decline from higher commodity inflation, partially offset by a 230 basis point increase from higher sales.
The increase in organic sales in the second quarter of 2026 was due to broad-based strength in end-markets, with particular strength in data center and machine OEM end-markets. The increase in organic sales in the first quartersix months of 2026 was due to strength in data center, residential,machine OEM, and machine OEMresidential end-markets, partially offset by weakness in industrial end-markets.
The operating margin decreased from 20.1% in the second quarter of 2025 to 19.8% in the second quarter of 2026. Material factors affecting this decrease were a 460 basis point decline from higher commodity and wage inflation, partially offset by a 240 basis point increase from higher sales, a 100 basis point increase from favorable mix, and an 80 basis point increase from operating efficiencies. The operating margin increased from 18.6%19.4% in the first quartersix months of 2025 to 19.2%19.6% in the first quartersix months of 2026. Material factors affecting this increase were a 180210 basis point increase from higher salessales, a 130 basis point increase from favorable mix, and a 290120 basis point increase from operating efficiencies, partially offset by a 470460 basis point decline from higher commodity and wage inflation.
The increase in organic sales in the firstsecond quarter of 2026 was due to strength in military aftermarket, commercial OEM,OEM and commercial aftermarket. The increase in organic sales in the first six months of 2026 was due to strength in commercial OEM, commercial aftermarket, and military aftermarket.
The operating margin increased from 23.1%22.2% in the firstsecond quarter of 2025 to 26.7%22.8% in the firstsecond quarter of 2026. Material factors affecting this increase were a 280160 basis point increase from higher sales, a 150 basis point increase from favorable mix, and a 40 basis point increase from the acquisition of Ultra PCS, partially offset by a 300 basis point decline from higher commodity and wage inflation. The operating margin increased from 22.6% in the first six months of 2025 to 24.7% in the first six months of 2026. Material factors affecting this increase were a 170 basis point increase from higher sales, a 130 basis point increase from the sale of a facility in the first quarter of 2026, a 190 basis point increase from higher sales, and a 160130 basis point increase from favorable mix, and a 30 basis point increase from the acquisition of Ultra PCS, partially offset by a 320310 basis point decline from higher commodity and wage inflation.
The decrease in organic sales in the second quarter of 2026 was due to weakness in the European region. The decrease in organic sales in the first quartersix months of 2026 was due to weakness in the North American region driven by the exit of a low-margin light vehicle business,business partiallyand offset by strengthweakness in the European region.
The operating margin wasincreased flatfrom at 11.7%12.1% in both the firstsecond quarter of 20262025 andto 2025.13.0% in the second quarter of 2026. Material factors affecting thethis operating marginincrease were a 320 basis point increase from favorable mix and a 180300 basis point increase from operating efficiencies, partially offset by a 210230 basis point decline from higher commodity and wage inflationinflation. andThe operating margin increased from 11.9% in the first six months of 2025 to 12.3% in the first six months of 2026. Material factors affecting this increase were a 120260 basis point increase from operating efficiencies, partially offset by a 220 basis point decline from lowerhigher sales.commodity and wage inflation.
The material factors affecting the increase in Total corporate expense in the second quarter and first quartersix months of 2026 were higher Other expense - net, Interest expense - net, Intangible asset amortization expense, and RestructuringOther programexpense changes.- net. The increase in Other expense - net is primarily due to higher acquisition and divestiture costs.
On February 6, 2026, Eaton Corporation, a subsidiary of Eaton, exercised a $1,000 million upsize of the existing $3,000 million five-year revolving credit agreement, increasing the total facility size to $4,000 million. The facility’s maturity date remains unchanged at September 27, 2030. The revolving credit facility is used to support commercial paper borrowings and is fully and unconditionally guaranteed by Eaton and certain of its direct and indirect subsidiaries on an unsubordinated, unsecured basis. There were no borrowings outstanding under the revolving credit facility at MarchJune 31,30, 2026. Also on February 6, 2026 the Company increased its commercial paper program from $3,000 million to $4,000 million. The Company maintains access to the commercial paper markets through its $4,000 million commercial paper program, of which $2,497$2,088 million was outstanding on MarchJune 31,30, 2026, used primarily to manage fluctuations in working capital and to partially fund acquisitions closed during 2026.
