UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended March 31, 2026
OR
For the transition period from _____ to ______
Commission file number 000-54863
(Exact name of registrant as specified in its charter) | ||
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | ||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
| (Registrant's telephone number, including area code) | |||||||||||||||||||||||||||||||||||
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| (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(s) | Name of each exchange on which registered | |||||||||||||||||||||||||||||||||
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.
| ☑ | 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 388.3 million ordinary shares outstanding as of March 31, 2026.
| TABLE OF CONTENTS | |||||
PART I — FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS.
EATON CORPORATION plc
CONSOLIDATED STATEMENTS OF INCOME
| Three months ended March 31 | |||||||||||
| (In millions except for per share data) | 2026 | 2025 | |||||||||
| Net sales | $ | $ | |||||||||
| Cost of products sold | |||||||||||
| Selling and administrative expense | |||||||||||
| Research and development expense | |||||||||||
| Interest expense - net | |||||||||||
| Other income - net | ( | ( | |||||||||
| Income before income taxes | |||||||||||
| Income tax expense | |||||||||||
| Net income | |||||||||||
| Less net income for noncontrolling interests | ( | ( | |||||||||
| Net income attributable to Eaton ordinary shareholders | $ | $ | |||||||||
| Net income per share attributable to Eaton ordinary shareholders | |||||||||||
| Diluted | $ | $ | |||||||||
| Basic | |||||||||||
| Weighted-average number of ordinary shares outstanding | |||||||||||
| Diluted | |||||||||||
| Basic | |||||||||||
| Cash dividends declared per ordinary share | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
EATON CORPORATION plc
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Three months ended March 31 | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Net income | $ | $ | |||||||||
| Less net income for noncontrolling interests | ( | ( | |||||||||
| Net income attributable to Eaton ordinary shareholders | |||||||||||
| Other comprehensive income (loss), net of tax | |||||||||||
| Currency translation and related hedging instruments | ( | ||||||||||
| Pensions and other postretirement benefits | ( | ||||||||||
| Cash flow hedges | ( | ||||||||||
| Other comprehensive income (loss) attributable to Eaton ordinary shareholders | ( | ||||||||||
| Total comprehensive income attributable to Eaton ordinary shareholders | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
EATON CORPORATION plc
CONSOLIDATED BALANCE SHEETS
| (In millions) | March 31, 2026 | December 31, 2025 | |||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash | $ | $ | |||||||||
| Short-term investments | |||||||||||
| Accounts receivable - net | |||||||||||
| Inventory | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment | |||||||||||
| Land and buildings | |||||||||||
| Machinery and equipment | |||||||||||
| Gross property, plant and equipment | |||||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Net property, plant and equipment | |||||||||||
| Other noncurrent assets | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets | |||||||||||
| Operating lease assets | |||||||||||
| Deferred income taxes | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and shareholders’ equity | |||||||||||
| Current liabilities | |||||||||||
| Short-term debt | $ | $ | |||||||||
| Current portion of long-term debt | |||||||||||
| Accounts payable | |||||||||||
| Accrued compensation | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Noncurrent liabilities | |||||||||||
| Long-term debt | |||||||||||
| Pension liabilities | |||||||||||
| Other postretirement benefits liabilities | |||||||||||
| Operating lease liabilities | |||||||||||
| Deferred income taxes | |||||||||||
| Other noncurrent liabilities | |||||||||||
| Total noncurrent liabilities | |||||||||||
| Shareholders’ equity | |||||||||||
Ordinary shares ( | |||||||||||
| Capital in excess of par value | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Shares held in trust | ( | ||||||||||
| Total Eaton shareholders’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
EATON CORPORATION plc
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three months ended March 31 | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile to net cash provided by operating activities | |||||||||||
| Depreciation and amortization | |||||||||||
| Deferred income taxes | |||||||||||
| Pension and other postretirement benefits expense | |||||||||||
| Contributions to pension plans | ( | ( | |||||||||
| Contributions to other postretirement benefits plans | ( | ( | |||||||||
| Changes in working capital | ( | ( | |||||||||
| Other - net | ( | ( | |||||||||
| Net cash provided by operating activities | |||||||||||
| Investing activities | |||||||||||
| Capital expenditures for property, plant and equipment | ( | ( | |||||||||
| Cash paid for acquisition of businesses, net of cash acquired | ( | ||||||||||
| Proceeds from sales of property, plant and equipment | |||||||||||
| Investments in nonmarketable securities | ( | ||||||||||
| Sales (purchases) of short-term investments - net | ( | ||||||||||
Payments for settlement of currency exchange contracts not designated as hedges - net | ( | ||||||||||
| Other - net | ( | ( | |||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||
| Financing activities | |||||||||||
| Proceeds from borrowings | |||||||||||
| Payments on borrowings | ( | ( | |||||||||
| Short-term debt, net | |||||||||||
| Debt issuance costs | ( | ||||||||||
| Cash dividends paid | ( | ( | |||||||||
| Exercise of employee stock options | |||||||||||
| Repurchase of shares | ( | ||||||||||
| Employee taxes paid from shares withheld | ( | ( | |||||||||
| Other - net | ( | ||||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Effect of currency on cash | ( | ||||||||||
| Total increase (decrease) in cash | ( | ||||||||||
| Cash at the beginning of the period | |||||||||||
| Cash at the end of the period | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
EATON CORPORATION plc
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Amounts are in millions 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.
Note 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Eaton Corporation plc (Eaton or the Company) have been prepared in accordance with generally accepted accounting principles for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles (US GAAP) for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) have been made that are necessary for a fair presentation of the condensed consolidated financial statements for the interim periods.
This Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in Eaton’s 2025 Form 10-K. The interim period results are not necessarily indicative of the results to be expected for the full year. Management has evaluated subsequent events through the date this Form 10-Q was filed with the Securities and Exchange Commission.
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which consists of the legacy Vehicle and eMobility segments. Historical segment information has been recast to reflect this change.
Certain prior year amounts have been reclassified to conform to the current year presentation.
Recently Issued Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). This accounting standard requires disaggregated income statement expense disclosures on an annual and interim basis, including inventory purchases, employee compensation, depreciation, and intangible asset amortization for each income statement line item that contains these expenses. The standard also requires disclosure of total selling expenses on an annual and interim basis, and the definition of those expenses disclosed annually. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and may be applied prospectively or retrospectively. The Company is evaluating the impact of ASU 2024-03 and expects the standard will only impact its disclosures with no material impact to the consolidated financial statements.
In September 2025, the FASB issued Accounting Standards Update 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06). This accounting standard changes when software project costs should be capitalized by removing all references to development stages and requiring costs to be capitalized when (1) the Company authorizes and commits to funding the software project and (2) it is probable the software project will be completed. The standard also requires additional annual and interim disclosures, including the capitalized software balance and accumulated amortization. ASU 2025-06 is effective for annual reporting periods, including interim reporting periods within those annual periods, beginning after December 15, 2027, with early adoption permitted and may be applied prospectively, retrospectively, or using a modified prospective transition approach. The Company is evaluating the impact of ASU 2025-06 to the consolidated financial statements and related disclosures.
In December 2025, the FASB issued Accounting Standards Update 2025-10, Government Grants (Topic 832) – Accounting for Government Grants Received by Business Entities (ASU 2025-10). This accounting standard requires a government grant to be recognized when (1) it is probable the conditions of the grant will be met and (2) the grant will be received. ASU 2025-10 is effective for annual reporting periods, including interim reporting periods within those annual periods, beginning after December 15, 2028, with early adoption permitted and may be applied using a modified prospective approach, modified retrospective approach, or a retrospective approach. The Company is evaluating the impact of ASU 2025-10 to the consolidated financial statements and related disclosures.
6
Note 2. ACQUISITIONS AND DIVESTITURE OF BUSINESSES
Acquisition of Fibrebond Corporation
On April 1, 2025, Eaton acquired Fibrebond Corporation (Fibrebond) for $1.43 billion, net of cash acquired. Fibrebond is a U.S. based designer and builder of pre-integrated modular power enclosures for data center, industrial, utility and communications customers. Fibrebond is reported within the Electrical Americas business segment.
