HUBBELL REPORTS SECOND QUARTER 2024 RESULTS
- 2Q diluted EPS of $3.94; adjusted diluted EPS of $4.37
- 2Q net sales +6% (organic +2%; net M&A +5%)
- 2Q operating margin 20.7%; adjusted operating margin 22.8% (+40bps y/y)
- Raising FY24 outlook; diluted EPS of $14.30-$14.60; adj. diluted EPS of $16.20-$16.50
Hubbell Incorporated (NYSE: HUBB) today reported operating results for the second quarter ended June 30, 2024.
“Hubbell delivered solid performance in the second quarter,” said Gerben Bakker, Chairman, President and CEO. “Operational execution was strong, and the Company returned to adjusted operating margin expansion in the quarter.”
Mr. Bakker continued, “Second quarter performance was highlighted by strong organic growth and margin expansion in our Electrical Solutions segment. Robust project activity drove strong sales growth in datacenters and renewables as our vertical market strategy continues to gain traction and differentiate Hubbell with our customers. Operational execution on HES segment unification and simplification efforts contributed to significant operating margin expansion in the quarter. In Utility Solutions, sales growth was driven by acquisitions, as well as strong growth in transmission/substation infrastructure and grid automation. Utility distribution markets continued to be impacted by customer inventory normalization, and telcom markets were weak. Utility T&D end customer demand remains strong, and HUS achieved sequential operating margin improvement in the second quarter.”
Mr. Bakker concluded, “As grid modernization and electrification drive investment in utility and electrical infrastructure, Hubbell is uniquely positioned to continue achieving differentiated, sustainable outperformance for our customers and shareholders. We are raising our full year 2024 outlook, and are confident in our ability to continue delivering on our commitments.”
Certain terms used in this release, including “net debt”, “free cash flow”, “organic net sales”, “organic net sales growth”, “restructuring-related costs”, “Adjusted EBITDA”, and certain other “adjusted” measures, are defined under the section entitled “Non-GAAP Definitions.” See page 10 for more information.
SECOND QUARTER FINANCIAL HIGHLIGHTS
The comments and year-over-year comparisons in this segment review are based on second quarter results in 2024 and 2023.
Utility Solutions segment net sales in the second quarter of 2024 increased 12% to $927 million compared to $831 million reported in the second quarter of 2023. Organic net sales decreased approximately 1% in the quarter while acquisitions added 13%. Grid Infrastructure net sales increased approximately 12% and Grid Automation net sales increased approximately 10%. Segment operating income was $196 million, or 21.2% of net sales, in the second quarter of 2024 as compared to $200 million, or 24.0% of net sales in the same period of 2023. Adjusted operating income was $222 million, or 24.0% of net sales, in the second quarter of 2024 as compared to $213 million, or 25.6% of net sales in the prior year period. Changes in operating income and operating margin were primarily due to the impact of acquisitions, favorable price and productivity in excess of cost inflation, volume declines in enclosures products primarily driven by telcom markets, and higher restructuring and related investment.
Electrical Solutions segment net sales in the second quarter of 2024 decreased to $526 million compared to $535 million reported in the second quarter of 2023. Organic net sales increased 7% in the quarter, while a divestiture reduced segment net sales by 9%. Segment operating income was $105 million, or 20.0% of net sales, compared to $88 million, or 16.5% of net sales in the same period of 2023. Adjusted operating income was $109 million, or 20.8% of net sales, in the second quarter of 2024 as compared to $93 million, or 17.3% 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 the impact of portfolio transformation and mix, as well as 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 second quarter 2024 excludes $0.40 of amortization of acquisition-related intangible assets and $0.03 of transaction, integration, and separation costs. Adjusted diluted EPS in the second quarter 2023 excluded $0.25 of amortization of acquisition-related intangible assets.
Net cash provided by operating activities was $240 million in the second quarter of 2024 versus net cash provided by operating activities of $228 million in the 2023 period. Free cash flow was $206 million in the second quarter of 2024 versus $192 million in the comparable period of 2023.
SUMMARY & OUTLOOK
For the full year 2024, Hubbell anticipates diluted earnings per share in the range of $14.30-$14.60 and anticipates adjusted diluted earnings per share (“Adjusted EPS”) in the range of $16.20-$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 7-8% and organic net sales growth of approximately 3%, 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.
CONFERENCE CALL
Hubbell will conduct an earnings conference call to discuss its second quarter 2024 financial results today, July 30, 2024 at 10:00 a.m. ET. A live audio of the conference call will be available and can be accessed by visiting Hubbell’s “Investor Relations – Events/Presentations” section of www.hubbell.com. Audio replays will also be available at the conclusion of the call by visiting www.hubbell.com and selecting “Investors” from the options at the bottom of the page and then “Events/Presentations” from the drop-down menu.
About the Company
Hubbell Incorporated is a leading manufacturer of utility and electrical solutions enabling customers to operate critical infrastructure safely, reliably and efficiently. With 2023 revenues of $5.4 billion, Hubbell solutions electrify economies and energize communities. The corporate headquarters is located in Shelton, CT.
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