Eaton 10-Q 2025-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to ______

Commission file number 000-54863

EATON CORPORATION plc
(Exact name of registrant as specified in its charter)

Ireland															98-1059235
(State or other jurisdiction of incorporation or organization)															(IRS Employer Identification Number)
Eaton House,			30 Pembroke Road,			Dublin 4,			Ireland						D04 Y0C2
(Address of principal executive offices)															(Zip Code)

															+353						1637 2900
						(Registrant's telephone number, including area code)
						Not applicable
						(Former name, former address and former fiscal year if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class									Trading Symbol												Name of each exchange on which registered
Ordinary shares ($0.01 par value)									ETN												New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer," “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer			☑						Accelerated filer			☐						Non-accelerated filer			☐
Smaller reporting company			☐						Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange

Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

There were 391.3 million Ordinary Shares outstanding as of March 31, 2025.

TABLE OF CONTENTS
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS			2
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			24
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			35
ITEM 4. CONTROLS AND PROCEDURES			35
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			35
ITEM 1A. RISK FACTORS			35
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			36
ITEM 5. OTHER INFORMATION			36
ITEM 6. EXHIBITS			37
SIGNATURES			39

PART I — FINANCIAL INFORMATION

EATON CORPORATION plc

CONSOLIDATED STATEMENTS OF INCOME

			Three months ended March 31
(In millions except for per share data)			2025						2024
Net sales			$	6,377					$	5,943
Cost of products sold			3,930						3,725
Selling and administrative expense			1,048						1,025
Research and development expense			198						189
Interest expense - net			33						30
Other income - net			(9)						(26)
Income before income taxes			1,177						1,001
Income tax expense			212						179
Net income			965						822
Less net income for noncontrolling interests			(1)						(1)
Net income attributable to Eaton ordinary shareholders			$	964					$	821
Net income per share attributable to Eaton ordinary shareholders
Diluted			$	2.45					$	2.04
Basic			2.46						2.05
Weighted-average number of ordinary shares outstanding
Diluted			393.6						401.9
Basic			392.2						399.9
Cash dividends declared per ordinary share			$	1.04					$	0.94

The accompanying notes are an integral part of these condensed consolidated financial statements.

EATON CORPORATION plc

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

			Three months ended March 31
(In millions)			2025						2024
Net income			$	965					$	822
Less net income for noncontrolling interests			(1)						(1)
Net income attributable to Eaton ordinary shareholders			964						821
Other comprehensive income (loss), net of tax
Currency translation and related hedging instruments			84						(53)
Pensions and other postretirement benefits			(3)						17
Cash flow hedges			11						(4)
Other comprehensive income (loss) attributable to Eaton ordinary shareholders			92						(40)
Total comprehensive income attributable to Eaton ordinary shareholders			$	1,056					$	781

The accompanying notes are an integral part of these condensed consolidated financial statements.

EATON CORPORATION plc

CONSOLIDATED BALANCE SHEETS

(In millions)			March 31, 2025						December 31, 2024
Assets
Current assets
Cash			$	1,777					$	555
Short-term investments			162						1,525
Accounts receivable - net			5,094						4,619
Inventory			4,392						4,227
Prepaid expenses and other current assets			1,009						874
Total current assets			12,434						11,801
Property, plant and equipment
Land and buildings			2,177						2,239
Machinery and equipment			6,981						6,823
Gross property, plant and equipment			9,158						9,062
Accumulated depreciation			(5,394)						(5,333)
Net property, plant and equipment			3,765						3,729
Other noncurrent assets
Goodwill			14,851						14,713
Other intangible assets			4,586						4,658
Operating lease assets			813						806
Deferred income taxes			609						609
Other assets			2,148						2,066
Total assets			$	39,206					$	38,381
Liabilities and shareholders’ equity
Current liabilities

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Amounts are in millions of dollars or shares unless indicated otherwise (per share data assume dilution). Columns and rows may not add and the sum of components may not equal total amounts reported due to rounding.

