UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, ~~2022~~2023

Commission file number 000-54863


EATON CORPORATION plc
(Exact name of registrant as specified in its charter)

Ireland

98-1059235

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification Number)

Eaton House,

30 Pembroke Road,

Dublin 4,

Ireland

D04 Y0C2

(Address of principal executive offices)

(Zip Code)

+353

1637 2900

(Registrant's telephone number, including area code)

Not applicable

(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

Name of each exchange on which registered

Ordinary shares ($0.01 par value)

ETN

New York Stock Exchange

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 and post 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. (Check one):

Large Accelerated Filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

(Do not check if a smaller reporting 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 ~~399.0~~398.6 million Ordinary Shares outstanding as of March 31, ~~2022.~~2023.

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PART I — FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS.

EATON CORPORATION plc

CONSOLIDATED STATEMENTS OF INCOME


		Three months ended March 31						Three months ended March 31
(In millions except for per share data)	(In millions except for per share data)		2022		2021		(In millions except for per share data)		2023		2022
Net sales	Net sales		$	4,843	$	4,692	Net sales		$	5,483	$	4,843

Cost of products sold	Cost of products sold		3,269		3,184		Cost of products sold		3,599		3,269
Selling and administrative expense	Selling and administrative expense		790		795		Selling and administrative expense		904		790

Research and development expense	Research and development expense		165		148		Research and development expense		179		165
Interest expense - net	Interest expense - net		32		38		Interest expense - net		50		32
Gain on sale of business	Gain on sale of business		24		—		Gain on sale of business		—		24

Other income - net	Other income - net		(8)		(11)		Other income - net		(11)		(8)
Income before income taxes	Income before income taxes		619		538		Income before income taxes		762		619
Income tax expense	Income tax expense		86		79		Income tax expense		123		86
Net income	Net income		533		459		Net income		639		533
Less net income for noncontrolling interests	Less net income for noncontrolling interests		(1)		(1)		Less net income for noncontrolling interests		(1)		(1)
Net income attributable to Eaton ordinary shareholders	Net income attributable to Eaton ordinary shareholders		$	532	$	458	Net income attributable to Eaton ordinary shareholders		$	638	$	532

Net income per share attributable to Eaton ordinary shareholders	Net income per share attributable to Eaton ordinary shareholders						Net income per share attributable to Eaton ordinary shareholders
Diluted	Diluted		$	1.33	$	1.14	Diluted		$	1.59	$	1.33
Basic	Basic		1.33		1.15		Basic		1.60		1.33

Weighted-average number of ordinary shares outstanding	Weighted-average number of ordinary shares outstanding						Weighted-average number of ordinary shares outstanding
Diluted	Diluted		401.8		400.9		Diluted		400.5		401.8
Basic	Basic		399.2		398.3		Basic		398.5		399.2

Cash dividends declared per ordinary share	Cash dividends declared per ordinary share		$	0.81	$	0.76	Cash dividends declared per ordinary share		$	0.86	$	0.81

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EATON CORPORATION plc

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


		Three months ended March 31						Three months ended March 31
(In millions)	(In millions)		2022		2021		(In millions)		2023		2022
Net income	Net income		$	533	$	459	Net income		$	639	$	533
Less net income for noncontrolling interests	Less net income for noncontrolling interests		(1)		(1)		Less net income for noncontrolling interests		(1)		(1)
Net income attributable to Eaton ordinary shareholders	Net income attributable to Eaton ordinary shareholders		532		458		Net income attributable to Eaton ordinary shareholders		638		532

Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax						Other comprehensive income (loss), net of tax
Currency translation and related hedging instruments	Currency translation and related hedging instruments		(62)		(172)		Currency translation and related hedging instruments		119		(62)
Pensions and other postretirement benefits	Pensions and other postretirement benefits		77		47		Pensions and other postretirement benefits		(2)		77
Cash flow hedges	Cash flow hedges		101		95		Cash flow hedges		15		101

Other comprehensive income (loss) attributable to Eaton ordinary shareholders			116		(30)
Other comprehensive income attributable to Eaton ordinary shareholders							Other comprehensive income attributable to Eaton ordinary shareholders		132		116

Total comprehensive income attributable to Eaton ordinary shareholders	Total comprehensive income attributable to Eaton ordinary shareholders		$	648	$	428	Total comprehensive income attributable to Eaton ordinary shareholders		$	770	$	648

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EATON CORPORATION plc

CONSOLIDATED BALANCE SHEETS


(In millions)	(In millions)	March 31, 2022		December 31, 2021		(In millions)	March 31, 2023		December 31, 2022
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash	Cash	$	237	$	297	Cash	$	235	$	294
Short-term investments	Short-term investments	268		271		Short-term investments	289		261
Accounts receivable - net	Accounts receivable - net	3,667		3,297		Accounts receivable - net	4,239		4,076
Inventory	Inventory	3,317		2,969		Inventory	3,604		3,430

Prepaid expenses and other current assets	Prepaid expenses and other current assets	705		677		Prepaid expenses and other current assets	772		685
Total current assets	Total current assets	8,194		7,511		Total current assets	9,138		8,746

Property, plant and equipment	Property, plant and equipment					Property, plant and equipment
Land and buildings	Land and buildings	2,245		2,227		Land and buildings	2,174		2,129
Machinery and equipment	Machinery and equipment	5,685		5,591		Machinery and equipment	6,021		5,885
Gross property, plant and equipment	Gross property, plant and equipment	7,930		7,818		Gross property, plant and equipment	8,195		8,013
Accumulated depreciation	Accumulated depreciation	(4,832)		(4,754)		Accumulated depreciation	(4,989)		(4,867)
Net property, plant and equipment	Net property, plant and equipment	3,098		3,064		Net property, plant and equipment	3,206		3,146

Other noncurrent assets	Other noncurrent assets					Other noncurrent assets
Goodwill	Goodwill	14,955		14,751		Goodwill	14,894		14,796
Other intangible assets	Other intangible assets	6,012		5,855		Other intangible assets	5,386		5,485

Operating lease assets	Operating lease assets	449		442		Operating lease assets	579		570
Deferred income taxes	Deferred income taxes	388		392		Deferred income taxes	340		330
Other assets	Other assets	2,112		2,012		Other assets	1,975		1,940
Total assets	Total assets	$	35,208	$	34,027	Total assets	$	35,517	$	35,014

Liabilities and shareholders’ equity	Liabilities and shareholders’ equity					Liabilities and shareholders’ equity
Current liabilities	Current liabilities					Current liabilities
Short-term debt	Short-term debt	$	1,116	$	13	Short-term debt	$	87	$	324
Current portion of long-term debt	Current portion of long-term debt	1,728		1,735		Current portion of long-term debt	8		10
Accounts payable	Accounts payable	2,867		2,797		Accounts payable	3,118		3,072
Accrued compensation	Accrued compensation	331		501		Accrued compensation	350		467

Other current liabilities	Other current liabilities	2,214		2,166		Other current liabilities	2,524		2,488
Total current liabilities	Total current liabilities	8,256		7,212		Total current liabilities	6,087		6,360

Noncurrent liabilities	Noncurrent liabilities					Noncurrent liabilities
Long-term debt	Long-term debt	6,763		6,831		Long-term debt	8,701		8,321
Pension liabilities	Pension liabilities	831		872		Pension liabilities	651		649
Other postretirement benefits liabilities	Other postretirement benefits liabilities	260		263		Other postretirement benefits liabilities	174		177
Operating lease liabilities	Operating lease liabilities	342		337		Operating lease liabilities	466		459
Deferred income taxes	Deferred income taxes	635		559		Deferred income taxes	537		530
Other noncurrent liabilities	Other noncurrent liabilities	1,465		1,502		Other noncurrent liabilities	1,417		1,444
Total noncurrent liabilities	Total noncurrent liabilities	10,296		10,364		Total noncurrent liabilities	11,946		11,580

Shareholders’ equity	Shareholders’ equity					Shareholders’ equity
Ordinary shares (399.0 million outstanding in 2022 and 398.8 million in 2021)		4		4
Ordinary shares (398.6 million outstanding in 2023 and 397.8 million in 2022)						Ordinary shares (398.6 million outstanding in 2023 and 397.8 million in 2022)	4		4
Capital in excess of par value	Capital in excess of par value	12,427		12,449		Capital in excess of par value	12,502		12,512
Retained earnings	Retained earnings	7,707		7,594		Retained earnings	8,757		8,468
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(3,517)		(3,633)		Accumulated other comprehensive loss	(3,814)		(3,946)
Shares held in trust	Shares held in trust	(1)		(1)		Shares held in trust	—		(1)
Total Eaton shareholders’ equity	Total Eaton shareholders’ equity	16,620		16,413		Total Eaton shareholders’ equity	17,449		17,038
Noncontrolling interests	Noncontrolling interests	36		38		Noncontrolling interests	36		38
Total equity	Total equity	16,656		16,451		Total equity	17,485		17,075
Total liabilities and equity	Total liabilities and equity	$	35,208	$	34,027	Total liabilities and equity	$	35,517	$	35,014

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EATON CORPORATION plc

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


		Three months ended March 31					Three months ended March 31
(In millions)	(In millions)	2022		2021		(In millions)	2023		2022
Operating activities	Operating activities					Operating activities
Net income	Net income	$	533	$	459	Net income	$	639	$	533
Adjustments to reconcile to net cash provided by operating activities	Adjustments to reconcile to net cash provided by operating activities					Adjustments to reconcile to net cash provided by operating activities
Depreciation and amortization	Depreciation and amortization	244		208		Depreciation and amortization	238		244
Deferred income taxes	Deferred income taxes	15		(39)		Deferred income taxes	17		15
Pension and other postretirement benefits expense	Pension and other postretirement benefits expense	6		14		Pension and other postretirement benefits expense	4		6
Contributions to pension plans	Contributions to pension plans	(32)		(243)		Contributions to pension plans	(29)		(32)
Contributions to other postretirement benefits plans	Contributions to other postretirement benefits plans	(6)		(6)		Contributions to other postretirement benefits plans	(5)		(6)

Gain on sale of business	Gain on sale of business	(24)		—		Gain on sale of business	—		(24)
Changes in working capital	Changes in working capital	(785)		(108)		Changes in working capital	(498)		(785)
Other - net	Other - net	91		(25)		Other - net	(31)		91
Net cash provided by operating activities	Net cash provided by operating activities	42		260		Net cash provided by operating activities	335		42

Investing activities	Investing activities					Investing activities
Capital expenditures for property, plant and equipment	Capital expenditures for property, plant and equipment	(115)		(119)		Capital expenditures for property, plant and equipment	(126)		(115)
Cash paid for acquisitions of businesses, net of cash acquired		(612)		(1,700)
Cash paid for acquisition of a business, net of cash acquired						Cash paid for acquisition of a business, net of cash acquired	—		(612)

Proceeds from sales of property, plant and equipment						Proceeds from sales of property, plant and equipment	3		4
Investments in associate companies	Investments in associate companies	(17)		(80)		Investments in associate companies	—		(17)
Purchases of short-term investments - net	Purchases of short-term investments - net	(1)		(280)		Purchases of short-term investments - net	(27)		(1)
Payments for settlement of currency exchange contracts not designated as hedges - net		—		(17)
Proceeds from settlement of currency exchange contracts not designated as hedges - net						Proceeds from settlement of currency exchange contracts not designated as hedges - net	41		—
Other - net	Other - net	(17)		(5)		Other - net	(14)		(21)
Net cash used in investing activities	Net cash used in investing activities	(762)		(2,201)		Net cash used in investing activities	(124)		(762)

Financing activities	Financing activities					Financing activities
Proceeds from borrowings	Proceeds from borrowings	—		1,798		Proceeds from borrowings	318		—
Payments on borrowings	Payments on borrowings	(4)		(3)		Payments on borrowings	(3)		(4)
Short-term debt, net	Short-term debt, net	1,105		463		Short-term debt, net	(236)		1,105

Cash dividends paid	Cash dividends paid	(320)		(300)		Cash dividends paid	(334)		(320)
Exercise of employee stock options	Exercise of employee stock options	8		21		Exercise of employee stock options	17		8
Repurchase of shares	Repurchase of shares	(86)		(59)		Repurchase of shares	—		(86)

Employee taxes paid from shares withheld	Employee taxes paid from shares withheld	(50)		(37)		Employee taxes paid from shares withheld	(40)		(50)
Other - net	Other - net	(1)		(8)		Other - net	(1)		(1)
Net cash provided by financing activities		652		1,875
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	(281)		652

Effect of currency on cash	Effect of currency on cash	8		(11)		Effect of currency on cash	11		8
Less: Increase in cash classified as held for sale		—		(7)
Decrease in cash		(60)		(84)

Total decrease in cash						Total decrease in cash	(59)		(60)
Cash at the beginning of the period	Cash at the beginning of the period	297		438		Cash at the beginning of the period	294		297
Cash at the end of the period	Cash at the end of the period	$	237	$	354	Cash at the end of the period	$	235	$	237

The accompanying notes are an integral part of these condensed consolidated financial statements.