The acquisition of Fibrebond has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. During the measurement period, which ended in March 2026, opening balance sheet adjustments were made to finalize Eaton's fair value estimates based on the final valuations received, which are summarized in the table below. The measurement period adjustments did not have a material impact to the Consolidated Statements of Income.
| (In millions) | Preliminary Allocation | Measurement Period Adjustments | Final Allocation | |||||||||||||||||
| Accounts receivable | $ | $ | ( | $ | ||||||||||||||||
| Inventory | ||||||||||||||||||||
| Prepaid expenses and other current assets | ( | |||||||||||||||||||
| Property, plant and equipment | ||||||||||||||||||||
| Other intangible assets | ||||||||||||||||||||
| Other assets | ||||||||||||||||||||
| Accounts payable | ( | ( | ||||||||||||||||||
| Other current liabilities | ( | ( | ||||||||||||||||||
| Other noncurrent liabilities | ( | ( | ( | |||||||||||||||||
| Total identifiable net assets | ||||||||||||||||||||
| Goodwill | ( | |||||||||||||||||||
| Total consideration, net of cash received | $ | $ | ( | $ | ||||||||||||||||
Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Fibrebond. Goodwill recognized as a result of the acquisition is deductible for tax purposes. The estimated fair value of the customer relationships, technology, trademarks and backlog intangible assets of $410 million, $171 million, $74 million and $60 million, respectively were determined using either the relief-from-royalty model or the multi-period excess earnings model, which are discounted cash flow models that rely on the Company's estimates. These estimates require judgment of future revenue growth rates, future margins, and the applicable weighted-average cost of capital used to discount those estimated cash flows. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise. The estimated useful lives for the customer relationships, technology, trademarks and backlog intangible assets were 17 years, 9 years, 17 years and 2 years, respectively. See Note 6 for additional information about goodwill.
As part of the acquisition, Eaton assumed $240 million of employee transaction and retention awards. Awards vest in six equal annual installments starting in the second quarter of 2025, subject to continued employment with Eaton. Forfeited employee awards are paid to former Fibrebond shareholders annually. Eaton recognizes compensation expense for the awards over the requisite service period and any employee forfeitures owed to former Fibrebond shareholders are expensed immediately in Other income - net. During the first quarter of 2026, compensation expense of $10 million, $3 million and $1 million were included in Costs of products sold, Selling and administrative expense, and Other income - net, respectively, on the Consolidated Statements of Income.
7
Acquisition of Resilient Power Systems Inc.
On August 6, 2025, Eaton acquired Resilient Power Systems Inc. (Resilient), a leading North American developer and manufacturer of innovative energy solutions, including solid-state transformer-based technology. Resilient was acquired for $86 million, including $55 million of cash paid at closing and an initial estimate of $31 million for the fair value of contingent future consideration based on 2025 through 2028 revenue performance and achievement of technology-based milestones. The fair value of contingent consideration liabilities is estimated by discounting contingent payments expected to be made, and may increase or decrease based on changes in milestone achievements and discount rates, with a maximum possible undiscounted value of $45 million. As of March 31, 2026, the fair value of the contingent future payments is $32 million. Resilient is reported within the Electrical Americas business segment.
As part of the acquisition, Eaton assumed employee incentives with a maximum payout of $50 million contingent upon achievement of the same revenue performance and technology-based milestones, as well as continued employment with Eaton. The incentives will be paid over three years , starting in 2026 and concluding in 2028. As of March 31, 2026, the Company expects to pay $50 million of employee incentives based on the estimated probability of the milestones being achieved. Compensation expense will be recognized over the requisite service period. During the first quarter of 2026, compensation expense of $11 million was included in Selling and administrative expense on the Consolidated Statements of Income.
Investment in SPAN
On January 15, 2026, Eaton invested $75 million in SPAN for a stake of approximately 7 percent. SPAN is a manufacturer of smart panel and power controls technology to further enable affordable home electrification at scale. Eaton accounts for this nonmarketable investment at cost, less impairment, adjusted for observable price changes. The investment is included in Other assets on the Consolidated Balance Sheets.
Acquisition of Ultra PCS Limited
On January 23, 2026, Eaton acquired Ultra PCS Limited (Ultra PCS) for $1.53 billion, net of cash acquired. Ultra PCS is headquartered in the U.K. with operations in the U.K. and the U.S. Ultra PCS produces electronic controls, sensing, stores ejection and data processing solutions, enabling mission success for global aerospace customers in the air and on the ground. Ultra PCS is reported within the Aerospace business segment.
The acquisition of Ultra PCS has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date. These preliminary estimates will continue to be revised during the measurement period as third-party valuations are received and finalized, further information becomes available and additional analyses are performed. These differences could have a material impact on Eaton's preliminary purchase price allocation.
| (In millions) | January 23, 2026 | |||||||
| Accounts receivable | $ | |||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Property, plant and equipment | ||||||||
| Other intangible assets | ||||||||
| Other assets | ||||||||
| Accounts payable | ( | |||||||
| Other current liabilities | ( | |||||||
| Other noncurrent liabilities | ( | |||||||
| Total identifiable net assets | ||||||||
| Goodwill | ||||||||
| Total consideration, net of cash received | $ | |||||||
Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Ultra PCS. As a result of the acquisition, goodwill of $99 million recognized in the United States is expected to be deductible for tax purposes. Other intangible assets of $798 million are expected to include customer relationships, technology and backlog. Given the timing of the acquisition, Eaton utilized a benchmarking approach based on similar acquisitions to determine the preliminary fair values for intangible assets. See Note 6 for additional information about goodwill.
8
The Company incurred $17 million of acquisition related transaction costs during the first quarter of 2026 for Ultra PCS that were included in Selling and administrative expense on the Consolidated Statements of Income.
Eaton's 2026 condensed consolidated financial statements include Ultra PCS results of operations, including segment operating profit of $13 million on sales of $48 million, from the date of acquisition through March 31, 2026.
Acquisition of Boyd Thermal
On March 12, 2026, Eaton acquired Boyd Thermal for $9.55 billion, net of cash acquired. Boyd Thermal is a U.S. based global leader in thermal components, systems, and ruggedized solutions for data center, aerospace and other end-markets. Boyd Thermal employs more than 6,000 people with manufacturing sites across North America, Asia, and Europe. Boyd Thermal is reported within the Electrical Global business segment.
The acquisition of Boyd Thermal has been accounted for using the acquisition method of accounting which requires the assets acquired and liabilities assumed be recognized at their respective fair values on the acquisition date. The table below summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed on the acquisition date. These preliminary estimates will continue to be revised during the measurement period as third-party valuations are received and finalized, further information becomes available and additional analyses are performed. These differences could have a material impact on Eaton's preliminary purchase price allocation.
| (In millions) | March 12, 2026 | |||||||
| Accounts receivable | $ | |||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Property, plant and equipment | ||||||||
| Other intangible assets | ||||||||
| Other assets | ||||||||
| Accounts payable | ( | |||||||
| Other current liabilities | ( | |||||||
| Other noncurrent liabilities | ( | |||||||
| Total identifiable net assets | ||||||||
| Goodwill | ||||||||
| Total consideration, net of cash received | $ | |||||||
Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Boyd Thermal. Goodwill recognized as a result of the acquisition is not expected to be deductible for tax purposes. Other intangible assets of $5,587 million are expected to include customer relationships, technology and backlog. Given the timing of the acquisition, Eaton utilized a benchmarking approach based on similar acquisitions to determine the preliminary fair values for intangible assets. See Note 6 for additional information about goodwill.
The Company incurred $35 million of acquisition related transaction costs during the first quarter of 2026 for Boyd Thermal that were included in Selling and administrative expense on the Consolidated Statements of Income.
Eaton's 2026 condensed consolidated financial statements include Boyd Thermal results of operations, including segment operating profit of $24 million on sales of $92 million, from the date of acquisition through March 31, 2026.
Spin-off of Mobility business
On January 26, 2026, Eaton announced its intention to pursue a spin-off of its Mobility business, which consists of the Mobility business segment, into an independent, publicly traded company. Eaton expects to complete the anticipated spin-off by the end of the first quarter of 2027, subject to customary legal and regulatory requirements and approvals, including final approval of the Company’s Board of Directors and effectiveness of a Form 10 registration statement filed with the Securities and Exchange Commission. The planned spin-off is expected to be completed in a manner that is tax-free to Eaton ordinary shareholders for U.S. federal income tax purposes.
9
Note 3. REVENUE RECOGNITION
The following table provides disaggregated sales by lines of businesses, geographic destination, market channel or end market, as applicable, for the Company's business segments:
| Three months ended March 31 | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Electrical Americas | |||||||||||
| Products | $ | $ | |||||||||
| Systems | |||||||||||
| Total | $ | $ | |||||||||
| Electrical Global | |||||||||||
| Products | $ | $ | |||||||||
| Systems | |||||||||||
| Total | $ | $ | |||||||||
| Aerospace | |||||||||||
| Original Equipment Manufacturers | $ | $ | |||||||||
| Aftermarket | |||||||||||
| Industrial and Other | |||||||||||
| Total | $ | $ | |||||||||
| Mobility | |||||||||||
| Vehicle | $ | $ | |||||||||
| eMobility | |||||||||||
| Total | $ | $ | |||||||||
| Total net sales | $ | $ | |||||||||
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (revenue recognized exceeds amount billed to the customer), and deferred revenue (advance payments and billings in excess of revenue recognized). Accounts receivable from customers were $5,709 million and $4,682 million at March 31, 2026 and December 31, 2025, respectively. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. Unbilled receivables were $933 million and $759 million at March 31, 2026 and December 31, 2025, respectively, and are recorded in Prepaid expenses and other current assets. The increase in unbilled receivables reflects higher revenue recognized and not yet billed from increased business activity in 2026, higher revenue recognized over time in 2026, and unbilled receivables associated with the Ultra PCS acquisition.
