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ORANGE, Conn.--(BUSINESS WIRE)--Oct. 18, 2001--Hubbell Incorporated (NYSE: HUBA, HUBB) today reported its results for the third quarter and nine month periods ended September 30, 2001.
The Company also noted that it expects to record a charge to fourth quarter 2001 earnings for capacity reduction and other programs.
For the third quarter 2001, sales were $326 million versus $361 million for the period in the prior year. Net income totaled $19.5 million or $.33 per share, fully diluted, as compared to $33.0 million and $.55, respectively, in 2000.
Sales for the first nine months of 2001 totaled $1,011 million as compared to $1,078 million for the equivalent period last year. Net income and fully diluted earnings per share in the current year were $62.4 million and $1.06 as compared to $109.9 million and $1.77 in the prior year.
Year-over-year comparison of operating results should note a number of relevant events during the base year of 2000 which had been previously announced. These included asset sales, special and nonrecurring charges and reversals of prior restructuring charges in the first and second quarters, and the acquisition of GAI-Tronics during the third quarter.
OPERATIONS REVIEW
In analyzing Hubbell's operating experience during the third quarter of 2001, Timothy Powers, President and CEO, cited the impact of the September terrorism. ``Each of us, as Americans, has been affected by the treachery and the horror of last month. The effect of the attacks has been a further slowing in an already weak economy, and a sharp decline in consumer confidence. That combination is translating into a worsening of the recessionary trend.''
``The task is to manage for the realities,'' Powers continued, ``to take consistent and prudent steps to mitigate the effects of weak markets. Our action plan to lower operating costs has been in place since the third quarter of last year with successive stages implemented as the Company continuously adjusts to the economic environment. The effort has been across the board, and the accomplishments in 2001 have been substantial:
- Total labor force is 18% lower than the third quarter 2000,
- Reduction of capital expenditures, operating expenses, and work force will reduce 2001 costs by $70 million.
- $30 million in inventory reduction, receivables lower by $13 million, and other cash management programs which have increased cash flow from operations by more than 70% compared to the same period last year.
The next stage is underway and includes development of a comprehensive program to further reduce manufacturing capacity and targeted fixed costs. This program is expected to result in a fourth quarter charge in the range of $45-55 million once finalized. Actions being considered include changes in product sourcing and further product line rationalization intended to take advantage of low cost areas of supply as well as to increase utilization of existing facilities. The charge is expected to primarily include asset write-downs of redundant machinery, tooling and other assets associated with reducing the number of plants. In addition, severance costs will be provided in connection with these and other actions aimed at adjusting costs to current and projected levels of business activity.``
SEGMENT REVIEW
During the third quarter, Hubbell's Electrical Segment reported a 10% decline in sales and a 45% decline in operating profit. Positive year-over-year sales and profit comparisons within the segment were reported by units serving the energy industries under Killark and Chalmit brand names, and Hubbell operations in Canada and Mexico. The impact on profitability of lower volumes at the high margin Wiring Systems business and at the Lighting operations were primarily responsible for the Segment's negative profit comparison.
Similar effects were seen in the Power Systems Segment where sales declined by 10% and operating profit by 39%. Volume declined throughout the segment but the impact on operating profit was most pronounced at industry-leading units such as Ohio Brass, Anderson, and Fargo. Exacerbating the impact on profitability of continuing low volume was the unabsorbed overhead of these high fixed costs operations. Even with mounting concern about the reliability of the power grid infrastructure in North America, the level of incoming orders has not yet begun to rise.
Profitability for the Industrial Technology Segment was especially impacted even though sales declined only by 6%. The bulk of the Segment's North American markets are industrial manufacturers contending with a recession while the Haefely operation with substantial business in international markets saw an abrupt slowing and a 24% volume decline.
FINANCIAL REVIEW
Cash flow from operations continued the positive trend of 2001 by strengthening to $73 million in the third quarter for a year-to-date total of $150 million. Inventory management programs reduced that component of working capital by $21 million in the third quarter or $30 million so far in 2001. In addition, Hubbell continued its repayment of short-term debt - - reduction of more than $108 million through September - - and achieved further reductions in receivables during the quarter. Hubbell's balance sheet remains strong with more than $225 million in cash and investments.
SUMMARY AND OUTLOOK
In looking toward the remainder of this year and beyond, Powers said: ``The effect of the September events is likely to extend the recession well into, if not through, the year 2002. As the nation moves forward and the impact of September can be fully assessed, the economy will have the advantages of the Federal Reserve's interest rate cuts of the past year, continued low inflation, and the lower individual tax rates already passed and the possible addition of new proposals.''
``Nonetheless, and before the effect of the charge noted earlier, we expect Hubbell's fourth quarter 2001 sales and earnings to be below the third quarter results announced today.''
``With the economic environment so uncertain, it is impossible to quantify expectations for 2002 from this vantage point. We will remain tightly focused on the factors that we can control to further reduce our costs and capacity as needed.''
