Eaton (ETN) Reports In-Line Q3 EPS; Guides Modestly Below the Street

November 1, 2016 6:33 AM EDT

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Eaton (NYSE: ETN) reported Q3 EPS of $1.15, in-line with the analyst estimate of $1.15. Revenue for the quarter came in at $5 billion versus the consensus estimate of $5.05 billion.


Eaton sees Q4 2016 EPS of $1.05-$1.15, versus the consensus of $1.18.

Eaton sees FY2016 EPS of $4.15-$4.25, versus the consensus of $4.28.

Craig Arnold, Eaton chairman and chief executive officer, said, “Our third quarter operating earnings per share were at the midpoint of our guidance despite third quarter sales coming in 1 percent lower than our expectations. We had previously expected organic sales for the third quarter to be the same as in the second quarter.

“Our segment margins were strong, at 16.0 percent, and excluding restructuring costs incurred in the quarter, 16.5 percent,” said Arnold. “Our strong margins were a result of tight cost control and higher restructuring savings. Our restructuring costs in the quarter came in at $23 million, slightly under our estimate at the start of the quarter.

“Our operating cash flow in the third quarter was $798 million, keeping us on trajectory to meet our cash flow guidance for the year,” said Arnold. “We continued to return substantial cash to our shareholders, repurchasing $243 million of our shares in the quarter. So far in 2016, our repurchases total $567 million, 2.0 percent of our shares outstanding at the beginning of the year.

“Looking at full-year 2016, we now expect a decline in organic revenue of approximately 4 percent,” said Arnold. “We are maintaining our estimate of the impact of negative currency translation at $225 million.

“We anticipate net income and operating earnings per share for the fourth quarter of 2016 to be between $1.05 and $1.15,” said Arnold. “For the full year, we expect net income and operating earnings per share to be between $4.15 and $4.25, a decline of 2 percent at the midpoint from our prior guidance.

For earnings history and earnings-related data on Eaton (ETN) click here.

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