Diversified industrial manufacturer Eaton Corporation (NYSE:ETN)
today announced net income per share of $0.97 for the second
quarter of 2011, an increase of 47 percent over the $0.66 earned in
the second quarter of 2010. Sales in the second quarter were $4.09
billion, 21 percent above the second quarter of 2010. Net income in
the second quarter was $336 million compared to $226 million in
2010.
Net income in both periods included charges for integration of
acquisitions. Before these acquisition integration charges,
operating earnings per share in the second quarter of 2011 were
$0.97 compared to $0.68 per share in 2010, an increase of 43
percent. Operating earnings in the second quarter were $338 million
compared to $232 million in 2010.
Alexander M. Cutler, Eaton chairman and chief executive officer,
said, “We are pleased with our second quarter results, which
exceeded the high end of our guidance for the quarter. Our sales in
the second quarter were 8 percent higher than in the first quarter
of 2011, reflecting the continued expansion of our markets around
the world.
“Sales in the second quarter increased 21 percent compared to
the second quarter of 2010,” said Cutler. “Sales growth was
comprised of 14 percent core growth, 6 percent from foreign
exchange, and 1 percent from acquisitions. End markets grew 12
percent in the quarter.
“We are very pleased with our 13.9 percent segment operating
margin in the second quarter, setting a new segment operating
margin record,” said Cutler.
“The year is shaping up to be better than we forecasted in
April,” said Cutler. “We now anticipate our overall end markets
will grow by 11 percent versus our earlier forecast of 10
percent.
“We anticipate net income per share for the third quarter of
2011 to be between $1.01 and $1.11,” said Cutler. “Operating
earnings per share for the third quarter, which exclude charges to
integrate our recent acquisitions, are anticipated to be between
$1.03 and $1.13. Our outlook anticipates higher sales and margins
in the third quarter over the second quarter, offset partially by a
higher tax rate.
“We are raising our guidance for the full year. As a result of
our strong second quarter and our slightly stronger market outlook
for the year, we are raising our full-year per share guidance at
the midpoint by $0.15, resulting in net income per share of between
$3.86 and $4.06 and operating earnings per share of between $3.90
and $4.10.
“We expect 2011 to be a year of record sales and record
profits,” said Cutler. “Our sales are projected to be 19 percent
above 2010 and 6 percent above our previous annual sales record,
which we achieved in 2008. Our operating earnings per share at the
midpoint of our guidance is 42 percent above 2010 and 16 percent
above our previous operating earnings per share record. We are
particularly encouraged by the outlook for our 2011 results, given
that many of our significant businesses are just beginning to
recover from the economic downturn of 2008 and 2009.”
Business Segment Results
Second quarter sales for the Electrical Americas segment were
$1.03 billion, up 16 percent compared to 2010. The sales increase
was comprised of 11 percent core growth, 4 percent from
acquisitions, and 1 percent from foreign exchange. Operating
profits in the second quarter were $144 million. Excluding
acquisition integration charges of $1 million during the quarter,
operating profits were $145 million, up 20 percent over results in
2010.
“End markets for our Electrical Americas segment grew 10 percent
during the second quarter,” said Cutler. “The industrial markets
were the strongest sector of the business in the quarter.
“Our bookings in the Electrical Americas segment, adjusted for
foreign exchange, increased 9 percent compared to the second
quarter of 2010 resulting in a record backlog for the segment,”
said Cutler. “We expect that Electrical Americas markets will grow
7 percent during 2011 and believe the momentum in our Electrical
Americas markets so far this year will lead to stronger market
conditions next year.
“During the quarter, we completed the acquisition of C.I. ESI de
Colombia S.A.,” said Cutler. “This acquisition will help grow
Eaton’s presence in Colombia and serve as a platform for future
growth in the region.”
Sales for the Electrical Rest of World segment were $787
million, an increase of 18 percent compared to the second quarter
of 2010. The sales increase was comprised of a 5 percent increase
in core sales and a 13 percent increase from foreign currency.
The segment reported operating profits of $77 million. Excluding
acquisition integration charges of $1 million during the quarter,
operating profits totaled $78 million, an increase of 16 percent
over the second quarter of 2010.
