Eaton Corp plc

Previous wording

This Form 10-Q Report contains “forward-looking statements” within the meaning of federal securities laws. These forward-looking statements are based upon management’s current expectations, predictions, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, litigation, expected capital expenditures, future dividend payments, anticipated share repurchases, liquidity, the successful integration of recent acquisitions, the anticipated separation and divestiture of the Mobility business, anticipated capital deployment, and expected restructuring program charges and benefits. These statements may also discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to the Company. These statements are not guarantees of future performance, and actual results may differ materially. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as “aim,” “anticipate,” “believe,” “could,” “develop,” “endeavor,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project” “seek,” “should,” “target,” “will,” “would” or other similar words, phrases or expressions. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside of our control.

Current wording

This Form 10-Q Report contains “forward-looking statements” within the meaning of federal securities laws. These forward-looking statements are based upon management’s current expectations, predictions, estimates, assumptions and beliefs concerning future events and conditions and may discuss, among other things, litigation, expected capital expenditures, future dividend payments, anticipated share repurchases, liquidity, the successful integration of recent acquisitions, the anticipated separation and divestiture of the Mobility business, the anticipated closing of COL Group, anticipated capital deployment, and expected restructuring program charges and benefits. These statements may also discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to the Company. These statements are not guarantees of future performance, and actual results may differ materially. Any statement that is not historical in nature is a forward-looking statement and may be identified by the use of words and phrases such as “aim,” “anticipate,” “believe,” “could,” “develop,” “endeavor,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project” “seek,” “should,” “target,” “will,” “would” or other similar words, phrases or expressions. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. These statements should be used with caution and are subject to various risks and uncertainties, many of which are outside of our control.

Previous wording

On January 26, 2026, Eaton announced its intention to separate its Mobility business segment from the rest of Eaton via a spin-off. On June 10, 2026, Eaton entered into definitive agreements with Dana Incorporated (Dana), whereby Eaton will separate the Mobility business and combine it with Dana in a Reverse Morris Trust (RMT) transaction (the separation and merger with and into Dana described below collectively referred to as the Transaction). As part of the Transaction, Eaton will distribute the Mobility business (other than certain assets and liabilities that will be sold directly to Dana in a concurrent asset sale) to Eaton shareholders through an exchange offer (split-off), in which Eaton shareholders will have the opportunity to tender their Eaton shares in exchange for shares of Mobility (USA) Corporation, a wholly owned subsidiary of Eaton (SpinCo), followed, if necessary, by a clean-up pro rata distribution. Immediately thereafter, a direct, wholly owned subsidiary of SpinCo will merge with and into Dana, with Dana surviving as a direct, wholly owned subsidiary of SpinCo. Following completion of the Transaction, Eaton shareholders are expected to own at least 50.1% of the combined company's outstanding shares. Eaton will also receive a cash distribution of approximately $1.1 billion prior to completion of the Transaction, subject to a customary cash and indebtedness adjustment and tax payments to various global jurisdictions and transaction related charges. Eaton expects to use the cash distribution consistent with its capital allocation framework, including repayment of outstanding indebtedness.

Current wording

On January 26, 2026, Eaton announced its intention to separate its Mobility business segment from the rest of Eaton via a spin-off. On June 10, 2026, Eaton entered into definitive agreements with Dana Incorporated (Dana), and on October 16, 2026, entered into a supplemental letter agreement, whereby Eaton will separate the Mobility business and combine it with Dana in a Reverse Morris Trust (RMT) transaction (collectively referred to as the Transaction). As part of the Transaction, Eaton will distribute the Mobility business (other than certain assets and liabilities that will be sold directly to Dana in a concurrent asset sale) to Eaton shareholders through an exchange offer (split-off), in which Eaton shareholders will have the opportunity to tender their Eaton shares in exchange for shares of Mobility (USA) Corporation, a wholly owned subsidiary of Eaton (SpinCo), followed, if necessary, by a clean-up pro rata distribution. Immediately thereafter, a two-step merger will take place. In the first merger step, a direct, wholly owned corporation subsidiary of SpinCo will merge with and into Dana, with Dana surviving such first merger as a direct, wholly owned subsidiary of SpinCo. Then immediately following the first merger, Dana will merge with and into a direct, wholly owned limited liability company subsidiary of SpinCo (the Second Merger Sub), with the Second Merger Sub surviving as a direct, wholly owned subsidiary of SpinCo. Following completion of the Transaction, Eaton shareholders are expected to own 50.1% of the combined company's outstanding shares. Certain of Eaton's subsidiaries will also receive a cash distribution of approximately $1.1 billion prior to completion of the Transaction, subject to a customary cash and indebtedness adjustment and tax payments to various global jurisdictions and transaction related adjustments. Eaton expects to use the cash distribution consistent with its capital allocation framework, including repayment of outstanding indebtedness.

