Thomas B. Okray
Executive Vice President and Chief Financial Officer at Eaton
Thanks, Craig. I'll start by providing a summary of our Q3 results, which include several records. With respect to the topline, we posted an all-time quarterly sales record of $5.9 billion. Organic growth continues to be strong, up 9% for the quarter, building upon six consecutive quarters of double-digit growth and three quarters on a two-year stack of mid-20s growth. Operating profit recorded all-time records on both the margin and absolute basis. Operating profit grew 23% and segment margin expanded 240 basis points to 23.6%.
We posted a very strong incremental margin of 46%, up sequentially from 33% in Q2 and 27% in Q1. Adjusted EPS increased by 22% over the prior year to $2.47 per share, an all-time quarterly record and well above the high-end of our guidance range. The -- this performance resulted in a third quarter operating cash flow record. Our $1.4 billion in operating cash flow was 18% higher than the prior year, generating 16% free cash flow margin in over 100% free cash flow conversion.
Looking at our results on a year-to-date basis, organic growth is up 12%, segment margin is up 170 basis points, we generated incremental margin of 35%, adjusted EPS growth of 19%, a 73% increase in operating cash flow versus prior year, and free cash flow up 90% year-over-year.
Moving on to the next slide. Our Electrical Americas business continues to execute well and delivered another very strong quarter. We set all-time quarterly records for sales, operating profit and margins. Organic sales growth remained very strong at 19%. Electrical Americas has generated double-digit organic growth for seven consecutive quarters, with six of the quarters greater than 15%. On a two-year stack, organic growth is up 37%. In the quarter, there was broad-based growth in nearly all end-markets, with double-digit growth everywhere except residential, and especially robust growth in industrial, utility, machine OEM and data center markets.
Record operating margin of 27.7% was up 420 basis points versus prior year, benefiting from higher volumes and effective management of price/cost. Incremental margin was 50% for the segment. On a rolling 12-month basis, orders were down 3%. It's important to note that the dollar value of orders remains high and the decline needs to be viewed in context of the 36% order growth in Q3 of last year. As discussed on last quarter's call, order intake is an important metric, but needs to be analyzed together with record backlog. Currently, in our Electrical sector, we have backlog coverage of almost three times our historical average. We've looked at multiple scenarios with meaningful order intake decline and are confident in those scenarios, given our backlog coverage that we can generate robust organic growth for several quarters into 2025.
In this regard, Electrical Americas backlog increased 19% year-over-year and 5% sequentially, resulting in a book-to-bill ratio above 1.1 on a rolling 12-month basis. For orders, we had particular strength in data center, industrial facilities and institutional markets. Also, our major project negotiations pipeline in Q3 was up 33% versus prior year and 19% sequentially from especially strong growth in data center, institutional, government and water, wastewater markets. Data center negotiations increased almost four times. On a two-year stack, our negotiations pipeline was up 180%. Overall, Electrical Americas continues to have a very strong year.
On page 11, you will find the results for our Electrical Global segment. Despite flat organic growth, we posted a Q3 sales record. We had strength in our commercial and institutional, industrial and utility markets. Regionally, we saw weakness in EMEA markets that were offset in other markets where growth was in line with expectations. We expect the softness in EMEA to be short-term, with organic growth in the segment returning to low- to mid-single-digits in Q4. Operating margin of 21.8% was up 120 basis points compared to prior year. Operating profit and margin were all-time quarterly records. Margin improvements were primarily driven by effectively managing price/cost. Orders were up 1% on a rolling 12-month basis, with strength in data center and utility markets. Importantly, book-to-bill remained greater than 1.
Before moving to our industrial businesses, I'd like to briefly recap the combined Electrical segments. For Q3, we posted organic growth of 11%, incremental margin of 53%, and segment margin of 25.5%, which was up 320 basis points over prior year. On a rolling 12-month basis, our book-to-bill ratio for our Electrical sector remains very strong, at more than 1.1. We remain quite confident in our positioning for continued growth with strong margins in our overall Electrical business.
