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8-K - FORM 8-K - HUBBELL INCd570452d8k.htm

Exhibit 99.1

 

LOGO  

 

       

Date: July 18, 2013

 

   NEWS RELEASE

 

         Hubbell Incorporated
         40 Waterview Drive
         Shelton, CT 06484
         475-882-4000
      Contact: James M. Farrell   

HUBBELL REPORTS SECOND QUARTER RESULTS;

NET SALES OF $801.3 MILLION AND EARNINGS PER DILUTED SHARE OF $1.37

SHELTON, CT. (July 18, 2013) – Hubbell Incorporated (NYSE: HUBA, HUBB) today reported operating results for the second quarter ended June 30, 2013.

Net sales in the second quarter of 2013 were $801.3 million, an increase of 3% compared to the $778.4 million reported in the second quarter of 2012. Operating income was $132.1 million, or 16.5% of net sales, compared to $124.5 million, or 16.0% of net sales, for the comparable period of 2012. Net income in the second quarter of 2013 was $82.1 million versus $77.5 million reported in the second quarter of 2012. Earnings per diluted share were $1.37 in the second quarter of 2013 compared to $1.29 reported in the second quarter of 2012. Free cash flow (defined as cash flow from operations less capital expenditures) was $52.8 million in the second quarter of 2013 versus $49.9 million reported in the comparable period of 2012.

For the first six months of 2013 net sales were $1.5 billion, an increase of 3% compared to the same period last year. Operating income was $229.8 million, or 14.9% of net sales, compared to $226.2 million, or 15.1% of net sales, for the comparable period of 2012. Net income in the first six months of 2013 was $148.0 million, an increase of 5% compared to the $140.7 million reported in the first six months of 2012. Earnings per diluted share were $2.47, or 6% above the $2.34 reported for the comparable period of 2012. Free cash flow was $82.5 million compared to $83.6 million reported in the first six months of 2012.

 

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OPERATIONS REVIEW

David G. Nord, President and Chief Executive Officer, said, “I am pleased with our performance in the quarter which included both higher sales and operating margin compared to 2012. The sales increase was due to the impact of acquisitions while our base business was in line with last year’s strong results. From a profitability perspective, we were able to expand our operating margin by fifty basis points despite incurring costs associated with facility consolidations in our Power segment. I am also pleased to announce that we completed the acquisition of Connector Manufacturing Company during the second quarter. CMC manufactures high quality mechanical and compression connectors and has been added to our Electrical segment.”

Mr. Nord continued “The macroeconomic environment in the second quarter modestly improved from the beginning of the year. U.S. non-residential activity benefitted from higher levels of renovation projects, particularly for our lighting businesses. North American electrical utility demand was below the prior year which benefitted from unusually strong spending due to favorable weather conditions and high levels of transmission project activity. Demand for our industrial businesses was mixed while the residential markets remained strong.”

SEGMENT REVIEW

The comments and year-over-year percentages in this segment review are based on second quarter results in 2013 and 2012.

Electrical segment net sales in the second quarter of 2013 increased 5% to $564.5 million compared to $536.3 million reported in the second quarter of 2012. The increase was primarily due to acquisitions which contributed 3% to sales in the quarter. Organic volume increased due to higher shipments of lighting products partially offset by weaker industrial demand, most notably in high voltage test equipment. Compared to the second quarter of 2012, operating income increased 9% to $88.9 million, or 15.7% of net sales. The increase in operating income was primarily due to the benefit of pricing and material costs while productivity offset all other cost increases.

 

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Hubbell’s Power segment net sales in the second quarter of 2013 were $236.8 million compared to $242.1 million reported in the second quarter of 2012. The decrease was primarily due to lower levels of project related transmission spending and weaker distribution sales partially offset by the favorable impact of an acquisition. Compared to the second quarter of 2012, operating income declined slightly to $43.2 million. Operating margin in the second quarter of 2013 was 18.2% compared to 17.9% reported in the comparable period of 2012. The increase in operating margin was primarily due to a favorable product mix partially offset by facility consolidation costs.

SUMMARY & OUTLOOK

Mr. Nord commented, “Looking to our full year outlook for 2013, we expect overall sales to increase in the 4 to 6% range and operating margin to expand approximately 30 basis points. The sales outlook has increased slightly due to the impact of our recent acquisition. From a profitability perspective, the impact of our acquisition activity will slightly mute the level of operating margin improvement.”

Mr. Nord concluded, “The first half results were largely in line with expectations and we now turn our attention to navigating through the second half of the year where we will be focused on integrating our recent acquisitions and driving margin improvement. Our financial position remains strong and we plan to continue deploying our capital in value creating ways. I am encouraged that the investments we have made in productivity programs and business development have translated into increased profitability.”

