The following information was excerpted from a press release announcing Eaton first quarter fiscal 2014 results. 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 financial presentation…click here.
Power management company Eaton Corporation plc (NYSE:ETN) today announced that operating earnings per share, which exclude charges of $0.09 per share to
integrate recent acquisitions, were $1.01 for the first quarter of 2014, up 20 percent over the first quarter of 2013. Sales in the first quarter of 2014 were $5.5 billion, 3½ percent above the same period in 2013. Operating earnings for the first quarter of 2014, excluding pre-tax charges of $66 million to integrate recent acquisitions, were $483 million, an increase of 21 percent over 2013.
Alexander M. Cutler, Eaton chairman and chief executive officer, said, “Our first quarter results are a solid start to the year, coming in slightly above the midpoint of our range in spite of the negative impact from the severe winter weather we encountered in North America. We estimate the severe weather reduced earnings in the quarter by $0.03 per share.
“Our 3½ percent sales growth in the first quarter consisted of a healthy increase of 4½ percent in core sales, partially offset by a 1 percent decline from currency translation,” said Cutler.
“We entered 2014 expecting it would be a year of modest global economic growth, leading to 3 percent growth in our markets,” said Cutler. “We continue to believe our markets will grow 3 percent in 2014.
“We anticipate operating earnings per share for the second quarter of 2014, which exclude an estimated $35 million of charges to integrate our recent acquisitions, to be between $1.05 and $1.15,” said Cutler. “This guidance excludes the impact on our earnings from the sale of our two aerospace businesses, which we expect to close in the middle of the second quarter.
“Our Cooper integration remains on track to generate an increase of $95 million in operating earnings in 2014 over 2013 and an additional $150 million of operating earnings in 2015,” said Cutler. “In order to generate enhanced efficiencies in the Industrial Sector (the Hydraulics, Aerospace, and Vehicle business segments), we expect to incur restructuring costs of $40 million, or $0.08 per share, during the second quarter of 2014. We anticipate the savings generated in 2015 by the restructuring will be $35 million, or $0.07 per share.
“We are maintaining our guidance for full year 2014 operating earnings per share of between $4.50 and $4.90,” said Cutler. “This guidance includes the impact of the restructuring charges in the Industrial Sector.”
Business Segment Results
Sales for the Electrical Products segment were $1.7 billion, up 4 percent over 2013. Operating profits were $250 million. Excluding acquisition integration charges of $29 million during the quarter, operating profits were $279 million, up 14 percent over the first quarter of 2013.
“Our bookings in the first quarter in the Electrical Products segment were up 6 percent over the first quarter a year ago,” said Cutler.
Sales for the Electrical Systems and Services segment were $1.5 billion, the same as in the first quarter of 2013. Core sales were up 2 percent, which was offset by a decline of 2 percent from currency translation. The segment reported operating profits of $169 million. Excluding acquisition integration charges of $26 million during the quarter, operating profits were $195 million, down 9 percent from the first quarter of 2013. Bookings in the first quarter were down 6 percent from the first quarter of 2013.
“Profits in our Electrical Systems and Service business were reduced by $13 million during the quarter by the severe winter weather, which necessitated premium freight and overtime,” said Cutler. “Bookings were also negatively impacted, as placement of major projects was delayed.
“In both of our Electrical segments, our end markets were strongest in North America, and we saw continued improvement in European markets,” said Cutler. “We believe sales and bookings will improve in the second and third quarters, in line with the normal seasonal pattern of demand.”
Hydraulics segment sales were $782 million, an increase of 3 percent over the first quarter of 2013. Operating profits in the first quarter were $108 million. Excluding acquisition integration charges of $4 million, operating profits were $112 million, an increase of 24 percent.
“The hydraulics markets in the first quarter of 2014 grew modestly over the first quarter of 2013,” said Cutler. “Our bookings in the quarter increased 9 percent over the first quarter of 2013.”
Aerospace segment sales were $464 million, up 7 percent over the first quarter of 2013. Operating profits in the first quarter were $62 million, even with the first quarter of 2013.
“Aerospace markets in the first quarter posted another quarter of modest growth, with strongest growth in the commercial OEM market,” said Cutler. “Bookings in the quarter rose 2 percent, driven by a 15 percent increase in aftermarket bookings.”
The Vehicle segment posted sales of $996 million, up 6 percent compared to the first quarter of 2013. The segment reported operating profits in the first quarter of $151 million, up 14 percent over the first quarter of 2013.
“North American markets were particularly strong in the quarter,” said Cutler. “We now expect the NAFTA Class 8 truck market to be 280,000 in 2014, up from our prior estimate of 265,000.”
Eaton is a power management company with 2013 sales of $22.0 billion. Eaton provides energy-efficient solutions that help our customers effectively manage electrical, hydraulic and mechanical power more efficiently, safely and sustainably. Eaton has approximately 101,000 employees and sells products to customers in more than 175 countries. For more information, visit www.eaton.com.
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 2014 operating earnings per share, full year 2014 operating earnings per share, 2014 sales in our Electrical segments, Cooper integration savings, proposed restructuring actions, bookings 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.
The company’s comparative financial results for the three months ended March 31, 2014 are available on the company’s website, www.eaton.com.