© 2019 Eaton. All rights reserved..
Annual investor conference
Brian Brickhouse, Group President, Electrical Systems & Services
March 1, 2019
2© 2019 Eaton. All rights reserved..
Key takeaways for today
• Eaton has a leading electrical business that serves
customers around the world and across many key
end markets
• Our broad portfolio and other areas of competitive
strength allow us to meet the needs of multiple
stakeholders in our complex markets
• Our focus on strategic growth initiatives will help us deliver
organic growth across our end markets, aligned to secular
growth trends
3© 2019 Eaton. All rights reserved..
Eaton’s electrical businesses will deliver solid results in 2019
2019E Sales
$7.4B - $7.5B
2019E Op. Margin
18.6% - 19.2%
Electrical Products2018 Sales: $7.1B
8%
18%
2019E Thru thecycle
13%-16%
Operating Margin
2019E Sales
$6.3B - $6.4B
2019E Op. Margin
15.2% - 15.8%
Electrical Systems & Services2018 Sales: $6.0B
• Residential &
non-residential products
• Industrial controls
• Low voltage and
medium voltage
circuit protection
• Lighting
• Bussmann fuses
• B-Line structural support
• Wiring devices
• Life safety
• Power distribution &
control assemblies
• Power quality
• Utility power systems
• Harsh & hazardous
electrical equipment
• Software
• Services
Operating margin through the cycle is pro-forma, reflecting the spin of Lighting and the acquisition of Ulusoy Elektrik
10%
20%
2019E Thru thecycle
19%-22%
4© 2019 Eaton. All rights reserved..
Our business is balanced both geographically and across key end markets
Geographic Mix
Revenue mix is pro-forma, reflecting the spin of Lighting and the acquisition of Ulusoy Elektrik
Commercial construction
28%
Machine builders
11%Industrial facilities
21%
Data center & IT17%
Resi8%
Utility15%
32%
Industrial
End Market Mix
United States
57% Rest of world
43%
5© 2019 Eaton. All rights reserved..
We’ve used M&A to shape our portfolio to drive growth and improve margins
Commercial
Construction
Cooper
Cutler-
Hammer
Delta
Moeller
Westinghouse
Residential
Cooper
Cutler-
Hammer
Data Center & IT
Cooper
Delta
MGE
Phoenixtec
Powerware
Westinghouse
Industrial Facilities
Cooper
Delta
Moeller
Ulusoy Elektrik
WestinghouseMachine Builders
Cutler-
Hammer
Moeller
Westinghouse
Utility
Cooper
Ulusoy Elektrik
Westinghouse
6© 2019 Eaton. All rights reserved..
We are further optimizing our portfolio with the spin of our Lighting business
Lighting business overview
Lighting competitive strengths Impact on Eaton Electrical
• Eaton’s electrical business will continue to be a global
leader in providing electrical solutions
• Eaton Electrical continues to focus on investing for growth
and driving synergies across the portfolio
• Lighting has separate sales force, supply chain,
manufacturing, engineering and technology
• Occupies a leading position in the North American
lighting market
• Innovation and technology leader in connected LED
lighting systems
• Strong relationships with lighting agents, electrical
distributors and end users across North America
• $1.7B in sales
• U.S. offices in Atlanta, GA and over 5,000
employees worldwide
• Portfolio includes lighting, controls and sensor networks
to serve industrial, commercial, residential and electric
utility customers
• Brands include Halo, Metalux, McGraw-Edison
7© 2019 Eaton. All rights reserved..
The recently announced acquisition of Ulusoy Elektrikstrengthens our position in IEC power distribution assemblies
Main production facility in
Ankara, Turkey
The acquisition delivers value to our
business in a number of areas:
• Becomes a center of gravity for our IEC
medium voltage assemblies business
with a highly-capable, competitive
manufacturing base
• Complementary IEC assemblies
offering that fills gaps in our portfolio
• Improves our ability to serve the global
IEC medium voltage assemblies market
Business has very attractive 28%
EBIT margins
MV switchgear Substation kiosks Accessories & other
8© 2019 Eaton. All rights reserved..
In addition to a broad portfolio, we have many other areas of strength that enable us to win in the marketplace
Technically
differentiated products
Scale that allows us to
be cost competitive
Ability to provide a broad
electrical solution with our
extensive portfolio
Strong channel presence
and loyal partners
Ability to drive specifications due to
deep electrical application expertise
and large commercial team
Brand recognition
Extensive
footprint and large
team to serve our customers
manufacturing
service
9© 2019 Eaton. All rights reserved..
