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ORANGE, Conn.--(BUSINESS WIRE)--Oct. 18, 2005--Hubbell Incorporated (NYSE: HUBA, HUBB) today reported an 18% increase in earnings per share diluted to $.79 for the quarter ended September 30, 2005 versus $.67 in the third quarter of 2004.
Sales for the quarter were $561.1 million or a 7% increase over sales of $525.1 million reported for the corresponding period of 2004. Net income rose by 17% to $48.5 million compared to $41.5 million reported in the prior year's third quarter.
OPERATIONS REVIEW
"We're pleased with our overall quarterly performance -- sales increase of 7%, net income increase of 17% -- especially considering the strength of the prior year," said Timothy H. Powers, Chairman, President, and Chief Executive Officer. "In particular, our Power Systems segment saw positive results from its storm-preparedness strategy and was well positioned to provide a wide range of utility infrastructure repair products to the hurricane ravaged Gulf Coast. Our Electrical segment is successfully responding to challenges in its markets as evidenced by the improvement in our operating margin compared with the first and second quarters of this year. Also, the Industrial Technology segment reported double digit sales and profit improvements. Overall operating margin of 13% in the quarter exceeded our expectations."
"We also expanded our foundation for future growth. Our Wiring Systems business introduced an important new metal raceway product line, and on October 3, our second major implementation in the Hubbell 2006 SAP program went 'live'. We also completed four small, but strategic acquisitions: two joined the Industrial Technology segment, and one went to each of the Electrical and Power Systems segments."
SEGMENT REVIEW
Comparisons noted in this Segment Review are third quarter of 2005 versus the third quarter of 2004.
Sales for the Electrical segment were 3% higher while operating profit was flat. Included in these results are restructuring expenses of $1.2 million pre-tax in 2005 and $2.1 million pre-tax in 2004. Within the segment, comparative performance varied depending upon the market. Volume in the overall non-residential construction market - the segment's largest single market - remained below last year. Nonetheless, the Wiring Systems and Hubbell Electrical Products businesses reported modestly higher sales. Sales of commercial and industrial lighting fixtures were lower, but continued strength of the residential fixture market offset that impact. Total operating profit for the segment was below the prior year, but close control of costs and an improved product sales mix helped to substantially offset lower unit volumes and higher freight and utility costs brought about by record energy prices.
The Power Systems segment reported a very strong quarter with sales and operating profits up 19% and 79%, respectively. Our industry leading position in utility infrastructure components and tools, rapid response capabilities in hurricane affected areas, and acquisitions each played a role in achieving the quarter's results. Our investments in lean concepts have enhanced our flexibility and contributed to record levels of sales and profitability. Also contributing to improved profitability was our ability to offset material cost escalation.
The Industrial Technology segment reported another quarter of solid revenue and operating profit growth: sales rose by 17% and operating profit improved by 40%. The segment capitalized on the strength of its end markets with sales up by double-digits from customers in high voltage instrumentation, specialty communications, industrial components and controls markets. Two small acquisitions also contributed to the higher sales. Operating profits were higher and margin increased to 14.8% versus 12.3% in the prior year largely due to performance at GAI-Tronics and Gleason Reel.
Cash flow from operations was $79 million in the 2005 third quarter compared to $66 million in the prior year third quarter. Cash generation in the quarter resulted from strong net income and lower levels of working capital. Capital expenditures in the quarter of $18 million were higher compared with $11 million in the prior year primarily due to new product development and expanded support of the continuing lighting restructuring. Cash expended on acquisitions in the 2005 third quarter totaled $48 million. There were no acquisitions in the 2004 third quarter.
SUMMARY AND OUTLOOK
"Three months ago when we reported second quarter 2005 results, we projected improving performance in the remaining quarters of the year," Powers noted. "We've delivered on this expectation in the third quarter. We adapted quickly and efficiently to weakness in non-residential markets. Our lean manufacturing initiative, lower cost sourcing, lighting restructuring, and faster new product development all played a part."
"Hubbell's market diversity is also a key element of our strategy for growth. As the Electrical segment progressively improves its performance, our other segments can be expected to add another quarter of growth to finish the year. Power Systems and Industrial Technology use product and technology leadership to maximize results in their separate markets and customer bases."
