HUBBELL REPORTS 2019 FOURTH QUARTER ANDFULL YEAR
RESULTS
- Q4 diluted EPS of $1.85; adjusted diluted EPS of $1.91(1)
- Includes restructuring and related investment ($0.26)
- Q4 net sales decreased 4% (organic -3%, net M&A -1%)
- Full Year 2019 diluted EPS of $7.31; adjusted diluted EPS of
$8.12 (1)
- Includes restructuring and related investment ($0.51)
- Full Year 2019 free cash flow of $498 million (3)
- FY20 diluted EPS expected range of $7.50-$7.80; adjusted
diluted EPS of $8.50-$8.80 (1)
- Includes restructuring and related investment (~$0.40)
Hubbell Incorporated (NYSE: HUBB) today reported
operating results for the fourth quarter ended December 31,
2019.
"Hubbell delivered another solid quarter of
operating performance," said David G. Nord, Chairman and Chief
Executive Officer. "The Company essentially achieved our target to
deliver $500 million of free cash flow by 2020 a year earlier than
previously committed, driven by effective working capital
management. We also continue to deploy this cash to attractive
bolt-on acquisitions, two of which closed in December. Cantega
Technologies is a provider of asset protection solutions to the
power grid, an attractive market niche with strong growth and
margin characteristics. Connector Products is a designer and
manufacturer of electrical connectors and accessories, with high
margins and a strong track record of growth, providing a strong
complement to our Burndy brand."
Mr. Nord continued, "End market trends were
mixed overall. Our utility facing markets remain strong, with
ongoing strength in T&D components more than offsetting the
impact of difficult prior year comparisons at Aclara. Electrical
segment end markets were softer, driven by weakness in C&I
lighting, along with continued softening in industrial and oil
markets."
"We continued to be proactive by accelerating
our investment in restructuring actions over and above our full
year guidance, which we expect to generate significant cost savings
in 2020 and beyond. We also remained effective in driving price and
productivity to offset inflationary headwinds as price/cost
continued to be a positive contributor to another quarter of
adjusted operating margin expansion."
Mr. Nord concluded, "Hubbell's fourth quarter
and full year results reflect continued execution in an uncertain
environment. We remain cautious on near-term volume expectations,
but with aggressive cost actions already underway and continued
opportunity for operational improvement ahead of us, we are
confident in our ability to drive consistent and differentiated
performance. Our high quality portfolio of electrical and utility
solutions with strong brand value and best in class reliability
positions us well for long-term success."
FINANCIAL HIGHLIGHTS
The comments and year-over-year comparisons in
this segment review are based on fourth quarter results in 2019 and
2018.
Electrical segment net sales in the fourth
quarter of 2019 of $618 million decreased 7% from $667 million in
the fourth quarter of 2018. Organic sales decreased 6% in the
quarter while a divestiture subtracted less than 2%. Electrical
segment operating income in the fourth quarter was $73 million, or
11.9% of net sales, compared to $74 million, or 11.1% of net sales
in the same period of 2018. Adjusted operating income was $79
million, or 12.8% of net sales, in the fourth quarter of 2019 as
compared to $80 million, or 12.0% of net sales in the same period
of the prior year (1). Changes in adjusted operating income and
adjusted operating margin were primarily due to lower volumes,
increased investment in restructuring and related activities, and a
divestiture, offset by price realization and productivity in excess
of cost inflation, as well as a discrete tariff exclusion benefit.
The company recognized this benefit of ~$0.15 in the quarter as
certain product categories previously subject to Section 301 List 1
and List 2 tariffs have been granted a temporary exclusion, which
applies to tariff costs incurred on those product categories in
2018 and 2019.
Power segment net sales in the fourth quarter of
2019 increased 2% to $485 million compared to $478 million
reported in the fourth quarter of 2018. Organic sales grew 2%
compared to the fourth quarter of 2018, with legacy Power Systems
growing mid single digits and Aclara down mid single digits.
Acquisitions added less than a point to sales growth. Power segment
operating income in the fourth quarter was $63 million, or 12.9% of
net sales, compared to $62 million, or 13.0% of net sales in the
same period of 2018. Adjusted operating income was $75 million, or
15.4% of net sales, in the fourth quarter of 2019 as compared to
$72 million, or 15.2% of net sales in the same period of the prior
year (1). The increases in adjusted operating income and
adjusted operating margin were primarily due to price realization
and productivity in excess of cost inflation, partially offset by
increased investment in restructuring and related activities.
