With Boyd's strong performance, what are its competitive advantages compared to competitors, and what is its expected cadence for Q3 and Q4?

Boyd is a market leader in liquid cooling, acting as a design partner for chip providers, giving them early access and bidding opportunities. Their proven scalability, quality (derived from aerospace background), deep product breadth, and engineering expertise are key advantages. The integration is focused on accelerating development while preserving their core strengths. “I would start by saying that I believe they're going to continue to win because they are the partner -- the design partner for broad-based chip providers. They are always in their road maps and gives them a first look and a first chance to bid, which I think is fascinating.”

What drove the significant upside in Electrical Global's organic growth, and what gives confidence in sustained double-digit growth for the back half?

All Electrical Global businesses (EMEA, APAC, GIS) meaningfully exceeded organic growth expectations, with EMEA and APAC up 20% and GIS up high teens. Data center organic revenues were up 65%, and machine OEM up over 20%. Orders were up 33% on a 12-month basis, and organic backlog (ex-Boyd) increased 54%, providing confidence for the raised full-year guidance. “I would lead by saying that in Q2 -- and I'm very pleased to say that all businesses, our EMEA, our APAC and our [ GIS ] businesses all performed meaningfully ahead of organic growth expectations. All did really, really well.”

After a year as CEO, what are your reflections on the ups and downs, and how does that shape your view of the business going forward?

The CEO reflected on the strategic shift to 'Lead, Invest, Execute for Growth,' aiming to add $10 billion to the top line between 2024 and 2026, a significant acceleration from the prior decade. This involved portfolio reshaping through acquisitions and divestitures, strengthening the leadership team, and successful organic capacity investments, with major ramp-up disruptions now largely behind. The company is poised for a new growth cycle. “So if you look at these 3 years, beginning of '24 to end of '26, including our renewed guidance, we will add $10 billion to the top line. So in 3 years, we're going to do 10x what we did in the last decade, so the prior decade.”

ETN

Eaton (ETN) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Jul 31, 2026

Source: earnings call transcript

Executive summary

Eaton Q2 FY26 — Record Revenue and EPS, Strong Data Center Demand, and Raised Full-Year Guidance

Eaton delivered record Q2 FY26 results, driven by robust execution and unprecedented demand across its Electrical segments, particularly in data centers. The company raised its full-year guidance, reflecting confidence in its strategic pillars of leading, investing, and executing for growth, and its ability to capitalize on secular tailwinds. Management highlighted the successful ramp-up of capacity in Electrical Americas and the strong performance of recent acquisitions.

Highlights

Adjusted EPS of $3.15 exceeded guidance by $0.10 at the midpoint, reflecting strong operating performance.
Record revenue of $8.5 billion, with 21% total growth and 14% organic growth.
Electrical Americas organic growth accelerated to 18%, achieving 190 basis points of margin expansion quarter-over-quarter.
Total company book-to-bill remained strong at 1.2, with Electrical Americas at 1.3 and Aerospace at 1.2.
Full-year guidance raised for organic growth by 200 basis points to 12% midpoint and adjusted EPS by $0.22 to $13.50 midpoint.

