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Hubbell Announces Second Quarter, First Half, Results; Records Special Charges and a Gain On Sale of Business
ORANGE, Conn.--(BUSINESS WIRE)--July 19, 2000--Hubbell
Incorporated (NYSE:HUBA)(NYSE:HUBB) today reported its results for the
second quarter and first half of 2000. The Company also recorded a
gain from the sale of its WavePacer DSL assets that was partially
offset by special charges as well as adjustment of costs accrued in
connection with Hubbell's 1997 streamlining program.
For the second quarter ended June 30, 2000, sales were $356.6 million versus $368.6 million in the prior year. Net income totaled $41.7 million and earnings per share, fully diluted, were $.67 versus the prior year's totals of $43.1 million and $.65, respectively. Sales increased by 2% excluding acquisitions, divestitures, and the expected decline in Pulsecom's legacy products.
For the first half of 2000, sales were $717.3 million as compared to $736.1 million in the corresponding period of last year. Net income was $76.8 million and earnings per share, fully diluted, were $1.22 versus the 1999 results of $82.8 million and $1.25, respectively.
Results for all periods were impacted by Hubbell's continuing stock repurchase program as well as:
In commenting on its operating experience in the quarter, the Company noted that its segment results reflected the economic conditions in each of Hubbell's markets. In the Electrical segment, sales and operating profit declined versus the prior year as slowing was noted in markets for core wiring systems and lighting fixture products. The majority of the negative impact on the segment's operating profit comparison, however, originated in the commodity products and Pulsecom operations. In commodity products, order volume was down year-over-year, and progress in correcting inefficiencies and reducing costs of a new distribution center lagged behind schedule. At Pulsecom year-over-year sales were lower for the legacy products retained by Hubbell, but shipments appear to have stabilized at $16-19 million per quarter with operating profit margin on those sales well into double-digits.
Order input and shipments from Hubbell's Power Systems segment remained strong. On a continuing operations basis, i.e. excluding the prior year contributions from the Kerite subsidiary sold in September, 1999, segment sales increased by better than 10% and the segment's better than 11% operating margin exceeded its mid-year goal. With continued strength expected in utility product markets, profitability should show further improvements through the second half of 2000.
Hubbell's Other Segment reported strongly positive year-over-year sales improvement chiefly as a result of the Haefely acquisition in September 1999 although operating profit remained even with the 1999 totals. With the integration of the Haefely and Hipotronics organizations continuing on schedule, profitability improvements are anticipated in the second half. Also in the second quarter, Hubbell announced an agreement to acquire GAI-Tronics Corporation, which will join this segment; the transaction is expected to close in the third quarter.
As previously announced, Hubbell sold its WavePacer DSL assets in April, 2000, which resulted in a $36.2 million pre-tax gain in the second quarter ($26.8 million net of tax or $.43 per diluted share) - Offsetting this gain are a number of special and non-recurring charges recorded in the first two quarters of 2000 which total $23.7 million ($17.5 million net of tax or $.28 per diluted share).
The charges are comprised of:
-- First and second quarter 2000 charges of $3.7 million and $6.7
million, respectively, for additional cost reduction initiatives
offset by reversal of $3.5 million and $7.0 million in the two
quarters, respectively, of costs accrued under the 1997 program
which are no longer needed.
Certain statements contained herein may constitute forward-looking statement within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as "expects", "projected", "scheduled", and "unanticipated". 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: achieving sales levels to fulfill revenue expectations; unexpected costs or charges, certain of which may be outside the control of the Company; general economic and business conditions; competition; successfully completing the Company's consolidation, streamlining, and reorganization program and other factors.
Hubbell Incorporated is an international manufacturer of quality electrical and electronic products for commercial, industrial, utility, and telecommunications markets. With $1.4 billion in annual revenues, Hubbell Incorporated operates manufacturing facilities in North America, Puerto Rico, Mexico, Switzerland, and the United Kingdom, participates in a joint venture in Taiwan, and maintains sales offices in the Singapore, Hong Kong, South Korea, and the Middle East. The corporate headquarters is located in Orange, CT.
For the second quarter ended June 30, 2000, sales were $356.6 million versus $368.6 million in the prior year. Net income totaled $41.7 million and earnings per share, fully diluted, were $.67 versus the prior year's totals of $43.1 million and $.65, respectively. Sales increased by 2% excluding acquisitions, divestitures, and the expected decline in Pulsecom's legacy products.
For the first half of 2000, sales were $717.3 million as compared to $736.1 million in the corresponding period of last year. Net income was $76.8 million and earnings per share, fully diluted, were $1.22 versus the 1999 results of $82.8 million and $1.25, respectively.
Results for all periods were impacted by Hubbell's continuing stock repurchase program as well as:
| -- | In 1999: The sale of Hubbell's Kerite subsidiary and acquisition of Haefely, and |
| -- | In 2000: The sales of a surplus facility, an investment, and WavePacer assets, and the charges discussed below. |
In commenting on its operating experience in the quarter, the Company noted that its segment results reflected the economic conditions in each of Hubbell's markets. In the Electrical segment, sales and operating profit declined versus the prior year as slowing was noted in markets for core wiring systems and lighting fixture products. The majority of the negative impact on the segment's operating profit comparison, however, originated in the commodity products and Pulsecom operations. In commodity products, order volume was down year-over-year, and progress in correcting inefficiencies and reducing costs of a new distribution center lagged behind schedule. At Pulsecom year-over-year sales were lower for the legacy products retained by Hubbell, but shipments appear to have stabilized at $16-19 million per quarter with operating profit margin on those sales well into double-digits.
