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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | ||||
Emerging growth company | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ |
EXHIBIT NO. | DOCUMENT DESCRIPTION |
99.1* | |
101.INS | XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. |
101.SCH* | XBRL Taxonomy Extension Schema Document |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
104* | Cover Page Interactive Data File, (formatted as Inline XBRL and contained in Exhibit 101) |
*Filed herewithin. |
HUBBELL INCORPORATED | |||
By: | /s/ Joseph A. Capozzoli | ||
Name: | Joseph A. Capozzoli | ||
Title: | Vice President, Controller |
Date: | February 4, 2020 | NEWS RELEASE | ||
Hubbell Incorporated 40 Waterview Drive Shelton, CT 06484 475-882-4000 |
• | Q4 diluted EPS of $1.85; adjusted diluted EPS of $1.91(1) |
◦ | Includes restructuring and related investment ($0.26) |
• | Q4 net sales decreased 4% (organic -3%, net M&A -1%) |
• | Full Year 2019 diluted EPS of $7.31; adjusted diluted EPS of $8.12 (1) |
◦ | Includes restructuring and related investment ($0.51) |
• | Full Year 2019 free cash flow of $498 million (3) |
• | FY20 diluted EPS expected range of $7.50-$7.80; adjusted diluted EPS of $8.50-$8.80 (1) |
◦ | Includes restructuring and related investment (~$0.40) |
Dan Innamorato |
Hubbell Incorporated |
40 Waterview Drive |
P.O. Box 1000 |
Shelton, CT 06484 |
(475) 882-4000 |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net sales | $ | 1,103.3 | $ | 1,144.1 | $ | 4,591.0 | $ | 4,481.7 | |||||||
Cost of goods sold | 777.3 | 823.5 | 3,238.3 | 3,181.3 | |||||||||||
Gross profit | 326.0 | 320.6 | 1,352.7 | 1,300.4 | |||||||||||
Selling & administrative expenses | 190.1 | 184.0 | 756.1 | 743.5 | |||||||||||
Operating income | 135.9 | 136.6 | 596.6 | 556.9 | |||||||||||
Operating income as a % of Net sales | 12.3 | % | 11.9 | % | 13.0 | % | 12.4 | % | |||||||
Gain on disposition of business | — | — | 21.7 | — | |||||||||||
Multi-employer pension income (expense) | 14.4 | — | (8.5 | ) | — | ||||||||||
Interest expense, net | (16.2 | ) | (17.8 | ) | (67.9 | ) | (72.3 | ) | |||||||
Other income (expense), net | (3.2 | ) | (4.1 | ) | (21.4 | ) | (17.6 | ) | |||||||
Total other expense, net | (5.0 | ) | (21.9 | ) | (76.1 | ) | (89.9 | ) | |||||||
Income before income taxes | 130.9 | 114.7 | 520.5 | 467.0 | |||||||||||
Provision for income taxes | 27.8 | 25.5 | 113.1 | 100.9 | |||||||||||
Net income | 103.1 | 89.2 | 407.4 | 366.1 | |||||||||||
Less: Net income attributable to noncontrolling interest | 1.2 | 1.2 | 6.5 | 5.9 | |||||||||||
Net income attributable to Hubbell | $ | 101.9 | $ | 88.0 | $ | 400.9 | $ | 360.2 | |||||||
Earnings Per Share: | |||||||||||||||
Basic | $ | 1.87 | $ | 1.61 | $ | 7.35 | $ | 6.57 | |||||||
Diluted | $ | 1.85 | $ | 1.60 | $ | 7.31 | $ | 6.54 | |||||||
Cash dividends per common share | $ | 0.91 | $ | 0.84 | $ | 3.43 | $ | 3.15 |
December 31, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 182.0 | $ | 189.0 | |||
Short-term investments | 14.2 | 9.2 | |||||