Adjusted fourth quarter results exclude two
items: $0.25 of amortization of acquisition-related intangible
assets, and a non-recurring gain of $0.20 related to the Company's
settlement of a previously disclosed obligation associated
with the withdrawal from a multi-employer pension plan.
Net cash provided from operating activities was
$207 million in the fourth quarter of 2019 versus $178 million in
the comparable period of 2018. Free cash flow (defined as net cash
provided by operating activities less capital expenditures) was
$185 million in the fourth quarter of 2019 versus $152 million
reported in the comparable period of 2018 (3).
SUMMARY & OUTLOOK
For the full year 2020, Hubbell anticipates end
markets will grow approximately 1 - 3%. The Company expects 3 - 4%
growth in electrical T&D markets, 1 - 2% in non-residential
markets, (2) - 2% in industrial markets, 2 - 4% in residential
markets, (2) - 2% in oil markets and 1 - 3% in gas distribution
markets. Sales growth from previously completed acquisitions is
expected to fully offset the impact of divestitures.
Hubbell anticipates 2020 adjusted diluted
earnings per share (“Adjusted EPS”) in the range of $8.50 to
$8.80(1) and GAAP diluted earnings per share expectations in the
range of $7.50 to $7.80. Adjusted EPS excludes amortization
of acquisition-related intangible assets, which the Company expects
to be approximately $1.00 for the full year(1). The Company
believes Adjusted EPS is a useful measure of underlying financial
performance in light of our acquisition strategy.
The earnings per share and adjusted earnings per
share ranges are based on an adjusted tax rate of ~23% and include
approximately $0.40 of anticipated restructuring and related
investment. The ranges also incorporate the impact of a previously
completed divestiture and previously completed acquisitions, the
net of which is expected to be a modest tailwind to 2020 adjusted
EPS. The Company expects free cash flow to be ~110% of adjusted net
income in 2020. (1,3)
CONFERENCE CALL
Hubbell will conduct an earnings conference call
to discuss its fourth quarter 2019 financial results today,
February 4, 2020 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 of the recorded conference call will
be available after the call and can be accessed two hours after the
conclusion of the original conference call by calling (855)
859-2056 and using passcode 8159402. The replay will remain
available until March 4, 2020 at 11:59 p.m. ET. 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.
FORWARD-LOOKING STATEMENTS
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 expectations regarding our financial results and
outlook, anticipated end market growth, expectations with respect
to the Company's position to deliver differentiated results in our
Power segment, our beliefs about M&A contributing to future
earnings growth, expectations regarding the impact of high quality
portfolio of electrical solutions and utility solutions with strong
brand value and best in class reliability, projected earnings per
share expectations, anticipated impacts of acquisitions and a
divestiture on our earnings, expectations regarding acquisitions
completed in the fourth quarter of 2019, expectations regarding
projected free cash flow in 2020, expectations regarding continued
opportunity for operational improvement and confidence in our
ability to drive consistent and differentiated performance, and
other statements that are not strictly historic in nature. In
addition, all statements regarding anticipated growth, improvement
in operating results, market conditions and economic conditions are
forward-looking, including those regarding the future growth of the
Company’s end markets. These statements may be identified by the
use of forward-looking words or phrases such as “believe”,
“expect”, “anticipate”, “plan”, “estimated”, “target”,
“should” “could”, “may”, "subject to", “continues”,
“growing”, “projected”, “if”, “potential”, “will likely
be”, and similar words and phrases. Such forward-looking statements
are based on our current expectations and involve numerous
assumptions, known and unknown risks, uncertainties and other
factors which may cause actual and future performance or the
Company’s achievements 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: the outcome of contingencies or costs compared to
amounts provided for such contingencies, including those with
respect to pension withdrawal liabilities; achieving sales levels
to meet revenue expectations; unexpected costs or charges, certain
of which may be outside the Company’s control; the effects of
tariffs and other trade actions taken by the U.S. and other
countries; changes in product sales prices and material costs;
expected benefits of productivity improvements and cost reduction
actions; effects of unfavorable foreign currency exchange
rates; the impact of U.S. tax reform legislation; general economic
and business conditions; the impact of and the ability to complete
and integrate strategic acquisitions; the impact of certain
divestitures, including the sale of the Haefely business; the
ability to effectively develop and introduce new products, expand
into new markets and deploy capital; 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, 2018 and Current
Reports on Form 8-K.