10
Changes in the deferred revenue liabilities are as follows:
| (In millions) | Deferred Revenue | ||||
Balance at January 1, 2026 | $ | ||||
| Customer deposits and billings | |||||
| Revenue recognized in the period | ( | ||||
| Deferred revenue from business acquisitions | |||||
| Translation | ( | ||||
Balance at March 31, 2026 | $ | ||||
| (In millions) | Deferred Revenue | ||||
Balance at January 1, 2025 | $ | ||||
| Customer deposits and billings | |||||
| Revenue recognized in the period | ( | ||||
| Translation | |||||
Balance at March 31, 2025 | $ | ||||
Deferred revenue liabilities of $1,088 million and $899 million as of March 31, 2026 and December 31, 2025, respectively, were included in Other current liabilities on the Consolidated Balance Sheets with the remaining balance presented in Other noncurrent liabilities.
A significant portion of open orders placed with Eaton are by customers of electrical products and electrical system and services, original equipment manufacturers or distributors. These open orders are not considered firm as they have been historically subject to releases by customers. In measuring backlog of unsatisfied or partially satisfied obligations, only the amount of orders to which customers are firmly committed are included. Using this criterion, total backlog at March 31, 2026 was approximately $22.8 billion. At March 31, 2026, approximately 68 % of this backlog is targeted for delivery to customers in the next twelve months and the rest thereafter.
Note 4. CREDIT LOSSES FOR RECEIVABLES
Receivables are exposed to credit risk based on the customers’ ability to pay which is influenced by, among other factors, their financial liquidity position. Eaton’s receivables are generally short-term in nature with a majority outstanding less than 90 days.
Eaton performs ongoing credit evaluation of its customers and maintains sufficient allowances for potential credit losses. The Company evaluates the collectability of its receivables based on the length of time the receivable is past due, and any anticipated future write-off based on historic experience adjusted for current market conditions. The Company's global credit department performs the credit evaluation and monitoring process to estimate and manage credit risk. The process includes an evaluation of credit losses for both the overall segment receivable and specific customer balances. The process also includes review of customer financial information and credit ratings, approval and monitoring of customer credit limits, and an assessment of current market conditions. The Company may also require prepayment from customers to mitigate credit risk. Receivable balances are written off against an allowance for credit losses after a final determination of collectability has been made.
Accounts receivable are net of an allowance for credit losses of $58 million and $57 million at March 31, 2026 and December 31, 2025, respectively. The change in the allowance for credit losses includes expense and net write-offs, none of which are significant.
11
Note 5. INVENTORY
Inventory is carried at lower of cost or net realizable value using the first-in, first-out (FIFO) method. The components of inventory are as follows:
| (In millions) | March 31, 2026 | December 31, 2025 | |||||||||
| Raw materials | $ | $ | |||||||||
| Work-in-process | |||||||||||
| Finished goods | |||||||||||
| Total inventory | $ | $ | |||||||||
Note 6. GOODWILL
Changes in the carrying amount of goodwill by business segment are as follows:
| (In millions) | January 1, 2026 | Additions | Translation | March 31, 2026 | |||||||||||||||||||
| Electrical Americas | $ | $ | $ | ( | $ | ||||||||||||||||||
| Electrical Global | ( | ||||||||||||||||||||||
| Aerospace | ( | ||||||||||||||||||||||
| Mobility | ( | ||||||||||||||||||||||
| Total | $ | $ | $ | ( | $ | ||||||||||||||||||
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which consists of the legacy Vehicle and eMobility segments. The Company's reporting units are equivalent to the business segments, except for the Aerospace segment which continues to have two reporting units.
As a result of the re-segmentation, the goodwill of the legacy Vehicle and eMobility reporting units was combined and assigned to the new Mobility reporting unit. The re-segmentation did not result in a reallocation of goodwill using a relative fair value methodology, as the re-segmentation resulted in a combination of previously existing reporting units and did not change the composition of other reporting units.
The 2026 additions to goodwill relate primarily to the anticipated synergies of acquiring Boyd Thermal and Ultra PCS. The allocation of the purchase price from the Resilient, Ultra PCS and Boyd Thermal acquisitions are preliminary and will be completed during the measurement period.
12
Note 7. SUPPLY CHAIN FINANCE PROGRAM
The Company negotiates payment terms directly with its suppliers for the purchase of goods and services. In addition, 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. If a supplier elects to participate in the SCF program, the supplier decides which invoices are sold to the financial institution and the Company has no economic interest in a supplier’s decision to sell an invoice. 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. The amounts due to the financial institution for suppliers that participate in the SCF program are included in on the Consolidated Balance Sheets, and the associated payments are included in operating activities on the Condensed Consolidated Statements of Cash Flows.
The changes in SCF obligations are as follows:
| (In millions) | SCF Obligations | ||||
Balance at January 1, 2026 | $ | ||||
| Invoices confirmed during the period | |||||
| Invoices paid during the period | ( | ||||
| Translation | ( | ||||
Balance at March 31, 2026 | $ | ||||
| (In millions) | SCF Obligations | ||||
Balance at January 1, 2025 | $ | ||||
| Invoices confirmed during the period | |||||
| Invoices paid during the period | ( | ||||
| Translation | |||||
Balance at March 31, 2025 | $ | ||||
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Note 8. DEBT
On February 6, 2026, Eaton Corporation, a subsidiary of Eaton, exercised a $1,000 million upsize of the existing $3,000 million five-year revolving credit agreement, increasing the total facility size to $4,000 million. The facility’s maturity date remains unchanged at September 27, 2030. The revolving credit facility is used to support commercial paper borrowings and is 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 the revolving credit facility at March 31, 2026. Also on February 6, 2026, the Company increased its commercial paper program from $3,000 million to $4,000 million. The Company maintains access to the commercial paper markets through its $4,000 million commercial paper program, of which $2,497 million was outstanding on March 31, 2026.
On March 6, 2026, Eaton Corporation, a subsidiary of Eaton, issued notes (2026 U.S. Notes) with an aggregate face amount of $8,500 million. The 2026 U.S. Notes are comprised of six tranches: 3.850 % notes due 2028 in the amount of $1,500 million; 3.950 % notes due 2029 in the amount of $1,500 million; 4.200 % notes due 2031 in the amount of $1,500 million; 4.500 % notes due 2033 in the amount of $1,000 million; 4.800 % notes due 2036 in the amount of $2,000 million; and 5.450 % notes due 2056 in the amount of $1,000 million. Interest is payable semi-annually. The issuer received proceeds totaling $8,428 million from the 2026 U.S. Notes issuance, net of financing costs and discounts. The 2026 U.S. Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The U.S. 2026 Notes contain customary optional redemption and par call provisions. The U.S. 2026 Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2026 U.S. Notes at a purchase price of 101 % of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the respective terms of the 2026 U.S. Notes. The 2026 U.S. Notes are subject to customary non-financial covenants.
On March 10, 2026, Eaton Capital Unlimited Company, a subsidiary of Eaton, issued Euro denominated notes (2026 Euro Notes) with an aggregate face amount of €1,200 million ($1,390 million). The 2026 Euro Notes are comprised of two tranches of €600 3.550 % and 4.000 % per annum. The issuer received proceeds totaling €1,191 million ($1,380 million) from the 2026 Euro Notes issuance, net of financing costs and discounts. The 2026 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2026 Euro Notes contain customary optional redemption and par call provisions. The 2026 Euro Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2026 Euro Notes at a purchase price of 101 % of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the respective terms of the 2026 Euro Notes. The 2026 Euro Notes are subject to customary non-financial covenants.
On March 6, 2026, Eaton Corporation, a subsidiary of Eaton, terminated the $8,000 million senior unsecured delayed-draw term loan facility (Term Credit Agreement) entered into on February 6, 2026. No loans were outstanding as of the date of termination and the Company incurred no fees or penalties in connection with the termination. The Term Credit Agreement was terminated in connection with the issuance of the 2026 U.S. Notes and 2026 Euro Notes.
