Exhibit 99.1
|
Date: | October 20, 2011 | NEWS RELEASE |
| For Release: | IMMEDIATELY | |||||
| Hubbell Incorporated 40 Waterview Drive Shelton, CT 06484 475-882-4000 |
||||||
| Contact: | James M. Farrell | |||||
HUBBELL REPORTS THIRD QUARTER RESULTS;
NET SALES OF $764.3 MILLION AND EARNINGS PER DILUTED SHARE OF $1.37
SHELTON, CT. (October 20, 2011) — Hubbell Incorporated (NYSE: HUBA, HUBB) today reported
operating results for the third quarter ended September 30, 2011.
Net sales in the third quarter of 2011 were $764.3 million, an increase of 12% compared to the
$685.0 million reported in the third quarter of 2010. Operating income was $125.3 million, or
16.4% of net sales, compared to $117.6 million, or 17.2% of net sales, for the comparable period of
2010. The effective tax rate in the third quarter of 2011 was 29.4% compared to 34.3% reported in
the third quarter of 2010. Net income in the third quarter of 2011 was $82.4 million, an increase
of 16% compared to $71.3 million reported in the third quarter of 2010. Earnings per diluted share
in the third quarter of 2011 were $1.37, an increase of 16% compared to $1.18 reported in the third
quarter of 2010. Free cash flow (defined as cash flow from operations less capital expenditures)
was $90.6 million in the third quarter of 2011 versus $71.4 million reported in the comparable
period of 2010.
For the first nine months of 2011, net sales were $2.1 billion, an increase of 12% compared to the
same period last year. Operating income was $314.0 million, or 14.7% of net sales, compared to
$276.8 million, or 14.6% of net sales, for the comparable period of 2010. The effective tax rate
in the first nine months of 2011 was 30.6% compared to 33.2% reported for the comparable period of
2010. Net income in the first nine months of 2011 was $197.9 million an increase of 18% compared to
the $167.5 million reported in the comparable period of 2010. Earnings per diluted share were
$3.25, or 17% above the $2.77 reported for the comparable period of 2010. Free cash flow was
$175.9 million compared to $142.2 million reported in the first nine months of 2010.
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OPERATIONS REVIEW
Timothy H. Powers, Chairman, President, and Chief Executive Officer said “This was another terrific
quarter for Hubbell. We experienced growth across the portfolio led by our utility business that
continued their strong upward trends. We reported operating margin of 16.4%, with good improvement
on a sequential basis but down compared to 2010. As a reminder, the prior year included several
large high margin project shipments in our electrical segment. In addition, our price realization
in the quarter was lower than anticipated in certain businesses and when combined with higher
commodity costs reduced our operating margin by slightly less than one percentage point.
“Looking at our end markets, our incoming orders in the third quarter were very strong as both the
electrical and power segments experienced double-digit growth rates compared to the prior year. The
strength in utility was driven by an increase in distribution and transmission demand and improved
international growth. The industrial maintenance and repair markets were higher as capacity
utilization rates continue to tick up. In addition, the energy markets have been strong which has
benefitted our harsh and hazardous businesses. New construction spending in the U.S.
non-residential market was lower but was more than offset by higher demand for renovation and
relight products. The residential market for single family housing remains weak.”
SEGMENT REVIEW
The comments and year-over-year percentages in this segment review are based on third quarter
results in 2011 and 2010.
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Electrical segment net sales in the third quarter of 2011 increased 7% to $526.6 million compared
to $490.6 million reported in the third quarter of 2010. The sales increase was broad based, while
favorable foreign currency translation and price realization added 2% and 1%, respectively, to
sales in the quarter. Compared to the third quarter of 2010, operating income decreased 3% to
$81.5 million, or 15.5% of net sales. The decrease in operating income was primarily due to a less
favorable mix and commodity costs in excess of price realization.
Hubbell’s Power segment net sales in the third quarter of 2011 increased 22% to $237.7 million
compared to $194.4 million reported in the third quarter of 2010. The increase was due to stronger
demand for both distribution and transmission products as well as increased international sales.