About the Company
Hubbell Incorporated is an international
manufacturer of high quality, reliable electrical products and
utility solutions for a broad range of customer and end market
applications. With 2019 revenues of $4.6 billion, Hubbell
Incorporated operates manufacturing facilities in the United States
and around the world. The corporate headquarters is located in
Shelton, CT.
Contact:
| Dan
Innamorato |
| Hubbell
Incorporated |
| 40 Waterview
Drive |
| P.O. Box
1000 |
| Shelton, CT
06484 |
| (475)
882-4000 |
| |
| |
| |
| |
#######
HUBBELL
INCORPORATEDCondensed Consolidated Statement of
Income(unaudited)(in millions,
except per share amounts)
| |
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
| Net sales |
$ |
1,103.3 |
|
|
$ |
1,144.1 |
|
|
$ |
4,591.0 |
|
|
$ |
4,481.7 |
|
| Cost of goods
sold |
777.3 |
|
|
823.5 |
|
|
3,238.3 |
|
|
3,181.3 |
|
| Gross profit |
326.0 |
|
|
320.6 |
|
|
1,352.7 |
|
|
1,300.4 |
|
| Selling & administrative
expenses |
190.1 |
|
|
184.0 |
|
|
756.1 |
|
|
743.5 |
|
| Operating income |
135.9 |
|
|
136.6 |
|
|
596.6 |
|
|
556.9 |
|
| Operating income as a % of Net
sales |
12.3 |
% |
|
11.9 |
% |
|
13.0 |
% |
|
12.4 |
% |
| Gain on disposition of
business |
— |
|
|
— |
|
|
21.7 |
|
|
— |
|
| Multi-employer pension income
(expense) |
14.4 |
|
|
— |
|
|
(8.5 |
) |
|
— |
|
| Interest expense,
net |
(16.2 |
) |
|
(17.8 |
) |
|
(67.9 |
) |
|
(72.3 |
) |
| Other
income (expense), net |
(3.2 |
) |
|
(4.1 |
) |
|
(21.4 |
) |
|
(17.6 |
) |
| Total other expense,
net |
(5.0 |
) |
|
(21.9 |
) |
|
(76.1 |
) |
|
(89.9 |
) |
| Income before income
taxes |
130.9 |
|
|
114.7 |
|
|
520.5 |
|
|
467.0 |
|
| Provision for income
taxes |
27.8 |
|
|
25.5 |
|
|
113.1 |
|
|
100.9 |
|
| Net income |
103.1 |
|
|
89.2 |
|
|
407.4 |
|
|
366.1 |
|
| Less: Net income attributable
to noncontrolling interest |
1.2 |
|
|
1.2 |
|
|
6.5 |
|
|
5.9 |
|
| Net income attributable to
Hubbell |
$ |
101.9 |
|
|
$ |
88.0 |
|
|
$ |
400.9 |
|
|
$ |
360.2 |
|
| Earnings Per
Share: |
|
|
|
|
|
|
|
| Basic |
$ |
1.87 |
|
|
$ |
1.61 |
|
|
$ |
7.35 |
|
|
$ |
6.57 |
|
| Diluted |
$ |
1.85 |
|
|
$ |
1.60 |
|
|
$ |
7.31 |
|
|
$ |
6.54 |
|
| Cash dividends per common
share |
$ |
0.91 |
|
|
$ |
0.84 |
|
|
$ |
3.43 |
|
|
$ |
3.15 |
|
HUBBELL
INCORPORATEDCondensed Consolidated Balance
Sheet(unaudited)(in
millions)
| |
December 31, 2019 |
|
December 31, 2018 |
| ASSETS |
|
|
|
| Cash and cash
equivalents |
$ |
182.0 |
|
|
$ |
189.0 |
|
| Short-term
investments |
14.2 |
|
|
9.2 |
|
| Accounts receivable,
net |
683.0 |
|
|
725.4 |
|
| Inventories, net |
633.0 |
|
|
651.0 |
|
| Other current
assets |
62.0 |
|
|
69.1 |
|
|
TOTAL CURRENT ASSETS |
1,574.2 |
|
|
1,643.7 |
|
| Property, plant and equipment,
net |
505.2 |
|
|
502.1 |
|
| Investments |
55.7 |
|
|
56.3 |
|
| Goodwill |
1,811.8 |
|
|
1,784.4 |
|
| Intangible assets,
net |
781.5 |
|
|
819.5 |
|
| Other long-term
assets |
174.6 |
|
|
66.1 |
|
|
TOTAL ASSETS |
$ |
4,903.0 |
|
|
$ |
4,872.1 |
|
| LIABILITIES AND
EQUITY |
|
|
|
| Short-term debt and current
portion of long-term debt |
$ |
65.4 |
|
|
$ |
56.1 |
|
| Accounts payable |