14
Note 9. RETIREMENT BENEFITS PLANS
The components of retirement benefits expense (income) are as follows:
| United States pension benefit expense | Non-United States pension benefit expense | Other postretirement benefits expense (income) | |||||||||||||||||||||||||||||||||
| Three months ended March 31 | |||||||||||||||||||||||||||||||||||
| (In millions) | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Amortization | ( | ( | |||||||||||||||||||||||||||||||||
| ( | ( | ( | |||||||||||||||||||||||||||||||||
| Settlements | |||||||||||||||||||||||||||||||||||
| Total expense (income) | $ | $ | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||
The components of retirement benefits expense (income) other than service costs are included in Other income - net.
During 2020, the Company announced it was freezing its United States pension plans for its non-union employees. The freeze was effective January 1, 2021 for non-union U.S. employees whose retirement benefit was determined under a cash balance formula and was effective January 1, 2026 for non-union U.S. employees whose retirement benefit is determined under a final average pay formula.
Note 10. LEGAL CONTINGENCIES
Eaton is subject to a broad range of claims, administrative proceedings, and legal proceedings, including, but not limited to, claims for punitive damages, penalties, and interest, in a variety of matters, including, but not limited to, contract, indemnity, tax, patent infringement, intellectual property, personal injury, commercial, warranty, product liability, environmental, antitrust and trade regulation, class action, and labor and employment matters. Eaton is also subject to legal claims from historic products which may have contained asbestos. Insurance may cover some of the costs associated with claims and proceedings involving Eaton. Although it is not possible to predict with certainty the outcome or cost of these matters, the Company believes they will not have a material adverse effect on the condensed consolidated financial statements.
Note 11. INCOME TAXES
The effective income tax rate for the first quarter of 2026 was expense of 21.6 % compared to expense of 18.0 % for the first quarter of 2025. The increase in the effective tax rate in the first quarter of 2026 was primarily due to greater levels of income in higher tax jurisdictions and the fact that the effective tax rate for the first quarter of 2025 included a reduction in the amount of foreign unrecognized tax benefits.
15
Note 12. EATON SHAREHOLDERS' EQUITY
The changes in Shareholders’ equity are as follows:
| Ordinary shares | Capital in excess of par value | Retained earnings | Accumulated other comprehensive loss | Shares held in trust | Total Eaton shareholders' equity | Noncontrolling interests | Total equity | ||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | Dollars | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends paid and accrued | — | — | — | ( | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares under equity-based compensation plans | — | ( | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Changes in noncontrolling interest of consolidated subsidiaries - net | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares | Capital in excess of par value | Retained earnings | Accumulated other comprehensive loss | Shares held in trust | Total Eaton shareholders' equity | Noncontrolling interests | Total equity | ||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | Shares | Dollars | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends paid and accrued | — | — | — | ( | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares under equity-based compensation plans | — | ( | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Changes in noncontrolling interest of consolidated subsidiaries - net | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of shares | ( | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
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, 2026, no ordinary shares were repurchased. During the three months ended March 31, 2025, 1.9 million ordinary shares were repurchased under the 2025 Program and the 2022 Program in the open market at a total cost of $608 million.
The changes in Accumulated other comprehensive loss are as follows:
| (In millions) | Currency translation and related hedging instruments | Pensions and other postretirement benefits | Cash flow hedges | Total | |||||||||||||||||||
Balance at January 1, 2026 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | ( | ||||||||||||||||||||
| Amounts reclassified from Accumulated other comprehensive loss (income) | ( | ( | |||||||||||||||||||||
| Net current-period Other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||
Balance at March 31, 2026 | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
16
The reclassifications out of Accumulated other comprehensive loss are as follows:
| (In millions) | Three months ended March 31, 2026 | Consolidated Statements of Income classification | ||||||||||||
| Gains and (losses) on net investment hedges (amount excluded from effectiveness testing) | ||||||||||||||
| Currency exchange contracts | $ | Interest expense - net | ||||||||||||
| Tax expense | ||||||||||||||
| Total, net of tax | ||||||||||||||
| Amortization of defined benefits pensions and other postretirement benefits items | ||||||||||||||
| Actuarial loss and prior service cost | ( | 1 | ||||||||||||
| Tax benefit | ||||||||||||||
| Total, net of tax | ( | |||||||||||||
| Gains and (losses) on cash flow hedges | ||||||||||||||
| Floating-to-fixed interest rate swaps | Interest expense - net | |||||||||||||
| Currency exchange contracts | Net sales and Cost of products sold | |||||||||||||
| Tax expense | ( | |||||||||||||
| Total, net of tax | ||||||||||||||
| Total reclassifications for the period | $ | ( | ||||||||||||
1 These components of Accumulated other comprehensive loss are included in the computation of net periodic benefit cost. See Note 9 for additional information about pension and other postretirement benefits items.
Net Income Per Share Attributable to Eaton Ordinary Shareholders
A summary of the calculation of net income per share attributable to Eaton ordinary shareholders is as follows:
| Three months ended March 31 | |||||||||||
| (In millions except for per share data) | 2026 | 2025 | |||||||||
| Net income attributable to Eaton ordinary shareholders | $ | $ | |||||||||
| Weighted-average number of ordinary shares outstanding - diluted | |||||||||||
| Less dilutive effect of equity-based compensation | |||||||||||
| Weighted-average number of ordinary shares outstanding - basic | |||||||||||
| Net income per share attributable to Eaton ordinary shareholders | |||||||||||
| Diluted | $ | $ | |||||||||
| Basic | |||||||||||
For the first quarter of 2026 and 2025, all stock options were included in the calculation of diluted net income per share attributable to Eaton ordinary shareholders because they were all dilutive.
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Note 13. FAIR VALUE MEASUREMENTS
Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a fair value hierarchy is established, which categorizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
A summary of financial instruments and contingent consideration recognized at fair value, and the fair value measurements used, is as follows:
| (In millions) | Total | Quoted prices in active markets for identical assets (Level 1) | Other observable inputs (Level 2) | Unobservable inputs (Level 3) | |||||||||||||||||||
| March 31, 2026 | |||||||||||||||||||||||
| Cash | $ | $ | $ | $ | |||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||
| ( | ( | ||||||||||||||||||||||
| Contingent future payments from acquisition of Resilient Power Systems Inc. (Note 2) | ( | ( | |||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Cash | $ | $ | $ | $ | |||||||||||||||||||
| Short-term investments | |||||||||||||||||||||||
| ( | ( | ||||||||||||||||||||||
| Contingent future payments from acquisition of Resilient Power Systems Inc. (Note 2) | ( | ( | |||||||||||||||||||||
Eaton values its financial instruments using an industry standard market approach, in which prices and other relevant information is generated by market transactions involving identical or comparable assets or liabilities.
Other Fair Value Measurements
Long-term debt and the current portion of long-term debt had a carrying value of $18,619 million and fair value of $18,065 million at March 31, 2026 compared to $9,894 million and $9,587 million, respectively, at December 31, 2025. The fair value of Eaton's debt instruments was estimated using prevailing market interest rates on debt with similar creditworthiness, terms and maturities and is considered a Level 2 fair value measurement.
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Note 14. RESTRUCTURING CHARGES
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 $374 million. This restructuring program is expected to be completed in 2026 and is expected to incur additional expenses related to workforce reductions of $78 million and plant closing and other costs of $24 million, resulting in total estimated charges of $475 million for the entire program.
A summary of restructuring program charges is as follows:
| Three months ended March 31 | |||||||||||
| (In millions except for per share data) | 2026 | 2025 | |||||||||
| Workforce reductions | $ | $ | |||||||||
| Plant closing and other | |||||||||||
| Total before income taxes | |||||||||||
| Income tax benefit | |||||||||||
| Total after income taxes | $ | $ | |||||||||
| Per ordinary share - diluted | $ | $ | |||||||||
Restructuring program charges (income) related to the following business segments:
| Three months ended March 31 | Restructuring program charges incurred from inception through | ||||||||||||||||
| (In millions) | 2026 | 2025 | March 31, 2026 | ||||||||||||||
| Electrical Americas | $ | $ | $ | ||||||||||||||
| Electrical Global | |||||||||||||||||
| Aerospace | ( | ||||||||||||||||
| Mobility | |||||||||||||||||
| Corporate | |||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||
A summary of liabilities related to workforce reductions, plant closing, and other associated costs is as follows:
| (In millions) | Workforce reductions | Plant closing and other | Total | ||||||||||||||
Balance at January 1, 2024 | $ | $ | $ | ||||||||||||||
| Liability recognized, net | |||||||||||||||||
| Payments, utilization and translation | ( | ( | ( | ||||||||||||||
Balance at December 31, 2024 | |||||||||||||||||
Liability recognized, net1 | |||||||||||||||||
| Payments, utilization and translation | ( | ( | ( | ||||||||||||||
Balance at December 31, 2025 | |||||||||||||||||
| Liability recognized, net | |||||||||||||||||
| Payments, utilization and translation | ( | ( | ( | ||||||||||||||
Balance at March 31, 2026 | $ | $ | $ | ||||||||||||||
1The restructuring program liability was adjusted by $12 million in the fourth quarter of 2025 primarily related to true-ups for completed workforce reductions in the Mobility business segment.
