Diversified power management company
) released its first quarter results with earnings per share of
84 cents falling short of the year-ago figure of 92 cents by
8.7%. However, earnings were ahead of the Zacks Consensus
Estimate by a nickel.
Eaton's GAAP earnings during the first quarter were 79 cents per
share versus 91 cents reported in the year-ago quarter. The
difference between GAAP and operating earnings was due to charges
of 5 cents related to integrating recent acquisitions.
Eaton's first quarter total revenue was $5.31 billion, up 34.1%
from $3.96 billion a year ago.
The year-over-year increase was due to positive contribution from
acquired assets, offset to some extent by a decline in core sales
and unfavorable currency conversion.
However, quarterly revenue was $88 million lower than the Zacks
Consensus Estimate of $5.39 billion.
Electrical Americas: Within its Electrical unit, Electrical
Americas' revenues improved 87% from the year-ago quarter to $1.7
billion, while operating profit (excluding acquisition
integration charges) increased 76% to $244 million. The
significant upside reflects the positive impact from the
acquisition of Cooper Industries.
Electrical Rest of the World: The Electrical Rest of the World
segment's sales were up 79% to $1.5 billion. Operating income of
$215 million (excluding acquisition integration charges) was up
176% from the year-ago quarter. Combined booking in the quarter
improved 2% year over year.
Hydraulics: At $756 million, Hydraulics sales improved 3% over
the prior year, while operating profits came in at $90 million,
down 18% from the corresponding quarter last year.
Aerospace: Segmental sales in the quarter grew 1% to $434 million
while operating profit was up 3.0% to $62 million.
Vehicle: Segment revenue improved 11% year over year to $939
million. However, operating income of $132 million declined
18% from the year-ago quarter.
Cost of product sold in the first quarter 2013 was $3.73 billion,
increasing 35.6% from the prior-year period.
Selling and administrative expenses also followed a similar
trend, increasing 36.5% to $958 million from $702 million in the
prior year. Corporate integration charges for the Cooper
acquisition were included in selling and administrative expenses
resulting in the jump in expenses.
Research and development expenses increased 44.8% to $152
Despite the increase in expenses in the reported quarter, a more
significant improvement in the top line benefited margins. Total
segment operating profit was up 32.9% to $723 million.
Cash and short-term investments as of Mar 31, 2013 were $639
million versus $577 million as of Dec 31, 2012.
Long-term debt was $9.47 billion as of Mar 31, 2013 compared with
$9.76 billion as of Dec 31, 2012.
Eaton reiterated its 2013 pro forma earnings in the range of
$4.05-$4.45 per share. The guidance excludes acquisition
integration charges. Second quarter 2013 earnings are expected to
be between $1.05 and $1.15 per share.
Eaton expects the Cooper acquisition to contribute to its top
line and expects its overall markets to improve by 2% to 3% in
2013 from 2012 levels.
Other Company Releases
A. O. Smith Corporation
) reported earnings of 96 cents per share in the first quarter
2013, beating the Zacks Consensus Estimate by 19 cents.
) reported earnings of $1.68 per share in the third quarter of
fiscal 2013, surpassing the Zacks Consensus Estimate by a penny.
UQM Technologies Inc.
) is expected to report its fourth quarter fiscal 2013 earnings
on May 25, 2013. The Zacks Consensus Estimate is at a loss of 3
Eaton Corporation's first quarter results benefited from the
contribution of its acquired assets. The acquired assets are
expected to boost the performance of Eaton going forward.
However, the pace of economic recovery in Eaton's service
territories has been sluggish, which we believe resulted in a 5%
decline in Eaton's core sales. In addition, bookings in
Electrical Products and Hydraulics segments declined from the
Even though Eaton continues to benefit from its acquired assets,
the decline in core sales of the company in the last three
quarters is something that the company needs to address.
Cleveland, Ohio-based Eaton Corporation was founded in 1916.
This company is a leading supplier of power accessories in the
aerospace industry and has customers spanning 150 countries. With
a market cap of $27.63 billion, the company has 103,000 full time
employees. Eaton Corporation currently retains a Zacks Rank #3
SMITH (AO) CORP (AOS): Free Stock Analysis
EATON CORP PLC (ETN): Free Stock Analysis
PARKER HANNIFIN (PH): Free Stock Analysis
UQM TECH INC (UQM): Free Stock Analysis
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