In addition, price realization contributed 3% to sales in the quarter. Compared to the third
quarter of 2010, operating income increased 30% to $43.8 million, or 18.4% of net sales. The
increase in operating income was primarily due to higher sales partially offset by increased
commodity costs. Productivity improvements offset inflationary cost increases and spending to
support growth initiatives.
SUMMARY & OUTLOOK
Mr. Powers commented “I am very pleased with our overall performance in the first nine months of
the year. We have continued to execute our strategy and deliver strong performance despite macro
economic uncertainty. For the full year 2011, we now expect net sales to increase by approximately
12% and operating margins to expand by approximately 20 to 30 basis points.”
Mr. Powers concluded “turning to 2012, we are optimistic that our diverse end market exposure will
provide modest organic growth next year. We do not anticipate growth in U.S. non-residential new
construction as third party forecasts have been pushing any meaningful recovery into 2013. However,
the strong demand we have been experiencing for retrofit and relighting projects is anticipated to
offset the new construction weakness. The utility market is expected to grow with modest increases
anticipated for our distribution products. We also anticipate the recent growth trends we have
experienced for transmission related projects will continue in 2012 and beyond. The industrial
markets are expected to expand in the coming year although the growth is likely to be more modest
than our recent experience. For the residential market, we do not anticipate any
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significant
improvements until at least 2013. So, overall, we expect our organic sales to increase in the low
single-digit range in 2012 compared to 2011. The global economy is likely to remain volatile, but
our organization is more agile than ever and is capable of responding quickly and appropriately as
the market dictates. As always, we will continue to focus on the things we can control. We will
look to increase our earnings in 2012 through higher sales, careful management of pricing relative
to commodity costs and will continue to drive our productivity programs. Finally, with our strong
balance sheet position and free cash flow generation, we have the flexibility to make
acquisitions.”
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”, 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 impacts 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 “Quantiative and Qualitative Disclosures about Market Risk”
Sections in the Annual Report on Form 10-K for the year ended December 31, 2010.
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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 2010 revenues of $2.5 billion, Hubbell Incorporated operates manufacturing
facilities in the United States, Canada, Switzerland, Puerto Rico, Mexico, the People’s 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 People’s Republic
of China, India, Mexico, South Korea, and 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 data)
Condensed Consolidated Statement of Income
(unaudited)
(in millions, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net Sales |
$ | 764.3 | $ | 685.0 | $ | 2,131.6 | $ | 1,901.9 | ||||||||
Cost of goods sold |
512.0 | 449.8 | 1,444.2 | 1,280.0 | ||||||||||||
Gross Profit |
252.3 | 235.2 | 687.4 | 621.9 | ||||||||||||
Selling & administrative expenses |
127.0 | 117.6 | 373.4 | 345.1 | ||||||||||||
Operating income |
125.3 | 117.6 | 314.0 | 276.8 | ||||||||||||
Operating income as of % of Net sales |
16.4 | % | 17.2 | % | 14.7 | % | 14.6 | % | ||||||||