347.7 |
|
|
393.7 |
|
| Accrued salaries, wages and
employee benefits |
101.5 |
|
|
101.6 |
|
| Accrued insurance |
68.1 |
|
|
61.3 |
|
| Other accrued
liabilities |
262.2 |
|
|
226.6 |
|
|
TOTAL CURRENT LIABILITIES |
844.9 |
|
|
839.3 |
|
| Long-term debt |
1,506.0 |
|
|
1,737.1 |
|
| Other non-current
liabilities |
591.6 |
|
|
496.8 |
|
|
TOTAL LIABILITIES |
2,942.5 |
|
|
3,073.2 |
|
| Hubbell Shareholders’
Equity |
1,947.1 |
|
|
1,780.6 |
|
| Noncontrolling
interest |
13.4 |
|
|
18.3 |
|
|
TOTAL EQUITY |
1,960.5 |
|
|
1,798.9 |
|
| TOTAL LIABILITIES AND
EQUITY |
$ |
4,903.0 |
|
|
$ |
4,872.1 |
|
HUBBELL
INCORPORATEDCondensed Consolidated Statement of
Cash Flows(unaudited)(in
millions)
| |
Twelve Months Ended December 31, |
| |
2019 |
|
2018 |
| Cash Flows From Operating
Activities |
|
|
|
|
Net income attributable to Hubbell |
$ |
400.9 |
|
|
$ |
360.2 |
|
|
Depreciation and amortization |
151.0 |
|
|
148.4 |
|
|
Stock-based compensation expense |
16.4 |
|
|
24.2 |
|
|
Gain on disposition of business |
(21.7 |
) |
|
— |
|
|
Multi-employer pension expense, net |
8.5 |
|
|
— |
|
|
Deferred income taxes |
6.1 |
|
|
49.0 |
|
|
Accounts receivable, net |
46.2 |
|
|
(75.4 |
) |
|
Inventories, net |
12.2 |
|
|
34.2 |
|
|
Accounts payable |
(41.2 |
) |
|
21.5 |
|
|
Current liabilities |
5.0 |
|
|
(5.9 |
) |
|
Contributions to defined benefit pension
plans |
(10.4 |
) |
|
(27.9 |
) |
|
Other, net |
18.6 |
|
|
(11.2 |
) |
|
Net cash provided by operating activities |
591.6 |
|
|
517.1 |
|
| Cash Flows From Investing
Activities |
|
|
|
|
Capital expenditures |
(93.9 |
) |
|
(96.2 |
) |
|
Proceeds from disposal of business, net of
cash |
33.4 |
|
|
— |
|
|
Acquisition of businesses, net of cash
acquired |
(70.8 |
) |
|
(1,118.0 |
) |
|
Net change in investments |
(1.6 |
) |
|
3.9 |
|
|
Other, net |
4.0 |
|
|
8.9 |
|
|
Net cash used in investing activities |
(128.9 |
) |
|
(1,201.4 |
) |
| Cash Flows From Financing
Activities |
|
|
|
|
Long-term debt (repayment) issuance, net |
(225.0 |
) |
|
778.7 |
|
|
Short-term debt (repayment) borrowings, net |
(0.1 |
) |
|
(37.2 |
) |
|
Payment of dividends |
(186.6 |
) |
|
(172.3 |
) |
|
Repurchase of common shares |
(35.0 |
) |
|
(40.0 |
) |
|
Other, net |
(24.3 |
) |
|
(22.7 |
) |
|
Net cash (used) provided by financing
activities |
(471.0 |
) |
|
506.5 |
|
| Effect of foreign exchange rate
changes on cash and cash equivalents |
1.3 |
|
|
(8.2 |
) |
| Increase (decrease) in cash and
cash equivalents |
(7.0 |
) |
|
(186.0 |
) |
| Cash and cash
equivalents |
|
|
|
|
Beginning of period |
189.0 |
|
|
375.0 |
|
|
End of period |
$ |
182.0 |
|
|
$ |
189.0 |
|
HUBBELL
INCORPORATEDRestructuring and Related Costs
Included in Consolidated
Results(unaudited)(in millions,
except per share amounts)
| |
Three Months Ended December 31, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
| |
Costs of goods sold |
|
S&A expense |
|
Total |
| Restructuring
costs |
$ |
11.0 |
|
|
$ |
5.9 |
|
|
$ |
5.4 |
|
|
$ |
3.0 |
|
|
$ |
16.4 |
|
|
$ |
8.9 |
|
| Restructuring related costs
(benefit) |
1.7 |
|
|
0.1 |
|
|
0.7 |
|
|
(2.4 |
) |
|
2.4 |
|
|
(2.3 |
) |