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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 ~~2021~~2022 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.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Adoption of New Accounting Standard

Eaton adopted Accounting Standards Update 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, in the first quarter of 2023. The standard requires disclosure of certain information about the Company's supply chain finance program, including key terms and a rollforward of confirmed amounts payable. The adoption of the standard did not have a material impact on the condensed consolidated financial statements.

Note 2.ACQUISITIONS AND DIVESTITURE OF BUSINESSES

~~Acquisition of Tripp Lite~~

On March 17, 2021, Eaton acquired Tripp Lite for $1.65 billion, net of cash received. Tripp Lite is a leading supplier of power quality products and connectivity solutions including single-phase uninterruptible power supply systems, rack power distribution units, surge protectors, and enclosures for data centers, industrial, medical, and communications markets in the Americas. Tripp Lite is reported within the Electrical Americas business segment.

The acquisition of Tripp Lite 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 2022, 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
Short-term investments $ 5 $ — $ 5
Accounts receivable 94 (1) 93
Inventory 184 (5) 179
Prepaid expenses and other current assets 6 (1) 5
Property, plant and equipment 6 (5) 1
Other intangible assets 630 (26) 604
Other assets — 2 2
Accounts payable (13) — (13)
Other current liabilities (32) (2) (34)
Other noncurrent liabilities (157) (10) (167)
Total identifiable net assets 723 (48) 675
Goodwill 928 48 976
Total consideration, net of cash received $ 1,651 $ — $ 1,651

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Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Tripp Lite. Goodwill recognized as a result of the acquisition is not deductible for tax purposes. The estimated fair values of the customer relationships, trademarks and technology intangible assets of $539 million, $33 million and $32 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 customer relationships, trademarks and technology intangible assets were 20 years, 15 years, and 5 years, respectively. See Note 6 for additional information about goodwill.

~~Eaton's 2021 Condensed Consolidated Financial Statements include Tripp Lite’s results of operations, including sales of $26 million, from the date of acquisition through March 31, 2021.~~

~~Acquisition of Mission Systems~~

On June 1, 2021, Eaton acquired Mission Systems for $2.80 billion, net of cash received. Mission Systems is a leading manufacturer of air-to-air refueling systems, environmental systems, and actuation primarily for defense markets. Mission Systems is reported within the Aerospace business segment.

The acquisition of Mission Systems 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. There has not been a material change from the estimated fair values of the assets acquired and liabilities assumed presented in Note 2 to the Consolidated Financial Statements in the 2021 Form 10-K. Draft third-party valuations for Other intangible assets and Property, plant and equipment have been received. These preliminary estimates will be finalized in the second quarter of 2022 when our review of the third-party valuations are completed, further information becomes available and additional analyses are performed, and these differences could have a material impact on Eaton's preliminary purchase price allocation.

Sale of Hydraulics business

On August 2, 2021, Eaton completed the sale of the Hydraulics business to Danfoss A/~~S. As a result of the sale, the Company received $3.1 billion, net of cash sold,~~S and recognized a pre-tax gain of $617 million in 2021. ~~According to the terms of the sales agreement, the~~The Company finalized negotiations of post-closing adjustments with Danfoss A/S ~~during the first quarter of 2022. As a result of these negotiations, the Company~~and recognized an additional pre-tax gain of $24 ~~million. The business had sales~~million in the first quarter of ~~$1.3 billion~~2022 and received cash of $22 million in ~~2021 through~~ the ~~date~~second quarter of ~~the sale.~~

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2022 from Danfoss A/S to fully settle all post-closing adjustments.

Acquisition of Royal Power Solutions

On January 5, 2022, Eaton acquired Royal Power Solutions for ~~$612~~$610 million, net of cash received. Royal Power Solutions is a U.S. based manufacturer of high-precision electrical connectivity components used in electric vehicle, energy management, industrial and mobility markets. Royal Power Solutions is reported within the eMobility business segment.

The acquisition of Royal Power Solutions 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, and these differences could have a material impact on Eaton's preliminary purchase price allocation.

~~(In millions)~~

~~January 5, 2022~~

~~Accounts receivable~~

~~Inventory~~

~~Prepaid expenses and other current assets~~

~~Property, plant and equipment~~

~~Other intangible assets~~

~~306~~

~~Other assets~~

~~Accounts payable~~

~~(24)~~

~~Other current liabilities~~

~~(10)~~

~~Other noncurrent liabilities~~

~~(70)~~

~~Total identifiable net assets~~

~~328~~

~~Goodwill~~

~~284~~

~~Total consideration, net of cash received~~

~~612~~

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Royal Power Solutions. Goodwill recognized as a result of the acquisition is not deductible for tax purposes. Other intangible assets of $306 million are expected to include customer relationships, trademarks and technology. 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.

Eaton's 2022 Condensed Consolidated Financial Statements include Royal Power Solutions' results of operations, including segment operating profit of $5 million on sales of $38 million, from the date of acquisition through March 31, 2022.

Acquisition of a 50%stake in Jiangsu Huineng Electric Co., Ltd’s circuit breaker business

On July 1, 2022, Eaton acquired a 50 percent stake in Jiangsu Huineng Electric Co., Ltd’s circuit breaker business, which manufactures and markets low-voltage circuit breakers in China. Eaton accounts for this investment on the equity method of accounting and is reported within the Electrical Global business segment.

Acquisition of a 49% stake in Jiangsu Ryan Electrical Co. Ltd.

On April 23, 2023, Eaton acquired a 49 percent stake in Jiangsu Ryan Electrical Co. Ltd., a manufacturer of power distribution and sub-transmission transformers in China. Eaton will account for this investment on the equity method of accounting and will report it within the Electrical Global business segment.

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Note 3. REVENUE RECOGNITION

Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. Sales are measured at the amount of consideration the Company expects to be paid in exchange for these products or services.

The following table provides disaggregated sales by lines of businesses, geographic destination, market channel or end market, as applicable, for the Company's operating segments:


		Three months ended March 31						Three months ended March 31
(In millions)	(In millions)		2022		2021		(In millions)		2023		2022
Electrical Americas	Electrical Americas						Electrical Americas
Products	Products		$	603	$	520	Products		$	716	$	603
Systems	Systems		1,288		1,102		Systems		1,578		1,288
Total	Total		$	1,891	$	1,622	Total		$	2,294	$	1,891

Electrical Global	Electrical Global						Electrical Global
Products	Products		$	876	$	713	Products		$	882	$	876
Systems	Systems		561		540		Systems		618		561
Total	Total		$	1,437	$	1,253	Total		$	1,500	$	1,437

Hydraulics
United States			$	—	$	222
Rest of World			—		339
Total			$	—	$	561

Aerospace	Aerospace						Aerospace
Original Equipment Manufacturers	Original Equipment Manufacturers		$	293	$	208	Original Equipment Manufacturers		$	314	$	293
Aftermarket	Aftermarket		221		146		Aftermarket		264		221
Industrial and Other	Industrial and Other		204		165		Industrial and Other		225		204
Total	Total		$	718	$	519	Total		$	803	$	718

Vehicle	Vehicle						Vehicle
Commercial	Commercial		$	402	$	342	Commercial		$	448	$	402
Passenger and Light Duty	Passenger and Light Duty		269		312		Passenger and Light Duty		291		269
Total	Total		$	671	$	654	Total		$	739	$	671

eMobility	eMobility		$	126	$	83	eMobility		$	147	$	126

Total net sales	Total net sales		$	4,843	$	4,692	Total net sales		$	5,483	$	4,843

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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 ~~$3,216~~$3,726 million and ~~$2,896~~$3,581 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, 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 ~~$194~~$251 million and ~~$187~~$233 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and are recorded in Prepaid expenses and other current assets. The increase in unbilled receivables reflects higher revenue recognized from increased business activity in ~~2022.~~2023.

Changes in the deferred revenue liabilities are as follows:


(In millions)	Deferred Revenue
Balance at January 1, 2023	$	508
Customer deposits and billings	514
Revenue recognized in the period	(421)

Translation	4

Balance at March 31, 2023	$	605


(In millions)	Deferred Revenue
Balance at January 1, 2022	$	422
Customer deposits and billings	342
Revenue recognized in the period	(334)

Translation	(2)

Balance at March 31, 2022	$	428


~~(In millions)~~	~~Deferred Revenue~~
~~Balance at January 1, 2021~~	$	~~257~~
~~Customer deposits and billings~~	~~276~~
~~Revenue recognized in the period~~	~~(262)~~
~~Translation and other~~	~~(3)~~

~~Balance at March 31, 2021~~	$	~~268~~

Deferred revenue liabilities of ~~$401~~$586 million and ~~$395~~$489 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, were included in Other current liabilities with the remaining balance presented in Other noncurrent liabilities.

A significant portion of open orders placed with Eaton are by 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, ~~2022~~2023 was approximately ~~$9.3~~$12.3 billion. At March 31, ~~2022,~~2023, approximately ~~87%~~82% 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 market conditions. The Company's segments, supported by our global credit department, perform 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 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 ~~$42~~$39 million and $31 million at March 31, ~~2022~~2023 and December 31, ~~2021.~~2022, respectively. The change in the allowance for credit losses includes expense and net write-offs, none of which are significant.

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Note 5. INVENTORY

Inventory is carried at lower of cost or net realizable value. The components of inventory are as follows:


(In millions)	(In millions)	March 31, 2022		December 31, 2021		(In millions)	March 31, 2023		December 31, 2022
Raw materials	Raw materials	$	1,219	$	1,096	Raw materials	$	1,407	$	1,275
Work-in-process	Work-in-process	783		620		Work-in-process	916		781
Finished goods	Finished goods	1,315		1,253		Finished goods	1,281		1,375
Total inventory	Total inventory	$	3,317	$	2,969	Total inventory	$	3,604	$	3,430

Note 6. GOODWILL

Changes in the carrying amount of goodwill by segment are as follows:

(In millions) January 1,
2022 Additions Translation March 31,
2022
Electrical Americas $ 7,417 $ 5 $ 6 $ 7,428
Electrical Global 4,183 2 (65) 4,120
Aerospace 2,781 8 (36) 2,753
Vehicle 290 — — 290
eMobility 80 284 — 364
Total $ 14,751 $ 299 $ (95) $ 14,955

The 2022 additions to goodwill relate primarily to the anticipated synergies of acquiring Royal Power Solutions. The allocation of the purchase price from this acquisition is preliminary and will be completed during the measurement period.


(In millions)	January 1, 2023		Translation		March 31, 2023
Electrical Americas	$	7,402	$	8	$	7,411
Electrical Global	3,929		58		3,987

Aerospace	2,844		30		2,873
Vehicle	287		1		288
eMobility	334		—		334
Total	$	14,796	$	98	$	14,894

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 Accounts payable 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, 2023	$	208
Invoices confirmed during the period	297
Invoices paid during the period	(234)
Translation	12
Balance at March 31, 2023	$	283

Note 8. DEBT

On March 3, 2023, a subsidiary of Eaton issued Euro denominated notes (2023 Euro Notes) in a private issuance with a face value of €300 million ($318 million). The floating rate notes are due June 3, 2024 with interest payable quarterly based on the three-month Euro Interbank Offered Rate plus 25 basis points. The 2023 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton. The 2023 Euro Notes contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2023 Euro Notes at a purchase price of 100.5% of the principal amount plus accrued and unpaid interest. The 2023 Euro Notes are subject to customary non-financial covenants.

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Note 7.9. RETIREMENT BENEFITS PLANS

The components of retirement benefits expense (income) are as follows:


		United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)					United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
		Three months ended March 31													Three months ended March 31
(In millions)	(In millions)	2022		2021		2022		2021		2022		2021		(In millions)	2023		2022		2023		2022		2023		2022
Service cost	Service cost	$	8	$	10	$	16	$	19	$	—	$	—	Service cost	$	5	$	8	$	11	$	16	$	—	$	—
Interest cost	Interest cost	20		17		12		10		2		2		Interest cost	36		20		21		12		2		2
Expected return on plan assets	Expected return on plan assets	(53)		(56)		(31)		(30)		—		—		Expected return on plan assets	(49)		(53)		(30)		(31)		—		—
Amortization	Amortization	8		10		12		19		(2)		(1)		Amortization	1		8		1		12		(4)		(2)
		(17)		(19)		9		18		—		1			(7)		(17)		3		9		(2)		—

Settlements	Settlements	14		14		—		—		—		—		Settlements	9		14		1		—		—		—
Total expense (income)	Total expense (income)	$	(3)	$	(5)	$	9	$	18	$	—	$	1	Total expense (income)	$	2	$	(3)	$	4	$	9	$	(2)	$	—

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 is effective January 1, 2026 for non-union U.S. employees whose retirement benefit is determined under a final average pay formula.