Accounts receivable, net | 683.0 | 725.4 | |||||
Inventories, net | 633.0 | 651.0 | |||||
Other current assets | 62.0 | 69.1 | |||||
TOTAL CURRENT ASSETS | 1,574.2 | 1,643.7 | |||||
Property, plant and equipment, net | 505.2 | 502.1 | |||||
Investments | 55.7 | 56.3 | |||||
Goodwill | 1,811.8 | 1,784.4 | |||||
Intangible assets, net | 781.5 | 819.5 | |||||
Other long-term assets | 174.6 | 66.1 | |||||
TOTAL ASSETS | $ | 4,903.0 | $ | 4,872.1 | |||
LIABILITIES AND EQUITY | |||||||
Short-term debt and current portion of long-term debt | $ | 65.4 | $ | 56.1 | |||
Accounts payable | 347.7 | 393.7 | |||||
Accrued salaries, wages and employee benefits | 101.5 | 101.6 | |||||
Accrued insurance | 68.1 | 61.3 | |||||
Other accrued liabilities | 262.2 | 226.6 | |||||
TOTAL CURRENT LIABILITIES | 844.9 | 839.3 | |||||
Long-term debt | 1,506.0 | 1,737.1 | |||||
Other non-current liabilities | 591.6 | 496.8 | |||||
TOTAL LIABILITIES | 2,942.5 | 3,073.2 | |||||
Hubbell Shareholders’ Equity | 1,947.1 | 1,780.6 | |||||
Noncontrolling interest | 13.4 | 18.3 | |||||
TOTAL EQUITY | 1,960.5 | 1,798.9 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 4,903.0 | $ | 4,872.1 |
Twelve Months Ended December 31, | |||||||
2019 | 2018 | ||||||
Cash Flows From Operating Activities | |||||||
Net income attributable to Hubbell | $ | 400.9 | $ | 360.2 | |||
Depreciation and amortization | 151.0 | 148.4 | |||||
Stock-based compensation expense | 16.4 | 24.2 | |||||
Gain on disposition of business | (21.7 | ) | — | ||||
Multi-employer pension expense, net | 8.5 | — | |||||
Deferred income taxes | 6.1 | 49.0 | |||||
Accounts receivable, net | 46.2 | (75.4 | ) | ||||
Inventories, net | 12.2 | 34.2 | |||||
Accounts payable | (41.2 | ) | 21.5 | ||||
Current liabilities | 5.0 | (5.9 | ) | ||||
Contributions to defined benefit pension plans | (10.4 | ) | (27.9 | ) | |||
Other, net | 18.6 | (11.2 | ) | ||||
Net cash provided by operating activities | 591.6 | 517.1 | |||||
Cash Flows From Investing Activities | |||||||
Capital expenditures | (93.9 | ) | (96.2 | ) | |||
Proceeds from disposal of business, net of cash | 33.4 | — | |||||
Acquisition of businesses, net of cash acquired | (70.8 | ) | (1,118.0 | ) | |||
Net change in investments | (1.6 | ) | 3.9 | ||||
Other, net | 4.0 | 8.9 | |||||
Net cash used in investing activities | (128.9 | ) | (1,201.4 | ) | |||
Cash Flows From Financing Activities | |||||||
Long-term debt (repayment) issuance, net | (225.0 | ) | 778.7 | ||||
Short-term debt (repayment) borrowings, net | (0.1 | ) | (37.2 | ) | |||
Payment of dividends | (186.6 | ) | (172.3 | ) | |||
Repurchase of common shares | (35.0 | ) | (40.0 | ) | |||
Other, net | (24.3 | ) | (22.7 | ) | |||
Net cash (used) provided by financing activities | (471.0 | ) | 506.5 | ||||
Effect of foreign exchange rate changes on cash and cash equivalents | 1.3 | (8.2 | ) | ||||
Increase (decrease) in cash and cash equivalents | (7.0 | ) | (186.0 | ) | |||
Cash and cash equivalents | |||||||
Beginning of period | 189.0 | 375.0 | |||||
End of period | $ | 182.0 | $ | 189.0 |