"However, much remains to be seen in the remainder of the year," Powers concluded. "Energy continues to be expensive, the economic impact of recent hurricanes is not yet quantified, and the direction of raw material prices remains unsettled. Accordingly, consistent with our prior guidance, we expect 2005 earnings per share before restructuring to be in the range of $2.55-$2.65."
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 capital resources, performance and results of operations and are based on the Company's reasonable current expectations. These statements may be identified by the use of forward-looking words or phrases such as "may", "plan", "can be expected", "guidance", "improves", "continues", "progress", "remains to be seen", "only the beginning", "remain unsettled", "continued growth", "not yet quantified", and variations thereof and similar terms. 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, but are not limited to: achieving sales levels to fulfill revenue expectations; unexpected costs or charges, certain of which may be outside the control of the Company; expected benefits of process improvement and other lean initiatives; the effect and costs of the ongoing Hubbell 2006 business information system initiative and restructuring programs; the availability and costs of raw materials and purchased components; changes in our served markets or competition; realization of price increases; the ability to achieve projected levels of efficiencies and cost reduction measures; ability to integrate acquisitions into our core business and forecast future sales accretion; general economic and business conditions; and other factors described in our Securities and Exchange Commission filings, including the "Business" Section in the Annual Report on Form 10-K for the year ended December 31, 2004.
Hubbell Incorporated is an international manufacturer of quality electrical and electronic products for commercial, industrial, residential, utility, and telecommunications markets. With 2004 revenues of $2.0 billion, Hubbell Incorporated operates manufacturing facilities in North America, Puerto Rico, Mexico, Brazil, 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
(UNAUDITED)
(in millions, except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2005 2004 2005 2004
------ -------- -------- --------
Net Sales $561.1 $525.1 $1,569.2 $1,493.2
Cost of goods sold 396.9 (1) 377.7 (4) 1,125.2 (1) 1,072.9 (4)
------ ------ -------- --------
Gross Profit 164.2 147.4 444.0 420.3
Selling & administrative
expenses 89.9 83.6 270.2 (2) 247.2
Special charges 1.0 1.9 5.2 12.6
------ ------ -------- --------
Total Operating Income 73.3 61.9 168.6 160.5
Investment income 2.5 1.3 7.0 3.5
Interest expense (5.3) (5.2) (15.4) (15.4)
Other income (expense),
net (0.2) 0.8 (0.1) 0.3
------ ------ -------- --------
-
Total Other Expense, net (3.0) (3.1) (8.5) (11.6)
------ ------ -------- --------
Income Before Income
Taxes 70.3 58.8 160.1 148.9
Provision for income
taxes 21.8 (3) 17.3 47.1 (3) 42.0
------ ------ -------- --------
NET INCOME $ 48.5 $ 41.5 $ 113.0 $ 106.9
====== ====== ======== ========
Earnings Per Share -
Diluted $ 0.79 $ 0.67 $ 1.82 $ 1.74
====== ====== ======== ========
Average Shares
Outstanding - Diluted 61.5 61.9 62.0 61.5
(1) 2005 third quarter and year-to-date Cost of goods sold includes
special charges of $0.2 and $0.7, respectively, related to Electrical
segment restructuring.
(2) 2005 year-to-date Selling & administrative expenses includes $4.6
of transactional expenses in support of the Company's strategic growth
initiatives.
(3) 2005 third quarter and year-to-date Provision for income taxes
includes $1.9 of tax associated with anticipated dividend
repatriations under the American Jobs Creation Act of 2004.
(4) 2004 third quarter and year-to-date Cost of goods sold includes
special charges of $0.2 and $1.3, respectively, related to Electrical
segment restructuring.
