ORANGE, CT--(BUSINESS WIRE)--July 19, 2001--Hubbell Incorporated (NYSE: HUBA, HUBB) today reported its results for the second quarter and first half ended June 30, 2001.
For the second quarter, sales were $341 million versus $357 million for the period in the prior year. Net income totaled $21.8 million or $.37 per share, fully diluted, as compared to $41.7 million and $.67, respectively, in the second quarter 2000.
For the first half of the current year, sales were $685 million as compared to $717 million for the period last year. Net income for the first six months was $43.0 million and fully diluted earnings per share were $.73 versus $76.8 million and $1.22, respectively, in the prior year.
There were a number of one time events which affect year-over-year comparisons. Included in the profit totals for the prior year periods was a $9.3 million gain, net of tax, or $.15 per diluted share comprised of a second quarter gain on the sale of Hubbell's WavePacer DSL assets which was partially offset by a number of special and non-recurring streamlining charges recorded in the first two quarters. Benefiting sales and profit totals for the first half of 2001 was the acquisition of GAI-Tronics Inc., which was completed in July, 2000.
In an analysis of its operating experience during the second quarter, the Company noted the substantially changed economic environment as compared to the mid-point of last year. Slowing among the industrial manufacturers which comprise the majority of Hubbell's customers has continued with U.S. industrial production through June falling for the ninth consecutive month. Exacerbating the impact have been continuing inventory reductions throughout distribution channels and among end-users as each contends with the slumping economy. Margins were reduced in each of Hubbell's business segments due to underutilized plant capacity and a larger proportion of lower margin product in the sales mix.
``As we've noted in previous releases and in a number of public presentations,'' said Timothy Powers, President and Chief Executive Officer of Hubbell, ``the Company's actions to counter the slowdown began in the third quarter last year and substantial progress has been made. Labor force has been reduced by more than 16% since September 2000 and capital expenditures and variable expenses in 2001 will be reduced to a level appropriate for the current volume of business. These actions will reduce expenditures by $70 million in 2001.''
``Second quarter results,'' Powers continued, ``came in as expected in a near-match to the first quarter even though the economy continued slowing. The strength of the Hubbell brand in the marketplace, our continuing cost reduction efforts, and a slightly lower tax rate due to a smaller proportion of income generated in the U.S., all contributed to this result.''
During the second quarter, Hubbell's Electrical Segment reported an 9% decline in sales and a 35% reduction in operating profit excluding one-time events. The impact on operating profit was compounded by the slowing of industrial customer volume to the high margin Wiring Systems businesses and substantially lower demand and profitability at the Pulsecom telecommunications unit. A number of Electrical units improved their performances year-over-year. Chief among them were the Raco/Bell commodity products operations which reported modestly higher sales and mid-single digit operating margin versus a loss last year. Hubbell operations serving the energy industries also reported higher sales and operating profit.
The Power Systems Segment's operating profits declined by more than 40% on 10% lower sales volume excluding one-time events. Hubbell's Power Systems' operations are a leading supplier to North American customers, but the pace of business - even with mounting concern about the reliability of the infrastructure grid - has not yet begun to rise. The high fixed costs of these operations which manufacture a broad line of electric utility products and the continuing low level of sales volume and order input from utility customers both impacted profitability.
Hubbell's Industrial Technology Segment reported sales and operating profit substantially above the levels of one year ago. The addition of the GAI-Tronics operation in July of 2000 more than offset the lower results from the segment's operations serving industrial customers. GAI-Tronics is a leading supplier to the global market for specialized communications systems designed for indoor and outdoor hazardous locations.
Operating cash flow in the second quarter showed a positive trend and strengthened to $45 million as compared to $32 million in the first quarter of the year. The Company's focus on inventory management reduced that component of working capital by $9 million. In addition, Hubbell continued its repayment of short-term borrowings with the total reduced by $50 million in the second quarter and a total of nearly $90 million year-to-date 2001. The Company's financial resources remained strong at mid-year with just under $200 million in cash and investments.
Summary and Outlook
Discussing the remainder of the year, Powers said: ``It's important to reiterate that we will continue to focus on managing for the recession which is underway in manufacturing. At most of our businesses we have seen average daily order rates in the second quarter level with those of the first quarter. So the economy may be reaching a bottom. Our expectations, however, are for a slow, prolonged recovery which may not begin until next year. We will continue to focus on cash management and expect to make continued improvements through the year's last two quarters.''
-0- Certain statements contained herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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; and competition.