Interest expense, net |
(7.3 | ) | (7.8 | ) | (22.3 | ) | (22.9 | ) | ||||||||
Other expense, net |
— | (0.6 | ) | (3.8 | ) | (1.6 | ) | |||||||||
Total other expense, net |
(7.3 | ) | (8.4 | ) | (26.1 | ) | (24.5 | ) | ||||||||
Income before income taxes |
118.0 | 109.2 | 287.9 | 252.3 | ||||||||||||
Provision for income taxes |
34.7 | 37.5 | 88.2 | 83.7 | ||||||||||||
Net income |
$ | 83.3 | $ | 71.7 | $ | 199.7 | $ | 168.6 | ||||||||
Less: Net income attributable to noncontrolling interest |
0.9 | 0.4 | 1.8 | 1.1 | ||||||||||||
Net income attributable to Hubbell |
$ | 82.4 | $ | 71.3 | $ | 197.9 | $ | 167.5 | ||||||||
Earnings Per Share: |
||||||||||||||||
Basic |
$ | 1.38 | $ | 1.19 | $ | 3.29 | $ | 2.79 | ||||||||
Diluted |
$ | 1.37 | $ | 1.18 | $ | 3.25 | $ | 2.77 | ||||||||
Cash dividends per common share |
$ | 0.38 | $ | 0.36 | $ | 1.14 | $ | 1.08 | ||||||||
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HUBBELL INCORPORATED
Condensed Consolidated Balance Sheet
(unaudited)
(in millions)
Condensed Consolidated Balance Sheet
(unaudited)
(in millions)
| September 30, 2011 | December 31, 2010 | |||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 511.8 | $ | 520.7 | ||||
Short-term investments |
6.7 | 8.8 | ||||||
Accounts receivable, net |
455.3 | 341.8 | ||||||
Inventories, net |
331.2 | 298.4 | ||||||
Deferred taxes and other |
59.5 | 56.4 | ||||||
TOTAL CURRENT ASSETS |
1,364.5 | 1,226.1 | ||||||
Property, plant and equipment, net |
357.3 | 358.3 | ||||||
Investments |
39.3 | 30.2 | ||||||
Goodwill |
722.7 | 724.0 | ||||||
Intangible assets, net |
259.9 | 273.5 | ||||||
Other long-term assets |
66.4 | 93.7 | ||||||
TOTAL ASSETS |
$ | 2,810.1 | $ | 2,705.8 | ||||
LIABILITIES AND EQUITY |
||||||||
Short-term debt |
$ | 2.3 | $ | 1.8 | ||||
Accounts payable |
221.0 | 160.8 | ||||||
Accrued salaries, wages and employee benefits |
60.7 | 70.4 | ||||||
Accrued insurance |
49.7 | 48.5 | ||||||
Dividends payable |
22.4 | 21.9 | ||||||
Other accrued liabilities |
173.7 | 141.6 | ||||||
TOTAL CURRENT LIABILITIES |
529.8 | 445.0 | ||||||
Long-term debt |
596.2 | 595.9 | ||||||
Other non-current liabilities |
201.6 | 201.4 | ||||||
TOTAL LIABILITIES |
1,327.6 | 1,242.3 | ||||||
Hubbell Shareholders’ Equity |
1,477.1 | 1,459.2 | ||||||
Noncontrolling interest |
5.4 | 4.3 | ||||||
TOTAL EQUITY |
1,482.5 | 1,463.5 | ||||||
TOTAL LIABILITIES AND EQUITY |
$ | 2,810.1 | $ | 2,705.8 | ||||
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HUBBELL INCORPORATED
Condensed Consolidated Statement of Cash Flows
(unaudited)
(in millions)
Condensed Consolidated Statement of Cash Flows
(unaudited)
(in millions)
| Nine Months Ended | ||||||||
| September 30 | ||||||||
| 2011 | 2010 | |||||||
Cash Flows From Operating Activities |
||||||||
Net income attributable to Hubbell |
$ | 197.9 | $ | 167.5 | ||||
Depreciation and amortization |
51.7 | 54.8 | ||||||
Stock-based compensation expense |
7.7 | 6.9 | ||||||
Deferred income taxes |
14.5 | 4.7 | ||||||
Changes in working capital |
(60.2 | ) | (67.3 | ) | ||||
Contributions to defined benefit pension plans |
(2.1 | ) | (2.6 | ) | ||||
Other, net |
7.7 | 12.0 | ||||||
Net cash provided by operating activities |
217.2 | 176.0 | ||||||
Cash Flows From Investing Activities |
||||||||
Capital expenditures |
(41.3 | ) | (33.8 | ) | ||||
Net change in investments |
(5.8 | ) | (12.0 | ) | ||||
Other, net |
5.5 | 2.3 | ||||||
Net cash used in investing activities |
(41.6 | ) | (43.5 | ) | ||||
Cash Flows From Financing Activities |
||||||||
Short-term debt borrowings, net |
0.6 | 2.2 | ||||||
Payment of dividends |
(67.7 | ) | (64.0 | ) | ||||
Acquisition of common shares |
(137.7 | ) | (2.9 | ) | ||||
