“We haven’t done many mergers over the past couple of years,” Arnold said. “So, we have more bandwidth today to take on these projects. ... There is no better time for these projects.”
Thomas Okray, in his final meeting with analysts as Eaton's chief financial officer — Feb. 2, was his last day in the job — added, “It is riskier if we didn’t do it. We can lean forward at a time of strength.”
Eaton had a specific number on the cost of the restructuring - $375 million - and the timeline (through 2026) but not a lot of detail. One traditional element of restructurings — job reductions — wasn't mentioned at all in Eaton's earnings release or during the call with analysts. Asked in an email about the possibility of job cuts, an Eaton spokesperson wrote that "details on specific activities are not available at this time."
Eaton's operations include plastics for battery components.
The company's stock rose after the earnings and restructuring announcement. As of 1 p.m. Friday, Eaton stock was trading at $270.12 per share, up about 2% from Thursday's close and near the 52-week high of $271.09. The stock's 52-week low is $155.38.
Eaton reported that net income rose 31% to $946 million, or $2.35 per share, in the fourth quarter from earnings of $721 million, or $1.80 a share, a year earlier.
A major source of the company's improved performance was its Electrical Americas segment, where sales hit a record $2.7 billion, up 16% from the fourth quarter of 2022. A much smaller unit, eMobility, also saw strong growth in the fourth quarter, with sales rising to $165 million, up 19% from $139 million in Q4 2022.
The company now estimates adjusted earnings per share of $9.95 and $10.35 for 2024.
Analyst Scott Davis, founding partner of Melius Research, said in a research note on Thursday that Eaton "is hardly a hidden gem, arguably the opposite (we love it, but now everyone else does too, but growth and revisions continue to differentiate not only vs. industrial peers but also a wider set of [comparisons].”