Previous wording

The RMT transaction is intended to be tax-free for U.S. federal income tax purposes to Eaton and Eaton’s shareholders and is expected to close in the first quarter of 2027, subject to Dana stockholder approval, regulatory approvals, and customary closing conditions. Until the Transaction closes, the Mobility business segment will continue to operate as a business segment of Eaton and its financial results reported in Eaton’s continuing operations. In the event the Transaction is not consummated, Eaton intends to separate its Mobility business segment in a spin-off.

Current wording

The RMT transaction is intended to be tax-free for U.S. federal income tax purposes to Eaton and Eaton’s shareholders and is expected to close in the first four months of 2027, subject to Dana stockholder approval, regulatory approvals, and customary closing conditions. Until the Transaction closes, the Mobility business segment will continue to operate as a business segment of Eaton and its financial results reported in Eaton’s continuing operations. In the event the Transaction is not consummated, Eaton intends to separate its Mobility business segment in a spin-off.

Previous wording

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

Current wording

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

Previous wording

•The acquisitions of Fibrebond Corporation, Resilient Power Systems Inc., Ultra PCS Limited, Boyd Thermal, and Exertherm, the anticipated divestiture of the Mobility business, transactions completed prior to 2023, and other charges to acquire and exit businesses.

Current wording

•The acquisitions of Fibrebond Corporation, Resilient Power Systems Inc., Ultra PCS Limited, Boyd Thermal, and Exertherm, the anticipated separation of the Mobility business, transactions completed prior to 2023, and other charges to acquire and exit businesses.

Previous wording

•Employee transaction and retention award compensation expense related to the acquisition of Fibrebond of $27 million and $39 million in the second quarter and the first six months of 2026, respectively, and $47 million in the second quarter and the first six months of 2025.

Current wording

•Employee transaction and retention award compensation expense related to the acquisition of Fibrebond of $12 million and $52 million in the third quarter and the first nine months of 2026, respectively, and $16 million and $64 million in the third quarter and the first nine months of 2025, respectively.

Previous wording

•Employee incentive compensation expense related to the acquisition of Resilient of $6 million and $16 million in the second quarter and first six months of 2026, respectively.

Current wording

•Employee incentive compensation expense related to the acquisition of Resilient of $4 million and $20 million in the third quarter and first nine months of 2026, respectively, and $4 million in the third quarter of 2025.

Previous wording

Charges in 2026 and 2025 were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other expense (income) - net. In Business Segment Information in Note 15, the charges were included in Other expense - net.

Current wording

Charges in 2026 and 2025 were included in Cost of products sold, Selling and administrative expense, Research and development expense, or Other expense - net. In Business Segment Information in Note 15, the charges were included in Other expense - net.

Previous wording

Additionally, during the second quarter and the first six months of 2026, Eaton incurred $52 million of withholding taxes related to funding the acquisition of Boyd Thermal, which are included in Income tax expense (benefit) in the table above.

Current wording

Additionally, during the second quarter of 2026, Eaton incurred $52 million of withholding taxes related to funding the acquisition of Boyd Thermal, which are included in Income tax expense (benefit) in the table above for the nine months ended September 30, 2026.

Previous wording

During the first quarter of 2024, Eaton implemented a 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. Since the inception of the program, the Company has incurred charges of $397 million. This restructuring program is expected to be completed in 2026 and is expected to incur additional expenses related to workforce reductions of $60 million and plant closing and other costs of $18 million, resulting in total estimated charges of $475 million for the entire program. The Company expects mature year benefits of $375 million when the multi-year program is fully implemented.

Current wording

During the first quarter of 2024, Eaton implemented a 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. Since the inception of the program, the Company has incurred charges of $394 million. This restructuring program is expected to be completed in 2026 and is expected to incur additional expenses related to workforce reductions of $20 million and plant closing and other costs of $16 million, resulting in total estimated charges of $430 million for the entire program. The Company expects mature year benefits of $415 million when the multi-year program is fully implemented.

