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 ~~September 30, 2023~~March 31, 2024

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 ~~399.3~~399.8 million Ordinary Shares outstanding as of ~~September 30, 2023.~~March 31, 2024.

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PART I — FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS.

EATON CORPORATION plc

CONSOLIDATED STATEMENTS OF INCOME

Three months ended
September 30 Nine months ended
September 30
(In millions except for per share data) 2023 2022 2023 2022
Net sales $ 5,880 $ 5,313 $ 17,229 $ 15,368
Cost of products sold 3,684 3,545 11,030 10,319
Selling and administrative expense 949 813 2,839 2,431
Research and development expense 187 165 553 498
Interest expense - net 33 37 124 100
Gain on sale of business — — — 24
Other expense (income) - net (52) 34 (56) (16)
Income before income taxes 1,079 720 2,739 2,060
Income tax expense 187 112 463 316
Net income 892 608 2,277 1,743
Less net income for noncontrolling interests (1) (1) (4) (2)
Net income attributable to Eaton ordinary shareholders $ 891 $ 607 $ 2,273 $ 1,741
Net income per share attributable to Eaton ordinary shareholders
Diluted $ 2.22 $ 1.52 $ 5.67 $ 4.34
Basic 2.23 1.52 5.70 4.36
Weighted-average number of ordinary shares outstanding
Diluted 401.6 400.3 400.9 400.9
Basic 399.4 398.4 399.0 398.9
Cash dividends declared per ordinary share $ 0.86 $ 0.81 $ 2.58 $ 2.43


	Three months ended March 31
(In millions except for per share data)	2024		2023
Net sales	$	5,943	$	5,483

Cost of products sold	3,725		3,599
Selling and administrative expense	1,025		904
Research and development expense	189		179
Interest expense - net	30		50

Other income - net	(26)		(11)
Income before income taxes	1,001		762
Income tax expense	179		123
Net income	822		639
Less net income for noncontrolling interests	(1)		(1)
Net income attributable to Eaton ordinary shareholders	$	821	$	638

Net income per share attributable to Eaton ordinary shareholders
Diluted	$	2.04	$	1.59
Basic	2.05		1.60

Weighted-average number of ordinary shares outstanding
Diluted	401.9		400.5
Basic	399.9		398.5

Cash dividends declared per ordinary share	$	0.94	$	0.86

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
September 30 Nine months ended
September 30
(In millions) 2023 2022 2023 2022
Net income $ 892 $ 608 $ 2,277 $ 1,743
Less net income for noncontrolling interests (1) (1) (4) (2)
Net income attributable to Eaton ordinary shareholders 891 607 2,273 1,741
Other comprehensive income (loss), net of tax
Currency translation and related hedging instruments (165) (483) 11 (1,015)
Pensions and other postretirement benefits 18 (4) 14 32
Cash flow hedges (21) (36) (7) 133
Other comprehensive income (loss) attributable to Eaton
ordinary shareholders (167) (522) 18 (850)
Total comprehensive income attributable to Eaton
ordinary shareholders $ 724 $ 85 $ 2,291 $ 891


	Three months ended March 31
(In millions)	2024		2023
Net income	$	822	$	639
Less net income for noncontrolling interests	(1)		(1)
Net income attributable to Eaton ordinary shareholders	821		638

Other comprehensive income (loss), net of tax
Currency translation and related hedging instruments	(53)		119
Pensions and other postretirement benefits	17		(2)
Cash flow hedges	(4)		15


Other comprehensive income (loss) attributable to Eaton ordinary shareholders	(40)		132

Total comprehensive income attributable to Eaton ordinary shareholders	$	781	$	770

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)	September 30, 2023		December 31, 2022		(In millions)	March 31, 2024	December 31, 2023
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash	Cash	$	348	$	294
Short-term investments	Short-term investments	1,558		261
Accounts receivable - net	Accounts receivable - net	4,460		4,076
Inventory	Inventory	3,713		3,430

Prepaid expenses and other current assets	Prepaid expenses and other current assets	904		685
Prepaid expenses and other current assets
Prepaid expenses and other current assets
Total current assets	Total current assets	10,983		8,746

Property, plant and equipment	Property, plant and equipment
Property, plant and equipment
Property, plant and equipment
Land and buildings
Land and buildings
Land and buildings	Land and buildings	2,174		2,129
Machinery and equipment	Machinery and equipment	6,228		5,885
Gross property, plant and equipment	Gross property, plant and equipment	8,403		8,013
Accumulated depreciation	Accumulated depreciation	(5,062)		(4,867)
Net property, plant and equipment	Net property, plant and equipment	3,341		3,146

Other noncurrent assets	Other noncurrent assets
Other noncurrent assets
Other noncurrent assets
Goodwill
Goodwill
Goodwill	Goodwill	14,781		14,796
Other intangible assets	Other intangible assets	5,158		5,485

Operating lease assets
Operating lease assets
Operating lease assets	Operating lease assets	600		570
Deferred income taxes	Deferred income taxes	349		330
Other assets	Other assets	2,076		1,940
Total assets	Total assets	$	37,289	$	35,014

Liabilities and shareholders’ equity
Liabilities and shareholders’ equity
Liabilities and shareholders’ equity	Liabilities and shareholders’ equity
Current liabilities	Current liabilities					Current liabilities
Short-term debt	Short-term debt	$	24	$	324
Current portion of long-term debt	Current portion of long-term debt	975		10
Accounts payable	Accounts payable	3,255		3,072
Accrued compensation	Accrued compensation	592		467

Other current liabilities	Other current liabilities	2,716		2,488
Other current liabilities
Other current liabilities
Total current liabilities	Total current liabilities	7,563		6,360

Noncurrent liabilities
Noncurrent liabilities
Noncurrent liabilities	Noncurrent liabilities
Long-term debt	Long-term debt	8,150		8,321
Pension liabilities	Pension liabilities	611		649
Other postretirement benefits liabilities	Other postretirement benefits liabilities	170		177
Operating lease liabilities	Operating lease liabilities	486		459
Deferred income taxes	Deferred income taxes	460		530
Other noncurrent liabilities	Other noncurrent liabilities	1,429		1,444
Total noncurrent liabilities	Total noncurrent liabilities	11,306		11,580

Shareholders’ equity	Shareholders’ equity
Ordinary shares (399.3 million outstanding in 2023 and 397.8 million in 2022)		4		4
Shareholders’ equity
Shareholders’ equity
Ordinary shares (399.8 million outstanding in 2024 and 399.4 million in 2023)
Capital in excess of par value	Capital in excess of par value	12,604		12,512
Retained earnings	Retained earnings	9,703		8,468
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(3,927)		(3,946)
Shares held in trust	Shares held in trust	(1)		(1)
Total Eaton shareholders’ equity	Total Eaton shareholders’ equity	18,383		17,038
Noncontrolling interests	Noncontrolling interests	36		38
Total equity	Total equity	18,420		17,075
Total liabilities and equity	Total liabilities and equity	$	37,289	$	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

Nine months ended
September 30
(In millions) 2023 2022
Operating activities
Net income $ 2,277 $ 1,743
Adjustments to reconcile to net cash provided by operating activities
Depreciation and amortization 695 716
Deferred income taxes (69) (74)
Pension and other postretirement benefits expense 13 39
Contributions to pension plans (83) (80)
Contributions to other postretirement benefits plans (15) (18)
Gain on sale of business — (24)
Changes in working capital (436) (968)
Other - net (56) 12
Net cash provided by operating activities 2,326 1,347
Investing activities
Capital expenditures for property, plant and equipment (514) (389)
Proceeds from sales of property, plant and equipment 54 166
Cash paid for acquisition of a business, net of cash acquired — (612)
Proceeds from (payments for) sale of business, net of cash sold (2) 31
Investments in associate companies (68) (42)
Purchases of short-term investments - net (1,304) (45)
Proceeds from (payments for) settlement of currency exchange contracts not designated as hedges - net 61 (34)
Other - net (9) (58)
Net cash used in investing activities (1,782) (983)
Financing activities
Proceeds from borrowings 818 1,995
Payments on borrowings (11) (2,008)
Short-term debt, net (295) 896
Cash dividends paid (1,035) (977)
Exercise of employee stock options 73 16
Repurchase of shares — (286)
Employee taxes paid from shares withheld (49) (60)
Other - net (9) (22)
Net cash used in financing activities (507) (445)
Effect of currency on cash 18 15
Total increase (decrease) in cash 54 (67)
Cash at the beginning of the period 294 297
Cash at the end of the period $ 348 $ 231



	Three months ended March 31
(In millions)	2024		2023
Operating activities
Net income	$	822	$	639
Adjustments to reconcile to net cash provided by operating activities
Depreciation and amortization	225		238
Deferred income taxes	32		17
Pension and other postretirement benefits expense	4		4
Contributions to pension plans	(46)		(29)
Contributions to other postretirement benefits plans	(4)		(5)


Changes in working capital	(524)		(498)







Other - net	(34)		(31)
Net cash provided by operating activities	475		335

Investing activities
Capital expenditures for property, plant and equipment	(183)		(126)


Proceeds from sales of property, plant and equipment	58		3

Sales (purchases) of short-term investments - net	150		(27)
Proceeds from settlement of currency exchange contracts not designated as hedges - net	11		41
Other - net	(3)		(14)
Net cash provided by (used in) investing activities	33		(124)

Financing activities
Proceeds from borrowings	—		318
Payments on borrowings	(4)		(3)
Short-term debt, net	(7)		(236)

Cash dividends paid	(368)		(334)
Exercise of employee stock options	41		17
Repurchase of shares	(138)		—

Employee taxes paid from shares withheld	(56)		(40)
Other - net	(4)		(1)
Net cash used in financing activities	(536)		(281)

Effect of currency on cash	13		11

Total decrease in cash	(15)		(59)
Cash at the beginning of the period	488		294
Cash at the end of the period	$	473	$	235

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 ~~2022~~2023 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.

~~Adoption of New~~Recently Issued Accounting ~~Standard~~Pronouncements

~~Eaton adopted~~In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ~~2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50)~~2023-07, Segment Reporting (Topic 280): ~~Disclosure of Supplier Finance Program Obligations,~~Improvements to Reportable Segment Disclosures (ASU 2023-07). This accounting standard requires additional segment disclosures on an annual and interim basis, including significant segment expenses that are regularly provided to the chief operating decision maker. The standard does not change how operating segments and reportable segments are determined. ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023 and interim reporting periods beginning after December 15, 2024. The standard is required to be applied retrospectively to all periods presented in the ~~first quarter~~consolidated financial statements. Eaton plans to adopt the standard for the year ended December 31, 2024. The Company is evaluating the impact of ~~2023. The~~ASU 2023-07 and expects the standard will only impact its segment disclosures with no material impact to the consolidated financial statements.

