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8-K - FORM 8-K - HUBBELL INC | y83994e8vk.htm |
Exhibit 99.1
Date:
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April 22, 2010 | NEWS RELEASE | ||
For Release:
|
IMMEDIATELY | |||
Hubbell Incorporated 584 Derby-Milford Road |
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P. O. Box 549 | ||||
Orange, CT 06477 | ||||
203-799-4100 | ||||
Contact:
|
William R. Sperry |
HUBBELL REPORTS FIRST QUARTER RESULTS;
NET SALES OF $570.5 MILLION AND EARNINGS PER DILUTED SHARE OF $0.64
ORANGE, CT. (April 22, 2010) Hubbell Incorporated (NYSE: HUBA, HUBB) today reported
operating results for the first quarter ended March 31, 2010.
Net sales in the first quarter of 2010 were $570.5 million, a decrease of 3% compared to the $585.6
million reported in the first quarter of 2009. Operating income was $65.7 million, 15% above 2009,
resulting in operating income as a percent of net sales of 11.5%. Net income in the first quarter
of 2010 was $38.6 million versus $33.8 million reported in 2009. Earnings per diluted share were
$0.64 in the first quarter of 2010 compared to $0.60 reported in the first quarter of 2009. Free
cash flow (defined as cash flow from operations less capital expenditures) was $12.8 million in the
first quarter of 2010 versus $38.6 million reported in 2009.
OPERATIONS REVIEW
Timothy H. Powers, Chairman, President, and Chief Executive Officer said Our first quarter results
were consistent with our recent performance, with year-over-year operating margin expansion despite
lower sales. Our overall reported sales were down 3%, including the Burndy acquisition which added
7% to net sales in the quarter. The sales decline in the quarter was
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primarily due to weaker
demand for our non-residential construction products, decreased shipments for our high voltage test
equipment and lower storm related volume in our power
business. In addition, favorable foreign currency translation added 2% to sales while lower pricing
reduced sales by 1%. Importantly, our incoming orders exceeded our billings for the first quarter
resulting in a $33 million increase in backlog. I am also pleased that despite lower sales, we
were able to increase operating margin by 170 basis points compared to 2009. The margin improvement
was due to productivity improvements and lower restructuring costs while commodity costs and
pricing were slightly negative. We did take further actions in the first quarter to reduce salaried
and hourly headcount in businesses where demand has continued to deteriorate.
Mr. Powers added The economic environment was generally consistent with our expectations. In
our Electrical segment, U.S. non-residential construction continues to experience dramatically
lower demand due to tight credit and rising vacancy rates. The industrial maintenance and repair
markets have improved in many areas as factory utilization has risen and there has been an increase
in capital investments. The residential market appears to have bottomed but the recovery has been
slower than anticipated and the growth projections for the year have been tempered. In our Power
segment, excluding storms, underlying demand was lower for both distribution and transmission
products as utility companies remained cautious with spending as the year began.
SEGMENT REVIEW
The comments and year-over-year percentages in this segment review are based on first quarter
results in 2010 and 2009.
Electrical segment net sales increased 2% year-over-year as the impact of Burndy more than offset
weaker demand in our Commercial and Industrial lighting businesses and lower high voltage test
equipment shipments. The acquisition of Burndy in the fourth quarter of 2009 added 11% to net
sales and was accretive to earnings in the first quarter of 2010. Compared to the first quarter of
2009, operating income increased 45% to $40.1 million, or 9.8% of net sales. The increase in
operating income and margin was due to productivity improvements, lower restructuring costs and
lower commodity costs partially offset by lower organic volume.
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Hubbells Power segment net sales decreased by 12% compared to the first quarter of 2009 due to the
impact of lower demand for both distribution and transmission products as well as lower storm
related shipments. Operating income decreased to $25.6 million compared to $29.6 million reported
in the first quarter of 2009. The decrease in operating income was primarily due to unfavorable
price and commodity costs and lower volume partially offset by productivity improvements.