The next slide highlights our Aerospace segment. We posted all-time quarterly sales and operating profit records. Organic growth was 10% for the quarter, with a 3% contribution from foreign exchange. We've posted double-digit growth in six of the last seven quarters in this segment. Growth was driven by broad strength across all markets, with particularly strong growth in commercial OE and commercial aftermarket, which were up 21% and 27% respectively. Operating margin of 24.1% was up 10 basis points on a year-over-year basis and up 160 basis points sequentially. Growth in orders and backlog continue to be very strong. On a rolling 12-month basis, orders increased 16%, with especially strong growth in commercial OEM, commercial aftermarket and defense OEM. Year-over-year backlog increased 22% in Q3 and 4% sequentially, reflecting continued momentum in the Aerospace recovery. On a rolling 12-month basis, our book-to-bill for our Aerospace segment remains very strong at 1.2.
Moving to our Vehicle segment on Page 13. In the quarter, organic growth was down 1%, foreign exchange had a 2% favorable impact. We saw growth in APAC, North American automotive and EMEA markets, more than offset by decline in North American Class 8 and South American markets. Operating margins came in at 17.4%, 60 basis points above prior year, driven by effective price/cost management, partially offset by lower sales volumes. 17.4% margins represents 210 basis points of sequential increase, primarily driven by manufacturing efficiency improvements. We continue to pursue and win new business and growth areas, such as EV torque win with a major Chinese OEM. We also have momentum, winning program length extensions and volume increases with multiple OEMs globally.
On Page 14, we show results for our eMobility business. We generated another strong quarter of growth, including an all-time sales record. Revenue was up 19%, all organic. Margin improved 150 basis points versus prior year to breakeven. The result was mostly driven by higher volumes from ramping programs and improved manufacturing productivity. Overall, we remain very encouraged by the growth prospects of the eMobility segment. So far, in 2023, we have won new programs worth $1.1 billion of mature year revenues. This is nearly 145% increase in new program wins since the $450 million highlighted in last quarter's earnings call. Through these wins, we continue to find opportunities to leverage expertise in differentiated technologies across segments. Should be noted, we have increased our interim revenue target for 2025 by 25% from $1.2 billion to $1.5 billion.
Moving to Page 15, we show our Electrical and Aerospace backlog updated through Q3. As you can see, we continue to build backlog, with Electrical stepping up to $9.4 billion and Aerospace reaching $3.1 billion, sequential increases of 5% and 4% respectively. Both businesses have increased their backlogs by significantly more than 100% since Q3 2020. The backlog build gives us confidence in our order outlook for the quarters to come.
On the next page, we show our fiscal year organic growth and operating margin guidance. For organic growth, we are increasing Electrical Americas, lowering Electrical Global and eMobility, while narrowing the range of our total organic growth, resulting in a 50 basis-point increase at the midpoint. We now expect organic growth in Electrical Americas to be 16.5% to 18.5%, up 250 basis points from our prior 14% to 16% guidance. This represents 850 basis points improvement from our initial 2023 guidance. For Electrical Global, we're lowering our organic growth guidance from 6% to 8% to 4% to 6% based on weaker-than-expected end-markets in Europe. For eMobility, the midpoint of our organic growth guidance is now 25% versus 35%, mostly due to OEM related delays for their EV platforms.
For segment margins, we're increasing our total Eaton margin guidance range by 50 basis points. This is a result of an improved outlook in Electrical Americas, where we increased the range by 150 basis points on strong demand and continued operational execution. We are lowering margin guidance for Electrical Global 50 basis points due to lower growth. The 21.8% midpoint comfortably exceeds our target to reach 21.5% by 2025 and represents a 160 basis-point increase versus prior year. In summary, as we approach the final quarter of 2023, we remain well-positioned to deliver another very strong year of financial performance.
On Page 17, we have additional guidance metrics for 2023 in Q4. Following our strong year-to-date performance and improved margin expectations, we are raising our full-year EPS range to $8.95 per share to $9.05 per share. The $9.00 midpoint represents 19% growth in adjusted EPS over the prior year. We're also raising our operating cash flow and free cash flow guidance ranges by $100 million each to reflect our stronger earnings and solid working capital management. For Q4, we are guiding organic growth of 8% to 10%, segment margins of 22.3% to 22.7%, representing a 170 basis-point improvement at the midpoint versus prior year. Adjusted EPS is a range of $2.39 to $2.49, an 18% increase versus prior year at the midpoint.
The next chart summarizes the progression of our guidance in 2023. Throughout the year, we've demonstrated the ability to execute on our commitments and raised guidance for all of the metrics shown. We are well on-track to deliver our third year in a row of double-digit organic growth with all-time record margins and $1 billion or nearly 40% increase in operating cash flow.
Now, I'll hand it back to Craig.