“Our markets in the second quarter grew 6 percent, with both
European and Asian electrical markets increasing 6 percent,” said
Cutler. “Our bookings for the Electrical Rest of World segment,
adjusted for foreign exchange and acquisitions, declined 4 percent
in the quarter driven by a sharp drop in orders for solar
inverters. For all of 2011, we are maintaining our forecast that
markets in our Electrical Rest of World segment will grow 7
percent.
“During the quarter, we completed the acquisition of ACTOM (Pty)
Limited’s low-voltage electrical business in South Africa,” said
Cutler. “This acquisition provides us with a solid position in the
South African electrical market, as well as a platform for growth
in southern Africa.”
Hydraulics segment sales were $728 million, up 28 percent
compared to the second quarter of 2010. Global hydraulics markets
were up 18 percent in the quarter, with U.S. markets up 21 percent
and non-U.S. markets up 16 percent. Operating profits in the second
quarter were $120 million, up 56 percent compared to the second
quarter of 2010.
“The global hydraulics markets in the second quarter continued
the strong rebound we saw in the first quarter,” said Cutler. “Our
bookings, adjusted for foreign exchange, increased 20 percent in
the second quarter. For all of 2011, we continue to believe global
hydraulics markets will grow 18 percent.
“Our Hydraulics segment had an outstanding quarter, achieving
record sales, operating profits, and margins,” said Cutler. “We
were particularly pleased with the record quarterly margin of 16.5
percent.
“We made further progress during the quarter in our strategy of
building a significant filtration business, completing the
acquisition of Internormen Technology Group and announcing an
agreement to acquire E. Begerow GmbH,” said Cutler. “These
acquisitions double the size of our filtration business and add
important new products and end markets to our business.”
Aerospace segment sales were $409 million, up 11 percent
compared to the second quarter of 2010. Aerospace markets were up 4
percent compared to the second quarter of 2010. Operating profits
in the second quarter were $50 million compared to $48 million in
the second quarter of 2010.
“Aerospace bookings declined 1 percent during the second
quarter, adjusted for foreign exchange, reflecting lower military
bookings,” said Cutler. “During the second half of 2011, we believe
the planned expansion in commercial aircraft production will offset
the sluggish conditions in military markets and so we are
maintaining our forecast that the global aerospace market will grow
4 percent in 2011.
“Similar to our first quarter, our margins in the second quarter
were impacted by increased expenses from changes in scope, program
delays, and execution of new customer programs,” said Cutler. “We
believe that our margins in the second half of 2011 will improve
over first half levels.”
The Truck segment posted record quarterly sales of $673 million
in the second quarter, up 37 percent compared to 2010. Truck
production in the second quarter was up 27 percent, with U.S.
markets up 53 percent and non-U.S. markets up 5 percent. The
segment reported operating profits of $120 million.
“We continue to expect the NAFTA Class 8 market to total 265,000
units in 2011,” said Cutler. “Outside NAFTA, we expect markets to
register more modest growth.
“We were pleased with our 17.8 percent margin in the quarter and
are increasing our full year margin guidance for the segment,” said
Cutler. “As volumes continue to ramp up through this business
cycle, we expect our margins will improve further.”
The Automotive segment posted second quarter sales of $460
million, up 18 percent from the second quarter of 2010. Global
automotive markets were up 9 percent, with U.S. markets up 15
percent and non-U.S. markets up 7 percent. The segment reported
operating profits of $55 million, an increase of 41 percent over
the second quarter of 2010.
“We are pleased with the Automotive segment margin of 12.0
percent and as a result, we are raising our full year margin
guidance,” said Cutler.
“While there was very little impact on us, global automotive
production was impacted in the second quarter by Japanese supply
issues,” said Cutler. “Fortunately, there was less disruption than
many industry experts had forecasted. We believe that third quarter
global auto production will rebound from second quarter levels, as
the supply situation returns to normal.”
Eaton Corporation is a diversified power management company with
2010 sales of $13.7 billion. Celebrating its 100th anniversary in
2011, Eaton is a global technology leader in electrical components
and systems for power quality, distribution and control; hydraulics
components, systems and services for industrial and mobile
equipment; aerospace fuel, hydraulics and pneumatic systems for
commercial and military use; and truck and automotive drivetrain
and powertrain systems for performance, fuel economy and safety.
Eaton has approximately 73,000 employees and sells products to
customers in more than 150 countries. For more information, visit
www.eaton.com.
