Manufacturers

Hubbell Reports Stronger-Than-Expected Earnings in 1Q

SHELTON, Conn. — Hubbell Incorporated today reported operating results for the first quarter ended March 31, 2022. 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 is off to a strong start in 2022,” said Gerben Bakker, Chairman, President and Chief Executive Officer. “First quarter organic net sales growth of 21% reflected both strong price traction and volume growth. Price realization of 12% continued to accelerate sequentially as the Company works to actively offset inflationary headwinds, and price/material turned positive in the quarter. Volumes grew sequentially and year-over-year as Hubbell continued to navigate a dynamic supply chain environment to effectively serve our customers.”

Bakker continued, “Grid modernization and electrification drove strong demand for reliable and efficient critical infrastructure solutions, leading to continued orders growth across both segments. In Utility Solutions, demand strength was broad-based as the need to harden and upgrade the electrical grid continues to drive sales growth and ongoing backlog build. In Electrical Solutions, strong demand across light industrial, heavy industrial and non-residential markets was partially offset by softness in the residential market.”

Bakker concluded, “Margins expanded year-over-year in the first quarter, driven by volume growth and favorable price/material realization. While supply chain headwinds persist, and continue to result in manufacturing and transportation inefficiencies, we are pleased with our execution in the quarter. Looking ahead, we are confident in our near-term outlook and our ability to deliver attractive long-term results for our shareholders.”

FIRST QUARTER FINANCIAL HIGHLIGHTS

The comments and year-over-year comparisons in this segment review are based on first quarter results in 2022 and 2021.

Electrical Solutions segment net sales in the first quarter of 2022 increased 19% to $504 million compared to $424 million reported in the first quarter of 2021. Organic sales increased 19% in the quarter while foreign exchange was flat. Operating income was $54.8 million, or 10.9% of net sales, compared to $49.2 million, or 11.6% of net sales in the same period of 2021. Adjusted operating income was $58.3 million, or 11.6% of net sales, in the first quarter of 2022 as compared to $52.6 million, or 12.4% of net sales in the same period of the prior year. Changes in adjusted operating profit and operating margin were driven primarily by price realization, volume growth and productivity, offset by material inflation, higher logistics and supply chain costs, and increased restructuring investment.

Utility Solutions segment net sales in the first quarter of 2022 increased 22% to $652 million compared to $532 million reported in the first quarter of 2021. Organic net sales increased 23% in the quarter, with dispositions reducing sales by 1%. Total Utility T&D Components sales increased approximately 31% and Utility Communications and Controls sales increased by approximately 2%. Operating income was $88 million, or 13.5% of net sales, in the first quarter of 2022 as compared to $61 million, or 11.4% of net sales in the same period of 2021. Adjusted operating income was $102 million, or 15.7% of net sales, in the first quarter of 2022 as compared to $79 million, or 14.8% of net sales in the same period of the prior year. Increases in adjusted operating profit and adjusted operating margin were primarily due to price realization, volume growth and productivity, partially offset by material inflation and higher logistics and supply chain costs.

Adjusted first quarter 2022 results exclude $0.24 of amortization of acquisition-related intangible assets. Adjusted first quarter 2021 results exclude $0.30 of amortization of acquisition-related intangible assets. Results from discontinued operations are presented on a GAAP basis and include amortization of acquisition-related intangible assets, transaction and separation costs and gain on disposal of business.

Net cash used in operating activities was $14.4 million in the first quarter of 2022 versus net cash provided by operating activities of $53.1 million in the comparable period of 2021. Free cash flow was a $35.8 million use of cash in the first quarter of 2022 versus a $33.8 million source of cash reported in the comparable period of 2021 as the Company built working capital to serve strong customer demand.

SUMMARY & OUTLOOK

For the full year 2022, Hubbell anticipates diluted earnings per share in the range of $8.00-$8.40 and anticipates adjusted diluted earnings per share (“Adjusted EPS”) in the range of $9.00-$9.40. Adjusted EPS excludes amortization of acquisition-related intangible assets, which the Company expects to be approximately $1.00 for the full year. The Company believes Adjusted EPS is a useful measure of underlying performance in light of our acquisition strategy and core operations.

Hubbell anticipates 2022 total sales growth and organic net sales growth of 11-13%. 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 per share of anticipated restructuring and related investment. The Company continues to expect full year 2022 free cash flow conversion of 90-100% of adjusted net income.

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