Eaton (NYSE: ETN) reported Q4 EPS of $1.46, $0.03 better than the analyst estimate of $1.43. Revenue for the quarter came in at $5.46 billion versus the consensus estimate of $5.42 billion.

Craig Arnold, Eaton chairman and chief executive officer, said, “We had a very strong fourth quarter, with better-than-expected organic revenue growth and margins. Organic growth came in at 7 percent, 1 percent higher than our guidance. Our segment margins in the fourth quarter were 17.4 percent, 20 basis points above the midpoint of our margin guidance and 100 basis points over the fourth quarter of 2017.

“Operating cash flow in the fourth quarter, excluding the $300 million payment for the arbitration decision related to the legacy Cooper business, was $1.1 billion,” said Arnold. “We took advantage of the significant pullback in financial markets in December and repurchased $700 million of our shares in the fourth quarter. This represents 2.3 percent of our shares outstanding at the start of the quarter. We intend to continue taking advantage of any periods of share price weakness to buy our shares back.”

For full year 2018, sales were $21.6 billion, 6 percent higher than 2017. Segment margins were 16.8 percent, up 100 basis points over 2017. Earnings per share were $4.91, and excluding the impact of the arbitration decision, earnings per share were $5.39. This represents an increase of 16 percent over 2017, excluding the 2017 gain on the Eaton Cummins joint venture and the 2017 income related to the U.S. tax bill. Operating cash flow in 2018 was $3.0 billion, excluding the $300 million arbitration payment related to the legacy Cooper business. During 2018, share repurchases totaled 17.5 million shares, at a cost of $1.3 billion, representing 4.0 percent of shares outstanding at the beginning of the year.

“Looking at 2019, we expect our organic revenues to grow between 4 and 5 percent, partially offset by approximately 1 percent from negative currency translation,” said Arnold. “We anticipate segment margins to be between 17.0 percent and 17.4 percent, representing at the midpoint a 40 basis point improvement over 2018.

“We expect 2019 earnings per share to be between $5.70 and $6.00, representing at the midpoint a 9 percent increase over 2018 excluding the 2018 arbitration decision,” said Arnold. “We anticipate earnings per share for the first quarter of 2019 to be between $1.18 and $1.28, a 12 percent increase at the midpoint over the first quarter of 2018.”

GUIDANCE:

Eaton sees FY2019 EPS of $5.70-$6.00, versus the consensus of $5.85.

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