In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09). This accounting standard requires ~~disclosure~~disaggregated income tax disclosures on an annual basis, including information on the Company’s effective income tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024, and may be applied prospectively or retrospectively. The Company is evaluating the impact of ~~certain information about the Company's supply chain finance program, including key terms~~ASU 2023-09 and ~~a rollforward of confirmed amounts payable. The adoption of~~expects the standard ~~did not have a~~will only impact its income taxes disclosures with no material impact onto the ~~condensed~~ consolidated financial statements.

Note 2. ~~ACQUISITIONS AND DIVESTITURE OF BUSINESSES~~INVESTMENT IN ASSOCIATE COMPANY

~~Sale of Hydraulics business~~

On August 2, 2021, Eaton completed the sale of the Hydraulics business to Danfoss A/S and recognized a pre-tax gain of $617 million in 2021. The Company finalized negotiations of post-closing adjustments with Danfoss A/S and recognized an additional pre-tax gain of $24 million in the first quarter of 2022 and received cash of $22 million in the second quarter of 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 $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.

Eaton's 2022 Condensed Consolidated Financial Statements include Royal Power Solutions' results of operations, including segment operating profit of $17 million on sales of $120 million, from the date of acquisition through September 30, 2022.

~~Russia~~

During the second quarter of 2022, in light of the ongoing war with Ukraine, the Company decided to exit its business operations in Russia and recorded charges of $29 million presented in Other expense (income) - net on the Consolidated Statements of Income. The charges consisted primarily of write-downs of accounts receivable, inventory and other assets, and accruals for severance.

~~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 accounts for this investment on the equity method of accounting and is reported 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
September 30 Nine months ended
September 30
(In millions) 2023 2022 2023 2022
Electrical Americas
Products $ 748 $ 737 $ 2,221 $ 2,034
Systems 1,846 1,442 5,205 4,167
Total $ 2,594 $ 2,179 $ 7,426 $ 6,201
Electrical Global
Products $ 848 $ 855 $ 2,620 $ 2,609
Systems 655 631 1,952 1,809
Total $ 1,503 $ 1,486 $ 4,572 $ 4,418
Aerospace
Original Equipment Manufacturers $ 342 $ 303 $ 980 $ 881
Aftermarket 302 256 863 719
Industrial and Other 223 209 674 628
Total $ 867 $ 768 $ 2,517 $ 2,227
Vehicle
Commercial $ 452 $ 460 $ 1,359 $ 1,307
Passenger and Light Duty 301 284 884 816
Total $ 753 $ 744 $ 2,242 $ 2,123
eMobility $ 163 $ 137 $ 471 $ 399
Total net sales $ 5,880 $ 5,313 $ 17,229 $ 15,368

~~Table of Contents~~


	Three months ended March 31
(In millions)	2024		2023
Electrical Americas
Products	$	733	$	716
Systems	1,957		1,578
Total	$	2,690	$	2,294

Electrical Global
Products	$	844	$	882
Systems	656		618
Total	$	1,500	$	1,500






Aerospace
Original Equipment Manufacturers	$	355	$	314
Aftermarket	291		264
Industrial and Other	225		225
Total	$	871	$	803

Vehicle
Commercial	$	435	$	448
Passenger and Light Duty	290		291
Total	$	724	$	739

eMobility	$	158	$	147

Total net sales	$	5,943	$	5,483

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 ~~$3,983~~$4,170 million and ~~$3,581~~$3,966 million at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, 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 ~~$313~~$301 million and ~~$233~~$289 million at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, 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 ~~2023.~~2024.

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Changes in the deferred revenue liabilities are as follows:


(In millions)	Deferred Revenue
Balance at January 1, 2024	$	626
Customer deposits and billings	657
Revenue recognized in the period	(612)

Translation	(5)

Balance at March 31, 2024	$	666


(In millions)	Deferred Revenue
Balance at January 1, 2023	$	508
Customer deposits and billings	~~1,684~~514
Revenue recognized in the period	~~(1,563)~~(421)

Translation	14

Balance at ~~September 30,~~March 31, 2023	$	~~630~~605


~~(In millions)~~	~~Deferred Revenue~~
~~Balance at January 1, 2022~~	$	~~422~~
~~Customer deposits and billings~~	~~1,135~~
~~Revenue recognized in the period~~	~~(1,086)~~

~~Translation and other~~	~~(42)~~
~~Balance at September 30, 2022~~	$	~~429~~

Deferred revenue liabilities of ~~$610~~$651 million and ~~$489~~$610 million as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, 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 ~~September 30, 2023~~March 31, 2024 was approximately ~~$12.9~~$15 billion. At ~~September 30, 2023,~~March 31, 2024, approximately ~~81%~~79% 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 ~~$43~~$39 million and ~~$31~~$38 million at ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. The change in the allowance for credit losses includes expense and net write-offs, none of which are significant.

~~Table of Contents~~

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)	September 30, 2023		December 31, 2022		(In millions)	March 31, 2024	December 31, 2023
Raw materials	Raw materials	$	1,471	$	1,275
Work-in-process	Work-in-process	901		781
Finished goods	Finished goods	1,341		1,375
Total inventory	Total inventory	$	3,713	$	3,430

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Note 6. GOODWILL

Changes in the carrying amount of goodwill by segment are as follows:
(In millions) January 1, 2023 Translation September 30, 2023
Electrical Americas $ 7,402 $ 2 $ 7,404
Electrical Global 3,929 (24) 3,905
Aerospace 2,844 8 2,851
Vehicle 287 — 287
eMobility 334 — 334
Total $ 14,796 $ (15) $ 14,781


(In millions)	January 1, 2024		Translation		March 31, 2024
Electrical Americas	$	7,415	$	(8)	$	7,407
Electrical Global	4,038		(73)		3,965

Aerospace	2,901		(18)		2,883
Vehicle	289		(1)		288
eMobility	334		—		334
Total	$	14,977	$	(100)	$	14,877

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, 2024	$	369
Invoices confirmed during the period	351
Invoices paid during the period	(359)

Balance at March 31, 2024	$	361


(In millions)	SCF Obligations
Balance at January 1, 2023	$	~~208~~219
Invoices confirmed during the period	~~988~~297
Invoices paid during the period	~~(834)~~(234)
Translation	101
Balance at ~~September 30,~~March 31, 2023	$	~~372~~283

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~~Note 8. DEBT~~

On October 2, 2023, the Company replaced its existing $500 million 364-day revolving credit facility with a new $500 million 364-day revolving credit facility that will expire on September 30, 2024. The Company also has a $2,500 million five-year revolving credit facility that will expire on October 1, 2027. The revolving credit facilities totaling $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 September 30, 2023. The Company maintains access to the commercial paper markets through its $3,000 million commercial paper program, of which none was outstanding on September 30, 2023.

On May 18, 2023, Eaton issued senior notes (2023 Notes) with a face amount of $500 million. The 2023 Notes mature in 2028 with interest payable semi-annually at a rate of 4.35% per annum. The issuer received proceeds totaling $497 million from the issuance, net of financing costs. The 2023 Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2023 Notes contain customary optional redemption and par call provisions. The 2023 Notes also contain a provision which upon a change of control requires the Company to make an offer to purchase all or any part of the 2023 Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The 2023 Notes are subject to customary non-financial covenants.

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.

~~Table of Contents~~

Note 9.8. 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)
Three months ended September 30
(In millions) 2023 2022 2023 2022 2023 2022
Service cost $ 4 $ 6 $ 11 $ 15 $ — $ —
Interest cost 35 32 22 12 3 2
Expected return on plan assets (48) (50) (31) (28) — —
Amortization 1 2 1 11 (4) (1)
(8) (10) 4 9 (1) —
Settlements 9 18 1 — — —
Total expense (income) $ 1 $ 8 $ 5 $ 10 $ (1) $ —
United States
pension benefit expense (income) Non-United States
pension benefit expense (income) Other postretirement
benefits expense (income)
Nine months ended September 30
(In millions) 2023 2022 2023 2022 2023 2022
Service cost $ 14 $ 22 $ 32 $ 45 $ — $ 1
Interest cost 106 80 64 36 8 5
Expected return on plan assets (146) (155) (91) (88) — —
Amortization 3 14 5 35 (13) (5)
(23) (39) 11 27 (5) —
Settlements 28 49 2 1 — —
Total expense (income) $ 5 $ 10 $ 13 $ 29 $ (5) $ —

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


	United States pension benefit expense				Non-United States pension benefit expense
	Three months ended March 31
(In millions)	2024		2023		2024		2023
Service cost	$	5	$	5	$	12	$	11
Interest cost	33		36		21		21
Expected return on plan assets	(47)		(49)		(33)		(30)
Amortization	2		1		3		1
	(7)		(7)		3		3

Settlements	9		9		1		1
Total expense	$	1	$	2	$	4	$	4

The components of retirement benefits expense other than service costs are included in Other ~~expense (income)~~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 third quarter and first nine months of 2023, the Company recognized settlement losses from lump-sum distributions of $10 million and $30 million, respectively. During the third quarter and first nine months of 2022, the Company recognized settlement losses from lump-sum distributions of $18 million and $50 million, respectively. During the third quarter and first nine months 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 a decrease of $88 million and $178 million in funded status and corresponding increase in Accumulated other comprehensive loss in the third quarter and first nine months of 2022, respectively.

Note ~~10.~~9. 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 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.~~condensed consolidated financial statements.

Table of Contents

Note 10. INCOME TAXES

The effective income tax rate for the first quarter of 2024 was expense of 17.9% compared to expense of 16.1% for the first quarter of 2023. The increase in the effective tax rate in the first quarter of 2024 was primarily due to greater levels of income in higher tax jurisdictions, partially offset by a larger impact from the excess tax benefits recognized for employee share-based payments in the 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 $27 million plus $118 million of interest and penalties (translated at the March 31, 2024 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. On May 20, 2022, the court largely upheld its prior decision without further clarification. On June 9, 2022, the Company filed its notice of appeal to the second level court. The Company intends to continue its challenge of this assessment in the judicial system.

As previously disclosed for Case 1, the Company received a separate tax assessment alleging a tax deficiency of $33 million plus $120 million of interest and penalties (translated at the March 31, 2024 exchange rate), which the Company is challenging in the judicial system. On April 4, 2024, the court published a favorable decision resulting in a reduction to the Case 1 assessment for the goodwill generated from the acquisition of a third-party business. In the same decision, the court confirmed the cancellation of an additional 75% penalty imposed by the tax authorities. As a result of the favorable decision, the alleged tax deficiency was reduced to $32 million plus $98 million of interest and penalties (translated at the March 31, 2024 exchange rate). The remainder of Case 1 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, 2024, the Company pledged Brazilian real estate assets with net book value of $20 million and provided additional security in the form of bank secured bonds and insurance bonds totaling $136 million and a cash deposit of $26 million (translated at the March 31, 2024 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.