Wants a supplier who can
leverage deep application
expertise to solve complex
electrical issues. Looks for
value-added technical
differentiation. Drives
product specification
Success requires meeting the needs of many stakeholders in a complex market
Electrical
contractor
Electrical
distributor
Wants products that
satisfy specifications,
are broadly available
through the channel,
and can reduce their
installation time
Wants to partner with
manufacturers with
broad portfolios and
products that satisfy
specifications to drive
more sales
Critical stakeholders
General
contractor
Electrical
distributorOwner
Engineer/
consultant
Eaton’s many stakeholders
We are closely aligned to our stakeholders’ needs
Electrical
contractor
Broader
community
Facility
usersArchitect
Owner
10© 2019 Eaton. All rights reserved..
Our focus on strategic growth initiatives will help us drive above market growth
Intelligent and connected solutions
• Intelligent circuit protection
• Energy aware UPS
• Smart home solutionsInnovative business models
• PredictPulse™ data center monitoring
• Intelligent factory
Leading service capabilities
• Turnkey project management
• Power systems engineering
Expanding core markets
• Energy storage
• Microgrids
• Compact gas insulated switchgear
Accelerating project productivity
• Enhanced collaboration tools
• Prefabricated and modular products
• Automated designs
Channel programs
• Eaton Distributor Advantage Program
• Contractor programs
End-market focused initiatives
• Broad utility solution offering
• Comprehensive data center portfolio
Leading
service
capabilities
Accelerating
project
productivity
Channel
programs
Expanding
core markets
End-market
focused
initiatives
Innovative
business
models
Intelligent &
connected
solutions
Electrical Sector
strategic growth initiatives
11© 2019 Eaton. All rights reserved..
Agenda
Industrial facilities and machine builders
Commercial and residential buildings1
2
3
Utility4
Data centers
Our strategy in action, aligned to secular growth trends
12© 2019 Eaton. All rights reserved..
Since 2014, construction
job openings in the U.S.
have doubled, while
hires have only
increased
By 2023,
approximately
voice assistant
devices will be used to
control smart homes
The global modular
construction market is
projected to grow at
to $157B
by 2023
California Title 24 requires
solar on new homes
after 2020 & net zero
energy on new
commercial buildings by 2030
Construction project efficiency, integration of renewables and automation are opportunities for growth in commercial and residential
6.9%
CAGR
275M
14%
13© 2019 Eaton. All rights reserved..
Contractors and distributors seek productivity improvements, while building users demand safety, efficiency and comfort
✓ Protecting people and assets
✓ Project efficiency
✓ Incorporating renewables
✓ Energy efficiency and comfort
Eaton’s application expertise and experience working with a multi-layered channel allows us to drive
project productivity and introduce innovative solutions for building owners
Customer requirements
14© 2019 Eaton. All rights reserved..
Eaton offers a full product portfolio with industry-leading technology and total lifecycle services for commercial and residential buildings
Structural solutions
Backup power
protection
Hospital-grade
wiring devices
Lighting and
controls
Power distribution
and control
Services
Life safety and
mass notification
Facility power
monitoring
Automatic
transfer
switch
Lighting
controls
Meter breakers
Air
conditioning
disconnects
and spa panels
Temporary power
panels
Receptacles and
combination
devices
Indoor/outdoor
lighting
Surge protection
LoadcentersAFCI, GFCI and
thermal-magnetic
protection
15© 2019 Eaton. All rights reserved..
Our smart electrical outlets, switches and dimmers integrate with broader smart home ecosystems
New DR Horton homes will
feature Eaton connected
wiring devices50,000
Why it matters to our customers:
• Integrates with leading home automation ecosystems
• Remote operation of lights for added home security
• Contractors able to install and commission without internet using
Z-Wave or Bluetooth technology, creating a smart home before
the homeowner moves in
• High-quality, modern aesthetics
Connected home wiring devices integrate lighting and plug loads into a
smart home ecosystem using Z-Wave Plus and Bluetooth BLE technology
16© 2019 Eaton. All rights reserved..
Our innovative structural solutions help contractors do their jobs faster, reducing overall cost
Contractor hours
reduction vs.
traditional conduit
trapeze methods
50%+
Why it matters to our customers:
• Reduce installation time by an entire shift per building with hands-
free brackets and by 50% with our new conduit trapeze support
versus traditional strut
• Our conduit trapeze support requires 75% fewer materials per job
• One hands-free bracket product can handle multiple box sizes,
meaning fewer parts to manage on-site
Hands-free brackets reduce required handling with a snap-on
feature. Conduit trapeze support can be used in versatile
applications to eliminate material and reduce installation time
17© 2019 Eaton. All rights reserved..
Eaton’s smart evacuation system uses embedded intelligence to direct people away from danger
of programmable scenarios,
customizable to each structure
Why it matters to our customers:
• Modern buildings are expected to provide even safer environments
for building users – this intelligent system ensures faster and safer
evacuations in crowded, high-risk areas where users may not be
familiar with their surroundings
• Eaton technicians ensure compliance with standards and mitigate
existing risks using a cost-effective solution
Eaton is enabling superior building safety with an intelligent system of
connected, adaptive emergency signage that uses real-time data to
direct people away from danger
Hundreds
18© 2019 Eaton. All rights reserved..
