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Hubbell Annual Report, Year Ended Dec 31, 2006

Filing Date
Filed February 27, 2007
Period End
December 31, 2006
Security
HUBB
In the record · 2016–202610-K1110-Q338-K110

HUBB filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 110 current reports (8-K) between 2016 and 2026.

  1. Restructuring8-K · Jan ’17Jan ’17
  2. Leadership change8-K · Mar ’19Mar ’19
  3. Material agreement8-K · Mar ’21Mar ’21
  4. Material agreement8-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 10-K filed February 27, 2007. Cited figures are marked; the original filing is the authoritative source.

Hubbell Incorporated's 2006 results show net sales of $2.41 billiona, up from $2.10 billion in 2005, with all three segments contributing to the increase.

Net income declined to $158.1 millionb from $165.1 million, and diluted EPS fell to $2.59 from $2.67. Management described 2006 as a particularly challenging year, citing operational inefficiencies from the SAP system rollout and new product launches, along with a gross profit margin that decreased to 27.2% from 28.3% as commodity raw material costs rose. Operating margin declined to 9.7% from 10.8%, and cash provided by operating activities fell to $139.9 million from $184.1 million, largely due to higher inventory and receivables.

For 2007, the company guides to net sales growth of 6% to 8% excluding currency effects, operating margin expansion of about one percentage point, a 29.5% effective tax rate, and diluted EPS of $2.90 to $3.15c. Free cash flow is expected to be $175 to $190 million. The board approved a new stock repurchase program of up to $200 million over two years in February 2007, and the company expects spending on share repurchases and/or acquisitions of $150 to $200 million in 2007.

Residential markets are expected to decline significantly in 2007. The balance sheet remains conservative, with total debt of $220.2 milliond, debt to total capitalization of 18%, and shareholders' equity of $1.02 billion.

Acquisitions in 2006 included Strongwell Lenoir City, Inc. for $117.4 million and Austdac Pty Limited for $28.1 million. The company's Lighting Business Integration and Rationalization Program is substantially complete, with savings estimated at $20 to $25 million annually.

02—Key points

Key Highlights

  1. Net sales rose to $2,414.3 million in 2006 from $2,104.9 million in 2005, with all three segments contributing to growth.
  2. Net income fell to $158.1 million from $165.1 million, and diluted EPS declined to $2.59 from $2.67.
  3. Gross profit margin decreased to 27.2% from 28.3%, reflecting commodity raw material cost increases and production inefficiencies.
  4. Operating income was $233.9 million, with operating margin of 9.7% versus 10.8% in 2005.
  5. Operating cash flow declined to $139.9 million from $184.1 million, driven by higher inventory and accounts receivable.
  6. 2007 guidance calls for net sales growth of 6% to 8% excluding currency effects and diluted EPS of $2.90 to $3.15.
  7. A new $200 million share repurchase program was approved in February 2007, to be completed over two years.

03—Questions

Frequently Asked Questions

  1. Why did Hubbell's profitability decline in 2006 despite higher sales?

    Management attributed the decline to operational inefficiencies from the SAP enterprise system rollout and new product launches, plus commodity raw material costs that rose faster than selling price increases. Gross profit margin fell to 27.2% from 28.3%, and S&A expenses rose to 17.2% of sales from 17.0%.

  2. What does management expect for 2007?

    Management expects net sales growth of 6% to 8% excluding currency effects, with Power and Industrial Technology leading. Operating profit margin is expected to rise about one percentage point, the effective tax rate is estimated at 29.5%, and diluted EPS is projected at $2.90 to $3.15. Residential markets are expected to decline significantly.

  3. How strong is Hubbell's balance sheet?

    At December 31, 2006, total debt was $220.2 million, debt to total capitalization was 18%, and cash and investments totaled $81.5 million. Shareholders' equity was $1,015.5 million. The company had $200 million available under its committed bank credit facility.

  4. What acquisitions did Hubbell make in 2006?

    Hubbell acquired Strongwell Lenoir City, Inc. (renamed Hubbell Lenoir City, Inc.) in June 2006 for $117.4 million in cash, added to the Power segment. It also acquired Austdac Pty Limited in November 2006 for $28.1 million net of cash acquired, added to the Industrial Technology segment.

  5. What are the company's capital return plans?

    Hubbell repurchased $95.1 million of common shares in 2006 and paid $80.1 million in dividends. Its $1.32 annual dividend per share was unchanged. In February 2007, the board approved a new program to repurchase up to $200 million of Class A and Class B common stock over two years, to begin after the February 2006 program is completed.

04—Continue

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