By SHELTON, CT. (January 28, 2014) - Hubbell Incorporated (NYSE: HUBA, HUBB) today reported operating results for the fourth quarter ended December 31, 2013.
Net sales in the fourth quarter of 2013 were $806.6 million, an increase of 7% compared to the $752.5 million reported in the fourth quarter of 2012. Operating income was $126.2 million, or 15.6% of net sales, compared to $110.5 million, or 14.7% of net sales, for the comparable period of 2012. Net income in the fourth quarter of 2013 was $82.0 million, an increase of 14% compared to the $71.9 million reported in the fourth quarter of 2012. Earnings per diluted share were $1.38, an increase of 15% compared to the $1.20 reported in the fourth quarter of 2012. Free cash flow (defined as cash flow from operations less capital expenditures) was $137.5 million in the fourth quarter of 2013 versus $139.3 million reported in the comparable period of 2012.
Net sales for the full year 2013 were $3.2 billion, an increase of 5% compared to 2012. Operating income was $507.6 million, or 15.9% of net sales, compared to $471.8 million, or 15.5% of net sales, for the comparable period of 2012. Net income for the full year 2013 was $326.5 million, an increase of 9% compared to the $299.7 million reported in 2012. Earnings per diluted share were $5.47, or 9% above the $5.00 reported for the comparable period of 2012. Free cash flow was $323.0 million compared to $300.0 million reported in 2012.
OPERATIONS REVIEW
David G. Nord, President and Chief Executive Officer, said, "Hubbell performed well in the fourth quarter as our businesses remained focused on executing through mixed market conditions. Our sales grew 7% while earnings per diluted share increased 15% compared to the fourth quarter of 2012. I am proud of the organization's ability to close out 2013 on such a strong note and we are off to a good start in 2014 with three acquisitions already completed in the month of January. These deals will add approximately $45 million in annual revenues and demonstrate our continued commitment to growing the enterprise by adding strategically attractive brands to the portfolio."
Mr. Nord added "In reviewing the full year results, Hubbell delivered a solid year of operational performance. Our entire team's commitment to productivity and operational excellence enabled the organization to reach a record level of operating profit. In addition, our continued strong cash flow generation allowed us to create value through a combination of dividends, acquisitions and share repurchases. During 2013, the dividend was increased 11% and we spent over $125 million on a combination of acquisitions and share repurchases. In addition, we increased our capital expenditures by 20% to support growth and productivity initiatives. These actions, along with our strong financial performance, helped Hubbell increase total shareholder return."
SEGMENT REVIEW
The comments and year-over-year comparisons in this segment review are based on fourth quarter results in 2013 and 2012.
Electrical segment net sales in the fourth quarter of 2013 increased 12% to $585.2 million compared to $521.4 million reported in the fourth quarter of 2012. Acquisitions added 5% to sales in the quarter with the remainder of the increase being primarily driven by higher shipments of residential products and high voltage test equipment. Compared to the fourth quarter of 2012, operating income increased 27% to $86.1 million, or 14.7% of net sales. The increase in operating income was primarily due to the benefit of higher volume and lower costs.
Hubbell's Power segment net sales in the fourth quarter of 2013 were $221.4 million compared to $231.1 million reported in the fourth quarter of 2012. The sales were impacted by weaker transmission spending and lower storm related shipments. Compared to the fourth quarter of 2012, operating income decreased 6% to $40.1 million. Operating margin in the fourth quarter of 2013 was 18.1%, compared to 18.4% reported in the comparable period of 2012. The decrease in operating margin was primarily due to lower volume partially offset by productivity.
SUMMARY & OUTLOOK
Mr. Nord commented, "As I reflect back on our performance in 2013, I am very proud of the Hubbell team's accomplishments. During the past year, our leadership team spent a significant amount of time and energy building the foundation for a One Hubbell strategy. We made a lot of progress and enjoyed several early successes with this new approach. I am confident this strategy should result in long-term benefits to the Company, and further enhance shareholder value."
