HUBBELL REPORTS FOURTH QUARTER 2021 AND FULL YEAR RESULTS FROM CONTINUING OPERATIONS
- C&I Lighting reported as discontinued operations for current and all prior periods presented
- Q4 diluted EPS from continuing operations of $1.81; adjusted diluted EPS from continuing operations of $2.07
- Q4 net sales from continuing operations +20% (organic +16%)
- FY 2021 diluted EPS from continuing operations of $6.66; adjusted diluted EPS from continuing operations of $8.05
- FY22 diluted EPS from continuing operations expected range of $7.75-$8.25; adjusted diluted EPS of $8.75-$9.25
Hubbell Incorporated (NYSE: HUBB) today reported operating results for the fourth quarter ended December 31, 2021. As a result of the previously announced closing of the divestiture of Commercial & Industrial Lighting, the Company is reporting the results of that business as discontinued operations in the current and all prior periods presented.
“Hubbell delivered a strong finish to 2021,” said Gerben Bakker, Chairman, President and Chief Executive Officer. “Fourth quarter sales growth of 20% was bolstered by 11 points of price realization, as well as previously completed acquisitions and year-over-year volume growth as the Company continues to successfully navigate a dynamic supply chain environment. Our end markets remain strong, as grid modernization and electrification continue to drive customer demand for Hubbell’s reliable and efficient critical infrastructure solutions across our Utility and Electrical segments. We exited the year with another quarter of significant orders growth and backlog visibility.”
Mr. Bakker continued, “Operationally, mid teens year-over-year operating profit growth in the fourth quarter represented solid execution. While material inflation, ongoing supply chain disruption, and increased freight and logistics costs continue to present significant headwinds, we accelerated our productivity and price initiatives to exit the year price/material neutral.”
Mr. Bakker concluded, “With a strong operational finish to 2021, a favorable end market setup and a more focused portfolio, we believe Hubbell is well positioned to continue generating differentiated returns for our shareholders over the long term. In the near term, our 2022 outlook anticipates attractive double digit year-over-year growth in adjusted earnings per share, and we remain confident in our ability to execute.”
Certain terms used in this release, including “Net debt”, “Free Cash Flow”, “Organic net sales”, “Organic growth”, “Restructuring-related costs”, “EBITDA”, and certain “adjusted” measures, are defined under the section entitled “Non-GAAP Definitions.” See page 8 for more information.
FINANCIAL HIGHLIGHTS
The comments and year-over-year comparisons in this segment review are based on fourth quarter results in 2021 and 2020.
Electrical Solutions segment net sales in the fourth quarter of 2021 of $489 million increased 22% from $402 million in the fourth quarter of 2020. Organic sales increased 21% in the quarter while acquisitions added 1%. Electrical Solutions segment operating income in the fourth quarter was $63 million, or 13.0% of net sales, compared to $41 million, or 10.3% of net sales in the same period of 2020. Adjusted operating income was $67 million, or 13.7% of net sales, in the fourth quarter of 2021 as compared to $45 million, or 11.2% of net sales in the same period of the prior year. Increases in adjusted operating income and adjusted operating margin were primarily due to higher volumes, price realization in excess of material inflation, and productivity and restructuring benefits, partially offset by higher logistics and supply chain costs.
Utility Solutions segment net sales in the fourth quarter of 2021 increased 19% to $612 million compared to $515 million reported in the fourth quarter of 2020. Organic sales increased 13% compared to the fourth quarter of 2020, while net M&A added 6%. Total Utility T&D Components sales increased approximately 26% and Utility Communications and Controls sales increased by approximately 2%. Utility Solutions segment operating income in the fourth quarter was $71 million, or 11.6% of net sales, compared to $73 million, or 14.2% of net sales in the same period of 2020. Adjusted operating income was $86 million, or 14.1% of net sales, in the fourth quarter of 2021 as compared to $88 million, or 17.1% of net sales in the same period of the prior year. The decreases in adjusted operating income and adjusted operating margin were primarily due to material cost inflation in excess of price realization and higher logistics and supply chain costs, partially offset by higher volumes and productivity and restructuring benefits.
Adjusted fourth quarter 2021 results exclude $0.26 of amortization of acquisition-related intangible assets. Adjusted fourth quarter 2020 results exclude $0.26 of amortization of acqusition-related intangible assets as well as $0.01 due to a pension settlement charge. Results from discontinued operations are presented on a GAAP basis, and include amortization of acquisition-related intangible assets, transaction and separation costs as well as a one-time tax benefit in the fourth quarter of 2021.
Net cash provided from operating activities was $233 million in the fourth quarter of 2021 versus $156 million in the comparable period of 2020. Free cash flow (defined as net cash provided by operating activities less capital expenditures) was $206 million in the fourth quarter of 2021 versus $121 million reported in the comparable period of 2020.
