Press Release

SHELTON, Conn.--(BUSINESS WIRE)--Oct. 18, 2012-- Hubbell Incorporated (NYSE: HUBA, HUBB) today reported operating results for the third quarter ended September 30, 2012.

Net sales in the third quarter of 2012 were $789.7 million, an increase of 3% compared to the $764.3 million reported in the third quarter of 2011. Operating income was $135.1 million, or 17.1% of net sales, compared to $125.3 million, or 16.4% of net sales, for the comparable period of 2011. Net income in the third quarter of 2012 was $87.1 million versus $82.4 million reported in the third quarter of 2011. Earnings per diluted share were $1.45 in the third quarter of 2012 compared to $1.37 reported in the third quarter of 2011. Free cash flow (defined as cash flow from operations less capital expenditures) was $77.1 million in the third quarter of 2012 versus $90.6 million reported in the comparable period of 2011.

For the first nine months of 2012 net sales were $2.3 billion, an increase of 8% compared to the same period last year. Operating income was $361.3 million, or 15.8% of net sales, compared to $314.0 million, or 14.7% of net sales, for the comparable period of 2011. Net income in the first nine months of 2012 was $227.8 million, an increase of 15% compared to the $197.9 million reported in the first nine months of 2011. Earnings per diluted share were $3.80, or 17% above the $3.25 reported for the comparable period of 2011. Free cash flow was $160.7 million compared to $175.9 million reported in the first nine months of 2011.

OPERATIONS REVIEW

Timothy H. Powers, Chairman and Chief Executive Officer said, “I am very pleased with our third quarter results. Despite a challenging macro environment, our sales increased 3% due to higher organic growth. Acquisitions added two percentage points to our sales growth in the quarter and were essentially offset by unfavorable foreign currency rates. We also expanded our operating margin to 17.1%, 70 basis points above the third quarter of 2011 with both our Electrical and Power segments contributing.”

“Looking at our end markets, we experienced a slower economy than anticipated during the third quarter. The U.S. non-residential new construction market appeared to get weaker and we have yet to see any meaningful improvement in this area. Renovation and relight projects, including LED fixtures, continued to grow in the quarter. Our other construction related end market, residential, also showed improvement. North American electrical utility demand increased due to the strength of transmission projects while international and construction markets weakened. Industrial demand was mixed with continued higher growth in the energy related industries while our MRO related industrial businesses slowed.”

SEGMENT REVIEW

The comments and year-over-year percentages in this segment review are based on third quarter results in 2012 and 2011.

Electrical segment net sales in the third quarter of 2012 increased 5% to $551.8 million compared to $526.6 million reported in the third quarter of 2011. The sales increase was led by higher demand in the energy and residential markets. Acquisitions added 3% to sales in the quarter while the impact of unfavorable foreign exchange rates reduced sales by 2%. Compared to the third quarter of 2011, operating income increased 11% to $90.7 million, or 16.4% of net sales. The increase in operating income was primarily due to price realization and lower commodity costs. These benefits were partially offset by higher costs, including pension and benefit related expenses, in excess of productivity improvements.

Hubbell’s Power segment net sales in the third quarter of 2012 were $237.9 million compared to $237.7 million reported in the third quarter of 2011. The sales were essentially flat as higher levels of transmission spending were offset by weaker demand in the international and construction markets. In addition, unfavorable foreign exchange rates reduced sales by 2%. Compared to the third quarter of 2011, operating income increased 1% to $44.4 million, or 18.7% of net sales. The slight increase in operating income was primarily due to price realization and productivity improvements in excess of cost increases.

SUMMARY & OUTLOOK

Mr. Powers commented, “Looking at the remainder of 2012, we remain on track to deliver another year of record results despite macro economic uncertainty. For the full year 2012, we now expect net sales to increase by approximately 6% and operating margins to expand by approximately 70 basis points.”

Mr. Powers concluded, “Looking ahead to 2013, third party forecasts for our end markets have recently moderated but still point to modest growth for next year. However, we remain cautious given the uncertainty surrounding the upcoming elections, potential U.S. fiscal cliff and some recent weakness in the global market. Given this level of near term uncertainty, we expect to provide a more detailed outlook on our next scheduled conference call in January. We are more optimistic with the medium to long term outlook. We expect a more meaningful and sustainable recovery in the construction markets which remain at or near trough levels. Those markets represent approximately fifty percent of our overall sales and we are well positioned to participate in that recovery. We also expect to benefit from growth trends in the energy related markets as well transmission project spending. We plan to remain active on the acquisition front looking across our portfolio for opportunities to extend our brands and value to our customers. From a profitability perspective, our objective remains to continue expanding operating margin. We plan to accomplish this through both higher volumes, including new product introductions, as well as continued efforts and focus on productivity improvements throughout the organization.”

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. In addition, all statements regarding anticipated growth or improvement in operating results, anticipated market conditions, and economic recovery are forward-looking. These statements may be identified by the use of forward-looking words or phrases such as “improved,” “leading,” “improving,” “continuing growth,” “continued,” “ranging,” “contributing,” “primarily,” “plan,” “expect,” “anticipated,” “expected,” “expectations,” “should result,” “uncertain,” “goals,” “projected,” “on track,” “likely,” “intend” and others. 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; anticipated impacts from the Federal stimulus package; expected benefits of process improvement and other lean initiatives; the expected benefit and effect of the business information system initiative and streamlining programs; the availability and costs of raw materials and purchased components; realization of price increases; the ability to achieve projected levels of efficiencies and cost reduction measures; general economic and business conditions; competition; and other factors described in our Securities and Exchange Commission filings, including the “Business,” “Risk Factors,” and “Quantitative and Qualitative Disclosures about Market Risk” Sections in the Annual Report on Form 10-K for the year ended December 31, 2011.

Hubbell Incorporated is an international manufacturer of quality electrical and electronic products for a broad range of non-residential and residential construction, industrial and utility applications. With 2011 revenues of $2.9 billion, Hubbell Incorporated operates manufacturing facilities in the United States, Canada, Switzerland, Puerto Rico, Mexico, the People’s Republic of China, Italy, the United Kingdom, Brazil and Australia. Hubbell also participates in joint ventures in Taiwan and Hong Kong, and maintains sales offices in Singapore, the People’s Republic of China, India, Mexico, South Korea and the Middle East. The corporate headquarters is located in Shelton, CT.

Source: Hubbell Incorporated

Hubbell Incorporated
James M. Farrell, 475-882-4000