During the first quarter of 2023 and 2022, the Company recognized settlement losses from lump-sum distributions of $10 million and $14 million, ~~and~~respectively. During the first quarter of 2022, the Company remeasured certain pension plans as a result of lump-sum distributions exceeding or expected to exceed the sum of service and interest costs for the year. These remeasurements resulted in ~~increases of $32 million in pension assets, decreases of $15 million in pension liabilities, and decreases~~an increase of $47 million in funded status and corresponding decrease in Accumulated other comprehensive ~~loss.~~

~~The components~~loss in the first quarter of ~~retirement benefits expense (income) other than service costs are included in Other income - net.~~

2022.

~~Table of Contents~~

Note 8.10. LEGAL CONTINGENCIES

Eaton is subject to a broad range of claims, administrative and legal proceedings such as lawsuits that relate to contractual allegations and indemnity claims, tax audits, patent infringement, personal injuries, antitrust matters, and employment-related matters. Eaton is also subject to ~~asbestos~~legal claims from historic products which may have contained asbestos. Insurance may cover some of the costs associated with these claims and proceedings. 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 9.11. INCOME TAXES

The effective income tax rate for the first quarter of ~~2022~~2023 was expense of ~~13.9%~~16.1% compared to expense of ~~14.7%~~13.9% for the first quarter of ~~2021.~~2022. The ~~decrease~~increase in the effective tax rate in the first quarter of ~~2022~~2023 was primarily due to greater levels of income in higher tax jurisdictions and a smaller impact from the excess tax benefits recognized for employee share-based payments in the ~~first quarter of 2022.~~quarter.

~~Brazil Tax Years 2005-2012~~

The Company has two Brazilian tax cases primarily relating to the amortization of certain goodwill generated from the acquisition of third-party businesses and corporate reorganizations. One case involves tax years 2005-2008 (Case 1), and the other involves tax years 2009-2012 (Case 2). Case 2 is proceeding on a more accelerated timeline than Case 1. For Case 2, the Company received a tax assessment in 2014 that included interest and penalties. In November 2019, the Company received an unfavorable result at the final tax administrative appeals level, resulting in an alleged tax deficiency of $29 million plus $107 million of interest and penalties (translated at the March 31, 2022 exchange rate). The Company is challenging this assessment in the judicial system and, on April 18, 2022, received an unfavorable decision at the first judicial level. On April 27, 2022, the Company filed a motion for clarification relating to that decision, which is currently pending with the court. The Company intends to continue its challenge of this assessment in the judicial system, including appealing the April 18, 2022 decision, if necessary.

As previously disclosed for Case 1, the Company received a separate tax assessment alleging a tax deficiency of $35 million plus $115 million of interest and penalties (translated at the March 31, 2022 exchange rate), which the Company is challenging in the judicial system. This case is still pending resolution at the first judicial level.

Both cases are expected to take several years to resolve through the Brazilian judicial system and require provision of certain assets as security for the alleged deficiencies. As of March 31, 2022, the Company pledged Brazilian real estate assets with net book value of $22 million and provided additional security in the form of bank secured bonds totaling $113 million and a cash deposit of $20 million (translated at the March 31, 2022 exchange rate).

The Company believes that the final resolution of both of the assessments will not have a material impact on its condensed consolidated financial statements. The ultimate outcome of these matters cannot be predicted with certainty given the complex nature of tax controversies. Should the ultimate outcome of these matters deviate from our reasonable expectations, they may have a material adverse impact on the Company’s condensed consolidated financial statements. However, Eaton believes that its interpretations of tax laws and application of tax laws to its facts are correct.

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Note 12. EQUITY

~~Note 10. 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)	Shares	Dollars
Balance at January 1, 2023	397.8	$	4	$	12,512	$	8,468	$	(3,946)	$	(1)	$	17,038	$	38	$	17,075


Net income	—	—		—		638		—		—		638		1		639
Other comprehensive income, net of tax								132				132		—		132
Cash dividends paid and accrued	—	—		—		(348)		—		—		(348)		(4)		(352)

Issuance of shares under equity-based compensation plans	0.7	—		(11)		(1)		—		1		(11)		—		(11)

Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		1		1



Balance at March 31, 2023	398.6	$	4	$	12,502	$	8,757	$	(3,814)	$	—	$	17,449	$	36	$	17,485


	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, 2022	398.8	$	4	$	12,449	$	7,594	$	(3,633)	$	(1)	$	16,413	$	38	$	16,451


Net income	—	—		—		532		—		—		532		1		533
Other comprehensive income, net of tax								116				116		—		116
Cash dividends paid and accrued	—	—		—		(331)		—		—		(331)		(2)		(333)

Issuance of shares under equity-based compensation plans	0.8	—		(22)		(2)		—		—		(24)		—		(24)

Changes in noncontrolling interest of consolidated subsidiaries - net	—	—		—		—		—		—		—		(1)		(1)


Repurchase of shares	(0.6)	—		—		(86)		—		—		(86)		—		(86)
Balance at March 31, 2022	399.0	$	4	$	12,427	$	7,707	$	(3,517)	$	(1)	$	16,620	$	36	$	16,656

On February 27, 2019, the Board of Directors adopted a share repurchase program for share repurchases up to $5.0 billion of ordinary shares (2019 Program). On February 23, 2022, the Board renewed the 2019 Program by providing authority for up to $5.0 billion in repurchases to be made during the three-year period commencing on that date (2022 Program). Under the 2022 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, 2023, no ordinary shares were repurchased. During the three months ended March 31, 2022, 0.6 million ordinary shares were repurchased under the 2022 program in the open market at a total cost of $86 million. ~~During the three months ended March 31, 2021, 0.5 million ordinary shares were repurchased under the 2019 Program in the open market at a total cost of $59 million.~~

~~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) Shares Dollars
Balance at January 1, 2022 398.8 $ 4 $ 12,449 $ 7,594 $ (3,633) $ (1) $ 16,413 $ 38 $ 16,451
Net income — — — 532 — — 532 1 533
Other comprehensive income, net of tax 116 116 — 116
Cash dividends paid and accrued — — — (331) — — (331) (2) (333)
Issuance of shares under equity-based compensation plans 0.8 — (22) (2) — — (24) — (24)
Changes in noncontrolling interest of consolidated subsidiaries - net — — — — — — — (1) (1)
Repurchase of shares (0.6) — — (86) — — (86) — (86)
Balance at March 31, 2022 399.0 $ 4 $ 12,427 $ 7,707 $ (3,517) $ (1) $ 16,620 $ 36 $ 16,656

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, 2021 398.1 $ 4 $ 12,329 $ 6,794 $ (4,195) $ (2) $ 14,930 $ 43 $ 14,973
Net income — — — 458 — — 458 1 459
Other comprehensive loss, net of tax (30) (30) — (30)
Cash dividends paid and accrued — — — (309) — — (309) — (309)
Issuance of shares under equity-based compensation plans 0.9 — 6 (1) — — 5 — 5
Changes in noncontrolling interest of consolidated subsidiaries - net — — — — — — — (2) (2)
Repurchase of shares (0.5) — — (59) — — (59) — (59)
Balance at March 31, 2021 398.5 $ 4 $ 12,335 $ 6,883 $ (4,225) $ (2) $ 14,995 $ 42 $ 15,037

The changes in Accumulated other comprehensive loss are as follows:


(In millions)	(In millions)	Currency translation and related hedging instruments		Pensions and other postretirement benefits		Cash flow hedges		Total		(In millions)	Currency translation and related hedging instruments		Pensions and other postretirement benefits		Cash flow hedges		Total
Balance at January 1, 2022		$	(2,617)	$	(986)	$	(30)	$	(3,633)
Balance at January 1, 2023										Balance at January 1, 2023	$	(3,264)	$	(810)	$	129	$	(3,946)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(62)		47		102		87		Other comprehensive income (loss) before reclassifications	121		(11)		26		136
Amounts reclassified from Accumulated other comprehensive loss (income)	Amounts reclassified from Accumulated other comprehensive loss (income)	—		30		(1)		29		Amounts reclassified from Accumulated other comprehensive loss (income)	(1)		8		(11)		(4)
Net current-period Other comprehensive income (loss)	Net current-period Other comprehensive income (loss)	(62)		77		101		116		Net current-period Other comprehensive income (loss)	119		(2)		15		132
Balance at March 31, 2022		$	(2,679)	$	(909)	$	71	$	(3,517)
Balance at March 31, 2023										Balance at March 31, 2023	$	(3,145)	$	(813)	$	144	$	(3,814)

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The reclassifications out of Accumulated other comprehensive loss are as follows:

(In millions)

Three months ended March 31, 2022

Consolidated statements
of income classification

(In millions)

Three months ended March 31, 2023

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 benefit pensions and other

postretirement benefits items

Amortization of defined benefits pensions and other

postretirement benefits items

Amortization of defined benefits pensions and other

postretirement benefits items

Actuarial loss and prior service cost

(32)

Actuarial loss and prior service cost

(8)

Tax benefit

—

Total, net of tax

(30)

Total, net of tax

(8)

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

Commodity contracts

Cost of products sold

Tax expense

—

Tax expense

(3)

Total, net of tax

Total reclassifications for the period

(29)

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 79 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						Three months ended March 31
(In millions except for per share data)	(In millions except for per share data)		2022		2021		(In millions except for per share data)		2023		2022
Net income attributable to Eaton ordinary shareholders	Net income attributable to Eaton ordinary shareholders		$	532	$	458	Net income attributable to Eaton ordinary shareholders		$	638	$	532

Weighted-average number of ordinary shares outstanding - diluted	Weighted-average number of ordinary shares outstanding - diluted		401.8		400.9		Weighted-average number of ordinary shares outstanding - diluted		400.5		401.8
Less dilutive effect of equity-based compensation	Less dilutive effect of equity-based compensation		2.6		2.6		Less dilutive effect of equity-based compensation		2.0		2.6
Weighted-average number of ordinary shares outstanding - basic	Weighted-average number of ordinary shares outstanding - basic		399.2		398.3		Weighted-average number of ordinary shares outstanding - basic		398.5		399.2

Net income per share attributable to Eaton ordinary shareholders	Net income per share attributable to Eaton ordinary shareholders						Net income per share attributable to Eaton ordinary shareholders
Diluted	Diluted		$	1.33	$	1.14	Diluted		$	1.59	$	1.33
Basic	Basic		1.33		1.15		Basic		1.60		1.33

For the first quarter of 2023 and 2022, all ~~stock options were included in the calculation of diluted net income per share attributable to Eaton ordinary shareholders because they were all dilutive. For the first quarter of 2021, 0.1 million of~~ stock options were excluded from the calculation of diluted net income per share attributable to Eaton ordinary shareholders because the exercise price of the options exceeded the average market price of the ordinary shares during the period and their effect, accordingly, would have been antidilutive.

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Note ~~11.~~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)	(In millions)	Total		Level 1		Level 2		Level 3		(In millions)	Total		Level 1		Level 2		Level 3
March 31, 2022
March 31, 2023										March 31, 2023
Cash	Cash	$	237	$	237	$	—	$	—	Cash	$	235	$	235	$	—	$	—
Short-term investments	Short-term investments	268		268		—		—		Short-term investments	289		289		—		—
Net derivative contracts	Net derivative contracts	44		—		44		—		Net derivative contracts	44		—		44		—
Contingent consideration from acquisition of Green Motion		(57)		—		—		(57)
Contingent future payments from acquisition of Green Motion										Contingent future payments from acquisition of Green Motion	(45)		—		—		(45)

December 31, 2021
December 31, 2022										December 31, 2022
Cash	Cash	$	297	$	297	$	—	$	—	Cash	$	294	$	294	$	—	$	—
Short-term investments	Short-term investments	271		271		—		—		Short-term investments	261		261		—		—
Net derivative contracts	Net derivative contracts	41		—		41		—		Net derivative contracts	29		—		29		—
Contingent consideration from acquisition of Green Motion		(57)		—		—		(57)
Contingent future payments from acquisition of Green Motion										Contingent future payments from acquisition of Green Motion	(44)		—		—		(44)

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.

On March 22, 2021, Eaton acquired Green Motion SA, a leading designer and manufacturer of electric vehicle charging hardware and related software based in Switzerland. Green Motion SA was acquired for $106 million, including $49 million of cash paid at closing and an initial estimate of $57 million ~~of estimated~~for the fair value of contingent future consideration based on 2023 and 2024 revenue performance. 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 revenue estimates and discount rates, with a maximum possible undiscounted value of ~~$109~~$112 million. As of March 31, 2023, the fair value of the contingent future payments has been reduced to $45 million based primarily on anticipated reductions in projected 2023 revenue compared to the initial estimate.