Notice of conference call: Eaton’s conference call to discuss
its second quarter results is available to all interested parties
as a live audio webcast today at 10 a.m. 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 second quarter results,
which will be covered during the call.
This news release contains forward-looking statements concerning
our third quarter and full year 2011 sales, our third quarter 2011
tax rate, our third quarter and full year 2011 net income per share
and operating earnings per share, 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;
the availability of credit to customers and suppliers; 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 impact of acquisitions and
divestitures; 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
and six months ended June 30, 2011 are available on the company’s
website, www.eaton.com.
EATON CORPORATION CONSOLIDATED STATEMENTS OF INCOME
Three months
ended June 30
Six months
ended June 30
(In millions except for per share data) 2011 2010 2011 2010
Net
sales $ 4,090 $ 3,378 $ 7,893 $ 6,481 Cost of products
sold 2,862 2,387 5,544 4,588 Selling and administrative expense 698
604 1,363 1,191 Research and development expense 107 103 212 204
Interest expense-net 31 34 63 69 Other income-net (4 ) (1 ) (20 )
(9 )
Income before income taxes 396 251 731 438 Income tax
expense 58 22 107 53
Net income
338 229 624 385 Less net income for noncontrolling interests (2 )
(3 ) (1 ) (4 )
Net income attributable to Eaton common
shareholders $ 336 $ 226 $ 623 $ 381
Net income per common share Diluted $ 0.97 $
0.66 $ 1.80 $ 1.12 Basic 0.99 0.67 1.83 1.14
Weighted-average number of common shares outstanding Diluted
345.7 340.4 345.7 339.8 Basic 340.9 334.7 340.5 334.5
Cash dividends paid per common share $ 0.34 $ 0.25 $ 0.68 $
0.50
Reconciliation of net income attributable to Eaton
common shareholders to operating earnings Net income
attributable to Eaton common shareholders $ 336 $ 226 $ 623 $ 381
Excluding acquisition integration charges (after-tax) 2 6
4 12
Operating earnings $ 338 $
232 $ 627 $ 393 Net income per common
share - diluted $ 0.97 $ 0.66 $ 1.80 $ 1.12 Excluding per share
impact of acquisition integration charges (after-tax) — 0.02
0.01 0.03
Operating earnings per common
share $ 0.97 $ 0.68 $ 1.81 $ 1.15
Net income per common share, weighted-average number of common
shares outstanding, cash dividends paid per common share and
operating earnings per common share have been restated to give
effect to the two-for-one stock split. See the accompanying notes
for additional information.
See accompanying notes.
EATON CORPORATION BUSINESS SEGMENT INFORMATION
Three months
ended June 30
Six months
ended June 30
(In millions) 2011 2010 2011 2010
Net sales Electrical
Americas $ 1,033 $ 894 $ 1,997 $ 1,696 Electrical Rest of World 787
665 1,530 1,273 Hydraulics 728 568 1,413 1,058 Aerospace 409 370
798 746 Truck 673 492 1,249 945 Automotive 460 389
906 763
Total net sales $ 4,090 $ 3,378
$ 7,893 $ 6,481
Segment operating
profit Electrical Americas $ 144 $ 120 $ 276 $ 225 Electrical
Rest of World 77 60 147 102 Hydraulics 120 77 226 131 Aerospace 50
48 95 97 Truck 120 59 210 105 Automotive 55 39 105
81
Total segment operating profit 566 403
1,059 741
Corporate Amortization of intangible assets
(48 ) (43 ) (96 ) (88 ) Interest expense-net (31 ) (34 ) (63 ) (69
) Pension and other postretirement benefits expense (37 ) (29 ) (70
) (61 ) Other corporate expense-net (54 ) (46 ) (99 ) (85 )
Income before income taxes 396 251 731 438 Income tax
expense 58 22 107 53
Net income
338 229 624 385 Less net income for noncontrolling interests (2 )
(3 ) (1 ) (4 )
Net income attributable to Eaton common
shareholders $ 336 $ 226 $ 623 $ 381
See accompanying notes.