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF EARNINGS BY SEGMENT
(UNAUDITED)
(in millions, except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2005 2004 2005 2004
------ ------ -------- --------
Net Sales
Electrical $396.6 $386.2 $1,126.4 $1,106.9
Power 126.6 106.5 335.2 290.2
Industrial Technology 37.9 32.4 107.6 96.1
------- ---------------- ---------
Total Net Sales $561.1 $525.1 $1,569.2 $1,493.2
====== ====== ======== ========
Operating Income
Electrical $ 46.5 $ 47.5 $ 115.2 $ 131.5
Special charges (1.2) (2.1) (5.9) (13.9)
------ ------ -------- --------
Total Electrical 45.3 45.4 109.3 117.6
Power 22.4 12.5 49.3 32.1
Industrial Technology 5.6 4.0 14.6 10.8
------ ------ -------- --------
Subtotal 73.3 61.9 173.2 160.5
Unusual item - - (4.6)(1) -
------ ------ -------- --------
Total Operating
Income 73.3 61.9 168.6 160.5
------ ------ -------- --------
Other expense, net (3.0) (3.1) (8.5) (11.6)
------ ------ -------- --------
Income Before Income Taxes 70.3 58.8 160.1 148.9
Provision for income taxes 21.8 (2) 17.3 47.1 (2) 42.0
------ ------ -------- --------
NET INCOME $ 48.5 $ 41.5 $ 113.0 $ 106.9
====== ====== ======== ========
Earnings Per Share - Diluted $ 0.79 $ 0.67 $ 1.82 $ 1.74
====== ====== ======== ========
Average Shares Outstanding -
Diluted 61.5 61.9 62.0 61.5
(1) 2005 Unusual item of $4.6 represents transactional expenses in
support of the Company's strategic growth initiatives, included in
Selling & administrative expenses.
(2) 2005 third quarter and year-to-date Provision for income taxes
includes $1.9 of tax associated with anticipated dividend
repatriations under the American Jobs Creation Act of 2004.
HUBBELL INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in millions)
(UNAUDITED) (UNAUDITED)
SEPTEMBER 2005 JUNE 2005 DECEMBER 2004
-------------- ----------- -------------
ASSETS
Cash and cash equivalents $ 167.1 $ 179.9 $ 125.9
Short-term investments 101.3 127.2 215.6
Accounts receivable (net) 341.2 300.9 288.5
Inventories (net) 224.9 229.6 216.1
Deferred taxes and other 39.0 44.2 46.3
------------- --------- -----------
TOTAL CURRENT ASSETS 873.5 881.8 892.4
Property, plant and
equipment (net) 266.1 260.0 261.8
Investments 79.7 48.2 65.7
Goodwill 351.6 323.8 326.6
Intangible assets and other 126.0 112.9 95.9
------------- --------- -----------
TOTAL ASSETS $ 1,696.9 $ 1,626.7 $ 1,642.4
============= ========= ===========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Short-term debt and current
portion of long-term debt $ 108.1 $ 100.0 $ 99.9
Accounts payable 145.9 129.5 132.1
Accrued salaries, wages and
employee benefits 39.9 36.1 46.8
Accrued income taxes 41.2 32.1 24.4
Dividends payable 20.0 20.0 20.2
Other accrued liabilities 90.2 79.5 85.9
------------- --------- -----------
TOTAL CURRENT LIABILITIES 445.3 397.2 409.3
Long-term debt 199.2 199.1 199.1
Other non-current
liabilities 96.3 94.4 89.7
------------- --------- -----------
TOTAL LIABILITIES 740.8 690.7 698.1
SHAREHOLDERS' EQUITY 956.1 936.0 944.3
------------- --------- -----------
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $ 1,696.9 $ 1,626.7 $ 1,642.4
============= ========= ===========
HUBBELL INCORPORATED
CONDENSED CONSOLIDATED CASH FLOWS FROM OPERATING ACTIVITIES
AND SUPPLEMENTARY CASH FLOW INFORMATION
(in millions)
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30
2005 2004
------------ -----------
Operating Activities
Net Income $ 113.0 $ 106.9
Depreciation and amortization 36.7 37.5
Non-cash special charges 0.7 7.8
Changes in working capital (23.7) (17.3)
Contribution to domestic,
qualified, defined benefit
pension plans (10.0) -
Other, net 13.4 10.7
------------ -----------
Net cash provided by
operating activities 130.1 145.6
Supplementary Cash Flow Information
Capital expenditures $ (46.6) $ (26.0)
Acquisition of businesses $ (53.2) $ -
Acquisition of common shares $ (59.1) $ (4.8)
CONTACT: Hubbell Incorporated
Thomas R. Conlin, 203-799-4100
SOURCE: Hubbell Incorporated