Proceeds from exercise of stock options |
17.2 | 11.1 | ||||||
Other, net |
3.4 | 1.5 | ||||||
Net cash used in financing activities |
(184.2 | ) | (52.1 | ) | ||||
Effect of foreign exchange rate changes on cash
and cash equivalents |
(0.3 | ) | 3.9 | |||||
(Decrease) increase in cash and cash equivalents |
(8.9 | ) | 84.3 | |||||
Cash and cash equivalents |
||||||||
Beginning of period |
520.7 | 258.5 | ||||||
End of period |
$ | 511.8 | $ | 342.8 | ||||
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HUBBELL INCORPORATED
Segment Information
(unaudited)
(in millions)
Segment Information
(unaudited)
(in millions)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net Sales |
||||||||||||||||
Electrical |
$ | 526.6 | $ | 490.6 | $ | 1,490.6 | $ | 1,358.3 | ||||||||
Power |
237.7 | 194.4 | 641.0 | 543.6 | ||||||||||||
Total Net Sales |
$ | 764.3 | $ | 685.0 | $ | 2,131.6 | $ | 1,901.9 | ||||||||
Operating Income |
||||||||||||||||
Electrical |
$ | 81.5 | $ | 83.9 | $ | 208.3 | $ | 185.1 | ||||||||
Power |
43.8 | 33.7 | 105.7 | 91.7 | ||||||||||||
Total
Operating
Income |
$ | 125.3 | $ | 117.6 | $ | 314.0 | $ | 276.8 | ||||||||
Operating Income as a % of Net Sales |
||||||||||||||||
Electrical |
15.5 | % | 17.1 | % | 14.0 | % | 13.6 | % | ||||||||
Power |
18.4 | % | 17.3 | % | 16.5 | % | 16.9 | % | ||||||||
Total |
16.4 | % | 17.2 | % | 14.7 | % | 14.6 | % | ||||||||
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HUBBELL INCORPORATED
Earnings Per Share Calculation
(unaudited)
(in millions, except per share amounts)
Earnings Per Share Calculation
(unaudited)
(in millions, except per share amounts)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30 | September 30 | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Numerator: |
||||||||||||||||
Net income attributable to Hubbell |
$ | 82.4 | $ | 71.3 | $ | 197.9 | $ | 167.5 | ||||||||
Less: Earnings allocated to participating
securities |
0.2 | 0.3 | 0.7 | 0.7 | ||||||||||||
Net income available to common shareholders |
$ | 82.2 | $ | 71.0 | $ | 197.2 | $ | 166.8 | ||||||||
Denominator: |
||||||||||||||||
Average number of common shares outstanding |
59.3 | 59.8 | 59.9 | 59.8 | ||||||||||||
Potential dilutive shares |
0.6 | 0.4 | 0.7 | 0.4 | ||||||||||||
Average number of diluted shares outstanding |
59.9 | 60.2 | 60.6 | 60.2 | ||||||||||||
Earnings per Share: |
||||||||||||||||
Basic |
$ | 1.38 | $ | 1.19 | $ | 3.29 | $ | 2.79 | ||||||||
Diluted |
$ | 1.37 | $ | 1.18 | $ | 3.25 | $ | 2.77 | ||||||||
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HUBBELL INCORPORATED
Non-GAAP Financial Measures
(unaudited)
(in millions)
Non-GAAP Financial Measures
(unaudited)
(in millions)
Ratios of Total Debt to Total Capital and Net Debt to Total Capital
| September 30, 2011 | December 31, 2010 | |||||||
Total Debt |
$ | 598.5 | $ | 597.7 | ||||
Total Hubbell’s Shareholders’ Equity |
1,477.1 | 1,459.2 | ||||||
Total Capital |
$ | 2,075.6 | $ | 2,056.9 | ||||
Total Debt to Total Capital |
29 | % | 29 | % | ||||
Total Debt |
$ | 598.5 | $ | 597.7 | ||||
Less: Cash and cash equivalents |
(511.8 | ) | (520.7 | ) | ||||
Investments |
(46.0 | ) | (39.0 | ) | ||||
Net Debt |
$ | 40.7 | $ | 38.0 | ||||
Net Debt to Total Capital |
2 | % | 2 | % | ||||
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
| Nine Months Ended September 30 | ||||||||
| 2011 | 2010 | |||||||
Net cash provided by operating activities |
$ | 217.2 | $ | 176.0 | ||||
Less: Capital Expenditures |
(41.3 | ) | (33.8 | ) | ||||
Free cash flow |
$ | 175.9 | $ | 142.2 | ||||
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 strengthening the balance sheet.
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