Certain statements contained herein may constitute forward-looking statements 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; 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.
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HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF EARNINGS
(in millions, except per share data) unaudited
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2001 2000 2001 2000
------------ ------------ ------------ ------------
Net Sales $ 325.7 $ 360.8 $ 1,011.0 $ 1,078.0
Cost of goods
sold 245.7 260.4 759.6 800.1
------------ ------------ ------------ ------------
Gross Profit 80.0 100.4 251.4 277.9
Special charge
(credit), net - - - (0.1)
Selling &
administrative
expense 54.3 54.3 167.3 167.4
(Gain) on sale
of business - - - (36.2)
------------ ------------ ------------ ------------
Total Operating
Income 25.7 46.1 84.1 146.8
Investment
income 2.2 4.4 8.7 11.9
Interest
expense (3.3) (5.7) (12.8) (13.8)
Other income,
net 0.7 (0.2) 1.1 3.6
------------ ------------ ------------ ------------
Total Other
Income
(Expense) (0.4) (1.5) (3.0) 1.7
Income Before
Income Taxes 25.3 44.6 81.1 148.5
Provision for
income taxes 5.8 11.6 18.7 38.6
------------ ------------ ------------ ------------
Net Income $ 19.5 $ 33.0 $ 62.4 $ 109.9
============ ============ ============ ============
Earnings per
share - basic $0.33 $0.55 $1.06 $1.78
Earnings per
share - diluted $0.33 $0.55 $1.06 $1.77
Average number
of shares
outstanding -
basic 58,587 60,257 58,488 61,875
Average number
of shares
outstanding -
diluted 58,996 60,406 58,749 62,039
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF EARNINGS
(in millions, except per share data) unaudited
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2001 2000 2001 2000
------------ ------------ ----------- ------------
Net Sales
Electrical $ 210.3 $ 234.4 $ 644.8 $ 711.7
Power 80.9 89.9 258.0 280.7
Industrial
Technology 34.5 36.5 108.2 85.6
------------ ------------ ----------- ------------
Total Net Sales $ 325.7 $ 360.8 $ 1,011.0 $ 1,078.0
============ ============ =========== ============
Operating Income
Electrical $ 18.4 $ 33.2 $ 58.8 $ 98.5
Special & non-
recurring
charge, net - - - (19.2)
Gain on sale
of business - - - 36.2
Power 5.9 9.7 19.8 29.0
Special & non-
recurring
charge, net - - - (3.7)
Industrial
Technology 1.4 3.2 5.5 6.8
Special charge - - - (0.8)
------------ ------------ ----------- ------------
Total Operating
Income 25.7 46.1 84.1 146.8
------------ ------------ ----------- ------------
Other income, net (0.4) (1.5) (3.0) 1.7
------------ ------------ ----------- ------------
Income Before
Income Taxes 25.3 44.6 81.1 148.5
Provision for
income taxes 5.8 11.6 18.7 38.6
------------ ------------ ----------- ------------
Net Income $ 19.5 $ 33.0 $ 62.4 $ 109.9
============ ============ =========== ============
Earnings per
share - basic $0.33 $0.55 $1.06 $1.78
Earnings per
share - diluted $0.33 $0.55 $1.06 $1.77
Average number
of shares
outstanding -
basic 58,587 60,257 58,488 61,875
Average number
of shares
outstanding -
diluted 58,996 60,406 58,749 62,039
HUBBELL INCORPORATED
CONSOLIDATED BALANCE SHEET
(in millions)
(UNAUDITED)
SEP 2001 DEC 2000
-------------------- --------------------
ASSETS
Cash and temporary
cash investments $ 97.8 $ 74.8
Accounts receivable
(net) 196.9 209.8
Inventories (net) 268.8 298.6
Prepaid taxes
and other 26.7 36.8
-------------------- --------------------
CURRENT ASSETS 590.2 620.0
Property, plant
and equipment
(net) 286.6 305.3
Investments 128.4 192.9
Goodwill, (net) 257.7 262.0
Other 71.6 74.3
-------------------- --------------------
TOTAL ASSETS $ 1,334.5 $ 1,454.5
==================== ====================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Commercial paper
and notes $ 151.0 $ 259.5
Accounts payable 62.8 69.9
Accrued salaries,
wages and
employee benefits 21.4 21.0
Accrued income
taxes 42.3 43.9
Dividends payable 19.3 19.5
Other accrued
liabilities 74.9 75.6
-------------------- --------------------
CURRENT LIABILITIES 371.7 489.4
Long-term debt 99.8 99.7
Other non-current
liabilities 89.6 89.9
Deferred income taxes 6.2 6.0
-------------------- --------------------
TOTAL LIABILITIES 567.3 685.0
SHAREHOLDERS' EQUITY 767.2 769.5
-------------------- --------------------
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $ 1,334.5 $ 1,454.5
==================== ====================
Contact:
Hubbell Incorporated, Orange
Thomas R. Conlin, 203/799-4100