SUMMARY & OUTLOOK
Mr. Powers concluded Non-residential construction is our largest end market, and some market
indicators have weakened since the beginning of the year. However, based on our order volume, both
in the quarter where we built backlog as well as what we have seen to date in April; we continue to
expect a decline in the 20% range, consistent with our original outlook. The outlook for
residential construction and utility spending has moderated slightly, while our expectations in our
industrial markets have strengthened. The net result is our continued expectation for volume in
2010 to be comparable to 2009. Looking ahead, we will continue to manage those things which are
in our control; productivity programs to drive margin improvement and careful oversight of
commodity cost in relation to pricing. We expect the pricing environment to remain competitive and
for the net impact of commodity costs and pricing to be slightly negative for 2010. We intend to
meet that challenge by increasing our productivity efforts and driving cost containment initiatives
throughout the Company. I believe that our demonstrated capability to deliver strong results in
challenging end markets will continue to be realized. In addition, our balance sheet is as strong
as ever and we expect to continue to evaluate and pursue strategic acquisitions to add to our
portfolio.
Certain statements contained herein may constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These include statements about capital
resources, performance and results of operations and are based on the Companys reasonable current
expectations. In addition, all statements regarding anticipated growth or improvement in operating
results, anticipated market conditions, and economic recovery are
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forward-looking. These
statements may be identified by the use of forward-looking words or
phrases such as improved, leading, improving, continuing growth, continued, ranging,
contributing, primarily, plan, expect, anticipated, expected, expectations, should
result, uncertain, goals, projected, on track, likely, and others. Such forward-looking
statements involve numerous assumptions, known and unknown risks, uncertainties and other factors
which may cause actual and future performance or achievements of the Company to be materially
different from any future results, performance, or achievements expressed or implied by such
forward-looking statements. Such factors include, but are not limited to: achieving sales levels
to fulfill revenue expectations; unexpected costs or charges, certain of which may be outside the
control of the Company; anticipated benefit from the Federal stimulus package; expected benefits of
process improvement and other lean initiatives; the expected benefit and effect of the business
information system initiative and streamlining programs; the availability and costs of raw
materials and purchased components; realization of price increases; the ability to achieve
projected levels of efficiencies and cost reduction measures; general economic and business
conditions; competition; and other factors described in our Securities and Exchange Commission
filings, including the Business, Risk Factors, and Quantitative and Qualitative Disclosures
about Market Risk Sections in the Annual Report on Form 10-K for the year ended December 31, 2009.
Hubbell Incorporated is an international manufacturer of quality electrical and electronic products
for a broad range of non-residential and residential construction, industrial and utility
applications. With 2009 revenues of $2.4 billion, Hubbell Incorporated operates manufacturing
facilities in the United States, Canada, Switzerland, Puerto Rico, Mexico, the Peoples Republic of
China, Italy, the United Kingdom, Brazil and Australia. Hubbell also participates in joint
ventures in Taiwan and Hong Kong, and maintains sales offices in Singapore, the Peoples Republic
of China, Mexico, South Korea, and the Middle East. The corporate headquarters is located in
Orange, CT.
# # # # #
(Financial Schedules are Attached.)