These restructuring program charges (income) were included in , as appropriate. In Business Segment Information, these restructuring program charges are treated as Corporate items. See Note 15 for additional information about business segments.
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Note 15. BUSINESS SEGMENT INFORMATION
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. The Company's chief operating decision maker is the chief executive officer. Operating profit includes the operating profit from intersegment sales. For additional information regarding Eaton's business segments, see Note 18 to the consolidated financial statements contained in the 2025 Form 10-K.
The chief operating decision maker uses segment operating profit as an input to assess segment performance and determine appropriate resource allocations, including capital, financial, and employee resources. Segment operating profit results are regularly evaluated versus annual profit plan, forecast and/or prior year.
Other segment items are primarily comprised of Cost of products sold, Selling and administrative expense, Research and development expense, depreciation of property, plant and equipment, and certain items included in Other income – net on the Consolidated Statements of Income. The Company's chief operating decision maker manages these items on a consolidated basis.
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which includes the legacy Vehicle and eMobility segments. Historical segment information has been recast to reflect this change. Eaton's segments as of March 31, 2026 are as follows:
Electrical Americas and Electrical Global
The Electrical Americas segment consists of electrical components, industrial components, power distribution and assemblies, residential products, single phase power quality and connectivity, three phase power quality, wiring devices, circuit protection, utility power distribution, power reliability equipment, and services that are primarily produced and sold in North and South America. The Electrical Global segment consists of electrical components, industrial components, power distribution and assemblies, single phase and three phase power quality, and services that are primarily produced and sold outside of North and South America; as well as hazardous duty electrical equipment, cooling products, emergency lighting, fire detection, intrinsically safe explosion-proof instrumentation, and structural support systems that are produced and sold globally. The principal markets for these segments are commercial & institutional, data centers and distributed IT, industrial, utilities, residential, and machinery OEMs. These products are used wherever there is a demand for electrical power in data centers, utilities, industrial and energy facilities, commercial buildings, apartment and office buildings, hospitals, factories, and residencies. The segments share certain common global customers, but a large number of customers are located regionally. Sales are made through distributors, resellers, and manufacturers’ representatives, as well as directly to original equipment manufacturers, utilities, and certain other end users.
Aerospace
The Aerospace segment is a leading global supplier of aerospace fuel, hydraulics, and pneumatic systems for commercial and military use, as well as filtration systems for industrial applications. Products include hydraulic power generation systems for aerospace applications including pumps, motors, hydraulic power units, hose and fittings, electro-hydraulic pumps; controls and sensing products including valves, cylinders, electronic controls, electromechanical actuators, sensors, aircraft flap and slat systems and nose wheel steering systems; fluid conveyance products, including hose, thermoplastic tubing, fittings, adapters, couplings, sealing and ducting; fuel systems including air-to-air refueling systems, fuel pumps, fuel inerting products, sensors, valves, adapters and regulators; mission systems including oxygen generation system, payload carriages, and thermal management products; high performance interconnect products including wiring connectors and cables. The Aerospace segment also includes filtration systems including hydraulic filters, bag filters, strainers and cartridges; and golf grips. The principal markets for the Aerospace segment are manufacturers of commercial and military aircraft and related after-market customers, as well as industrial applications. These manufacturers and other customers operate globally. Products are sold and serviced through a variety of channels.
Mobility
The Mobility segment designs, manufactures, markets, and supplies a broad portfolio of mechanical, electrical, and electronic systems that improve emissions, fuel economy, power management, performance, and safety across on‑road and off‑road vehicles. The Mobility segment serves global OEMs and aftermarket customers with solutions spanning internal combustion, hybrid, and electrified powertrains, including transmissions and transmission components, clutches, differentials, hybrid systems, engine valves, fuel and vapor components, as well as high‑voltage inverters and converters, power electronics, circuit protection, vehicle controls, and power distribution systems. The principal markets for the Mobility segment are OEM and aftermarket customers of heavy-, medium-, and light‑duty trucks, SUVs, CUVs, passenger cars, construction, agricultural, material handling, and mining equipment.
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Business Segment Information
| Three months ended March 31 | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Net sales | |||||||||||
| Electrical Americas | $ | $ | |||||||||
| Electrical Global | |||||||||||
| Aerospace | |||||||||||
| Mobility | |||||||||||
| Total net sales | $ | $ | |||||||||
| Other segment items | |||||||||||
| Electrical Americas | $ | $ | |||||||||
| Electrical Global | |||||||||||
| Aerospace | |||||||||||
| Mobility | |||||||||||
| Total other segment items | $ | $ | |||||||||
| Segment operating profit | |||||||||||
| Electrical Americas | $ | $ | |||||||||
| Electrical Global | |||||||||||
| Aerospace | |||||||||||
| Mobility | |||||||||||
| Total segment operating profit | |||||||||||
| Corporate | |||||||||||
| Intangible asset amortization expense | ( | ( | |||||||||
| Interest expense - net | ( | ( | |||||||||
| Pension and other postretirement benefits income | |||||||||||
| Restructuring program charges | ( | ( | |||||||||
| Other expense - net | ( | ( | |||||||||
| Income before income taxes | |||||||||||
| Income tax expense | |||||||||||
| Net income | |||||||||||
| Less net income for noncontrolling interests | ( | ( | |||||||||
| Net income attributable to Eaton ordinary shareholders | $ | $ | |||||||||
21
| (In millions) | March 31, 2026 | December 31, 2025 | |||||||||
| Identifiable assets | |||||||||||
| Electrical Americas | $ | $ | |||||||||
| Electrical Global | |||||||||||
| Aerospace | |||||||||||
| Mobility | |||||||||||
| Total identifiable assets | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets | |||||||||||
| Corporate | |||||||||||
| Total assets | $ | $ | |||||||||
| Three months ended March 31 | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Capital expenditures for property, plant and equipment | |||||||||||
| Electrical Americas | $ | $ | |||||||||
| Electrical Global | |||||||||||
| Aerospace | |||||||||||
| Mobility | |||||||||||
| Total | |||||||||||
| Corporate | |||||||||||
| Total expenditures for property, plant and equipment | $ | $ | |||||||||
| Three months ended March 31 | |||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Depreciation of property, plant and equipment | |||||||||||
| Electrical Americas | $ | $ | |||||||||
| Electrical Global | |||||||||||
| Aerospace | |||||||||||
| Mobility | |||||||||||
| Total | |||||||||||
| Corporate | |||||||||||
| Total depreciation of property, plant and equipment | $ | $ | |||||||||
22
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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 electrification, digitalization, and the reindustrialization of and growth of megaprojects in North America and increased global infrastructure spending, all of which 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 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 $27.4 billion in 2025, the Company serves customers in 180 countries.
During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, which consists of the legacy Vehicle and eMobility segments. Historical segment information has been recast to reflect this change.
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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 and strong returns, and that align with secular trends and its power management strategies. During 2025 and 2026, Eaton completed several transactions to strengthen its portfolio.
| Acquisitions of businesses | Date of acquisition | Business segment | ||||||||||||
| 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. | ||||||||||||||
| Resilient Power Systems, Inc. | August 6, 2025 | Electrical Americas | ||||||||||||
| A leading North American developer and manufacturer of innovative energy solutions, including solid-state transformer-based technology. | ||||||||||||||
| Ultra PCS Limited | January 23, 2026 | Aerospace | ||||||||||||
Producer of electronic controls, sensing, stores ejection and data processing solutions with operations in the U.K. and U.S. | ||||||||||||||
| Boyd Thermal | March 12, 2026 | Electrical Global | ||||||||||||
A U.S. based global leader in thermal components, systems, and ruggedized solutions for data center, aerospace and other end-markets. | ||||||||||||||
On January 26, 2026, Eaton announced its intention to pursue a spin-off of its Mobility business, which consists of the Mobility business segment, into an independent, publicly traded company. Eaton expects to complete the anticipated spin-off by the end of the first quarter of 2027, subject to customary legal and regulatory requirements and approvals, including final approval of the Company’s Board of Directors and effectiveness of a Form 10 registration statement filed with the Securities and Exchange Commission. The planned spin-off is expected to be completed in a manner that is tax-free to Eaton ordinary shareholders for U.S. federal income tax purposes.
Additional information related to acquisitions of businesses is presented in Note 2.