EATON
CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS
June 30,2011 December 31,2010 (In millions)
Assets Current
assets Cash $ 282 $ 333 Short-term investments 601 838 Accounts
receivable-net 2,625 2,239 Inventory 1,766 1,564 Other current
assets 643 532 Total current assets 5,917 5,506
Property, plant and equipment-net 2,589 2,477 Other
noncurrent assets Goodwill 5,723 5,454 Other intangible assets
2,360 2,272 Deferred income taxes 961 1,001 Other assets 571
542 Total assets $ 18,121 $ 17,252
Liabilities and
shareholders’ equity Current liabilities Short-term debt $ 101
$ 72 Current portion of long-term debt 16 4 Accounts payable 1,534
1,408 Accrued compensation 367 465 Other current liabilities 1,385
1,284 Total current liabilities 3,403 3,233
Noncurrent liabilities Long-term debt 3,650 3,382 Pension
liabilities 1,222 1,429 Other postretirement benefits liabilities
639 743 Deferred income taxes 499 487 Other noncurrent liabilities
521 575 Total noncurrent liabilities 6,531 6,616
Shareholders’ equity Eaton shareholders’ equity 8,152 7,362
Noncontrolling interests 35 41 Total equity 8,187
7,403 Total liabilities and equity $ 18,121 $ 17,252
See accompanying notes.
EATON CORPORATION
NOTES TO THE SECOND QUARTER 2011 EARNINGS RELEASE
Amounts are in millions of dollars unless indicated otherwise
(per share data assume dilution).
On January 27, 2011, Eaton's Board of Directors
announced a two-for-one stock split of the Company’s common shares
effective in the form of a 100% stock dividend. The record date for
the stock split was February 7, 2011, and the additional
shares were distributed on February 28, 2011.
Accordingly, all per share amounts and average shares outstanding
presented in this earnings release have been adjusted retroactively
to reflect the stock split.
This earnings release includes certain non-GAAP financial
measures. These financial measures include operating earnings,
operating earnings per common share, and operating profit before
acquisition integration charges for each business segment, each of
which excludes amounts that differ from the most directly
comparable measure calculated in accordance with generally accepted
accounting principles (GAAP). A reconciliation of each of these
financial measures to the most directly comparable GAAP measure is
included in this earnings release. Management believes that these
financial measures are useful to investors because they exclude
transactions of an unusual nature, allowing investors to more
easily compare Eaton's financial performance period to period.
Management uses this information in monitoring and evaluating the
on-going performance of Eaton and each business segment.
Note 1. ACQUISITIONS OF BUSINESSES
In 2011 and 2010, Eaton acquired businesses and entered into a
joint venture in separate transactions. The Consolidated Statements
of Income include the results of these businesses from the dates of
the transactions or formation. These transactions are summarized
below:
Date of Business Annual
Acquired business
transaction segment sales ACTOM Low Voltage June 30, Electrical $65
for the A South Africa manufacturer and supplier of motor control
components, engineered electrical distribution systems and
uninterruptible power supply (UPS) systems. 2011
Rest ofWorld
year endedMay 31,2011
C.I. ESI de Colombia S.A. June 2,
Electrical
$8 for 2010
A Colombia-based distributor of industrial electrical equipment and
engineering services in the Colombian market, focused on oil and
gas, mining, and industrial and commercial construction. 2011
Americas
Internormen Technology Group
May 12, Hydraulics
$55 for 2010
A Germany-based manufacturer of hydraulic filtration and
instrumentation with sales and distribution subsidiaries in India,
China, Brazil and the United States. 2011
Eaton-SAMC (Shanghai) Aircraft Conveyance System Manufacturing Co.,
Ltd. March 8, Aerospace
New joint
A 49%-owned joint venture in China focusing on the design,
development, manufacturing and support of fuel and hydraulic
conveyance systems for the global civil aviation market. 2011
venture
Tuthill Coupling Group January 1, Hydraulics
$35 for the
A United States and France-based manufacturer of pneumatic and
hydraulic quick coupling solutions and leak-free connectors used in
industrial, construction, mining, defense, energy and power
applications. 2011
year endedNovember 30,2010
Chloride Phoenixtec Electronics October 12, Electrical
$25 for the
A China manufacturer of UPS systems. Eaton acquired the remaining
shares to increase its ownership from 50% to 100%. 2010
Rest ofWorld
year endedSeptember 30,2010
CopperLogic, Inc. October 1, Electrical
$35 for the
A United States-based manufacturer of electrical and
electromechanical systems. 2010 Americas
year endedSeptember 30,2010
Wright Line Holding, Inc. August 25, Electrical
$101 for the
A United States provider of customized enclosures, rack systems,
and air-flow management systems to store, power, and secure
mission-critical IT data center electronics. 2010 Americas
year endedJune 30,2010
EMC Engineers, Inc.