Table of Contents

Note 11. ~~INCOME TAXES~~

The effective income tax rate for the third quarter of 2023 was expense of 17.3% compared to expense of 15.5% for the third quarter of 2022. The effective income tax rate for the first nine months of 2023 was expense of 16.9% compared to expense of 15.4% for the first nine months of 2022. The increase in the effective tax rate in the third quarter and first nine months of 2023 was primarily due to greater levels of income in higher tax jurisdictions.

~~Note 12.~~EATON SHAREHOLDERS' 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
Net income — — — 744 — — 744 1 745
Other comprehensive income, net of tax 53 53 53
Cash dividends paid — — — (344) — — (344) — (344)
Issuance of shares under equity-based
   compensation plans 0.4 — 52 (1) — (1) 51 — 51
Changes in noncontrolling interest of
   consolidated subsidiaries - net — — — — — — — (1) (1)
Balance at June 30, 2023 399.0 $ 4 $ 12,554 $ 9,156 $ (3,760) $ (1) $ 17,953 $ 36 $ 17,988
Net income — — — 891 — — 891 1 892
Other comprehensive loss, net of tax — — — — (167) — (167) — (167)
Cash dividends paid — — — (343) — — (343) — (343)
Issuance of shares under equity-based
   compensation plans 0.4 — 51 (1) — — 50 — 50
Changes in noncontrolling interest of
   consolidated subsidiaries - net — — — — — — — (1) (1)
Balance at September 30, 2023 399.3 $ 4 $ 12,604 $ 9,703 $ (3,927) $ (1) $ 18,383 $ 36 $ 18,420

~~Table of Contents~~


	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, 2024	399.4	$	4	$	12,634	$	10,305	$	(3,906)	$	(1)	$	19,036	$	33	$	19,069


Net income	—	—		—		821		—		—		821		1		822
Other comprehensive loss, net of tax								(40)				(40)				(40)
Cash dividends paid and accrued	—	—		—		(381)		—		—		(381)		—		(381)

Issuance of shares under equity-based compensation plans	0.9	—		(4)		(1)		—		—		(5)		—		(5)




Repurchase of shares	(0.5)	—		—		(138)		—		—		(138)		—		(138)
Balance at March 31, 2024	399.8	$	4	$	12,630	$	10,605	$	(3,946)	$	(1)	$	19,292	$	34	$	19,326


	Ordinary shares																																						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)
(In millions)
(In millions)
Balance at January 1, 2023
Balance at January 1, 2023
Balance at January 1, 2023

			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
Net income
		Ordinary shares
(In millions)						Capital in excess of par value							Retained earnings								Accumulated other comprehensive loss				Shares held in trust					Total Eaton shareholders' equity				Noncontrolling interests			Total equity
Balance at January 1, 2022		398.8		$	4

Net income

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

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

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

Net income		—		—		—				601				—					—				601					—				601
Other comprehensive loss, net of tax														(444)									(444)									(444)
Cash dividends paid		—		—		—				(323)				—					—				(323)					—				(323)

Issuance of shares under equity-based compensation plans		—		—		26				1				—					—				27					—				27
Balance at March 31, 2023

Changes in noncontrolling interest of consolidated subsidiaries - net		—		—		(1)				—				—					—				(1)					—				(1)
Repurchase of shares		(0.7)		—		—				(100)				—					—				(100)					—				(100)
Balance at June 30, 2022		398.3		$	4	$	12,452			$	7,886			$	(3,961)				$	(1)			$	16,380				$	36			$	16,416
Balance at March 31, 2023

Net income		—		—		—				607				—					—				607					1				608
Other comprehensive loss, net of tax		—		—		—				—				(522)					—				(522)					—				(522)
Cash dividends paid		—		—		—				(323)				—					—				(323)					—				(323)

Issuance of shares under equity-based compensation plans		0.1		—		26				—				—					—				26					—				26
Balance at March 31, 2023

Changes in noncontrolling interest of consolidated subsidiaries - net		—		—		—				—				—					—				—					(2)				(2)
Repurchase of shares		(0.7)		—		—				(100)				—					—				(100)					—				(100)
Balance at September 30, 2022		397.7		$	4	$	12,478			$	8,070			$	(4,483)				$	(1)			$	16,068				$	35			$	16,103

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 ~~and nine~~ months ended ~~September 30, 2023, no ordinary shares were repurchased. During the three and nine months ended September 30, 2022, 0.7 million and 2.0~~March 31, 2024, 0.5 million ordinary shares ~~respectively,~~ were repurchased under the 2022 program in the open market at a total cost of ~~$100 million and $286 million, respectively.~~
$138 million. During the three months ended March 31, 2023, no ordinary shares were repurchased.

The changes in Accumulated other comprehensive loss are as follows:

(In millions) Currency translation and related hedging instruments Pensions and other postretirement benefits Cash flow
hedges Total
Balance at January 1, 2023 $ (3,264) $ (810) $ 129 $ (3,946)
Other comprehensive income (loss) before
    reclassifications 21 (8) 37 50
Amounts reclassified from Accumulated other
   comprehensive loss (income) (10) 21 (44) (32)
Net current-period Other comprehensive
   income (loss) 11 14 (7) 18
Balance at September 30, 2023 $ (3,253) $ (796) $ 122 $ (3,927)


(In millions)	Currency translation and related hedging instruments		Pensions and other postretirement benefits		Cash flow hedges		Total
Balance at January 1, 2024	$	(3,029)	$	(995)	$	118	$	(3,906)
Other comprehensive income (loss) before reclassifications	(49)		6		4		(39)
Amounts reclassified from Accumulated other comprehensive loss (income)	(4)		11		(9)		(1)
Net current-period Other comprehensive income (loss)	(53)		17		(4)		(40)
Balance at March 31, 2024	$	(3,082)	$	(978)	$	114	$	(3,946)

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

(In millions)

Nine months ended September 30, 2023

Consolidated Statements
of Income classification

(In millions)

Three months ended
March 31, 2024

Consolidated Statements
of Income classification

Gains and (losses) on net investment hedges (amount excluded
from effectiveness testing)

Currency exchange contracts

Interest expense - net

Currency exchange contracts

Interest expense - net

Tax expense

—

Total, net of tax

Amortization of defined benefits pensions and other
postretirement benefits items

Actuarial loss and prior service cost

(25)

Tax benefit

Total, net of tax

(21)

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

Currency exchange contracts

Net sales and Cost of products sold

Commodity contracts

Cost of products sold

Commodity contracts

(1)

Cost of products sold

Tax expense

(12)

Tax expense

Total, net of tax

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 98 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 September 30				Nine months ended September 30
		Three months ended March 31
		Three months ended March 31
		Three months ended March 31
(In millions except for per share data)	(In millions except for per share data)	2023		2022		2023		2022
(In millions except for per share data)
(In millions except for per share data)
Net income attributable to Eaton ordinary shareholders
Net income attributable to Eaton ordinary shareholders
Net income attributable to Eaton ordinary shareholders	Net income attributable to Eaton ordinary shareholders	$	891	$	607	$	2,273	$	1,741

Weighted-average number of ordinary shares outstanding - diluted	Weighted-average number of ordinary shares outstanding - diluted	401.6		400.3		400.9		400.9

Weighted-average number of ordinary shares outstanding - diluted

Weighted-average number of ordinary shares outstanding - diluted
Less dilutive effect of equity-based compensation	Less dilutive effect of equity-based compensation	2.2		1.9		1.9		2.0
Less dilutive effect of equity-based compensation
Less dilutive effect of equity-based compensation
Weighted-average number of ordinary shares outstanding - basic
Weighted-average number of ordinary shares outstanding - basic
Weighted-average number of ordinary shares outstanding - basic	Weighted-average number of ordinary shares outstanding - basic	399.4		398.4		399.0		398.9

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

Net income per share attributable to Eaton ordinary shareholders
Diluted
Diluted
Diluted	Diluted	$	2.22	$	1.52	$	5.67	$	4.34
Basic	Basic	2.23		1.52		5.70		4.36
Basic
Basic

For the ~~third~~first quarter of 2024 and 2023, 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 nine months of 2023, 0.1 million 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. For the third quarter and first nine months of 2022, 0.2 million and 0.1 million stock options, respectively, 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 ~~13.~~12. 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	Quoted prices in active markets for identical assets (Level 1)	Other observable inputs (Level 2)	Unobservable inputs (Level 3)
September 30, 2023
March 31, 2024										March 31, 2024
Cash	Cash	$	348	$	348	$	—	$	—
Short-term investments	Short-term investments	1,558		1,558		—		—
Net derivative contracts	Net derivative contracts	9		—		9		—
Contingent future payments from acquisition of Green Motion	Contingent future payments from acquisition of Green Motion	(45)		—		—		(45)

December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023
Cash	Cash	$	294	$	294	$	—	$	—
Short-term investments	Short-term investments	261		261		—		—
Net derivative contracts	Net derivative contracts	29		—		29		—
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 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 ~~$113~~$114 million. As of ~~September 30, 2023,~~March 31, 2024, the fair value of the contingent future payments has been reduced to ~~$45~~$17 million based primarily on lower revenue in 2023 and anticipated reductions in projected ~~2023~~2024 revenue compared to the initial ~~estimate.~~estimates at closing.

