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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 1-2958

https://cdn.kscope.io/83c005ee9914ecc297789062d2891c2c-lhubx1x1a03a04.jpg  
HUBBELL INCORPORATED
(Exact name of registrant as specified in its charter)
 
Connecticut06-0397030
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
40 Waterview Drive
Shelton,CT06484
(Address of principal executive offices)(Zip Code)
(475) 882-4000
(Registrant’s telephone number, including area code)
 
N/A
(Former name, former address and former fiscal year, if changed since last report.)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock - par value $0.01 per shareHUBBNew York Stock Exchange
Indicate by check mark
•whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes☑No☐
•whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes☑No☐
•whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☑
Accelerated filer 
☐Non-accelerated filer ☐Smaller reporting company☐
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 standard provided pursuant to Section 13(a) of the Exchange Act. ☐
•whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes☐No☑
 The number of shares outstanding of Hubbell common stock as of October 25, 2023 was 53,622,050.
HUBBELL INCORPORATED-Form 10-Q    1
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Index
Table of Contents
 
 
 
 
 
 
   
 

HUBBELL INCORPORATED-Form 10-Q    2
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PART I
FINANCIAL INFORMATION

ITEM 1Financial Statements

Condensed Consolidated Statements of Income (unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
(in millions, except per share amounts)2023202220232022
Net sales$1,375.8 $1,316.2 $4,027.1 $3,728.3 
Cost of goods sold888.4 917.7 2,595.2 2,623.5 
Gross profit487.4 398.5 1,431.9 1,104.8 
Selling & administrative expenses211.1 194.9 619.0 567.7 
Operating income276.3 203.6 812.9 537.1 
Interest expense, net(7.8)(12.1)(26.7)(37.9)
Pension charge (Note 13) — (1.5)— (5.9)
Other (expense) income, net(3.5)0.8 (12.4)6.9 
Total other expense(11.3)(12.8)(39.1)(36.9)
Income from continuing operations before income taxes265.0 190.8 773.8 500.2 
Provision for income taxes63.0 38.8 180.2 107.3 
Net income from continuing operations202.0 152.0 593.6 392.9 
Less: Net income from continuing operations attributable to noncontrolling interest(1.9)(1.7)(4.8)(4.5)
Net income from continuing operations attributable to Hubbell Incorporated200.1 150.3 588.8 388.4 
(Loss) Income from discontinued operations, net of tax (Note 2)— (11.2)— 52.9 
Net Income attributable to Hubbell Incorporated$200.1 $139.1 $588.8 $441.3 
Earnings per share:  
Basic earnings per share from continuing operations$3.72 $2.79 $10.96 $7.20 
Basic earnings per share from discontinued operations— (0.21)— 0.98 
Basic earnings per share$3.72 $2.58 $10.96 $8.18 
Diluted earnings per share from continuing operations$3.70 $2.78 $10.89 $7.16 
Diluted earnings per share from discontinued operations— (0.21)— 0.98 
Diluted earnings per share$3.70 $2.57 $10.89 $8.14 
Cash dividends per common share$1.12 $1.05 $3.36 $3.15 
See notes to unaudited Condensed Consolidated Financial Statements.
HUBBELL INCORPORATED-Form 10-Q    3
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Condensed Consolidated Statements of Comprehensive Income (unaudited)
 
 Three Months Ended September 30,
(in millions)20232022
Net income$202.0 $140.8 
Other comprehensive income (loss):  
Currency translation adjustments:
Foreign currency translation adjustments(12.8)(26.4)
Reclassification of currency translation losses included in net income— — 
Defined benefit pension and post-retirement plans, net of taxes of $(0.7) and $(1.1)
1.9 3.3 
Unrealized gain (loss) on investments, net of taxes of $0.1 and $0.3
(0.3)(0.9)
Unrealized gain (loss) on cash flow hedges, net of taxes of $(0.1) and $(0.3)
0.4 1.0 
Other comprehensive income (loss)(10.8)(23.0)
Comprehensive income191.2 117.8 
Less: Comprehensive income attributable to noncontrolling interest1.9 1.7 
Comprehensive income attributable to Hubbell Incorporated$189.3 $116.1 
See notes to unaudited Condensed Consolidated Financial Statements.






