01—Abstract
Summary
Summary of the 10-K filed February 18, 2014. Cited figures are marked; the original filing is the authoritative source.
Hubbell Incorporated reported net sales of $3.18 billiona for 2013, up from $3.04 billion in 2012, with operating income of $507.6 million (15.9% of net sales) and net income attributable to Hubbell of $326.5 million, or $5.47 diluted earnings per share.
The Electrical segment generated $2.26 billionb in net sales and $341.1 million in operating income, while the Power segment generated $921.3 million in net sales and $166.5 million in operating income. Acquisitions added three percentage points to 2013 net sales, and three acquisitions completed during the year cost $96.5 million net of cash acquired. Cash flow from operating activities was $381.8 million in 2013, capital expenditures were $58.8 million, and the company ended the year with $740.7 million in cash and cash equivalents.
Total debt was $597.5 millionc, debt to total capital was 24%, and the company reported net debt of $(189.1) million, meaning net cash. The $500 million revolving credit facility was undrawn at year end. Management's 2014 outlook calls for net sales growth of five to six percent, operating margin expansion of 20 to 30 basis points, a tax rate of approximately 32.5%, and free cash flow approximating net income.
The filing also highlights risks including the Powerweb Energy, Inc. lawsuit over wireless lighting technology, which the company says could have a material adverse effect if resolved unfavorably, and the concentrated voting power of the Class A common stock, which carries 20 votes per share. The company declared a dividend increase to $0.50d per Class B share per quarter in October 2013.
02—Key points
Key Highlights
- Net sales rose to $3,183.9 million in 2013 from $3,044.4 million in 2012, with acquisitions adding three percentage points to growth.
- Operating income increased to $507.6 million, or 15.9% of net sales, compared with 15.5% in 2012.
- Diluted earnings per share were $5.47 in 2013, versus $5.00 in 2012.
- Operating cash flow was $381.8 million, and cash and cash equivalents ended the year at $740.7 million.
- Debt to total capital improved to 24% from 26%, and the company reported net cash of $189.1 million at year end.
- The quarterly dividend was raised from $0.45 to $0.50 per share in October 2013, and $31.0 million was spent on share repurchases during 2013.
- Management expects 2014 net sales to rise five to six percent and free cash flow to approximate net income.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Hubbell kept $0.10.
- Revenue$3.18B100.0%
- Cost of revenue−$2.11B66.4%
- Gross profit$1.07B33.6%
- Operating costs−$562.9M17.7%
- Operating income$507.6M15.9%
- Interest, other & tax−$181.1M5.7%
- Net income$326.5M10.3%
Where FY2013 revenue went
$3.18B- Cost of revenue: $2.11B, 66% of revenue
- SG&A: $562.9M, 18% of revenue
- Net income: $326.5M, 10% of revenue
- Interest, other & tax: $181.1M, 5.7% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 18, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $3.18B$3.04B | +4.6% |
| Cost of Revenue | $2.11B$2.03B | +4.0% |
| Gross Profit | $1.07B$1.01B | +5.8% |
| SG&A Expenses | $562.90M$540.40M | +4.2% |
| Operating Income | $507.60M$471.80M | +7.6% |
| Interest Expense | $30.80M$30.80M | 0.0% |
| Net Income | $326.50M$299.70M | +8.9% |
| EPS (Basic) | $5.51$5.05 | +9.1% |
| EPS (Diluted) | $5.47$5.00 | +9.4% |
| Shares Outstanding (Basic) | 59.10M59.10M | 0.0% |
| Shares Outstanding (Diluted) | 59.60M59.80M | −0.3% |
05—Questions
Frequently Asked Questions
How did Hubbell's segments perform in 2013?
The Electrical segment's net sales increased to $2,262.6 million from $2,114.6 million, and its operating income rose 12% to $341.1 million. The Power segment's net sales declined 1% to $921.3 million, and its operating income decreased 1% to $166.5 million, with operating margin unchanged at 18.1%.
What is the status of the Powerweb Energy lawsuit?
Powerweb Energy, Inc. sued two Hubbell subsidiaries in February 2012 over the wiHUBB wireless lighting technology, alleging breach of contract and misappropriation of trade secrets. Discovery is complete, the company has moved for summary judgment, and no trial date has been set. The company believes it has meritorious defenses, but says the outcome remains unclear and could have a material adverse effect.
How much debt does Hubbell carry and when does it mature?
Long-term debt totaled $597.2 million at December 31, 2013, consisting of $300 million of 5.95% senior notes due 2018 and $300 million of 3.625% senior notes due 2022, both net of unamortized discount. The $500 million revolving credit facility was undrawn, and its maturity was extended to March 2018.
What does the company's 2014 outlook say?
Management expects net sales to increase five to six percent in 2014, with end markets growing approximately two to three percent. It expects operating margin to expand by about 20 to 30 basis points and a tax rate of approximately 32.5%, and it anticipates free cash flow to approximate net income.
How is voting power distributed among Hubbell's shareholders?
Class A common stock carries 20 votes per share and Class B carries one vote per share. As of December 31, 2013, holders of Class A stock held approximately 73% of the voting power while representing approximately 11% of the company's total equity value, and the Hubbell Trust and Roche Trust collectively held approximately 49% of the Class A stock.
06—Continue