Hubbell Incorporated is an international manufacturer of quality
electrical and electronic products for commercial, industrial,
utility, and telecommunications markets. With approximately $1.4
billion in annual revenues, Hubbell Incorporated operates
manufacturing facilities in North America, Puerto Rico, Mexico, Italy,
Switzerland, and the United Kingdom, participates in a joint venture
in Taiwan, and maintains sales offices in Singapore, Hong Kong, South
Korea, People's Republic of China, and the Middle East. The corporate
headquarters is located in Orange, CT.
HUBBELL INCORPORATED CONSOLIDATED STATEMENT OF EARNINGS (in millions, except per share data) unaudited THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 2001 2000 2001 2000 Net Sales $ 341.2 $ 356.6 $ 685.3 $ 717.3 Cost of goods sold 256.3 282.2 513.9 539.8 Gross Profit 84.9 74.4 171.4 177.5 Special charge (credit), net - (0.3) - (0.1) Selling & administrative expense 56.4 54.7 113.0 113.2 (Gain) on sale of business - (36.2) - (36.2) Total Operating Income 28.5 56.2 58.4 100.6 Investment income 3.1 3.8 6.5 7.5 Interest expense (4.2) (4.0) (9.5) (8.1) Other income, net 0.1 0.4 0.4 3.8 Total Other Income (Expense) (1.0) 0.2 (2.6) 3.2 Income Before Income Taxes 27.5 56.4 55.8 103.8 Provision for income taxes 5.7 14.7 12.8 27.0 Net Income $ 21.8 $ 41.7 $ 43.0 $ 76.8 Earnings per share - basic $0.37 $0.67 $0.73 $1.23 Earnings per share - diluted $0.37 $0.67 $0.73 $1.22 Average number of shares outstanding - basic 58,446 61,948 58,439 62,684 Average number of shares outstanding - diluted 58,661 62,099 58,639 62,855 HUBBELL INCORPORATED CONSOLIDATED STATEMENT OF EARNINGS (in millions, except per share data) unaudited THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30 JUNE 30 2001 2000 2001 2000 Net Sales Electrical $ 215.2 $ 234.4 $ 434.5 $ 477.3 Power 89.1 98.1 177.1 190.9 Industry 36.9 24.1 73.7 49.1 Total Net Sales 341.2 356.6 685.3 717.3 Operating Income Electrical $ 20.1 $ 30.9 $ 40.4 $ 65.3 Special & nonrecurring charge, net - (17.6) - (19.2) Gain on sale of business - 36.2 - 36.2 Power 6.2 10.9 13.9 19.3 Special & nonrecurring charge, net - (5.1) - (3.7) Industry 2.2 1.7 4.1 3.5 Special charge (0.8) - (0.8) Total Operating Income 28.5 56.2 58.4 100.6 Other income, net (1.0) 0.2 (2.6) 3.2 Income Before Income Taxes 27.5 56.4 55.8 103.8 Provision for income taxes 5.7 14.7 12.8 27.0 Net Income $ 21.8 $ 41.7 $ 43.0 $ 76.8 Earnings per share - basic $0.37 $0.67 $0.73 $1.23 Earnings per share - diluted $0.37 $0.67 $0.73 $1.22 Average number of shares outstanding - basic 58,446 61,948 58,439 62,684 Average number of shares outstanding - diluted 58,661 62,099 58,639 62,855 HUBBELL INCORPORATED CONSOLIDATED BALANCE SHEET (in millions) (UNAUDITED) JUN 2001 DEC 2000 ASSETS Cash and temporary cash investments $ 14.1 $ 74.8 Accounts receivable (net) 211.3 209.8 Net inventories 289.5 298.6 Prepaid taxes and other 26.7 36.8 CURRENT ASSETS 541.6 620.0 Property, plant and equipment (net) 291.4 305.3 Investments 179.8 192.9 Goodwill, less accumulated amortization 258.3 262.0 Other 73.1 74.3 TOTAL ASSETS $ 1,344.2 $ 1,454.5 LIABILITIES AND SHAREHOLDERS' EQUITY Commercial paper & notes $ 169.9 $ 259.5 Accounts payable 64.9 69.9 Accrued salaries, wages and employee benefits 19.9 21.0 Accrued income taxes 40.9 43.9 Dividends payable 19.3 19.5 Other accrued liabilities 70.0 75.6 CURRENT LIABILITIES 384.9 489.4 Long-term debt 99.7 99.7 Other non-current liabilities 90.2 89.9 Deferred income taxes 6.1 6.0 TOTAL LIABILITIES 580.9 685.0 SHAREHOLDERS' EQUITY 763.3 769.5 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 1,344.2 $ 1,454.5
Hubbell Incorporated, Orange Thomas R. Conlin 203-799-4100