 Nine Months Ended September 30,
(in millions)20232022
Net income$593.6 $445.8 
Other comprehensive income (loss):  
Currency translation adjustment:
Foreign currency translation adjustments0.5 (51.5)
Reclassification of currency translation losses included in net income— 0.5 
Defined benefit pension and post-retirement plans, net of taxes of $(2.5) and $(2.9)
5.3 8.8 
Unrealized gain (loss) on investments, net of taxes of $0.1 and $0.7
(0.3)(2.1)
Unrealized gain (loss) on cash flow hedges, net of taxes of $0.2 and $(0.3)
(0.5)0.9 
Other comprehensive income (loss)5.0 (43.4)
Comprehensive income598.6 402.4 
Less: Comprehensive income attributable to noncontrolling interest4.8 4.5 
Comprehensive income attributable to Hubbell Incorporated$593.8 $397.9 
enotes to unaudited Condensed Consolidated Financial Statements.
See notes to unaudited Condensed Consolidated Financial Statements.

HUBBELL INCORPORATED-Form 10-Q    4
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Condensed Consolidated Balance Sheets (unaudited)
 
(in millions)
September 30, 2023December 31, 2022
ASSETS  
Current Assets  
Cash and cash equivalents
$572.8 $440.5 
Short-term investments
17.9 14.3 
Accounts receivable (net of allowances of $13.2 and $14.3)
852.9 741.6 
Inventories, net
788.4 740.7 
   Other current assets86.4 84.3 
Total Current Assets2,318.4 2,021.4 
Property, Plant, and Equipment, net572.2 528.0 
Other Assets  
Investments61.6 65.9 
Goodwill1,994.7 1,970.5 
Other intangible assets, net644.7 669.9 
Other long-term assets176.7 146.9 
TOTAL ASSETS$5,768.3 $5,402.6 
LIABILITIES AND EQUITY  
Current Liabilities  
Short-term debt $3.3 $4.7 
Accounts payable
554.7 529.9 
Accrued salaries, wages and employee benefits
129.0 144.2 
Accrued insurance
80.8 75.6 
Other accrued liabilities
303.6 334.1 
Total Current Liabilities1,071.4 1,088.5 
Long-Term Debt1,439.7 1,437.9 
Other Non-Current Liabilities506.7 505.6 
TOTAL LIABILITIES3,017.8 3,032.0 
Hubbell Incorporated Shareholders’ Equity2,739.1 2,360.9 
Noncontrolling interest11.4 9.7 
TOTAL EQUITY2,750.5 2,370.6 
TOTAL LIABILITIES AND EQUITY$5,768.3 $5,402.6 
See notes to unaudited Condensed Consolidated Financial Statements.



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Condensed Consolidated Statements of Cash Flows (unaudited)
 Nine Months Ended September 30,
(in millions)20232022
Cash Flows from Operating Activities of Continuing Operations  
Net income from continuing operations$593.6 $392.9 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
110.1 107.6 
    Deferred income taxes(17.1)(41.7)
    Stock-based compensation21.6 21.7 
    Provision for bad debt expense— 5.7 
    Pension charge — 5.9 
    Loss on sale of assets1.5 2.3 
Changes in assets and liabilities, excluding effects of acquisitions:
    Increase in accounts receivable, net(101.0)(134.4)
    Increase in inventories, net(39.4)(67.8)
    Increase in accounts payable25.1 28.4 
   (Decrease) increase in current liabilities(45.2)65.4 
    Changes in other assets and liabilities, net2.5 17.2 
Contribution to qualified defined benefit pension plans(10.0)(12.5)
Other, net(6.4)3.1 
Net cash provided by operating activities from Continuing Operations535.3 393.8 
Cash Flows from Investing Activities of Continuing Operations  
Capital expenditures(103.8)(67.2)
Acquisitions, net of cash acquired(60.0)(163.6)
Proceeds from disposal of business, net of cash— 332.8 
Purchases of available-for-sale investments(13.7)(26.5)
Proceeds from available-for-sale investments15.8 15.7 
Other, net0.3 1.4 
Net cash (used in) provided by investing activities from Continuing Operations(161.4)92.6 
Cash Flows from Financing Activities of Continuing Operations 
Payments of short-term debt, net(1.4)(5.4)
Payment of dividends(180.1)(169.6)
Acquisition of common shares(30.0)(150.0)
Other, net(30.2)(15.3)
Net cash used in financing activities from Continuing Operations(241.7)(340.3)
Cash Flows from Discontinued Operations:
    Cash used in operating activities— (50.1)
    Cash used in investing activities— (1.7)
Cash used in discontinued operations— (51.8)
Effect of exchange rate changes on cash and cash equivalents0.3 (14.2)
Increase in cash and cash equivalents132.5 80.1 
Cash and cash equivalents, beginning of year440.5 286.2 
Cash and cash equivalents within assets held for sale, beginning of year— 0.7 
Restricted cash, included in other assets, beginning of year2.8 2.7 
Less: Restricted cash, included in Other Assets3.0 2.8 
Cash and cash equivalents, end of period$572.8 $366.9 
See notes to unaudited Condensed Consolidated Financial Statements.

