Driven by its monster acquisition of Cooper Industries, Eaton (NYSE:ETN) said Monday that its first-quarter sales and earnings skyrocketed to record levels, however revenue still fell short of expectations amid continued softness in global demand.
Much of the quarterly gains were attributed to Eaton’s $13 billion acquisition of Irish electrical equipment supplier Cooper Industries. Eaton has long said that the deal, which closed late last year, would be accretive to its earnings in 2014 and 2015.
"Our first quarter results are a solid start to the year, coming in above the high end of our guidance despite markets being slightly weaker than our expectations,” Eaton CEO Alexander Cutler said in a statement.
Investors cheered the earnings beat and sharp rise in sales, sending Eaton's shares up close to 3% to $60.29 in Monday morning trade.
The Dublin-based diversified manufacturer reported net income of $380 million, or 79 cents a share, compared with a year-earlier profit of $311 million, or 91 cents.
Excluding acquisition-related costs, Eaton posted adjusted earnings of $400 million, or 84 cents a share, topping average analyst estimates of 79 cents in a Thomson Reuters poll.
Revenue for the three months ended March 31 climbed 34% year-over-year to $5.31 billion from $3.96 billion a year ago, narrowly missing the Street’s view of $5.42 billion.
Core sales slumped 5% on an 11% decline in vehicle sales, partially offset by 40% growth from acquisitions as well as an 87% increase in electrical products to $1.66 billion and a 79% improvement in services sales to $1.52 billion.
The electrical products maker forecast current-quarter non-GAAP EPS in the range of $1.05 to $1.15, the midpoint of which is below the consensus view of $1.12.
For the full year, Eaton backed its earlier outlook of operating earnings between $4.05 and $4.45 a share, mostly below the Street’s outlook of $4.35. Cutler cautioned the results will "depend more on our execution than on global growth."
Eaton said previously it expects Cooper to contribute 15 cents to its 2013 EPS.