| Restructuring and related costs
(non-GAAP measure) (4) |
$ |
12.7 |
|
|
$ |
6.0 |
|
|
$ |
6.1 |
|
|
$ |
0.6 |
|
|
$ |
18.8 |
|
|
$ |
6.6 |
|
| |
Twelve Months Ended December 31, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
| |
Costs of goods sold |
|
S&A expense |
|
Total |
| Restructuring costs |
$ |
22.3 |
|
|
$ |
8.2 |
|
|
$ |
9.7 |
|
|
$ |
3.8 |
|
|
$ |
32.0 |
|
|
$ |
12.0 |
|
| Restructuring related costs
(benefit) |
2.6 |
|
|
0.3 |
|
|
2.4 |
|
|
3.5 |
|
|
5.0 |
|
|
3.8 |
|
| Restructuring and related costs
(non-GAAP measure) (4) |
$ |
24.9 |
|
|
$ |
8.5 |
|
|
$ |
12.1 |
|
|
$ |
7.3 |
|
|
$ |
37.0 |
|
|
$ |
15.8 |
|
| |
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
| Restructuring and related costs
included in Cost of goods sold |
|
|
|
|
|
|
|
|
Electrical |
$ |
5.8 |
|
|
$ |
2.8 |
|
|
$ |
15.1 |
|
|
$ |
5.2 |
|
|
Power |
6.9 |
|
|
3.2 |
|
|
9.8 |
|
|
3.3 |
|
|
Total |
$ |
12.7 |
|
|
$ |
6.0 |
|
|
$ |
24.9 |
|
|
$ |
8.5 |
|
|
Restructuring and related costs included in Selling &
administrative expenses |
|
|
|
|
|
|
|
|
Electrical |
$ |
5.6 |
|
|
$ |
0.4 |
|
|
$ |
9.9 |
|
|
$ |
4.0 |
|
|
Power |
0.5 |
|
|
0.2 |
|
|
2.2 |
|
|
3.3 |
|
|
Total |
$ |
6.1 |
|
|
$ |
0.6 |
|
|
$ |
12.1 |
|
|
$ |
7.3 |
|
|
|
|
|
|
|
|
|
|
| Impact on income before income
taxes |
$ |
18.8 |
|
|
$ |
6.6 |
|
|
$ |
37.0 |
|
|
$ |
15.8 |
|
| Impact on Net income available
to Hubbell common shareholders |
14.3 |
|
|
5.1 |
|
|
28.0 |
|
|
12.1 |
|
| Impact on Diluted earnings per
share |
$ |
0.26 |
|
|
$ |
0.09 |
|
|
$ |
0.51 |
|
|
$ |
0.22 |
|
HUBBELL
INCORPORATEDEarnings Per
Share(unaudited)(in millions,
except per share amounts)
| |
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
| |
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
| Net income attributable to
Hubbell (GAAP measure) |
$ |
101.9 |
|
|
$ |
88.0 |
|
|
16 |
% |
|
$ |
400.9 |
|
|
$ |
360.2 |
|
|
11 |
% |
| Amortization of
acquisition-related intangible assets, net of tax |
13.7 |
|
|
11.9 |
|
|
|
|
53.9 |
|
|
57.5 |
|
|
|
| Gain on disposition of
business, net of tax |
— |
|
|
— |
|
|
|
|
(20.5 |
) |
|
— |
|
|
|
| Multi-employer pension expense
(income), net of tax |
(10.7 |
) |
|
— |
|
|
|
|
6.4 |
|
|
— |
|
|
|
| Loss on investment, net of
tax |
— |
|
|
— |
|
|
|
|
5.0 |
|
|
— |
|
|
|
| Aclara transaction costs, net
of tax |
— |
|
|
0.6 |
|
|
|
|
— |
|
|
10.3 |
|
|
|
| Adjusted Net Income
(1) |
$ |
104.9 |
|
|
$ |
100.5 |
|
|
4 |
% |
|
$ |
445.7 |
|
|
$ |
428.0 |
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Hubbell (GAAP
measure) |
$ |
101.9 |
|
|
$ |
88.0 |
|
|
|
|
$ |
400.9 |
|
|
$ |
360.2 |
|
|
|
|
Less: Earnings allocated to participating
securities |
(0.3 |
) |
|
(0.3 |
) |
|
|
|
(1.5 |
) |
|
(1.3 |
) |
|
|
|
Net income available to common shareholders (GAAP measure)
[a] |
$ |
101.6 |
|
|
$ |
87.7 |
|
|
16 |
% |
|
$ |
399.4 |
|
|
$ |
358.9 |
|
|
11 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income (1) |
$ |
104.9 |
|
|
$ |
100.5 |
|
|
|
|
$ |
445.7 |
|
|
$ |
428.0 |
|
|
|
|
Less: Earnings allocated to participating
securities |
(0.3 |
) |
|
(0.3 |
) |
|
|
|
(1.7 |
) |
|
(1.5 |