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Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 1 Basis of Presentation
 
The accompanying unaudited Condensed Consolidated Financial Statements of Hubbell Incorporated (“Hubbell”, the “Company”, “registrant”, “we”, “our” or “us”, which references include its divisions and subsidiaries) have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by United States of America (“U.S.”) GAAP for audited financial statements. In the opinion of management, all adjustments consisting only of normal recurring adjustments considered necessary for a fair statement of the results of the periods presented have been included. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023.

The balance sheet at December 31, 2022 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Hubbell Incorporated Annual Report on Form 10-K for the year ended December 31, 2022.

Discontinued Operations

On February 1, 2022, the Company completed the sale of the Commercial and Industrial Lighting business (the "C&I Lighting business") to GE Current, a Daintree Company, for total net cash consideration of $332.8 million. The disposal of the C&I Lighting business met the criteria set forth in ASC 205-20 to be presented as a discontinued operation. The C&I Lighting business's results of operations and the related cash flows have been reclassified to income from discontinued operations in the Condensed Consolidated Statements of Income and cash flows from discontinued operations in the Condensed Consolidated Statement of Cash Flows, respectively, for all periods presented. For additional information regarding this transaction and its effect on our financial reporting, see Note 2 – Discontinued Operations, in the accompanying Condensed Consolidated Financial Statements.

Recently Adopted Accounting Pronouncements

In September 2022, the FASB issued ASU 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50: Disclosure of Supplier Finance Program Obligations)", which the Company adopted in the first quarter of 2023, with the exception of the rollforward information, which is effective for the Company in 2024.

Payment Services Arrangements
The Company has ongoing agreements with financial institutions to facilitate the processing of vendor payables. Under these agreements, the Company pays the financial institution the stated amount of confirmed invoices from participating suppliers on their original maturity date. The terms of the vendor payables are not affected by vendors participating in these agreements. As a result, the amounts owed are presented as accounts payable in the Company’s Condensed Consolidated Balance Sheet, of which $108.9 million and $91.9 million was outstanding at September 30, 2023 and December 31, 2022, respectively. Either party may terminate the agreements with 30 days written notice. Cash flows under the program are reported in operating activities in the Company’s Condensed Consolidated Statement of Cash Flows.

Commercial Card Program
In 2021, the Company entered into an agreement with a financial institution that allows participating suppliers to receive payment for outstanding invoices through a commercial purchasing card sponsored by a financial institution. The Company is required to then settle such outstanding invoices through a consolidated payment to the financial institution 15 days after the commercial card billing cycle. The Company receives the benefit of extended payment terms and a rebate from the financial institution. Either party may terminate the agreement with 60 days written notice. The amount outstanding to the financial institution is presented as short-term debt in the Company’s Condensed Consolidated Balance Sheet, of which, $2.2 million and $1.9 million was outstanding at September 30, 2023 and December 31, 2022, respectively. Cash flows under the program are reported in financing activities in the Company’s Condensed Consolidated Statement of Cash Flows.

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Recently Issued Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In December 2022, the FASB issued ASU No. 2022-06 Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extends the temporary accounting rules under Topic 848 to December 31, 2024. The Company continues to assess the impact of adopting this standard on its financial statements and the timing of adoption.



NOTE 2 Discontinued Operations
 
On February 1, 2022, the Company completed the sale of the C&I Lighting business to GE Current, a Daintree Company, for total net cash consideration of $332.8 million. We have concluded the divestiture met the criteria set forth in ASC 205-20 to be presented as a discontinued operation in our Condensed Consolidated Financial Statements for all periods presented. The C&I Lighting business was previously included in the Electrical Solutions segment.