IEEPA Tariffs
On February 20, 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA), and thereafter, the Court of International Trade (CIT) ordered the Customs and Border Protection (CBP) to develop a process to refund tariffs imposed under IEEPA. We are evaluating the impact of these developments on our business and financial statements and cannot reasonably estimate the financial impact nor deem such impact probable. Some of the factors considered in our evaluation include the uncertainty as to the extent tariffs will be refunded by CBP, what processes will govern such refunds, or if such refunds are fully collectable. No amounts have been recorded in the condensed consolidated financial statements as of March 31, 2026 given the uncertainty regarding the potential refund process.
24
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) | 2026 | 2025 | |||||||||
| Acquisition integration, divestiture charges and transaction costs | $ | 109 | $ | 10 | |||||||
| Income tax benefit | 21 | 2 | |||||||||
| Total after income taxes | $ | 87 | $ | 8 | |||||||
| Per ordinary share - diluted | $ | 0.22 | $ | 0.02 | |||||||
Acquisition integration, divestiture charges and transaction costs in 2026 and 2025 are primarily related to the following:
•The acquisitions of Fibrebond Corporation, Resilient Power Systems Inc., Ultra PCS Limited, Boyd Thermal, and Exertherm, the anticipated spin-off of the Mobility business, transactions completed prior to 2023, and other charges to acquire and exit businesses.
•Employee transaction and retention award compensation expense related to the acquisition of Fibrebond of $14 million in the first quarter of 2026.
•Employee incentive compensation expense related to the acquisition of Resilient of $11 million in the first quarter of 2026.
Charges in 2026 and 2025 were included in Cost of products sold, Selling and administrative expense, or Other income - net. In Business Segment Information in Note 15, 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 $374 million. This restructuring program is expected to be completed in 2026 and is expected to incur additional expenses related to workforce reductions of $78 million and plant closing and other costs of $24 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 14.
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Intangible Asset Amortization Expense
Intangible asset amortization expense is as follows:
| Three months ended March 31 | |||||||||||
| (In millions except for per share data) | 2026 | 2025 | |||||||||
| Intangible asset amortization expense | $ | 140 | $ | 106 | |||||||
| Income tax benefit | 30 | 22 | |||||||||
| Total after income taxes | $ | 111 | $ | 84 | |||||||
| Per ordinary share - diluted | $ | 0.29 | $ | 0.21 | |||||||
Consolidated Financial Results
| Three months ended March 31 | Increase (decrease) | ||||||||||||||||
| (In millions except for per share data) | 2026 | 2025 | |||||||||||||||
| Net sales | $ | 7,451 | $ | 6,377 | 17 | % | |||||||||||
| Gross profit | 2,652 | 2,447 | 8 | % | |||||||||||||
| Percent of net sales | 35.6 | % | 38.4 | % | |||||||||||||
| Income before income taxes | 1,107 | 1,177 | (6) | % | |||||||||||||
| Net income | 868 | 965 | (10) | % | |||||||||||||
| Less net income for noncontrolling interests | (2) | (1) | |||||||||||||||
| Net income attributable to Eaton ordinary shareholders | 866 | 964 | (10) | % | |||||||||||||
| Excluding acquisition and divestiture charges, after-tax | 87 | 8 | |||||||||||||||
| Excluding restructuring program charges, after-tax | 30 | 14 | |||||||||||||||
| Excluding intangible asset amortization expense, after-tax | 111 | 84 | |||||||||||||||
| Adjusted earnings | $ | 1,094 | $ | 1,070 | 2 | % | |||||||||||
| Net income per share attributable to Eaton ordinary shareholders - diluted | $ | 2.22 | $ | 2.45 | (9) | % | |||||||||||
| Excluding per share impact of acquisition and divestiture charges, after-tax | 0.22 | 0.02 | |||||||||||||||
| Excluding per share impact of restructuring program charges, after-tax | 0.08 | 0.04 | |||||||||||||||
| Excluding per share impact of intangible asset amortization expense, after-tax | 0.29 | 0.21 | |||||||||||||||
| Adjusted earnings per ordinary share | $ | 2.81 | $ | 2.72 | 3 | % | |||||||||||
Net Sales
| Changes in Net sales: | Three months ended March 31, 2026 | ||||
| Organic growth | 10 | % | |||
Acquisitions of businesses | 4 | % | |||
| Foreign currency | 3 | % | |||
| Total increase in Net sales | 17 | % | |||
The increase in organic sales in the first quarter of 2026 was due to strength in data center and machine OEM end-markets in the Electrical Americas and Electrical Global business segments, strength in commercial & institutional end-markets in the Electrical Americas business segment, strength in residential end-markets in the Electrical Global business segment, and strength in military aftermarket, commercial OEM, and commercial aftermarket in the Aerospace business segment, partially offset by weakness in industrial end-markets in the Electrical Americas and Electrical Global business segments, weakness in utility end-markets in the Electrical Americas business segment, and weakness in the North American region driven by the exit of a low-margin light vehicle business in the Mobility business segment.
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Gross Profit
Gross profit margin decreased from 38.4% in the first quarter of 2025 to 35.6% in the first quarter of 2026. Material factors affecting this decrease were a 400 basis point decline from commodity and wage inflation, partially offset by an 80 basis point increase from operating efficiencies and a 70 basis point increase from higher sales.
Income Taxes
The effective income tax rate for the first quarter of 2026 was expense of 21.6% compared to expense of 18.0% for the first quarter of 2025. The increase in the effective tax rate in the first quarter of 2026 was primarily due to greater levels of income in higher tax jurisdictions and the fact that the effective tax rate for the first quarter of 2025 included a reduction in the amount of foreign unrecognized tax benefits.
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, 2025 | $ | 964 | $ | 2.45 | |||||||
Business segment results of operations | |||||||||||
| Operational performance | 129 | 0.34 | |||||||||
| Foreign currency | 8 | 0.02 | |||||||||
| Corporate | |||||||||||
| Interest expense - net | (60) | (0.15) | |||||||||
| Intangible asset amortization expense | (27) | (0.08) | |||||||||
| Restructuring program charges | (16) | (0.04) | |||||||||
| Acquisition and divestiture charges | (80) | (0.20) | |||||||||
| Other corporate items | (9) | (0.02) | |||||||||
| Tax rate impact | (43) | (0.11) | |||||||||
| Impact of shares | — | 0.02 | |||||||||
March 31, 2026 | $ | 866 | $ | 2.22 | |||||||
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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 (1) the impact of foreign currency, (2) divestitures, and (3) firm orders in place prior to closing of business acquisitions
•Organic change in customer orders: Percentage change in firm customer orders on a trailing twelve month basis, excluding (1) the impact of foreign currency, (2) divestitures, and (3) firm orders in place prior to closing of business acquisitions
•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) | 2026 | 2025 | |||||||||||||||
| Net sales | $ | 3,600 | $ | 3,010 | 20 | % | |||||||||||
| Operating profit | $ | 922 | $ | 904 | 2 | % | |||||||||||
| Operating margin | 25.6 | % | 30.0 | % | |||||||||||||
| Changes in Net sales: | |||||||||||||||||
| Organic growth | 14 | % | |||||||||||||||
Acquisitions of businesses | 5 | % | |||||||||||||||
| Foreign currency | 1 | % | |||||||||||||||
| Total increase in Net sales | 20 | % | |||||||||||||||
Change from March 31 | |||||||||||||||||||||||
| Performance metrics: | March 31, 2026 | March 31, 2025 | 2026 vs. 2025 | 2025 vs. 2024 | |||||||||||||||||||
| Backlog | $ | 14,459 | $ | 10,050 | 44 | % | 5 | % | |||||||||||||||
| Organic change in backlog | 32 | % | 6 | % | |||||||||||||||||||
| Organic change in customer orders | 42 | % | (4) | % | |||||||||||||||||||
| Book-to-bill | 1.2 | 1.0 | |||||||||||||||||||||
The increase in organic sales in the first quarter of 2026 was due to strength in data center, commercial & institutional, and machine OEM end-markets, partially offset by weakness in utility and industrial end-markets.
The operating margin decreased from 30.0% in the first quarter of 2025 to 25.6% in the first quarter of 2026. Material factors affecting this decrease were a 480 basis point decline from higher commodity inflation and a 100 basis point decline from higher costs to support growth initiatives, partially offset by a 210 basis point increase from higher sales.