Previous wording

The increase in organic salesin thesecond quarter of 2026 was due to strength in data center and machine OEM end-markets in the Electrical Americas business segment, broad-based strength in end-markets of the Electrical Global business segment, and strength in commercial OEM, commercial aftermarket, and military OEM in the Aerospace business segment, partially offset by weakness in residential and industrial end-markets in the Electrical Americas business segment, and weakness in the European region in the Mobility business segment.

Current wording

The increase in organic salesin thethird quarter of 2026 was due to strength in data center, machine OEM, and commercial & institutional end-markets in the Electrical Americas business segment, broad-based strength in end-markets of the Electrical Global business segment, strength in commercial OEM and commercial aftermarket in the Aerospace business segment, and strength in the North American and European regions in the Mobility business segment, partially offset by weakness in military aftermarket in the Aerospace business segment.

Previous wording

The increase in organic salesin the firstsix months of 2026 was due to strength in data center and machine OEM end-markets in the Electrical Americas and Electrical Global business segments, strength in residential end-markets in the Electrical Global business segment, and strength in commercial OEM, commercial aftermarket, and military aftermarket in the Aerospace business segment, partially offset by weakness in industrial end-markets in the Electrical Americas and Electrical Global business segments, weakness in utility and residential end-markets in the Electrical Americas business segment, and weakness in the North American region driven by the exit of a low-margin light vehicle business and weakness in the European region in the Mobility business segment.

Current wording

The increase in organic salesin the first nine months of 2026 was due to strength in data center, machine OEM, and commercial & institutional end-markets in the Electrical Americas business segment, broad-based strength in end-markets of the Electrical Global business segment, and strength in commercial OEM and commercial aftermarket in the Aerospace business segment, partially offset by weakness in utility and residential end-markets in the Electrical Americas business segment.

Previous wording

Gross profit margin decreased from 37.0% in the second quarter of 2025 to 33.5% in the second quarter of 2026. Material factors affecting this decrease were a 390 basis point decline from higher commodity and wage inflation and a 150 basis point decline from higher intangible asset amortization, partially offset by a 160 basis point increase from higher sales.

Current wording

Gross profit margin decreased from 38.3% in the third quarter of 2025 to 34.7% in the third quarter of 2026. Material factors affecting this decrease were a 360 basis point decline from higher commodity and wage inflation and a 210 basis point decline from higher intangible asset amortization, partially offset by a 200 basis point increase from higher sales.

Previous wording

Gross profit margin decreased from 37.6% in the first six months of 2025 to 34.5% in the first six months of 2026. Material factors affecting this decrease were a 390 basis point decline from higher commodity and wage inflation and a 100 basis point decline from higher intangible asset amortization, partially offset by a 140 basis point increase from higher sales.

Current wording

Gross profit margin decreased from 37.9% in the first nine months of 2025 to 34.5% in the first nine months of 2026. Material factors affecting this decrease were a 380 basis point decline from higher commodity and wage inflation and a 140 basis point decline from higher intangible asset amortization, partially offset by a 160 basis point increase from higher sales.

Previous wording

The effective income tax rate for the second quarter and first six months of 2026 was expense of 28.1% and 24.9%, respectively, compared to expense of 17.2% and 17.6% for the second quarter and first six months of 2025. The increase in the effective tax rate in the second quarter and first six months of 2026 was primarily due to greater levels of income in higher tax jurisdictions and withholding tax expense related to funding the acquisition of Boyd Thermal.

Current wording

The effective income tax rate for the third quarter and first nine months of 2026 was expense of 21.3% and 23.5%, respectively, compared to expense of 20.7% and 18.7% for the third quarter and first nine months of 2025. The increase in the effective tax rate in the third quarter and first nine months of 2026 was primarily due to greater levels of income in higher tax jurisdictions and withholding tax expense related to funding the acquisition of Boyd Thermal.

Previous wording

The increase in organic sales in the second quarter of 2026 was due to strength in data center and machine OEM end-markets, partially offset by weakness in residential and industrial end-markets. The increase in organic sales in the first six months of 2026 was due to strength in data center and machine OEM end-markets, partially offset by weakness in residential, utility, and industrial end-markets.

Current wording

The increase in organic sales in the third quarter of 2026 was due to strength in data center, machine OEM, and commercial & institutional end-markets. The increase in organic sales in the first nine months of 2026 was due to strength in data center, machine OEM, and commercial & institutional end-markets, partially offset by weakness in utility and residential end-markets.