) |
|
|
|
Adjusted net income available to common shareholders (1)
[b] |
$ |
104.6 |
|
|
$ |
100.2 |
|
|
4 |
% |
|
$ |
444.0 |
|
|
$ |
426.5 |
|
|
4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares outstanding
[c] |
54.3 |
|
|
54.5 |
|
|
|
|
54.4 |
|
|
54.6 |
|
|
|
|
Potential dilutive shares |
0.4 |
|
|
0.2 |
|
|
|
|
0.3 |
|
|
0.3 |
|
|
|
|
Average number of diluted shares outstanding
[d] |
54.7 |
|
|
54.7 |
|
|
|
|
54.7 |
|
|
54.9 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Earnings per share (GAAP
measure): |
|
|
|
|
|
|
|
|
|
|
|
|
Basic [a] / [c] |
$ |
1.87 |
|
|
$ |
1.61 |
|
|
|
|
$ |
7.35 |
|
|
$ |
6.57 |
|
|
|
|
Diluted [a] / [d] |
$ |
1.85 |
|
|
$ |
1.60 |
|
|
16 |
% |
|
$ |
7.31 |
|
|
$ |
6.54 |
|
|
12 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Adjusted earnings per diluted
share (1) [b] / [d] |
$ |
1.91 |
|
|
$ |
1.84 |
|
|
4 |
% |
|
$ |
8.12 |
|
|
$ |
7.77 |
|
|
5 |
% |
HUBBELL
INCORPORATEDSegment
Information(unaudited)(in
millions)
|
Hubbell Incorporated |
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
| |
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
| Net
Sales [a] |
$ |
1,103.3 |
|
|
$ |
1,144.1 |
|
|
(4 |
)% |
|
$ |
4,591.0 |
|
|
$ |
4,481.7 |
|
|
2 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP measure [b] |
$ |
135.9 |
|
|
$ |
136.6 |
|
|
(1 |
)% |
|
$ |
596.6 |
|
|
$ |
556.9 |
|
|
7 |
% |
|
Amortization of acquisition-related intangible
assets |
18.3 |
|
|
15.8 |
|
|
|
|
72.1 |
|
|
75.9 |
|
|
|
|
Aclara transaction costs |
— |
|
|
0.2 |
|
|
|
|
— |
|
|
9.5 |
|
|
|
|
Adjusted operating income (1) [c] |
$ |
154.2 |
|
|
$ |
152.6 |
|
|
1 |
% |
|
$ |
668.7 |
|
|
$ |
642.3 |
|
|
4 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP measure [b] / [a] |
12.3 |
% |
|
11.9 |
% |
|
+40 bps |
|
13.0 |
% |
|
12.4 |
% |
|
+60 bps |
|
Adjusted operating margin (1) [c] / [a] |
14.0 |
% |
|
13.3 |
% |
|
+70 bps |
|
14.6 |
% |
|
14.3 |
% |
|
+30 bps |
|
Electrical segment |
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
| |
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
| Net Sales [a] |
$ |
618.0 |
|
|
$ |
666.6 |
|
|
(7 |
)% |
|
$ |
2,625.7 |
|
|
$ |
2,660.6 |
|
|
(1 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP measure [b] |
$ |
73.3 |
|
|
$ |
74.3 |
|
|
(1 |
)% |
|
$ |
320.1 |
|
|
$ |
320.8 |
|
|
— |
% |
|
Amortization of acquisition-related intangible
assets |
6.1 |
|
|
5.9 |
|
|
|
|
23.1 |
|
|
23.9 |
|
|
|
|
Adjusted operating income (1) [c] |
$ |
79.4 |
|
|
$ |
80.2 |
|
|
(1 |
)% |
|
$ |
343.2 |
|
|
$ |
344.7 |
|
|
— |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP measure [b] / [a] |
11.9 |
% |
|
11.1 |
% |
|
+80 bps |
|
12.2 |
% |
|
12.1 |
% |
|
+10 bps |
|
Adjusted operating margin (1) [c] / [a] |
12.8 |
% |
|
12.0 |
% |
|
+80 bps |
|
13.1 |
% |
|
13.0 |
% |
|
+10 bps |
| Power
segment |
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
| |
2019 |
|
2018 |
|
Change |
|
2019 |
|
2018 |
|
Change |
| Net Sales [a] |
$ |
485.3 |
|
|
$ |
477.5 |
|
|
2 |
% |
|
$ |
1,965.3 |
|
|
$ |
1,821.1 |
|
|
8 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP measure [b] |
$ |
62.6 |
|
