01—Abstract
Summary
Summary of the 10-K filed February 16, 2011. Cited figures are marked; the original filing is the authoritative source.
Hubbell Incorporated's 2010 Form 10-K reports net sales of $2.54 billiona, up from $2.36 billion in 2009, with net income attributable to Hubbell of $217.2 million, or $3.59 diluted earnings per share.
Operating income rose to $367.8 millionb (14.5% of sales) from $294.7 million (12.5%). The increase was driven by the Burndy acquisition, favorable currency translation and higher organic volume. Gross profit margin improved to 32.6% from 30.8%, reflecting productivity gains, while the Electrical segment's operating margin rose to 13.8% and the Power segment's margin declined to 16.2% from 18.6%.
Balance sheet and cash flow highlights include cash and cash equivalents of $520.7 millionc at year-end, total debt of $597.7 million, and a debt-to-total-capitalization ratio of 29%. Net cash from operating activities was $266.2 million, down from $397.7 million, mainly due to higher working capital. The company issued $300 million of 3.625% senior notes due 2022 and redeemed $200 million of 6.375% notes due 2012, recording a $14.7 million pre-tax loss on extinguishment of debt.
The Board raised the quarterly dividend from $0.36 to $0.38d per share, effective with the April 2011 payment. For 2011, management expects net sales to rise three to five percentage points, operating margin to expand by about 50 basis points, and free cash flow to approximately equal net income. Investors should also note the dual-class structure: Class A shares carry 20 votes each and held about 73% of voting power at December 31, 2010.
02—Key points
Key Highlights
- Net sales of $2,541.2 million in 2010, up from $2,355.6 million in 2009; diluted EPS of $3.59 versus $3.15
- Operating income of $367.8 million (14.5% of sales), up from $294.7 million (12.5%) in 2009
- Electrical segment net sales of $1,808.2 million with operating margin of 13.8%; Power segment net sales of $733.0 million with operating margin of 16.2%
- Net cash provided by operating activities of $266.2 million, down from $397.7 million in 2009, primarily due to higher working capital
- Debt refinancing: $300 million of 3.625% senior notes due 2022 issued, $200 million of 6.375% notes due 2012 retired, and a $14.7 million loss on extinguishment of debt recorded
- Quarterly dividend increased from $0.36 to $0.38 per share, starting with the April 11, 2011 payment
- 2011 outlook: net sales expected to increase three to five percentage points, operating margin to expand about 50 basis points, and free cash flow approximately equal to net income
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Hubbell kept $0.09.
- Revenue$2.54B100.0%
- Cost of revenue−$1.71B67.4%
- Gross profit$828.7M32.6%
- Operating costs−$460.9M18.1%
- Operating income$367.8M14.5%
- Interest, other & tax−$150.6M5.9%
- Net income$217.2M8.5%
Where FY2010 revenue went
$2.54B- Cost of revenue: $1.71B, 67% of revenue
- SG&A: $460.9M, 18% of revenue
- Net income: $217.2M, 8.5% of revenue
- Interest, other & tax: $150.6M, 5.9% of revenue
Kept 8.5% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 16, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $2.54B$2.36B | +7.9% |
| Cost of Revenue | $1.71B$1.63B | +5.1% |
| Gross Profit | $828.70M$725.90M | +14.2% |
| SG&A Expenses | $460.90M$431.20M | +6.9% |
| Operating Income | $367.80M$294.70M | +24.8% |
| Interest Expense | $31.10M$30.90M | +0.6% |
| Net Income | $217.20M$180.10M | +20.6% |
| EPS (Basic) | $3.61$3.16 | +14.2% |
| EPS (Diluted) | $3.59$3.15 | +14.0% |
| Shares Outstanding (Basic) | 59.90M56.80M | +5.5% |
| Shares Outstanding (Diluted) | 60.30M57.00M | +5.8% |
05—Questions
Frequently Asked Questions
How did Hubbell perform financially in 2010?
Net sales rose to $2.54 billion from $2.36 billion, driven by the Burndy acquisition, favorable currency translation and higher organic volume. Operating income increased to $367.8 million from $294.7 million, and net income attributable to Hubbell was $217.2 million, or $3.59 per diluted share.
What drove the improvement in profitability?
Gross profit margin rose to 32.6% from 30.8%, which the company attributed to productivity improvements, including improved factory utilization, and the favorable impact of the Burndy acquisition, partially offset by unfavorable price realization and higher commodity costs.
Why did operating cash flow decline in 2010?
Net cash provided by operating activities fell to $266.2 million from $397.7 million, primarily because of higher working capital requirements, including increases in accounts receivable and inventory due to higher sales, partially offset by higher accounts payable.
What does the 2011 outlook look like?
Management expects net sales to increase three to five percentage points compared to 2010, operating margin to expand by approximately 50 basis points, a tax rate increase of about 50 basis points, and free cash flow approximately equal to net income.
What should investors know about the share structure?
Hubbell has two classes of common stock. Class A shares carry 20 votes per share and represented approximately 73% of the voting power at December 31, 2010, while the Hubbell Trust and Roche Trust collectively held about 49% of Class A shares, giving the holders of Class A significant influence over board elections and major transactions.
06—Continue