01—Abstract
Summary
Summary of the 10-K filed February 11, 2022. Cited figures are marked; the original filing is the authoritative source.
Hubbell Incorporated's 2021 10-K reports net sales of $4,194.1 milliona, up $511.6 million or 13.9% from 2020, with organic Net sales up 9.7% on favorable price realization and higher volume.
Operating income rose to $532.3 millionb, but operating margin declined 70 basis points to 12.7%, as material cost inflation exceeded price realization and freight, logistics and manufacturing costs increased. Net income attributable to Hubbell was $399.5 million, and diluted EPS was $7.28 (continuing operations diluted EPS of $6.66, up 10.3%). Adjusted diluted EPS from continuing operations rose 12.7% to $8.05, excluding acquisition-related intangible amortization and other non-core items.
The Electrical Solutions segment (44% of 2021 consolidated revenues) grew net sales 16.0% to $1.86 billionc, while Utility Solutions (56%) grew 12.3% to $2.33 billion, with its operating margin falling to 12.2% from 14.7%. Free cash flow from continuing operations was $423.5 million, down from $520.1 million, and the company paid $216.9 million in dividends and reduced debt by $144.8 million. Backlog at December 31, 2021 was $1,848.0 million versus $1,065.8 million a year earlier.
Subsequent to year end, Hubbell completed the sale of its Commercial and Industrial Lighting business to GE Current on February 1, 2022 for a cash purchase price of $350 milliond, and anticipates a pre-tax gain of $80 million to $100 million in the first quarter of 2022. The filing also notes ongoing supply chain shortages, cost inflation, and COVID-19 related regulatory uncertainty as risks that may persist through 2022.
02—Key points
Key Highlights
- Net sales of $4,194.1 million, up 13.9% year over year; organic Net sales up 9.7%
- Operating margin declined 70 basis points to 12.7%; adjusted operating margin declined 90 basis points to 14.5% as material cost inflation exceeded price realization
- Diluted EPS of $7.28 total; continuing operations diluted EPS of $6.66, up 10.3%; adjusted diluted EPS from continuing operations of $8.05, up 12.7%
- Free cash flow from continuing operations of $423.5 million, down from $520.1 million in 2020
- Backlog of firm orders rose to $1,848.0 million at December 31, 2021 from $1,065.8 million at December 31, 2020
- Commercial and Industrial Lighting business sold for $350 million cash, closed February 1, 2022, presented as discontinued operations
- Dividend rate increased from $0.98 to $1.05 per share quarterly; $11.2 million of shares repurchased in 2021
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Hubbell kept $0.10.
- Revenue$4.19B100.0%
- Cost of revenue−$3.04B72.5%
- Gross profit$1.15B27.5%
- Operating costs−$619.2M14.8%
- Operating income$532.3M12.7%
- Interest, other & tax−$132.8M3.2%
- Net income$399.5M9.5%
Where FY2021 revenue went
$4.19B- Cost of revenue: $3.04B, 73% of revenue
- SG&A: $619.2M, 15% of revenue
- Net income: $399.5M, 9.5% of revenue
- Interest, other & tax: $132.8M, 3.2% of revenue
Kept 9.5% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 11, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $4.19B$3.68B | +13.9% |
| Cost of Revenue | $3.04B$2.60B | +17.2% |
| Gross Profit | $1.15B$1.09B | +6.1% |
| SG&A Expenses | $619.20M$591.30M | +4.7% |
| Operating Income | $532.30M$494.50M | +7.6% |
| Net Income | $399.50M$351.20M | +13.8% |
| EPS (Basic) | $7.33$6.46 | +13.5% |
| EPS (Diluted) | $7.28$6.43 | +13.2% |
| Shares Outstanding (Basic) | 54.30M54.20M | +0.2% |
| Shares Outstanding (Diluted) | 54.70M54.50M | +0.4% |
05—Questions
Frequently Asked Questions
How did Hubbell perform in 2021 compared with 2020?
Net sales increased 13.9% to $4,194.1 million, with organic Net sales up 9.7% on favorable price realization and higher volume. Net income attributable to Hubbell rose 10.6% from continuing operations to $365.0 million, while operating margin declined to 12.7% from 13.4%.
What drove the decline in margins?
The filing attributes the decline to material cost inflation that exceeded favorable price realization, along with higher freight, logistics and manufacturing costs. These were partially offset by higher volumes, restructuring savings and productivity initiatives.
What is the significance of the Commercial and Industrial Lighting sale?
Hubbell agreed in October 2021 to sell the business to GE Current for $350 million in cash and completed the sale on February 1, 2022. Its results are reported as discontinued operations, and the company expects a pre-tax gain of $80 million to $100 million in the first quarter of 2022.
What are the main risks highlighted in the filing?
Key risks include COVID-19 related disruptions and supply chain shortages, raw material and component cost inflation, U.S. trade policy and tariffs, goodwill impairment exposure on $2,552.8 million of goodwill and other intangible assets, and customer concentration, with the top ten customers accounting for approximately 42% of Net sales.
How is the company's balance sheet and debt position?
Long-term debt was $1,435.5 million at December 31, 2021, compared with $1,436.9 million a year earlier. Total debt to total capital was 39%, versus 43% in 2020. The company redeemed $300 million of 3.625% notes due 2022 by issuing $300 million of 2.300% notes due 2031, and its $750 million revolving credit facility was undrawn at year end.
06—Continue