With me today are Craig Arnold, our Chairman and CEO; and Rick Fearon, Vice Chairman and Chief Financial and Planning Officer. Our agenda today includes opening remarks by Craig highlighting the company’s performance in the second quarter. As we have done in our past calls, we’ll be taking questions at the end of Craig’s comments. The press release and the presentation we’ll go through today have been posted on our website at www.eaton.com. Please note that both the press release and the presentation include reconciliation to non-GAAP measures. A webcast of this call is accessible on our website, and it will be available for replay. I would like to remind you that our comments today will include statements related to expected future results of the company and are therefore forward-looking statements. Our actual results may differ materially from our forecasted projections due to a wide range of risks and uncertainties that are described in our earnings release and the presentation. They’re also outlined in our related 8-K filings. With that, I will turn it over to Craig.

Okay. Thanks, Yan. We’ll start on page three with recent highlights from the second quarter. And as you can imagine, I’m extraordinarily pleased with the way our teams have executed in the midst of this pandemic and the economic downturn. We’ve done a good job of keeping our employees safe, have delivered for our customers and certainly generated exceptional cash flow, all while flexing our costs at record rates. Our results, while compared to last year, certainly in absolute terms, were better than expectations, and we continue to make important investments for the future. Q2 earnings on a per share basis were $0.13 on a GAAP basis and $0.70 on an adjusted basis, which excludes $0.20 of charges related to acquisitions and divestitures and $0.37 related to the multiyear restructuring program that we just announced. Our Q2 revenues were $3.9 billion, down 22% organically. As we noted on our Q1 earnings call, April was down approximately 30%. This was followed by slightly better volumes in May and then relatively strong finish in June, which was down, let’s call it, low double digits. In fact, I would like to highlight that our Electrical business in the Americas, Europe, and Asia all posted low single-digit organic growth in revenue in the month of June. So once again, our Electrical businesses are remaining very resilient in the face of this pandemic and economic downturn. Segment margins were 14.7%, down 110 basis points from Q1, and our decremental margins were at 25%, 5 points better than our guidance of 30%. Once again, this is a good indication of how well our teams have done in controlling the elements that are really within our control. However, recognizing that some of our businesses could be looking at a slow and, certainly, what you could call a prolonged recovery, we announced a multiyear restructuring program of $280 million, including a $187 million charge in Q2. These actions will reduce structural costs for sure and are targeted in those end markets, including commercial aerospace, oil and gas, NAFTA Class 8 truck, and North American and European light vehicle markets, which have been highly impacted. I’ll provide more details on this program in a few minutes, but they’re covered on page 12. The other clear highlight for the quarter was our operating cash flow, which was $757 million and free cash flow of $667 million, both very strong results. This gives us the ability to reaffirm our free cash flow guidance of $2.3 billion to $2.7 billion, with a midpoint of $2.5 billion. Our teams continue to do great in converting cash as well. Finally, as most of you know, we made an important announcement during the quarter regarding sustainability and our commitment to our 2030 sustainability goals. I thought it would be helpful to put this announcement in the context to show you how it fits within the broader strategic framework of the company. To simply state, at Eaton, sustainability is really at the core of our mission. We talk about our mission being to improve the quality of life and the environment. If you think about all of our value propositions with customers, they’re built around creating safe, reliable, and efficient solutions, which we will call sustainable solutions. So, as we often say, what’s good for the environment is good for Eaton. We believe that meaningful efforts to support the environment are fundamental to how we create value for customers, and it’s certainly a place where we think Eaton should play a leadership role. Sustainability presents growth opportunities to help our customers solve their business goals. To this extent, we’ve laid out 10-year plans that include investing $3 billion in R&D to create sustainable products over this period. This also includes reducing our emissions from our installed base of products and upstream sources by some 15%. Just to give you an example of where we think this fits with our overall strategy, sustainability is about capitalizing on secular growth trends around electrification across all of our businesses and also in energy transition. Sustainability is also an important part of how we run the company on a day-to-day basis. Since 2015, we reduced our absolute greenhouse gas emissions by