Under the terms of the transaction, Hubbell and the buyer entered into a transition services agreement ("TSA"), pursuant to which the Company provides certain administrative and operational services for a period of 12 months or less. In addition, we entered into a short-term supply agreement whereby the Company acts as a supplier of finished goods and component parts to the C&I Lighting business after the completion of the sale. There was no income or loss from either of the TSA or the supply agreement for the three and nine months ended September 30, 2023. Income from the TSA and supply agreement for the three and nine months ended September 30, 2022 was $3.2 million and $10.8 million, respectively, and was recorded in Other Income in the Condensed Consolidated Financial Statements. The TSA and short-term supply agreement were effectively completed as of March 31, 2023.

The following table presents the summarized components of income from discontinued operations, net of income taxes, for the C&I Lighting business:
 Three Months Ended September 30,Nine Months Ended September 30,
(in millions)2023202220232022
Net sales$— $— $— $29.1 
Cost of goods sold— — — 27.7 
Gross profit— — — 1.4 
Selling & administrative expenses— 3.0 — 18.2 
Operating loss— (3.0)— (16.8)
(Loss) gain on disposal of business— (7.0)— 73.7 
Other expense— (0.2)— (1.4)
(Loss) income from discontinued operations before income taxes— (10.2)— 55.5 
Provision for income taxes— 1.0 — 2.6 
(Loss) income from discontinued operations, net of taxes$— $(11.2)$— $52.9 

(Loss) income from discontinued operations, net of taxes includes pre-tax transaction and separation costs of $3.0 million and $9.7 million for the three and nine months ended September 30, 2022, respectively, and a pre-tax (loss) gain on disposal of business of $(7.0) million and $73.7 million for the three and nine months ended September 30, 2022, respectively. The gain on disposal of business for the nine months ended September 30, 2022 includes a net working capital adjustment of $15.8 million that was cash settled in the third quarter of 2022. There were no transaction and separation costs or pre-tax gain on disposal of business in 2023.


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NOTE 3 Business Acquisitions
 
Acquisition

In the second quarter of 2023, the Company acquired all of the issued and outstanding membership interests of EI Electronics LLC ("EIG") for a cash purchase price of approximately $60 million, net of cash acquired, subject to customary purchase price adjustments. EIG offers fully integrated energy management and power quality monitoring solutions for the electric utility and commercial & industrial markets. This business is reported in the Utility Solutions segment. We have recognized intangible assets of $28.7 million and goodwill of $21.5 million as a result of this acquisition. The intangible assets of $28.7 million consist primarily of customer relationships, developed technology, a tradename and backlog and will be amortized over a weighted average period of approximately 14 years. All of the goodwill is expected to be deductible for tax purposes.

This business acquisition has been accounted for as a business combination and has resulted in the recognition of goodwill. The goodwill relates to a number of factors implied in the purchase price, including the future earnings and cash flow potential of the business as well as the complementary strategic fit and resulting synergies that such business acquisition brings to the Company’s existing operations.

Preliminary Allocation of Consideration Transferred to Net Assets Acquired

The following table presents the preliminary determination of the fair values of identifiable assets acquired and liabilities assumed from the Company's acquisition in the second quarter of 2023. The final determination of the fair value of certain assets and liabilities will be completed within the one year measurement period as required by FASB ASC Topic 805, “Business Combinations.” As the Company finalizes the fair values of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company's results of operations and financial position. The finalization of the purchase accounting assessment may result in a change in the valuation of assets acquired and liabilities assumed and may have a material impact on the Company's results of operations and financial position.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the date of acquisition (in millions):

Tangible assets acquired$19.6 
Intangible assets28.7 
Goodwill21.5 
Net deferred taxes— 
Other liabilities assumed(9.8)
Total Estimate of Consideration Transferred, Net of Cash Acquired$60.0 

The Condensed Consolidated Financial Statements include the results of operations of the acquired business from its date of acquisition. Pro forma information related to this acquisition has not been included because the impact of net sales and earnings related to the acquisition for the nine months ended September 30, 2023 was not material to the Company’s condensed consolidated results of operations.

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NOTE 4 Revenue
 
The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied, which generally occurs, for products, upon the transfer of control in accordance with the contractual terms and conditions of the sale. The majority of the Company’s revenue associated with products is recognized at a point in time when the product is shipped to the customer, with a relatively small amount of transactions, primarily in the Utility Solutions segment, recognized upon delivery of the product at the destination. Revenue from service contracts and post-shipment performance obligations are approximately two percent of total annual consolidated net revenue and those service contracts and post-shipment obligations are primarily within the Utility Solutions segment. Revenue from service contracts and post-shipment performance obligations is recognized when or as those obligations are satisfied. The Company primarily offers assurance-type standard warranties that do not represent separate performance obligations and on occasion will separately offer and price extended warranties that are separate performance obligations for which the associated revenue is recognized over-time based on the extended warranty period. The Company records amounts billed to customers for reimbursement of shipping and handling costs within revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of goods sold. Sales taxes and other usage-based taxes are excluded from revenue.

