-Press Release, Dublin, Ireland
Editor’s Note:
The following information was excerpted from a press release announcing Eaton’s first quarter results for 2013. Note that the information presented below comes from various sections of the company’s press release. The entire press release should be consulted for a complete discussion. To view the entire press release…click here. To view the slideshow presentation…click here.
Diversified industrial manufacturer Eaton Corporation plc (NYSE:ETN) today announced record quarterly sales and operating profits, driven by the acquisition of Cooper Industries. Sales in the first quarter of 2013 were $5.31 billion, 34 percent above the same period in 2012. Operating earnings for the first quarter of 2013, excluding charges of $22 million to integrate recent acquisitions, were a record $400 million, an increase of 28 percent over 2012. Operating earnings per share, which exclude charges of $0.05 per share to integrate recent acquisitions, were $0.84 for the first quarter of 2013. This result is a decrease of 9 percent from the first quarter of 2012, reflecting the shares issued as part of the acquisition of Cooper Industries and the purchase price accounting charges resulting from the transaction.
Alexander M. Cutler, Eaton chairman and chief executive officer, said, “Our first quarter results are a solid start to the year, coming in above the high end of our guidance despite markets being slightly weaker than our expectations. We were able to generate attractive operating margins, reflecting our enhanced portfolio as a result of the Cooper Industries acquisition and our continued focus on productivity improvements.
“Our 34 percent sales growth in the first quarter consisted of a decline of 5 percent in core sales and a 1 percent decline from currency translation, offset by 40 percent growth from acquisitions,” said Cutler. “Our markets in the first quarter were lower than a year ago, reflecting a continuation of the sluggish economic conditions experienced in many parts of the world during the second half of 2012.
“We entered 2013 expecting it would be a year of subpar global economic growth, leading to approximately 2 to 3 percent growth in our markets,” said Cutler. “We continue to believe our markets will grow 2 to 3 percent in 2013, most likely toward the lower end of the range.
“We anticipate operating earnings per share for the second quarter of 2013, which exclude an estimated $25 million of charges to integrate our recent acquisitions, to be between $1.05 and $1.15,” said Cutler. “There are two primary drivers of the expected increase in second quarter operating earnings per share over the first quarter: first, seasonally higher volumes, since our sales in the second quarter are typically 5 to 10 percent higher, and second, the absence of purchase price inventory expense in the second quarter related to the Cooper Industries acquisition.
“We are maintaining our guidance for full year operating earnings per share of between $4.05 and $4.45,” said Cutler. “2013 is a year in which our results will depend more on our execution than on global growth. We are off to a great start this year, with our execution driving stronger than expected results in the first quarter. Based on the midpoint of our guidance, our operating earnings per share in 2013 will grow 8 percent.”
Business Segment Results
Sales for the Electrical Products segment were $1.7 billion, up 87 percent over 2012, reflecting the impact of the Cooper Industries acquisition. Operating profits were $241 million. Excluding acquisition integration charges of $3 million during the quarter, operating profits were $244 million, up 76 percent over the first quarter of 2012.
“Our bookings in the Electrical Products segment were down 3 percent from the combined bookings of Eaton and legacy Cooper in the first quarter a year ago,” said Cutler.
Sales for the Electrical Systems and Services segment were $1.5 billion, up 79 percent over the first quarter of 2012, reflecting the impact of the Cooper Industries acquisition. The segment reported operating profits of $210 million. Excluding acquisition integration charges of $5 million during the quarter, operating profits were $215 million, up 176 percent. Combined bookings in the quarter increased 2 percent compared to the first quarter of 2012.
“In both of our Electrical segments, our end markets were strongest in the U.S., the Middle East and Latin America, with mixed conditions in Asia Pacific and weakness in Europe,” said Cutler. “We believe sales will improve during the balance of the year, in line with the normal seasonal pattern of demand.”
Hydraulics segment sales were $756 million, an increase of 3 percent compared to the first quarter of 2012. Sales growth was driven by revenues from acquisitions completed in 2012, which accounted for 13 percent growth, offset by a 9 percent decline in core sales and a 1 percent decline from currency translation. Operating profits in the first quarter were $78 million. Excluding acquisition integration charges of $12 million, operating profits were $90 million, a decline of 18 percent.
“The hydraulics markets in the first quarter grew modestly compared to the fourth quarter,” said Cutler. “Compared to strong conditions in the first quarter of 2012, the year-over-year comparisons are negative. Reflecting this, our bookings in the quarter declined 8 percent from the first quarter of 2012.”
Aerospace segment sales were $434 million, up 1 percent over the first quarter of 2012. Operating profits in the first quarter were $62 million, an increase of 3 percent compared to a year earlier.
“Aerospace markets grew modestly in the first quarter, with strongest growth in the commercial OEM market,” said Cutler.
The Vehicle segment posted sales of $939 million, down 11 percent compared to the first quarter of 2012. The segment reported operating profits in the first quarter of $132 million, a decrease of 18 percent from the first quarter of 2012.
“Continuing the trends we saw in the second half of last year, our NAFTA and European customers experienced generally weaker market conditions,” said Cutler.
Notice of conference call: Eaton’s conference call to discuss its first quarter results is available to all interested parties as a live audio webcast today at 10 a.m. United States Eastern time via a link on the center of Eaton’s home page. This news release can be accessed under its headline on the home page. Also available on the website prior to the call will be a presentation on first quarter results, which will be covered during the call.
This news release contains forward-looking statements concerning second quarter and full year 2013 operating earnings per share, acquisition integration charges, and the performance of our worldwide markets. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside the company’s control. The following factors could cause actual results to differ materially from those in the forward-looking statements: unanticipated changes in the markets for the company’s business segments; unanticipated downturns in business relationships with customers or their purchases from us; competitive pressures on sales and pricing; increases in the cost of material and other production costs, or unexpected costs that cannot be recouped in product pricing; the introduction of competing technologies; unexpected technical or marketing difficulties; unexpected claims, charges, litigation or dispute resolutions; strikes or other labor unrest; the performance of recent acquisitions; unanticipated difficulties integrating acquisitions; new laws and governmental regulations; interest rate changes; stock market and currency fluctuations; and unanticipated deterioration of economic and financial conditions in the United States and around the world. We do not assume any obligation to update these forward-looking statements.
Financial Results
The company’s comparative financial results for the three months ended March 31, 2013 are available on the company’s website, www.eaton.com.
Eaton is a diversified power management company providing energy-efficient solutions that help our customers effectively manage electrical, hydraulic and mechanical power. A global technology leader, Eaton acquired Cooper Industries plc in November 2012. The 2012 revenue of the combined companies was $21.8 billion on a pro forma basis. Eaton has approximately 103,000 employees and sells products to customers in more than 175 countries. For more information, visit www.eaton.com.