some 16%, and we’re certainly on track to deliver our 2025 targets. By 2030, we have now committed to achieve science-based targets of 50% reduction of greenhouse gas emissions from 2018 levels. We’re also committed to being carbon-neutral by 2030, which we’ll achieve through a combination of initiatives, including carbon offsets, such as reforestation, and continuing to optimize our sourcing of renewable electricity across all of our operations. This is a pretty comprehensive set of plans that we believe will deliver on our 2030 goal. Finally, to achieve these goals, we need to continue to build a workforce that’s engaged and passionate about making a difference, which will remain a large priority for the company. Hopefully, that provides context regarding why we think sustainability is such an important initiative for Eaton and how we plan to convert that into accelerated growth for the company. Now turning to page five, we summarize our Q2 financial results. I’d like to note a couple of things on this page. First, acquisitions increased sales by 2%, which was more than offset by the 8% impact from divestitures and also we had a negative currency impact of 2%. I’d also remind you that we now recognize all charges related to acquisitions, divestitures, and restructuring at corporate rather than at the segment level to make it easier for you to forecast by quarter and by segment without the volatility of these one-time charges. Next on page six, we show our results for Electrical Americas, with revenues down 29%, a 9% decline in organic revenue, a 19% impact from M&A primarily due to the divestiture of the lighting business, alongside a small impact from negative currency as well of 1%. Operating margins increased 130 basis points to 20.7%, favorably impacted by the divestiture of lighting, but also thanks to our team's excellent management of costs to counter the economic impact of COVID-19. This combination resulted in strong decremental margin performance, up 16%. Thus, this segment continues to prove to be highly resilient when you look at margins and orders and backlog, where orders increased 2.1% on a rolling 12-month basis, with strength in residential, utility, and data centers. Notably, our data center orders were up 7% on a rolling 12-month basis. Lastly, our bookings remained strong, up 11% year-over-year. Turning to page seven, we have our results for the Electrical Global segment. Revenues were down 16%, with a 14% decline in organic revenues and a 2% headwind from currency. Operating margins declined by 160 basis points but remained respectable at 16%, with well-managed decremental margins at 26%. Orders declined 4.6% on a rolling 12-month basis, with significant declines primarily in global oil and gas and industrial markets. Our backlog for Electrical Global increased 2% on a year-over-year basis. On page eight, we summarize our Hydraulics segment. For Q2, revenues were down 32%, with a 30% decline organic and a 2% currency impact. Operating margins were 9%, with orders for the quarter down 33.7% year-over-year, driven by weakness in both OEMs and the distributor channel. We continue to work closely with Danfoss and are completing the customary closing additions of regulatory approvals. Danfoss remains excited about owning the business. We now expect the transaction to close at the end of Q1 next year, delayed by COVID-19, which has impacted the pace of regulatory approvals. On page nine, we summarize our results for the Aerospace segment. Revenues declined 27%, with a negative 35% in organic growth offset by an 8% increase from the acquisition of Soria. Operating margins decreased to 14.8% due to lower sales, while the acquisition of Soria had a dilutive impact on margins. Orders declined 12.8% on a rolling 12-month basis, showing particular weakness in the quarter in the commercial OEM and aftermarket segments. It’s worth noting, however, that orders for the military aftermarket were up 13% on a rolling 12-month basis. Overall, backlog was down 5% year-over-year. The commercial aerospace markets are grappling with significant declines in passenger demand, which is impacting our business and affecting both the OEM and aftermarket. While we view this as a near-term dislocation and are taking necessary steps to position this business for the future, we remain confident in the long-term attractiveness of the aerospace market and will do what is needed to manage margins in the meantime. Turning to page 10, we summarize our results for the Vehicle segment. Revenues declined 59%, of which 52% was organic. In addition to the divestiture of the automotive fluid conveyance business, which impacted revenues by 4%, we had a 3% negative impact from currency. The decrease in organic sales was driven by widespread customer plant shutdowns due to COVID-19, resulting in lower Class 8 OEM production as well as continued weakness in light vehicle production. Most light and commercial OEMs had shutdowns that ranged between 6 and 8 weeks. These shutdowns began in late March and extended through the month of April into mid-May, resulting in many customers being shut down for nearly half of the second quarter. However, production is now beginning to come back online. Global light vehicle market production was down 55% in Q2, and