Other Fair Value Measurements

Long-term debt and the current portion of long-term debt had a carrying value of ~~$9,125~~$9,186 million and fair value of ~~$8,252~~$8,678 million at ~~September 30, 2023~~March 31, 2024 compared to ~~$8,331~~$9,261 million and ~~$7,625~~$8,924 million, respectively, at December 31, ~~2022.~~2023. The fair value of Eaton's debt instruments 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 ~~14.~~13. 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 as part of a hedging relationship, is effective and 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). The Company uses the spot rate method to assess hedge effectiveness when currency 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 relationship and the forward points are amortized to Interest expense - net on a straight-line basis over the term of the contract. The cash flows resulting from these currency exchange contracts are classified in investing activities on the Condensed Consolidated Statements of 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
September 30, 2023
March 31, 2024														March 31, 2024
Derivatives designated as hedges	Derivatives designated as hedges													Derivatives designated as hedges

Forward starting floating-to-fixed interest rate swaps
Forward starting floating-to-fixed interest rate swaps
Forward starting floating-to-fixed interest rate swaps	Forward starting floating-to-fixed interest rate swaps	$	53	$	—	$	1	$	—	$	—	Cash flow	8 years	$	216			$		$	—			$			$	—			$			$	—			$			$	1			Cash flow			Cash flow		8 years
Currency exchange contracts	Currency exchange contracts	764		27		1		13		3		Cash flow	1 to 28 months	Currency exchange contracts		311			9				9			3					3		5						5		—					—	Cash flow		Cash flow		1 to 22 months
Commodity contracts	Commodity contracts	58		—		—		2		—		Cash flow	1 to 12 months	Commodity contracts		42			2				2			—					—		—						—		—					—	Cash flow		Cash flow		1 to 11 months
Currency exchange contracts	Currency exchange contracts	549		—		—		2		—		Net investment	3 months	Currency exchange contracts		555			2				2			—					—		—						—		—					—	Net investment		Net investment		3 months
Total	Total			$	27	$	2	$	17	$	3

Derivatives not designated as hedges	Derivatives not designated as hedges

Derivatives not designated as hedges

Derivatives not designated as hedges
Currency exchange contracts
Currency exchange contracts
Currency exchange contracts	Currency exchange contracts	$	4,735	$	11			$	11				1 to 7 months	$	4,429			$		$	18															$	6															1 to 6 months

December 31, 2022
Derivatives designated as hedges
December 31, 2023

December 31, 2023

December 31, 2023
Derivatives designated as hedges														Derivatives designated as hedges
Forward starting floating-to-fixed interest rate swaps														Forward starting floating-to-fixed interest rate swaps		$	165					$	—						$	—						$	—						$	3				Cash flow		8 years
Currency exchange contracts	Currency exchange contracts	$	1,240	$	35	$	2	$	17	$	9	Cash flow	1 to 36 months	Currency exchange contracts		505			17				17			3					3		7						7		1					1	Cash flow		Cash flow		1 to 25 months
Commodity contracts	Commodity contracts	64		4		—		2		—		Cash flow	1 to 12 months	Commodity contracts		54			1				1			—					—		1						1		—					—	Cash flow		Cash flow		1 to 12 months
Currency exchange contracts														Currency exchange contracts		564						—							—							1							—					Net investment		3 months
Total	Total			$	39	$	2	$	19	$	9			Total								$	17		$				$	3		$				$	9			$			$	4

Derivatives not designated as hedges
Derivatives not designated as hedges
Derivatives not designated as hedges	Derivatives not designated as hedges
Currency exchange contracts	Currency exchange contracts	$	4,683	$	30			$	14				1 to 12 months	Currency exchange contracts		$	4,797		$			$	12															$	8														1 to 7 months

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 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 ~~$3,010~~$3,068 million at ~~September 30, 2023~~March 31, 2024 and ~~$2,711~~$3,140 million at December 31, ~~2022.~~2023.

As of ~~September 30, 2023,~~March 31, 2024, the volume of outstanding commodity contracts that were entered into to hedge forecasted transactions:

Commodity

~~September 30, 2023~~March 31, 2024

Term

Aluminum

Millions of pounds

1 to 9 months

Copper

Millions of pounds

1 to 11 months

~~Copper~~

~~Millions of pounds~~

~~1 to 12 months~~

Gold

~~1,662~~1,405

Troy ounces

1 to 1210 months

Silver

~~166,422~~20,376

Troy ounces

1 to 107 months

1716

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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)

Carrying amount of the hedged
assets (liabilities)

Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged asset (liabilities)1

Location on Consolidated Balance Sheets

September 30, 2023

December 31, 2022

September 30, 2023

December 31, 2022

Location on Consolidated Balance Sheets

March 31, 2024

December 31, 2023

March 31, 2024

December 31, 2023

Long-term debt

(713)

(44)

(48)

~~(a)~~1 At ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, these amounts include the cumulative liability amount of fair value hedging adjustments remaining for which the hedge accounting has been discontinued of ~~$44~~$40 million and ~~$48~~$42 million, respectively.

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

Three months ended September 30, 2023

Three months ended March 31, 2024

(In millions)

Net Sales

Cost of products sold

Interest expense - net

Amounts from Consolidated Statements of Income

5,880

3,684

Gain (loss) on derivatives designated as cash flow hedges

Forward starting floating-to-fixed interest rate swaps

Hedged item

—

(3)

Hedged item

Derivative designated as hedging instrument

—

Currency exchange contracts

Hedged item

(3)

(16)

—

Hedged item

Derivative designated as hedging instrument

Commodity contracts

Hedged item

Derivative designated as hedging instrument

—


		Three months ended September 30, 2022
		Three months ended March 31, 2023
		Three months ended March 31, 2023
		Three months ended March 31, 2023
(In millions)	(In millions)	Net Sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income
Amounts from Consolidated Statements of Income
Amounts from Consolidated Statements of Income	Amounts from Consolidated Statements of Income	$	5,313	$	3,545	$	37

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

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
Forward starting floating-to-fixed interest rate swaps	Forward starting floating-to-fixed interest rate swaps
Hedged item	Hedged item	$	—	$	—	$	(1)
Hedged item
Hedged item
Derivative designated as hedging instrument
Derivative designated as hedging instrument
Derivative designated as hedging instrument	Derivative designated as hedging instrument	—		—		1

Currency exchange contracts	Currency exchange contracts

Currency exchange contracts

Currency exchange contracts
Hedged item
Hedged item
Hedged item	Hedged item	$	5	$	(6)	$	—
Derivative designated as hedging instrument	Derivative designated as hedging instrument	(5)		6		—

Commodity contracts
Hedged item		$	—	$	3	$	—
Derivative designated as hedging instrument
Derivative designated as hedging instrument	Derivative designated as hedging instrument	—		(3)		—

1817

~~Table of Contents~~

Nine months ended September 30, 2023
(In millions) Net sales Cost of products sold Interest expense - net
Amounts from Consolidated Statements of Income $ 17,229 $ 11,030 $ 124
Gain (loss) on derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps
Hedged item $ — $ — $ (9)
Derivative designated as hedging instrument — — 9
Currency exchange contracts
Hedged item $ (2) $ (46) $ —
Derivative designated as hedging instrument 2 46 —
Commodity contracts
Hedged item $ — $ (1) $ —
Derivative designated as hedging instrument — 1 —

Nine months ended September 30, 2022
(In millions) Net sales Cost of products sold Interest expense - net
Amounts from Consolidated Statements of Income $ 15,368 $ 10,319 $ 100
Gain (loss) on derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps
Hedged item $ — $ — $ (1)
Derivative designated as hedging instrument — — 1
Currency exchange contracts
Hedged item $ 10 $ (12) $ —
Derivative designated as hedging instrument (10) 12 —
Gain (loss) on derivatives designated as fair value hedges
Fixed-to-floating interest rate swaps
Hedged item $ — $ — $ 8
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
September 30
(In millions) 2023 2022
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts $ 14 $ (52) Interest expense - net
Total $ 14 $ (52)

Gain (loss) recognized in Consolidated Statements of Income Consolidated Statements of Income classification
Nine months ended
September 30
(In millions) 2023 2022
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts $ 31 $ (85) Interest expense - net
Commodity contracts — (15)
Other expense (income) - net and Cost of products sold (a)
Total $ 31 $ (100)

~~(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 products 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)	2024		2023
Gain (loss) on derivatives not designated as hedges
Currency exchange contracts	$	20	$	11	Interest expense - net

Total	$	20	$	11

~~Table of Contents~~

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
September 30 Three months ended
September 30
(In millions) 2023 2022 2023 2022
Derivatives designated as
   cash flow hedges
Forward starting floating-to-fixed
interest rate swaps $ 1 $ (36) Interest expense - net $ 3 $ 1
Currency exchange contracts (2) (8) Net sales and Cost of products sold 20 (1)
Commodity contracts (1) (3) Cost of products sold — (3)
Derivatives designated as net
   investment hedges
Currency exchange contracts
Effective portion 3 — Gain (loss) on sale of business — —
Amount excluded from effectiveness
      testing 2 — Interest expense - net 4 —
Non-derivative designated as net
   investment hedges
Foreign currency denominated debt 85 164 Gain (loss) on sale of business — —
Total $ 87 $ 117 $ 27 $ (3)

~~Table of Contents~~


		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
		Nine months ended September 30					Nine months ended September 30
	Gain (loss) recognized in other comprehensive income (loss)													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				Three months ended March 31
(In millions)	(In millions)	2023		2022			2023		2022		(In millions)	2024	2023			2024			2023
Derivatives designated as cash flow hedges	Derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps	Forward starting floating-to-fixed interest rate swaps	$	2	$	202	Interest expense - net	$	9	$	1
Forward starting floating-to-fixed interest rate swaps
Forward starting floating-to-fixed interest rate swaps

Currency exchange contracts
Currency exchange contracts
Currency exchange contracts	Currency exchange contracts	47		(18)		Net sales and Cost of products sold	45		3
Commodity contracts	Commodity contracts	(2)		(11)		Cost of products sold	1		—

Derivatives designated as net investment hedges	Derivatives designated as net investment hedges
Derivatives designated as net investment hedges
Derivatives designated as net investment hedges
Currency exchange contracts	Currency exchange contracts
Currency exchange contracts
Currency exchange contracts
Effective portion
Effective portion
Effective portion	Effective portion	21		—		Gain (loss) on sale of business	—		—
Amount excluded from effectiveness testing	Amount excluded from effectiveness testing	11		—		Interest expense - net	10		—

Non-derivative designated as net investment hedges	Non-derivative designated as net investment hedges
Non-derivative designated as net investment hedges
Non-derivative designated as net investment hedges
Foreign currency denominated debt
Foreign currency denominated debt
Foreign currency denominated debt	Foreign currency denominated debt	19		405		Gain (loss) on sale of business	—		—
Total	Total	$	98	$	577		$	65	$	4

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 gains of ~~$21~~$19 million at ~~September 30, 2023.~~March 31, 2024. The pre-tax portion of the fair value of the forward points included in Accumulated other comprehensive loss were net gains of ~~$11~~$3 million at ~~September 30, 2023.~~March 31, 2024.

At ~~September 30, 2023,~~March 31, 2024, a gain of ~~$12~~$5 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 12twelve months.

2218

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Note ~~15.~~14. RESTRUCTURING CHARGES

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 initially respond to declining market conditions brought on by the COVID-19 pandemic. Since the inception of the program, the Company ~~has~~ incurred expenses of $199 million for workforce reductions and $184 million for plant closing and other costs, resulting in total charges of ~~$371 million.~~$382 million through December 31, 2023. This multi-year restructuring program was substantially complete at the end of 2023, with final payments expected to be made in 2024.