Other Fair Value Measurements

Long-term debt and the current portion of long-term debt had a carrying value of ~~$8,491~~$8,709 million and fair value of ~~$8,709~~$8,181 million at March 31, ~~2022~~2023 compared to ~~$8,566~~$8,331 million and ~~$9,232~~$7,625 million, respectively, at December 31, ~~2021.~~2022. The fair value of Eaton's debt instruments ~~were~~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 ~~12.~~14. DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, Eaton is exposed to certain risks related to fluctuations in interest rates, currency exchange rates and commodity prices. The Company uses various derivative and non-derivative financial instruments, primarily interest rate swaps, currency forward exchange contracts, currency swaps and commodity contracts to manage risks from these market fluctuations. The instruments used by Eaton are straightforward, non-leveraged instruments. The counterparties to these instruments are financial institutions with strong credit ratings. Eaton maintains control over the size of positions entered into with any one counterparty and regularly monitors the credit rating of these institutions. Such instruments are not purchased and sold for trading purposes.

Derivative financial instruments are accounted for at fair value and recognized as assets or liabilities in the Consolidated Balance Sheets. Accounting for the gain or loss resulting from the change in the fair value of the derivative financial instrument depends on whether it has been designated ~~and is effective,~~ as part of a hedging relationship, is effective and ~~if so, as to~~ the nature of the hedging activity. Eaton formally documents all relationships between derivative financial instruments accounted for as designated hedges and the hedged item, as well as its risk-management objective and strategy for undertaking the hedge transaction. This process includes linking derivative financial instruments to a recognized asset or liability, specific firm commitment, forecasted transaction, or net investment in a foreign operation. These financial instruments can be designated as:

•Hedges of the change in the fair value of a recognized fixed-rate asset or liability, or the firm commitment to acquire such an asset or liability (a fair value hedge); for these hedges, the gain or loss from the derivative financial instrument, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in income during the period of change in fair value.

•Hedges of the variable cash flows of a recognized variable-rate asset or liability, or the forecasted acquisition of such an asset or liability (a cash flow hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss on the hedged item is included in income.

•Hedges of the currency exposure related to a net investment in a foreign operation (a net investment hedge); for these hedges, the gain or loss from the derivative financial instrument is recognized in Accumulated other comprehensive income and reclassified to income in the same period when the gain or loss related to the net investment in the foreign operation is included in income.

The gain or loss from a derivative financial instrument designated as a hedge is classified in the same line of the Consolidated Statements of Income as the offsetting loss or gain on the hedged item. The cash flows resulting from these financial instruments are classified in operating activities on the Condensed Consolidated Statements of Cash Flows.

For derivatives that are not designated as a hedge, any gain or loss is immediately recognized in income. The majority of derivatives used in this manner relate to risks resulting from assets or liabilities denominated in a foreign currency and certain commodity contracts that arise in the normal course of business.

Eaton uses currency exchange contracts and certain of its debt denominated in foreign currency to hedge portions of its net investments in foreign operations against foreign currency exposure (net investment hedges). ~~Foreign~~The Company uses the spot rate method to assess hedge effectiveness when currency ~~denominated debt designated as non-derivative~~exchange contracts are used in net investment hedges. Under this method, changes in the spot exchange rate are recognized in Accumulated other comprehensive loss. Changes related to the forward rate are excluded from the hedging ~~instruments had~~relationship and the forward points are amortized to Interest expense - net on a ~~carrying value~~straight-line basis over the term of the contract. The cash flows resulting from these currency exchange contracts are classified in investing activities on ~~an after-tax basis~~the Condensed Consolidated Statements of ~~$2,819 million at March 31, 2022 and $2,880 million at December 31, 2021.~~Cash Flows.

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Derivative Financial Statement Impacts

The fair value of derivative financial instruments recognized in the Consolidated Balance Sheets is as follows:


(In millions)	(In millions)	Notional amount		Other current assets		Other noncurrent assets		Other current liabilities		Other noncurrent liabilities		Type of hedge	Term	(In millions)	Notional amount		Other current assets		Other noncurrent assets		Other current liabilities		Other noncurrent liabilities		Type of hedge	Term
March 31, 2022
March 31, 2023														March 31, 2023
Derivatives designated as hedges	Derivatives designated as hedges													Derivatives designated as hedges

Forward starting floating-to-fixed interest rate swaps		$	1,700	$	—	$	45	$	—	$	33	Cash flow	10 to 30 years

Currency exchange contracts														Currency exchange contracts	$	1,138	$	49	$	3	$	14	$	5	Cash flow	1 to 34 months
Commodity contracts														Commodity contracts	48		4		—		1		—		Cash flow	1 to 12 months
Currency exchange contracts														Currency exchange contracts	587		1		—		—		—		Net investment	3 months
Total														Total			$	53	$	3	$	15	$	5

Derivatives not designated as hedges														Derivatives not designated as hedges
Currency exchange contracts														Currency exchange contracts	$	4,977	$	22			$	14				1 to 12 months

December 31, 2022														December 31, 2022
Derivatives designated as hedges														Derivatives designated as hedges

Currency exchange contracts	Currency exchange contracts	1,248		21		—		12		5		Cash flow	1 to 36 months	Currency exchange contracts	$	1,240	$	35	$	2	$	17	$	9	Cash flow	1 to 36 months
Commodity contracts	Commodity contracts	58		5		—		—		—		Cash flow	1 to 12 months	Commodity contracts	64		4		—		2		—		Cash flow	1 to 12 months
Total	Total			$	26	$	45	$	12	$	38			Total			$	39	$	2	$	19	$	9

Derivatives not designated as hedges	Derivatives not designated as hedges													Derivatives not designated as hedges
Currency exchange contracts	Currency exchange contracts	$	4,664	$	42			$	20				1 to 12 months	Currency exchange contracts	$	4,683	$	30			$	14				1 to 12 months
Commodity contracts		41		2				1					1 month
Total				$	44			$	21

December 31, 2021
Derivatives designated as hedges
Fixed-to-floating interest rate swaps		$	1,800	$	22	$	29	$	—	$	—	Fair value	8 months to 13 years

Forward starting floating-to-fixed interest rate swaps		1,350		—		38		—		79		Cash flow	11 to 31 years
Currency exchange contracts		1,212		17		2		11		3		Cash flow	1 to 36 months
Commodity contracts		50		2		—		1		—		Cash flow	1 to 12 months
Total				$	41	$	69	$	12	$	82

Derivatives not designated as hedges
Currency exchange contracts		$	5,285	$	34			$	9				1 to 12 months
Commodity contracts		62		1				1					1 month
Total				$	35			$	10

The currency exchange contracts shown in the table above as derivatives not designated as hedges are primarily contracts entered into to manage currency volatility or exposure on intercompany receivables, payables and loans. While Eaton does not elect hedge accounting treatment for these derivatives, Eaton targets managing 100% of the intercompany balance sheet exposure to minimize the effect of currency volatility related to the movement of goods and services in the normal course of its operations. This activity represents the great majority of these currency exchange contracts. The cash flows resulting from the settlement of these derivatives have been classified in investing activities in the Condensed Consolidated ~~Statement~~Statements of Cash Flows.

Foreign currency denominated debt designated as non-derivative net investment hedging instruments had a carrying value on an after-tax basis of $3,092 million at March 31, 2023 and $2,711 million at December 31, 2022.

As of March 31, ~~2022,~~2023, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:

Commodity

March 31, ~~2022~~2023

Term

Aluminum

Millions of pounds

1 to 12 months

Copper

107

Millions of pounds

1 to 12 months

Gold

~~1,418~~1,690

Troy ounces

1 to 12 months

Silver

~~560,367~~510,167

Troy ounces

1 to 12 months

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The following amounts were recorded on the Consolidated Balance Sheets related to fixed-to-floating interest rate swaps:

(In millions) Carrying amount of the hedged
assets (liabilities)
Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged
asset (liabilities) (a)
Location on Consolidated Balance Sheets March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021
Long-term debt $ (2,413) $ (2,413) $ (70) $ (84)


(In millions)	Carrying amount of the hedged assets (liabilities)				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities) (a)
Location on Consolidated Balance Sheets	March 31, 2023		December 31, 2022			March 31, 2023		December 31, 2022
Long-term debt	$	(713)	$	(713)		$	(47)	$	(48)

(a) At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of ~~$70~~$47 million and ~~$33~~$48 million, respectively.

The impact of cash flow and fair value hedging activities to the Consolidated Statements of Income is as follows:


		Three months ended March 31, 2022						Three months ended March 31, 2023
(In millions)	(In millions)	Net sales		Cost of products sold		Interest expense - net			(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	Amounts from Consolidated Statements of Income	$	4,843	$	3,269	$	32		Amounts from Consolidated Statements of Income	$	5,483	$	3,599	$	50

Gain (loss) on derivatives designated as cash flow hedges	Gain (loss) on derivatives designated as cash flow hedges								Gain (loss) on derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps									Forward starting floating-to-fixed interest rate swaps
Hedged item									Hedged item	$	—	$	—	$	(3)
Derivative designated as hedging instrument									Derivative designated as hedging instrument	—		—		3

Currency exchange contracts	Currency exchange contracts								Currency exchange contracts
Hedged item	Hedged item	$	2	$	(3)	$	—		Hedged item	$	2	$	(15)	$	—
Derivative designated as hedging instrument	Derivative designated as hedging instrument	(2)		3		—			Derivative designated as hedging instrument	(2)		15		—

Commodity contracts
Hedged item		$	—	$	(1)	$	—
Derivative designated as hedging instrument		—		1		—

Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item		$	—	$	—	$	8
Derivative designated as hedging instrument		—		—		(8)


		Three months ended March 31, 2021						Three months ended March 31, 2022
(In millions)	(In millions)	Net sales		Cost of products sold		Interest expense - net			(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	Amounts from Consolidated Statements of Income	$	4,692	$	3,184	$	38		Amounts from Consolidated Statements of Income	$	4,843	$	3,269	$	32

Gain (loss) on derivatives designated as cash flow hedges	Gain (loss) on derivatives designated as cash flow hedges								Gain (loss) on derivatives designated as cash flow hedges
Currency exchange contracts	Currency exchange contracts								Currency exchange contracts
Hedged item	Hedged item	$	3	$	1	$	—		Hedged item	$	2	$	(3)	$	—
Derivative designated as hedging instrument	Derivative designated as hedging instrument	(3)		(1)		—			Derivative designated as hedging instrument	(2)		3		—

Commodity contracts	Commodity contracts								Commodity contracts
Hedged item	Hedged item	$	—	$	(2)	$	—		Hedged item	$	—	$	(1)	$	—
Derivative designated as hedging instrument	Derivative designated as hedging instrument	—		2		—			Derivative designated as hedging instrument	—		1		—

Gain (loss) on derivatives designated as fair value hedges	Gain (loss) on derivatives designated as fair value hedges								Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps	Fixed-to-floating interest rate swaps								Fixed-to-floating interest rate swaps
Hedged item	Hedged item	$	—	$	—	$	19		Hedged item	$	—	$	—	$	8
Derivative designated as hedging instrument	Derivative designated as hedging instrument	—		—		(19)			Derivative designated as hedging instrument	—		—		(8)

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The impact of derivatives not designated as hedges to the Consolidated Statements of Income is as follows:


	Gain (loss) recognized in Consolidated Statements of Income				Consolidated Statements of Income classification
	Three months ended March 31
(In millions)	2023		2022
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts	$	11	$	(8)	Interest expense - net
Commodity contracts	—		1		Other expense (income) - net and Cost of products sold (a)
Total	$	11	$	(7)

(a) In the second quarter of 2022, Eaton changed the presentation of gains and losses associated with derivative contracts for commodities that are not designated as hedges from Cost of product sold to Other expense (income) - net on the Consolidated Statements of Income. Prior period amounts have not been reclassified as they are not material.

Gain (loss) recognized in Consolidated Statements of Income Consolidated Statements of Income classification
Three months ended
March 31
(In millions) 2022 2021
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts $ (8) $ (63) Interest expense - net
Commodity Contracts 1 2 Cost of products sold
Total $ (7) $ (61)

The impact of derivative and non-derivative instruments designated as hedges to the Consolidated Statements of Income and Comprehensive Income is as follows:















	Gain (loss) recognized in other comprehensive income (loss)				Location of gain (loss) reclassified from Accumulated other comprehensive loss	Gain (loss) reclassified from Accumulated other comprehensive loss
	Three months ended March 31					Three months ended March 31
(In millions)	2023		2022			2023		2022
Derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps	$	—	$	124	Interest expense - net	$	3	$	—

Currency exchange contracts	31		—		Net sales and Cost of products sold	11		—
Commodity contracts	2		5		Cost of products sold	—		1

Derivatives designated as net investment hedges
Currency exchange contracts
Effective portion	(14)		—		Gain (loss) on sale of business	—		—
Amount excluded from effectiveness testing	5		—		Interest expense - net	1		—

Non-derivative designated as net investment hedges
Foreign currency denominated debt	(63)		62		Gain (loss) on sale of business	—		—
Total	$	(39)	$	191		$	15	$	1

Gain (loss) recognized in
other comprehensive
(loss) income Location of gain (loss)
reclassified from
Accumulated other
comprehensive loss Gain (loss) reclassified
from Accumulated other
comprehensive loss
Three months ended
March 31 Three months ended
March 31
(In millions) 2022 2021 2022 2021
Derivatives designated as cash
flow hedges
Forward starting floating-to-fixed
interest rate swaps $ 124 $ 129 Interest expense - net $ — $ —
Currency exchange contracts — (13) Net sales and Cost of products sold — (4)
Commodity contracts 5 3 Cost of products sold 1 2
Non-derivative designated as net
investment hedges
Foreign currency denominated debt 62 144 Interest expense - net — —
Total $ 191 $ 263 $ 1 $ (2)
The pre-tax portion of the fair value of currency exchange contracts designated as net investment hedges included in Accumulated other comprehensive loss were net losses of $14 million at March 31, 2023. The pre-tax portion of the fair value of the forward points included in Accumulated other comprehensive loss were net gains of $4 million at March 31, 2023.