Class 8 OEM build was down 70% during the same period. We project NAFTA Class 8 production to be 175,000 units for the year, down slightly from our prior forecast of 189,000 units and still down about 49% from 2019. This steep and sudden reduction in OEM production led to operating margins of negative 6.4%. Nonetheless, this business has done a great job managing decrementals, and despite the massive reduction in revenue, delivered a respectable decremental margin of 33%. We do expect better market conditions in the second half, positioning our business well to participate in this recovery. Moving to page 11, we have our eMobility segment. Revenues were down 33%, entirely organic, with operating margins negative 3.6% primarily due to lower volumes and particular weakness in the legacy internal combustion engine platforms. However, we remain confident about the long-term potential of this business and have seen upward revisions in the expectations for electric vehicle penetration. Overall, we’re well-positioned with the common technology platforms we are creating, leveraging the strength in our core electrical business. A recent example is a $21 million program for an export power inverter for a major commercial truck customer. In virtually all aspects of our business, electric content is increasing, and we are poised to participate in that growth. We’ve won programs with a value of approximately $500 million in mature year revenue. On page 12, we show the details of our plans to accelerate and expand our restructuring actions, due to the economic implications of the pandemic. We announced a $280 million multiyear restructuring program, taking charges of $187 million in Q2, while expecting an additional $93 million in costs realized through 2022. Over the next three years, we expect to deliver about $33 million of charges in the second half of this year, $55 million in 2021, and $5 million in 2022. We anticipate realizing $200 million in material benefits from these actions once fully implemented, with full-year implementation expected by 2023. Approximately two-thirds of these costs are in our industrial businesses, mainly vehicle and aerospace, with the remaining third in our electrical sector, particularly focusing on our oil and gas business within our electrical global segment. Turning to page 13, we provide our best Q3 outlook. While these markets will be stronger than Q2, we see year-over-year organic revenue expectations to remain negative. For Electrical Americas, we expect organic revenue to be flat, essentially between down 2% and up 2%, with strength in residential utility data centers offsetting industrial market weakness. For Electrical Global, we anticipate organic revenues to decline between 10% and 14%, with Asia Pacific and data center strengths countered by declines in Europe and oil and gas. For aerospace, we foresee organic revenues down between 28% and 32%, with military strength countered by significant declines in commercial markets. For the vehicle segment, we estimate a revenue decline between 30% and 34%. Thus, while markets are still weak, they will improve significantly from Q2. For eMobility, we expect declines between 13% and 17%, once again pressured by legacy internal combustion engines. Lastly, we forecast Hydraulics to be down between 23% and 27%. Overall, we estimate Q3 revenues down between 13% and 17%, showing improvement over Q2's 22% decline. But still, in absolute terms, markets remain in decline. Moving to page 14, our guidance for Q3 indicates expected organic revenue declines of 13% to 17%. This also includes our July data, showing low double-digit declines. We have provided no full-year revenue guidance due to ongoing pandemic uncertainty. We believe Q2 will be the trough for organic revenue declines, and barring a second wave of the pandemic, Q4 should be better than Q3. For Q3 and the full year, we anticipate decremental margins between 25% and 30%. Our tax rate on adjusted earnings is expected to be between 15% and 16%. We’re maintaining our free cash flow guidance for 2020 within the $2.3 billion to $2.7 billion range, considering the impact of the multiyear restructuring program, previously not included in our prior guidance. For reference, in the first half, we generated around 35% of our $2.5 billion midpoint in free cash flow guidance, consistent with our performance over the past 5 years. We’re providing new guidance for share buybacks of $1.7 billion to $1.9 billion for the year. We are excited about the Eaton story. Our focus remains on managing short-term challenges while staying aligned with our strategic and financial goals laid out in New York, summarized on page 15. We strive to position Eaton as an intelligent power management company benefiting from key secular growth trends, including electrification, energy transition, IoT, and connectivity. Despite temporary challenges, we believe long-term growth is the right strategy. Our long-term goals include 2% to 3% organic growth, 20% segment margins, 8% to 9% EPS growth, and delivering $3 billion a year in free cash flow. We will continue to focus on disciplined cash flow management, including investing in organic growth, delivering top-quartile dividends, ongoing share buyback programs, and careful portfolio management.