SUMMARY & OUTLOOK
For the full year 2022, Hubbell anticipates organic sales growth from continuing operations of 8-10%. The impact on sales of M&A and foreign exchange are expected to be approximately neutral.
Hubbell anticipates 2022 GAAP diluted earnings per share expectations in the range of $7.75 to $8.25 and adjusted diluted earnings per share (“Adjusted EPS”) from continuing operations in the range of $8.75 to $9.25. Adjusted EPS excludes amortization of acquisition-related intangible assets, which the Company expects to be approximately $1.00 per share for the full year. The Company believes Adjusted EPS is a useful measure of underlying financial performance in light of our acquisition strategy.
The earnings per share and adjusted earnings per share ranges are based on an adjusted tax rate of 22 to 22.5% and include approximately $0.30 of anticipated restructuring and related investment. The Company expects full year 2022 free cash flow conversion of 90 to 100% of adjusted net income.
CONFERENCE CALL
Hubbell will conduct an earnings conference call to discuss its fourth quarter 2021 financial results today, February 3, 2022 at 10:00 a.m. ET. A live audio of the conference call will be available and can be accessed by visiting Hubbell’s “Investor Relations – Events/Presentations” section of www.hubbell.com. Audio replays of the recorded conference call will be available after the call and can be accessed two hours after the conclusion of the original conference call by calling (855) 859-2056 and using passcode 8099591. The replay will remain available until March 2, 2022 at 11:59 p.m. ET. Audio replays will also be available at the conclusion of the call by visiting www.hubbell.com and selecting “Investors” from the options at the bottom of the page and then “Events/Presentations” from the drop-down menu.
FORWARD-LOOKING STATEMENTS
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 expectations regarding our financial results, condition and outlook, anticipated end markets, near-term volume, continued opportunity for operational improvement, our position to continue generating differentiated returns for our shareholders over the long term, anticipated double digit year-over-year growth in adjusted earnings per share, and all statements, including our projected financial results, set forth in “Summary & Outlook” above, as well as other statements that are not strictly historic in nature. In addition, all statements regarding anticipated growth, changes in operating results, market conditions and economic conditions are forward-looking. These statements may be identified by the use of forward-looking words or phrases such as “believe”, “expect”, “anticipate”, “plan”, “estimated”, “target”, “should”, “could”, “may”, “subject to”, “continues”, “growing”, “projected”, “if”, “potential”, “will likely be”, and similar words and phrases. Such forward-looking statements are based on our current expectations and involve numerous assumptions, known and unknown risks, uncertainties and other factors which may cause actual and future performance or the Company’s achievements 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: our ability to effectively execute our business plan in light of the ongoing and dynamic COVID-19 pandemic, particularly if and as new variants such as Delta and Omicron emerge; the effectiveness of the actions that we take to address the effects of the COVID-19 pandemic; the outcome of contingencies or costs compared to amounts provided for such contingencies, including those with respect to pension withdrawal liabilities; achieving sales levels to meet revenue expectations; unexpected costs or charges, certain of which may be outside the Company’s control; the effects of trade tariffs, import quotas and other trade restrictions or actions taken by the U.S., U.K., and other countries, including changes in U.S. trade policies; changes in product sales prices and material costs; failure to achieve projected levels of efficiencies, cost savings and cost reduction measures, including those expected as a result of our lean initiatives and strategic sourcing plans; effects of unfavorable foreign currency exchange rates and the potential use of hedging instruments to hedge the exposure to fluctuating rates of foreign currency exchange on inventory purchases; regulatory issues, changes in tax laws, or changes in geographic profit mix affecting tax rates and availability of tax incentives; general economic and business conditions as well as inflationary trends; the impact of and the ability to complete and integrate strategic acquisitions; the impact of certain divestitures, including the consummation and timing of, and the benefits and costs of, the pending sale of the Commercial and Industrial Lighting business to GE Current; the ability to effectively develop and introduce new products, expand into new markets and deploy capital; and other factors described in our Securities and Exchange Commission filings, including the “Business”, “Risk Factors”, “Forward-Looking Statements” and “Quantitative and Qualitative Disclosures about Market Risk” Sections in the Annual Report on Form 10-K for the year ended December 31, 2020 and Quarterly Reports on Form 10-Q.
About the Company
Hubbell Incorporated is a leading manufacturer of utility and electrical solutions enabling customers to operate critical infrastructure safely, reliably and efficiently. With 2021 revenues of $4.2 billion, Hubbell solutions empower and energize communities in front of and behind the meter. The corporate headquarters is located in Shelton, CT.
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