Alexander M. Cutler, Chairman and Chief Executive Officer

Eaton 

Sandy Cutler 

New York Analyst Meeting 

March 1, 2013 

© 2013 Eaton. All rights reserved.

Eaton – A Premier Diversified Power 

Management Company 

• A transformed company 

• Creating profitable growth 

• EBS powers the integration of Cooper 

• Summary 

© 2013 Eaton. All rights reserved. 

2

Cities & 

Buildings 

Eaton is the global leader in power management 

Electrical Fluid Mechanical 

Information 

Technology 

Energy & 

Utilities 

Uniquely positioned to provide safe, reliable, efficient and sustainable 

power management solutions for our global customers 


Industrial & 

Machinery 

Infrastructure 

Transportation 

3

In 2012, we completed the transformational 

acquisition of Cooper Industries 

+ Grows the global scale of our 

electrical business 

+ Improves our breadth of products with 

virtually no overlap 

+ Increases leverage to global megatrends: 

energy efficiency, utility grid upgrade, 

industrial safety 

+ Brings our overall portfolio to $23 B 

in revenue 

+ Combined company has 103,000 

employees, sales in 175 countries 


Founded 1833 

2012 Sales $5.9 B 

29,000 Employees 

Manufacturing in 23 countries 

Sales in over 100 countries 

4

We have resegmented our businesses 

Electrical Sector 

Electrical Products 

Legacy Eaton: Legacy Cooper: 

Non-residential & 

Residential Products 

Bussmann 

Lighting 

Industrial Controls B-Line 

Single Phase 

Power Quality 

Wiring Devices 

Safety 

Electrical Systems & Services 

Legacy Eaton: Legacy Cooper: 