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Electrical Global
| Three months ended March 31 | Increase (decrease) | ||||||||||||||||
| ($ in millions) | 2026 | 2025 | |||||||||||||||
| Net sales | $ | 1,945 | $ | 1,610 | 21 | % | |||||||||||
| Operating profit | $ | 373 | $ | 300 | 24 | % | |||||||||||
| Operating margin | 19.2 | % | 18.6 | % | |||||||||||||
| Changes in Net sales: | |||||||||||||||||
| Organic growth | 9 | % | |||||||||||||||
| Acquisition of a business | 6 | % | |||||||||||||||
| Foreign currency | 6 | % | |||||||||||||||
| Total increase in Net sales | 21 | % | |||||||||||||||
Change from March 31 | |||||||||||||||||||||||
| Performance metrics: | March 31, 2026 | March 31, 2025 | 2026 vs. 2025 | 2025 vs. 2024 | |||||||||||||||||||
| Backlog | $ | 3,162 | $ | 1,832 | 73 | % | 5 | % | |||||||||||||||
| Organic change in backlog | 20 | % | 5 | % | |||||||||||||||||||
| Organic change in customer orders | 13 | % | — | % | |||||||||||||||||||
| Book-to-bill | 1.1 | 1.0 | |||||||||||||||||||||
The increase in organic sales in the first quarter of 2026 was due to strength in data center, residential, and machine OEM end-markets, partially offset by weakness in industrial end-markets.
The operating margin increased from 18.6% in the first quarter of 2025 to 19.2% in the first quarter of 2026. Material factors affecting this increase were a 180 basis point increase from higher sales and a 290 basis point increase from operating efficiencies, partially offset by a 470 basis point decline from higher commodity and wage inflation.
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Aerospace
| Three months ended March 31 | Increase (decrease) | ||||||||||||||||
| ($ in millions) | 2026 | 2025 | |||||||||||||||
| Net sales | $ | 1,139 | $ | 979 | 16 | % | |||||||||||
| Operating profit | $ | 304 | $ | 226 | 35 | % | |||||||||||
| Operating margin | 26.7 | % | 23.1 | % | |||||||||||||
| Changes in Net sales: | |||||||||||||||||
| Organic growth | 9 | % | |||||||||||||||
| Acquisition of a business | 5 | % | |||||||||||||||
| Foreign currency | 2 | % | |||||||||||||||
| Total increase in Net sales | 16 | % | |||||||||||||||
Change from March 31 | ||||||||||||||||||||||||||
| Performance metrics: | March 31, 2026 | March 31, 2025 | 2026 vs. 2025 | 2025 vs. 2024 | ||||||||||||||||||||||
| Backlog | $ | 5,004 | $ | 3,899 | 28 | % | 16 | % | ||||||||||||||||||
| Organic change in backlog | 15 | % | 16 | % | ||||||||||||||||||||||
| Organic change in customer orders | 13 | % | 14 | % | ||||||||||||||||||||||
| Book-to-bill | 1.1 | 1.1 | ||||||||||||||||||||||||
The increase in organic sales in the first quarter of 2026 was due to strength in military aftermarket, commercial OEM, and commercial aftermarket.
The operating margin increased from 23.1% in the first quarter of 2025 to 26.7% in the first quarter of 2026. Material factors affecting this increase were a 280 basis point increase from the sale of a facility in the first quarter of 2026, a 190 basis point increase from higher sales, and a 160 basis point increase from favorable mix, partially offset by a 320 basis point decline from higher commodity and wage inflation.
Mobility
| Three months ended March 31 | Increase (decrease) | ||||||||||||||||
| (In millions) | 2026 | 2025 | |||||||||||||||
| Net sales | $ | 766 | $ | 779 | (2) | % | |||||||||||
| Operating profit | $ | 89 | $ | 91 | (2) | % | |||||||||||
| Operating margin | 11.7 | % | 11.7 | % | |||||||||||||
| Changes in Net sales: | |||||||||||||||||
| Organic growth | (6) | % | |||||||||||||||
| Foreign currency | 4 | % | |||||||||||||||
| Total decrease in Net sales | (2) | % | |||||||||||||||
The decrease in organic sales in the first quarter of 2026 was due to weakness in the North American region driven by the exit of a low-margin light vehicle business, partially offset by strength in the European region.
The operating margin was flat at 11.7% in both the first quarter of 2026 and 2025. Material factors affecting the operating margin were a 320 basis point increase from favorable mix and a 180 basis point increase from operating efficiencies, offset by a 210 basis point decline from higher commodity and wage inflation and a 120 basis point decline from lower sales.
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Corporate Expense
| Three months ended March 31 | Increase (decrease) | ||||||||||||||||
| (In millions) | 2026 | 2025 | |||||||||||||||
| Intangible asset amortization expense | $ | 140 | $ | 106 | 32 | % | |||||||||||
| Interest expense - net | 106 | 33 | 221 | % | |||||||||||||
| Pension and other postretirement benefits income | (4) | (5) | (20) | % | |||||||||||||
| Restructuring program charges | 39 | 18 | 117 | % | |||||||||||||
| Other expense - net | 302 | 193 | 56 | % | |||||||||||||
| Total corporate expense | $ | 583 | $ | 345 | 69 | % | |||||||||||
The material factors affecting the increase in Total corporate expense in the first quarter of 2026 were higher Other expense - net, Interest expense - net, Intangible asset amortization expense, and Restructuring program changes. The increase in Other expense - net is primarily due to higher acquisition and divestiture costs.
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.
On February 6, 2026, Eaton Corporation, a subsidiary of Eaton, exercised a $1,000 million upsize of the existing $3,000 million five-year revolving credit agreement, increasing the total facility size to $4,000 million. The facility’s maturity date remains unchanged at September 27, 2030. The revolving credit facility is used to support commercial paper borrowings and is 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 the revolving credit facility at March 31, 2026. Also on February 6, 2026 the Company increased its commercial paper program from $3,000 million to $4,000 million. The Company maintains access to the commercial paper markets through its $4,000 million commercial paper program, of which $2,497 million was outstanding on March 31, 2026, used primarily to manage fluctuations in working capital and to partially fund acquisitions closed during 2026.
On March 6, 2026, Eaton Corporation, a subsidiary of Eaton, issued notes (2026 U.S. Notes) with an aggregate face amount of $8,500 million. The 2026 U.S. Notes are comprised of six tranches: 3.85% notes due 2028 in the amount of $1,500 million; 3.95% notes due 2029 in the amount of $1,500 million; 4.20% notes due 2031 in the amount of $1,500 million; 4.50% notes due 2033 in the amount of $1,000 million; 4.80% notes due 2036 in the amount of $2,000 million; and 5.45% notes due 2056 in the amount of $1,000 million. Interest is payable semi-annually. The issuer received proceeds totaling $8,428 million from the 2026 U.S. Notes issuance, net of financing costs and discounts. The 2026 U.S. Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The U.S. 2026 Notes contain customary optional redemption and par call provisions. The U.S. 2026 Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2026 U.S. Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the respective terms of the 2026 U.S. Notes. The 2026 U.S. Notes are subject to customary non-financial covenants.
On March 10, 2026, Eaton Capital Unlimited Company, a subsidiary of Eaton, issued Euro denominated notes (2026 Euro Notes) with an aggregate face amount of €1,200 million ($1,390 million). The 2026 Euro Notes are comprised of two tranches of €600 million each, which mature in 2034 and 2038, with interest payable annually at a respective rate of 3.55% and 4.00% per annum. The issuer received proceeds totaling €1,191 million ($1,380 million) from the 2026 Euro Notes issuance, net of financing costs and discounts. The 2026 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2026 Euro Notes contain customary optional redemption and par call provisions. The 2026 Euro Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2026 Euro Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the respective terms of the 2026 Euro Notes. The 2026 Euro Notes are subject to customary non-financial covenants.
On March 6, 2026, Eaton Corporation, a subsidiary of Eaton, terminated the $8,000 million senior unsecured delayed-draw term loan facility (Term Credit Agreement) entered into on February 6, 2026. No loans were outstanding as of the date of termination and the Company incurred no fees or penalties in connection with the termination. The Term Credit Agreement was terminated in connection with the issuance of the 2026 U.S. Notes and 2026 Euro Notes.
31
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, 2026 and December 31, 2025, Eaton had cash of $565 million and $622 million, short-term investments of $186 million and $181 million, and short-term debt of $2,510 million and $1 million, respectively. Eaton believes it has the operating flexibility, cash flow, cash and short-term investment balances, availability under the existing revolving credit facility, 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, for at least the next 12 months and the foreseeable future thereafter.
On April 1, 2025, the Company paid $1.43 billion, net of cash acquired, to acquire Fibrebond Corporation. On August 6, 2025, the Company acquired Resilient Power Systems Inc. for $86 million, including $55 million of cash paid at closing and an initial estimate of $31 million for the fair value of contingent future consideration. On January 23, 2026, the Company paid $1.53 billion, net of cash acquired, to acquire Ultra PCS Limited and on March 12, 2026, the Company paid $9.55 billion, net of cash acquired, to acquire Boyd Thermal. Additionally, on January 15, 2026, Eaton invested $75 million in SPAN for a stake of approximately 7 percent.