On March 6, 2026, Eaton Corporation, a subsidiary of Eaton, issued notes (2026 U.S. Notes) with an aggregate face amount of $8,500 million. The 2026 U.S. Notes are comprised of six tranches: 3.85% notes due 2028 in the amount of $1,500 million; 3.95% notes due 2029 in the amount of $1,500 million; 4.20% notes due 2031 in the amount of $1,500 million; 4.50% notes due 2033 in the amount of $1,000 million; 4.80% notes due 2036 in the amount of $2,000 million; and 5.45% notes due 2056 in the amount of $1,000 million. Interest is payable semi-annually. The issuer received proceeds totaling $8,428$8,427 million from the 2026 U.S. Notes issuance, net of financing costs and discounts. The 2026 U.S. Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2026 U.S. 2026 Notes contain customary optional redemption and par call provisions. The 2026 U.S. 2026 Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2026 U.S. Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the respective terms of the 2026 U.S. Notes. The 2026 U.S. Notes are subject to customary non-financial covenants.
Over the course of a year, cash, short-term investments, and short-term debt may fluctuate in order to manage global liquidity. As of MarchJune 31,30, 2026 and December 31, 2025, Eaton had cash of $565$483 million and $622 million, short-term investments of $186$212 million and $181 million, and short-term debt of $2,510$2,091 million and $1 million, respectively. Eaton believes it has the operating flexibility, cash flow, cash and short-term investment balances, availability under the existing revolving credit facility, and access to capital markets in excess of the liquidity necessary to meet future operating needs of the business, fund capital expenditures and acquisitions of businesses, as well as scheduled payments of long-term debt, for at least the next 12 months and the foreseeable future thereafter.
Net cash provided by operating activities increased by $269$478 million in the first threesix months of 2026 compared to 2025. MaterialThe factorsmaterial factor affecting this increase werewas working capital balances being $299$564 lower, partially offset by lower net income of $97$257 million.
Net cash used in investing activities increased by $12,608$11,171 million in the first threesix months of 2026 compared to 2025. Material factors affecting this increase were an increase in cash paid for business acquisitions of $11,079 million in 2026 compared to no$1,450 million cash paid for business acquisitions in 2025 and purchases of short-term investments of $13$43 million in 2026 compared to sales of short term investments of $1,366$1,343 million in 2025.
Net cash provided by financing activities increased by $11,040$10,571 million in the first threesix months of 2026 compared to 2025. Material factors affecting this increase were an increase in proceeds from borrowings of $9,871 million in 2026 compared to no$1,058 million proceeds from borrowings in 2025, an increase in net proceeds of short-term debt of $2,507 million in 2026 from $805 million in 2025, and no repurchase of shares in 2026 compared to repurchase of shares of $615$1,307 million in 2025, and an increase in net proceeds of short-term debt of $2,088 million in 2026 from $1,111 million in 2025, partially offset by payments on borrowings of $1,069$1,143 million in 2026 from $3$713 million in 2025.
Capital expenditures were $193$446 million and $147$349 million in the first threesix months of 2026 and 2025, respectively. The Company plans to increase capital expenditures over the next several years to expand production capacity across various markets to support anticipated growth. As a result, Eaton expects approximately $1.15 billion in capital expenditures in 2026.
Cash dividend payments were $415$858 million and $397$818 million in the first threesix months of 2026 and 2025, respectively. Payment of quarterly dividends in the future depends upon the Company’s ability to generate net income and operating cash flows, among other factors, and is subject to declaration by the Eaton Board of Directors. The Company intends to continue to pay quarterly dividends in 2026.
On February 23, 2022, the Eaton Board of Directors adopted a share repurchase program for repurchases of ordinary shares up to $5.0 billion to be made during the three-year period commencing on that date (2022 Program). On February 27, 2025, the Eaton Board of Directors renewed the 2022 Program by providing authority for up to $9.0 billion in repurchases to be made during the three-year period commencing on that date (2025 Program). Under the 2025 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 and six months ended MarchJune 31,30, 2026, no ordinary shares were repurchased. During the three and six months ended MarchJune 31,30, 2025, 1.92.3 million and 4.2 million ordinary sharesshares, respectively, were repurchased under the 2025 Program and theor 2022 ProgramPrograms in the open market at a total cost of $608$698 million.million and $1,306 million, respectively. The Company does not intend to pursue share repurchases in 2026 due to the acquisition of Boyd Thermal on March 12, 2026.
The Company paid cash of $11,079 million and $1,450 million to acquire businesses in the first threesix months of 2026 toand acquire2025, businesses. There were no business acquisitions in the first three months of 2025.respectively. Additionally, the Company paid $85 million in the first threesix months of 2026 for investments in nonmarketable securities. There were no investments in nonmarketable securities in the first threesix months of 2025. The Company will continue to focus on deploying its capital toward businesses that provide opportunities for higher growth and strong returns, and align with secular trends and its power management strategies.
