Financial Analysis

The following table provides disaggregated sales by lines of businesses, geographic destination, market channel or end market, as applicable, for the Company's business segments: Three months ended June 30 Six months ended June 30 (In millions) 2026 2025 2026 2025 Electrical Americas Products $ 1,144 $ 817 $ 2,164 $ 1,560 Systems 2,806 2,533 5,387 4,800 Total $ 3,951 $ 3,350 $ 7,551 $ 6,360 Electrical Global Products $ 1,627 $ 1,008 $ 2,776 $ 1,946 Systems 890 744 1,687 1,416 Total $ 2,517 $ 1,753 $ 4,463 $ 3,362 Aerospace Original Equipment Manufacturers $ 456 $ 409 $ 864 $ 795 Aftermarket 474 396 920 746 Industrial and Other 292 275 578 518 Total $ 1,222 $ 1,080 $ 2,362 $ 2,059 Mobility Vehicle $ 684 $ 663 $ 1,298 $ 1,280 eMobility 157 182 309 343 Total $ 841 $ 845 $ 1,607 $ 1,623 Total net sales $ 8,531 $ 7,028 $ 15,982 $ 13,404

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FAIR VALUE MEASUREMENTS Fair value is measured based on an exit price, representing the amount that would be received to sell an asset or paid to satisfy a liability in an orderly transaction between market participants. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a fair value hierarchy is established, which categorizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. A summary of financial instruments and contingent consideration recognized at fair value, and the fair value measurements used, is as follows: (In millions) Total Quoted prices in active markets for identical assets (Level 1) Other observable inputs (Level 2) Unobservable inputs (Level 3) June 30, 2026 Cash $ 483 $ 483 $ $ Short-term investments 212 212 Derivative contract assets 17 17 Derivative contract liabilities (51) (51) Contingent future payments from acquisition of Resilient Power Systems Inc. (Note 2) (32) (32) December 31, 2025 Cash $ 622 $ 622 $ $ Short-term investments 181 181 Derivative contract assets 26 26 Derivati …

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INCOME TAXES The effective income tax rate for the second quarter and first six months of 2026 was expense of 28.1% and 24.9%, respectively, compared to expense of 17.2% and 17.6% for the second quarter and first six months of 2025. The increase in the effective tax rate in the second quarter and first six months of 2026 was primarily due to greater levels of income in higher tax jurisdictions and withholding tax expense related to funding the acquisition of Boyd Thermal.

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LEGAL CONTINGENCIES Eaton is subject to a broad range of claims, administrative proceedings, and legal proceedings, including, but not limited to, claims for punitive damages, penalties, and interest, in a variety of matters, including, but not limited to, contract, indemnity, tax, patent infringement, intellectual property, personal injury, commercial, warranty, product liability, environmental, antitrust and trade regulation, class action, and labor and employment matters. Eaton is also subject to legal claims from historic products which may have contained asbestos. Insurance may cover some of the costs associated with claims and proceedings involving Eaton. Although it is not possible to predict with certainty the outcome or cost of these matters, the Company believes they will not have a material adverse effect on the condensed consolidated financial statements.

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DEBT On February 6, 2026, Eaton Corporation, a subsidiary of Eaton, exercised a $1,000 million upsize of the existing $3,000 million five-year revolving credit agreement, increasing the total facility size to $4,000 million. The facilitys maturity date remains unchanged at September 27, 2030. The revolving credit facility is used to support commercial paper borrowings and is fully and unconditionally guaranteed by Eaton and certain of its direct and indirect subsidiaries on an unsubordinated, unsecured basis. There were no borrowings outstanding under the revolving credit facility at June 30, 2026. Also on February 6, 2026, the Company increased its commercial paper program from $3,000 million to $4,000 million. The Company maintains access to the commercial paper markets through its $4,000 million commercial paper program, of which $2,088 million was outstanding on June 30, 2026. On March 6, 2026, Eaton Corporation, a subsidiary of Eaton, issued notes (2026 U.S. Notes) with an aggregate face amount of $8,500 million. The 2026 U.S. Notes are comprised of six tranches: 3.850% notes due 2028 in the amount of $1,500 million; 3.950% notes due 2029 in the amount of $1,500 million; 4.200% notes due 2031 in the amount of $1,500 million; 4.500% notes due 2033 in the amount of $1,000 million; 4.800% notes due 2036 in the amount of $2,000 million; and 5.450% notes due 2056 in the amount of $1,000 million. Interest is payable semi-annually. The issuer received proceeds totaling $8,427 m …