Power Distribution & 

Assemblies 

Three Phase 

Power Quality 

Software & Services 

Power Systems 

Crouse-Hinds 

2012 Sales by Sector 

Pro-forma, including Cooper 

$13.2 B 

$8.6 B 

Total Sales $21.8 B 


Industrial Sector 

Hydraulics 

Aerospace 

Vehicle 

Truck and Automotive Drivetrain and 

Powertrain Systems 

5

We have achieved a powerful business mix… 

2012 Pro-forma, 

excluding Cooper 

11% 

25% 

18% 

46% 


8% 


including Cooper 

14% 

18% 

Electrical Hydraulics Aerospace Vehicle 

60% 

6

…that is balanced globally 



24% 

29% 

47% 




23% 

27% 

50% 

U.S. International Developed 

International Emerging 

7

Additional late cycle exposure from Cooper 

provides balance through the cycle 

2012 Global Sales by Cycle 

14% 

Residential Construction 

1-Phase Power Quality 

Heavy Duty Truck 

Automotive 

24% 30% 

31% 29% 

31% 30% 

Pro-forma, 


11% 

Pro-forma, 


Early $6.5 B Mid $6.4 B Late $6.5 B No Cycle $2.4 B 

Hydraulics 

Industrial Controls 

Medium Duty Truck 

Mid-sized Data Centers 


Cooper Late Cycle Exposure 

Commercial Aerospace 

Utilities 

Nonres. Construction 

Large Data Centers 

Utilities 

Nonresidential 

Construction 

Bussmann 

Lighting 

B-Line 

Wiring Devices 

Safety 

Power Systems 

Crouse-Hinds 

Electrical Service 

Defense 

Filtration 

Aerospace Aftermarket 

8






• Summary 


9

We have made solid progress towards our 

2015 goals, as established in 2010 

2015 Goal 


Progress 

Through 2012 

Cooper 

Impact 

YoY Sales Growth 12% – 14% 9% + 

Percent of Sales in Emerging 

Markets 

30% 24% − 

Operating EPS Growth 20% 18% + 

Free Cash Flow Margin 9% 7% + 

Segment Operating Margin 16% 14% + 

Return on Invested Capital 15% 13%* − 

*Note: 2012 ROIC represents YTD results through 

Q3:12, to exclude the impact of Cooper 

The transformed company will be higher growth and higher margin 

10

Our targeted mix shift has resulted in exposure 

to high-growth markets and powerful megatrends 

60…Percentage increase in global demand for energy in buildings 

projected by 2050 

600…Percentage increase in the global LED lighting market 

projected by 2020, a CAGR of ~25% 

70…Percentage increase in liquid petroleum demand in Non-OECD 

nations expected by 2040 

70…Percentage increase in food production by 2050 necessary to feed 

a global population of 9.1 billion people 

150…Percentage increase in annual distances travelled by commercial 

aviation expected by 2030 

25…Percentage increase in fuel economy necessary by model 

year 2018 to meet the first ever U.S. emissions standards for 

heavy-duty trucks 


11

Our Electrical Sector is driving innovation in both 

upstream and downstream applications 

Smart-grid Ready 

Recloser Control 

• Provides the intelligence 

that enables a reliable, 

self-healing grid 

• Simplifies installation, 

saving utilities up to 40% 

• Control software adapts as 

the Smart Grid evolves 

Energy Efficient 

Midrange UPS 

• Delivers up to 99% 

efficiency while 

maintaining a small 

physical footprint 

• Highest efficiency, 

3-level inverter, 

modular, integrated 

solution 

• Up to 45% end-toend 

cost reduction 

from earlier 

products Premier Product 

Upstream Downstream 


Essential Product 

IRiS LED 

Lighting System 

• Combines the flexibility 

of interchangeable 

optics with the energy 

savings, long life, and 

sustainability of LED 

• Incorporates intelligent 

controls that will 

integrate with virtually 

any system 

12

Our 2012 Hydraulics acquisitions are a 

platform for growth in emerging markets 

Acquisition 

Rationale: 

• HQ in S. Korea, 2011 sales $189M 

• Expands our portfolio of components 

for global construction equipment 

• Strengthens our ability to serve local 

OEMs with best cost manufacturing 

• HQ in Turkey, 2011 sales $335M 

• Expands our rubber, PVC, and 

thermoplastic industrial hose portfolio 

• Enhances market access to Eastern 

Europe, Asia, and Africa 


Delivering for 

Customers: 

Eaton has won the main control 

valves business from Hyundai Heavy 

Industries for their next generation 

5-ton and 8-ton class excavators 

Eaton has significantly expanded 

sales in Turkey, Middle East, 

Baltics, and CIS countries 

New customers added in 

10 countries where Eaton 

Hydraulics had no prior sales 

13

High Growth 

End Markets 

Despite slower forecasted global growth, we are 

targeting 8% growth through the cycle… 

Six 

Percent 

Core Revenue Growth ~2x GDP 

Innovation 

Emerging 

Markets 


+ Two 

Percent 

Growth from Acquisitions 

14

…supported by substantial cash generation from 

our transformed business 

Fundamental shift in levels of cash flow 

generation, starting in 2013 

2012 was an 

all-time record 

op. cash flow 

$1.7 B 

2012 2013e 


2013 is the 

start of a new 

era for Eaton 

$2.6 B – $2.7 B 

15

Each of our businesses is driving growth beyond 

end market dynamics and improving margins… 

Electrical 

Hydraulics 

Aerospace 

Vehicle 

Innovative 

Products 

• SmartWire-DT 

• 9395 Large UPS 

• LED 

• Arc-resistant switchgear 

• LifeSense Hose 

• Power On-demand 

• Laser clad coating 

• Plug-In Circuit Breakers 

• ArcAlertTM • Var. displacement pumps 

• Next-gen transmissions 

• Supercharger 

• Hollow Valves 


Emerging 

Markets 

• #1 1-phase UPS in China 

• Suzhou tech center 

• 2012 Acquisitions 

– Rolec (Chile) 

– Blinda* (Brazil) 

– Yuhua* (China) 

• 2012 Acquisitions 

– Polimer (Turkey) 

– Jeil (S. Korea) 

• OEM Platforms 

– KC390 (Embraer) 

– C919 (COMAC) 

– MC 21 (Irkut) 