COMPANY OVERVIEW

Eaton Corporation plc (Eaton or the Company) is an intelligent power management company dedicated to protecting the environment and improving the quality of life for people everywhere. We make products for the data center, utility, industrial, commercial, machine building, residential, aerospace and mobility markets. We are capitalizing on the megatrends of the energy transition, electrification, and digitalization. The reindustrialization of and growth of megaprojects in North America and increased global infrastructure spending focused on clean energy programs are expanding our end markets and positioning Eaton for growth for years to come. We are strengthening our participation across the entire electrical power value chain and benefiting from momentum in the data center and utility end markets as well as a growth cycle in the commercial aerospace and defense markets. We are guided by our commitment to operate sustainably and with the highest ethical standards. Our work is accelerating the planet’s transition to renewable energy sources, helping to solve the world’s most urgent power management challenges, and building a more sustainable society for people today and for future generations.

Founded in 1911, Eaton has continuously evolved to meet the changing and expanding needs of our stakeholders. With revenues of nearly $25 billion in 2024, the Company serves customers in more than 160 countries.

Portfolio Changes

The Company continues to actively manage its portfolio of businesses to deliver on its strategic objectives. The Company is focused on deploying its capital toward businesses that provide opportunities for above-market growth, strong returns, and align with secular trends and its power management strategies. During 2024 and 2025, Eaton continued to selectively add businesses to strengthen its portfolio.

Acquisitions of businesses and investments in associate companies						Date of acquisition						Business segment
Exertherm						May 20, 2024						Electrical Americas
A U.K. based provider of thermal monitoring solutions for electrical equipment.
NordicEPOD AS						May 31, 2024						Electrical Global
A 49 percent stake in NordicEPOD AS, which designs and assembles standardized power modules for data centers in the Nordic region.
Fibrebond Corporation						April 1, 2025						Electrical Americas
A U.S. based designer and builder of pre-integrated modular power enclosures for data center, industrial, utility and communications customers.

Additional information related to acquisitions of businesses is presented in Note 2.

RESULTS OF OPERATIONS

Non-GAAP Financial Measures

The following discussion of Consolidated Financial Results includes certain non-GAAP financial measures. These financial measures include adjusted earnings and adjusted earnings per ordinary share, each of which differs from the most directly comparable measure calculated in accordance with generally accepted accounting principles (GAAP). A reconciliation of adjusted earnings and adjusted earnings per ordinary share to the most directly comparable GAAP measure is included in the Consolidated Financial Results table below. Management believes that these financial measures are useful to investors because they provide additional meaningful financial information that should be considered when assessing our business performance and trends, and they allow investors to more easily compare Eaton’s financial performance period to period. Management uses this information in monitoring and evaluating the on-going performance of Eaton.

Acquisition and Divestiture Charges

Eaton incurs integration charges and transaction costs to acquire and integrate businesses, and transaction, separation and other costs to divest and exit businesses. Eaton also recognizes gains and losses on the sale of businesses. A summary of these Corporate items is as follows:

			Three months ended March 31
(In millions except for per share data)			2025						2024
Acquisition integration, divestiture charges and transaction costs			$	10					$	17
Income tax benefit			2						4
Total after income taxes			$	8					$	13
Per ordinary share - diluted			$	0.02					$	0.03

Acquisition integration, divestiture charges and transaction costs in 2025 are primarily related to the acquisitions of Fibrebond and Exertherm, transactions completed prior to 2023, and other charges to acquire and exit businesses. Acquisition integration, divestiture charges and transaction costs in 2024 are primarily related to acquisitions completed prior to 2023, and include other charges and income to acquire and exit businesses. These charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income - net. In Business Segment Information in Note 14, the charges were included in Other expense - net.

