01—Abstract
Summary
Summary of the 10-K filed February 9, 2023. Cited figures are marked; the original filing is the authoritative source.
Hubbell Incorporated reported 2022 net sales of $4,947.9 milliona, up $753.8 million, or 18.0%, from $4,194.1 million in 2021, driven by favorable price realization and higher unit volume.
Organic net sales grew 17.5%. Operating income rose to $709.1 millionb from $532.3 million, and operating margin increased 160 basis points to 14.3%. Net income from continuing operations attributable to Hubbell was $511.3 million, up 40.1%, and diluted earnings per share from continuing operations were $9.43, up 41.6%.
Adjusted diluted EPS from continuing operations, a non-GAAP measure, was $10.62c, up 31.9%. The company completed the sale of its Commercial and Industrial Lighting business to GE Current, a Daintree Company, on February 1, 2022, for net cash consideration of $332.8 million, and acquired PCX Holdings, Ripley Tools and REF for an aggregate $177.1 million. Free cash flow from continuing operations was $506.9 million, up from $423.5 million.
Hubbell paid $229.6 milliond in dividends and repurchased $182.0 million of shares in 2022. Its backlog of firm orders at December 31, 2022 was $2,463.4 million, compared with $1,848.0 million a year earlier. Management identifies inflation, supply chain disruptions, tariffs, COVID-19 effects and goodwill impairment risk as key concerns.
Goodwill and other intangible assets totaled approximately $2,640.4 million at year-end. Total debt was $1,442.6 million, and net debt was $921.9 million, or 24% of total capital.
02—Key points
Key Highlights
- Net sales of $4,947.9 million, up 18.0% year over year, with organic net sales up 17.5%
- Operating margin of 14.3%, up 160 basis points; adjusted operating margin of 15.9%, up 140 basis points
- Diluted EPS from continuing operations of $9.43, up 41.6%; adjusted diluted EPS of $10.62, up 31.9%
- Utility Solutions segment net sales of $2,871.1 million (up 23.0%) and operating income of $438.2 million; Electrical Solutions net sales of $2,076.8 million (up 11.7%)
- Free cash flow from continuing operations of $506.9 million, compared with $423.5 million in 2021
- Backlog of firm orders of $2,463.4 million at December 31, 2022, up from $1,848.0 million
- Net debt of $921.9 million, 24% of total capital; $750 million revolving credit facility undrawn at year-end
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Hubbell kept $0.11.
- Revenue$4.95B100.0%
- Cost of revenue−$3.48B70.3%
- Gross profit$1.47B29.7%
- Operating costs−$762.5M15.4%
- Operating income$709.1M14.3%
- Interest, other & tax−$163.2M3.3%
- Net income$545.9M11.0%
Where FY2022 revenue went
$4.95B- Cost of revenue: $3.48B, 70% of revenue
- SG&A: $762.5M, 15% of revenue
- Net income: $545.9M, 11% of revenue
- Interest, other & tax: $163.2M, 3.3% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 9, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $4.95B$4.19B | +18.0% |
| Cost of Revenue | $3.48B$3.04B | +14.3% |
| Gross Profit | $1.47B$1.15B | +27.8% |
| SG&A Expenses | $762.50M$619.20M | +23.1% |
| Operating Income | $709.10M$532.30M | +33.2% |
| Net Income | $545.90M$399.50M | +36.6% |
| EPS (Basic) | $10.13$7.33 | +38.2% |
| EPS (Diluted) | $10.07$7.28 | +38.3% |
| Shares Outstanding (Basic) | 53.70M54.30M | −1.1% |
| Shares Outstanding (Diluted) | 54.10M54.70M | −1.1% |
05—Questions
Frequently Asked Questions
How did Hubbell's revenue and profitability change in 2022?
Net sales rose 18.0% to $4,947.9 million, driven mainly by favorable price realization and higher unit volume. Operating income increased 33.2% to $709.1 million, and operating margin expanded 160 basis points to 14.3%, as price realization exceeded material cost inflation.
What drove the growth in the Utility Solutions segment?
Utility Solutions net sales increased 23.0% to $2,871.1 million, with organic net sales up 22.9% from favorable price realization and higher unit volume, partly offset by a commercial resolution in the fourth quarter of 2022. Segment operating income rose 54.2% to $438.2 million.
How much did Hubbell return to shareholders and what share repurchase authority remains?
Hubbell paid $229.6 million in dividends and repurchased $182.0 million of common stock in 2022. The Board approved a new $300 million repurchase program in October 2022, and total remaining repurchase authorization was approximately $406.7 million at December 31, 2022.
What are the main risks identified in the filing?
Key risks include inflation and supply chain disruptions, raw material and component costs, tariffs and changes in U.S. trade policy, currency fluctuations, the potential for goodwill and intangible asset impairments (approximately $2,640.4 million at year-end), LIBOR transition, and litigation and environmental matters.
What acquisitions and divestitures did Hubbell complete in 2022?
Hubbell sold its Commercial and Industrial Lighting business to GE Current for $332.8 million net cash on February 1, 2022. It acquired PCX Holdings, Ripley Tools and REF Automation for an aggregate $177.1 million, with PCX and REF reported in Electrical Solutions and Ripley Tools in Utility Solutions.
06—Continue