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Recently Issued Accounting Pronouncements In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2024-03, Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). This accounting standard requires disaggregated income statement expense disclosures on an annual and interim basis, including inventory purchases, employee compensation, depreciation, and intangible asset amortization for each income statement line item that contains these expenses. The standard also requires disclosure of total selling expenses on an annual and interim basis, and the definition of those expenses disclosed annually. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and may be applied prospectively or retrospectively. The Company is evaluating the impact of ASU 2024-03 and expects the standard will only impact its disclosures with no material impact to the consolidated financial statements. In September 2025, the FASB issued Accounting Standards Update 2025-06, Intangibles Goodwill and Other Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06). This accounting standard changes when software project costs should be capitalized by removing all references to development stages and requiri …

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RETIREMENT BENEFITS PLANS The components of retirement benefits expense (income) are as follows: United States pension benefit expense Non-United States pension benefit expense Other postretirement benefits expense Three months ended June 30 (In millions) 2026 2025 2026 2025 2026 2025 Service cost $ 1 $ 4 $ 13 $ 11 $ $ Interest cost 30 34 23 23 2 3 Expected return on plan assets (47) (47) (34) (33) Amortization 6 3 5 4 (2) (3) (10) (6) 7 5 Settlements, curtailments, and termination benefits 16 9 1 3 Total expense $ 6 $ 3 $ 8 $ 8 $ $ United States pension benefit expense Non-United States pension benefit expense Other postretirement benefits expense (income) Six months ended June 30 (In millions) 2026 2025 2026 2025 2026 2025 Service cost $ 2 $ 8 $ 25 $ 22 $ $ Interest cost 60 68 46 44 4 5 Expected return on plan assets (95) (95) (67) (64) Amortization 12 7 11 8 (5) (6) (21) (12) 15 10 (1) (1) Settlements, curtailments, and termination benefits 28 18 2 5 Total expense (income) $ 7 $ 6 $ 17 $ 15 $ (1) $ (1) The components of retirement benefits expense (income) other than service costs are included in Other expense (income) - net. During 2020, the Company announced it was freezing its United States pension plans for its non-union employees. The freeze was effective January 1, 2021 for non-union U.S. employees whose retirement benefit was determined under a cash balance formula and was effective January 1, 2026 for non-union U.S. employees whose retirement benefit is determined …

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RESTRUCTURING CHARGES During the first quarter of 2024, Eaton implemented a multi-year restructuring program to accelerate opportunities to optimize its operations and global support structure. These actions will better align the Company's functions to support anticipated growth and drive greater effectiveness throughout the Company. Since the inception of the program, the Company has incurred charges of $397 million. This restructuring program is expected to be completed in 2026 and is expected to incur additional expenses related to workforce reductions of $60 million and plant closing and other costs of $18 million, resulting in total estimated charges of $475 million for the entire program. A summary of restructuring program charges is as follows: Three months ended June 30 Six months ended June 30 (In millions except for per share data) 2026 2025 2026 2025 Workforce reductions $ 18 $ 7 $ 42 $ 19 Plant closing and other 6 17 20 23 Total before income taxes 24 24 62 42 Income tax benefit 5 5 13 9 Total after income taxes $ 19 $ 18 $ 49 $ 33 Per ordinary share - diluted $ 0.05 $ 0.05 $ 0.13 $ 0.08 Restructuring program charges (income) related to the following business segments: Three months ended June 30 Six months ended June 30 Restructuring program charges incurred from inception through (In millions) 2026 2025 2026 2025 June 30, 2026 Electrical Americas $ 10 $ 9 $ 11 $ 10 $ 38 Electrical Global 9 5 40 19 191 Aerospace 19 Mobility (2) 4 3 6 98 Corporate 6 6 9 7 51 Total …

