News

Eaton Reports Increase in Second Quarter Net Income

July 17, 2005 by Jeff Shepard

Eaton Corp. (Cleveland, OH), a manufacturer of electrical systems and components for power quality in automotive systems, announced net income per share of $1.37 for the second quarter of 2005, an increase of 33 percent over net income per share of $1.03 in the second quarter of 2004. Sales in the quarter were a record $2.83 billion, 18 percent above the same period in 2004. Net income was $209 million compared to $161 million in 2004, an increase of 30 percent.

Net income in both periods included charges for restructuring activities related to the integration of acquisitions. Before these restructuring charges, operating earnings per share in the second quarter of 2005 were $1.40 versus $1.06 per share in 2004, an increase of 32 percent, and operating earnings for the second quarter of 2005 were $214 million compared to $166 million in 2004, an increase of 29 percent.

Eaton Chairman and Chief Executive Officer Alexander Cutler said, "We are very pleased with our second-quarter results, which came in above our guidance. Sales growth in the quarter of 18 percent consisted of nine percent from organic growth, seven percent from acquisitions, and two percent from exchange rates. Our end markets grew by approximately seven percent. In the second quarter, our segment operating margin before restructuring charges was 13.3 percent, a significant step up from the 12.6 percent margin in the first quarter, and a record for the second quarter. Our operating cash flow for the quarter was $322 million."

"During the quarter, we repurchased $200 million of stock, and we also issued $200 million of long-term debt," said Cutler. "As we survey our end markets, we now anticipate growth in 2005 of between four percent to five percent. We anticipate net income per share for the third quarter of 2005 to be between $1.20 and $1.30. We are increasing our full-year guidance for net income per share by $0.10, to between $5.00 and $5.20. Operating earnings per share, which exclude restructuring charges to integrate acquisitions, are anticipated to be between $1.25 and $1.35 in the third quarter of 2005, and we are increasing our full-year guidance for operating earnings per share by $0.10, to between $5.20 and $5.40."