 

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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 Company’s reasonable current expectations. In addition, all statements regarding anticipated growth or improvement in operating results, anticipated market conditions, and economic recovery are 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”, “intend” 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; expected benefits of process improvement and other lean initiatives; the expected benefit and effect of the business information system initiatives 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, 2012.

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 2012 revenues of $3.0 billion, Hubbell Incorporated operates manufacturing facilities in the United States, Canada, Switzerland, Puerto Rico, Mexico, the People’s Republic of China (“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, China, India, Mexico, South Korea and countries in the Middle East. The corporate headquarters is located in Shelton, CT.

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HUBBELL INCORPORATED

Condensed Consolidated Statement of Income

(unaudited)

(in millions, except per share amounts)

 

     Three Months Ended     Six Months Ended  
     June 30     June 30  
     2013     2012     2013     2012  

Net Sales

   $ 801.3     $ 778.4     $ 1,541.4     $ 1,502.2  

Cost of goods sold

     529.3       518.6       1,033.1       1,008.3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

     272.0       259.8       508.3       493.9  

Selling & administrative expenses

     139.9       135.3       278.5       267.7  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     132.1       124.5       229.8       226.2  

Operating income as a % of Net sales

     16.5     16.0     14.9     15.1

Interest expense, net

     (7.3     (7.1     (14.6     (14.3

Other expense, net

     (2.0     (1.3     (1.2     (1.2
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense, net

     (9.3     (8.4     (15.8     (15.5

Income before income taxes

     122.8       116.1       214.0       210.7  

Provision for income taxes

     39.8       38.1       64.2       69.1  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 83.0     $ 78.0     $ 149.8     $ 141.6  

Less: Net income attributable to noncontrolling interest

     0.9       0.5       1.8       0.9  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Hubbell

   $ 82.1     $ 77.5     $ 148.0     $ 140.7  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings Per Share:

        

Basic

   $ 1.38     $ 1.31     $ 2.49     $ 2.37  

Diluted

   $ 1.37     $ 1.29     $ 2.47     $ 2.34  

Cash dividends per common share

   $ 0.45     $ 0.41     $ 0.90     $ 0.82  

 

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HUBBELL INCORPORATED

Condensed Consolidated Balance Sheet

(unaudited)

(in millions)

 

     June 30, 2013      December 31, 2012  

ASSETS

     

Cash and cash equivalents

   $ 586.6      $ 645.0  

Short-term investments

     7.0        8.8  

Accounts receivable, net

     468.8        405.2  

Inventories, net

     384.7        341.7  

Deferred taxes and other

     57.7        55.5  
  

 

 

    

 

 

 

TOTAL CURRENT ASSETS

     1,504.8        1,456.2  

Property, plant and equipment, net

     370.0        364.7  

Investments

     39.5        36.7  

Goodwill

     794.5        755.5  

Intangible assets, net

     293.0        288.1  

Other long-term assets

     39.2        45.8  
  

 

 

    

 

 

 

TOTAL ASSETS

   $  3,041.0      $  2,947.0  
  

 

 

    

 

 

 

LIABILITIES AND EQUITY

     

Accounts payable

   $ 245.4      $ 213.1  

Accrued salaries, wages and employee benefits

     55.0        75.4  

Accrued insurance

     44.0        39.6  

Other accrued liabilities

     108.0        119.3  
  

 

 

    

 

 

 

TOTAL CURRENT LIABILITIES

     452.4        447.4  

Long-term debt

     596.9        596.7  

Other non-current liabilities

     248.2        235.0  
  

 

 

    

 

 

 

TOTAL LIABILITIES

     1,297.5        1,279.1  

Hubbell Shareholders’ Equity

     1,735.7        1,661.2  

Noncontrolling interest

     7.8        6.7  
  

 

 

    

 

 

 

TOTAL EQUITY

     1,743.5        1,667.9  
  

 

 

    

 

 

 

TOTAL LIABILITIES AND EQUITY

   $  3,041.0      $  2,947.0  
  

 

 

    

 

 

 

 

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HUBBELL INCORPORATED

Condensed Consolidated Statement of Cash Flows

(unaudited)

(in millions)

 

     Six Months Ended June 30  
     2013     2012  

Cash Flows From Operating Activities

    

Net income attributable to Hubbell

   $  148.0     $  140.7  

Depreciation and amortization

     34.4       33.0  

Stock-based compensation expense

     5.7       5.3  

Deferred income taxes

     7.8       6.8  

Changes in working capital

     (90.2     (76.1

Contributions to defined benefit pension plans

     (1.9     (6.3

Other, net

     4.7       1.2  
  

 

 

   

 

 

 

Net cash provided by operating activities

     108.5       104.6  
  

 

 

   

 

 