Okay. Good. Thanks, Craig. Before we start our Q&A of our call today, I do see that we have a number of individuals in the queue with questions. So, I appreciate it if you can limit your opportunity to just one question and a follow-up. Thanks again in advance for your cooperation. With that, I will turn it over to the operator, who will give you guys the instruction.

Thank you. Our first question is from Nicole DeBlase from Deutsche Bank. Please go ahead.

Yes. Thanks. Good morning, guys. I guess maybe starting with the restructuring actions that you guys are taking, Craig. The information on the costs was helpful. I guess maybe some qualitative color around what you’re focusing on: headcount versus footprint or other things. And where I’m going with this is the cadence of payback over the next few years, including the second half of '20, as well as, I guess, why it’s taking some time to achieve payback from those actions?

I appreciate the question, Nicole. As I mentioned in my opening commentary, we always have a future view of restructuring projects that we’d like to undertake. The pacing items generally tend to be our internal capacity to manage them effectively, as well as our customers' ability to absorb them without creating disruptions. An economic downturn like the current one provides more capacity for everyone to engage in these projects. A lot of what we’re doing is entirely structural; we’re focused on eliminating fixed costs—some of which will involve headcount and some footprint adjustments. We have not yet finalized internal announcements about the specific impacts. To your point about returns, this $280 million investment expects to generate a return of about $200 million, making it an attractive program for ROI.

Got it. Thanks, Craig. That’s helpful. And you kind of teed up my follow-up there. I wanted to hit on decrementals. The 25% was impressive this quarter and above your own 30% guidance. How do we think about that through the rest of the year? We hope that Q2 will be the low point for revenue. Is there any possibility that 25% could improve in the second half as you execute on cost savings and perhaps see sequential improvements in revenues?

I appreciate the question. Our teams have done an extraordinary job on decremental margins and flexing costs. Embedded in the guidance of $25 million to $30 million is uncertainty regarding whether we might experience a second wave of the pandemic. There are hotspots around the US and potential for other forms of shutdowns, which creates uncertainty. We took extraordinary one-time costs in Q2 for time off without pay and travel, which was mostly halted. Some of these costs will come back as the year unfolds, but if we don't encounter a second wave, we will likely do better than the midpoint of our decremental range.

Thank you. Our next question will come from the line of Joe Ritchie from Goldman Sachs. Please go ahead.

Thanks. Good morning, everyone. Craig, maybe just starting out, I’d love to hear your thoughts on non-res construction, specifically in your exposure to it. There’s concern as we head into 2021 about a potential downturn in the markets. How is your business positioned for a possible non-res downturn? What actions are you taking as offsets?

Thanks for the question. Non-res construction primarily consists of our electrical business, as residential makes up less than 20% of our total business. Data centers continue to be strong markets, and we anticipate solid growth there. Utilities also represent attractive markets expected to perform well long-term. Commercial markets may see some risk, particularly offices, due to discussions around remote work's future. However, we believe there will be demand for more office space to allow for social distancing. In areas like warehousing and water/wastewater, we see strength. Our Electrical business has held up well due to a wide spread across different markets, so we remain optimistic about its prospects.

That's helpful color, Craig. My quick follow-up is on free cash flow. It was nice to see your affirmation of the range for this year. Looking ahead to next year, I know it’s difficult to predict, but if growth returns to more normal levels, what are your thoughts on your ability to grow free cash flow in 2021?