Concerns

Electrical Americas experienced a year-over-year margin decline primarily due to temporary negative price cost.
A higher tax rate partially offset the segment profit beat by $0.15.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Organic Growth	11% to 13% high materiality	FY26	High
Full-year 2026 Adjusted EPS	$13.40 to $13.60 high materiality	FY26	High
Full-year 2026 Cash Flow	Reaffirmed medium materiality	FY26	High
Q3 2026 Guidance	Provided low materiality	Q3 · FY26	High
Boyd Full-year Revenues	$1.8 billion medium materiality	FY26	High
Electrical Americas Organic Growth	15% medium materiality	FY26	High
Electrical Global Organic Growth	12% medium materiality	FY26	High
Electrical Americas Margin	32% high materiality	FY30	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Electrical Americas Organic sales growth accelerated, driven by data centers, machine OEM, and commercial and institutional. Margins improved significantly quarter-over-quarter, reflecting execution of the 'Execute for Growth' strategy. 190 basis points higher than Q1Data centers organic sales growth: ~65%Negotiations pipeline growth YTD: 60%Orders growth (rolling 12-month): 41%Book-to-bill: 1.3	—	18% organic	—	27.5%
Electrical Global Strong total and organic growth, driven by data center, utility, and machine OEM. Boyd acquisition significantly contributed to growth. Operating margin was better than expected. Down 30 basis points over prior year1 point higher than expectedBoyd acquisition contribution to growth: 25%Orders growth (rolling 12-month): 33%	—	44% total, 18% organic	—	19.8%
Aerospace Achieved record quarterly sales and segment profit, with strength in commercial OEM and aftermarket. Ultra PCS acquisition performed to expectations and was accretive to margins. Demand remains strong. Expanded by 60 basis pointsUltra PCS acquisition contribution to growth: 6 pointsBook-to-bill: 1.2	record quarterly sales	7% organic	—	22.8%
Mobility Organic decline was offset by FX. Margins improved year-over-year, with organic growth being slightly positive when excluding the intentional exit of low-margin business. Fully offset by positive foreign exchange impactExcluding low-margin business exit, organic growth slightly positive	—	Declined 2% organically	—	increased 90 basis points year-over-year
Combined Electrical segments Strong combined performance for the electrical businesses, with significant organic growth, margin expansion, and robust order and backlog growth. 110 basis points higher than Q1Orders growth (rolling 12-month): 38%Book-to-bill: 1.2Backlog growth YoY: 43%	—	27% total, 18% organic	—	24.5%

ETN operating KPIs by quarter

ETN operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	This call Jun 2026 Q2 FY26	Change vs prior quarter
Book-to-bill ratio Electrical Americas	—	—	1.1 ratio Even with record sales, book-to-bill increased to 1.1 with 17% growth in our large $11.4 billion backlog, providing strong visibility for our organic growth in 2025 and beyond. Source: earnings call transcript	1.1 ratio Book-to-bill remained at 1.1, and our backlog grew by $2 billion or 20% to $12 billion, providing strong visibility for our organic growth outlook. Source: earnings call transcript	1.2 ratio Book-to-bill increased to 1.2, and our backlog year-on-year grew by over $3 billion or 31% to $13.2 billion, providing strong visibility for our organic growth outlook. Source: earnings call transcript	1.3 ratio Our total company book-to-bill remains strong at 1.2, with Americas book-to-bill expanding to 1.3 and Aerospace to 1.2. Source: earnings call transcript	+8.3%
Backlog Electrical	$11.8B Backlog continues to be very strong with Electrical at $11.8 billion and Aerospace at $3.7 billion for a total backlog of $15.5 billion. Source: earnings call transcript	—	—	—	$15.3B On the right, backlog also continues to set records with Electrical at $15.3 billion and Aerospace at $4.3 billion for a total backlog of $19.6 billion. Source: earnings call transcript	—	—
Backlog Aerospace	$3.7B Backlog continues to be very strong with Electrical at $11.8 billion and Aerospace at $3.7 billion for a total backlog of $15.5 billion. Source: earnings call transcript	—	—	—	$4.3B On the right, backlog also continues to set records with Electrical at $15.3 billion and Aerospace at $4.3 billion for a total backlog of $19.6 billion. Source: earnings call transcript	—	—
Backlog	$15.5B Backlog continues to be very strong with Electrical at $11.8 billion and Aerospace at $3.7 billion for a total backlog of $15.5 billion. Source: earnings call transcript	—	—	—	$19.6B On the right, backlog also continues to set records with Electrical at $15.3 billion and Aerospace at $4.3 billion for a total backlog of $19.6 billion. Source: earnings call transcript	—	—
Book-to-bill ratio	—	1.1 ratio And as a result, total Eaton book-to-bill ratio at 1.1 with backlog growth year-over-year and sequentially. Source: earnings call transcript	—	1.2 ratio As a result, our book-to-bill for the combined segments was 1.2 on a quarterly basis and 1.1 on a rolling 12-month basis. Source: earnings call transcript	—	1.2 ratio Our total company book-to-bill remains strong at 1.2, with Americas book-to-bill expanding to 1.3 and Aerospace to 1.2. Source: earnings call transcript	—
Backlog Electrical Americas	—	—	$11.4B Even with record sales, book-to-bill increased to 1.1 with 17% growth in our large $11.4 billion backlog, providing strong visibility for our organic growth in 2025 and beyond. Source: earnings call transcript	$12B Book-to-bill remained at 1.1, and our backlog grew by $2 billion or 20% to $12 billion, providing strong visibility for our organic growth outlook. Source: earnings call transcript	$13.2B Book-to-bill increased to 1.2, and our backlog year-on-year grew by over $3 billion or 31% to $13.2 billion, providing strong visibility for our organic growth outlook. Source: earnings call transcript	—	+10%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total company book-to-bill 1.2 Q2 FY26