Restructuring Programs

During the first quarter of 2024, Eaton implemented a multi-year restructuring program to accelerate opportunities to optimize its operations and global support structure. These actions will better align the Company's functions to support anticipated growth and drive greater effectiveness throughout the Company. Since the inception of the program, the Company has incurred charges of $220 million. This restructuring program is expected to be completed in 2026 and is expected to incur additional expenses related to workforce reductions of $171 million and plant closing and other costs of $84 million, resulting in total estimated charges of $475 million for the entire program. The Company expects mature year benefits of $375 million when the multi-year program is fully implemented.

Additional information related to these restructuring programs is presented in Note 13.

Intangible Asset Amortization Expense

Intangible asset amortization expense is as follows:

									Three months ended March 31
(In millions except for per share data)															2025						2024
Intangible asset amortization expense															$	106					$	106
Income tax benefit															22						23
Total after income taxes															$	84					$	84
Per ordinary share - diluted															$	0.21					$	0.21

Consolidated Financial Results

															Three months ended March 31												Increase (decrease)
(In millions except for per share data)																		2025						2024
Net sales																					$	6,377					$	5,943					7		%
Gross profit																					2,447						2,218						10		%
Percent of net sales																					38.4		%				37.3		%
Income before income taxes																					1,177						1,001						18		%
Net income																					965						822						17		%
Less net income for noncontrolling interests																					(1)						(1)
Net income attributable to Eaton ordinary shareholders																					964						821						17		%
Excluding acquisition and divestiture charges, after-tax																					8						13
Excluding restructuring program charges, after-tax																					14						49
Excluding intangible asset amortization expense, after-tax																					84						84
Adjusted earnings																					$	1,070					$	966					11		%
Net income per share attributable to Eaton ordinary shareholders - diluted																					$	2.45					$	2.04					20		%
Excluding per share impact of acquisition and divestiture charges, after-tax																					0.02						0.03
Excluding per share impact of restructuring program charges, after-tax																					0.04						0.12
Excluding per share impact of intangible asset amortization expense, after-tax																					0.21						0.21
Adjusted earnings per ordinary share																					$	2.72					$	2.40					13		%

Net Sales

Changes in Net sales:									Three months ended March 31, 2025
Organic growth									9		%
Foreign currency									(2)		%
Total increase in Net sales									7		%

The increase in organic sales in the first quarter of 2025 was due to strength in data center and utility end-markets in the Electrical Americas and Electrical Global business segments, strength in machine OEM in the Electrical Global business segment, and strength in commercial aftermarket, military OEM, and military aftermarket in the Aerospace business segment, partially offset by weakness in industrial and residential end-markets in the Electrical Americas business segment.

Gross Profit

Gross profit margin increased from 37.3% in the first quarter of 2024 to 38.4% in the first quarter of 2025. Material factors affecting this increase were a 190 basis point increase from higher sales and a 140 basis point increase from operating efficiencies, partially offset by a 170 basis point decline from commodity and wage inflation and a 70 basis point decline from unfavorable product mix.

Income Taxes

The effective income tax rate for the first quarter of 2025 was expense of 18.0% compared to expense of 17.9% for the first quarter of 2024.

Net Income

Changes in Net income attributable to Eaton ordinary shareholders and Net income per share attributable to Eaton ordinary shareholders - diluted are summarized as follows:

									Three months ended
(In millions except for per share data)															Dollars						Per share
March 31, 2024															$	821					$	2.04
Business segment results of operations
Operational performance															118						0.30
Foreign currency															5						0.01
Corporate
Restructuring program charges															34						0.08
Acquisition and divestiture charges															5						0.01
Other corporate items															(21)						(0.05)
Tax rate impact															2						0.01
Impact of shares															—						0.05
March 31, 2025															$	964					$	2.45

Business Segment Results of Operations

The following is a discussion of Net sales, operating profit (loss) and operating margin by business segment. Additionally, the Company uses the following metrics as indicators of customer demand and future revenue expectations in the Electrical Americas, Electrical Global, and Aerospace business segments. The Company believes these metrics are useful to investors for the same reasons.

