Hubbell(US:HUBB)2025-05-02 12:07PART I FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements, management's discussion, and key disclosures for Q1 2025 Financial Statements This section presents Hubbell's unaudited condensed consolidated financial statements for Q1 2025, including income, balance sheets, cash flows, and notes Condensed Consolidated Statements of Income Hubbell reported a slight decrease in net sales but increased operating income, net income, and diluted EPS for Q1 2025 Condensed Consolidated Statements of Income (unaudited) | (in millions, except per share amounts) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net sales | $1,365.2 | $1,399.1 | | Gross profit | $451.2 | $447.7 | | Operating income | $239.0 | $228.5 | | Income before income taxes | $219.9 | $201.4 | | Net income attributable to Hubbell Incorporated | $169.7 | $147.8 | | Basic earnings per share | $3.16 | $2.75 | | Diluted earnings per share | $3.15 | $2.73 | Condensed Consolidated Balance Sheets Total assets and liabilities increased as of March 31, 2025, driven by current assets, goodwill, and short-term debt Condensed Consolidated Balance Sheets (unaudited) | (in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $2,261.8 | $2,089.3 | | Goodwill | $2,548.8 | $2,500.8 | | TOTAL ASSETS | $6,922.1 | $6,679.1 | | Total Current Liabilities | $1,938.3 | $1,274.2 | | Long-Term Debt | $1,044.0 | $1,442.7 | | TOTAL LIABILITIES | $3,649.9 | $3,396.4 | | TOTAL EQUITY | $3,272.2 | $3,282.7 | Condensed Consolidated Statements of Cash Flows Operating cash flow decreased, investing activities used cash for acquisitions, and financing activities provided cash from debt Condensed Consolidated Statements of Cash Flows (unaudited) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $37.4 | $92.2 | | Net cash (used in) provided by investing activities | $(99.3) | $88.6 | | Net cash provided by (used in) financing activities | $75.0 | $(125.3) | | Increase in cash and cash equivalents | $17.2 | $52.0 | Notes to Condensed Consolidated Financial Statements Detailed notes cover the Ventev acquisition, disaggregated revenue, segment performance, debt, and stock compensation - In Q1 2025, the Company acquired Ventev for approximately $73 million, net of cash, adding it to the Electrical Solutions segment23 - The company sold its residential lighting business in Q1 2024, recording a pre-tax loss of $5.3 million27 Net Sales by Segment (Q1 2025 vs Q1 2024) | in millions | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Utility Solutions | $857.1 | $894.0 | | Total Electrical Solutions | $508.1 | $505.1 | | TOTAL | $1,365.2 | $1,399.1 | - On March 25, 2025, the Company entered into a new five-year, $1.0 billion committed unsecured revolving credit facility, replacing its previous $750 million facility8489 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, covering sales, margins, segment performance, liquidity, and capital resources - Q1 2025 net sales decreased 2.4% to $1,365.2 million, primarily due to a 1.2% decline from divestitures (net of acquisitions) and a 0.6% contraction in organic net sales120 - Operating margin for Q1 2025 expanded by 120 basis points to 17.5%123 - Adjusted operating margin contracted by 40 basis points to 19.3%, as benefits from productivity and price were offset by cost inflation and lower volumes123 - Cash from operations decreased to $37.4 million in Q1 2025 from $92.2 million in Q1 2024, mainly due to increased working capital and a $20.0 million pension contribution154 - The company established a new $500.0 million stock repurchase program in February 2025, bringing the total outstanding authorization to approximately $635.0 million163 Results of Operations Net sales declined in Q1 2025 due to divestitures and organic decrease, while gross profit margin and operating income improved Reconciliation of Organic Net Sales Growth (Non-GAAP) | (in millions) | Three Months Ended March 31, 2025 | | :--- | :--- | | Net sales decline (GAAP) | $(33.9) | | Impact of acquisitions | $4.5 | | Impact of divestitures | $(21.1) | | Foreign currency exchange | $(8.6) | | Organic net sales decline (Non-GAAP) | $(8.7) | Reconciliation of Adjusted Operating Income (Non-GAAP) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Operating income (GAAP) | $239.0 | $228.5 | | Amortization of acquisition-related intangible assets | $24.5 | $39.4 | | Transaction, integration & separation costs | $0.4 | $7.3 | | Adjusted operating income (Non-GAAP) | $263.9 | $275.2 | - The effective tax rate decreased to 22.2% in Q1 2025 from 26.0% in Q1 2024, primarily due to tax expenses related to the residential lighting business divestiture in the prior year146 Segment Results Utility Solutions sales decreased organically, while Electrical Solutions grew organically driven by datacenter demand - Utility Solutions organic net sales decreased 3.7% in Q1 2025, driven by lower volume in Grid Automation products due to timing of large projects and weakness in telcom markets for enclosures148 - Electrical Solutions organic net sales grew 4.8% in Q1 2025, primarily driven by strength in the datacenter market, while broader industrial markets were steady and commercial markets were softer151 Segment Adjusted Operating Margin (Non-GAAP) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Utility Solutions | 21.0% | 21.8% | | Electrical Solutions | 16.5% | 15.8% | Financial Condition, Liquidity and Capital Resources Liquidity remains strong with a new credit facility, while cash was used for acquisitions, share repurchases, and dividends Cash Flow Summary | (In millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Operating activities | $37.4 | $92.2 | | Investing activities | $(99.3) | $88.6 | | Financing activities | $75.0 | $(125.3) | - In Q1 2025, the company invested $73.3 million to acquire Ventev and spent $26.0 million on capital expenditures159 - The company entered a new $1.0 billion revolving credit agreement in March 2025, which matures in 2030, and was undrawn as of March 31, 2025165168 Debt to Capital Ratio | (In millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Debt (GAAP) | $1,860.1 | $1,568.1 | | TOTAL CAPITAL (GAAP) | $5,121.5 | $4,836.4 | | Total Debt to Total Capital (GAAP) | 36% | 32% | Quantitative and Qualitative Disclosures About Market Risk No significant changes occurred in the company's exposure to market risks during Q1 2025 - There have been no significant changes in the Company's exposure to market risks such as foreign currency, material prices, and interest rates during the three months ended March 31, 2025184 Controls and Procedures Management concluded that disclosure controls were effective, with no material changes to internal controls - Based on an evaluation, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025187 - No changes occurred in the Company's internal control over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, these controls188 PART II OTHER INFORMATION This section provides other information, including updated risk factors, equity security sales, and other disclosures Risk Factors No material changes to risk factors, except for expanded discussion on U.S. and international trade policy changes - The primary updated risk factor relates to changes in U.S. and international trade policies, including new tariffs announced in early 2025 on goods from China, Canada, Mexico, and the EU191192 - Tariffs on imported materials like steel and aluminum, as well as finished goods, could increase costs, which may need to be passed on to customers, potentially reducing demand193 - Retaliatory tariffs from other countries could make it more difficult or costly for Hubbell to export its products, further impacting business operations and financial results194 Unregistered Sales of Equity Securities and Use of Proceeds The company details stock repurchase activities for Q1 2025, including a new $500 million program and shares repurchased - On February 12, 2025, the Board approved a new $500.0 million stock repurchase program, expiring in February 2028196 Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Number of Shares Purchased (000s) | Average Price Paid Per Share | Approximate Value of Shares that May Yet be Purchased ($ millions) | | :--- | :--- | :--- | :--- | | Jan 2025 | — | $— | $760.0 | | Feb 2025 | 159 | $385.40 | $704.7 | | Mar 2025 | 201 | $347.14 | $635.0 | | Total | 360 | $364.03 | $635.0 | Other Information No director or officer of the Company adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended March 31, 2025199 Exhibits This section lists the exhibits filed with the Form 10-Q, including the new Credit Agreement and certifications - Exhibit 10.1 is the Credit Agreement dated March 25, 2025202 - Exhibits 31.1, 31.2, 32.1, and 32.2 contain the required CEO and CFO certifications202