The Company manages a number of short-term and long-term debt instruments, including commercial paper. At MarchJune 31,30, 2026, the Company had Short-term debt of $2,510$2,091 million, Current portion of long-term debt of $84$11 million, and Long-term debt of $18,535$18,509 million. The Company believes it has the operating flexibility, cash flow, and access to capital markets to meet scheduled payments of long-term debt. For additional information on financing transactions and debt see Note 8.
Substantially all of the Senior Notes (with limited exceptions), together with the credit facilities described above under Liquidity and Financial Condition (the Credit Facilities), are guaranteed by Eaton and 17 of its subsidiaries. Accordingly, they rank equally with each other. However, because these obligations are not secured, they would be effectively subordinated to any existing or future secured indebtedness of Eaton and its subsidiaries. As of MarchJune 31,30, 2026, Eaton has no material, long-term secured debt. The guaranteed Registered Senior Notes are also structurally subordinated to the liabilities of Eaton's subsidiaries that are not guarantors. Except as described below under Future Guarantors, Eaton is not obligated to cause its subsidiaries to guarantee the Registered Senior Notes.
This Form 10-Q Report contains “forward-looking statements” within the meaning of federal securities laws. These forward-looking statements are based upon management’s current expectations, predictions, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, litigation, expected capital expenditures, future dividend payments, anticipated share repurchases, liquidity, the successful integration of recent acquisitions, the anticipated separation of the Mobility business, anticipated capital deployment, and expected restructuring program charges and benefits. These statements may also discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to the Company. These statements are not guarantees of future performance, and actual results may differ materially. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as “aim,” “anticipate,” “believe,” “could,” “develop,” “endeavor,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project” “seek,” “should,” “target,” “will,” “would” or other similar words, phrases or expressions. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside of our control.
The following factors could cause actual results to differ materially from those in the forward-looking statements: the impact of acquisitions, joint ventures, and investments and the integration of acquired entities; disruptions by natural disasters, labor strikes, wars, geopolitical instability and/or conflict, political unrest, terrorist activity, economic upheaval, or public health concerns that impact our production facilities; significant inflation or shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers; reliance on suppliers to provide raw materials, components and services; the development and use of artificial intelligence in our business operations, including potential impacts on compliance with law and our reputation; service interruptions, data corruption, loss or impairment, network security and related operational impacts due to cybersecurity attacks; weather disruptions and regulatory, market and social reactions to such disruptions; our ability to identify, attract, develop, engage and retain qualified employees; our ability to complete the anticipated spin-off of our Mobility business; stock price and end market impacts due to technology disruptions; volatility of end markets; continued successful research, development and marketing of new or improved products; geopolitical, economic or other risks arising from worldwide or regional economic conditions; the global nature of Eaton’s business and exposure to economic and political instability, including war or armed conflict, changes in governmental laws, regulations and policies; changes in countries’ trade policies, including the imposition of sanctions or tariffs; changes in our tax rates or tax laws and regulations applicable to our business; rules, regulations, audits and investigations and related compliance risks associated with being a governmental contractor; our ability to protect our intellectual property; litigation and environmental regulations impacting our business; and the other risk factors discussed in Part I, Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and other reports filed by the Company with the SEC. We disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.
