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ORANGE, Conn.--(BUSINESS WIRE)--April 22, 2003--Hubbell Incorporated (NYSE:HUBA, HUBB) today reported its results of operations for the first quarter ended March 31, 2003.
Sales for the quarter were $419.4 million or a 39% increase over sales of $301.7 million reported for the corresponding period of 2002. Net income was $21.7 million and diluted earnings per share were $ .36 as compared to a loss of $5.9 million or $ .10, respectively. The first quarter of 2002 included a charge of $25.4 million or $.43 per diluted share for goodwill impairment under FAS 142 which was recorded as the cumulative effect of a change in accounting principle.
Profitability for the periods were impacted by:
-- In the first quarter 2003, expenses of $1.1 million, pre-tax,
under the Company's previously announced restructuring of
Hubbell Lighting, Inc.
-- In the first quarter 2002, a benefit of $0.7 million, pre-tax,
from the net of a gain on the sale of a business and special
charge expenses.
Also included in current results were contributions from recent acquisitions: Hawke Limited completed in March, 2002, LCA Group, Inc., the domestic lighting division of U.S. Industries, Inc., completed in April, 2002, and the assets of the pole line hardware business of Cooper Power Systems, Inc., completed in November, 2002.
Operations Review
"Activity in the U.S. economy was significantly slower in each successive month of the first quarter," said Timothy H. Powers, President and Chief Executive Officer "with concerns leading up to the conflict with Iraq causing our customers to delay decisions to proceed on many commercial projects. Despite overall markets turning down, a positive comparison year-over-year was gained in earnings per share."
"We believe that these economic difficulties are temporary. Productivity improvements within the Company are continuous. Restructuring of Hubbell Lighting is on schedule and on budget. Our lean manufacturing initiatives are achieving their goals with eighteen major locations now participating. Our acquisition program has broadened our market diversification. And, we are continuing our successful focus on working capital efficiency with further reductions in inventories and receivables targeted in 2003."
Segment Review
Slowing demand in many industrial and utility markets negatively impacted limited overall results for each of the Company's three business segments. Contributions from acquisitions, strength in specialty markets, and internal profitability improvements benefited results.
Sales for the Electrical Segment rose by 62% and operating profit by 43%. The expansion of Hubbell Lighting, Inc., by acquisition was the primary contributor to the higher results with Progress Lighting, the nation's leading supplier of decorative residential and light commercial decorative lighting, reporting strong results. Other operating units within the segment also reported positive year-over-year sales comparisons including Hubbell's wiring device business and the Raco/Bell operations. These joined the Killark and Chalmit units in forging higher operating profit margins through continuing internal improvements.
Hubbell's Power Systems Segment reported a 2% decrease in sales with operating profit 10% lower due to $0.7 million of start-up costs incurred to integrate the newly acquired pole line hardware assets. The segment continues to contend with depressed demand throughout the utility industry. Utilities are continuing to react to uncertainties in the U.S. and the global economy as plant utilization rates remain stagnant at best, and major projects have been delayed or postponed. Liquidity constraints affecting many of the segment's utility customers are forcing reduced capital expenditures. Even utilities in a strong operating position are reducing current investment in favor of cash conservation for potential acquisition of generating or transmission assets which may be sold by distressed companies.
The Industrial Technology Segment reported a modest sales increase and higher operating profits. The GAI-Tronics unit made the primary contribution with strong sales and profit gains. This business continues to benefit from its leading share in the global market for specialty communications equipment and the emphasis on security and safety which GAI-Tronics product technology provides. With more than half of the segment's revenues generated by customers in the depressed industrial and high voltage instrumentation sectors, the segment's improving profitability reflects continuing success in sizing operations for market realities.
Summary and Outlook
"The current slow pace of business overall in the first quarter is likely to continue for the near-term," Powers said. "Even with an emerging resolution of the situation in Iraq, conditions in utility, telecommunications, and many commercial construction markets remain unsettled. Looking ahead, no catalyst for an upturn in our markets in 2003 is apparent which makes forecasting even more difficult than usual. Nonetheless, our continuing success in achieving internal improvements through Hubbell's multiple initiatives is a powerful advantage. The economic environment will, in time, improve. Right now we continue to focus on the Hubbell hallmarks of responsive actions, cost containment, and building future potential."
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, residential, utility, and telecommunications markets. With 2002 revenues of $1.6 billion, 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.