At March 31, ~~2022,~~2023, a gain of ~~$14~~$38 million of estimated unrealized net gains or losses associated with our cash flow hedges were expected to be reclassified to income from Accumulated other comprehensive loss within the next twelve months. These reclassifications relate to our designated foreign currency and commodity hedges that will mature in the next 12 months.

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Note ~~13.~~15. RESTRUCTURING CHARGES

In the second quarter of 2020, Eaton ~~decided to undertake~~initiated a multi-year restructuring program to reduce its cost structure and gain efficiencies in its business segments and at corporate in order to respond to declining market conditions brought on by the COVID-19 pandemic. Since the inception of the program, the Company has incurred charges of ~~$310~~$335 million. These restructuring activities are expected to ~~incur additional expenses of $40 million~~be completed in ~~2022 primarily comprised of plant closing and other costs, resulting in~~2023 with total estimated charges of $350 million cumulatively for the entire program. The remaining charges in 2023 are expected to relate primarily to plant closing and other costs.

A summary of restructuring program charges is as follows:

Three months ended
March 31
(In millions except for per share data) 2022 2021
Workforce reductions $ 5 $ 2
Plant closing and other 13 14
Total before income taxes 18 16
Income tax benefit 4 4
Total after income taxes $ 14 $ 12
Per ordinary share - diluted $ 0.03 $ 0.03


	Three months ended March 31
(In millions except for per share data)		2023		2022
Workforce reductions		$	2	$	5
Plant closing and other		7		13
Total before income taxes		10		18
Income tax benefit		2		4
Total after income taxes		$	8	$	14
Per ordinary share - diluted		$	0.02	$	0.03

Restructuring program charges related to the following segments:

Three months ended
March 31
(In millions) 2022 2021
Electrical Americas $ 5 $ 5
Electrical Global 5 2
Aerospace 3 1
Vehicle 3 6
Corporate 2 2
Total $ 18 $ 16


	Three months ended March 31
(In millions)		2023		2022
Electrical Americas		$	2	$	5
Electrical Global		3		5
Aerospace		1		3
Vehicle		2		3

Corporate		1		2
Total		$	10	$	18

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, 2020	$	—	$	—	$	—
Liability recognized	172		42		214
Payments, utilization and translation	(33)		(39)		(72)
Balance at December 31, 2020	139		3		142
Liability recognized	21		57		78
Payments, utilization and translation	(64)		(52)		(116)
Balance at December 31, 2021	96		8		104
Liability recognized, net1	(13)		47		33
Payments, utilization and translation	(45)		(51)		(96)
Balance at December 31, 2022	38		4		41
Liability recognized	2		7		10
Payments	(5)		(8)		(13)
Balance at March 31, 2023	$	35	$	3	$	38

(In millions) Workforce reductions Plant closing and other Total
Balance at January 1, 2020 $ — $ — $ —
  Liability recognized 172 42 214
  Payments, utilization and translation (33) (39) (72)
Balance at December 31, 2020 $ 139 $ 3 $ 142
  Liability recognized 21 57 78
  Payments, utilization and translation (64) (52) (116)
Balance at December 31, 2021 $ 96 $ 8 $ 104
  Liability recognized 5 13 18
  Payments, utilization and translation (12) (14) (26)
Balance at March 31, 2022 $ 89 $ 7 $ 96
1The restructuring program liability was adjusted by $30 million in 2022 related to true-ups for completed workforce reductions and the decision not to close a facility in the Vehicle segment that was previously included in the program.

These restructuring program charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income - net, as appropriate. In Business Segment Information, these restructuring program charges are treated as Corporate items. See Note 1416 for additional information about business segments.

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Note ~~14.~~16. 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. Eaton's operating segments are Electrical Americas, Electrical Global, Aerospace, Vehicle, and eMobility. ~~On August 2, 2021, Eaton completed the sale of the Hydraulics business.~~ Operating profit includes the operating profit from intersegment sales. For additional information regarding Eaton's business segments, see Note 17 to the Consolidated Financial Statements contained in the ~~2021~~2022 Form 10-K.

Three months ended
March 31
(In millions) 2022 2021
Net sales
Electrical Americas $ 1,891 $ 1,622
Electrical Global 1,437 1,253
Hydraulics — 561
Aerospace 718 519
Vehicle 671 654
eMobility 126 83
Total net sales $ 4,843 $ 4,692
Segment operating profit (loss)
Electrical Americas $ 361 $ 332
Electrical Global 279 213
Hydraulics — 84
Aerospace 159 96
Vehicle 113 113
eMobility (3) (7)
Total segment operating profit 909 831
Corporate
Intangible asset amortization expense (128) (92)
Interest expense - net (32) (38)
Pension and other postretirement benefits income 19 14
Restructuring program charges (18) (16)
Other expense - net (131) (161)
Income before income taxes 619 538
Income tax expense 86 79
Net income 533 459
Less net income for noncontrolling interests (1) (1)
Net income attributable to Eaton ordinary shareholders $ 532 $ 458


	Three months ended March 31
(In millions)		2023		2022
Net sales
Electrical Americas		$	2,294	$	1,891
Electrical Global		1,500		1,437

Aerospace		803		718
Vehicle		739		671
eMobility		147		126
Total net sales		$	5,483	$	4,843

Segment operating profit (loss)
Electrical Americas		$	525	$	361
Electrical Global		274		279

Aerospace		180		159
Vehicle		107		113
eMobility		(4)		(3)
Total segment operating profit		1,082		909

Corporate
Intangible asset amortization expense		(124)		(128)
Interest expense - net		(50)		(32)
Pension and other postretirement benefits income		11		19


Restructuring program charges		(10)		(18)
Other expense - net		(148)		(131)
Income before income taxes		762		619
Income tax expense		123		86
Net income		639		533
Less net income for noncontrolling interests		(1)		(1)
Net income attributable to Eaton ordinary shareholders		$	638	$	532

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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 improving the quality of life and protecting the environment for people everywhere. We are guided by our commitment to do business right, to operate sustainably and to help our customers manage power – today and well into the future. By capitalizing on the global growth trends of electrification and digitalization, we're accelerating the planet's transition to renewable energy, helping to solve the world's most urgent power management challenges, and doing what's best for our stakeholders and all of society.

Eaton’s businesses are well-positioned to take advantage of secular growth trends related to the energy transition from fossil fuels to renewables. We are responding to these trends by innovating solutions that transform the electrical power value chain, investing in electrical vehicle markets, increasing our focus on electrification, and employing digital technologies for power management. The Company’s innovations are expected to enable the integration of renewables and sustainability solutions, with new types of equipment, services, and software. These strategic focus areas are an important part of our response to climate change.

Additionally, over the past several years, Eaton has completed a number of transactions to add higher growth, better margin businesses to its portfolio. These portfolio updates have the Company better aligned with secular growth trends and well positioned for expected further growth. These changes to our portfolio of businesses along with double digit organic sales growth and operational performance has led to 20% growth in our net income per share in the first quarter of 2023 compared to the first quarter of 2022.

Founded in 1911, ~~Eaton has been~~2023 marks Eaton's 100th anniversary of being listed on the New York Stock ~~Exchange for nearly a century.~~Exchange. We reported revenues of ~~$19.6~~$20.8 billion in ~~2021~~2022 and serve customers in more than 170 countries.

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, strong returns, and align with secular trends and its power management strategies. During ~~2021~~2022 and ~~2022,~~2023, Eaton ~~has completed a number of transactions~~continued to selectively add businesses to strengthen its portfolio.

Acquisitions of businesses and investments in associate companies

Date of acquisition

Business segment

~~Tripp Lite~~

~~March 17, 2021~~

~~Electrical Americas~~

A leading supplier of power quality products and connectivity solutions including single-phase uninterruptible power supply systems, rack power distribution units, surge protectors, and enclosures for data centers, industrial, medical, and communications markets in the Americas.

~~Green Motion SA~~

~~March 22, 2021~~

~~Electrical Global~~

~~A leading designer and manufacturer of electric vehicle charging hardware and related software.~~

~~HuanYu High Tech~~

~~March 29, 2021~~

~~Electrical Global~~

~~A 50 percent stake in HuanYu High Tech, a subsidiary of HuanYu Group that manufactures and markets low-voltage circuit breakers and contactors in China, and throughout the Asia-Pacific region.~~

~~Mission Systems~~

~~June 1, 2021~~

~~Aerospace~~

~~A leading manufacturer of air-to-air refueling systems, environmental systems, and actuation primarily for defense markets.~~

~~Jiangsu YiNeng Electric's busway business~~

~~June 25, 2021~~

~~Electrical Global~~

~~A 50 percent stake in Jiangsu YiNeng Electric's busway business which manufactures and markets busway products in China.~~

Royal Power Solutions

January 5, 2022

eMobility

A manufacturer of high-precision electrical connectivity components used in electric vehicle, energy management, industrial and mobility markets.

~~Divestiture of~~Jiangsu Huineng Electric Co., Ltd’s circuit breaker business

~~Date of divestiture~~July 1, 2022

~~Business segment~~Electrical Global

~~Hydraulics~~

A 50 percent stake in Jiangsu Huineng Electric Co., Ltd's circuit breaker business which manufactures and markets low-voltage circuit breakers in China.

Jiangsu Ryan Electrical Co. Ltd.

~~August 2, 2021~~April 23, 2023

~~Hydraulics~~Electrical Global

A 49 percent stake in Jiangsu Ryan Electrical Co. Ltd., a manufacturer of power distribution and sub-transmission transformers in China.

Additional information related to acquisitions and divestiture of businesses is presented in Note 2.

Table of Contents

~~Restructuring~~

In the second quarter of 2020, Eaton decided to undertake a multi-year restructuring program to reduce its cost structure and gain efficiencies in its business segments and at corporate in order to respond to declining market conditions brought on by the COVID-19 pandemic. Since the inception of the program, the Company has incurred charges of $310 million. These restructuring activities are expected to incur additional expenses of $40 million in 2022 primarily comprised of plant closing and other costs, resulting in total estimated charges of $350 million for the entire program. The projected mature year savings from these restructuring actions are expected to be $250 million when fully implemented in 2023. Additional information related to this restructuring is presented in Note 13.

~~Summary of Results of Operations~~

~~A summary of Eaton’s Net sales, Net income attributable to Eaton ordinary shareholders, and Net income per share attributable to Eaton ordinary shareholders - diluted is as follows:~~

Three months ended
March 31
(In millions except for per share data) 2022 2021
Net sales $ 4,843 $ 4,692
Net income attributable to Eaton ordinary shareholders 532 458
Net income per share attributable to Eaton ordinary shareholders - diluted $ 1.33 $ 1.14

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 ~~exclude certain transactions, allowing~~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) 2022 2021
Acquisition integration, divestiture charges and transaction costs $ 29 $ 46
Gain on the sale of the Hydraulics business (24) —
Total before income taxes 5 46
Income tax benefit 1 9
Total after income taxes $ 4 $ 37
Per ordinary share - diluted $ 0.01 $ 0.09


	Three months ended March 31
(In millions except for per share data)		2023		2022
Acquisition integration, divestiture charges and transaction costs		$	13	$	29
Gain on the sale of the Hydraulics business		—		(24)
Total before income taxes		13		5
Income tax benefit		3		1
Total after income taxes		$	11	$	4
Per ordinary share - diluted		$	0.03	$	0.01

Acquisition integration, divestiture charges and transaction costs in 2023 and 2022 are primarily related to the ~~acquisitions~~acquisition of Royal Power Solutions ~~Souriau-Sunbank Connection Technologies, Green Motion, Tripp Lite,~~ and ~~Mission Systems,~~other acquisitions completed prior to 2022, and other charges and income to acquire and exit businesses. Charges in 2021 are primarily related to the divestiture of the Hydraulics business, the acquisitions of Tripp Lite, Mission Systems, Souriau-Sunbank Connection Technologies, and Ulusoy Elektrik Imalat Taahhut ve Ticaret A.S., and other charges to exit businesses. These charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other income - net. In Business Segment Information in Note ~~14,~~16, the charges were included in Other expense - net.

