SHELTON, Conn. — Hubbell Incorporated reported operating results for the first quarter ended March 31, 2024.
“Hubbell is off to a solid start in 2024,” said Gerben Bakker, Chairman, President and CEO. “Operating performance was highlighted by strong organic growth in our Electrical Solutions segment, where electrification drove broad-based strength across industrial markets and continued execution on our segment unification strategy drove operating profit growth and margin expansion. In Utility Solutions, sales growth was driven by acquisitions, as well as strength in grid protection and controls products and continued backlog conversion in AMI and smart meters. Utility T&D end market demand remains strong, with robust growth in transmission markets offset by continued channel inventory management in distribution markets as anticipated. Telcom markets were weak in the quarter.”
Bakker continued, “Operationally, price/cost/productivity was positive in both segments. Price traction is healthy, supported by our strong positions and leading service levels. As anticipated, investments in long-term growth and productivity initiatives impacted year-over-year operating margins in the first quarter, including increased restructuring and related investment.”
Bakker concluded, “Hubbell’s first quarter results position us well to achieve our reaffirmed 2024 outlook.”
FIRST QUARTER FINANCIAL HIGHLIGHTS
The comments and year-over-year comparisons in this segment review are based on first quarter results in 2024 and 2023.
Utility Solutions segment net sales in the first quarter of 2024 increased 14% to $894 million compared to $782 million reported in the first quarter of 2023. Organic net sales were flat in the quarter while acquisitions added 14%. Grid Infrastructure net sales increased approximately 9% and Grid Automation net sales increased approximately 28%. Segment operating income was $158 million, or 17.6% of net sales, in the first quarter of 2024 as compared to $178 million, or 22.7% of net sales in the same period of 2023. Adjusted operating income was $195 million, or 21.8% of net sales, in the first quarter of 2024 as compared to $191 million, or 24.4% of net sales in the prior year period. Changes in operating income and operating margin were primarily due to the impact of acquisitions, volume declines in enclosures products serving telcom markets, favorable price and productivity in excess of cost inflation, and investments for long-term growth and productivity.
Electrical Solutions segment net sales in the first quarter of 2024 increased to $505 million compared to $504 million reported in the first quarter of 2023. Organic net sales increased 6% in the quarter, while a divestiture reduced segment net sales by 6%. Segment operating income was $71 million, or 14.1% of net sales, compared to $71 million, or 14.2% of net sales in the same period of 2023. Adjusted operating income was $80 million, or 15.8% of net sales, in the first quarter of 2024 as compared to $76 million, or 15.0% of net sales in the same period of the prior year. Changes in operating income and operating margin were driven primarily by volume growth, favorable price and productivity in excess of cost inflation, and higher restructuring and related investment.
In December 2023, the Company entered into a definitive agreement to sell its residential lighting business for a cash purchase price of $131 million, subject to customary adjustments. The transaction closed in the first quarter of 2024 and the Company recorded a pre-tax loss on the sale of $5.3 million within Total other expense in the Company’s Condensed Consolidated Statement of Income.
Adjusted diluted EPS in the first quarter 2024 excludes $0.55 of amortization of acquisition-related intangible assets, a $0.22 loss on disposition of the residential lighting business, and $0.10 of transaction, integration, and separation costs. Adjusted diluted EPS in the first quarter 2023 excluded $0.24 of amortization of acquisition-related intangible assets.
Net cash provided by operating activities was $92 million in the first quarter of 2024 versus net cash provided by operating activities of $114 million in the 2023 period. Free cash flow was $52 million in the first quarter of 2024 versus $80 million in the comparable period of 2023.
SUMMARY & OUTLOOK
For the full year 2024, Hubbell anticipates diluted earnings per share in the range of $14.10-$14.60 and anticipates adjusted diluted earnings per share (“Adjusted EPS”) in the range of $16.00-$16.50. Adjusted EPS excludes amortization of acquisition-related intangible assets, which the Company expects to be approximately $1.60 for the full year, a $0.22 loss on disposition of the residential lighting business, and $0.10 of transaction, integration, and separation costs. The Company believes Adjusted EPS is a useful measure of underlying performance in light of our acquisition and divestiture strategy.
Hubbell anticipates full year 2024 total sales growth of 8-10% and organic net sales growth of 3-5%, as compared to full year 2023. The Company anticipates acquisitions net of the residential lighting business divestiture contributing approximately 5% to full year sales growth.
The diluted EPS and Adjusted EPS ranges are based on an adjusted tax rate of approximately 22.5% and include approximately $0.35 of anticipated restructuring and related investment. The Company continues to expect full year 2024 free cash flow of approximately $800 million.