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HUBBELL INCORPORATED
Condensed Consolidated Statement of Income
(in millions, except per share data)
(in millions, except per share data)
Three Months Ended | ||||||||
March 31 | ||||||||
(UNAUDITED) | (UNAUDITED) | |||||||
2010 | 2009 | |||||||
Net Sales |
$ | 570.5 | $ | 585.6 | ||||
Cost of Goods sold |
394.8 | 418.6 | ||||||
Gross Profit |
175.7 | 167.0 | ||||||
Selling & administrative expenses |
110.0 | 109.7 | ||||||
Total Operating Income |
65.7 | 57.3 | ||||||
Operating income as of % of Net Sales |
11.5 | % | 9.8 | % | ||||
Interest expense, net |
(7.6 | ) | (7.7 | ) | ||||
Other (expense) income, net |
(0.5 | ) | 0.2 | |||||
Income Before Income Taxes |
57.6 | 49.8 | ||||||
Provision for income taxes |
18.6 | 15.7 | ||||||
Net income |
$ | 39.0 | $ | 34.1 | ||||
Less: Net income attributable to Noncontrolling interest |
0.4 | 0.3 | ||||||
Net income attributable to Hubbell |
$ | 38.6 | $ | 33.8 | ||||
Earnings Per Share: |
||||||||
Basic |
$ | 0.64 | $ | 0.60 | ||||
Diluted |
$ | 0.64 | $ | 0.60 | ||||
` |
HUBBELL INCORPORATED
Condensed Consolidated Balance Sheet
(in millions)
Condensed Consolidated Balance Sheet
(in millions)
(UNAUDITED) | ||||||||
March 31, 2010 | December 31, 2009 | |||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 264.7 | $ | 258.5 | ||||
Accounts receivable, net |
348.4 | 310.1 | ||||||
Inventories, net |
270.4 | 263.5 | ||||||
Deferred taxes and other |
88.4 | 85.8 | ||||||
TOTAL CURRENT ASSETS |
971.9 | 917.9 | ||||||
Property, plant and equipment, net |
366.0 | 368.8 | ||||||
Investments |
29.2 | 28.1 | ||||||
Goodwill |
741.2 | 743.7 | ||||||
Intangible assets and other |
401.1 | 406.0 | ||||||
TOTAL ASSETS |
$ | 2,509.4 | $ | 2,464.5 | ||||
LIABILITIES AND EQUITY |
||||||||
Short-term debt |
$ | 3.4 | $ | | ||||
Accounts payable |
149.9 | 130.8 | ||||||
Accrued salaries, wages and employee benefits |
45.3 | 62.8 | ||||||
Accrued insurance |
59.7 | 49.3 | ||||||
Dividends payable |
21.6 | 20.9 | ||||||
Other accrued liabilities |
152.3 | 154.7 | ||||||
TOTAL CURRENT LIABILITIES |
432.2 | 418.5 | ||||||
Long-Term debt |
499.8 | 497.2 | ||||||
Other non-current liabilities |
247.6 | 246.8 | ||||||
TOTAL LIABILITIES |
1,179.6 | 1,162.5 | ||||||
Hubbell Shareholders Equity |
1,325.9 | 1,298.2 | ||||||
Noncontrolling Interest |
3.9 | 3.8 | ||||||
TOTAL EQUITY |
1,329.8 | 1,302.0 | ||||||
TOTAL LIABILITIES AND EQUITY |
$ | 2,509.4 | $ | 2,464.5 | ||||
HUBBELL INCORPORATED
Condensed Consolidated Statement of Cash Flows
(in millions)
Condensed Consolidated Statement of Cash Flows
(in millions)
Three Months Ended March 31 | ||||||||
(UNAUDITED) | (UNAUDITED) | |||||||
2010 | 2009 | |||||||
Cash Flows From Operating Activities |
||||||||
Net Income attributable to Hubbell |
$ | 38.6 | $ | 33.8 | ||||
Depreciation and amortization |
18.3 | 17.1 | ||||||
Stock-based compensation expense |
2.2 | 2.0 | ||||||
Deferred income taxes |
2.7 | 3.3 | ||||||
Changes in working capital |
(33.0 | ) | (9.3 | ) | ||||
Contributions to defined benefit pension plans |
(0.9 | ) | (0.8 | ) | ||||
Other, net |
(4.0 | ) | 0.5 | |||||
Net cash provided by operating activities |
23.9 | 46.6 | ||||||
