01—Abstract
Summary
Summary of the 10-Q filed July 31, 2024. Cited figures are marked; the original filing is the authoritative source.
Hubbell Incorporated's second-quarter 2024 Form 10-Q shows net sales of $1,452.5 milliona, up from $1,365.9 million a year earlier, with organic growth of 2% from price realization and 4% from acquisitions net of divestitures.
Operating income was $301.2 millionb versus $287.8 million, while diluted earnings per share rose to $3.94 from $3.82. Electrical Solutions drove the quarter, with operating margin expanding to 20.0% from 16.5%, while Utility Solutions organic net sales declined 1.5% on weakness in telecom and distribution markets, and its operating margin fell to 21.2% from 24.0%. For the six months, net income attributable to Hubbell was $361.4 million, down from $388.7 million, and diluted EPS was $6.67 versus $7.19.
Results were affected by higher interest expense tied to the Systems Control acquisition, a $5.3 millionc pre-tax loss on the sale of the residential lighting business, and higher intangible amortization. Operating cash flow was $331.8 million versus $341.4 million, and the company paid $131.0 million in dividends. Balance sheet leverage improved over the period.
Long-term debt fell to $1,892.7 milliond from $2,023.2 million, largely through $128.8 million of Term Loan payments, and net debt to total capital was 30% versus 34% at year-end 2023. The company reported $397.2 million of cash and an undrawn $750 million revolving credit facility. Management expects inflation, telecom softness and restructuring costs to remain factors, with $5.3 million of remaining restructuring costs for 2024 actions.
02—Key points
Key Highlights
- Net sales rose 6% to $1,452.5 million in Q2 2024, with Electrical Solutions organic growth of 7.2% led by datacenter and renewables.
- Utility Solutions organic net sales declined 1.5% in Q2 2024 due to enclosures weakness in telecom and customer inventory management in distribution.
- Q2 2024 operating income was $301.2 million (20.7% margin) versus $287.8 million (21.1%) in Q2 2023.
- Diluted EPS was $3.94 for Q2 2024 versus $3.82 a year earlier; six-month diluted EPS was $6.67 versus $7.19.
- Interest expense increased to $40.9 million for six months from $18.9 million, reflecting debt used for the Systems Control acquisition and higher market rates.
- Long-term debt declined to $1,892.7 million from $2,023.2 million, and net debt to total capital improved to 30% from 34%.
- Share repurchases were $20.0 million in the first six months, with $280.0 million remaining under the October 2022 authorization.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Hubbell kept $0.15.
- Revenue$1.45B100.0%
- Cost of revenue−$938.7M64.6%
- Gross profit$513.8M35.4%
- Operating costs−$207.5M14.3%
- Operating income$306.3M21.1%
- Interest, other & tax−$88.8M6.1%
- Net income$217.5M15.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 31, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $1.45B$1.37B | +6.3% |
| Cost of Revenue | $938.70M$869.70M | +7.9% |
| Gross Profit | $513.80M$496.20M | +3.5% |
| SG&A Expenses | $207.50M$208.40M | −0.4% |
| Operating Income | $306.30M$287.80M | +6.4% |
| Net Income | $217.50M$206.80M | +5.2% |
| EPS (Basic) | $4.04$3.85 | +4.9% |
| EPS (Diluted) | $4.01$3.82 | +5.0% |
| Shares Outstanding (Basic) | 53.70M53.60M | +0.2% |
| Shares Outstanding (Diluted) | 54.10M54.00M | +0.2% |
05—Questions
Frequently Asked Questions
How did Hubbell's second-quarter 2024 sales and profit compare with the prior year?
Net sales were $1,452.5 million, up from $1,365.9 million, and operating income was $301.2 million versus $287.8 million. Diluted EPS was $3.94 compared with $3.82. Acquisitions net of divestitures contributed about 4% of growth, with organic growth of 2%.
Why did Utility Solutions margins decline while Electrical Solutions improved?
Utility Solutions operating margin fell to 21.2% from 24.0%, citing material and other cost inflation, lower unit volume, and higher restructuring costs, along with Systems Control acquisition effects. Electrical Solutions margin rose to 20.0% from 16.5%, driven mainly by favorable price realization, productivity, higher volume, and the residential lighting disposition.
What drove higher interest expense and how is the debt position changing?
Interest expense rose primarily from debt incurred to acquire Systems Control and higher market interest rates. Long-term debt was reduced to $1,892.7 million from $2,023.2 million, including $128.8 million of Term Loan payments. The $750 million revolving credit facility was undrawn at June 30, 2024.
What one-time items affected the first half of 2024 results?
Hubbell recorded a $5.3 million pre-tax loss on the disposition of its residential lighting business, which sold for a cash purchase price of $131 million. It also recognized $9.0 million of transaction, integration and separation costs and $6.8 million of income tax expense related to that sale.
How much cash did the company return to shareholders and what cash generation did it report?
In the first six months of 2024, Hubbell paid $131.0 million in dividends and repurchased $20.0 million of common stock. Operating cash flow was $331.8 million, compared with $341.4 million in the prior-year period, and cash and cash equivalents were $397.2 million at June 30, 2024.
06—Continue