Within the Electrical Solutions segment, certain businesses require a portion of the transaction price to be paid in advance of transfer of control. Advance payments are not considered a significant financing component as they are received less than one year before the related performance obligations are satisfied. In addition, in the Utility Solutions segment, certain businesses offer annual maintenance service contracts that require payment at the beginning of the contract period. These payments are treated as a contract liability and are classified in Other accrued liabilities in the Condensed Consolidated Balance Sheets. Once control transfers to the customer and the Company meets the revenue recognition criteria, the deferred revenue is recognized in the Condensed Consolidated Statements of Income. The deferred revenue relating to the annual maintenance service contracts is recognized in the Condensed Consolidated Statements of Income on a straight-line basis over the expected term of the contract.

The following table presents disaggregated revenue by business group.
Three Months Ended September 30,Nine Months Ended September 30,
in millions2023202220232022
Net sales
   Utility T&D Components$618.2 $602.3 $1,864.5 $1,650.3 
   Utility Communications and Controls219.7 172.2 585.8 504.5 
Total Utility Solutions$837.9 $774.5 $2,450.3 $2,154.8 
   Electrical Products$214.4 $231.7 $631.4 $694.2 
   Connection and Bonding165.6 156.5 485.2 456.9 
   Industrial Controls112.3 95.4 315.3 245.1 
   Retail and Builder45.6 58.1 144.9 177.3 
Total Electrical Solutions$537.9 $541.7 $1,576.8 $1,573.5 
TOTAL$1,375.8 $1,316.2 $4,027.1 $3,728.3 

The following table presents disaggregated revenue by geographic location (on a geographic basis, the Company defines "international" as operations based outside of the United States and its possessions):
Three Months Ended September 30,Nine Months Ended September 30,
in millions2023202220232022
Net sales
   United States$796.5 $732.1 $2,323.4 $2,040.5 
   International41.4 42.4 126.9 114.3 
Total Utility Solutions$837.9 $774.5 $2,450.3 $2,154.8 
   United States$465.7 $477.5 $1,369.9 $1,379.3 
   International72.2 64.2 206.9 194.2 
Total Electrical Solutions$537.9 $541.7 $1,576.8 $1,573.5 
TOTAL$1,375.8 $1,316.2 $4,027.1 $3,728.3 
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Contract Balances

Our contract liabilities consist of advance payments for products as well as deferred revenue on service obligations and extended warranties. Deferred revenue is included in Other accrued liabilities in the Condensed Consolidated Balance Sheets.

Contract liabilities were $55.4 million as of September 30, 2023 compared to $45.8 million as of December 31, 2022. The $9.6 million increase in our contract liabilities balance was primarily due to a $45.7 million net increase in current year deferrals primarily due to timing of advance payments on certain orders, partially offset by the recognition of $36.1 million in revenue related to amounts that were recorded in contract liabilities at January 1, 2023. The Company has an immaterial amount of contract assets relating to performance obligations satisfied prior to payment that is recorded in Other long-term assets in the Condensed Consolidated Balance Sheets. Impairment losses recognized on our receivables and contract assets were immaterial for the three and nine months ended September 30, 2023.

Unsatisfied Performance Obligations

As of September 30, 2023, the Company had approximately $240 million of unsatisfied performance obligations for contracts with an original expected length of greater than one year, primarily relating to long-term contracts of the Utility Solutions segment to deliver and install meters, metering communications and grid monitoring sensor technology. The Company expects that a majority of the unsatisfied performance obligations will be completed and recognized over the next two years.


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NOTE 5 Segment Information

The Company's reporting segments consist of the Utility Solutions segment and the Electrical Solutions segment. The Utility Solutions segment consists of businesses that design, manufacture, and sell a wide variety of electrical distribution, transmission, substation, and telecommunications products. This includes utility transmission & distribution (T&D) components such as arresters, insulators, connectors, anchors, bushings, and enclosures. The Utility Solutions segment also offers solutions that serve the utility infrastructure, including smart meters, communications systems, and protection and control devices. The Hubbell Utility Solutions segment supports the electrical distribution, electrical transmission, water, gas distribution, telecommunications, and solar and wind markets. Products are sold to distributors and directly to users such as utilities, telecommunication companies, industrial firms, construction and engineering firms.