• Backlog: Includes orders to which customers are firmly committed

• Organic change in backlog: Percentage change in backlog, excluding the impact of foreign currency, acquisitions and divestitures

• Organic change in customer orders: Percentage change in firm customer orders on a trailing twelve month basis, excluding the impact of foreign currency, acquisitions and divestitures

• Book-to-bill: Average of the ratio of firm customer orders to Net sales for the last four quarters

Electrical Americas

			Three months ended March 31												Increase (decrease)
($ in millions)			2025						2024
Net sales			$	3,010					$	2,690					12		%
Operating profit			$	904					$	785					15		%
Operating margin			30.0		%				29.2		%
Changes in Net sales:
Organic growth															13		%
Foreign currency															(1)		%
Total increase in Net sales															12		%

																																	Change from March 31
Performance metrics:																					March 31, 2025						March 31, 2024						2025 vs. 2024						2024 vs. 2023
Backlog																					$	10,050					$	9,579					5		%				31		%
Organic change in backlog																																	6		%				31		%
Organic change in customer orders																																	(4)		%				8		%
Book-to-bill																					1.0						1.2

The increase in organic sales in the first quarter of 2025 was due to strength in data center and utility end-markets, partially offset by weakness in industrial and residential end-markets.

The operating margin increased from 29.2% in the first quarter of 2024 to 30.0% in the first quarter of 2025. Material factors affecting this increase were a 370 basis point increase from higher sales and a 100 basis point increase from operating efficiencies, partially offset by a 190 basis point decline from higher commodity and wage inflation, a 140 basis point decline from unfavorable product mix, and a 110 basis point decline from higher costs to support growth initiatives.

Strong demand signals continue to underpin our data center market outlook. One hyperscaler customer has paused or slowed some early-stage data center projects, while also making significant investments.

Electrical Global

			Three months ended March 31												Increase (decrease)
($ in millions)			2025						2024
Net sales			$	1,610					$	1,500					7		%
Operating profit			$	300					$	274					9		%
Operating margin			18.6		%				18.3		%
Changes in Net sales:
Organic growth															9		%
Foreign currency															(2)		%
Total increase in Net sales															7		%

															Change from March 31
Performance metrics:			March 31, 2025						March 31, 2024						2025 vs. 2024						2024 vs. 2023
Backlog			$	1,832					$	1,741					5		%				10		%
Organic change in backlog															5		%				12		%
Organic change in customer orders															—		%				4		%
Book-to-bill			1.0						1.1

The increase in organic sales in the first quarter of 2025 was due to strength in data center, machine OEM, and utility end-markets. Additionally, the increase in organic sales was due to strength in the European and Asia Pacific regions.

The operating margin increased from 18.3% in the first quarter of 2024 to 18.6% in the first quarter of 2025. Material factors affecting this increase were a 190 basis point increase from higher sales and a 170 basis point increase from operating efficiencies, partially offset by a 210 basis point decline from higher wage and commodity inflation and a 90 basis point decline from unfavorable product mix.

Strong demand signals continue to underpin our data center market outlook. One hyperscaler customer has paused or slowed some early-stage data center projects, while also making significant investments.

Aerospace

			Three months ended March 31												Increase (decrease)
($ in millions)			2025						2024
Net sales			$	979					$	871					12		%
Operating profit			$	226					$	201					12		%
Operating margin			23.1		%				23.1		%
Changes in Net sales:
Organic growth															13		%
Foreign currency															(1)		%
Total increase in Net sales															12		%

																		Change from March 31
Performance metrics:						March 31, 2025						March 31, 2024						2025 vs. 2024						2024 vs. 2023
Backlog						$	3,899					$	3,347					16		%				11		%
Organic change in backlog																		16		%				11		%
Organic change in customer orders																		14		%				2		%
Book-to-bill						1.1						1.1

The increase in organic sales in the first quarter of 2025 was due to broad-based strength across all markets, with particular strength in commercial aftermarket, military OEM, and military aftermarket.

