01—Abstract
Summary
Summary of the 10-K filed February 20, 2009. Cited figures are marked; the original filing is the authoritative source.
Hubbell Incorporated reported 2008 net sales of $2.7 billiona, up 7% from 2007, driven mainly by acquisitions and selling price increases.
Operating income rose to $346.0 millionb (12.8% of sales) from $299.4 million, and net income increased to $222.7 million, with diluted earnings per share of $3.94 versus $3.50 in 2007. The Electrical segment produced $1,958.2 million in sales and the Power segment $746.2 million, with the Power segment showing a 15.9% operating margin. Seven acquisitions costing $267.4 million in total were completed during 2008, including Kurt Versen, CDR Systems, Varon and USCO, and these businesses are expected to contribute approximately $200 million in annual net sales.
The balance sheet shifted meaningfully in 2008. Total debt rose to $497.4 millionc from $236.1 million after the company issued $300 million of 5.95% senior notes due 2018, and debt to total capitalization reached 33% compared with 18% a year earlier. Cash and cash equivalents increased to $178.2 million.
The company repurchased about 2.0 million shares for $96.6 milliond, and about $160 million remains available under its December 2007 repurchase program. Pension plans were underfunded at year end, with a funded status of $(106.2) million, and the company recorded a $92.1 million after-tax charge to equity for pension and postretirement plans. Management's 2009 outlook is negative.
It anticipates significant recessionary conditions in the U.S., with overall volumes expected to be down low to mid-teens compared with 2008 before currency effects. Management expects net sales and earnings to decline in 2009, but it plans to keep a conservative balance sheet and expects free cash flow to exceed net income. The full-year effect of 2008 acquisitions is expected to add approximately $100 million of incremental sales in 2009.
02—Key points
Key Highlights
- Net sales of $2,704.4 million in 2008, up from $2,533.9 million in 2007, with growth attributed to acquisitions and selling price increases
- Operating income of $346.0 million (12.8% of sales) versus $299.4 million (11.8%) in 2007; gross profit margin rose to 29.7% from 29.0%
- Diluted EPS of $3.94 for 2008 compared with $3.50 for 2007; net income of $222.7 million
- Seven acquisitions totaling $267.4 million, with expected annual net sales contribution of approximately $200 million
- Total debt increased to $497.4 million from $236.1 million following a $300 million senior notes offering in May 2008; debt to total capitalization was 33%
- Operating cash flow of $319.2 million in 2008 versus $335.2 million in 2007
- 2009 outlook calls for significant U.S. recessionary conditions, with overall volumes expected down low to mid-teens versus 2008
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Hubbell kept $0.08.
- Revenue$2.70B100.0%
- Cost of revenue−$1.90B70.3%
- Gross profit$803.4M29.7%
- Operating costs−$457.4M16.9%
- Operating income$346.0M12.8%
- Interest, other & tax−$123.3M4.6%
- Net income$222.7M8.2%
Where FY2008 revenue went
$2.70B- Cost of revenue: $1.90B, 70% of revenue
- SG&A: $457.4M, 17% of revenue
- Net income: $222.7M, 8.2% of revenue
- Interest, other & tax: $123.3M, 4.6% of revenue
Kept 8.2% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 20, 2009Financial Statements
05—Questions
Frequently Asked Questions
How did Hubbell perform financially in 2008?
Net sales rose 7% to $2.7 billion, operating income increased to $346.0 million from $299.4 million, and net income grew to $222.7 million. Diluted EPS was $3.94, up from $3.50 in 2007. The filing attributes the sales growth mainly to acquisitions and selling price increases, which added approximately four and three percentage points respectively.
What acquisitions did Hubbell complete in 2008?
The company bought Kurt Versen for $100.2 million, CDR Systems for $68.8 million, Varon Lighting for $55.6 million and USCO Power Equipment for $26.1 million. It also purchased three product lines for about $16.7 million in aggregate. Total 2008 acquisition spending net of cash acquired was $267.4 million across seven acquisitions.
How much debt does Hubbell carry and how did it change?
Total debt was $497.4 million at December 31, 2008, compared with $236.1 million a year earlier. The increase reflects a $300 million 5.95% senior note issued in May 2008 due 2018, along with the existing $200 million 6.375% notes due 2012. Debt to total capitalization was 33%, up from 18%. The $350 million revolving credit facility was undrawn at year end.
What does management expect for 2009?
Management anticipates significant recessionary conditions in the U.S. and a slowdown in global demand, with overall volumes expected to be down low to mid-teens compared with 2008, excluding currency effects. It expects net sales and earnings to decrease, and it plans further staff reductions. The company expects free cash flow to exceed net income in 2009 and expects the 2008 acquisitions to add about $100 million of incremental sales.
How much stock did Hubbell repurchase, and how much authorization remains?
During 2008 the company repurchased approximately 2.0 million shares for $96.6 million. As of December 31, 2008, approximately $160 million remained available under the December 2007 repurchase program, which authorized up to $200 million over a two-year period.
06—Continue