Previous wording

The increase in organic sales in the second quarter of 2026 was due to broad-based strength in end-markets, with particular strength in data center and machine OEM end-markets. The increase in organic sales in the first six months of 2026 was due to strength in data center, machine OEM, and residential end-markets, partially offset by weakness in industrial end-markets.

Current wording

The increase in organic sales in the third quarter of 2026 was due to broad-based strength in end-markets, with particular strength in data center, machine OEM, and utility end-markets. The increase in organic sales in the first nine months of 2026 was due to broad-based strength in end-markets, with particular strength in data center and machine OEM end-markets. Additionally, the increase in organic sales in the third quarter and first nine months of 2026 was due to broad-based strength in all regions, with particular strength in the Asia Pacific region.

Previous wording

The operating margin increased from 22.2% in the second quarter of 2025 to 22.8% in the second quarter of 2026. Material factors affecting this increase were a 160 basis point increase from higher sales, a 150 basis point increase from favorable mix, and a 40 basis point increase from the acquisition of Ultra PCS, partially offset by a 300 basis point decline from higher commodity and wage inflation. The operating margin increased from 22.6% in the first six months of 2025 to 24.7% in the first six months of 2026. Material factors affecting this increase were a 170 basis point increase from higher sales, a 130 basis point increase from the sale of a facility in the first quarter of 2026, a 130 basis point increase from favorable mix, and a 30 basis point increase from the acquisition of Ultra PCS, partially offset by a 310 basis point decline from higher commodity and wage inflation.

Current wording

The operating margin decreased from 25.9% in the third quarter of 2025 to 24.9% in the third quarter of 2026. Material factors affecting this decrease were a 230 basis point decline from higher commodity and wage inflation and a 100 basis point decline from unfavorable mix, partially offset by a 160 basis point increase from operating efficiencies and a 110 basis point increase from higher sales. The operating margin increased from 23.8% in the first nine months of 2025 to 24.7% in the first nine months of 2026. Material factors affecting this increase were a 150 basis point increase from higher sales, a 90 basis point increase from the sale of a facility in the first quarter of 2026, a 70 basis point increase from favorable mix, and a 60 basis point increase from operating efficiencies, partially offset by a 280 basis point decline from higher commodity and wage inflation.

Previous wording

The operating margin increased from 12.1% in the second quarter of 2025 to 13.0% in the second quarter of 2026. Material factors affecting this increase were a 300 basis point increase from operating efficiencies, partially offset by a 230 basis point decline from higher commodity and wage inflation. The operating margin increased from 11.9% in the first six months of 2025 to 12.3% in the first six months of 2026. Material factors affecting this increase were a 260 basis point increase from operating efficiencies, partially offset by a 220 basis point decline from higher commodity and wage inflation.

Current wording

The operating margin increased from 13.5% in the third quarter of 2025 to 17.2% in the third quarter of 2026. Material factors affecting this increase were a 270 basis point increase from favorable mix, a 250 basis point increase from operating efficiencies and a 140 basis point increase from higher sales, partially offset by a 320 basis point decline from higher commodity and wage inflation. The operating margin increased from 12.5% in the first nine months of 2025 to 14.0% in the first nine months of 2026. Material factors affecting this increase were a 260 basis point increase from favorable mix and a 240 basis point increase from operating efficiencies, partially offset by a 250 basis point decline from higher commodity and wage inflation.

Previous wording

The material factors affecting the increase in Total corporate expense in the second quarter and first six months of 2026 were higher Interest expense - net, Intangible asset amortization expense, and Other expense - net. The increase in Other expense - net is primarily due to higher acquisition and divestiture costs.

Current wording

The material factors affecting the increase in Total corporate expense in the third quarter and first nine months of 2026 were higher Intangible asset amortization expense, Interest expense - net, and Other expense - net, partially offset by lower Restructuring program charges (income). The increase in Other expense - net is primarily due to higher acquisition and divestiture costs.

Previous wording

On February 6, 2026, Eaton Corporation, a subsidiary of Eaton, exercised a $1,000 million upsize of the existing $3,000 million five-year revolving credit agreement, increasing the total facility size to $4,000 million. The facility’s maturity date remains unchanged at September 27, 2030. The revolving credit facility is used to support commercial paper borrowings and is 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 the revolving credit facility at June 30, 2026. Also on February 6, 2026 the Company increased its commercial paper program from $3,000 million to $4,000 million. The Company maintains access to the commercial paper markets through its $4,000 million commercial paper program, of which $2,088 million was outstanding on June 30, 2026, used primarily to manage fluctuations in working capital and to partially fund acquisitions closed during 2026.