The operating margin was flat at 23.1% in both the first quarter of 2025 and 2024. Material factors affecting the operating margin were a 460 basis point increase from higher sales, partially offset by a 250 basis point decline due to the sale of a production facility in the first quarter of 2024 and a 240 basis point decline from higher commodity and wage inflation.

Vehicle

			Three months ended March 31												Increase (decrease)
(In millions)			2025						2024
Net sales			$	617					$	724					(15)		%
Operating profit			$	96					$	116					(17)		%
Operating margin			15.5		%				16.0		%
Changes in Net sales:
Organic growth															(11)		%
Foreign currency															(4)		%
Total decrease in Net sales															(15)		%

The decrease in organic sales in the first quarter of 2025 was due to weakness in the North American truck and light vehicle markets.

The operating margin decreased from 16.0% in the first quarter of 2024 to 15.5% in the first quarter of 2025. Material factors affecting this decrease were a 220 basis point decline from higher wage and commodity inflation and a 190 basis point decline from lower sales, partially offset by a 280 basis point increase from operating efficiencies and a 50 basis point increase from higher income from investments in associate companies.

eMobility

			Three months ended March 31												Increase (decrease)
(In millions)			2025						2024
Net sales			$	162					$	158					2		%
Operating loss			$	(4)					$	(4)					—		%
Operating margin			(2.7)		%				(2.7)		%
Changes in Net sales:
Organic growth															3		%
Foreign currency															(1)		%
Total increase in Net sales															2		%

The increase in organic sales in the in the first quarter of 2025 was due to strength in the European region, partially offset by weakness in the North American region.

The operating margin was flat at negative 2.7% in both the first quarter of 2025 and 2024. Material factors affecting the operating margin were a 690 basis point increase from operating efficiencies, a 300 basis point increase from higher sales and a 190 basis point increase from favorable product mix, partially offset by a 450 basis point decline from higher commodity and wage inflation, a 330 basis point decline from the sale of non-production facilities in the first quarter of 2024, and a 330 basis point decline from higher costs to support growth initiatives.

Corporate Expense

			Three months ended March 31												Increase (decrease)
(In millions)			2025						2024
Intangible asset amortization expense			$	106					$	106					—		%
Interest expense - net			33						30						10		%
Pension and other postretirement benefits income			(5)						(12)						(58)		%
Restructuring program charges			18						63						(71)		%
Other expense - net			193						184						5		%
Total corporate expense			$	345					$	371					(7)		%

Total corporate expense decreased from $371 million in the first quarter of 2024 to $345 million in the first quarter of 2025. The material factor affecting this decrease was lower Restructuring program charges.

LIQUIDITY, CAPITAL RESOURCES, AND FINANCIAL CONDITION

Liquidity and Financial Condition

Eaton’s objective is to finance its business through operating cash flow and an appropriate mix of equity and long-term and short-term debt. By diversifying its debt maturity structure, Eaton reduces liquidity risk.

The Company maintains revolving credit facilities consisting of a $500 million 364-day revolving credit facility that will expire on September 29, 2025 and a $2,500 million five-year revolving credit facility that will expire on October 1, 2027. The revolving credit facilities totaling $3,000 million are used to support commercial paper borrowings and are fully and unconditionally guaranteed by Eaton and certain of its direct and indirect subsidiaries on an unsubordinated, unsecured basis. There were no borrowings outstanding under Eaton’s revolving credit facilities at March 31, 2025. The Company maintains access to the commercial paper markets through its $3,000 million commercial paper program, of which $800 million was outstanding on March 31, 2025, used primarily with funding the acquisition of Fibrebond Corporation.

