Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 31, 2026 · Beat 7 of last 7 quarters
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Eaton's record backlog and raised guidance underscore the sustained strength of the AI infrastructure buildout, with data center demand continuing to outpace expectations. The company's grid-to-chip portfolio, including Boyd's liquid cooling, positions it to capture value across the entire data center power and cooling stack. The 307 GW U.S. data center backlog implies multi-year visibility for electrical infrastructure suppliers.
Eaton delivered record Q2 revenue of $8.5 billion, up 21% total and 14% organic, with adjusted EPS of $3.15 beating guidance by $0.10. Electrical Americas grew 18% organically with margins of 27.5%, up 190 bps sequentially, while Electrical Global grew 18% organically with Boyd contributing 25 points of total growth. Aerospace grew 7% organically with record sales and segment profit, and Mobility declined 2% organically. The company raised full-year guidance and noted that all acquisitions are performing at or above expectations, with Boyd's full-year revenue raised to $1.8 billion.
Management raised full-year 2026 organic growth guidance by 200 basis points to a midpoint of 12% (range 11%-13%), and raised adjusted EPS guidance by $0.22 to a midpoint of $13.50 (range $13.40-$13.60). Electrical Americas organic growth midpoint raised to 15% and Electrical Global to 12%. Segment margin guidance was reaffirmed, with Electrical Americas expected to improve sequentially through the back half, driven by price/cost normalization and output/productivity gains. Demand signals remain strong: U.S. data center backlog grew to 307 gigawatts (15 years at 2025 build rates), and the company expects its total addressable market to grow about 10% this year.
“We are delivering roughly 25% growth in revenue per day since the start of 2025, up 16% in the year and another impressive 8% in Q2 over Q1. Q1 to Q2 represented the largest quarterly ramp in production output in our financial model, and we overdeliver on it.”
on Capacity ramp execution
“Total U.S. data center backlog has grown to 307 gigawatts or 15 years of backlog at 2025 build rates, up from 12 years in our last update. Only roughly 20% of this backlog converts near term. The majority will translate to 2028 and beyond deliveries, a very nice tailwind for Eaton for years to come.”
on Data center demand
“I will be shocked if they cannot overdeliver on this number, to be honest. Now if you look at Q2, they delivered $432 million in revenue, which was 20% above their commitment and our Q2 guidance.”
on Boyd performance
Can you remind us how you look at Boyd's competitive advantages compared to competitors and maybe also talk about Boyd's cadence between 3Q and 4Q?
Paulo highlighted Boyd's role as a design partner for chip providers, giving early visibility into roadmaps and a first chance to bid. He cited Boyd's scale in liquid cooling (cold plates and CDUs), proven ability to scale reliably with high quality, and aerospace pedigree. He noted competitors are smaller and may have quality issues. Boyd delivered $432M in Q2, 20% above commitment, and full-year guidance was raised to $1.8B.
I wanted to ask on Electrical Global organic growth, which was the biggest upside surprise in our model. What drove that level of upside and organic inflection? Is it the legacy business getting better? Are you starting to see revenue synergies or tailwinds from Boyd?
Paulo said all businesses (EMEA, APAC, GIS) performed meaningfully ahead of expectations, with EMEA and APAC up 20% and GIS up high teens. Data center revenue was up 65%, much faster than the market's 23% growth, indicating share gains. Machine OEM was up over 20%, utilities and commercial/institutional up low teens. Orders were up 33% on a rolling 12-month basis, and total backlog up 103% (54% organic ex-Boyd). This drove the guidance raise from 7.5% to 12%.
It looks like your guide for Electrical Americas assumes relatively flat sequential revenues Q2 to Q3 to Q4. So that lift in margins tied to price/cost and output sounds like it requires higher revenue. Is there any mutual exclusivity between revenue and margin here?
Dave explained that margin improvement comes from reduced premium costs (regular time vs. overtime), more experienced operators, manufacturing engineering cost-out, and productivity investments. He noted that price/cost normalization is a key driver, with pricing actions implemented in Q2 and early August. He confirmed that price increases are more than just general increases, including discrete price actions.