During the first quarter of 2024, Eaton implemented a new multi-year restructuring program to accelerate opportunities to optimize its operations and global support structure. These actions will better align the Company's functions to support anticipated growth and drive greater effectiveness throughout the Company. Restructuring charges incurred under this program were $63 million in the first quarter of 2024. This restructuring ~~activities are~~program is expected to be completed in ~~2023 with~~2026 and is expected to incur additional expenses related to workforce reductions of $216 million and plant closing and other costs of $96 million, resulting in total estimated charges of ~~$380~~$375 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
September 30 Nine months ended
September 30
(In millions except for per share data) 2023 2022 2023 2022
Workforce reductions $ — $ 5 $ 17 $ 11
Plant closing and other 7 17 29 38
Total before income taxes 7 22 46 49
Income tax benefit 1 4 9 10
Total after income taxes $ 5 $ 18 $ 37 $ 39
Per ordinary share - diluted $ 0.01 $ 0.04 $ 0.09 $ 0.10


	Three months ended March 31
(In millions except for per share data)	2024		2023
Workforce reductions	$	59	$	2
Plant closing and other	4		7
Total before income taxes	63		10
Income tax benefit	14		2
Total after income taxes	$	49	$	8
Per ordinary share - diluted	$	0.12	$	0.02

Restructuring program charges related to the following segments:
Three months ended
September 30 Nine months ended
September 30
(In millions) 2023 2022 2023 2022
Electrical Americas $ — $ 4 $ 4 $ 14
Electrical Global 5 8 22 14
Aerospace 1 2 4 6
Vehicle 1 2 4 8
eMobility — — 6 —
Corporate — 5 6 7
Total $ 7 $ 22 $ 46 $ 49


	Three months ended March 31
(In millions)	2024		2023
Electrical Americas	$	7	$	2
Electrical Global	24		3
Aerospace	8		1
Vehicle	24		2

Corporate	—		1
Total	$	63	$	10

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, net 17 29 46
Payments (15) (27) (41)
Balance at September 30, 2023 $ 40 $ 6 $ 46
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.


(In millions)	Workforce reductions		Plant closing and other		Total












Balance at January 1, 2024	$	35	$	6	$	41
Liability recognized, net	59		4		63
Payments, utilization and translation	(14)		(3)		(18)
Balance at March 31, 2024	$	80	$	7	$	86

These restructuring program charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other ~~expense (income) -~~income – net, as appropriate. In Business Segment Information, these restructuring program charges are treated as Corporate items. See Note 1615 for additional information about business segments.

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Note ~~16.~~15. 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. Operating profit includes the operating profit from intersegment sales. For additional information regarding Eaton's business segments, see Note 1718 to the ~~Consolidated Financial Statements~~consolidated financial statements contained in the ~~2022~~2023 Form 10-K.


		Three months ended September 30				Nine months ended September 30
				Three months ended March 31
				Three months ended March 31
				Three months ended March 31
(In millions)	(In millions)	2023		2022		2023		2022		(In millions)	2024	2023
Net sales	Net sales
Electrical Americas	Electrical Americas	$	2,594	$	2,179	$	7,426	$	6,201
Electrical Americas
Electrical Americas
Electrical Global	Electrical Global	1,503		1,486		4,572		4,418

Aerospace
Aerospace
Aerospace	Aerospace	867		768		2,517		2,227
Vehicle	Vehicle	753		744		2,242		2,123
eMobility	eMobility	163		137		471		399
Total net sales	Total net sales	$	5,880	$	5,313	$	17,229	$	15,368

Segment operating profit (loss)	Segment operating profit (loss)
Segment operating profit (loss)
Segment operating profit (loss)
Electrical Americas
Electrical Americas
Electrical Americas	Electrical Americas	$	719	$	511	$	1,913	$	1,368
Electrical Global	Electrical Global	328		305		892		866

Aerospace
Aerospace
Aerospace	Aerospace	209		185		580		506
Vehicle	Vehicle	131		125		353		346
eMobility	eMobility	—		(2)		(5)		(7)
Total segment operating profit	Total segment operating profit	1,386		1,124		3,732		3,079

Corporate	Corporate
Corporate
Corporate
Intangible asset amortization expense
Intangible asset amortization expense
Intangible asset amortization expense	Intangible asset amortization expense	(107)		(124)		(344)		(375)
Interest expense - net	Interest expense - net	(33)		(37)		(124)		(100)
Pension and other postretirement benefits income	Pension and other postretirement benefits income	11		7		33		35

Restructuring program charges

Restructuring program charges

Restructuring program charges	Restructuring program charges	(7)		(22)		(46)		(49)
Other expense - net	Other expense - net	(171)		(227)		(512)		(529)
Income before income taxes	Income before income taxes	1,079		720		2,739		2,060
Income tax expense	Income tax expense	187		112		463		316
Net income	Net income	892		608		2,277		1,743
Less net income for noncontrolling interests	Less net income for noncontrolling interests	(1)		(1)		(4)		(2)
Net income attributable to Eaton ordinary shareholders	Net income attributable to Eaton ordinary shareholders	$	891	$	607	$	2,273	$	1,741

2420

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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 ~~a global~~an intelligent power management company dedicated to protecting the environment and 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~~make products for the data center, utility, industrial, commercial, machine building, residential, aerospace and to help our customers manage power – today and well into the future. We're committed to 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.

mobility markets. We are well positioned to capitalize on the megatrends of electrification, energy transition and digitalization. The reindustrialization of North America and Europe, ~~emerging~~growth in North American megaprojects, and increased global infrastructure spending focused on clean energy programs are expanding our end markets and positioning Eaton for growth for years to come. We are strengthening our participation across the entire electrical power value chain and benefiting from momentum in the data center and utility end markets as well as a growth cycle in the commercial aerospace and defense markets.

~~Over~~ We are guided by our commitment to operate sustainably and with the ~~past several years, we've completed~~highest ethical standards. Our work is accelerating the planet’s transition to renewable energy sources, helping to solve the world’s most urgent power management challenges, and building a ~~number of transactions to add higher-growth, higher-margin businesses to our portfolio. These updates have better aligned the Company with secular growth trends~~more sustainable society for people today and ~~positioned the Company~~ for future ~~growth. This transformation of our portfolio of businesses, along with continued organic sales growth and operational performance, has led to 46% growth in our net income per share~~ ~~in the third quarter of 2023 compared to the third quarter of 2022.~~generations.

~~Founded~~Eaton was founded in 1911 ~~Eaton is marking its 100~~th ~~anniversary of being~~and has been listed on the New York Stock ~~Exchange.~~Exchange for more than a century. We reported revenues of ~~$20.8~~$23.2 billion in ~~2022~~2023 and serve customers in more than ~~170~~160 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 2022 and 2023, Eaton continued to selectively add businesses to strengthen its portfolio.

~~Acquisitions of businesses and investments in associate companies~~

~~Date of acquisition~~

~~Business segment~~

~~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.~~

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

~~July 1, 2022~~

~~Electrical Global~~

~~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.~~

~~April 23, 2023~~

~~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.~~

2521

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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 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
		Three months ended March 31
		Three months ended March 31
(In millions except for per share data)
(In millions except for per share data)
(In millions except for per share data)
Acquisition integration, divestiture charges and transaction costs
Acquisition integration, divestiture charges and transaction costs
Acquisition integration, divestiture charges and transaction costs

		Three months ended September 30				Nine months ended September 30
(In millions except for per share data)		2023		2022		2023		2022
Acquisition integration, divestiture charges and transaction costs		$	18	$	103	$	69	$	182
Gain on the sale of the Hydraulics business		—		—		—		(24)
Total before income taxes		18		103		69		158
Income tax benefit

Income tax benefit

Income tax benefit	Income tax benefit	4		17		14		25
Total after income taxes	Total after income taxes	$	14	$	86	$	54	$	133
Total after income taxes
Total after income taxes
Per ordinary share - diluted	Per ordinary share - diluted	$	0.03	$	0.21	$	0.14	$	0.33
Per ordinary share - diluted
Per ordinary share - diluted

Acquisition integration, divestiture charges and transaction costs in 2024 and 2023 ~~and 2022~~ are primarily related to ~~the acquisition of Royal Power Solutions and other~~ acquisitions completed prior to ~~2022,~~2023, including other charges and income to acquire and exit businesses. ~~Costs in 2023 and 2022 also included certain indemnity claims associated with the sale of 50% interest in the commercial vehicle automated transmission business in 2017.~~Costs in 2022 also included charges of $29 million presented in Other expense (income) - net on the Consolidated Statements of Income related to the decision in the second quarter of 2022 to exit the Company's business operations in Russia. These charges consisted primarily of write-downs of accounts receivable, inventory and other assets, and accruals for severance. These charges were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other ~~expense (income)~~income - net. In Business Segment Information in Note ~~16,~~15, the charges were included in Other expense - net.

Restructuring Programs

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 initially respond to declining market conditions brought on by the COVID-19 pandemic. Since the inception of the program, the Company ~~has~~ incurred expenses of $199 million for workforce reductions and $184 million for plant closing and other costs, resulting in total charges of ~~$371 million.~~$382 million through December 31, 2023. This restructuring program was substantially complete at the end of 2023.

During the first quarter of 2024, Eaton implemented a new multi-year restructuring program to accelerate opportunities to optimize its operations and global support structure. These actions will better align the Company's functions to support anticipated growth and drive greater effectiveness throughout the Company. Restructuring charges incurred under this program were $63 million in the first quarter of 2024. This restructuring ~~activities are~~program is expected to be completed in ~~2023 with~~2026 and is expected to incur additional expenses related to workforce reductions of $216 million and plant closing and other costs of $96 million, resulting in total estimated charges of ~~$380~~$375 million ~~cumulatively~~ for the entire ~~program and projected~~program. The Company expects mature year ~~savings~~benefits of ~~$265~~$325 million when the multi-year program is fully implemented. ~~The remaining charges in 2023 are expected to relate primarily to plant closing and other costs.~~

Additional information related to ~~this~~these restructuring programs is presented in Note ~~15.~~14.