The Electrical Solutions segment comprises businesses that sell stock and custom products including standard and special application wiring device products, rough-in electrical products, connector and grounding products, lighting fixtures, components and other electrical equipment. The products are typically used in and around industrial, commercial and institutional facilities by electrical contractors, maintenance personnel, electricians, utilities, and telecommunications companies. In addition, certain of our businesses design and manufacture industrial controls and communication systems used in the non-residential and industrial markets. Many of these products are designed such that they can also be used in harsh and hazardous locations where a potential for fire and explosion exists due to the presence of flammable gasses and vapors. Harsh and hazardous products are primarily used in the oil and gas (onshore and offshore) and mining industries. There are also a variety of wiring devices, lighting fixtures and electrical products that have residential and utility applications, including residential products with Internet-of-Things ("IoT") enabled technologies. These products are primarily sold through electrical and industrial distributors, home centers, retail and hardware outlets, lighting showrooms and residential product oriented internet sites. Special application products are primarily sold through wholesale distributors to contractors, industrial customers and OEMs.

The following table sets forth financial information by reporting segment (in millions):
 Net SalesOperating IncomeOperating Income as a % of Net Sales
 202320222023202220232022
Three Months Ended September 30,      
Utility Solutions$837.9 $774.5 $186.8 $129.8 22.3 %16.8 %
Electrical Solutions537.9 541.7 89.5 73.8 16.6 %13.6 %
TOTAL$1,375.8 $1,316.2 $276.3 $203.6 20.1 %15.5 %
Nine Months Ended September 30,
Utility Solutions$2,450.3 $2,154.8 $563.8 $329.3 23.0 %15.3 %
Electrical Solutions1,576.8 1,573.5 249.1 207.8 15.8 %13.2 %
TOTAL$4,027.1 $3,728.3 $812.9 $537.1 20.2 %14.4 %


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NOTE 6 Inventories, net
 
Inventories, net consists of the following (in millions):
 September 30, 2023December 31, 2022
Raw material$346.4 $302.8 
Work-in-process171.2 161.7 
Finished goods451.6 463.2 
Subtotal969.2 927.7 
Excess of FIFO over LIFO cost basis(180.8)(187.0)
TOTAL$788.4 $740.7 
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NOTE 7 Goodwill and Other Intangible Assets, net

Changes in the carrying values of goodwill for the nine months ended September 30, 2023, by segment, were as follows (in millions):
 Segment 
 Utility SolutionsElectrical SolutionsTotal
BALANCE AT DECEMBER 31, 2022$1,275.9 $694.6 $1,970.5 
Prior year acquisitions1.2 2.1 3.3 
Current year acquisitions(1)
21.5 — 21.5 
Foreign currency translation (0.2)(0.4)(0.6)
BALANCE AT SEPTEMBER 30, 2023$1,298.4 $696.3 $1,994.7 
 (1) Refer to Note 3 - Business Acquisitions for additional information.

The carrying value of other intangible assets included in Other intangible assets, net in the Condensed Consolidated Balance Sheets is as follows (in millions):
 September 30, 2023December 31, 2022
 Gross AmountAccumulated
Amortization		Gross AmountAccumulated
Amortization
Definite-lived:    
Patents, tradenames and trademarks$190.7 $(82.1)$187.9 $(75.7)
Customer relationships, developed technology and other977.0 (481.3)955.3 (437.8)
TOTAL DEFINITE-LIVED INTANGIBLES$1,167.7 $(563.4)$1,143.2 $(513.5)
Indefinite-lived:  
Tradenames and other40.4 — 40.2 — 
TOTAL OTHER INTANGIBLE ASSETS$1,208.1 $(563.4)$1,183.4 $(513.5)
 
Amortization expense associated with definite-lived intangible assets was $18.4 million and $18.7 million during the three months ended September 30, 2023 and 2022, respectively, and $54.3 million and $53.6 million during the nine months ended September 30, 2023 and 2022, respectively. Future amortization expense associated with these intangible assets is estimated to be $18.5 million for the remainder of 2023, $69.3 million in 2024, $67.1 million in 2025, $63.4 million in 2026, $57.2 million in 2027, and $51.7 million in 2028. The Company amortizes intangible assets with definite lives using either an accelerated method that reflects the pattern in which economic benefits of the intangible assets are consumed and results in higher amortization in the earlier years of the assets useful lives, or using a straight line method. Approximately 80% of the gross value of definite-lived intangible assets follow an accelerated amortization method.