• Jining, China expansion 

• Vocational fleet wins in high 

growth markets 

Outgrowth drivers lead to strong margin performance 

Margin Improvement 

Forecast 2012 - 2015 

+ 300 bps 

+ 400 bps 

+ 350 bps 

+ 250 bps 

*Denotes Cooper acquisitions prior to Eaton ownership 

16

…tracking towards our new goal of 17% 

segment margin by 2015 

20% 

16% 

12% 

8% 

4% 

0% 

Segment Operating Profit 

2009 2010 2011 2012 2013e 2015e 

Note: 2012 Segment Operating Profit is adjusted for 

restructuring charges of $50 M 


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• Summary 


18

1994 

We have a strong track-record of leveraging EBS 

to effectively integrate large acquisitions 

Eaton acquires the 

Westinghouse Distribution 

and Control Business Unit, 

tripling our presence in 

industrial controls and power 

distribution 

$1.1 B 

Acquired Sales 

1999 

Eaton acquires publicly-listed 

Aeroquip-Vickers, a major 

manufacturer of hoses, 

couplings and industrial and 

aerospace hydraulics 

$2.2 B 


2004 

Eaton acquires Powerware, 

expanding our offering of 

power quality products for 

commercial, industrial, and 

institutional applications 

$800 M 



2005 - 2007 

Eaton acquires Cobham 

Fluid & Air, Perkin 

Elmer Aerospace, and 

Argo-tech to bolster our 

aerospace business 

Aerospace 

Aerospace fluid & air 

$600 M 


2008 

Eaton acquires 

Moeller Group and 

publicly-listed 

Phoenixtec Power, 

to expand our 

electrical presence in 

EMEA and APAC 

$2.0 B 


Eaton Revenue Prior to Acquisition 

$4.1 B $6.6 B $8.1 B $9.8 B $12.4 B 

19

We deploy a dedicated integration team as a 

fundamental element of EBS 

Integration Senior Leadership 

• Dedicated leaders representing all key 

functions, managing a total integration 

team of ~50 employees 

• Enables business unit leadership (the 

“run team”) to remain focused on 

delivering day-to-day results 

• Includes both Legacy Eaton and 

Legacy Cooper leadership, maximizing 

effectiveness and knowledge transfer 


20

In our Q4:12 earnings call, we shared our 

expectation of faster synergy realization in 2013… 


Annual Pre-tax Synergies 

($Millions) 2013 2014 2015 2016 

Sales synergies 10 35 70 115 

Cost-out synergies 65 80 140 240 260 

Total Operational Synergies 75 90 175 310 375 

Global cash management and 

resultant tax benefits 

160 160 160 160 

20% faster realization in 2013 of previously announced synergies 

21

…today, we are increasing our expectation 

of mature year synergies 


Annual Pre-tax Synergies 

($Millions) 2013 2014 2015 2016 

Sales synergies 10 35 70 115 

Cost-out synergies 65 80 140 145 240 250 260 290 

Total Operational Synergies 75 90 175 180 310 320 375 405 

Global cash management and 

resultant tax benefits 

160 160 160 160 

Acquisition integration costs, pre-tax 90 75 90 25 30 - 

New synergy estimates reflect an additional $30M of mature year synergies 

22

Since embarking on a new strategy in 2000, we 

have fundamentally improved our business… 

2000 2012 Change 

Sales $8.3B $21.8B pf 2.6x 

Market capitalization 

(as of 12/31) 

$5.5B $25.1B 4.6x 

Segment margins 9.8% 14.1%* 430 bps 

Free cash flow $0.13B $1.08B 8.1x 

Elec / Hyd / Aero sales 

% of total 

Emerging market sales 

% of sales 

$4.7B 

56% 

$0.8B 

10% 

$17.9B pf 

82% 

$5.0B pf 

23% 

Note: pro-forma 2012 sales metrics include Cooper full-year results. 

* 2012 segment margins adjusted for $50M restructuring 


3.8x 

a 

6.3x 

Strategic 

Imperatives 

Improve size 

Improve 

performance 

Improve 

consistency 

23

Return 

Index 

550 

500 

450 

400 

350 

300 

250 

200 

150 

100 

50 

…and created exceptional value for our 

shareholders 

Cumulative Shareholder Returns 

0 

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Feb 201322 

2013 

Eaton S&P 500 PDI Group 

Note: PDI Group represents an equal weighted index of DHR, DOV, EMR, GE, ITW, MMM, UTX; 

Source: Capital IQ 


2000 – Feb 2013 

CAGR 

14.1% 

7.5% 

3.1% 

24

We have continued to increase our dividends in 

line with our earnings growth expectations 

• We announced a 10.5% increase in our 

quarterly dividend 

• 70% - 80% of the dividend is expected 

to be treated as a return of capital 

• We expect the return of capital 

treatment of our dividends to continue 

over the medium term 

$2.00 

$1.50 

$1.00 

$0.50 

$0.00 


Dividends Per Share 

2000 2002 2004 2006 2008 2010 2012 2013e 

25






• Summary 


26

2013 – the start of a new era for Eaton 

• The transformed company will be higher growth, higher margin 

• We expect revenue growth through the cycle of 8% 

• We have raised our segment margin goal to 17% 

• The Eaton Business System powers our integrated operating model, and 

will drive the integration of Cooper 

• Strong EPS accretion from year one; exceeding original estimates 

• We now expect $30M in additional mature year synergies 

• Our dividend provides a yield in the top quartile of our peers, and is 

expected to be treated as a return of capital over the medium term 

• We have the balance across our businesses to drive strong earnings 

growth throughout the economic cycle 


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Alexander M. Cutler, Chairman and Chief Executive Officer

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