Intangible Asset Amortization Expense

Intangible asset amortization expense is as follows:


		Three months ended September 30				Nine months ended September 30
		Three months ended March 31
		Three months ended March 31
		Three months ended March 31
(In millions except for per share data)
(In millions except for per share data)
(In millions except for per share data)	(In millions except for per share data)	2023		2022		2023		2022
Intangible asset amortization expense	Intangible asset amortization expense	$	107	$	124	$	344	$	375
Intangible asset amortization expense
Intangible asset amortization expense
Income tax benefit
Income tax benefit
Income tax benefit	Income tax benefit	23		27		74		80
Total after income taxes	Total after income taxes	$	84	$	97	$	269	$	295
Total after income taxes
Total after income taxes
Per ordinary share - diluted	Per ordinary share - diluted	$	0.21	$	0.25	$	0.67	$	0.74
Per ordinary share - diluted
Per ordinary share - diluted

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Consolidated Financial Results


		Three months ended September 30						Increase (decrease)			Nine months ended September 30								Increase (decrease)
		Three months ended March 31
		Three months ended March 31
		Three months ended March 31
(In millions except for per share data)
(In millions except for per share data)
(In millions except for per share data)	(In millions except for per share data)	2023			2022					Increase (decrease)				2023				2022			Increase (decrease)
Net sales	Net sales	$	5,880		$	5,313					$	17,229			$	15,368
Net sales
Net sales
Gross profit
Gross profit
Gross profit	Gross profit	2,196			1,768			24	%		6,199				5,049				23	%
Percent of net sales	Percent of net sales	37.3		%	33.3		%				36.0		%		32.9		%
Percent of net sales
Percent of net sales
Income before income taxes
Income before income taxes
Income before income taxes	Income before income taxes	1,079			720			50	%		2,739				2,060				33	%
Net income	Net income	892			608			47	%		2,277				1,743				31	%
Net income
Net income
Less net income for noncontrolling interests
Less net income for noncontrolling interests
Less net income for noncontrolling interests	Less net income for noncontrolling interests	(1)			(1)						(4)				(2)
Net income attributable to Eaton ordinary shareholders	Net income attributable to Eaton ordinary shareholders	891			607			47	%		2,273				1,741				31	%
Net income attributable to Eaton ordinary shareholders
Net income attributable to Eaton ordinary shareholders
Excluding acquisition and divestiture charges, after-tax
Excluding acquisition and divestiture charges, after-tax
Excluding acquisition and divestiture charges, after-tax	Excluding acquisition and divestiture charges, after-tax	14			86						54				133
Excluding restructuring program charges, after-tax	Excluding restructuring program charges, after-tax	5			18						37				39
Excluding restructuring program charges, after-tax
Excluding restructuring program charges, after-tax
Excluding intangible asset amortization expense, after-tax	Excluding intangible asset amortization expense, after-tax	84			97						269				295
Excluding intangible asset amortization expense, after-tax
Excluding intangible asset amortization expense, after-tax
Adjusted earnings
Adjusted earnings
Adjusted earnings	Adjusted earnings	$	994		$	807		23	%		$	2,633			$	2,207			19	%

Net income per share attributable to Eaton ordinary shareholders - diluted	Net income per share attributable to Eaton ordinary shareholders - diluted	$	2.22		$	1.52		46	%		$	5.67			$	4.34			31	%

Net income per share attributable to Eaton ordinary shareholders - diluted

Net income per share attributable to Eaton ordinary shareholders - diluted
Excluding per share impact of acquisition and divestiture charges, after-tax
Excluding per share impact of acquisition and divestiture charges, after-tax
Excluding per share impact of acquisition and divestiture charges, after-tax	Excluding per share impact of acquisition and divestiture charges, after-tax	0.03			0.21						0.14				0.33
Excluding per share impact of restructuring program charges, after-tax	Excluding per share impact of restructuring program charges, after-tax	0.01			0.04						0.09				0.10
Excluding per share impact of restructuring program charges, after-tax
Excluding per share impact of restructuring program charges, after-tax
Excluding per share impact of intangible asset amortization expense, after-tax
Excluding per share impact of intangible asset amortization expense, after-tax
Excluding per share impact of intangible asset amortization expense, after-tax	Excluding per share impact of intangible asset amortization expense, after-tax	0.21			0.25						0.67				0.74
Adjusted earnings per ordinary share	Adjusted earnings per ordinary share	$	2.47		$	2.02		22	%		$	6.57			$	5.51			19	%
Adjusted earnings per ordinary share
Adjusted earnings per ordinary share

Net Sales

Changes in Net sales are summarized as follows: Three months ended September 30, 2023 Nine months ended September 30, 2023
Organic growth 9 % 12 %
Foreign currency 2 % — %
Total increase in Net sales 11 % 12 %

~~Organic~~Net sales increased 9%8% in the ~~third~~first quarter of ~~2023~~2024 driven entirely by ~~primarily due to strength~~organic sales. The increase in ~~industrial, utility, machine OEM, and data center end-markets of the Electrical Americas business segment, strength in~~organic sales ~~to commercial OEM and aftermarket in the Aerospace business segment, and the ramp up of key programs in the eMobility business segment due to robust demand for electric vehicles.~~

~~Organic sales increased 12% in the first~~ ~~nine months~~ of ~~2023~~was primarily due to strength in commercial & institutional, ~~utility,~~ industrial, and data center end-markets ofin the Electrical Americas and Electrical Global business segments, strength in sales to commercial OEM and aftermarket in the Aerospace business segment, and strength in the ~~North American,~~ European ~~and Asia Pacific regions in the Vehicle business segment, and the ramp up of key programs~~region in the eMobility business ~~segment due to robust demand for electric vehicles.~~segment.

Gross Profit

Gross profit margin increased from ~~33.3%~~34.4% in the ~~third~~first quarter of ~~2022~~2023 to 37.3% in the ~~third~~first quarter of ~~2023~~2024 primarily due to higher sales volumes and net price realization, and operating efficiencies in the Electrical Americas and Vehicle business segments, partially offset by higher costs to support growth initiatives in the Electrical Americas and Aerospace business segments, ~~and net sales price realization in the Electrical Global and Vehicle business segments, partially offset by lower sales volumes in the Electrical Global and Vehicle business segments, and~~ unfavorable product mix in the ~~Electrical Global~~Aerospace business segment, and lower sales volume in the Vehicle business segment.

~~Gross profit margin increased from 32.9%~~Income Taxes

The effective income tax rate for the first quarter of 2024 was expense of 17.9% compared to expense of 16.1% for the first quarter of 2023. The increase in the effective tax rate in the first ~~nine months~~quarter of ~~2022 to 36.0% in the first nine months of 2023~~2024 was primarily due to greater levels of income in higher ~~sales volumes and net price realization,~~tax jurisdictions, partially offset by ~~unfavorable product mix and operating inefficiencies~~a larger impact from the excess tax benefits recognized for employee share-based payments in the ~~Electrical Global and Vehicle business segments.~~quarter.

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~~Income Taxes~~

The European Union (EU) member states formally adopted a directive to implement a 15% global minimum effective tax rate by country as established by the Organization for Economic Co-operation and Development (OECD). EU member states, including Ireland, are required to enact legislation to implement the global minimum tax rules by the end of 2023, with effective dates of January 1, 2024, and January 1, 2025, for different aspects of the directive. The Company will continue to monitor and evaluate the impact of global minimum tax legislation as it is enacted by Ireland and other countries in which we operate. Upon full implementation, the global minimum tax could have a material negative impact on our effective tax rate, financial condition, results of operations, and cash flows.

Net Income

Changes in Net income attributable to Eaton ordinary shareholders and Net income per share attributable to Eaton ordinary shareholders - diluted are summarized as follows:


		Three months ended				Nine months ended
		Three months ended
		Three months ended
		Three months ended
(In millions except for per share data)	(In millions except for per share data)	Dollars		Per share		Dollars		Per share
September 30, 2022		$	607	$	1.52	$	1,741	$	4.34
(In millions except for per share data)
(In millions except for per share data)
March 31, 2023
March 31, 2023
March 31, 2023
Business segment results of operations	Business segment results of operations
Performance		213		0.52		554		1.37
Business segment results of operations
Business segment results of operations
Operational performance
Operational performance
Operational performance
Foreign currency
Foreign currency
Foreign currency	Foreign currency	5		0.01		(10)		(0.02)
Corporate	Corporate
Corporate
Corporate
Intangible asset amortization expense
Intangible asset amortization expense
Intangible asset amortization expense	Intangible asset amortization expense	13		0.04		26		0.07
Restructuring program charges	Restructuring program charges	13		0.03		2		0.01
Restructuring program charges
Restructuring program charges
Acquisition and divestiture charges
Acquisition and divestiture charges
Acquisition and divestiture charges	Acquisition and divestiture charges	72		0.18		79		0.19
Other corporate items	Other corporate items	(18)		(0.04)		(82)		(0.20)
Other corporate items
Other corporate items
Tax rate impact
Tax rate impact
Tax rate impact	Tax rate impact	(14)		(0.04)		(37)		(0.09)

September 30, 2023		$	891	$	2.22	$	2,273	$	5.67
March 31, 2024

March 31, 2024

March 31, 2024

Business Segment Results of Operations

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

Electrical Americas


		Three months ended September 30						Increase (decrease)			Nine months ended September 30										Increase (decrease)
		Three months ended March 31
		Three months ended March 31
		Three months ended March 31
(In millions)	(In millions)	2023			2022					Increase (decrease)				2023					2022						Increase (decrease)
(In millions)
(In millions)
Net sales
Net sales
Net sales	Net sales	$	2,594		$	2,179		19	%					$	7,426				$	6,201			20	%

Operating profit	Operating profit	$	719		$	511		41	%		$	1,913				$	1,368				40	%

Operating profit

Operating profit
Operating margin
Operating margin
Operating margin	Operating margin	27.7		%	23.5		%				25.8		%			22.1		%

Net sales increased ~~19% in the third quarter of 2023 and 20%~~17% in the first ~~nine months~~quarter of ~~2023~~2024 driven entirely by organic sales growth. The increase in organic sales ~~in the third quarter of 2023 was primarily due to~~reflects broad-based strength in ~~industrial, utility, machine OEM, and data center end-markets. The increase in organic sales in the first nine months of 2023 was primarily due to~~end-markets, with particular strength in commercial & institutional, ~~utility,~~ industrial, and data center end-markets.

The operating margin increased from ~~23.5%~~22.9% in the ~~third quarter of 2022 to 27.7% in the third~~first quarter of 2023 ~~and from 22.1%~~to 29.2% in the first ~~nine months~~quarter of ~~2022 to 25.8% in the first nine months of 2023~~2024 primarily due to higher sales volumes and net price realization, and operating efficiencies, partially offset by higher costs to support growth ~~initiatives, and net gains from the sale of non-production facilities in 2022.~~initiatives.