Current wording

On February 6, 2026, Eaton Corporation, a subsidiary of Eaton, exercised a $1,000 million upsize of the existing $3,000 million five-year revolving credit agreement, increasing the total facility size to $4,000 million. The facility’s maturity date remains unchanged at September 27, 2030. The revolving credit facility is used to support commercial paper borrowings and is 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 the revolving credit facility at September 30, 2026. Also on February 6, 2026 the Company increased its commercial paper program from $3,000 million to $4,000 million. The Company maintains access to the commercial paper markets through its $4,000 million commercial paper program, of which $1,592 million was outstanding on September 30, 2026, used primarily to manage fluctuations in working capital and to partially fund acquisitions closed during 2026.

Previous wording

On March 6, 2026, Eaton Corporation, a subsidiary of Eaton, issued notes (2026 U.S. Notes) with an aggregate face amount of $8,500 million. The 2026 U.S. Notes are comprised of six tranches: 3.85% notes due 2028 in the amount of $1,500 million; 3.95% notes due 2029 in the amount of $1,500 million; 4.20% notes due 2031 in the amount of $1,500 million; 4.50% notes due 2033 in the amount of $1,000 million; 4.80% notes due 2036 in the amount of $2,000 million; and 5.45% notes due 2056 in the amount of $1,000 million. Interest is payable semi-annually. The issuer received proceeds totaling $8,427 million from the 2026 U.S. Notes issuance, net of financing costs and discounts. The 2026 U.S. Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2026 U.S. Notes contain customary optional redemption and par call provisions. The 2026 U.S. Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2026 U.S. Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the respective terms of the 2026 U.S. Notes. The 2026 U.S. Notes are subject to customary non-financial covenants.

Current wording

On March 6, 2026, Eaton Corporation, a subsidiary of Eaton, issued notes (2026 U.S. Notes) with an aggregate face amount of $8,500 million. The 2026 U.S. Notes are comprised of six tranches: 3.850% notes due 2028 in the amount of $1,500 million; 3.950% notes due 2029 in the amount of $1,500 million; 4.200% notes due 2031 in the amount of $1,500 million; 4.500% notes due 2033 in the amount of $1,000 million; 4.800% notes due 2036 in the amount of $2,000 million; and 5.450% notes due 2056 in the amount of $1,000 million. Interest is payable semi-annually. The issuer received proceeds totaling $8,421 million from the 2026 U.S. Notes issuance, net of financing costs and discounts. The 2026 U.S. Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2026 U.S. Notes contain customary optional redemption and par call provisions. The 2026 U.S. Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2026 U.S. Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the respective terms of the 2026 U.S. Notes. The 2026 U.S. Notes are subject to customary non-financial covenants.

Previous wording

On March 10, 2026, Eaton Capital Unlimited Company, a subsidiary of Eaton, issued Euro denominated notes (2026 Euro Notes) with an aggregate face amount of €1,200 million ($1,390 million). The 2026 Euro Notes are comprised of two tranches of €600 million each, which mature in 2034 and 2038, with interest payable annually at a respective rate of 3.55% and 4.00% per annum. The issuer received proceeds totaling €1,191 million ($1,380 million) from the 2026 Euro Notes issuance, net of financing costs and discounts. The 2026 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2026 Euro Notes contain customary optional redemption and par call provisions. The 2026 Euro Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2026 Euro Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the respective terms of the 2026 Euro Notes. The 2026 Euro Notes are subject to customary non-financial covenants.

Current wording

On March 10, 2026, Eaton Capital Unlimited Company, a subsidiary of Eaton, issued Euro denominated notes (2026 Euro Notes) with an aggregate face amount of €1,200 million ($1,390 million). The 2026 Euro Notes are comprised of two tranches of €600 million each, which mature in 2034 and 2038, with interest payable annually at a respective rate of 3.550% and 4.000% per annum. The issuer received proceeds totaling €1,191 million ($1,379 million) from the 2026 Euro Notes issuance, net of financing costs and discounts. The 2026 Euro Notes are fully and unconditionally guaranteed on an unsubordinated, unsecured basis by Eaton and certain of its direct and indirect subsidiaries. The 2026 Euro Notes contain customary optional redemption and par call provisions. The 2026 Euro Notes also contain a change of control provision which requires the Company to make an offer to purchase all or any part of the 2026 Euro Notes at a purchase price of 101% of the principal amount plus accrued and unpaid interest. The capitalized deferred financing fees are amortized in Interest expense - net over the respective terms of the 2026 Euro Notes. The 2026 Euro Notes are subject to customary non-financial covenants.

