ETN 10-Q filed 2026-11-03 | Key takeaways

New acquisition: Signed agreement on September 25, 2026 to acquire COL Group for €810M ($921M), a leader in medium-voltage electrical distribution solutions based in Italy

Mobility separation update: Supplemental letter agreement with Dana executed October 16, 2026; transaction expected to close in first four months of 2027

IRS tax dispute: On October 27, 2026, IRS issued Statutory Notices of Deficiency proposing $290M in additional taxes plus $120M in penalties for tax years 2014-2016

Debt issuance: Q1 2026 saw $8.5B in U.S. Notes and €1.2B (~$1.4B) in Euro Notes issued to fund acquisitions

Goodwill increased to $20.3B from $15.8B at December 31, 2025, primarily from Boyd Thermal ($3.8B) and Ultra PCS ($865M) acquisitions

Effective tax rate increased to 21.3% in Q3 2026 from 20.7% in Q3 2025 due to higher income in higher tax jurisdictions and withholding taxes on Boyd Thermal funding

Backlog increased to $26.2B at September 30, 2026 from $24.1B at June 30, 2026, with 72% targeted for delivery in next twelve months

Signed agreement on September 25, 2026 to acquire COL Group for €810M ($921M at Sep 30, 2026 exchange rate), a leader in medium-voltage electrical distribution solutions including SF6-free switchgear, grid automation technologies and modular power systems. COL Group has approximately 400 employees and facilities in Turin, Milan, Bergamo, and Catania, Italy. Transaction expected to close in Q1 2027 subject to customary closing conditions and regulatory approvals. COL Group will be reported within Electrical Globa...

On October 27, 2026, IRS issued Statutory Notices of Deficiency for tax years 2014-2016 proposing assessments of $290M in additional taxes plus $120M in penalties, net of agreed credits and deductions. The proposed assessments are for similar issues in litigation for tax years 2011-2013, pertaining to transfer pricing adjustments for products manufactured in Puerto Rico, Dominican Republic, and Mexico, and adjustments challenging interest rates on intercompany debt and intercompany fees for financial guarantees....

On October 16, 2026, Eaton entered into a supplemental letter agreement with Dana Incorporated updating the terms of the planned Mobility business separation and merger. The transaction structure now includes a two-step merger process. Following completion, Eaton shareholders expected to own 50.1% of the combined company's outstanding shares. A cash distribution of approximately $1.1B will be received by certain Eaton subsidiaries prior to closing.

On February 6, 2026, the revolving credit facility was increased by $1.0B to $4.0B total, with maturity remaining September 27, 2030. The commercial paper program was increased from $3.0B to $4.0B, with $1.6B outstanding at September 30, 2026. On March 6, 2026, issued $8.5B in 2026 U.S. Notes across six tranches (3.85%-5.45% due 2028-2056), receiving net proceeds of $8.4B. On March 10, 2026, issued €1.2B in 2026 Euro Notes (3.55% due 2034 and 4.0% due 2038), receiving net proceeds of €1.2B ($1.4B). On March 6, 2...

During Q3 2026, the company recognized settlement losses of $17M from lump-sum distributions and remeasured certain pension plans resulting in a $42M decrease in funded status and corresponding increase in accumulated other comprehensive loss. During 2020, the company announced it was freezing its U.S. pension plans for non-union employees. The freeze was effective January 1, 2021 for cash balance formula employees and effective January 1, 2026 for final average pay formula employees.

During Q3 2026, the company recognized net restructuring program income of $3M ($2M after tax, or -$0.01 per diluted share), compared to charges of $55M in Q3 2025. For the nine months ended September 30, 2026, restructuring charges were $59M compared to $97M in the prior year period. The restructuring program, initiated in Q1 2024, has incurred $394M in total charges to date and is expected to be completed in 2026 with total estimated charges of $430M.