SHELTON, Conn. — Hubbell Incorporated today reported operating results for the fourth quarter ended December 31, 2021. As a result of the previously announced closing of the divestiture of Commercial & Industrial Lighting, the Company is reporting the results of that business as discontinued operations in the current and all prior periods presented.
“Hubbell delivered a strong finish to 2021,” said Gerben Bakker, Chairman, President and Chief Executive Officer. “Fourth quarter sales growth of 20% was bolstered by 11 points of price realization, as well as previously completed acquisitions and year-over-year volume growth as the Company continues to successfully navigate a dynamic supply chain environment. Our end markets remain strong, as grid modernization and electrification continue to drive customer demand for Hubbell’s reliable and efficient critical infrastructure solutions across our Utility and Electrical segments. We exited the year with another quarter of significant orders growth and backlog visibility.”
Bakker continued, “Operationally, mid teens year-over-year operating profit growth in the fourth quarter represented solid execution. While material inflation, ongoing supply chain disruption, and increased freight and logistics costs continue to present significant headwinds, we accelerated our productivity and price initiatives to exit the year price/material neutral.”
Bakker concluded, “With a strong operational finish to 2021, a favorable end market setup and a more focused portfolio, we believe Hubbell is well positioned to continue generating differentiated returns for our shareholders over the long term. In the near term, our 2022 outlook anticipates attractive double digit year-over-year growth in adjusted earnings per share, and we remain confident in our ability to execute.”
FINANCIAL HIGHLIGHTS
The comments and year-over-year comparisons in this segment review are based on fourth quarter results in 2021 and 2020.
Electrical Solutions segment net sales in the fourth quarter of 2021 of $489 million increased 22% from $402 million in the fourth quarter of 2020. Organic sales increased 21% in the quarter while acquisitions added 1%. Electrical Solutions segment operating income in the fourth quarter was $63 million, or 13.0% of net sales, compared to $41 million, or 10.3% of net sales in the same period of 2020. Adjusted operating income was $67 million, or 13.7% of net sales, in the fourth quarter of 2021 as compared to $45 million, or 11.2% of net sales in the same period of the prior year. Increases in adjusted operating income and adjusted operating margin were primarily due to higher volumes, price realization in excess of material inflation, and productivity and restructuring benefits, partially offset by higher logistics and supply chain costs.
Utility Solutions segment net sales in the fourth quarter of 2021 increased 19% to $612 million compared to $515 million reported in the fourth quarter of 2020. Organic sales increased 13% compared to the fourth quarter of 2020, while net M&A added 6%. Total Utility T&D Components sales increased approximately 26% and Utility Communications and Controls sales increased by approximately 2%. Utility Solutions segment operating income in the fourth quarter was $71 million, or 11.6% of net sales, compared to $73 million, or 14.2% of net sales in the same period of 2020. Adjusted operating income was $86 million, or 14.1% of net sales, in the fourth quarter of 2021 as compared to $88 million, or 17.1% of net sales in the same period of the prior year. The decreases in adjusted operating income and adjusted operating margin were primarily due to material cost inflation in excess of price realization and higher logistics and supply chain costs, partially offset by higher volumes and productivity and restructuring benefits.
Adjusted fourth quarter 2021 results exclude $0.26 of amortization of acquisition-related intangible assets. Adjusted fourth quarter 2020 results exclude $0.26 of amortization of acqusition-related intangible assets as well as $0.01 due to a pension settlement charge. Results from discontinued operations are presented on a GAAP basis, and include amortization of acquisition-related intangible assets, transaction and separation costs as well as a one-time tax benefit in the fourth quarter of 2021.
Net cash provided from operating activities was $233 million in the fourth quarter of 2021 versus $156 million in the comparable period of 2020. Free cash flow (defined as net cash provided by operating activities less capital expenditures) was $206 million in the fourth quarter of 2021 versus $121 million reported in the comparable period of 2020.
SUMMARY & OUTLOOK
For the full year 2022, Hubbell anticipates organic sales growth from continuing operations of 8-10%. The impact on sales of M&A and foreign exchange are expected to be approximately neutral.
Hubbell anticipates 2022 GAAP diluted earnings per share expectations in the range of $7.75 to $8.25 and adjusted diluted earnings per share (“Adjusted EPS”) from continuing operations in the range of $8.75 to $9.25. Adjusted EPS excludes amortization of acquisition-related intangible assets, which the Company expects to be approximately $1.00 per share for the full year. The Company believes Adjusted EPS is a useful measure of underlying financial performance in light of our acquisition strategy.
The earnings per share and adjusted earnings per share ranges are based on an adjusted tax rate of 22 to 22.5% and include approximately $0.30 of anticipated restructuring and related investment. The Company expects full year 2022 free cash flow conversion of 90 to 100% of adjusted net income.
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