|
$ |
62.3 |
|
|
1 |
% |
|
$ |
276.5 |
|
|
$ |
236.1 |
|
|
17 |
% |
|
Amortization of acquisition-related intangible
assets |
12.2 |
|
|
9.9 |
|
|
|
|
49.0 |
|
|
52.0 |
|
|
|
|
Aclara transaction costs |
— |
|
|
0.2 |
|
|
|
|
— |
|
|
9.5 |
|
|
|
|
Adjusted operating income (1) [c] |
$ |
74.8 |
|
|
$ |
72.4 |
|
|
3 |
% |
|
$ |
325.5 |
|
|
$ |
297.6 |
|
|
9 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
| Operating margin |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP measure [b] / [a] |
12.9 |
% |
|
13.0 |
% |
|
-10 bps |
|
14.1 |
% |
|
13.0 |
% |
|
+110 bps |
|
Adjusted operating margin (1) [c] / [a] |
15.4 |
% |
|
15.2 |
% |
|
+20 bps |
|
16.6 |
% |
|
16.3 |
% |
|
+30 bps |
HUBBELL
INCORPORATEDAdjusted
EBITDA(unaudited)(in
millions)
| |
Three Months Ended December 31, |
| |
2019 |
|
2018 |
|
Change |
| Net
income |
$ |
103.1 |
|
|
$ |
89.2 |
|
|
16 |
% |
|
Provision for income taxes |
27.8 |
|
|
25.5 |
|
|
|
|
Interest expense, net |
16.2 |
|
|
17.8 |
|
|
|
| Other
income (expense), net |
3.2 |
|
|
4.1 |
|
|
|
|
Depreciation and amortization |
39.9 |
|
|
35.6 |
|
|
|
|
Multi-employer pension income |
(14.4 |
) |
|
— |
|
|
|
| Aclara
transaction costs in operating income |
— |
|
|
0.2 |
|
|
|
|
Subtotal |
72.7 |
|
|
83.2 |
|
|
|
|
Adjusted EBITDA (1) |
$ |
175.8 |
|
|
$ |
172.4 |
|
|
2 |
% |
| |
Twelve Months Ended December 31, |
| |
2019 |
|
2018 |
|
Change |
| Net
income |
$ |
407.4 |
|
|
$ |
366.1 |
|
|
11 |
% |
|
Provision for income taxes |
113.1 |
|
|
100.9 |
|
|
|
|
Interest expense, net |
67.9 |
|
|
72.3 |
|
|
|
| Other
income (expense), net |
21.4 |
|
|
17.6 |
|
|
|
|
Depreciation and amortization |
151.0 |
|
|
148.4 |
|
|
|
|
Multi-employer pension expense, net |
8.5 |
|
|
— |
|
|
|
| Gain
on disposition of business |
(21.7 |
) |
|
— |
|
|
|
| Aclara
transaction costs in operating income |
— |
|
|
9.5 |
|
|
|
|
Subtotal |
340.2 |
|
|
348.7 |
|
|
|
|
Adjusted EBITDA (1) |
$ |
747.6 |
|
|
$ |
714.8 |
|
|
5 |
% |
HUBBELL
INCORPORATEDAdditional Non-GAAP Financial
Measures(unaudited)(in
millions)
Ratios of Total Debt to Total Capital and Net Debt to
Total Capital
| |
December 31, 2019 |
|
December 31, 2018 |
| Total Debt |
$ |
1,571.4 |
|
|
$ |
1,793.2 |
|
| Total Hubbell Shareholders’
Equity |
1,947.1 |
|
|
1,780.6 |
|
| Total Capital |
$ |
3,518.5 |
|
|
$ |
3,573.8 |
|
| Total Debt to Total
Capital |
45 |
% |
|
50 |
% |
| Less: Cash and
Investments |
$ |
251.9 |
|
|
$ |
254.5 |
|
| Net Debt (2) |
$ |
1,319.5 |
|
|
$ |
1,538.7 |
|
| Net Debt to Total Capital
(2) |
38 |
% |
|
43 |
% |
Free Cash Flow Reconciliation
| |
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
| |
2019 |
|
2018 |
|
2019 |
|
2018 |
| Net cash provided by operating
activities |
$ |
206.5 |
|
|
$ |
177.9 |
|
|
$ |
591.6 |
|
|
$ |
517.1 |
|
| Less: Capital
expenditures |
(21.3 |
) |
|
(25.5 |
) |
|
(93.9 |
) |
|
(96.2 |
) |
| Free cash flow
(3) |
$ |
185.2 |
|
|
$ |
152.4 |
|
|
$ |
497.7 |
|
|
$ |
420.9 |
|
HUBBELL
INCORPORATEDFootnotes
(1) References to "adjusted" operating measures
exclude the impact of certain costs, gains or losses. Management