Restructuring

In the second quarter of 2020, Eaton initiated a multi-year restructuring program to reduce its cost structure and gain efficiencies in its business segments and at corporate in order to respond to declining market conditions brought on by the COVID-19 pandemic. Since the inception of the program, the Company has incurred charges of $335 million. These restructuring activities are expected to be completed in 2023 with total estimated charges of $350 million cumulatively for the entire program and projected mature year savings of $250 million when fully implemented. The remaining charges in 2023 are expected to relate primarily to plant closing and other costs. Additional information related to this restructuring is presented in Note 15.

Intangible Asset Amortization Expense

Intangible asset amortization expense is as follows:


	Three months ended March 31
(In millions except for per share data)		2023		2022
Intangible asset amortization expense		$	124	$	128
Income tax benefit		27		29
Total after income taxes		$	97	$	99
Per ordinary share - diluted		$	0.24	$	0.25

Table of Contents

~~Intangible Asset Amortization Expense~~

~~Intangible asset amortization expense is as follows:~~

Three months ended
March 31
(In millions except for per share data) 2022 2021
Intangible asset amortization expense $ 128 $ 92
Income tax benefit 29 22
Total after income taxes $ 99 $ 70
Per ordinary share - diluted $ 0.25 $ 0.18

Consolidated Financial Results


		Three months ended March 31						Increase (decrease)						Three months ended March 31		Increase (decrease)
(In millions except for per share data)	(In millions except for per share data)		2022				2021				(In millions except for per share data)				2023				Increase (decrease)
Net sales	Net sales			$	4,843			$	4,692		3	%	Net sales			$	5,483			$	4,843		13	%
Gross profit	Gross profit			1,574				1,508			4	%	Gross profit			1,884				1,574			20	%
Percent of net sales	Percent of net sales			32.5		%		32.1		%			Percent of net sales			34.4		%		32.5		%
Income before income taxes	Income before income taxes			619				538			15	%	Income before income taxes			762				619			23	%
Net income	Net income			533				459			16	%	Net income			639				533			20	%
Less net income for noncontrolling interests	Less net income for noncontrolling interests			(1)				(1)					Less net income for noncontrolling interests			(1)				(1)
Net income attributable to Eaton ordinary shareholders	Net income attributable to Eaton ordinary shareholders			532				458			16	%	Net income attributable to Eaton ordinary shareholders			638				532			20	%
Excluding acquisition and divestiture charges, after-tax	Excluding acquisition and divestiture charges, after-tax			4				37					Excluding acquisition and divestiture charges, after-tax			11				4
Excluding restructuring program charges, after-tax	Excluding restructuring program charges, after-tax			14				12					Excluding restructuring program charges, after-tax			8				14
Excluding intangible asset amortization expense, after-tax	Excluding intangible asset amortization expense, after-tax			99				70					Excluding intangible asset amortization expense, after-tax			97				99
Adjusted earnings	Adjusted earnings			$	649			$	577		12	%	Adjusted earnings			$	753			$	649		16	%

Net income per share attributable to Eaton ordinary shareholders - diluted	Net income per share attributable to Eaton ordinary shareholders - diluted			$	1.33			$	1.14		17	%	Net income per share attributable to Eaton ordinary shareholders - diluted			$	1.59			$	1.33		20	%
Excluding per share impact of acquisition and divestiture charges, after-tax	Excluding per share impact of acquisition and divestiture charges, after-tax			0.01				0.09					Excluding per share impact of acquisition and divestiture charges, after-tax			0.03				0.01
Excluding per share impact of restructuring program charges, after-tax	Excluding per share impact of restructuring program charges, after-tax			0.03				0.03					Excluding per share impact of restructuring program charges, after-tax			0.02				0.03
Excluding per share impact of intangible asset amortization expense, after-tax	Excluding per share impact of intangible asset amortization expense, after-tax			0.25				0.18					Excluding per share impact of intangible asset amortization expense, after-tax			0.24				0.25
Adjusted earnings per ordinary share	Adjusted earnings per ordinary share			$	1.62			$	1.44		13	%	Adjusted earnings per ordinary share			$	1.88			$	1.62		16	%

Net Sales


Changes in Net sales are summarized as follows:			Three months ended March 31
	~~2022~~		2023
Organic growth			1015	%
~~Acquisitions of businesses~~	6	%
~~Divestiture of business~~	~~(12)~~	%
Foreign currency			~~(1)~~(2)	%
Total increase (decrease) in Net sales			313	%

Organic sales increased ~~10%~~15% in the first quarter of ~~2022 due~~2023 due to broad-based strength in end-markets of the Electrical Americas and Electrical Global business segments, strength in sales to commercial OEM and ~~the impact of the continued recovery of commercial aviation from the reduction of travel restrictions from the COVID-19 pandemic~~aftermarket in the Aerospace business ~~segment.Despite strong growth, many of our businesses continue to be impacted by supply chain disruptions or shortages, inflation, labor shortages,~~segment, and ~~plant shutdowns associated with lockdowns in various cities around the globe.~~

~~The acquisitions of Tripp Lite, Mission Systems,~~higher sales volumes including inflationary pricing recovery for both Vehicle and ~~Royal Power Solutions increased sales in the~~ ~~first quarter of 2022, while the divestiture of the Hydraulics~~eMobility business ~~reduced sales.~~segments.

~~Table of Contents~~

Gross Profit

Gross profit margin increased from ~~32.1% in the first quarter of 2021 to~~ 32.5% in the first quarter of 2022 to 34.4% in the first quarter of 2023 primarily due to higher ~~organic sales. Gross profit also improved due to the net impact of the acquisition of Tripp Lite~~sales volumes including inflationary pricing recovery. Conversely, wage and ~~Royal Power Solutions~~commodity inflation, and ~~the divestiture of the Hydraulics business. Conversely, commodity and logistics inflation~~operating inefficiencies had an unfavorable impact on gross margin, ~~during the first quarter of 2022,~~ despite offsetting ~~pricing~~price actions.

Income Taxes

Table of ~~2022.~~Contents

Net Income

~~Net income attributable to Eaton ordinary shareholders of $532 million~~Changes in the first quarter of 2022 increased 16% compared to Net income attributable to Eaton ordinary shareholders of $458 million in the first quarter of 2021. The increase in the first quarter of 2022 was primarily due to higher gross profit and lower acquisition and divestiture charges, partially offset by higher intangible asset amortization expense.

Net income per ordinary share increased to $1.33 in the first quarter of 2022 compared to $1.14 in the first quarter of 2021. The increase in Net income per ordinary share in the first quarter of 2022 was due to higher Net income attributable to Eaton ordinary shareholders and ~~the impact of the Company's share repurchases over the past year.~~

~~Adjusted Earnings~~

Adjusted earnings of $649 million in the first quarter of 2022 increased 12% compared to Adjusted earnings of $577 million in the first quarter of 2021. The increase in Adjusted earnings in the first quarter of 2022 was primarily due to higher Net income per share attributable to Eaton ordinary shareholders ~~adjusted for acquisition and divestiture charges, restructuring program charges, and intangible asset amortization expense.~~

Adjusted earnings per ordinary share increased to $1.62 in the first quarter of 2022 compared to $1.44 in the first quarter of 2021. The increase in Adjusted earnings per ordinary share in the first quarter of 2022 was due to higher Adjusted earnings and the impact of the Company's share repurchases over the past year.- diluted are summarized as follows:


	Three months ended
(In millions except for per share data)	Dollars		Per share
March 31, 2022	$	532	$	1.33
Business segment results of operations
Performance	160		0.40
Foreign currency	(13)		(0.03)
Corporate
Intangible asset amortization expense	2		0.01
Restructuring program charges	6		0.01
Acquisition and divestiture charges	(7)		(0.02)
Other corporate items	(29)		(0.07)
Tax rate impact	(13)		(0.03)

March 31, 2023	$	638	$	1.59

Business Segment Results of Operations

The following is a discussion of Net sales, operating profit and operating margin by business segment.

Electrical Americas


		Three months ended March 31						Increase (decrease)						Three months ended March 31		Increase (decrease)
(In millions)	(In millions)		2022				2021				(In millions)				2023				Increase (decrease)
Net sales	Net sales			$	1,891			$	1,622		17	%	Net sales			$	2,294			$	1,891		21	%

Operating profit	Operating profit			$	361			$	332		9	%	Operating profit			$	525			$	361		45	%
Operating margin	Operating margin			19.1		%		20.5		%			Operating margin			22.9		%		19.1		%

Changes in Net sales are summarized as follows:				Three months ended March 31
				2022
Organic growth				10		%
Acquisition of Tripp Lite				7		%

Total increase (decrease) in Net sales				17		%

Net sales increased 21% in the first quarter of 2023 compared to the first quarter of 2022 due to a 22% increase in organic sales with a small offset from negative currency translation. The increase in organic sales reflects broad-based strength in end-markets, with particular strength in commercial & institutional, utility, and data center end-markets.

The operating margin increased from 19.1% in the first quarter of 2022 to 22.9% in the first quarter of 2023 primarily due to higher sales volumes including inflationary pricing recovery, partially offset by wage and commodity inflation.

Table of Contents

Electrical Global


	Three months ended March 31						Increase (decrease)
(In millions)		2023				2022
Net sales			$	1,500			$	1,437		4	%

Operating profit			$	274			$	279		(2)	%
Operating margin			18.3		%		19.4		%

Changes in Net sales are summarized as follows:										Three months ended March 31
										2023
Organic growth										8	%

Divestiture										(1)	%
Foreign currency										(3)	%
Total increase in Net sales										4	%

The increase in organic sales in the first quarter of ~~2022 reflects broad-based~~2023 was primarily due to strength in ~~end-markets, with particular strength in residential~~utility, data center and ~~industrial.~~distributed IT end-markets.

The operating margin decreased from ~~20.5% in the first quarter of 2021 to 19.1%~~19.4% in the first quarter of 2022 to 18.3% in the first quarter of 2023 primarily due to operating inefficiencies from ongoing, but improving, supply chain constraints and higher costs to support growth initiatives, partially offset by higher sales volumes including inflationary pricing recovery.

Aerospace


	Three months ended March 31						Increase (decrease)
(In millions)		2023				2022
Net sales			$	803			$	718		12	%

Operating profit			$	180			$	159		13	%
Operating margin			22.5		%		22.1		%

Changes in Net sales are summarized as follows:										Three months ended March 31
										2023
Organic growth										13	%


Foreign currency										(1)	%
Total increase in Net sales										12	%

The increase in organic sales in the first quarter of 2023 was primarily due to strength in sales to commercial OEM and aftermarket.

The operating margin increased from 22.1% in the first quarter of 2022 to 22.5% in the first quarter of 2023 primarily due to higher sales volumes including inflationary pricing recovery, partially offset by commodity and wage inflation.

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Vehicle


	Three months ended March 31						Increase (decrease)
(In millions)		2023				2022
Net sales			$	739			$	671		10	%

Operating profit			$	107			$	113		(5)	%
Operating margin			14.5		%		16.8		%

Changes in Net sales are summarized as follows:										Three months ended March 31
										2023
Organic growth										11	%


Foreign currency										(1)	%
Total increase in Net sales										10	%

The increase in organic sales in the first quarter of 2023 was primarily due to strength in the North America truck and light vehicle markets, South American truck, bus and agriculture markets, and European light vehicle markets.

The operating margin decreased from 16.8% in the first quarter of 2022 to 14.5% in the first quarter of 2023 primarily due to commodity and ~~logistics~~wage inflation, ~~supply chain disruptions,~~ and ~~increased costs for growth related investments,~~operating inefficiencies, partially offset by higher sales volumes including inflationary pricing recovery.

eMobility


	Three months ended March 31						Increase (decrease)
(In millions)		2023				2022
Net sales			$	147			$	126		17	%

Operating loss			$	(4)			$	(3)		(33)	%
Operating margin			(2.7)		%		(2.4)		%

Changes in Net sales are summarized as follows:										Three months ended March 31
										2023
Organic growth										18	%


Foreign currency										(1)	%
Total increase in Net sales										17	%

The increase in organic sales in the first quarter of 2023 was due to strength in North American and European markets primarily due to robust demand for electric vehicles.

The operating margin decreased from negative 2.4% in the ~~acquisition~~first quarter of ~~Tripp Lite.~~2022 to negative 2.7% in the first quarter of 2023 primarily due to manufacturing start-up costs associated with new electric vehicle programs, and wage and commodity inflation, partially offset by higher sales volumes including inflationary pricing recovery.