July 15,
Electrical $24 for 2009 A United States energy engineering and
energy services company that delivers energy efficiency solutions
for a wide range of governmental, educational, commercial and
industrial facilities.
2010
Americas
On June 30, 2011, Eaton reached an agreement to
acquire E. Begerow GmbH & Co. KG, a Germany-based system
provider of advanced liquid filtration solutions. This business
develops and produces technologically innovative filter media and
filtration systems for food and beverage, chemical, pharmaceutical
and industrial applications and had sales of $84 in 2010. The terms
of the agreement are subject to customary closing conditions. The
acquisition is expected to close during the third quarter of 2011.
This business will be included in the Hydraulics segment.
Note 2. ACQUISITION INTEGRATION CHARGES
Eaton incurs charges related to the integration of acquired
businesses. A summary of these charges follows:
Three months ended June 30
Acquisitionintegration charges
Operating profitas reported
Operating profitexcluding
acquisitionintegration charges
2011 2010 2011 2010 2011 2010
Business
segment
Electrical Americas $ 1 $ 1 $ 144 $ 120 $ 145 $ 121 Electrical Rest
of World 1 7 77 60 78 67 Hydraulics — — 120 77 120 77 Aerospace — 1
50 48 50 49 Truck — — 120 59 120 59 Automotive — — 55
39 55 39 Total before income taxes $ 2
$ 9 $ 566 $ 403 $ 568 $ 412 After-tax
integration charges $ 2 $ 6 Per common share $ — $ 0.02
Six months ended June 30
Acquisitionintegration charges
Operating profitas reported
Operating profitexcluding
acquisitionintegration charges
2011 2010 2011 2010 2011 2010
Business
segment
Electrical Americas $ 4 $ 2 $ 276 $ 225 $ 280 $ 227 Electrical Rest
of World 1 14 147 102 148 116 Hydraulics — — 226 131 226 131
Aerospace — 2 95 97 95 99 Truck — — 210 105 210 105 Automotive —
— 105 81 105 81 Total before
income taxes $ 5 $ 18 $ 1,059 $ 741 $
1,064 $ 759 After-tax integration charges $ 4 $ 12 Per
common share $ 0.01 $ 0.03
Charges in 2011 were related primarily to CopperLogic, Wright
Line Holding and EMC Engineers. Charges in 2010 were related
primarily to Moeller and Phoenixtec. These charges were included in
Cost of products sold or Selling and administrative expense, as
appropriate. In Business Segment Information, the charges reduced
Operating profit of the related business segment.
Note 3. RETIREMENT BENEFITS PLANS
The components of retirement benefits expense follow:
Three months ended June 30
Pensionbenefit expense
Other postretirementbenefits expense
2011 2010 2011 2010 Service cost $ 35 $ 30 $ 4 $ 4
Interest cost 53 50 10 12 Expected return on plan assets (59 ) (55
) — — Amortization 22 15 3 2 51 40 17 18
Settlement loss 7 4 — — Total expense $ 58
$ 44 $ 17 $ 18
Six months ended June 30
Pensionbenefit expense
Other postretirementbenefits expense
2011 2010 2011 2010 Service cost $ 71 $ 59 $ 8 $ 8
Interest cost 106 100 20 23 Expected return on plan assets (118 )
(109 ) — — Amortization 44 30 6 5 103 80 34 36
Settlement loss 10 9 — — Total expense $ 113
$ 89 $ 34 $ 36
During the second quarter, Eaton contributed $100 into a
Voluntary Employee Benefit Association trust for the pre-funding of
postretirement Medicare Part D prescription drug benefits for the
Company’s eligible United States employees and retirees.
Note 4. INCOME TAXES
The effective income tax rate for the second quarter of 2011 was
14.7% compared to 9.0% for the second quarter of 2010 and 14.6% for
the first six months of 2011 compared to 12.2% for the first six
months of 2010. Higher effective tax rates in both the three and
six month periods of 2011 were primarily attributable to greater
levels of income in high tax jurisdictions, particularly the United
States, due to improved economic conditions.
Grafico Azioni Eaton (NYSE:ETN)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Eaton (NYSE:ETN)
Storico
Da Lug 2023 a Lug 2024