Previous wording

Over the course of a year, cash, short-term investments, and short-term debt may fluctuate in order to manage global liquidity. As of June 30, 2026 and December 31, 2025, Eaton had cash of $483 million and $622 million, short-term investments of $212 million and $181 million, and short-term debt of $2,091 million and $1 million, respectively. Eaton believes it has the operating flexibility, cash flow, cash and short-term investment balances, availability under the existing revolving credit facility, 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, for at least the next 12 months and the foreseeable future thereafter.

Current wording

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, 2026 and December 31, 2025, Eaton had cash of $528 million and $622 million, short-term investments of $290 million and $181 million, and short-term debt of $1,594 million and $1 million, respectively. Eaton believes it has the operating flexibility, cash flow, cash and short-term investment balances, availability under the existing revolving credit facility, 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, for at least the next 12 months and the foreseeable future thereafter.

Previous wording

On April 1, 2025, the Company paid $1.43 billion, net of cash acquired, to acquire Fibrebond Corporation. On August 6, 2025, the Company acquired Resilient Power Systems Inc. for $86 million, including $55 million of cash paid at closing and an initial estimate of $31 million for the fair value of contingent future consideration. On January 23, 2026, the Company paid $1.53 billion, net of cash acquired, to acquire Ultra PCS Limited and on March 12, 2026, the Company paid $9.55 billion, net of cash acquired, to acquire Boyd Thermal. Additionally, on January 15, 2026, Eaton invested $75 million in SPAN for a stake of approximately 7 percent.

Current wording

On April 1, 2025, the Company paid $1.43 billion, net of cash acquired, to acquire Fibrebond Corporation. On August 6, 2025, the Company acquired Resilient Power Systems Inc. for $86 million, including $55 million of cash paid at closing and an initial estimate of $31 million for the fair value of contingent future consideration. On January 23, 2026, the Company paid $1.53 billion, net of cash acquired, to acquire Ultra PCS Limited and on March 12, 2026, the Company paid $9.55 billion, net of cash acquired, to acquire Boyd Thermal. Additionally, the Company expects to close the acquisition of COL Group in the first quarter of 2027 for €810 million ($921 million, translated at the September 30, 2026 exchange rate). On January 15, 2026, Eaton invested $75 million in SPAN for a stake of approximately 7 percent.

Previous wording

Net cash provided by operating activities increased by $478 million in the first six months of 2026 compared to 2025. The material factor affecting this increase was working capital balances being $564 lower, partially offset by lower net income of $257 million.

Current wording

Net cash provided by operating activities increased by $436 million in the first nine months of 2026 compared to 2025. The material factor affecting this increase was working capital balances being $263 million lower.

Previous wording

Net cash used in investing activities increased by $11,171 million in the first six months of 2026 compared to 2025. Material factors affecting this increase were an increase in cash paid for business acquisitions of $11,079 million in 2026 compared to $1,450 million cash paid for business acquisitions in 2025 and purchases of short-term investments of $43 million in 2026 compared to sales of short term investments of $1,343 million in 2025.

Current wording

Net cash used in investing activities increased by $11,224 million in the first nine months of 2026 compared to 2025. Material factors affecting this increase were an increase in cash paid for business acquisitions of $11,079 million in 2026 compared to $1,504 million in 2025, purchases of short-term investments of $122 million in 2026 compared to sales of short-term investments of $1,287 million in 2025, and an increase in capital expenditures for property, plant and equipment to $721 million in 2026 from $527 million in 2025.

Previous wording

Net cash provided by financing activities increased by $10,571 million in the first six months of 2026 compared to 2025. Material factors affecting this increase were an increase in proceeds from borrowings of $9,871 million in 2026 compared to $1,058 million proceeds from borrowings in 2025, no repurchase of shares in 2026 compared to repurchase of shares of $1,307 million in 2025, and an increase in net proceeds of short-term debt of $2,088 million in 2026 from $1,111 million in 2025, partially offset by payments on borrowings of $1,143 million in 2026 from $713 million in 2025.