Table of Contents

~~Electrical Global~~Corporate Expense

Three months ended
March 31 Increase (decrease)
(In millions) 2022 2021
Net sales $ 1,437 $ 1,253 15 %
Operating profit $ 279 $ 213 31 %
Operating margin 19.4 % 17.0 %
Changes in Net sales are summarized as follows: Three months ended
March 31
2022
Organic growth 18 %
Foreign currency (3) %
Total increase (decrease) in Net sales 15 %


	Three months ended March 31					Increase (decrease)
(In millions)		2023			2022
Intangible asset amortization expense			$	124		$	128	(3)	%
Interest expense - net			50			32		56	%
Pension and other postretirement benefits income			(11)			(19)		(42)	%


Restructuring program charges			10			18		(44)	%
Other expense - net			148			131		13	%
Total corporate expense			$	320		$	290	10	%

~~The increase in organic sales~~Total corporate expense was $320 million in the first quarter of ~~2022 was primarily due~~2023 compared to ~~broad-based strength in end-markets, with particular strength in commercial and industrial markets, including oil and gas.~~

~~The operating margin increased from 17.0% in the first quarter of 2021 to 19.4% in the first quarter of 2022 primarily due to higher organic sales.~~

~~Hydraulics~~

On August 2, 2021, Eaton completed the sale of the Hydraulics business segment. For the three months ended March 31, 2021, the Hydraulics segment generated net sales of $561 million and operating profit of $84 million.

~~Aerospace~~

Three months ended
March 31 Increase (decrease)
(In millions) 2022 2021
Net sales $ 718 $ 519 38 %
Operating profit $ 159 $ 96 66 %
Operating margin 22.1 % 18.5 %
Changes in Net sales are summarized as follows: Three months ended
March 31
2022
Organic growth 15 %
Acquisition of Mission Systems 25 %
Foreign currency (2) %
Total increase (decrease) in Net sales 38 %

~~The increase in organic sales in the first quarter of 2022 was primarily due to the continued recovery of commercial aviation from the reduction of travel restrictions from the COVID-19 pandemic.~~

~~The operating margin increased from 18.5% in the first quarter of 2021 to 22.1% in the first quarter of 2022 primarily due to higher organic sales volumes and favorable product mix.~~

~~Table of Contents~~

~~Vehicle~~

Three months ended
March 31 Increase (decrease)
(In millions) 2022 2021
Net sales $ 671 $ 654 3 %
Operating profit $ 113 $ 113 — %
Operating margin 16.8 % 17.3 %
Changes in Net sales are summarized as follows: Three months ended
March 31
2022
Organic growth 3 %
Total increase (decrease) in Net sales 3 %

The increase in organic sales in the first quarter of 2022 was primarily due to strength in the North American truck aftermarket and the South American truck, bus and agriculture markets, partially offset by weakness in global light vehicle markets.

The operating margin decreased from 17.3% in the first quarter of 2021 to 16.8% in the first quarter of 2022 primarily due to commodity and logistics inflation, partially offset by higher organic sales.

~~eMobility~~

Three months ended
March 31 Increase (decrease)
(In millions) 2022 2021
Net sales $ 126 $ 83 52 %
Operating profit (loss) $ (3) $ (7) 57 %
Operating margin (2.4) % (8.4) %
Changes in Net sales are summarized as follows: Three months ended
March 31
2022
Organic growth 7 %
Acquisition of Royal Power Solutions 46 %
Foreign currency (1) %
Total increase (decrease) in Net sales 52 %

~~The increase in organic sales in the first quarter of 2022 was primarily due to strength in North America truck and off road markets.~~

~~The operating margin increased from negative 8.4% in the first quarter of 2021 to negative 2.4% in the first quarter of 2022 primarily due to the acquisition of Royal Power Solutions.~~

~~Table of Contents~~

~~Corporate Expense~~

Three months ended
March 31 Increase (decrease)
(In millions) 2022 2021
Intangible asset amortization expense $ 128 $ 92 39 %
Interest expense - net 32 38 (16) %
Pension and other postretirement benefits income (19) (14) 36 %
Restructuring program charges 18 16 13 %
Other expense - net 131 161 (19) %
Total corporate expense $ 290 $ 293 (1) %

~~Total corporate expense was~~ $290 million in the first quarter of ~~2022 compared to Total corporate expense of $293 million in the first quarter of 2021.~~2022. The ~~decrease~~increase in Total corporate ~~expense~~expense for the first quarter of ~~2022~~2023 was primarily due to ~~lower Other expense - net, lower~~higher Interest expense - net and ~~higher Pension and other postretirement benefits income, partially offset by higher Intangible asset amortization expense.~~Other expense - net. The ~~decrease~~increase in Other expense - net is primarily due to the 2022 gain on sale of the Hydraulics business discussed in Note ~~2 and lower acquisition and divestiture charges.~~2.

2826

Table of Contents

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 March 3, 2023, a subsidiary of Eaton issued Euro denominated notes (2023 Euro Notes) in a private issuance with a face value of €300 million ($318 million). The floating rate notes are due June 3, 2024 with interest payable quarterly based on the three-month Euro Interbank Offered Rate plus 25 basis points. Proceeds from the Euro Notes were used to pay down outstanding U.S. dollar commercial paper. The 2023 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton. The 2023 Euro Notes contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2023 Euro Notes at a purchase price of 100.5% of the principal amount plus accrued and unpaid interest. The 2023 Euro Notes are subject to customary non-financial covenants.

The Company maintains revolving credit facilities consisting of a $500 million 364-day revolving credit facility that will expire on October ~~3, 2022~~2, 2023 and a ~~$2,000~~$2,500 million five-year revolving credit facility that will expire on October ~~4, 2026.~~1, 2027. The revolving credit facilities totaling ~~$2,500~~$3,000 million are used to support commercial paper borrowings and are 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 Eaton’s revolving credit facilities at March 31, ~~2022.~~2023. The Company maintains access to the commercial paper markets through its ~~$2,500~~$3,000 million commercial paper program, of which ~~$1,096~~$59 million was outstanding on March 31, ~~2022.~~2023, used primarily to manage fluctuations in working capital.

~~Eaton received proceeds of $3.1 billion from~~In 2022, the ~~sale of its Hydraulics business in 2021. The~~ Company paid ~~$4.45 billion to acquire Tripp Lite and Mission Systems in 2021, and $612~~$610 million to acquire Royal Power Solutions ~~in 2022.~~and received cash of $22 million from Danfoss A/S to fully settle all post-closing adjustments from the sale of the Hydraulics business.

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, ~~2022~~2023 and December 31, ~~2021,~~2022, Eaton had cash of ~~$237~~$235 million and ~~$297~~$294 million, short-term investments of ~~$268~~$289 million and ~~$271~~$261 million, and short-term debt of ~~$1,116~~$87 million and ~~$13~~$324 million, respectively. Eaton believes it has the operating flexibility, cash flow, cash and short-term investment balances, availability under existing revolving credit facilities, 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.

Eaton was 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							Three months ended March 31
(In millions)	(In millions)	2022		2021		Change from 2021		(In millions)	2023		2022		Change from 2022
Net cash provided by operating activities	Net cash provided by operating activities	$	42	$	260	$	(218)	Net cash provided by operating activities	$	335	$	42	$	293
Net cash used in investing activities	Net cash used in investing activities	(762)		(2,201)		1,439		Net cash used in investing activities	(124)		(762)		638
Net cash provided by financing activities		652		1,875		(1,223)
Net cash provided by (used in) financing activities								Net cash provided by (used in) financing activities	(281)		652		(933)
Effect of currency on cash	Effect of currency on cash	8		(11)		19		Effect of currency on cash	11		8		3
Increase in cash classified as held for sale		—		(7)		7

Total decrease in cash	Total decrease in cash	$	(60)	$	(84)			Total decrease in cash	$	(59)	$	(60)

Operating Cash Flow

Net cash provided by operating activities ~~decreased~~increased by ~~$218~~$293 million in the first three months of ~~2022~~2023 compared to ~~2021. The decrease in net cash provided by operating activities in the first three months of~~ 2022 ~~was~~ primarily due to ~~higher~~lower working capital balances ~~to support the Company’s organic growth,~~and higher net income in 2023, partially offset by ~~lower pension contributions in 2022 due to a $200 million contribution to Eaton's U.S. qualified pension plan in 2021,~~ cash received from the termination of interest rate swaps ~~in 2022, and higher net income~~ in 2022.

Investing Cash Flow

Net cash used in investing activities decreased by ~~$1,439~~$638 million in the first three months of ~~2022~~2023 compared to ~~2021. The decrease in the use of cash in the first three months of~~ 2022 ~~was~~ primarily driven by no cash paid for business acquisitions in ~~2022~~2023 compared to cash paid for business acquisitions of $612 million ~~compared to cash paid~~ in ~~2021 for business acquisitions~~2022.

Table of ~~$1,700 million, and net purchases of short-term investments of $1 million in 2022 compared to $280 million in 2021.~~Contents

Financing Cash Flow

Net cash ~~provided by~~used in financing activities ~~decreased~~increased by ~~$1,223~~$933 million in the first three months of ~~2022~~2023 compared to ~~2021. The decrease in the source of cash in the first three months of~~ 2022 ~~was~~ primarily due to ~~no proceeds from borrowings in 2022 compared to proceeds from borrowings~~net payments of ~~$1,798~~short-term debt of $236 million in ~~2021, partially offset by~~2023 compared to net proceeds of short-term debt of $1,105 million in 2022, partially offset by higher proceeds from borrowings of $318 million in 2023 compared to ~~$463~~no proceeds from borrowings in 2022, and no repurchase of shares in 2023 compared to repurchase of shares of $86 million in ~~2021.~~

~~Table of Contents~~

2022.

Uses of Cash

Capital Expenditures

Capital expenditures were ~~$115~~$126 million and ~~$119~~$115 million in the first three months of ~~2022~~2023 and ~~2021,~~2022, respectively. Eaton expects approximately ~~$650~~$700 million in capital expenditures in ~~2022.~~2023.

Dividends

Cash dividend payments were ~~$320~~$334 million and ~~$300~~$320 million in the first three months of 2023 and 2022, ~~and 2021,~~ respectively. ~~On February 23, 2022, Eaton's Board of Directors declared a quarterly dividend of $0.81 per ordinary share, a 7% increase over the dividend paid in the fourth quarter of 2021.~~ 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 ~~2022.~~2023.

Share Repurchases

On February 27, 2019, the Board of Directors adopted a share repurchase program for share repurchases up to $5.0 billion of ordinary shares (2019 Program). On February 23, 2022, the Board renewed the 2019 Program by providing authority for up to $5.0 billion in repurchases to be made during the three-year period commencing on that date (2022 Program). Under the 2022 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. InDuring the ~~first~~ three months ofended March 31, 2023, no ordinary shares were repurchased. During the three months ended March 31, 2022, 0.6 million ordinary shares were repurchased under the 2022 program in the open market at a total cost of $86 million. ~~In the first three months of 2021, 0.5~~At March 31, 2023, there is $4,714 million ~~ordinary shares were repurchased~~still available for share repurchases under the ~~2019 Program in the open market at a total cost of $59 million.~~2022 Program. The Company will continue to pursue share repurchases in ~~2022~~2023 depending on market conditions and capital levels.

Acquisition of Businesses

The Company paid cash of $612 million ~~and $1,700 million~~ to acquire ~~businesses~~a business in the first three months of ~~2022 and 2021, respectively.~~2022. There were no business acquisitions in the first three months of 2023. 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, ~~2022,~~2023, the Company had Short-term debt of ~~$1,116~~$87 million, Current portion of long-term debt of ~~$1,728~~$8 million, and Long-term debt of ~~$6,763~~$8,701 million.

~~Table of Contents~~

Supply Chain Finance Program

~~The Company negotiates payment terms directly with its suppliers for the purchase of goods and services. In addition, a~~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. 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. ~~The amounts due to the financial institution for suppliers that participate in~~For additional information on the SCF program, ~~are included in Accounts payable on the Company’s Consolidated Balance Sheets, and the associated payments are included in operating activities on the Condensed Consolidated Statements~~see Note 7.

Table of Cash Flows. At  March 31, 2022 and December 31, 2021, Accounts payable included $168 million and $151 million, respectively, payable to suppliers that have elected to participate in the SCF program.Contents

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) ~~and~~, September 15, 2017 (the 2017 Indenture) and August 23, 2022 (as supplemented by the First and Second Supplemental Indentures of the same date, the 2022 Indenture). The senior notes of Eaton Corporation are registered under the Securities Act of 1933, as amended (the Registered Senior Notes). Eaton ~~Corporation is also the issuer of one outstanding series of privately placed debt securities (the PPNs), and Eaton~~ Capital Unlimited Company, ~~another~~a subsidiary of Eaton, is the issuer of ~~four~~five outstanding series of debt securities sold in offshore transactions under Regulation S promulgated under the Securities Act (the Eurobonds). The ~~PPNs, 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, for example, see Note 8 of the Financial Statements included herewith), together with the credit facilities described above under Liquidity and Financial Condition ~~and Liquidity~~ (the Credit Facilities), are guaranteed by Eaton and 1817 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, ~~2022,~~2023, 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-K filed on February ~~24, 2021~~23, 2023 (10-K Exhibit 22), details the primary obligors and guarantors with respect to the guaranteed Registered Senior Notes.