(Financial Schedules are Attached.)
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF EARNINGS
(in millions, except per share data) unaudited
THREE MONTHS ENDED
MARCH 31
------- -------
2003 % 2002 %
------- ------ ------- ------
Net Sales $419.4 100.0 $301.7 100.0
Cost of goods sold 309.7 73.8 225.3 74.7
------- ------ ------- ------
Gross Profit 109.7 26.2 76.4 25.3
Selling & administrative expenses 74.8 17.8 50.8 16.8
Special charge 1.1 0.7
Gain on sale of business - (1.4)
------- -------
Total Operating Income 33.8 8.1 26.3 8.7
Investment income 1.0 1.3
Interest expense (5.2) (2.2)
Other income (expense), net (0.3) (0.1)
------- -------
Total Other Income (Expense) (4.5) (1.1) (1.0) (0.3)
Income Before Income Taxes
and Accounting Change 29.3 7.0 25.3 8.4
Provision for income taxes 7.6 5.8
------- -------
Income Before Effect of
Accounting Change 21.7 5.2 19.5 6.5
------- -------
Effect of Accounting Change
Net of Tax (SFAS 142) - (25.4)
------- -------
NET INCOME (LOSS) $ 21.7 5.2 $ (5.9) (2.0)
======= =======
Earnings (loss) per share after $ 0.37 ($0.10)
accounting change - basic
Earnings (loss) per share after $ 0.36 ($0.10)
accounting change - diluted
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF EARNINGS
(in millions, except per share data) unaudited
THREE MONTHS ENDED
MARCH 31
--------- ---------
2003 2002
--------- ---------
Net Sales
Electrical $312.1 $193.1
Power 79.0 80.4
Industrial Technology 28.3 28.2
--------- ---------
Total Net Sales $419.4 $301.7
========= =========
Operating Income (Loss)
Electrical $ 26.8 $ 17.2
Special charge, net (1.1) (0.6)
Gain on sale of business - 1.4
--------- ---------
Total Electrical 25.7 18.0
Power 6.4 7.2
Special charge, net - (0.1)
--------- ---------
Total Power 6.4 7.1
Industrial Technology 1.7 1.2
--------- ---------
Total Operating Income (Loss) 33.8 26.3
--------- ---------
Other income (expense), net (4.5) (1.0)
--------- ---------
Income Before Income Taxes
and Accounting Change 29.3 25.3
Provision for income taxes 7.6 5.8
--------- ---------
Income Before Effect of
Accounting Change 21.7 19.5
--------- ---------
Effect of Accounting Change
Net of Tax (SFAS 142) - (25.4)
--------- ---------
NET INCOME (LOSS) $ 21.7 $ (5.9)
========= =========
Earnings (loss) per share after accounting $ 0.37 ($0.10)
change - basic
Earnings (loss) per share after accounting $ 0.36 ($0.10)
change - diluted
HUBBELL INCORPORATED
CONSOLIDATED BALANCE SHEET
(in millions)
(UNAUDITED)
MAR 2003 DEC 2002
------------ ---------
ASSETS
Cash and temporary cash investments $ 54.9 $ 40.0
Short-term investments 15.0 15.0
Accounts receivable (net) 233.3 221.2
Inventories 254.5 258.0
Deferred taxes and other 57.1 62.1
------------ ---------
CURRENT ASSETS 614.8 596.3
Property, plant and equipment (net) 312.0 320.6
Investments 75.3 76.5
Goodwill 317.5 314.6
Intangible assets and other 99.7 102.3
------------ ---------
TOTAL ASSETS $1,419.3 $1,410.3
============ =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Commercial paper and notes $ - $ -
Accounts payable 88.0 86.2
Accrued salaries, wages and employee benefits 40.3 39.8
Accrued income taxes 32.9 25.5
Dividends payable 19.5 19.5
Other accrued liabilities 79.3 83.7
------------ ---------
CURRENT LIABILITIES 260.0 254.7
Long-term debt 298.7 298.7
Other non-current liabilities 111.8 112.7
------------ ---------
TOTAL LIABILITIES 670.5 666.1
SHAREHOLDERS' EQUITY 748.8 744.2
------------ ---------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $1,419.3 $1,410.3
============ =========
CONTACT: Hubbell Incorporated, Orange
Thomas R. Conlin, 203/799-4100
SOURCE: Hubbell Incorporated