Cash Flows From Investing Activities |
||||||||
Capital expenditures |
(11.1 | ) | (8.0 | ) | ||||
Acquisition of businesses, net of cash acquired |
| (0.3 | ) | |||||
Net change in investments |
(0.5 | ) | (2.2 | ) | ||||
Other, net |
1.1 | 0.3 | ||||||
Net cash used in investing activities |
(10.5 | ) | (10.2 | ) | ||||
Cash Flows From Financing Activities |
||||||||
Short-term debt borrowings |
3.4 | | ||||||
Payment of dividends |
(20.9 | ) | (19.7 | ) | ||||
Proceeds from exercise of stock options |
9.6 | | ||||||
Other, net |
1.7 | | ||||||
Net cash used in financing activities |
(6.2 | ) | (19.7 | ) | ||||
Effect of foreign exchange rate changes on cash and cash equivalents |
(1.0 | ) | (2.9 | ) | ||||
Increase in cash and cash equivalents |
6.2 | 13.8 | ||||||
Cash and cash equivalents |
||||||||
Beginning of period |
258.5 | 178.2 | ||||||
End of period |
$ | 264.7 | $ | 192.0 | ||||
HUBBELL INCORPORATED
Ratios of Total Debt to Total Capital and Net Debt to Total Capital
(in millions)
Ratios of Total Debt to Total Capital and Net Debt to Total Capital
(in millions)
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
Total Debt |
$ | 503.2 | $ | 497.2 | ||||
Total Hubbells Shareholders Equity |
1,325.9 | 1,298.2 | ||||||
Total Capital |
$ | 1,829.1 | $ | 1,795.4 | ||||
Total Debt to Total Capital |
28 | % | 28 | % | ||||
Total Debt |
$ | 503.2 | $ | 497.2 | ||||
Less: Cash and cash equivalents |
264.7 | 258.5 | ||||||
Investments |
29.2 | 28.1 | ||||||
Net Debt |
$ | 209.3 | $ | 210.6 | ||||
Net Debt to Total Capital |
11 | % | 12 | % |
Free Cash Flow Reconciliation
Three Months Ended March 31, | ||||||||
2010 | 2009 | |||||||
Net cash provided by operating activities |
$ | 23.9 | $ | 46.6 | ||||
Less: Capital Expenditures |
(11.1 | ) | (8.0 | ) | ||||
Free cash flow |
$ | 12.8 | $ | 38.6 | ||||
HUBBELL INCORPORATED
Segment Information
(in millions)
Segment Information
(in millions)
Three Months Ended March 31 | ||||||||
(UNAUDITED) | (UNAUDITED) | |||||||
2010 | 2009 | |||||||
Net Sales |
||||||||
Electrical |
$ | 409.3 | $ | 402.5 | ||||
Power |
161.2 | 183.1 | ||||||
Total Net Sales |
$ | 570.5 | $ | 585.6 | ||||
Operating Income |
||||||||
Electrical |
$ | 40.1 | $ | 27.7 | ||||
Power |
25.6 | 29.6 | ||||||
Total Operating Income |
$ | 65.7 | $ | 57.3 | ||||
Operating Income as a % of Net Sales |
||||||||
Electrical |
9.8 | % | 6.9 | % | ||||
Power |
15.9 | % | 16.2 | % | ||||
Total |
11.5 | % | 9.8 | % |
HUBBELL INCORPORATED
Earnings Per Share Calculation
(in millions, except per share amounts)
Earnings Per Share Calculation
(in millions, except per share amounts)
Three Months Ended | ||||||||
March 31 | ||||||||
2010 | 2009 | |||||||
Numerator: |
||||||||
Net income attributable to Hubbell |
$ | 38.6 | $ | 33.8 | ||||
Less: Earnings allocated to participating securities |
0.2 | 0.1 | ||||||
Net income available to common shareholders |
$ | 38.4 | $ | 33.7 | ||||
Denominator: |
||||||||
Average number of common shares outstanding |
59.7 | 56.2 | ||||||
Potential dilutive shares |
0.3 | 0.1 | ||||||
Average number of diluted shares outstanding |
60.0 | 56.3 | ||||||
Earnings per Share: |
||||||||
Basic |
$ | 0.64 | $ | 0.60 | ||||
Diluted |
$ | 0.64 | $ | 0.60 |