Electrical Americas book-to-bill 1.3 Q2 FY26

Aerospace book-to-bill 1.2 Q2 FY26

Electrical Americas backlog expanded Q2 FY26

$5 billion added since early last year, $700 million sequentially

Electrical Global total backlog up 103% Q2 FY26

YoY

Includes Boyd contribution

Electrical Global organic backlog up 54% Q2 FY26

YoY

Excludes Boyd contribution

Total Electrical business book-to-bill 1.2 Q2 FY26

Total Electrical business backlog up 43% Q2 FY26

YoY

Total U.S. data center backlog 307 gigawatts Q2 FY26

up from 12 years

Represents 15 years at 2025 build rates; only ~20% converts near term, majority for 2028 and beyond

Deals & partnerships

Fibrebond Market leader in building modular solutions for data centers.

Acquisition to enhance capabilities in prefab and modularization for data centers.

Resilient Power Provider of medium voltage solid-state transformers for 800-volt DC applications.

Acquisition to strengthen Eaton's technology leadership in 800-volt DC transition for data centers.

Ultra PCS Leader in technology for defense systems.

Acquisition to enhance Aerospace segment's capabilities and contribute to growth and margins.

Boyd Market leader in liquid cooling solutions (cold plates, CDUs).

Acquisition to complete Eaton's 'grid to chip' portfolio and provide strategic read into chip development.

Mobility business Separation of automotive sector business via Reverse Morris Trust.

Strategic move to align capital to higher-return, higher-growth opportunities.

Capital programs

Electrical Americas capacity expansion underway more than $1 billion

Benefit:2 dozen projects

Investment in capacity expansion to meet demand, with facilities ramping up and bulk of disruption behind.

Risks & headwinds

Temporary negative price cost Q2 FY26

Caused majority of Electrical Americas YoY margin decline

Mitigation:Pricing actions taken in Q2 and early Q3; expected to return to roughly neutral impact in H2 FY26.

Higher tax rate Q2 FY26

Offset segment profit beat by $0.15

What to watch in Q3 FY26

Electrical Americas margin improvement

Q3 FY26

Current 27.5% (Q2 FY26)

Target Continued improvement (250 bps improvement from Q2 to Q3)

Why it matters

This is a key indicator of the successful execution of the 'Execute for Growth' strategy and overall profitability for the largest segment.

If you look at Q2 to Q3, which is a 250 basis point improvement, 150 basis points is price cost and 100 basis points is output and productivity.

Find out whether ETN delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you discuss the growth trends in your electrical businesses outside of data centers and their implications for the second half?

