Eaton Q1 Operating Earnings Top Expectations, Maintains Full Year Outlook

Eaton Corporation plc ETN reported that net income attributable to its shareholders fell 13.3 percent to $404 million in the first quarter from $466 million in the same quarter last year. Similarly, its earnings dropped 11 percent to $0.88 a share from $0.99 a share in the comparable period.

Eaton said that its operating earnings per share were $0.88 for the first quarter representing 13 percent fall from the first quarter of 2015. Street analysts expected the company to report earnings of $0.85 a share.

The company's net sales also slipped 7.85 percent to $4.81 billion from $5.22 billion in the previous year quarter and came in above the analysts' predictions of $4.77 billion.

Eaton Chairman and CEO Alexander Cutler said, "Our first quarter results are a solid start to the year, coming in near the top end of our guidance range. Our 8 percent sales decline in the first quarter consisted of a 6 percent decline in organic sales and an additional 2 percent from negative currency translation," said Cutler. "Our organic sales in the quarter came in modestly higher than our guidance."

He continued, "We had strong cash flow in the first quarter, generating operating cash flow of $371 million, a record for the first quarter. We returned substantial cash to our shareholders during the quarter, raising our quarterly dividend in February by 4 percent and repurchasing $100 million of our shares."

Cutler added, "Our restructuring program is proceeding well. We spent $63 million in the first quarter, slightly less than we had forecast at the start of the year. Our expected savings in 2016 from restructuring actions remains the same as our earlier estimate."

"We still expect a decline in organic revenue in 2016 of between 2 and 4 percent," said Cutler. "We now believe the impact from negative currency translation in 2016 will be less than the $400 million we estimated at the start of the year. Our current estimate is that negative currency translation for the year is likely to be about $200 million."

Moving ahead, Eaton said it expects operating earnings to be $1.00-$1.10 a share for the second quarter while analysts predict $1.08 a share. Cutler said the company was maintaining its operating earnings forecast of $4.15-$4.45 a share for the full year. The mid-point was better than the Street analysts' estimations of $4.26 a share.

On Thursday, shares of the company traded 1 percent lower.