Eaton Corporation plc (NYSE:ETN) Q4 2023 Earnings Call Transcript
Eaton Corporation plc (NYSE:ETN) Q4 2023 Earnings Call Transcript February 1, 2024
Eaton Corporation plc beats earnings expectations. Reported EPS is $2.55, expectations were $2.47. Eaton Corporation plc isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Ladies and gentlemen, thank you for standing by and welcome to the Eaton Fourth Quarter 2023 Conference Call. [Operator Instructions] And as a reminder, your conference is being recorded. I would now like to turn the conference over to your host, Yan Jin. Please go ahead.
Yan Jin: Good morning. Thank you all for joining us for Eaton's fourth quarter 2023 earnings call. With me today are Craig Arnold, our Chairman and CEO; and Tom Okray, Executive Vice President and Chief Financial Officer. Our agenda today includes operating remarks by Craig, then I will turn it over to Tom who will highlight the company's performance in the fourth quarter. As we have done on our past calls, we'll be taking questions at end of Craig's closing commentary. The press release and the presentation we'll go through today have been posted on our website. The presentation includes adjusted earnings per share, adjusted free cash flow and other non-GAAP measures, they are reconciled in the appendix. A webcast of this call is accessible on our website and will be available for replay.
I would like to remind you that our comments today will include statements related to the expected future results of the company and are therefore forward-looking statements. Our actual results may differ materially from our forecasted projections due to a wide range of risks and uncertainties that are described in our earnings release and the presentation. With that, I will turn it over to Craig.
Craig Arnold: Okay. Thanks, Yan. We're pleased to report our Q4 results and record performance for the year. Our team continued to deliver on our commitments, supported by strong markets and good execution. So let me begin with some highlights of the quarter on Page 3. We generated adjusted EPS of $2.55 for the quarter and $9.12 for the year, both all-time records. Adjusted EPS was up 24% and full year was up 20%. And we continued to post strong margins. Q4 was 22.8%, up 200 basis points and above the high end of our guidance. We also delivered strong incremental margins, 42% in the quarter. And we continue to see strong market activity. On a rolling 12-month basis, book-to-bill for Electrical and Aerospace was 1.1 and our backlog increased by 15% for Electrical and 13% for Aerospace.
And as you've read, we're initiating guidance for 2024 and expect another year of strong organic growth, double-digit increases in adjusted EPS and continued strength in cash flow. And I'll go through the full guidance details shortly. Lastly, we're announcing a multiyear restructuring program that will eliminate fixed costs and improve our overall efficiency. The program will cost $375 million and deliver $325 million of mature year benefits. So the combination of market tailwinds, our internal growth initiatives and our continued focus on operating efficiency will allow us to deliver outstanding results for years to come. And speaking of market tailwinds, let's turn to Slide 4. In the last couple of quarters, we shared our framework while we think about key growth drivers for the company.
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