Eaton (NYSE:ETN) reported what executives called a “solid” fourth quarter for 2025, pointing to accelerating order trends in its Electrical Americas and Aerospace segments and continued strength tied to data center spending. Management also highlighted a significant portfolio move: an announced intent to spin off the company’s Mobility business into a separate publicly traded company.
Demand and backlog growth driven by Electrical Americas and Aerospace
CEO Paulo Ruiz said demand remained “tremendous,” led by Electrical Americas, where orders on a trailing 12-month basis accelerated to 16% growth from 7% in the third quarter. Ruiz said Electrical Americas backlog increased 31% year-over-year to an all-time record, while Aerospace posted 11% trailing 12-month order growth and 16% backlog expansion year-over-year. For the combined Electrical Americas and Aerospace segments, book-to-bill was above 1.2 on a quarterly basis and about 1.1 on a trailing 12-month basis, the company said.
Q4 financial performance and segment results
Leonetti said fourth-quarter organic growth was 9%, driven by Aerospace, Electrical Americas, and Electrical Global, partially offset by declines in vehicle and eMobility. Eaton posted quarterly revenue of $7.1 billion, segment margins of 24.9% (up 20 basis points year-over-year), and adjusted earnings per share of $3.33, up 18% from the prior year and in line with the midpoint of guidance.
- Electrical Americas: Organic sales grew 15%, led by data centers (up about 40%) and strength in commercial and institutional markets. Operating margin was 29.8%, down 180 basis points year-over-year, which management attributed largely to capacity ramp costs. Orders accelerated to up 16% on a trailing 12-month basis, with quarterly orders up more than 50% and book-to-bill at 1.2. Backlog grew 31% year-over-year to $13.2 billion.
- Electrical Global: Total growth was 10%, including 6% organic growth. Operating margin expanded 200 basis points year-over-year to 19.7% on sales growth and operational improvement in EMEA, partially offset by higher inflation. Orders rose 6% on a rolling 12-month basis and backlog increased 19% year-over-year, with book-to-bill above one on a rolling 12-month basis.
- Aerospace: Organic sales increased 12%, delivering quarterly record sales. Operating margin improved 120 basis points to 24.1%, driven primarily by sales growth. On a trailing 12-month basis, orders increased 11% and backlog rose 16% year-over-year (and 3% sequentially). Management said the Ultra PCS acquisition closed in January.
- Vehicle: Organic sales declined 13%, driven by weakness in North America truck and light vehicle markets. Margins declined 230 basis points year-over-year, primarily due to lower sales.
- eMobility: Revenue decreased 15% (including a 17% organic decline, partially offset by a 2% favorable effect). Operating profit was $10 million.
Portfolio moves: Mobility spin and acquisitions
Ruiz said Eaton announced $13 billion in investments in 2025, highlighted by acquisitions of Fibrebond, Resilient Power Systems, Ultra PCS, and the planned addition of Boyd Thermal. He also said Eaton intends to spin off Mobility—its vehicle and eMobility segments—into a separate publicly traded company.
Management described Mobility as a standalone business with approximately $3 billion in revenue, focused on “safety-critical components and systems” for automotive and commercial vehicles. Ruiz said the separation is intended to sharpen Eaton’s focus on higher-growth, higher-margin electrical and aerospace markets and to allow Mobility to pursue opportunities with more tailored capital allocation. He said Eaton expects the separation to be “immediately accretive” to organic growth rate and operating margin.
Capacity ramp in Electrical Americas: near-term costs, long-term targets
Executives spent substantial time addressing the scale-up underway in Electrical Americas. Ruiz said Eaton has announced around $1.5 billion of investments to expand capacity and is deploying “Tiger teams” to accelerate execution at critical sites. While acknowledging complexity, he reiterated confidence in meeting margin objectives, including a 32% Electrical Americas margin target by 2030 and a 2026 margin expectation of about 30% at the midpoint for the segment.
Leonetti quantified the impact of ramp-related costs, saying the Electrical Americas margin headwind was about 100 basis points in 2025 and could be about 130 basis points in 2026, with costs “front-end loaded.” Ruiz said the company expects improvement through the year, describing a cadence of Q1 pressure, progress in Q2, momentum into Q3, and stronger backlog liquidation in Q4, extending into 2027 as later projects ramp.
On the construction program, Ruiz said about half of roughly two dozen projects had completed construction by mid-2025, with ramp beginning in the second half and “more into Q4.” He added that for the remaining projects, roughly half of that construction would be “largely done” by the first half of 2026, with ramp starting near the end of the first half, while the final set would continue through 2026 and ramp production in 2027.
2026 outlook: growth, margin, and cash flow guidance
For 2026, Eaton guided to 7% to 9% organic growth, with Electrical Americas expected to grow about 10% at the midpoint. Segment margin guidance was 24.6% to 25% for 2026, up about 30 basis points at the midpoint versus 2025, driven by improvements across businesses, according to management.
Adjusted EPS guidance for 2026 was $13.00 to $13.50, with a midpoint of $13.25, representing about 10% growth from 2025. Cash flow guidance was $3.9 billion to $4.3 billion, up 14% at the midpoint. Leonetti said Eaton does not plan to buy back shares in 2026 due to the pending Boyd deal, and expects share count to remain relatively flat year-over-year.
For the first quarter, Eaton guided to 5% to 7% organic growth and operating margins of 22.2% to 22.6%, reflecting higher-than-typical ramp-up costs early in the year with improvement anticipated each quarter.
Management also disclosed a leadership transition: Ruiz said CFO Olivier Leonetti plans to leave the company on April 1, 2026 as part of a planned transition.
During Q&A, executives reiterated confidence in sustained data center growth, citing industry indicators such as 2025 data center announcements and backlog growth of more than 200% year-over-year, an industry backlog equating to about 11 years at 2025 build rates, and project starts up nearly 100% year-over-year. Leonetti also said Eaton is investing organically (capacity, front-end resources, innovation) and inorganically (including Resilient Power, Fibrebond, and the announced Boyd Thermal acquisition) to expand its data center offering.
Ruiz said Eaton does not currently see the same dynamic of customers seeking multi-year capacity reservation agreements, stating that orders are being placed for delivery in roughly 12 to 18 months. He also said Eaton is “ready” for an 800V DC transition through Resilient Power and is working with authorities and industry participants on codes needed to commercialize the technology.
About Eaton (NYSE:ETN)
Eaton (NYSE: ETN) is a diversified power management company that designs, manufactures and distributes products and systems to manage electrical, hydraulic and mechanical power. The company’s offerings are used to improve energy efficiency, reliability and safety across a wide range of applications, with core capabilities in electrical distribution and control, industrial hydraulics and aerospace systems.
Its product portfolio includes switchgear, circuit breakers, transformers, power distribution units, uninterruptible power supplies and surge protection devices for electrical infrastructure, along with hydraulic pumps, valves and filtration systems for industrial and mobile equipment.