Eaton is 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 2025 | ||||||||||||||||
| (In millions) | 2026 | 2025 | |||||||||||||||
| Net cash provided by operating activities | $ | 507 | $ | 238 | $ | 269 | |||||||||||
| Net cash provided by (used in) investing activities | (11,375) | 1,233 | (12,608) | ||||||||||||||
| Net cash provided by (used in) financing activities | 10,796 | (244) | 11,040 | ||||||||||||||
| Effect of currency on cash | 14 | (7) | 21 | ||||||||||||||
| Total increase (decrease) in cash | $ | (58) | $ | 1,221 | |||||||||||||
Operating Cash Flow
Net cash provided by operating activities increased by $269 million in the first three months of 2026 compared to 2025. Material factors affecting this increase were working capital balances being $299 lower, partially offset by lower net income of $97 million.
Investing Cash Flow
Net cash used in investing activities increased by $12,608 million in the first three months of 2026 compared to 2025. Material factors affecting this increase were an increase in cash paid for business acquisitions of $11,079 million in 2026 compared to no cash paid for business acquisitions in 2025 and purchases of short-term investments of $13 million in 2026 compared to sales of short term investments of $1,366 million in 2025.
Financing Cash Flow
Net cash provided by financing activities increased by $11,040 million in the first three months of 2026 compared to 2025. Material factors affecting this increase were an increase in proceeds from borrowings of $9,871 million in 2026 compared to no proceeds from borrowings in 2025, an increase in net proceeds of short-term debt of $2,507 million in 2026 from $805 million in 2025, and no repurchase of shares in 2026 compared to repurchase of shares of $615 million in 2025, partially offset by payments on borrowings of $1,069 million in 2026 from $3 million in 2025.
Uses of Cash
Capital Expenditures
Capital expenditures were $193 million and $147 million in the first three months of 2026 and 2025, 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 $1.15 billion in capital expenditures in 2026.
Dividends
Cash dividend payments were $415 million and $397 million in the first three months of 2026 and 2025, 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 2026.
32
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, 2026, no ordinary shares were repurchased. During the three months ended March 31, 2025, 1.9 million ordinary shares were repurchased under the 2025 Program and the 2022 Program in the open market at a total cost of $608 million. The Company does not intend to pursue share repurchases in 2026 due to the acquisition of Boyd Thermal on March 12, 2026.
Acquisition of Businesses and Investments in Nonmarketable Securities
The Company paid cash of $11,079 million in the first three months of 2026 to acquire businesses. There were no business acquisitions in the first three months of 2025. Additionally, the Company paid $85 million in the first three months of 2026 for investments in nonmarketable securities. There were no investments in nonmarketable securities in the first three months of 2025. 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.
Debt
The Company manages a number of short-term and long-term debt instruments, including commercial paper. At March 31, 2026, the Company had Short-term debt of $2,510 million, Current portion of long-term debt of $84 million, and Long-term debt of $18,535 million. The Company believes it has the operating flexibility, cash flow, and access to capital markets to meet scheduled payments of long-term debt. For additional information on financing transactions and debt see Note 8.
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), 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), and May 9, 2025 (as supplemented by the First and Second Supplemental Indentures of the same date, the Third Supplemental Indenture dated March 6, 2026, and the Fourth Supplemental Indenture dated March 10, 2026, the 2025 Indenture). Eaton Capital Unlimited Company, a subsidiary of Eaton, is the issuer of six outstanding series of debt securities sold in offshore transactions under Regulation S promulgated under the Securities Act (the Eurobonds) and Registered Senior Notes (as defined below) issued under the 2025 Indenture. The senior notes issued under the 1994, 2012, 2017, 2022, and 2025 Indentures are registered under the Securities Act of 1933, as amended (the Registered Senior Notes). 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, 2026, 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-Q filed on August 5, 2025 (10-Q Exhibit 22) details the primary obligors and guarantors with respect to the guaranteed Registered Senior Notes.
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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-Q 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 and 2025 Indentures, 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 and 2025 Indentures provide 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, 2026 | December 31, 2025 | |||||||||
| Current assets | $ | 4,307 | $ | 4,075 | |||||||
| Noncurrent assets | 22,833 | 13,439 | |||||||||
| Current liabilities | 6,339 | 4,598 | |||||||||
| Noncurrent liabilities | 20,547 | 10,788 | |||||||||
| Amounts due to subsidiaries that are non-issuers and non-guarantors - net | 6,701 | 9,499 | |||||||||
| (In millions) | Three months ended March 31, 2026 | ||||||||||
| Net sales | $ | 4,344 | |||||||||
| Sales to subsidiaries that are non-issuers and non-guarantors | 279 | ||||||||||
| Cost of products sold | 3,153 | ||||||||||
| Expense from subsidiaries that are non-issuers and non-guarantors - net | 71 | ||||||||||
| Net income | 313 | ||||||||||
The financial information presented is that of the issuers 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 the issuers 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.
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FORWARD-LOOKING STATEMENTS
This Form 10-Q Report contains “forward-looking statements” within the meaning of federal securities laws. These forward-looking statements are based upon management’s current expectations, predictions, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, litigation, expected capital expenditures, future dividend payments, anticipated share repurchases, liquidity, the successful integration of recent acquisitions, the anticipated separation of the Mobility business, anticipated capital deployment, and expected restructuring program charges and benefits. These statements may also discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to the Company. These statements are not guarantees of future performance, and actual results may differ materially. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as “aim,” “anticipate,” “believe,” “could,” “develop,” “endeavor,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project” “seek,” “should,” “target,” “will,” “would” or other similar words, phrases or expressions. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside of our control.
The following factors could cause actual results to differ materially from those in the forward-looking statements: the impact of acquisitions, joint ventures, and investments and the integration of acquired entities; disruptions by natural disasters, labor strikes, wars, geopolitical instability and/or conflict, political unrest, terrorist activity, economic upheaval, or public health concerns that impact our production facilities; significant inflation or shortages of raw materials, energy, components, and/or labor, or similar challenges for our customers; reliance on suppliers to provide raw materials, components and services; the development and use of artificial intelligence in our business operations, including potential impacts on compliance with law and our reputation; service interruptions, data corruption, loss or impairment, network security and related operational impacts due to cybersecurity attacks; weather disruptions and regulatory, market and social reactions to such disruptions; our ability to identify, attract, develop, engage and retain qualified employees; our ability to complete the anticipated spin-off of our Mobility business; stock price and end market impacts due to technology disruptions; volatility of end markets; continued successful research, development and marketing of new or improved products; geopolitical, economic or other risks arising from worldwide or regional economic conditions; the global nature of Eaton’s business and exposure to economic and political instability, including war or armed conflict, changes in governmental laws, regulations and policies; changes in countries’ trade policies, including the imposition of sanctions or tariffs; changes in our tax rates or tax laws and regulations applicable to our business; rules, regulations, audits and investigations and related compliance risks associated with being a governmental contractor; our ability to protect our intellectual property; litigation and environmental regulations impacting our business; and the other risk factors discussed in Part I, Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and other reports filed by the Company with the SEC. We disclaim any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes in exposures to market risk since December 31, 2025.
ITEM 4.CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in Eaton's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Eaton's reports filed under the Exchange Act is accumulated and communicated to management, including Eaton's Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.
Pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act, an evaluation was performed under the supervision and with the participation of Eaton's management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that Eaton's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2026.
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Internal Control over Financial Reporting
During the first quarter of 2026, there was no change in Eaton’s internal control over financial reporting that materially affected, or is reasonably likely to materially affect, internal control over financial reporting. Management is currently evaluating the impact of businesses acquired in the past twelve months on Eaton's internal control over financial reporting.
PART II — OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS.
Information regarding the Company's legal proceedings is presented in Note 10 of the Notes to the condensed consolidated financial statements.
ITEM 1A.RISK FACTORS.
“Item 1A. Risk Factors” in Eaton's 2025 Form 10-K includes a discussion of the Company's risk factors. There have been no material changes from the risk factors described in the 2025 Form 10-K.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
(c) Issuer's Purchases of Equity Securities
During the first quarter of 2026, there were no shares repurchased.
ITEM 5. OTHER INFORMATION.
During the three months ended March 31, 2026, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of the Company adopted terminated
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ITEM 6.EXHIBITS.
Eaton Corporation plc
First Quarter 2026 Report on Form 10-Q
_______________________________
| * | Submitted electronically herewith. | |||||||
| + | Denotes management contracts or contemporary plans or arrangements required to be filed as Exhibits to this Form 10-Q. | |||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| EATON CORPORATION plc | ||||||||||||||
| Registrant | ||||||||||||||
| Date: | May 5, 2026 | By: | /s/ David B. Foster | |||||||||||
| David B. Foster | ||||||||||||||
| Principal Financial Officer | ||||||||||||||
| (On behalf of the registrant and as Principal Financial Officer) | ||||||||||||||
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