Mr. Nord concluded, "Turning to 2014, third party forecasts for our end markets suggest a better environment than we experienced in 2013. We expect the non-residential market for new construction to improve, the industrial markets to expand and the residential market to remain strong. The utility market is expected to remain challenging in the near term where overall demand is anticipated to be flat. The combination of the end market growth and our already completed acquisitions should result in sales increasing by approximately five to six percent. From a profitability perspective, we plan to expand our operating margins by approximately 20 to 30 basis points. The tax rate is expected to increase to approximately 32.5%, which excludes any benefit from the R&D Tax Credit. We also plan to leverage our strong financial position to enhance shareholder value through capital deployment with particular emphasis on acquisitions. This puts us in good position to continue to build upon the positive momentum created in the past year."
Certain statements contained herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements about capital resources, performance and results of operations and are based on the Company's reasonable current expectations. In addition, all statements regarding anticipated growth or improvement in operating results, anticipated market conditions, and economic recovery are forward-looking. These statements may be identified by the use of forward-looking words or phrases such as "improved", "leading", "improving", "continuing growth", "continued", "ranging", "contributing", "primarily", "plan", "expect", "anticipated", "expected", "expectations," "should result", "uncertain", "goals", "projected", "on track", "likely", "intend" and others. Such forward-looking statements involve numerous assumptions, known and unknown risks, uncertainties and other factors which may cause actual and future performance or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to: achieving sales levels to fulfill revenue expectations; unexpected costs or charges, certain of which may be outside the control of the Company; expected benefits of process improvement and other lean initiatives; the expected benefit and effect of the business information system initiatives and streamlining programs; the availability and costs of raw materials and purchased components; realization of price increases; the ability to achieve projected levels of efficiencies and cost reduction measures; general economic and business conditions; competition; and other factors described in our Securities and Exchange Commission filings, including the "Business", "Risk Factors", and "Quantitative and Qualitative Disclosures about Market Risk" Sections in the Annual Report on Form 10-K for the year ended December 31, 2012.
Hubbell Incorporated is an international manufacturer of quality electrical and electronic products for a broad range of non-residential and residential construction, industrial and utility applications. With 2013 revenues of $3.2 billion, Hubbell Incorporated operates manufacturing facilities in the United States, Canada, Switzerland, Puerto Rico, Mexico, the People's Republic of China ("China"), Italy, the United Kingdom, Brazil and Australia. Hubbell also participates in joint ventures in Taiwan and Hong Kong, and maintains sales offices in Singapore, China, India, Mexico, South Korea and countries in the Middle East. The corporate headquarters is located in Shelton, CT.