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Electrical Global


	Three months ended March 31						Increase (decrease)
(In millions)	2024			2023
Net sales	$	1,500		$	1,500		—	%

Operating profit	$	274		$	274		—	%
Operating margin	18.3		%	18.3		%

Three months ended
September 30 Increase (decrease) Nine months ended
September 30 Increase (decrease)
(In millions) 2023 2022 2023 2022
Net sales $ 1,503 $ 1,486 1 % $ 4,572 $ 4,418 3 %
Operating profit $ 328 $ 305 8 % $ 892 $ 866 3 %
Operating margin 21.8 % 20.6 % 19.5 % 19.6 %
Changes in Net sales are summarized as follows: Three months ended September 30, 2023 Nine months ended September 30, 2023
Organic growth — % 5 %
Divestiture (1) % (1) %
Foreign currency 2 % (1) %
Total increase in Net sales 1 % 3 %


Changes in Net sales are summarized as follows:	Three months ended March 31, 2024
Organic growth	1	%


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

~~Despite weakness in the European region, organic sales were flat in the third quarter of 2023 compared to the third quarter of 2022 due to strength in other global markets.~~ The increase in organic sales in the first ~~nine months~~quarter of ~~2023~~2024 was primarily due to strength in commercial & institutional, industrial, ~~utility,~~ and data center end-markets, partially offset by weakness in utility, machine OEM, and residential end-markets. Additionally, the increase in organic sales was primarily due to strength in the Asia Pacific region and the Global Energy Infrastructure Solutions (GEIS) business, partially offset by weakness in the European region.

The operating margin ~~increased from 20.6%~~was flat at 18.3% in both the ~~third~~first quarter of ~~2022 to 21.8% in the third quarter of 2023 primarily due to net~~2024 and 2023.

Aerospace


	Three months ended March 31						Increase (decrease)
(In millions)	2024			2023
Net sales	$	871		$	803		9	%

Operating profit	$	201		$	180		12	%
Operating margin	23.1		%	22.5		%

Net sales ~~price realization and a net gain on the sale of a non-production facility, partially offset by lower sales volumes and unfavorable product mix. The operating margin decreased from 19.6%~~increased 9% in the first ~~nine months~~quarter of ~~2022 to 19.5% in the first nine months of 2023 primarily due to operating inefficiencies from ongoing supply chain constraints and unfavorable product mix, partially offset~~2024 driven entirely by ~~higher~~organic sales ~~volumes and net price realization, and a net gain on the sale of a non-production facility.~~

~~Aerospace~~

Three months ended
September 30 Increase (decrease) Nine months ended
September 30 Increase (decrease)
(In millions) 2023 2022 2023 2022
Net sales $ 867 $ 768 13 % $ 2,517 $ 2,227 13 %
Operating profit $ 209 $ 185 13 % $ 580 $ 506 15 %
Operating margin 24.1 % 24.0 % 23.0 % 22.7 %

Changes in Net sales are summarized as follows: Three months ended September 30, 2023 Nine months ended September 30, 2023
Organic growth 10 % 12 %
Foreign currency 3 % 1 %
Total increase in Net sales 13 % 13 %

growth. The increase in organic sales ~~in the third quarter and first nine months of 2023~~ was primarily due to broad-based strength across all end markets with particular strength in commercial OEM and aftermarket.

The operating margin increased from ~~24.0%~~22.5% in the ~~third quarter of 2022 to 24.1% in the third~~first quarter of 2023 ~~and from 22.7%~~to 23.1% in the first ~~nine months~~quarter of ~~2022 to 23.0% in the first nine months of 2023~~2024 primarily due to higher sales volumes and net price ~~realization.~~realization, and a gain on the sale of a production facility in the first quarter of 2024, partially offset by higher costs to support growth initiatives and unfavorable product mix.

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Vehicle


	Three months ended March 31						Increase (decrease)
(In millions)	2024			2023
Net sales	$	724		$	739		(2)	%

Operating profit	$	116		$	107		8	%
Operating margin	16.0		%	14.5		%

Three months ended
September 30 Increase (decrease) Nine months ended
September 30 Increase (decrease)
(In millions) 2023 2022 2023 2022
Net sales $ 753 $ 744 1 % $ 2,242 $ 2,123 6 %
Operating profit $ 131 $ 125 5 % $ 353 $ 346 2 %
Operating margin 17.4 % 16.8 % 15.7 % 16.3 %
Changes in Net sales are summarized as follows: Three months ended September 30, 2023 Nine months ended September 30, 2023
Organic growth (1) % 5 %
Foreign currency 2 % 1 %
Total increase in Net sales 1 % 6 %


Changes in Net sales are summarized as follows:	Three months ended March 31, 2024
Organic growth	(3)	%


Foreign currency	1	%
Total increase in Net sales	(2)	%

The decrease in organic sales in the ~~third~~first quarter of ~~2023~~2024 was primarily due to weakness in the ~~South~~North American ~~truck, bus and agriculture market,~~region, partially offset by strength in the Asia Pacific region. ~~The increase in organic sales in the first nine months of 2023 was primarily due to strength in the North American, European, and Asia Pacific regions.~~

The operating margin increased from ~~16.8%~~14.5% in the ~~third quarter of 2022 to 17.4% in the third~~first quarter of 2023 to 16.0% in the first quarter of 2024 primarily due to operating efficiencies and net sales price realization, partially offset by lower sales volumes. The operating margin decreased from 16.3% in the first nine months of 2022 to 15.7% in the first nine months of 2023 primarily due to commodity and wage inflation, and operating inefficiencies, partially offset by higher sales volumes and net price realization.

eMobility

Three months ended
September 30 Increase (decrease) Nine months ended
September 30 Increase (decrease)
(In millions) 2023 2022 2023 2022
Net sales $ 163 $ 137 19 % $ 471 $ 399 18 %
Operating loss $ — $ (2) 100 % $ (5) $ (7) 29 %
Operating margin — % (1.5) % (1.1) % (1.7) %


	Three months ended March 31						Increase (decrease)
(In millions)	2024			2023
Net sales	$	158		$	147		7	%

Operating loss	$	(4)		$	(4)		—	%
Operating margin	(2.7)		%	(2.7)		%

Net sales increased ~~19% in the third quarter of 2023 and 18%~~7% in the first ~~nine months~~quarter of ~~2023~~2024 driven entirely by organic sales growth. The increase in organic sales reflects ~~the ramp up of key programs due to robust demand for electric vehicles~~strength in the European ~~market in the third quarter of 2023 and~~region, partially offset by weakness in the North American ~~and European markets in the first nine months of 2023.~~region.

The operating margin was flat at negative 2.7% in both the first quarter of 2024 and 2023.

Corporate Expense


	Three months ended March 31				Increase (decrease)
(In millions)	2024		2023
Intangible asset amortization expense	$	106	$	124	(15)	%
Interest expense - net	30		50		(40)	%
Pension and other postretirement benefits income	(12)		(11)		9	%


Restructuring program charges	63		10		530	%
Other expense - net	184		148		24	%
Total corporate expense	$	371	$	320	16	%

Total corporate expense increased from ~~negative 1.5%~~$320 million in the ~~third quarter of 2022 to 0.0% in the third~~first quarter of 2023 to $371 million in the first quarter of 2024 primarily due to higher sales volumes and net price realization, and improved manufacturing productivity. The operating margin increased from negative 1.7% in the first nine months of 2022 to negative 1.1% in the first nine months of 2023 primarily due to higher sales volumes and net price realization, partially offset by manufacturing start-up costs associated with new electric vehicle programs.

~~Table of Contents~~

~~Corporate Expense~~

Three months ended
September 30 Increase (decrease) Nine months ended
September 30 Increase (decrease)
(In millions) 2023 2022 2023 2022
Intangible asset amortization expense $ 107 $ 124 (14) % $ 344 $ 375 (8) %
Interest expense - net 33 37 (11) % 124 100 24 %
Pension and other postretirement benefits income (11) (7) 57 % (33) (35) (6) %
Restructuring program charges 7 22 (68) % 46 49 (6) %
Other expense - net 171 227 (25) % 512 529 (3) %
Total corporate expense $ 307 $ 403 (24) % $ 993 $ 1,018 (2) %

~~Total corporate expense decreased from $403 million in the third quarter of 2022 to $307 million in the third quarter of 2023 primarily due to lower Acquisition and divestiture~~Restructuring program charges included in Other expense - net as integration activities wind down on prior acquisitions. Total corporate expenses decreased from $1,018 million in the first nine months of 2022 to $993 million in the first nine months of 2023 primarily due to lower Intangible asset amortization expense and Other expense - net, partially offset by ~~higher~~lower Interest expense - ~~net.~~net and Intangible asset amortization expense. The ~~decrease~~increase in Other expense - net is primarily due to ~~lower Acquisition and divestiture charges as integration activities wind down on prior acquisitions.~~higher costs for litigation matters.

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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 October 2, 2023, the~~The Company ~~replaced its existing $500 million 364-day~~maintains revolving credit ~~facility with~~facilities consisting of a ~~new~~ $500 million 364-day revolving credit facility that will expire on September 30, 2024 ~~on substantially similar terms. The Company also has~~and a $2,500 million five-year revolving credit facility that will expire on October 1, 2027. The revolving credit facilities totaling $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 ~~September 30, 2023.~~March 31, 2024. The Company maintains access to the commercial paper markets through its $3,000 million commercial paper program, of which none was outstanding on ~~September 30, 2023.~~

On May 18, 2023, Eaton issued senior notes (2023 Notes) with a face amount of $500 million. The 2023 Notes mature in 2028 with interest payable semi-annually at a rate of 4.35% per annum. The issuer received proceeds totaling $497 million from the issuance, net of financing costs. Proceeds from the 2023 Notes were used primarily to pay down outstanding U.S. dollar commercial paper. The 2023 Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2023 Notes contain customary optional redemption and par call provisions. The 2023 Notes also contain a provision which upon a change of control requires the Company to make an offer to purchase all or any part of the 2023 Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The 2023 Notes are subject to customary non-financial covenants.

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.

In 2022, the Company paid $610 million to acquire Royal Power Solutions and received cash of $22 million from Danfoss A/S to fully settle all post-closing adjustments from the sale of the Hydraulics business.31, 2024.

