Eaton Corporation (ETN) Q2 2026 earnings summary

Executive summary

• Achieved record Q2 2026 sales of $8.53 billion, up 21% year-over-year, with 14% organic growth and 7% from acquisitions.

• Adjusted EPS reached $3.15, a Q2 record, exceeding guidance, with segment margins at 23.1%, both above expectations.

• Robust order momentum and record backlogs across Electrical Americas, Electrical Global, and Aerospace segments, with book-to-bill ratios at 1.2–1.3.

• Announced the planned separation of the Mobility business via a Reverse Morris Trust with Dana, expected to close in Q1 2027 and deliver a $1.1B cash distribution.

• Major acquisitions (Boyd Thermal, Ultra PCS, Fibrebond, Resilient Power) and portfolio transformation drive growth and margin expansion.

Financial highlights

• Adjusted EPS for Q2 2026 was $3.15 (up 7% YoY), and $5.96 for the first half, both records; net income attributable to shareholders was $821 million, down from $982 million in Q2 2025.

• Segment operating profit rose 17% to $1.97B; segment margins were 23.1%, above guidance but down 80 bps year-over-year.

• Operating cash flow was $1.1 billion for Q2 2026 (up 23% YoY), and $1.63 billion for the first half; free cash flow was $874 million for Q2 2026.

• Gross profit margin decreased to 33.5% in Q2 2026 from 37.0% in Q2 2025, mainly due to inflation and increased amortization.

• Effective tax rate increased to 28.1% in Q2 2026, driven by higher income in high-tax jurisdictions and acquisition-related taxes.

Outlook and guidance

• Full-year 2026 organic growth expected at 11–13%, with segment margins of 24.1–24.5% and adjusted EPS guidance raised to $13.40–$13.60.

• Q3 2026 organic growth guidance: 13.5–15.5%, segment margins 24.6–25.0%, adjusted EPS $3.46–$3.56.

• Free cash flow for FY2026 expected between $3.9B and $4.3B; capex planned at $1.15B.

• No share repurchases planned for 2026 due to the Boyd Thermal acquisition; quarterly dividends to continue.

• Strong backlog and end-market demand provide visibility and confidence for 2026 and 2027.