Over the course of a year, cash, short-term investments, and short-term debt may fluctuate in order to manage global liquidity. As of March 31, 2025 and December 31, 2024, Eaton had cash of $1,777 million and $555 million, short-term investments of $162 million and $1,525 million, respectively, with $805 million short-term debt as of March 31, 2025 and no short-term debt as of December 31, 2024. Eaton believes it has the operating flexibility, cash flow, cash and short-term investment balances, availability under existing revolving credit facilities, and access to capital markets in excess of the liquidity necessary to meet future operating needs of the business, fund capital expenditures and acquisitions of businesses, as well as scheduled payments of long-term debt.

On April 1, 2025, the Company paid $1.45 billion, net of cash acquired, to acquire Fibrebond Corporation.

Eaton was in compliance with each of its debt covenants for all periods presented.

Cash Flows

A summary of cash flows is as follows:

			Three months ended March 31												Change from 2024
(In millions)			2025												2024
Net cash provided by operating activities			$	238											$	475					$	(237)
Net cash provided by investing activities			1,233												33						1,200
Net cash used in financing activities			(244)												(536)						292
Effect of currency on cash			(7)												13						(20)
Total increase (decrease) in cash			$	1,221											$	(15)

Operating Cash Flow

Net cash provided by operating activities decreased by $237 million in the first three months of 2025 compared to 2024. Material factors affecting this decrease were higher working capital balances of $389 million, partially offset by higher net income of $143 million.

Investing Cash Flow

Net cash provided by investing activities increased by $1,200 million in the first three months of 2025 compared to 2024. The material factor affecting this increase was an increase in sales of short-term investments to $1,366 million in 2025 from $150 million in 2024.

Financing Cash Flow

Net cash used in financing activities decreased by $292 million in the first three months of 2025 compared to 2024. Material factors affecting this decrease were net proceeds of short-term debt of $805 million in 2025 compared to net payments of short-term debt of $7 million in 2024, partially offset by an increase in repurchase of shares to $615 million in 2025 from $138 million in 2024.

Uses of Cash

Capital Expenditures

Capital expenditures were $147 million and $183 million in the first three months of 2025 and 2024, respectively. The Company plans to increase capital expenditures over the next several years to expand production capacity across various markets to support anticipated growth. As a result, Eaton expects approximately $900 million in capital expenditures in 2025.

Dividends

Cash dividend payments were $397 million and $368 million in the first three months of 2025 and 2024, respectively. Payment of quarterly dividends in the future depends upon the Company’s ability to generate net income and operating cash flows, among other factors, and is subject to declaration by the Eaton Board of Directors. The Company intends to continue to pay quarterly dividends in 2025.

Share Repurchases

On February 23, 2022, the Board of Directors adopted a share repurchase program for repurchases of ordinary shares up to $5.0 billion to be made during the three-year period commencing on that date (2022 Program). On February 27, 2025, the Board of Directors renewed the 2022 Program by providing authority for up to $9.0 billion in repurchases to be made during the three-year period commencing on that date (2025 Program). Under the 2025 Program, the ordinary shares are expected to be repurchased over time, depending on market conditions, the market price of ordinary shares, capital levels, and other considerations. During the three months ended March 31, 2025, 1.9 million ordinary shares were repurchased under the 2025 and 2022 Programs in the open market at a total cost of $608 million. During the three months ended March 31, 2024, 0.5 million ordinary shares were repurchased under the 2022 program in the open market at a total cost of $138 million. The Company will continue to pursue share repurchases in 2025 depending on market conditions and capital levels.

Acquisition of Businesses and Investments in Associate Companies

There were no business acquisitions in the first three months of 2025 and 2024. The Company paid cash of $13 million for investments in associate companies in the first three months of 2025. There were no investments in associate companies in the first three months 2024. The Company will continue to focus on deploying its capital toward businesses that provide opportunities for higher growth and strong returns, and align with secular trends and its power management strategies. On April 1, 2025, Eaton acquired Fibrebond Corporation for $1.45 billion, net of cash acquired.

