February 1, 2023
- Q4 diluted EPS from continuing operations of $2.27; adjusted diluted EPS from continuing operations of $2.60
- Q4 net sales from continuing operations +11% (organic +10%)
- FY 2022 diluted EPS from continuing operations of $9.43; adjusted diluted EPS from continuing operations of $10.62
- FY 2023 diluted EPS from continuing operations expected range of $10.00-$10.50; adjusted diluted EPS of $11.00-$11.50
Hubbell Incorporated recently reported operating results for the fourth quarter and full year ended December 31, 2022.
“2022 was a great year for Hubbell,” said Gerben Bakker, Chairman, President and Chief Executive Officer. “Attractive markets underpinned by grid modernization and electrification, along with strong price realization driven by our leading positions and service levels, drove organic net sales growth of 18% for the full year. Consistent execution through a dynamic operating environment contributed to strong full year operating margin expansion and significant operating profit growth.”
Mr. Bakker continued, “Hubbell’s performance in the fourth quarter reflected a continuation of these strong fundamental trends. Utility Solutions demand remained strong, and orders continued to outpace shipment levels as customers actively invested to harden and modernize critical utility and communications infrastructure. In Electrical Solutions, orders and shipments softened in the fourth quarter as expected, driven by customer inventory management. Operationally, we delivered another quarter of strong operating margin expansion as we continued to actively manage price/cost while investing for future growth and productivity.”
Mr. Bakker concluded, “I am proud of our employees who worked so hard throughout 2022 to deliver these strong results for our customers and shareholders, while also driving significant progress in executing on our strategy as an integrated operating company. Looking ahead, with a high quality portfolio and leading positions in attractive markets, Hubbell is well positioned to continue delivering differentiated results for our shareholders in 2023 and beyond.”
Certain terms used in this release, including “Net debt”, “Free Cash Flow”, “Organic net sales”, “Organic net sales growth”, “Restructuring-related costs”, “EBITDA”, and certain “adjusted” measures, are defined under the section entitled “Non-GAAP Definitions.” See page 8 for more information.
HUBBELL’S FINANCIAL HIGHLIGHTS
The comments and year-over-year comparisons in this segment review are based on fourth quarter results in 2022 and 2021.
Utility Solutions segment net sales in the fourth quarter of 2022 increased 17% to $716 million compared to $612 million reported in the fourth quarter of 2021. Organic net sales increased 17% compared to the fourth quarter of 2021, while acquisitions added 1% and foreign exchange caused a <1% decrease.Total Utility T&D Components sales increased approximately 27% and Utility Communications and Controls sales decreased by approximately 10% in the fourth quarter of 2022.
Utility Solutions segment operating income in the fourth quarter of 2022 was $109 million, or 15.2% of net sales, compared to $71 million, or 11.6% of net sales in the same period of 2021. Adjusted operating income was $123 million, or 17.2% of net sales, in the fourth quarter of 2022 as compared to $86 million, or 14.1% of net sales in the same period of the prior year.
The increases in operating income and operating margin were primarily due to price realization in excess of material inflation and higher volumes, partially offset by cost inflation in excess of productivity.
Electrical Solutions segment net sales in the fourth quarter of 2022 of $503 million increased 3% from $489 million in the fourth quarter of 2021. Organic net sales increased 1% in the quarter while acquisitions added 3%, and foreign exchange caused a 1% decrease. Electrical Solutions segment operating income in the fourth quarter of 2022 was $63 million, or 12.5% of net sales, compared to $63 million, or 13.0% of net sales in the same period of 2021.
Adjusted operating income was $72 million, or 14.3% of net sales, in the fourth quarter of 2022 as compared to $67 million, or 13.7% of net sales in the same period of the prior year. Increases in operating income and operating margin were primarily due to price realization in excess of material inflation and restructuring benefits, partially offset by lower volume and cost inflation in excess of productivity.
Adjusted EPS in the fourth quarter 2022 results exclude $0.31 of amortization of acquisition-related intangible assets and $0.02 of pension charges. Adjusted EPS in the fourth quarter 2021 results exclude $0.26 of amortization of acquisition-related intangible assets.
Net cash provided by operating activities from continuing operations was $242 million in the fourth quarter of 2022 versus $226 million in the comparable period of 2021. Free cash flow (defined as net cash provided by operating activities less capital expenditures) was $180 million in the fourth quarter of 2022 versus $198 million reported in the comparable period of 2021.
SUMMARY & OUTLOOK
For the full year 2023, Hubbell anticipates total sales growth of 5-7% and organic sales growth of 4-6%. Acquisitions are anticipated to contribute approximately 1% to total sales growth.
Hubbell expects 2023 GAAP diluted earnings per share in the range of $10.00 to $10.50 and adjusted diluted earnings per share from continuing operations (“Adjusted EPS”) in the range of $11.00 to $11.50. 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 22.5 to 23.0% and include approximately $0.25 of anticipated restructuring and related investment. The Company expects full year 2023 free cash flow conversion of 90 to 95% of adjusted net income.
Hubbell will conduct an earnings conference call to discuss its fourth quarter 2022 financial results today, January 31, 2023 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 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.
Visit HERE and click Hubbell Reports Fourth Quarter and Full Year 2022 Results for more information.