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-K 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 is 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.

~~Generally,~~Though the terms of the indentures vary slightly, generally, each guarantee of the Registered Senior Notes by a guarantor ~~other than~~that is a subsidiary of Eaton Corporation provides that it will be automatically and unconditionally released and discharged ~~upon:~~under certain circumstances, including, but not limited to:

(a)the consummation of ~~any transaction~~certain types of transactions permitted under the applicable indenture, ~~resulting~~including one that results in such guarantor ceasing to be a ~~subsidiary, such as a sale to a third party;~~subsidiary; and

(b)for Registered Senior Notes issued under the 2022 Indenture, 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), ~~becoming~~becomes prohibited by any applicable law, rule or regulation or by any contractual obligation; or

~~(c)~~(d)such guarantee ~~resulting~~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)~~; or~~.

~~(d)~~such guarantor becoming a controlled foreign corporation within the meaning Section 957(a) of the Internal Revenue Code (a CFC), or an entity the material assets of which is limited to equity interests of a CFC.

Notwithstanding the foregoing, each guarantee by a direct or indirect parent of Eaton Corporation (other than Eaton) provides that it will be released only under the circumstances described in subparagraphs (b) and (c) above.

The guarantee of Eaton does not contain any release provisions.

~~Table of Contents~~

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 Indenture provides 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.

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Summarized Financial Information of Guarantors and Issuers

(In millions) March 31,
2022 December 31,
2021
Current assets $ 3,264 $ 3,032
Noncurrent assets 11,578 11,553
Current liabilities 4,944 3,950
Noncurrent liabilities 8,349 8,461
Amounts due to subsidiaries that are non-issuers and non-guarantors - net 16,621 18,006
Three months ended
March 31
(In millions) 2022
Net sales $ 2,550
Sales to subsidiaries that are non-issuers and non-guarantors 215
Cost of products sold 2,125
Expense from subsidiaries that are non-issuers and non-guarantors - net 89
Net income 42


(In millions)	March 31, 2023		December 31, 2022
Current assets	$	3,206	$	3,363
Noncurrent assets	12,919		12,938
Current liabilities	2,634		2,948
Noncurrent liabilities	10,378		10,047
Amounts due to subsidiaries that are non-issuers and non-guarantors - net	16,565		16,285

(In millions)			Three months ended March 31, 2023
Net sales			$	3,144
Sales to subsidiaries that are non-issuers and non-guarantors			256
Cost of products sold			2,505
Expense from subsidiaries that are non-issuers and non-guarantors - net			164
Net income			28

The financial information presented is that of Eaton Corporation 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 Eaton Corporation 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.

FORWARD-LOOKING STATEMENTS

This Form 10-Q Report contains forward-looking statements concerning our acquisition strategy, litigation, expected capital expenditures, future dividend payments, anticipated share repurchases, and expected restructuring program charges and benefits. These statements may discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to Eaton, based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “possible,” “potential,” “predict,” “project” or other similar words, phrases or expressions. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside Eaton’s control. The following factors could cause actual results to differ materially from those in the forward-looking statements: the course of the COVID-19 pandemic, including government responses thereto and the rate of global economic recovery therefrom; unanticipated changes in the markets for the Company’s business segments; unanticipated downturns in business relationships with customers or their purchases from us; the availability of credit to customers and suppliers; supply chain disruptions, competitive pressures on sales and pricing; unanticipated changes in the cost of material, labor and other production costs, or unexpected costs that cannot be recouped in product pricing; the introduction of competing technologies; unexpected technical or marketing difficulties; unexpected claims, charges, litigation or dispute resolutions; strikes or other labor unrest; the impact of acquisitions and divestitures; unanticipated difficulties integrating acquisitions; new laws and governmental regulations; interest rate changes; tax rate changes or exposure to additional income tax liability; stock market and currency fluctuations; war, natural disasters, civil or political unrest or terrorism; and unanticipated deterioration of economic and financial conditions in the United States and around the world. Eaton does not assume any obligation to update these forward-looking statements.

~~Table of Contents~~

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in exposures to market risk since December 31, ~~2021.~~2022.

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ITEM 4.CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures - Pursuant to SEC Rule 13a-15, an evaluation was performed under the supervision and with the participation of Eaton’s management, including Craig Arnold - Principal Executive Officer; and Thomas B. Okray - Principal Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, management concluded that Eaton’s disclosure controls and procedures were effective as of March 31, ~~2022.~~2023.

Disclosure controls and procedures are designed to ensure 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.

During the first quarter of ~~2022,~~2023, 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 current legal proceedings is presented in Note 810 of the Notes to the condensed consolidated financial statements.

ITEM 1A.RISK FACTORS.

“Item 1A. Risk Factors” in Eaton's ~~2021~~2022 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 ~~2021~~2022 Form ~~10-K, except as follows:~~

Eaton uses a variety of raw materials and components in its businesses, and significant shortages, price increases or supplier insolvencies, or similar challenges for our customers could adversely impact our results of operations.

Eaton's major requirements for raw materials are described in Item 1 “Raw Materials” of our Form 10-K for the year ended December 31, 2021. Shortages have affected the prices Eaton's businesses are charged as global economies recover from the COVID-19 pandemic.

Additionally, some of our suppliers of component parts and logistics have increased their prices in response to increases in their costs of raw materials, energy and/or labor. If we are unable to increase prices commensurately with increased costs without compromising the competitive position of our products and services, our results could be negatively impacted. These economic conditions have also impacted customers in certain of our end markets, potentially affecting short-term demand for some of our products. These conditions may be exacerbated by Russia's invasion of Ukraine and the related economic and other retaliatory measures taken by the United States, the European Union and other nations. While Russia's invasion of Ukraine has not had a material impact on Eaton’s results to date, it is impossible to determine its outcome, or how it will affect global macroeconomic conditions generally in the future. Should these trends continue or worsen, the Company and/or some of our customers may be impacted, which could have a material adverse impact on our operating results.

10-K.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During the first quarter of ~~2022, 0.6 million ordinary~~2023, there were no shares were repurchased in the open market at a total cost of $86 million. These shares were repurchased under the program approved by the Board on February 23, 2022 (the 2022 Program). A summary of the shares repurchased in the first quarter of 2022 is as follows:

Month Total number
of shares
purchased Average
price paid
per share Total number of
shares purchased as
part of publicly
announced
plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions)
January — $ — — $ 1,972
February — $ — — $ 5,000
March 584,539 $ 147.22 584,539 $ 4,914
Total 584,539 $ 147.22 584,539

repurchased.

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ITEM 6.EXHIBITS.

Eaton Corporation plc

First Quarter ~~2022~~2023 Report on Form 10-Q


3 (i)						Certificate of Incorporation — Incorporated by reference to the Form S-8 filed November 30, 2012

3 (ii)						Amended and Restated Memorandum and Articles of Incorporation — Incorporated by reference to the Form 8-K filed on May 1, 2017

4.1						Description of Eaton Corporation plc’s Securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.1 of the registrant's Form 10-K filed on February 26, 2020)

4.2						Indenture dated as of November 20, 2012, among Turlock Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 of Eaton Corporation plc's Form 8-K Current Report filed on November 26, 2012 (Commission File No. 333-182303))

4.3						Supplemental Indenture No. 1, dated as of November 30, 2012, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 of the registrant's Form S-4 filed on September 6, 2013)

4.4						Supplemental Indenture No. 2, dated as of January 8, 2013, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference Exhibit 4.3 of the registrant's Form S-4 filed on September 6, 2013)

4.5						Supplemental Indenture No. 3, dated as of December 20, 2013, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference Exhibit 4.4 of the registrant's Form 10-K filed on February 28, 2018)

4.6						Supplemental Indenture No. 4, dated as of December 20, 2017 and effective as of January 1, 2018, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference Exhibit 4.5 of the registrant's Form 10-K filed on February 28, 2018)

4.7						Supplemental Indenture No. 5, dated as of February 16, 2018, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference Exhibit 4.6 of the registrant's Form 10-K filed on February 28, 2018)

4.8						Indenture dated as of August 23, 2022, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee

4.9						First Supplemental Indenture dated as of August 23, 2022, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee

4.10						Second Supplemental Indenture dated as of August 23, 2022, among Eaton Corporation, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee

4.11						Pursuant to Regulation S-K Item 601(b)(4), Eaton agrees to furnish to the SEC, upon request, a copy of the instruments defining the rights of holders of its long-term debt other than those set forth in Exhibits (4.2 - 4.7) hereto

10.1						5-Year Revolving Credit Agreement, dated as of October ~~4, 2021,~~3, 2022, among Eaton Corporation, ~~plc, Eaton Corporation, Eaton Capital Unlimited,~~ the guarantors from time to time party thereto, the several lenders from time to time parties thereto, Citibank, N.A., as Administrative Agent, Citibank, N.A., JPMorgan Chase Bank, N.A., and BofA Securities, Inc.~~, BNP Paribas Securities Corp., Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding, Inc.,~~ as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent and Bank of America, N.A.~~, BNP Paribas, Deutsche Bank AG New York Branch and Morgan Stanley Senior Funding, Inc.,~~ as documentation ~~agents, incorporated by reference to Exhibit 99.1 to The Form 8-K filed by the registrant on October 8, 2021.~~agent.

10.2						364-Day Revolving Credit Agreement, dated as of October ~~4, 2021,~~3, 2022, among Eaton Corporation, ~~plc, Eaton Corporation, Eaton Capital Unlimited,~~ the guarantors from time to time party thereto, the several lenders from time to time parties thereto, Citibank, N.A., as Administrative Agent, Citibank, N.A., JPMorgan Chase Bank, N.A., and BofA Securities, ~~Inc., BNP Paribas Securities Corp., Deutsche Bank Securities Inc. and Morgan Stanley Senior Funding,~~ Inc., as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent and Bank of America, N.A.~~, BNP Paribas, Deutsche Bank AG New York Branch and Morgan Stanley Senior Funding, Inc.,~~ as documentation ~~agents, incorporated by reference to Exhibit 99.2 to The Form 8-K filed by the registrant on October 8, 2021.~~agent.

22						~~Table of Senior Notes, Issuer and Guarantors (incorporated by reference to the Form 10-K Report filed on February 24, 2021)~~

31.1						Certification of Principal Executive Officer (Pursuant to Rule 13a-14(a)) — Filed in conjunction with this Form 10-Q Report *

31.2						Certification of Principal Financial Officer (Pursuant to Rule 13a-14(a)) — Filed in conjunction with this Form 10-Q Report *

32.1						Certification of Principal Executive Officer (Pursuant to Rule 13a-14(b) as adopted pursuant to Section 906 of the Sarbanes-Oxley Act) — Filed in conjunction with this Form 10-Q Report *

32.2						Certification of Principal Financial Officer (Pursuant to Rule 13a-14(b) as adopted pursuant to Section 906 of the Sarbanes-Oxley Act) — Filed in conjunction with this Form 10-Q Report *

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101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. *

101.SCH						XBRL Taxonomy Extension Schema Document *

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document *

101.DEF						XBRL Taxonomy Extension Label Definition Document *

101.LAB						XBRL Taxonomy Extension Label Linkbase Document *

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document *

104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)


*						Submitted electronically herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 ~~3, 2022~~2, 2023

By:

/s/ Thomas B. Okray

Thomas B. Okray

Principal Financial Officer

(On behalf of the registrant and as Principal Financial Officer)

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TABLE OF CONTENTS
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS			2
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			2220
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			3330
ITEM 4. CONTROLS AND PROCEDURES			3331
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			3331
ITEM 1A. RISK FACTORS			3331

ITEM 2. UNRESTRICTED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			3431


ITEM 6. EXHIBITS			3532
SIGNATURES			3734


(In millions)	Preliminary Allocation		Measurement Period Adjustments		Final Allocation

Short-term investments	$	5	$	—	$	5
Accounts receivable	94		(1)		93
Inventory	184		(5)		179
Prepaid expenses and other current assets	6		(1)		5
Property, plant and equipment	6		(5)		1
Other intangible assets	630		(26)		604
Other assets	—		2		2
Accounts payable	(13)		—		(13)
Other current liabilities	(32)		(2)		(34)
Other noncurrent liabilities	(157)		(10)		(167)
Total identifiable net assets	723		(48)		675

Goodwill	928		48		976
Total consideration, net of cash received	$	1,651	$	—	$	1,651


(In millions)	January 1, 2022		Additions		Translation		March 31, 2022
Electrical Americas	$	7,417	$	5	$	6	$	7,428
Electrical Global	4,183		2		(65)		4,120

Aerospace	2,781		8		(36)		2,753
Vehicle	290		—		—		290
eMobility	80		284		—		364
Total	$	14,751	$	299	$	(95)	$	14,955


Month	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions)
January	—	$	—	—	$	1,972
February	—	$	—	—	$	5,000
March	584,539	$	147.22	584,539	$	4,914
Total	584,539	$	147.22	584,539