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REVENUE RECOGNITION Sales are recognized when obligations under the terms of the contract are satisfied and control of promised goods or services have transferred to our customers. Control is transferred when the customer has the ability to direct the use of and obtain benefits from the goods or services. Sales are measured at the amount of consideration the Company expects to be paid in exchange for these products or services. The following table provides disaggregated sales by lines of businesses, geographic destination, market channel or end market, as applicable, for the Company's business segments: Three months ended June 30 Six months ended June 30 (In millions) 2026 2025 2026 2025 Electrical Americas Products $ 1,144 $ 817 $ 2,164 $ 1,560 Systems 2,806 2,533 5,387 4,800 Total $ 3,951 $ 3,350 $ 7,551 $ 6,360 Electrical Global Products $ 1,627 $ 1,008 $ 2,776 $ 1,946 Systems 890 744 1,687 1,416 Total $ 2,517 $ 1,753 $ 4,463 $ 3,362 Aerospace Original Equipment Manufacturers $ 456 $ 409 $ 864 $ 795 Aftermarket 474 396 920 746 Industrial and Other 292 275 578 518 Total $ 1,222 $ 1,080 $ 2,362 $ 2,059 Mobility Vehicle $ 684 $ 663 $ 1,298 $ 1,280 eMobility 157 182 309 343 Total $ 841 $ 845 $ 1,607 $ 1,623 Total net sales $ 8,531 $ 7,028 $ 15,982 $ 13,404 The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (revenue recognized exceeds amount billed to the customer), and deferred revenue (advance payments …

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BUSINESS SEGMENT INFORMATION Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. The Company's chief operating decision maker is the chief executive officer. Operating profit includes the operating profit from intersegment sales. For additional information regarding Eaton's business segments, see Note 18 to the consolidated financial statements contained in the 2025 Form 10-K. The chief operating decision maker uses segment operating profit as an input to assess segment performance and determine appropriate resource allocations, including capital, financial, and employee resources. Segment operating profit results are regularly evaluated versus annual profit plan, forecast and/or prior year. Other segment items are primarily comprised of Cost of products sold, Selling and administrative expense, Research and development expense, depreciation of property, plant and equipment, and certain items included in Other expense (income) net on the Consolidated Statements of Income. The Company's chief operating decision maker manages these items on a consolidated basis. During the first quarter of 2026, Eaton re-segmented certain business segments due to a reorganization of the Company's businesses. The new segment is Mobility, w …

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EATON SHAREHOLDERS' EQUITY The changes in Shareholders equity are as follows: Ordinary shares Capital in excess of par value Retained earnings Accumulated other comprehensive loss Shares held in trust Total Eaton shareholders' equity Noncontrolling interests Total equity (In millions) Shares Dollars Balance at January 1, 2026 387.9 $ 4 $ 12,837 $ 10,702 $ (4,118) $ $ 19,425 $ 44 $ 19,469 Net income 866 866 2 868 Other comprehensive loss, net of tax (118) (118) (118) Cash dividends paid and accrued (431) (431) (1) (432) Issuance of shares under equity-based compensation plans 0.4 (21) (1) (21) (21) Changes in noncontrolling interest of consolidated subsidiaries - net (1) (1) Balance at March 31, 2026 388.3 4 12,817 11,137 (4,235) (1) 19,721 44 19,765 Net income 821 821 1 823 Other comprehensive income, net of tax 90 90 90 Cash dividends paid (427) (427) (1) (428) Issuance of shares under equity-based compensation plans 0.2 50 (1) 1 50 50 Changes in noncontrolling interest of consolidated subsidiaries - net 1 1 Balance at June 30, 2026 388.4 $ 4 $ 12,867 $ 11,530 $ (4,146) $ $ 20,254 $ 45 $ 20,299 Ordinary shares Capital in excess of par value Retained earnings Accumulated other comprehensive loss Shares held in trust Total Eaton shareholders' equity Noncontrolling interests Total equity (In millions) Shares Dollars Balance at January 1, 2025 392.9 $ 4 $ 12,731 $ 10,096 $ (4,342) $ (1) $ 18,488 $ 43 $ 18,531 Net income 964 964 1 965 Other comprehensive income, net of tax 92 92 …

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