ETN insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 2 Form 4 filings (1 insider, 4 trade dates, 1,161 shares, about $482.4K) and open-market sales in 6 filings (5 insiders, 5 trade dates, 39,589 shares, about $17.1M). Net open-market shares: -38,428 (purchases minus sales); net value about -$16.6M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-02 | Wadecki Adam A |
Option exercise | 997 | — | — |
| 2026-10-02 | Wadecki Adam A |
Shares withheld for tax | 390 | $442.83 | $172.7K |
| 2026-08-13 | Johnson Gerald |
Open-market purchase | 130 | $455.90 | $59.3K |
| 2026-08-12 | Johnson Gerald |
Open-market purchase | 70 | $469.93 | $32.9K |
| 2026-08-11 | Monesmith Heath B. |
Shares withheld for tax | 218 | $458.11 | $99.9K |
| 2026-08-11 | Monesmith Heath B. |
Option exercise | 583 | $171.31 | $99.9K |
| 2026-08-11 | Monesmith Heath B. |
Shares withheld for tax | 217 | $458.12 | $99.4K |
| 2026-08-11 | Monesmith Heath B. |
Option exercise | 658 | $151.76 | $99.9K |
| 2026-08-11 | Monesmith Heath B. |
Option exercise | 18,036 | $130.86 | $2.4M |
| 2026-08-11 | Monesmith Heath B. |
Shares withheld for tax | 218 | $458.16 | $99.9K |
| 2026-08-11 | Monesmith Heath B. |
Option exercise | 764 | $130.86 | $100.0K |
| 2026-08-11 | Monesmith Heath B. |
Open-market sale | 18,036 | $458.04 | $8.3M |
| 2026-08-06 | Yelton Michael |
Shares withheld for tax | 221 | $451.53 | $99.8K |
| 2026-08-06 | Yelton Michael |
Option exercise | 658 | $151.76 | $99.9K |
| 2026-08-04 | Wadecki Adam A |
Open-market sale | 525 | $440.54 | $231.3K |
| 2026-05-22 | Thompson Dorothy C |
Open-market sale | 167 | $385.00 | $64.3K |
| 2026-05-13 | Galvao Antonio |
Open-market sale | 494 | $405.86 | $200.5K |
| 2026-05-11 | Johnson Gerald |
Open-market purchase | 215 | $419.02 | $90.1K |
| 2026-05-08 | Johnson Gerald |
Open-market purchase | 746 | $402.29 | $300.1K |
| 2026-05-06 | Page Gregory R |
Shares withheld for tax | 150 | $416.50 | $62.5K |
| 2026-05-06 | Page Gregory R |
Option exercise | 621 | — | — |
| 2026-05-06 | Napoli Silvio |
Shares withheld for tax | 299 | $416.50 | $124.5K |
| 2026-05-06 | Napoli Silvio |
Option exercise | 621 | — | — |
| 2026-05-06 | Monesmith Heath B. |
Open-market sale | 18,367 | $409.11 | $7.5M |
| 2026-05-06 | Johnson Gerald |
Option exercise | 353 | — | — |
| 2026-05-06 | Johnson Gerald |
Shares withheld for tax | 85 | $416.50 | $35.4K |
| 2026-05-06 | Denk Peter |
Open-market sale | 2,000 | $417.94 | $835.9K |
| 2026-05-06 | Terrell Karenann K |
Option exercise | 621 | — | — |
| 2026-05-06 | Terrell Karenann K |
Shares withheld for tax | 150 | $416.50 | $62.5K |
| 2026-05-06 | Thompson Dorothy C |
Option exercise | 621 | — | — |
| 2026-05-06 | Thompson Dorothy C |
Shares withheld for tax | 150 | $416.50 | $62.5K |
| 2026-05-06 | Schulten Andre |
Shares withheld for tax | 150 | $416.50 | $62.5K |
| 2026-05-06 | Schulten Andre |
Option exercise | 621 | — | — |
| 2026-05-06 | Ryerkerk Lori |
Shares withheld for tax | 150 | $416.50 | $62.5K |
| 2026-05-06 | Ryerkerk Lori |
Option exercise | 621 | — | — |
| 2026-05-06 | Pragada Robert V |
Shares withheld for tax | 150 | $416.50 | $62.5K |
| 2026-05-06 | Pragada Robert V |
Option exercise | 621 | — | — |
| 2026-05-06 | Pianalto Sandra |
Option exercise | 621 | — | — |
| 2026-05-06 | Pianalto Sandra |
Shares withheld for tax | 150 | $416.50 | $62.5K |
| 2026-05-06 | Wilson Darryl L. |
Shares withheld for tax | 150 | $416.50 | $62.5K |
| 2026-05-06 | Wilson Darryl L. |
Option exercise | 621 | — | — |
Well-known investors holding ETN (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Coatue Management (Philippe Laffont) | 2026-06-30 | 4,968,415 | $2.1B | 4.35% | Added 5% |
| Baillie Gifford | 2026-06-30 | 598,890 | $255.2M | 0.23% | Reduced 3% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 287,651 | $120.2M | 0.04% | Reduced 24% |
| D. E. Shaw & Co. | 2026-06-30 | 172,578 | $73.5M | 0.05% | Added 24% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 167,470 | $71.4M | 0.04% | Added 49% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 64,750 | $27.6M | 0.06% | Reduced 10% |
| Millennium Management (Israel Englander) | 2026-06-30 | 28,012 | $11.9M | 0.01% | Reduced 69% |
| Two Sigma Investments | 2026-06-30 | 22,520 | $9.6M | 0.01% | Reduced 39% |
| Bridgewater Associates | 2026-06-30 | 19,541 | $7.0M | — | Sold out |