In periods like this, as we de-capitalize the business and free up cash from working capital, earnings are down significantly. However, as we expand during an economic upswing, we expect earnings and consequently cash flows to increase. Over time, we've maintained strong free cash flow generation, consistent during expansion and contraction cycles.

I want to add some color on trends in electrical. One metric we measure is our negotiations for large projects in the Americas. If you exclude oil and gas activities, our negotiations in Q2 were flat year-over-year, indicating stability amidst macroeconomic turbulence.

Thank you. Our next question is from Jeff Sprague from Vertical Research. Please go ahead.

Thank you. Good day, everyone. I’d like to get some additional color on the vehicle business. Production is starting to look better as lockdowns ease. What do you foresee for the profit trajectory there? Do you expect Q2 to be the only quarter showing an operating loss?

Thank you for the question, Jeff. It has been a long time since we've posted a loss in our vehicle business. The figures from Q2 were an extraordinary combination of events, considering that half the quarter's production was lost. The team has done a remarkable job in managing decrementals, maintaining a 33% decremental margin. Going forward, volumes are expected to significantly improve in Q2, and we don’t anticipate seeing losses in the vehicle business in future quarters unless we encounter a severe market downturn again.

Great. And a second question, regarding aerospace: do you believe we’ve seen the bottom in aftermarket activity? Or do you think we’ll still deal with delays due to grounded planes affecting material availability and possibly cause an extended bottom?

That's a solid question, one that many are attempting to analyze. We observed notably poor aftermarket numbers in Q2, making it hard to imagine further declines. Flight activity levels are lifting, and we see more planes flying now than during Q2. Internationally, certain regions have recaptured flight hours faster than the U.S. The large number of grounded aircraft and the potential impact of parts from these planes on the aftermarket remain unknown at this point.

Thank you. Our next question is from Nigel Coe from Wolfe Research. Please go ahead.

Thanks, good morning. I wanted to delve into your Q3 framework and the down low double digits. I understand you want to be conservative, but is there any reason why July should have been better than your Q3 framework? Also, within this, Electrical Americas appears flat compared to a 9% decline in Q2. What’s driving that change?

I appreciate the question, Nigel. I view June and July as running at similar levels in terms of performance. Our Q3 forecast reflects a continuation of this trend; however, uncertainty remains due to ongoing pandemic spread across various parts of the U.S. which could impact our figures. This apprehension contributes to a cautious perspective regarding future revenue outlook for the remaining months.

What’s getting materially better for Electrical Americas in Q3 compared to Q2?

Electrical Americas experienced more disruptions than other segments in Q2 due to construction project shutdowns. Our anticipation for Q3 is based on a general improvement with no repeat of the extensive shutdowns. This, combined with production challenges, will lead to better overall performance in the Electrical Americas segment.

Additionally, some production challenges constrained our sales due to layout changes in our plants during Q2. We expect these limitations will have less impact and allow for higher sales volumes in Q3.

Thank you. Our next question is from David Raso from Evercore. Please go ahead.

Hi. Good morning. Can you clarify if the month of June saw Electrical Americas post low single-digit revenue growth? Similarly for Electrical Global? If that’s the case, why then is the expectation flat for Americas in Q3 if you were already up low single?

You heard me right; Electrical showed positive sales growth in June. That said, the month should not be oversimplified as a seasonal trend since we also experienced some catch-up. Projects due for April or May slipped into June, which may have skewed the totals. Our guidance for Q3 incorporates this nuance, and we expect to see a more consistent outlook rather than solely relying on June's results.

Understood. Just to clarify, did you say vehicle margins for the year would recover to double digits?

Yes, I did.

Thank you. Our next question is from Jeff Hammond from KeyBanc. Please go ahead.

Hey, guys. Good morning. Can you talk about where the incremental utility spend is being seen or where you're experiencing the most resistance? And regarding data center activity, what are your insights on growth expectations there?