Order input and shipments from Hubbell's Power Systems segment remained strong. On a continuing operations basis, i.e. excluding the prior year contributions from the Kerite subsidiary sold in September, 1999, segment sales increased by better than 10% and the segment's better than 11% operating margin exceeded its mid-year goal. With continued strength expected in utility product markets, profitability should show further improvements through the second half of 2000.
Hubbell's Other Segment reported strongly positive year-over-year sales improvement chiefly as a result of the Haefely acquisition in September 1999 although operating profit remained even with the 1999 totals. With the integration of the Haefely and Hipotronics organizations continuing on schedule, profitability improvements are anticipated in the second half. Also in the second quarter, Hubbell announced an agreement to acquire GAI-Tronics Corporation, which will join this segment; the transaction is expected to close in the third quarter.
As previously announced, Hubbell sold its WavePacer DSL assets in April, 2000, which resulted in a $36.2 million pre-tax gain in the second quarter ($26.8 million net of tax or $.43 per diluted share) - Offsetting this gain are a number of special and non-recurring charges recorded in the first two quarters of 2000 which total $23.7 million ($17.5 million net of tax or $.28 per diluted share).
The charges are comprised of:
| -- | $20.3 million charged to second quarter operating income for a new initiative to streamline the Company's product offering and eliminate non-strategic inventories. Approximately 10% of the Company's total SKU's have been discontinued to improve manufacturing efficiency and reduce working capital needs. |
| -- | $3.5 million charged to second quarter net sales in response to higher credit activity associated with the distribution facility for electrical products. |
million, respectively, for additional cost reduction initiatives
offset by reversal of $3.5 million and $7.0 million in the two
quarters, respectively, of costs accrued under the 1997 program
which are no longer needed.
Certain statements contained herein may constitute forward-looking statement within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as "expects", "projected", "scheduled", and "unanticipated". 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: achieving sales levels to fulfill revenue expectations; unexpected costs or charges, certain of which may be outside the control of the Company; general economic and business conditions; competition; successfully completing the Company's consolidation, streamlining, and reorganization program and other factors.
Hubbell Incorporated is an international manufacturer of quality electrical and electronic products for commercial, industrial, utility, and telecommunications markets. With $1.4 billion in annual revenues, Hubbell Incorporated operates manufacturing facilities in North America, Puerto Rico, Mexico, Switzerland, and the United Kingdom, participates in a joint venture in Taiwan, and maintains sales offices in the Singapore, Hong Kong, South Korea, and the Middle East. The corporate headquarters is located in Orange, CT.
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data) unaudited
THREE MONTHS ENDED
MARCH 31,
-------------- --------------
2000 1999
-------------- --------------
Net Sales
Electrical $ 242.9 $ 253.1
Power 92.8 97.5
Other 25.0 16.9
-------------- --------------
Total Net Sales 360.7 367.5
-------------- --------------
Operating Profit
Electrical 34.4 38.1
Special Charge, net (1.6) -
Power 8.4 12.5
Special Charge, net 1.4 -
Other 1.8 1.2
-------------- --------------
Total Operating Profit 44.4 51.8
-------------- --------------
Other income, net 3.0 1.8
-------------- --------------
Income before income taxes 47.4 53.6
Provision for income taxes 12.3 13.9
-------------- --------------
Net income $ 35.1 $ 39.7
============== ==============
Earnings per share - basic $0.55 $0.61
Earnings per share - diluted $0.55 $0.60
Average number of shares
outstanding - basic 63,419 65,294
Average number of shares
outstanding - diluted 63,611 66,255
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
---------- --------- -------- --------
2000 1999 2000 1999
---------- --------- -------- --------
Net Sales
Electrical $ 234.4 $ 247.9 $ 477.3 $ 501.1
Power 98.1 102.4 190.9 199.9
Other 24.1 18.3 49.1 35.1
---------- --------- -------- --------
Total Net Sales 356.6 368.6 717.3 736.1
---------- --------- -------- --------
Operating Profit
Electrical 30.9 40.4 65.3 78.6
Special &
Non-recurring
Charge, net (17.6) - (19.2) -
Gain on Sale
of Business 36.2 - 36.2 -
Power 10.9 13.7 19.3 26.2
Special &
Non-recurring
Charge, net (5.1) - (3.7) -
Other 1.7 1.8 3.5 2.9
Special Charge (0.8) - (0.8) -
---------- --------- -------- --------
Total Operating
Profit 56.2 55.9 100.6 107.7
---------- --------- -------- --------
Other income, net 0.2 2.4 3.2 4.2
---------- --------- -------- --------
Income before
income taxes 56.4 58.3 103.8 111.9
Provision for
income taxes 14.7 15.2 27.0 29.1
---------- --------- -------- --------
Net income $ 41.7 $ 43.1 $ 76.8 $ 82.8
========== ========= ======== ========
Earnings per share
- basic $0.67 $0.66 $1.23 $1.27
Earnings per share
- diluted $0.67 $0.65 $1.22 $1.25
Average number of
shares outstanding
- basic 61,948 65,015 62,684 65,155
Average number of
shares outstanding
- diluted 62,099 66,248 62,855 66,250