Over the course of a year, cash, short-term investments, and short-term debt may fluctuate in order to manage global liquidity. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, Eaton had cash of ~~$348~~$473 million and ~~$294~~$488 million, short-term investments of ~~$1,558~~$1,969 million and ~~$261~~$2,121 million, and short-term debt of ~~$24~~$1 million and ~~$324~~$8 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:


		Nine months ended September 30
	Three months ended March 31							Three months ended March 31	Change from 2023
(In millions)	(In millions)	2023		2022		Change from 2022
Net cash provided by operating activities	Net cash provided by operating activities	$	2,326	$	1,347	$	979
Net cash used in investing activities		(1,782)		(983)		(799)
Net cash provided by operating activities
Net cash provided by operating activities
Net cash provided by (used in) investing activities
Net cash used in financing activities	Net cash used in financing activities	(507)		(445)		(62)
Effect of currency on cash	Effect of currency on cash	18		15		3
Total increase (decrease) in cash		$	54	$	(67)
Total decrease in cash

Operating Cash Flow

Net cash provided by operating activities increased by ~~$979~~$140 million in the first ~~nine~~three months of ~~2023~~2024 compared to ~~2022~~2023 primarily due to ~~lower investment in working capital and~~ higher net income in 2024, partially offset by higher working capital balances.

Investing Cash Flow

Net cash provided by investing activities increased by $156 million in the first three months of 2024 compared to 2023 primarily driven by an increase in sales of short-term investments to $150 million in 2024 compared to purchases of short-term investments of $27 million in 2023 and proceeds from the sale of certain facilities in 2024, partially offset by an increase in capital expenditures for property, plant and equipment to $183 million in 2024 from $126 million in 2023.

Financing Cash Flow

Net cash used in financing activities increased by $255 million in the first three months of 2024 compared to 2023 primarily due to no proceeds from borrowings in 2024 compared to proceeds from borrowings of $318 million in 2023, and an increase in repurchase of shares to $138 million in 2024 compared to no repurchase of shares in 2023, partially offset by a decrease in net payments of short-term debt to $7 million in 2024 from $236 million in 2023.

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~~Investing Cash Flow~~

Net cash used in investing activities increased by $799 million in the first nine months of 2023 compared to 2022 primarily driven by an increase in net purchases of short-term investments to $1,304 million in 2023 from $45 million in 2022, and an increase in capital expenditures for property, plant and equipment to $514 million in 2023 from $389 million in 2022, partially offset by no cash paid for business acquisitions in 2023 compared to cash paid of $612 million in 2022.

~~Financing Cash Flow~~

Net cash used in financing activities increased by $62 million in the first nine months of 2023 compared to 2022 primarily due to net payments of short-term debt of $295 million in 2023 compared to net proceeds of short-term debt of $896 million in 2022, lower proceeds from borrowings of $818 million in 2023 compared to $1,995 million in 2022, partially offset by lower payments on borrowings of $11 million in 2023 compared to $2,008 million in 2022 and no repurchase of shares in 2023 compared to repurchase of shares of $286 million in 2022.

Uses of Cash

Capital Expenditures

Capital expenditures were ~~$514~~$183 million and ~~$389~~$126 million in the first ~~nine~~three months of 2024 and 2023, ~~and 2022,~~ respectively. The Company plans to increase capital expenditures over the next five years to expand production capacity across various markets to support anticipated growth. As a result, Eaton expects approximately ~~$700~~$800 million in capital expenditures in ~~2023.~~2024.

Dividends

Cash dividend payments were ~~$1,035~~$368 million and ~~$977~~$334 million in the first ~~nine~~three months of ~~2023~~2024 and ~~2022,~~2023, respectively. 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 ~~2023.~~2024.

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. During the three ~~and nine~~ months ended ~~September 30, 2023, no ordinary shares were repurchased. During the three and nine months ended September 30, 2022, 0.7 million and 2.0~~March 31, 2024, 0.5 million ordinary shares ~~respectively,~~ were repurchased under the 2022 ~~Program~~program in the open market at a total cost of ~~$100 million and $286 million, respectively. At September 30,~~$138 million. During the three months ended March 31, 2023, ~~there is $4,714 million still available for share repurchases under the 2022 Program.~~no ordinary shares were repurchased. The Company will continue to pursue share repurchases in ~~2023~~2024 depending on market conditions and capital levels.

Acquisition of Businesses

~~The Company paid cash of $612 million to acquire a business in the first nine months of 2022.~~ There were no business acquisitions in the first ~~nine~~three months of 2024 and 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 ~~September 30, 2023,~~March 31, 2024, the Company had Short-term debt of ~~$24~~$1 million, Current portion of long-term debt of ~~$975~~$994 million, and Long-term debt of ~~$8,150~~$8,192 million. The Company believes it has the operating flexibility, cash flow, and access to capital markets to meet scheduled payments of long-term debt.

Supply Chain Finance Program

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. 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. For additional information on the SCF program, see Note 7.

~~Table of 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), September 15, 2017 (the 2017 Indenture) and August 23, 2022 (as supplemented by the First and Second Supplemental Indentures of the same date and the Third Supplemental Indenture dated May 18, 2023, the 2022 Indenture). The senior notes of Eaton Corporation are registered under the Securities Act of 1933, as amended (the Registered Senior Notes). Eaton Capital Unlimited Company, a subsidiary of Eaton, is the issuer of five outstanding series of debt securities sold in offshore transactions under Regulation S promulgated under the Securities Act (the Eurobonds). The Eurobonds and the Registered Senior Notes (together, the Senior Notes) comprise substantially all of Eaton’s long-term indebtedness.

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Substantially all of the Senior Notes (with limited ~~exceptions, for example, see Note 8 of the Financial Statements included herewith)~~exceptions), together with the credit facilities described above under Liquidity and Financial Condition (the Credit Facilities), are guaranteed by Eaton and 17 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 ~~September 30, 2023,~~March 31, 2024, 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 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~~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 are 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.

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

(a)the consummation of certain types of transactions permitted under the applicable indenture, including one that results in such guarantor ceasing to be a 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), becomes prohibited by any applicable law, rule or regulation or by any contractual obligation; or

(d)such guarantee 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).

The guarantee of Eaton does not contain any release provisions.

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'~~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)

September 30,
2023

December 31,
2022

(In millions)

March 31, 2024

December 31, 2023

Current assets

4,189

3,363

Noncurrent assets

12,937

12,938

Current liabilities

3,820

2,948

Noncurrent liabilities

9,763

10,047

Amounts due to subsidiaries that are non-issuers and non-guarantors - net

17,360

16,285

(In millions)

Nine months ended September 30, 2023

(In millions)

Three months ended
March 31, 2024

Net sales

9,926

Sales to subsidiaries that are non-issuers and non-guarantors

803

Cost of products sold

7,484

Expense from subsidiaries that are non-issuers and non-guarantors - net

787

Net income

135

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 litigation, expected capital deployment, expected capital expenditures, future dividend payments, anticipated share repurchases, and expected restructuring program charges and ~~benefits, and the anticipated impact of the global minimum tax regulation.~~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: global pandemics such as COVID-19; 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 at Eaton or at our customers or suppliers; 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, geopolitical tensions, 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.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in exposures to market risk since December 31, ~~2022.~~2023.

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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~~Olivier Leonetti - 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 ~~September 30, 2023.~~March 31, 2024.

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 ~~third~~first quarter of ~~2023,~~2024, 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.

PART II — OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS.

Information regarding the Company's current legal proceedings is presented in Note 109 of the Notes to the condensed consolidated financial statements.

ITEM 1A.RISK FACTORS.

“Item 1A. Risk Factors” in Eaton's ~~2022~~2023 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 ~~2022~~2023 Form 10-K.

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

During the ~~third~~first quarter of ~~2023, there~~2024, 0.5 million ordinary shares were norepurchased in the open market at a total cost of $138 million. These shares ~~repurchased.~~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 2024 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	—	$	—	—	$	4,714
February	451,586	$	283.45	451,586	$	4,586
March	36,098	$	289.78	36,098	$	4,576
Total	487,684	$	283.92	487,684

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ITEM 6.EXHIBITS.

Eaton Corporation plc

~~Third~~First Quarter ~~2023~~2024 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 - 4.10) hereto

10.1						5-Year Revolving Credit Agreement, dated as of October 3, 2022, among Eaton Corporation, 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. as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent and Bank of America, N.A. as documentation agent.

10.2						364-Day Revolving Credit Agreement, dated as of October 2 , 202 3 ~~2022,~~, among Eaton Corporation, 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., as joint lead arrangers and joint bookrunners, JPMorgan Chase Bank, N.A., as syndication agent and Bank of America, N.A. as documentation agent.

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:

~~October 31, 2023~~April 30, 2024

By:

/s/ ~~Thomas B. Okray~~Olivier Leonetti

~~Thomas B. Okray~~Olivier Leonetti

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			2521
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			3530
ITEM 4. CONTROLS AND PROCEDURES			3631
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			3631
ITEM 1A. RISK FACTORS			3631

ITEM 2. ~~UNRESTRICTED~~UNRE GISTER ED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			3631


ITEM 6. EXHIBITS			3732
SIGNATURES			3934


(In millions)	January 1, 2023		Translation		September 30, 2023
Electrical Americas	$	7,402	$	2	$	7,404
Electrical Global	3,929		(24)		3,905

Aerospace	2,844		8		2,851
Vehicle	287		—		287
eMobility	334		—		334
Total	$	14,796	$	(15)	$	14,781


	United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
	Three months ended September 30
(In millions)	2023		2022		2023		2022		2023		2022
Service cost	$	4	$	6	$	11	$	15	$	—	$	—
Interest cost	35		32		22		12		3		2
Expected return on plan assets	(48)		(50)		(31)		(28)		—		—
Amortization	1		2		1		11		(4)		(1)
	(8)		(10)		4		9		(1)		—

Settlements	9		18		1		—		—		—
Total expense (income)	$	1	$	8	$	5	$	10	$	(1)	$	—


	United States pension benefit expense (income)				Non-United States pension benefit expense (income)				Other postretirement benefits expense (income)
	Nine months ended September 30
(In millions)	2023		2022		2023		2022		2023		2022
Service cost	$	14	$	22	$	32	$	45	$	—	$	1
Interest cost	106		80		64		36		8		5
Expected return on plan assets	(146)		(155)		(91)		(88)		—		—
Amortization	3		14		5		35		(13)		(5)
	(23)		(39)		11		27		(5)		—

Settlements	28		49		2		1		—		—
Total expense (income)	$	5	$	10	$	13	$	29	$	(5)	$	—


	Nine months ended September 30, 2022
(In millions)	Net sales		Cost of products sold		Interest expense - net
Amounts from Consolidated Statements of Income	$	15,368	$	10,319	$	100

Gain (loss) on derivatives designated as cash flow hedges
Forward starting floating-to-fixed interest rate swaps
Hedged item	$	—	$	—	$	(1)
Derivative designated as hedging instrument	—		—		1

Currency exchange contracts
Hedged item	$	10	$	(12)	$	—
Derivative designated as hedging instrument	(10)		12		—







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