Three Months Ended December 31, | |||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Costs of goods sold | S&A expense | Total | |||||||||||||||||||||
Restructuring costs | $ | 11.0 | $ | 5.9 | $ | 5.4 | $ | 3.0 | $ | 16.4 | $ | 8.9 | |||||||||||
Restructuring related costs (benefit) | 1.7 | 0.1 | 0.7 | (2.4 | ) | 2.4 | (2.3 | ) | |||||||||||||||
Restructuring and related costs (non-GAAP measure) (4) | $ | 12.7 | $ | 6.0 | $ | 6.1 | $ | 0.6 | $ | 18.8 | $ | 6.6 |
Twelve Months Ended December 31, | |||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Costs of goods sold | S&A expense | Total | |||||||||||||||||||||
Restructuring costs | $ | 22.3 | $ | 8.2 | $ | 9.7 | $ | 3.8 | $ | 32.0 | $ | 12.0 | |||||||||||
Restructuring related costs (benefit) | 2.6 | 0.3 | 2.4 | 3.5 | 5.0 | 3.8 | |||||||||||||||||
Restructuring and related costs (non-GAAP measure) (4) | $ | 24.9 | $ | 8.5 | $ | 12.1 | $ | 7.3 | $ | 37.0 | $ | 15.8 |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Restructuring and related costs included in Cost of goods sold | |||||||||||||||
Electrical | $ | 5.8 | $ | 2.8 | $ | 15.1 | $ | 5.2 | |||||||
Power | 6.9 | 3.2 | 9.8 | 3.3 | |||||||||||
Total | $ | 12.7 | $ | 6.0 | $ | 24.9 | $ | 8.5 | |||||||
Restructuring and related costs included in Selling & administrative expenses | |||||||||||||||
Electrical | $ | 5.6 | $ | 0.4 | $ | 9.9 | $ | 4.0 | |||||||
Power | 0.5 | 0.2 | 2.2 | 3.3 | |||||||||||
Total | $ | 6.1 | $ | 0.6 | $ | 12.1 | $ | 7.3 | |||||||
Impact on income before income taxes | $ | 18.8 | $ | 6.6 | $ | 37.0 | $ | 15.8 | |||||||
Impact on Net income available to Hubbell common shareholders | 14.3 | 5.1 | 28.0 | 12.1 | |||||||||||
Impact on Diluted earnings per share | $ | 0.26 | $ | 0.09 | $ | 0.51 | $ | 0.22 |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||
Net income attributable to Hubbell (GAAP measure) | $ | 101.9 | $ | 88.0 | 16 | % | $ | 400.9 | $ | 360.2 | 11 | % | |||||||||
Amortization of acquisition-related intangible assets, net of tax | 13.7 | 11.9 | 53.9 | 57.5 | |||||||||||||||||
Gain on disposition of business, net of tax | — | — | (20.5 | ) | — | ||||||||||||||||
Multi-employer pension expense (income), net of tax | (10.7 | ) | — | 6.4 | — | ||||||||||||||||
Loss on investment, net of tax | — | — | 5.0 | — | |||||||||||||||||
Aclara transaction costs, net of tax | — | 0.6 | — | 10.3 | |||||||||||||||||
Adjusted Net Income (1) | $ | 104.9 | $ | 100.5 | 4 | % | $ | 445.7 | $ | 428.0 | 4 | % | |||||||||
Numerator: | |||||||||||||||||||||
Net income attributable to Hubbell (GAAP measure) | $ | 101.9 | $ | 88.0 | $ | 400.9 | $ | 360.2 | |||||||||||||
Less: Earnings allocated to participating securities | (0.3 | ) | (0.3 | ) | (1.5 | ) | (1.3 | ) | |||||||||||||
Net income available to common shareholders (GAAP measure) [a] | $ | 101.6 | $ | 87.7 | 16 | % | $ | 399.4 | $ | 358.9 | 11 | % | |||||||||
Adjusted Net Income (1) | $ | 104.9 | $ | 100.5 | $ | 445.7 | $ | 428.0 | |||||||||||||
Less: Earnings allocated to participating securities | (0.3 | ) | (0.3 | ) | (1.7 | ) | (1.5 | ) | |||||||||||||