 

Cash Flows From Investing Activities

    

Capital expenditures

     (26.0     (21.0

Acquisition of businesses, net of cash acquired

     (81.7     (53.0

Net change in investments

     (1.1     2.1  

Other, net

     4.0       6.3  
  

 

 

   

 

 

 

Net cash used in investing activities

     (104.8     (65.6
  

 

 

   

 

 

 

Cash Flows From Financing Activities

    

Short-term debt repayments, net

     —         (2.7

Payment of dividends

     (53.3     (46.9

Repurchase of common shares

     (6.5     (42.1

Proceeds from exercise of stock options

     1.1       19.8  

Other, net

     5.0       8.8  
  

 

 

   

 

 

 

Net cash used in financing activities

     (53.7     (63.1
  

 

 

   

 

 

 

Effect of foreign exchange rate changes on cash and cash equivalents

     (8.4     (0.9
  

 

 

   

 

 

 

Decrease in cash and cash equivalents

     (58.4     (25.0

Cash and cash equivalents

    

Beginning of period

     645.0       569.6  
  

 

 

   

 

 

 

End of period

   $  586.6     $  544.6  
  

 

 

   

 

 

 

 

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HUBBELL INCORPORATED

Segment Information

(unaudited)

(in millions)

 

     Three Months Ended June 30     Six Months Ended June 30  
     2013     2012     2013     2012  

Net Sales

        

Electrical

   $ 564.5     $ 536.3     $ 1,079.8     $ 1,041.4  

Power

     236.8       242.1       461.6       460.8  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Net Sales

   $ 801.3     $ 778.4     $ 1,541.4     $ 1,502.2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

        

Electrical

   $ 88.9     $ 81.2     $ 150.5     $ 145.0  

Power

     43.2       43.3       79.3       81.2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Income

   $ 132.1     $ 124.5     $ 229.8     $ 226.2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income as a % of Net Sales

        

Electrical

     15.7     15.1     13.9     13.9

Power

     18.2     17.9     17.2     17.6

Total

     16.5     16.0     14.9     15.1

 

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HUBBELL INCORPORATED

Earnings Per Share Calculation

(unaudited)

(in millions, except per share amounts)

 

     Three Months Ended
June 30
     Six Months Ended
June 30
 
     2013      2012      2013      2012  

Numerator:

           

Net income attributable to Hubbell

   $ 82.1      $ 77.5      $ 148.0      $ 140.7  

Less: Earnings allocated to participating securities

     0.3        0.3        0.5        0.5  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income available to common shareholders

   $ 81.8      $ 77.2      $ 147.5      $ 140.2  

Denominator:

           

Average number of common shares outstanding

     59.1        59.1        59.1        59.2  

Potential dilutive shares

     0.5        0.6        0.5        0.6  
  

 

 

    

 

 

    

 

 

    

 

 

 

Average number of diluted shares outstanding

     59.6        59.7        59.6        59.8  
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per Share:

           

Basic

   $ 1.38      $ 1.31      $ 2.49      $ 2.37  

Diluted

   $ 1.37      $ 1.29      $ 2.47      $ 2.34  

 

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HUBBELL INCORPORATED

Non-GAAP Financial Measures

(unaudited)

(in millions)

Ratios of Total Debt to Total Capital and Net Debt to Total Capital

 

     June 30, 2013     December 31, 2012  

Total Debt

   $ 596.9     $ 596.7  

Total Hubbell’s Shareholders’ Equity

     1,735.7       1,661.2  
  

 

 

   

 

 

 

Total Capital

   $ 2,332.6     $ 2,257.9  
  

 

 

   

 

 

 

Total Debt to Total Capital

     26     26

Total Debt

   $ 596.9     $ 596.7  

Less:  Cash and cash equivalents

     (586.6     (645.0

           Investments

     (46.5     (45.5
  

 

 

   

 

 

 

Net Debt

   $ (36.2   $ (93.8
  

 

 

   

 

 

 

Net Debt to Total Capital

     (2 %)      (4 %) 

Note: Management believes that net debt to capital is a useful measure regarding Hubbell’s financial leverage for evaluating the Company’s ability to meet its funding needs.

Free Cash Flow Reconciliation

 

     Six Months Ended June 30  
     2013     2012  

Net cash provided by operating activities

   $ 108.5     $ 104.6  

Less: Capital Expenditures

     (26.0     (21.0
  

 

 

   

 

 

 

Free cash flow

   $ 82.5     $ 83.6  
  

 

 

   

 

 

 

Note: Management believes that free cash flow provides useful information regarding Hubbell’s ability to generate cash without reliance on external financings. In addition, management uses free cash flow to evaluate the resources available for investments in the business, strategic acquisitions and further strengthening the balance sheet.

 

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