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NOTE 8 Other Accrued Liabilities

Other accrued liabilities consists of the following (in millions):
 September 30, 2023December 31, 2022
Customer program incentives$55.5 $87.8 
Accrued income taxes22.0 4.5 
Contract liabilities - deferred revenue55.4 45.8 
Customer refund liability 19.5 14.8 
Accrued warranties short-term(1)
21.1 20.2 
Current operating lease liabilities30.3 30.5 
Other99.8 130.5 
TOTAL$303.6 $334.1 
(1) Refer to Note 22 - Guarantees, in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022 for additional information regarding warranties.



NOTE 9 Other Non-Current Liabilities

Other non-current liabilities consists of the following (in millions):
 September 30, 2023December 31, 2022
Pensions$144.7 $155.3 
Other post-retirement benefits14.3 14.3 
Deferred tax liabilities101.5 113.8 
Accrued warranties long-term(1)
25.7 26.0 
Non-current operating lease liabilities107.6 84.9 
Other112.9 111.3 
TOTAL$506.7 $505.6 
(1) Refer to Note 22 - Guarantees, in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022 for additional information regarding warranties.
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NOTE 10 Total Equity

A summary of changes in total equity for the three and nine months ended September 30, 2023 and the three and nine months ended September 30, 2022 is provided below (in millions, except per share amounts):
Common StockAdditional
Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Total Hubbell
Shareholders'
Equity		Non-
controlling
interest
BALANCE AT DECEMBER 31, 2022$0.6 $— $2,705.5 $(345.2)$2,360.9 $9.7 
Net income— — 388.7 — 388.7 2.9 
Other comprehensive (loss) income— — — 15.8 15.8 — 
Stock-based compensation— 16.1 — — 16.1 — 
Acquisition/surrender of common shares(1)
— (16.3)(24.5)— (40.8)— 
Cash dividends declared ($2.24 per share)
— — (120.2)— (120.2)— 
Dividends to noncontrolling interest— — — — — (2.2)
Directors deferred compensation— 0.2 — — 0.2 — 
BALANCE AT JUNE 30, 2023$0.6 $— $2,949.5 $(329.4)$2,620.7 $10.4 
Net income— — 200.1 — 200.1 1.9 
Other comprehensive (loss) income— — — (10.8)(10.8)— 
Stock-based compensation— 5.5 — — 5.5 — 
Acquisition/surrender of common shares(1)
— (4.3)(12.1)— (16.4)— 
Cash dividends declared ($1.12 per share)
— — (60.2)— (60.2)— 
Dividends to noncontrolling interest— — — — — (0.9)
Directors deferred compensation— 0.2 — — 0.2 — 
BALANCE AT SEPTEMBER 30, 2023$0.6 $1.4 $3,077.3 $(340.2)$2,739.1 $11.4 
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Common StockAdditional
Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Total Hubbell
Shareholders'
Equity		Non-
controlling
interest
BALANCE AT DECEMBER 31, 2021$0.6 $— $2,560.0 $(330.8)$2,229.8 $10.9 
Net income— — 302.2 — 302.2 2.8 
Other comprehensive (loss) income— — — (20.4)(20.4)— 
Stock-based compensation— 16.7 — — 16.7 — 
Acquisition/surrender of common shares(1)
— (13.1)(145.2)— (158.3)— 
Cash dividends declared ($2.10 per share)
— — (113.4)— (113.4)— 
Dividends to noncontrolling interest— — — — — (2.7)
Directors deferred compensation— 0.3 — — 0.3 — 
BALANCE AT JUNE 30, 2022$0.6 $3.9 $2,603.6 $(351.2)$2,256.9 $11.0 
Net income— — 139.1 — 139.1 1.7 
Other comprehensive (loss) income— — — (23.0)(23.0)— 
Stock-based compensation— 5.0 — — 5.0 — 
Acquisition/surrender of common shares(1)
— (0.9)— — (0.9)— 
Cash dividends declared ($1.05 per share)
— — (56.5)— (56.5)— 
Dividends to noncontrolling interest— — — — — (1.2)
Directors deferred compensation — (1.9)— — (1.9)— 
BALANCE AT SEPTEMBER 30, 2022$0.6 $6.1 $2,686.2 $(374.2)$2,318.7 $11.5 
(1) For accounting purposes, the Company treats repurchased shares as constructively retired when acquired and accordingly charges the purchase price against common stock par value, Additional paid-in capital, to the extent available, and Retained earnings. The change in Retained earnings of $36.6 million and $145.2 million in the first nine months of 2023 and 2022, respectively, reflects this accounting treatment.