Adjusted net income available to common shareholders (1) [b] | $ | 104.6 | $ | 100.2 | 4 | % | $ | 444.0 | $ | 426.5 | 4 | % | |||||||||
Denominator: | |||||||||||||||||||||
Average number of common shares outstanding [c] | 54.3 | 54.5 | 54.4 | 54.6 | |||||||||||||||||
Potential dilutive shares | 0.4 | 0.2 | 0.3 | 0.3 | |||||||||||||||||
Average number of diluted shares outstanding [d] | 54.7 | 54.7 | 54.7 | 54.9 | |||||||||||||||||
Earnings per share (GAAP measure): | |||||||||||||||||||||
Basic [a] / [c] | $ | 1.87 | $ | 1.61 | $ | 7.35 | $ | 6.57 | |||||||||||||
Diluted [a] / [d] | $ | 1.85 | $ | 1.60 | 16 | % | $ | 7.31 | $ | 6.54 | 12 | % | |||||||||
Adjusted earnings per diluted share (1) [b] / [d] | $ | 1.91 | $ | 1.84 | 4 | % | $ | 8.12 | $ | 7.77 | 5 | % |
Hubbell Incorporated | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||
Net Sales [a] | $ | 1,103.3 | $ | 1,144.1 | (4 | )% | $ | 4,591.0 | $ | 4,481.7 | 2 | % | |||||||||
Operating Income | |||||||||||||||||||||
GAAP measure [b] | $ | 135.9 | $ | 136.6 | (1 | )% | $ | 596.6 | $ | 556.9 | 7 | % | |||||||||
Amortization of acquisition-related intangible assets | 18.3 | 15.8 | 72.1 | 75.9 | |||||||||||||||||
Aclara transaction costs | — | 0.2 | — | 9.5 | |||||||||||||||||
Adjusted operating income (1) [c] | $ | 154.2 | $ | 152.6 | 1 | % | $ | 668.7 | $ | 642.3 | 4 | % | |||||||||
Operating margin | |||||||||||||||||||||
GAAP measure [b] / [a] | 12.3 | % | 11.9 | % | +40 bps | 13.0 | % | 12.4 | % | +60 bps | |||||||||||
Adjusted operating margin (1) [c] / [a] | 14.0 | % | 13.3 | % | +70 bps | 14.6 | % | 14.3 | % | +30 bps |
Electrical segment | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||
Net Sales [a] | $ | 618.0 | $ | 666.6 | (7 | )% | $ | 2,625.7 | $ | 2,660.6 | (1 | )% | |||||||||
Operating Income | |||||||||||||||||||||
GAAP measure [b] | $ | 73.3 | $ | 74.3 | (1 | )% | $ | 320.1 | $ | 320.8 | — | % | |||||||||
Amortization of acquisition-related intangible assets | 6.1 | 5.9 | 23.1 | 23.9 | |||||||||||||||||
Adjusted operating income (1) [c] | $ | 79.4 | $ | 80.2 | (1 | )% | $ | 343.2 | $ | 344.7 | — | % | |||||||||
Operating margin | |||||||||||||||||||||
GAAP measure [b] / [a] | 11.9 | % | 11.1 | % | +80 bps | 12.2 | % | 12.1 | % | +10 bps | |||||||||||
Adjusted operating margin (1) [c] / [a] | 12.8 | % | 12.0 | % | +80 bps | 13.1 | % | 13.0 | % | +10 bps |
Power segment | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||
2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||
Net Sales [a] | $ | 485.3 | $ | 477.5 | 2 | % | $ | 1,965.3 | $ | 1,821.1 | 8 | % | |||||||||
Operating Income | |||||||||||||||||||||
GAAP measure [b] | $ | 62.6 | $ | 62.3 | 1 | % | $ | 276.5 | $ | 236.1 | 17 | % | |||||||||
Amortization of acquisition-related intangible assets | 12.2 | 9.9 | 49.0 | 52.0 | |||||||||||||||||
Aclara transaction costs | — | 0.2 | — | 9.5 | |||||||||||||||||
Adjusted operating income (1) [c] | $ | 74.8 | $ | 72.4 | 3 | % | $ | 325.5 | $ | 297.6 | 9 | % | |||||||||
Operating margin | |||||||||||||||||||||