Debt

The Company manages a number of short-term and long-term debt instruments, including commercial paper. At March 31, 2025, the Company had Short-term debt of $805 million, Current portion of long-term debt of $1,666 million, and Long-term debt of $7,609 million. The Company believes it has the operating flexibility, cash flow, and access to capital markets to meet scheduled payments of long-term debt.

Supply Chain Finance Program

A third-party financial institution offers a voluntary supply chain finance (SCF) program that enables certain of the Company’s suppliers, at the supplier’s sole discretion, to sell receivables due from the Company to the financial institution on terms directly negotiated with the financial institution. The SCF program does not have a significant impact on the Company’s liquidity as payments by the Company to participating suppliers are paid to the financial institution on the invoice due date, regardless of whether an individual invoice is sold by the supplier to the financial institution. For additional information on the SCF program, see Note 7.

Guaranteed Debt

Issuers, Guarantors and Guarantor Structure

Eaton Corporation has issued senior notes pursuant to indentures dated April 1, 1994 (the 1994 Indenture), November 20, 2012 (the 2012 Indenture), September 15, 2017 (the 2017 Indenture) and August 23, 2022 (as supplemented by the First and Second Supplemental Indentures of the same date and the Third Supplemental Indenture dated May 18, 2023, the 2022 Indenture). The senior notes of Eaton Corporation are registered under the Securities Act of 1933, as amended (the Registered Senior Notes). Eaton Capital Unlimited Company, a subsidiary of Eaton, is the issuer of five outstanding series of debt securities sold in offshore transactions under Regulation S promulgated under the Securities Act (the Eurobonds). The Eurobonds and the Registered Senior Notes (together, the Senior Notes) comprise substantially all of Eaton’s long-term indebtedness.

Substantially all of the Senior Notes (with limited exceptions), together with the credit facilities described above under Liquidity and Financial Condition (the Credit Facilities), are guaranteed by Eaton and 17 of its subsidiaries. Accordingly, they rank equally with each other. However, because these obligations are not secured, they would be effectively subordinated to any existing or future secured indebtedness of Eaton and its subsidiaries. As of March 31, 2025, Eaton has no material, long-term secured debt. The guaranteed Registered Senior Notes are also structurally subordinated to the liabilities of Eaton's subsidiaries that are not guarantors. Except as described below under Future Guarantors, Eaton is not obligated to cause its subsidiaries to guarantee the Registered Senior Notes.

The table set forth in Exhibit 22 filed with the Form 10-K filed on February 23, 2023 (10-K Exhibit 22) details the primary obligors and guarantors with respect to the guaranteed Registered Senior Notes.

Terms of Guarantees of Registered Securities

Payment of principal and interest on the Registered Senior Notes is guaranteed, on an unsecured, unsubordinated basis by the subsidiaries of Eaton set forth in the table referenced in the 10-K Exhibit 22. Each guarantee is full and unconditional, and joint and several. Each guarantor’s guarantee is an unsecured obligation that ranks equally with all its other unsecured and unsubordinated indebtedness. The obligations of each guarantor under its guarantee of the Registered Senior Notes are subject to a customary savings clause or similar provision designed to prevent such guarantee from constituting a fraudulent conveyance or otherwise legally impermissible or voidable obligation.

Though the terms of the indentures vary slightly, generally, each guarantee of the Registered Senior Notes by a guarantor that is a subsidiary of Eaton Corporation provides that it will be automatically and unconditionally released and discharged under certain circumstances, including, but not limited to:

(a)the consummation of certain types of transactions permitted under the applicable indenture, including one that results in such guarantor ceasing to be a subsidiary; and

(b)for Registered Senior Notes issued under the 2022 Indenture, when such guarantor is a guarantor or issuer of indebtedness in an aggregate outstanding principal amount of less than 25% of our total outstanding indebtedness.