For utility markets, the stability appears to be broad-based, with minimal variation depending on the region. On the data center side, we’re seeing a strong return in hyperscale, which typically experiences lumpy demand. In the last quarter, we saw significant growth as hyperscale customers continue to expand their requirements. On the hydraulics side, there is a general systematic slowdown in the construction market, while the Ag market is performing better. Particularly in China, the market has already returned to growth, contrasting with slower conditions elsewhere.

For the timing of the transaction closing, it primarily hinges on regulatory reviews that have been delayed due to staff working remotely. We do anticipate the process to continue moving along, albeit at a slower pace than initially expected.

Danfoss remains genuinely enthusiastic about the transaction; their leadership has publicly expressed their excitement as they work to integrate our businesses.

Thank you. Our next question is from John Inch from Gordon Haskett. Please go ahead.

Thanks. Good morning, everyone. Craig and Rick, can you reiterate how big the new build portion for office buildings is as a percentage of Electrical Americas and Global? This would seem to be a significant risk that could impede growth.

New builds for office space represent just under 20% of our overall electrical business. It's important to contextualize that while there may be concerns for the office market, we believe workspace dynamics may remain fluid depending on how businesses adapt post-pandemic.

Retrofitting accounts for about 25% to 30% of the electrical sector, but the larger proportion of activities fall outside of that percentage for new builds and remodels.

Okay. Just to clarify, is the $280 million charge on top of the $50 million to $60 million of quiet restructuring you do annually, or are you folding that into the $280 million?

Yes, it’s the latter. We’re pulling forward a number of restructuring programs we planned to execute anyway. All these will be consolidated under the $280 million restructuring plan.

Thank you. Our next question is from Andy Casey from Wells Fargo Securities. Please go ahead.

Hi. Good morning. Can you talk about M&A potential? I’m curious if the dislocation has created new opportunities and your thoughts on valuations in this context?

We have the balance sheet to consider M&A, especially with the anticipated cash inflow from our hydraulics sale. However, the market uncertainty and valuation expectations of companies has not quite lowered in line with market realities. We remain actively exploring our pipeline, focusing on potential deals primarily around the Electrical business.

As for Q3 guidance, no significant changes are expected in corporate pension and other expenses, which should remain relatively consistent.

Thank you. Our next question is from Andrew Obin from Bank of America. Please go ahead.

Hi, everyone. Just a question on inventories in the channel. Have dealers been destocking during this period? What levels are you seeing in North America and internationally? Is there a need for restocking?

We've seen some destocking during Q2, but that process is now behind us. Our channel checks show that distributor inventory levels are aligned with expectations for upcoming revenues, so the situation doesn't indicate immediate restocking requirements.

About supply chain changes, especially with regards to China and Mexico. What adjustments have you made to your internal sourcing and supply chains post-COVID?

We've made no material changes to our supply chain structure throughout the pandemic. We manufacture in zone currency, ensuring that we generally produce in areas we sell to. Our supply chain has held up incredibly well, and we didn’t lose orders due to breakdowns. Challenges were related to border definitions of essential industries, which have since been resolved.

Thank you. Our next question is from Julian Mitchell from Barclays. Please go ahead.

Hi, good morning. Can you help me understand the hydraulics contribution to this year’s estimated $2.5 billion midpoint for free cash flow? What’s the cash portion of the restructuring charges in that figure?

I don’t have the exact hydraulics contribution right now, but we can follow up offline. The cash portion of the restructuring charge is estimated at about $50 million and retaining our cash flow guidance, even with that integration.

Understood. Regarding Aerospace margins, can you explain the impact of Souriau-Sunbank on margins during Q2? What do you expect from that acquisition going forward?

The margins for Souriau pre-acquisition were in the high teens. By comparison, our business operates in the 22% to 24% range. We recorded approximately 100 to 150 basis points drop in margins attributable to this acquisition. Overall, this should allow you to gauge how Souriau has impacted our performance.

Thank you all. We have reached the end of our call. We appreciate everyone’s questions. As always, Chip and I will be available for follow-up inquiries. Thank you for joining us today.

Thank you. That concludes our conference for today. Thank you for your participation and for using AT&T conferencing services. You may now disconnect.