GAAP measure [b] / [a] | 12.9 | % | 13.0 | % | -10 bps | 14.1 | % | 13.0 | % | +110 bps | |||||||||||
Adjusted operating margin (1) [c] / [a] | 15.4 | % | 15.2 | % | +20 bps | 16.6 | % | 16.3 | % | +30 bps |
Three Months Ended December 31, | ||||||||||
2019 | 2018 | Change | ||||||||
Net income | $ | 103.1 | $ | 89.2 | 16 | % | ||||
Provision for income taxes | 27.8 | 25.5 | ||||||||
Interest expense, net | 16.2 | 17.8 | ||||||||
Other income (expense), net | 3.2 | 4.1 | ||||||||
Depreciation and amortization | 39.9 | 35.6 | ||||||||
Multi-employer pension income | (14.4 | ) | — | |||||||
Aclara transaction costs in operating income | — | 0.2 | ||||||||
Subtotal | 72.7 | 83.2 | ||||||||
Adjusted EBITDA (1) | $ | 175.8 | $ | 172.4 | 2 | % |
Twelve Months Ended December 31, | ||||||||||
2019 | 2018 | Change | ||||||||
Net income | $ | 407.4 | $ | 366.1 | 11 | % | ||||
Provision for income taxes | 113.1 | 100.9 | ||||||||
Interest expense, net | 67.9 | 72.3 | ||||||||
Other income (expense), net | 21.4 | 17.6 | ||||||||
Depreciation and amortization | 151.0 | 148.4 | ||||||||
Multi-employer pension expense, net | 8.5 | — | ||||||||
Gain on disposition of business | (21.7 | ) | — | |||||||
Aclara transaction costs in operating income | — | 9.5 | ||||||||
Subtotal | 340.2 | 348.7 | ||||||||
Adjusted EBITDA (1) | $ | 747.6 | $ | 714.8 | 5 | % |
December 31, 2019 | December 31, 2018 | ||||||
Total Debt | $ | 1,571.4 | $ | 1,793.2 | |||
Total Hubbell Shareholders’ Equity | 1,947.1 | 1,780.6 | |||||
Total Capital | $ | 3,518.5 | $ | 3,573.8 | |||
Total Debt to Total Capital | 45 | % | 50 | % | |||
Less: Cash and Investments | $ | 251.9 | $ | 254.5 | |||
Net Debt (2) | $ | 1,319.5 | $ | 1,538.7 | |||
Net Debt to Total Capital (2) | 38 | % | 43 | % |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net cash provided by operating activities | $ | 206.5 | $ | 177.9 | $ | 591.6 | $ | 517.1 | |||||||
Less: Capital expenditures | (21.3 | ) | (25.5 | ) | (93.9 | ) | (96.2 | ) | |||||||
Free cash flow (3) | $ | 185.2 | $ | 152.4 | $ | 497.7 | $ | 420.9 |
◦ | Effective as of the first quarter of 2019, amortization of acquisition-related intangible assets associated with all of our business acquisitions, including inventory step-up amortization associated with those acquisitions; |
◦ | The effects of the net charge in 2019 to recognize certain additional liabilities associated with the Company's participation and withdrawal from a multi-employer pension plan; |
◦ | A gain recognized in the third quarter of 2019 from the disposition of a business; |
◦ | An investment loss recognized in the third quarter of 2019 and reported within Other income (expense), net in the Condensed Consolidated Statement of Income; |
◦ | Adjusted operating measures in 2018 also excluded Aclara transaction costs, which includes professional services and other fees that were incurred in connection with the acquisition of Aclara; |
◦ | Adjusted EBITDA also excludes the Other income (expense), net, and Interest expense, net, captions of the Condensed Consolidated Statement of Income, as well as provision for income taxes. |