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Contact: James M. Farrell
Hubbell Incorporated
40 Waterview Drive
P.O. Box 1000
Shelton, Connecticut 06484
(475) 882-4000
| HUBBELL INCORPORATED | ||||||||||||
| Condensed Consolidated Statement of Income | ||||||||||||
| (unaudited) | ||||||||||||
| (in millions, except per share amounts) | ||||||||||||
| Three Months Ended | Year Ended | |||||||||||
| December 31 | December 31 | |||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| Net sales | $ | 806.6 | $ | 752.5 | $ | 3,183.9 | $ | 3,044.4 | ||||
| Cost of goods sold | 535.7 | 502.7 | 2,113.4 | 2,032.2 | ||||||||
| Gross profit | 270.9 | 249.8 | 1,070.5 | 1,012.2 | ||||||||
| Selling & administrative expenses | 144.7 | 139.3 | 562.9 | 540.4 | ||||||||
| Operating income | 126.2 | 110.5 | 507.6 | 471.8 | ||||||||
| Operating income as a % of Net sales | 15.6% | 14.7% | 15.9% | 15.5% | ||||||||
| Interest expense, net | (7.5) | (7.5) | (29.5) | (29.0) | ||||||||
| Other income (expense), net | (2.2) | (0.9) | (4.3) | (1.0) | ||||||||
| Total other expense, net | (9.7) | (8.4) | (33.8) | (30.0) | ||||||||
| Income before income taxes | 116.5 | 102.1 | 473.8 | 441.8 | ||||||||
| Provision for income taxes | 33.7 | 29.2 | 144.0 | 139.7 | ||||||||
| Net income | 82.8 | 72.9 | 329.8 | 302.1 | ||||||||
| Less: Net income attributable to noncontrolling interest | 0.8 | 1.0 | 3.3 | 2.4 | ||||||||
| Net income attributable to Hubbell | $ | 82.0 | $ | 71.9 | $ | 326.5 | $ | 299.7 | ||||
| Earnings Per Share: | ||||||||||||
| Basic | $ | 1.39 | $ | 1.21 | $ | 5.51 | $ | 5.05 | ||||
| Diluted | $ | 1.38 | $ | 1.20 | $ | 5.47 | $ | 5.00 | ||||
| Cash dividends per common share | $ | 0.50 | $ | 0.45 | $ | 1.85 | $ | 1.68 | ||||
| HUBBELL INCORPORATED | |||||
| Condensed Consolidated Balance Sheet | |||||
| (unaudited) | |||||
| (in millions) | |||||
| December 31, 2013 | December 31, 2012 | ||||
| ASSETS | |||||
| Cash and cash equivalents | $ | 740.7 | $ | 645.0 | |
| Short-term investments | 10.1 | 8.8 | |||
| Accounts receivable, net | 440.9 | 405.2 | |||
| Inventories, net | 385.7 | 341.7 | |||
| Deferred taxes and other | 55.0 | 55.5 | |||
| TOTAL CURRENT ASSETS | 1,632.4 | 1,456.2 | |||
| Property, plant and equipment, net | 377.1 | 364.7 | |||
| Investments | 35.8 | 36.7 | |||
| Goodwill | 800.4 | 755.5 | |||
| Intangible assets, net | 286.6 | 288.1 | |||
| Other long-term assets | 54.9 | 45.8 | |||
| TOTAL ASSETS | $ | 3,187.2 | $ | 2,947.0 | |
| LIABILITIES AND EQUITY | |||||
| Short-term debt | $ | 0.3 | $ | - | |
| Accounts payable | 225.9 | 213.1 | |||
| Accrued salaries, wages and employee benefits | 74.7 | 75.4 | |||
| Accrued insurance | 41.8 | 39.6 | |||
| Other accrued liabilities | 124.3 | 119.3 | |||
| TOTAL CURRENT LIABILITIES | 467.0 | 447.4 | |||
| Long-term debt | 597.2 | 596.7 | |||
| Other non-current liabilities | 208.2 | 235.0 | |||
| TOTAL LIABILITIES | 1,272.4 | 1,279.1 | |||
| Hubbell Shareholders' Equity | 1,906.4 | 1,661.2 | |||
| Noncontrolling interest | 8.4 | 6.7 | |||
| TOTAL EQUITY | 1,914.8 | 1,667.9 | |||
| TOTAL LIABILITIES AND EQUITY | $ | 3,187.2 | $ | 2,947.0 | |
| HUBBELL INCORPORATED | ||||||||||||
| Earnings Per Share Calculation | ||||||||||||
| (unaudited) | ||||||||||||
| (in millions, except per share amounts) | ||||||||||||
| Three Months Ended | Year Ended | |||||||||||