Current wording

Net cash provided by financing activities increased by $10,763 million in the first nine months of 2026 compared to 2025. Material factors affecting this increase were an increase in proceeds from borrowings of $9,871 million in 2026 compared to $1,058 million proceeds from borrowings in 2025, no repurchase of shares in 2026 compared to repurchase of shares of $1,669 million in 2025, and an increase in net proceeds of short-term debt of $1,592 million in 2026 from $761 million in 2025, partially offset by an increase in payments on borrowings of $1,145 million in 2026 from $714 million in 2025.

Previous wording

Capital expenditures were $446 million and $349 million in the first six months of 2026 and 2025, respectively. The Company plans to increase capital expenditures over the next several years to expand production capacity across various markets to support anticipated growth. As a result, Eaton expects approximately $1.15 billion in capital expenditures in 2026.

Current wording

Capital expenditures were $721 million and $527 million in the first nine months of 2026 and 2025, respectively. The Company plans to increase capital expenditures over the next several years to expand production capacity across various markets to support anticipated growth. As a result, Eaton expects approximately $1.15 billion in capital expenditures in 2026.

Previous wording

Cash dividend payments were $858 million and $818 million in the first six months of 2026 and 2025, 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 2026.

Current wording

Cash dividend payments were $1,285 million and $1,222 million in the first nine months of 2026 and 2025, 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 2026.

Previous wording

On February 23, 2022, the Eaton Board of Directors adopted a share repurchase program for repurchases of ordinary shares up to $5.0 billion to be made during the three-year period commencing on that date (2022 Program). On February 27, 2025, the Eaton Board of Directors renewed the 2022 Program by providing authority for up to $9.0 billion in repurchases to be made during the three-year period commencing on that date (2025 Program). Under the 2025 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 six months ended June 30, 2026, no ordinary shares were repurchased. During the three and six months ended June 30, 2025, 2.3 million and 4.2 million ordinary shares, respectively, were repurchased under the 2025 or 2022 Programs in the open market at a total cost of $698 million and $1,306 million, respectively. The Company does not intend to pursue share repurchases in 2026 due to the acquisition of Boyd Thermal on March 12, 2026.

Current wording

On February 23, 2022, the Eaton Board of Directors adopted a share repurchase program for repurchases of ordinary shares up to $5.0 billion to be made during the three-year period commencing on that date (2022 Program). On February 27, 2025, the Eaton Board of Directors renewed the 2022 Program by providing authority for up to $9.0 billion in repurchases to be made during the three-year period commencing on that date (2025 Program). Under the 2025 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, 2026, no ordinary shares were repurchased. During the three and nine months ended September 30, 2025, 1.0 million and 5.2 million ordinary shares, respectively, were repurchased under the 2025 or 2022 Programs in the open market at a total cost of $355 million and $1,661 million, respectively. The Company does not intend to pursue share repurchases in 2026 due to the acquisition of Boyd Thermal on March 12, 2026.

Previous wording

The Company paid cash of $11,079 million and $1,450 million to acquire businesses in the first six months of 2026 and 2025, respectively. Additionally, the Company paid $85 million in the first six months of 2026 for investments in nonmarketable securities. There were no investments in nonmarketable securities in the first six months of 2025. 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.

Current wording

The Company paid cash of $11,079 million and $1,504 million to acquire businesses in the first nine months of 2026 and 2025, respectively. Additionally, the Company paid $92 million in the first nine months of 2026 for investments in nonmarketable securities. There were no investments in nonmarketable securities in the first nine months of 2025. 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.

Previous wording

The Company manages a number of short-term and long-term debt instruments, including commercial paper. At June 30, 2026, the Company had Short-term debt of $2,091 million, Current portion of long-term debt of $11 million, and Long-term debt of $18,509 million. The Company believes it has the operating flexibility, cash flow, and access to capital markets to meet scheduled payments of long-term debt. For additional information on financing transactions and debt see Note 8.

Current wording

The Company manages a number of short-term and long-term debt instruments, including commercial paper. At September 30, 2026, the Company had Short-term debt of $1,594 million, Current portion of long-term debt of $710 million, and Long-term debt of $17,802 million. The Company believes it has the operating flexibility, cash flow, and access to capital markets to meet scheduled payments of long-term debt. For additional information on financing transactions and debt see Note 8.