Further, each guarantee by a direct or indirect parent of Eaton Corporation (other than Eaton) provides that it will also be released if:

(c)such guarantee (so long as the guarantor is not obligated under any other U.S. debt obligations), becomes prohibited by any applicable law, rule or regulation or by any contractual obligation; or

(d)such guarantee results in material adverse tax consequences to Eaton or any of its subsidiaries (so long as the applicable guarantor is not obligated under any other U.S. debt obligation).

The guarantee of Eaton does not contain any release provisions.

Future Guarantors

The 2012 and 2017 Indentures generally provide that, with certain limited exceptions, any subsidiary of Eaton must become a guarantor if it becomes obligated as borrower or guarantor under any series of debt securities or a syndicated credit facility. Further, the 2012 and 2017 Indentures provide that any entity that becomes a direct or indirect parent entity of Eaton Corporation and holds any material assets, with certain limited exceptions, or owes any material liabilities must become a guarantor. The 2022 Indenture provides only that, with certain limited exceptions, any subsidiary of Eaton must become a guarantor if it becomes obligated as borrower or guarantor under indebtedness with an aggregate outstanding principal amount in excess of 25% of the Parent and its Subsidiaries’ then-outstanding indebtedness.

The 1994 Indenture does not contain provisions with respect to future guarantors.

Summarized Financial Information of Guarantors and Issuers

(In millions)			March 31, 2025						December 31, 2024
Current assets			$	5,137					$	5,027
Noncurrent assets			13,195						13,225
Current liabilities			5,403						3,738
Noncurrent liabilities			9,640						10,564
Amounts due to subsidiaries that are non-issuers and non-guarantors - net			9,509						10,334
(In millions)									Three months ended March 31, 2025
Net sales									$	3,832
Sales to subsidiaries that are non-issuers and non-guarantors									249
Cost of products sold									2,740
Expense from subsidiaries that are non-issuers and non-guarantors - net									144
Net income									338

The financial information presented is that of Eaton Corporation and the Guarantors, which includes Eaton Corporation plc, on a combined basis and the financial information of non-issuer and non-guarantor subsidiaries has been excluded. Intercompany balances and transactions between Eaton Corporation and Guarantors have been eliminated, and amounts due from, amounts due to, and transactions with non-issuer and non-guarantor subsidiaries have been presented separately.

FORWARD-LOOKING STATEMENTS

This Form 10-Q Report contains forward-looking statements concerning litigation, expected capital expenditures, future dividend payments, anticipated share repurchases, liquidity, and expected restructuring program charges and benefits. These statements may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to Eaton, based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside Eaton’s control. The following factors could cause actual results to differ materially from those in the forward-looking statements: global pandemics; unanticipated changes in the markets for the Company’s business segments; unanticipated downturns in business relationships with customers or their purchases from us; the availability of credit to customers and suppliers; supply chain disruptions, competitive pressures on sales and pricing; unanticipated changes in the cost of material, labor and other production costs, or unexpected costs that cannot be recouped in product pricing; the introduction of disruptive or competing technologies; unexpected technical or marketing difficulties; unexpected or adverse determinations with respect to claims, charges, audits, investigations, court or administrative proceedings, litigation, arbitrations, judgements, or dispute resolutions; strikes or other labor unrest at Eaton or at our customers or suppliers; the impact of acquisitions and divestitures unanticipated difficulties integrating acquisitions; the effect, interpretation, or application of new or existing laws, regulations, legal proceedings or accounting pronouncements, tariffs and governmental regulations; interest rate changes; tax rate changes or exposure to additional income tax liability; stock market and currency fluctuations; war, geopolitical tensions, natural disasters, civil or political unrest or terrorism; and unanticipated deterioration of economic and financial conditions in the United States and around the world. Eaton does not assume any obligation to update these forward-looking statements.