| December 31 | December 31 | |||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| Numerator: | ||||||||||||
| Net income attributable to Hubbell | $ | 82.0 | $ | 71.9 | $ | 326.5 | $ | 299.7 | ||||
| Less: Earnings allocated to participating securities | 0.2 | 0.2 | 1.0 | 1.0 | ||||||||
| Net income available to common shareholders | $ | 81.8 | $ | 71.7 | $ | 325.5 | $ | 298.7 | ||||
| Denominator: | ||||||||||||
| Average number of common shares outstanding | 59.0 | 59.1 | 59.1 | 59.1 | ||||||||
| Potential dilutive shares | 0.5 | 0.5 | 0.5 | 0.7 | ||||||||
| Average number of diluted shares outstanding | 59.5 | 59.6 | 59.6 | 59.8 | ||||||||
| Earnings per Share: | ||||||||||||
| Basic | $ | 1.39 | $ | 1.21 | $ | 5.51 | $ | 5.05 | ||||
| Diluted | $ | 1.38 | $ | 1.20 | $ | 5.47 | $ | 5.00 | ||||
| HUBBELL INCORPORATED | |||||
| Condensed Consolidated Statement of Cash Flows | |||||
| (unaudited) | |||||
| (in millions) | |||||
| Year Ended December 31 | |||||
| 2013 | 2012 | ||||
| Cash Flows From Operating Activities | |||||
| Net income attributable to Hubbell | $ | 326.5 | $ | 299.7 | |
| Depreciation and amortization | 70.6 | 66.8 | |||
| Stock-based compensation expense | 14.3 | 15.8 | |||
| Deferred income taxes | 13.3 | 27.5 | |||
| Changes in working capital | (55.1) | (45.3) | |||
| Contributions to defined benefit pension plans | (3.2) | (22.6) | |||
| Other, net | 15.4 | 7.2 | |||
| Net cash provided by operating activities | 381.8 | 349.1 | |||
| Cash Flows From Investing Activities | |||||
| Capital expenditures | (58.8) | (49.1) | |||
| Acquisition of businesses, net of cash acquired | (96.5) | (90.7) | |||
| Net change in investments | (0.6) | 9.9 | |||
| Other, net | 4.8 | 13.8 | |||
| Net cash used in investing activities | (151.1) | (116.1) | |||
| Cash Flows From Financing Activities | |||||
| Short-term debt borrowings (repayments), net | 0.3 | (2.9) | |||
| Payment of dividends | (109.5) | (122.3) | |||
| Repurchase of common shares | (31.0) | (75.6) | |||
| Proceeds from exercise of stock options | 2.4 | 24.8 | |||
| Other, net | 6.9 | 14.3 | |||
| Net cash used in financing activities | (130.9) | (161.7) | |||
| Effect of foreign exchange rate changes on cash and cash equivalents | (4.1) | 4.1 | |||
| Increase in cash and cash equivalents | 95.7 | 75.4 | |||
| Cash and cash equivalents | |||||
| Beginning of period | 645.0 | 569.6 | |||
| End of period | $ | 740.7 | $ | 645.0 | |
| HUBBELL INCORPORATED | ||||||||||||
| Segment Information | ||||||||||||
| (unaudited) | ||||||||||||
| (in millions) | ||||||||||||
| Three Months Ended | Year Ended | |||||||||||
| December 31 | December 31 | |||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||
| Net Sales | ||||||||||||
| Electrical | $ | 585.2 | $ | 521.4 | $ | 2,262.6 | $ | 2,114.6 | ||||
| Power | 221.4 | 231.1 | 921.3 | 929.8 | ||||||||
| Total Net Sales | $ | 806.6 | $ | 752.5 | $ | 3,183.9 | $ | 3,044.4 | ||||
| Operating Income | ||||||||||||
| Electrical | $ | 86.1 | $ | 68.0 | $ | 341.1 | $ | 303.7 | ||||
| Power | 40.1 | 42.5 | 166.5 | 168.1 | ||||||||
| Total Operating Income | $ | 126.2 | $ | 110.5 | $ | 507.6 | $ | 471.8 | ||||
| Operating Income as a % of Net Sales | ||||||||||||
| Electrical | 14.7% | 13.0% | 15.1% | 14.4% | ||||||||
| Power | 18.1% | 18.4% | 18.1% | 18.1% | ||||||||
| Total | 15.6% | 14.7% | 15.9% | 15.5% | ||||||||
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