Agenda
Industrial facilities and machine builders
Commercial and residential buildings1
2
3
Utility4
Data centers
Our strategy in action, aligned to secular growth trends
19© 2019 Eaton. All rights reserved..
All five hyperscale
operators power their
data centers with at
least renewable
energy
By 2022,
of IT assets in
enterprise data centers
will have the ability to
run autonomously
By 2021,hyperscale
data centers will
account for
of all data center traffic
25 billion “things”
will create data by 2021,
growing at a
33% CAGR
Several dynamic trends have created new opportunities for growth in the data center space
50%
55% 50%
20© 2019 Eaton. All rights reserved..
✓ Reliable power
✓ Resource optimization
✓ Commissioning speed
✓ Ease of operations
Eaton’s broad portfolio, application expertise and innovative products allow customers to
maximize their data center value
Customer requirements
Data center operators want reliable power and a partner who can help them rapidly optimize resources
21© 2019 Eaton. All rights reserved..
Eaton offers a full product portfolio with industry-leading technology and total lifecycle services for data centers
Components for electrical
and mechanical subsystems
Facility power distribution
Facility/power monitoring
and management
Monitoring consoles
White space power
distribution
Airflow and thermal
management solutions
Turnkey power
containers
Power conditioning,
quality and backup
Design, build, planning
and support services
Wire and cable
management
Racks,
enclosures
and cages
Indoor and
outdoor lighting
22© 2019 Eaton. All rights reserved..
PredictPulse™ data center monitoring and control reduces the risk of costly downtime
Reduces risk
of UPS
component
downtime
75%
Why it matters to our customers:
• Eaton is first to offer cloud-based monitoring with predictive analytics
• Prevents costly data center outages by monitoring UPS component
health and providing service alerts before an event occurs
• Reduces downtime by providing our technicians with better information
to speed up repairs
• Achieves cost savings by extending UPS product life by two years
Our 24/7 service uses cloud connectivity to monitor real-time data from
over 300 sensor points on a data center UPS and employs predictive
diagnostics to ensure functionality
Innovative
business
models
23© 2019 Eaton. All rights reserved..
Why it matters to our customers:
• Data center operators are looking for ways to lower total cost of
ownership and utilize their existing assets to generate revenue
• Reduces energy charges by avoiding peak time usage
• Eaton technology demonstration with Microsoft won the Data Center
Dynamics 2018 Global Award for Mission Critical Innovation
Energy Aware UPS allows data centers to cut operating costs and sell energy back to the grid
Typical energy
savings for a
30MW data center10%
Eaton offers the first dual-purpose UPS that enables data centers to sell
energy services to utilities. Customers can generate incremental revenue by
using their UPS and Lithium-ion batteries to help stabilize the grid while also
lowering their own energy bills with smart energy consumption
24© 2019 Eaton. All rights reserved..
Why it matters to our customers:
• The electrical system is often the longest part of data center
construction projects. Eaton’s faster lead times get customers’
sites up and running as quickly as possible
• By configuring switchgear in the factory and sending settings
through the cloud, Eaton is identifying problems earlier and saving
multiple days of on-site configuration
New digital innovations have improved our design, manufacturing and commissioning processes, reducing our switchgear delivery time
Commissioning time
saved for a data
center customer30%
We have shortened deployment times by using standard digital customer
designs as a starting point for customization and pushing configuration
settings from the cloud to our power distribution assemblies
Previously Now
factoryexperts
Technical expert
spent multiple days
on site
Configuration done
remotely through
the cloud
25© 2019 Eaton. All rights reserved..
Agenda
Industrial facilities and machine builders
Commercial and residential buildings1
2
3
Utility4
Data centers
Our strategy in action, aligned to secular growth trends
26© 2019 Eaton. All rights reserved..
In 2017, the 3-D printing
industry grew
to $7.3B
By 2020, industrial
companies will spend
By 2021,
of G2000 manufacturers
will have transitioned to
intelligent
manufacturing
of Fortune 100
Industrials are looking to drive profitability through digital technologies and energy efficiency
$907B
20%
per year
on the Industrial Internet
of Things
2/3
21%
companies have
renewable energy
targets
27© 2019 Eaton. All rights reserved..
Industrial facilities and machine builders prioritize safety, but also require solutions that help maximize profits
✓ Safety in high-risk areas
✓ Reliable processes
✓ Extend equipment service life
✓ Lower operating costs
✓ Meet regulatory requirements
Eaton’s expertise in industrial solutions helps customers master power capabilities and safety systems
integral to uninterrupted operations and maximized production, even in the harshest environments
Customer requirements
28© 2019 Eaton. All rights reserved..
