01—Abstract
Summary
Summary of the 10-K filed February 15, 2012. Cited figures are marked; the original filing is the authoritative source.
Hubbell Incorporated reported 2011 net sales of $2.87 billiona, up 13% from $2.54 billion in 2010, driven primarily by higher organic volume (volume added ten percentage points).
Operating income rose 15% to $423.8 millionb, with operating margin of 14.8% versus 14.5% in 2010. Net income attributable to Hubbell was $267.9 million, and diluted earnings per share were $4.42, compared with $3.59 in 2010. The Electrical segment generated $2.00 billion in net sales and $282.0 million of operating income, while the Power segment generated $867.4 million in net sales and $141.8 million of operating income.
Backlog at December 31, 2011 was approximately $288.2 millionc, up from $271.5 million. Cash flow from operations was $335.0 million in 2011, and capital expenditures were $55.4 million. The company spent $137.7 million repurchasing Class B shares and completed its December 2007 repurchase program, while a new $200 million September 2011 program remains fully available.
Total debt was $599.2 milliond against total Hubbell shareholders' equity of $1,467.8 million, and the company reported net debt of $(25.2) million, meaning net cash, at year-end. The company also entered a five-year $500 million revolving credit facility in October 2011, which was undrawn at year-end.
For 2012, management expects net sales to increase four to six percent, operating margin to expand by approximately 50 basis points, and the effective tax rate to rise to approximately 32.5%. The Board approved an increase in the quarterly dividend from $0.38 to $0.41 per share, beginning with the April 2012 payment.
02—Key points
Key Highlights
- Net sales of $2,871.6 million in 2011, up 13% from $2,541.2 million in 2010, with volume contributing ten percentage points of growth.
- Operating income of $423.8 million (14.8% of sales) versus $367.8 million (14.5%) in 2010; gross profit margin declined to 32.2% from 32.6% due to higher commodity costs.
- Diluted EPS of $4.42 versus $3.59 in 2010; net income attributable to Hubbell of $267.9 million, which includes no debt extinguishment charge in 2011 (2010 included a $14.7 million charge).
- Power segment net sales rose 18% to $867.4 million with operating margin of 16.3%; Electrical segment net sales rose 11% to $2,004.2 million with operating margin of 14.1%.
- Backlog of approximately $288.2 million at December 31, 2011, up from $271.5 million a year earlier.
- Quarterly dividend increased from $0.38 to $0.41 per share, with the increase starting with the April 11, 2012 payment; 2011 cash dividends declared totaled $1.52 per share.
- Cash and cash equivalents of $569.6 million; total debt of $599.2 million; $200 million September 2011 share repurchase authorization fully available at year-end.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Hubbell kept $0.09.
- Revenue$2.87B100.0%
- Cost of revenue−$1.95B67.8%
- Gross profit$923.7M32.2%
- Operating costs−$499.9M17.4%
- Operating income$423.8M14.8%
- Interest, other & tax−$155.9M5.4%
- Net income$267.9M9.3%
Where FY2011 revenue went
$2.87B- Cost of revenue: $1.95B, 68% of revenue
- SG&A: $499.9M, 17% of revenue
- Net income: $267.9M, 9.3% of revenue
- Interest, other & tax: $155.9M, 5.4% of revenue
Kept 9.3% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 15, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $2.87B$2.54B | +13.0% |
| Cost of Revenue | $1.95B$1.71B | +13.7% |
| Gross Profit | $923.70M$828.70M | +11.5% |
| SG&A Expenses | $499.90M$460.90M | +8.5% |
| Operating Income | $423.80M$367.80M | +15.2% |
| Interest Expense | $30.90M$31.10M | −0.6% |
| Net Income | $267.90M$217.20M | +23.3% |
| EPS (Basic) | $4.47$3.61 | +23.8% |
| EPS (Diluted) | $4.42$3.59 | +23.1% |
| Shares Outstanding (Basic) | 59.70M59.90M | −0.3% |
| Shares Outstanding (Diluted) | 60.40M60.30M | +0.2% |
05—Questions
Frequently Asked Questions
How did Hubbell perform financially in 2011?
Net sales rose 13% to $2,871.6 million, operating income increased 15% to $423.8 million, and net income attributable to Hubbell grew to $267.9 million, or $4.42 per diluted share. Growth was driven mainly by higher organic volume, partly offset by commodity cost increases.
What is management's outlook for 2012?
Management expects overall net sales to increase four to six percent compared with 2011, operating margin to expand by approximately 50 basis points, and the effective tax rate to rise to approximately 32.5%. It also anticipates free cash flow approximately equal to net income.
How strong is Hubbell's balance sheet and liquidity?
At December 31, 2011, the company had $569.6 million of cash and cash equivalents and total debt of $599.2 million, producing net debt of $(25.2) million. Total Hubbell shareholders' equity was $1,467.8 million. The $500 million revolving credit facility was undrawn at year-end, and the single financial covenant requires total debt not to exceed 55% of total capitalization.
How is Hubbell returning capital to shareholders?
The company paid $90.1 million in dividends and spent $137.7 million repurchasing Class B common stock in 2011, completing its December 2007 program. A new $200 million repurchase program approved in September 2011 had the full amount available at December 31, 2011. The Board also approved raising the quarterly dividend to $0.41 per share.
What are the main risks highlighted by the filing?
Risks include competitive pricing pressure, commodity and raw material cost increases, reliance on foreign sourcing (including Mexico and China), customer credit quality (top 10 customers account for approximately 33% of trade accounts receivable), and the concentration of voting power in Class A shares, which hold approximately 73% of the voting power.
06—Continue