Eaton is seeing strong, broad-based growth across most electrical end markets beyond data centers. Commercial and institutional, machine OEM, and distributed IT all showed double-digit organic revenue growth. Orders are accelerating broadly, with machine OEM orders up in the mid-30s and other markets in the mid-to-high teens.

“As you look beyond data centers in Electrical, you'll see that we realized strong growth across most of Electrical end markets in the quarter, including double-digit organic revenue in commercial and institutional, which is still a very important market for us. Machine OEM recovering really strongly, also double digits, and also distributed IT recovering really nicely, also double digits.”

asked by Deane Dray · answered by Paulo Sternadt

3 min read 7 chapters

Detailed narrative

Strategic Transformation and Culture

Eaton is executing its 'Lead, Invest, Execute for Growth' strategy, focusing on cultural evolution and portfolio reshaping. This includes strategic acquisitions like Fibrebond, Resilient Power, Ultra PCS, and Boyd, which are delivering higher growth and accretive margins. The company also made the 'tough call' to separate its Mobility business, aligning capital to higher-return opportunities.

This transformation aims to make Eaton leaner, more agile, customer-centric, competitive, and innovative, empowering its 100,000 employees.

Electrical Americas Execution and Capacity Ramp

Electrical Americas is prioritizing scaling capacity, investing over $1 billion in capacity expansion across two dozen projects. The segment has achieved roughly 25% growth in revenue per day since early 2025, with an 8% increase in Q2 over Q1. This successful ramp-up, particularly clearing the largest sequential hurdle from Q1 to Q2, demonstrates the effectiveness of the 'Execute for Growth' strategy and is driving margin improvements, with 190 basis points gained quarter-over-quarter.

Unprecedented Data Center Demand and Long-Term Tailwinds

Demand from the data center market continues to grow faster than estimated, with the total U.S. data center backlog reaching 307 gigawatts. This represents 15 years of backlog at 2025 build rates, an increase from 12 years in the prior update.

While only about 20% of this backlog is expected to convert near-term, the majority will translate into deliveries for 2028 and beyond, providing a significant and durable tailwind for Eaton for years to come.

Boyd Acquisition Performance and Strategic Importance

The Boyd acquisition is performing strongly, delivering $432 million in revenue in Q2, 20% above commitments. Boyd is recognized as a market leader in liquid cooling (cold plates and CDUs) and serves as a design partner for chip providers, offering early strategic insights into chip development.

This acquisition enhances Eaton's 'grid to chip' portfolio, providing a critical component for future data center architectures and contributing to the Electrical Global segment's strong performance.

Broad-Based Electrical Market Strength Beyond Data Centers

Beyond the robust data center demand, Eaton's Electrical businesses are experiencing broad-based growth. Electrical Americas saw double-digit organic revenue growth in commercial and institutional, machine OEM, and distributed IT. Electrical Global also demonstrated strong performance across EMEA, APAC, and GIS, with machine OEM orders rebounding significantly in the mid-30s.

This diversified growth across end markets underscores the strength of Eaton's portfolio and its ability to capitalize on multiple secular trends.

Eaton's Positioning for 800-Volt DC Transition

Eaton is strategically positioned for the industry's transition to 800-volt DC architecture, which significantly improves data center efficiency. The company's comprehensive offering includes leadership in medium voltage solid-state transformers (via Resilient Power), core DC breaker technology, advanced power electronics (UPS capabilities), and critical cooling solutions (Boyd).

This integrated approach, combined with a strong service network, aims to provide a complete and reliable solution for data center operators in this evolving landscape.

Modularization and Prefabrication Trend

Eaton is actively addressing the industry trend towards modularization and prefabrication, driven by the scarcity of skilled labor for traditional 'stick build' construction. The acquisition of Fibrebond, a market leader in building modular solutions, is a key part of this strategy.

This approach is expected to become even more critical with the simplification of architecture brought by 800-volt DC conversion, allowing Eaton to package its equipment more effectively and meet customer demands for efficient, scalable deployments.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.