Eaton offers a full product portfolio with industry-leading technology and total lifecycle services for industrial facilities
Enclosure solutions
Structural solutions
Control and
instrumentation
Services
Power distribution
and protection
Filtration
Monitoring and
communication
Lighting
solutions
29© 2019 Eaton. All rights reserved..
Arc quenching switchgear uses innovative technology to provide industry-leading arc protection that minimizes equipment damage
Reported arc flash
incidents in the U.S.
each year
1,800 - 3,250
Why it matters to our customers:
• Industry leader in safety; reacts to electrical arc over 10x
faster than other solutions
• Arc elimination provides advanced equipment protection,
making it possible to return switchgear to service within hours,
not days or weeks
• No ducts, plenums or special construction required
In 2018, Eaton launched arc-quenching switchgear that provides
industry-leading protection against arc faults and dramatically
reduces downtime after an arc fault incident
30© 2019 Eaton. All rights reserved..
Why it matters to our customers:
• Eaton’s decades of expertise in power management makes us an
authority on power optimization, adding to our customer’s bottom line
• Our insight into the plant’s power genome provides important diagnostics
information – even about equipment not specifically being monitored
• Provides information on utilization levels to optimize equipment
purchases and reduce carbon footprint
Eaton’s intelligent factory solution optimizes energy use, minimizing operating costs
Saved in annual
power expense20%
Last year we tested our Intelligent Power IoT solution in our own facilities, monitoring
equipment at two sites. Now we’re evolving, expanding to five more plants and will
introduce this power savings solution to customers this year
31© 2019 Eaton. All rights reserved..
Eaton’s IoT enabled panelboard provides greater reliability and safety to harsh and hazardous sites
Of refinery shutdowns are
due to electrical equipment20%
Why it matters to our customers:
• Embedded circuit breaker intelligence visualized with our Power
Xpert Dashboard gives users real-time and historical metering as well
as diagnostics at their fingertips
• IoT capabilities enable predictive maintenance of the panelboard and
remote operations, keeping people out of combustible areas
• Overload alerts notify users when circuit nears a threshold,
minimizing downtime for critical processes
We’ve combined our connected and intelligent circuit protection
with our harsh and hazardous expertise to bring our customers a
smart panelboard for use in combustible applications
32© 2019 Eaton. All rights reserved..
Agenda
Industrial facilities and machine builders
Commercial and residential buildings1
2
3
Utility4
Data centers
Our strategy in action, aligned to secular growth trends
33© 2019 Eaton. All rights reserved..
Key trends are driving utilities to make smart grid investments beyond their typical capital spending
2/3+
In 2017, U.S. utilities
deployed
of demand response
programs for every
1GW of new capacity
added to the grid
~0.6GW
In 2017, renewable
capacity additions
accounted for over
of net global electricity
capacity growth
One large U.S. utility
reported more than
650 million attempted
cyberattacks in 2017
2/3 7.8 hours,
The average 2017
power outage in the U.S.
lasted
up from approximately
4 hours in 2016
34© 2019 Eaton. All rights reserved..
With the added complexity of renewables and cyber attacks, utilities want solutions that ensure reliable power
✓ Reliable power
✓ Incorporating renewables
✓ Enhanced cybersecurity
✓ Automation
Eaton’s broad portfolio, technically differentiated products and application expertise make
us the best partner for utilities
Customer requirements
35© 2019 Eaton. All rights reserved..
Eaton’s digital solutions for utilities optimize grid operations while making them more reliable and more automated
NOVA NX-T recloser
with Form 7 control
CYME grid
automation software
Next generation
demand response
• Advanced intelligence
highly customizable for
improved grid productivity
• Embedded cybersecurity
with built-in encryption
• Two-way communication
and dynamic control at
the individual load level
so that demand response
customers maintain a
high quality of service
• Uses digital twin
technology to analyze
capacity for adding
renewable generation
sources while maintaining
power reliability
36© 2019 Eaton. All rights reserved..
Incremental
growth above
market by 2023
We will leverage our broad portfolio, application expertise and innovative products to outgrow the market
$500M+
37© 2019 Eaton. All rights reserved..
Key takeaways for today
• Eaton has a leading electrical business that serves customers around the
world and across many key end markets
• Portfolio shaped by M&A
• Attractive profitability
• Our broad portfolio and other areas of competitive strength allow us to meet
the needs of multiple stakeholders in our complex markets
• Technology differentiation, channel strength, manufacturing scale and footprint, and
deep domain expertise
• Our focus on strategic growth initiatives will help us deliver organic growth
across our end markets, aligned to secular growth trends
38© 2019 Eaton. All rights reserved..