believes these adjusted operating measures provide useful
information regarding our underlying performance from period to
period and an understanding of our results of operations without
regard to items we do not consider a component of our core
operating performance. Adjusted operating measures include adjusted
operating income, adjusted operating margin, adjusted net income,
adjusted net income available to common shareholders, adjusted net
income attributable to Hubbell, adjusted earnings per diluted
share, and adjusted EBITDA, which exclude, where applicable:
- Effective as of the first quarter of 2019, amortization
of acquisition-related intangible assets associated with all of our
business acquisitions, including inventory step-up amortization
associated with those acquisitions;
- The effects of the net charge in 2019 to recognize certain
additional liabilities associated with the Company's participation
and withdrawal from a multi-employer pension plan;
- A gain recognized in the third quarter of 2019 from the
disposition of a business;
- An investment loss recognized in the third quarter of 2019 and
reported within Other income (expense), net in the Condensed
Consolidated Statement of Income;
- Adjusted operating measures in 2018 also excluded Aclara
transaction costs, which includes professional services and other
fees that were incurred in connection with the acquisition of
Aclara;
- Adjusted EBITDA also excludes the Other income (expense), net,
and Interest expense, net, captions of the Condensed Consolidated
Statement of Income, as well as provision for income taxes.
Each of these adjusted operating measures are
non-GAAP measures. Management uses the adjusted measures when
assessing the performance of the business. Reconciliations of each
of these non-GAAP measures to the most directly comparable GAAP
measure can be found in the tables within this press release.
(2) Net debt (defined as total debt less cash
and investments) to total capital is a non-GAAP measure that we
believe is a useful measure for evaluating the Company's financial
leverage and the ability to meet its funding needs.
(3) Free cash flow is a non-GAAP measure that we
believe provides useful information regarding the Company's ability
to generate cash without reliance on external financing. 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.
(4) In connection with our restructuring and
related actions we have incurred restructuring costs as defined by
U.S. GAAP, which are primarily severance and employee benefits,
asset impairments, accelerated depreciation, as well as facility
closure, contract termination and certain pension costs that are
directly related to restructuring actions. We also incur
restructuring-related costs, which are costs associated with our
business transformation initiatives, including the consolidation of
back-office functions and streamlining our processes, and certain
other costs and gains associated with restructuring actions. We
refer to these costs on a combined basis as "restructuring and
related costs", which is a non-GAAP measure.
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