The detailed components of total comprehensive income are presented in the Condensed Consolidated Statements of Comprehensive Income.
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NOTE 11 Accumulated Other Comprehensive Loss

A summary of the changes in Accumulated other comprehensive loss (net of tax) for the nine months ended September 30, 2023 is provided below (in millions):
(debit) creditCash flow
hedge gain (loss)		Unrealized
gain (loss) on
available-for-
sale securities		Pension
and post
retirement
benefit plan
adjustment		Cumulative
translation
adjustment		Total
BALANCE AT DECEMBER 31, 2022$0.6 $(0.8)$(188.6)$(156.4)$(345.2)
Other comprehensive income (loss) before reclassifications0.1 (0.3)— 0.5 0.3 
Amounts reclassified from accumulated other comprehensive income (loss)(0.6)— 5.3 — 4.7 
Current period other comprehensive income (loss)(0.5)(0.3)5.3 0.5 5.0 
BALANCE AT SEPTEMBER 30, 2023$0.1 $(1.1)$(183.3)$(155.9)$(340.2)

A summary of the gain (loss) reclassifications out of Accumulated other comprehensive loss for the three and nine months ended September 30, 2023 and 2022 is provided below (in millions): 
Three Months Ended September 30,Nine Months Ended September 30,
Details about Accumulated Other
Comprehensive Loss Components		20232022 20232022Location of Gain (Loss) Reclassified into Income
Cash flow hedges gain (loss):      
Forward exchange contracts$— $— $— $— Net sales
0.1 0.3  0.8 0.5 Cost of goods sold
— — — — Other expense, net
 0.1 0.3  0.8 0.5 Total before tax
 — (0.1) (0.2)(0.1)Tax benefit (expense)
 $0.1 $0.2  $0.6 $0.4 Gain (loss) net of tax
Amortization of defined benefit pension and post retirement benefit items:      
Prior-service costs (a)$(0.1)$(0.1)$(0.3)$(0.3) 
Actuarial gains (losses) (a)(2.5)(2.8)(7.5)(7.8) 
Settlement losses (a)— (1.7)— (7.5)
 (2.6)(4.6)(7.8)(15.6)Total before tax
 0.7 1.3 2.5 3.9 Tax benefit (expense)
 $(1.9)$(3.3)$(5.3)$(11.7)Gain (loss) net of tax
Reclassification of currency translation gain (loss):
$— $— $— $(0.5)Gain (loss) on disposition of business (Note 2)
— — — — Tax benefit (expense)
$— $— $— $(0.5)Gain (loss) net of tax
Gains (losses) reclassified into earnings$(1.8)$(3.1)$(4.7)$(11.8)Gain (loss) net of tax

(a) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (see Note 13 - Pension and Other Benefits in the Notes to Condensed Consolidated Financial Statements for additional details).
HUBBELL INCORPORATED-Form 10-Q    18
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NOTE 12 Earnings Per Share

The Company computes earnings per share using the two-class method, which is an earnings allocation formula that determines earnings per share for common stock and participating securities. Service-based and performance-based restricted stock awards granted by the Company are considered participating securities as these awards contain a non-forfeitable right to dividends.
 
The following table sets forth the computation of earnings per share for the three and nine months ended September 30, 2023 and 2022 (in millions, except per share amounts):
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Numerator:  
Net income from continuing operations attributable to Hubbell Incorporated$200.1 $150.3 $588.8 $388.4 
Less: Earnings allocated to participating securities(0.5)(0.4)(1.4)(1.0)
Net income from continuing operations available to common shareholders$199.6 $149.9 $587.4 $387.4 
Net (loss) income from discontinued operations attributable to Hubbell Incorporated$— $(11.2)$— $52.9 
Less: Earnings allocated to participating securities— — — (0.1)
Net (loss) income from discontinued operations available to common shareholders$— $(11.2)$— $52.8 
Net income attributable to Hubbell Incorporated$200.1 $139.1 $588.8 $441.3 
Less: Earnings allocated to participating securities(0.5)(0.4)(1.4)(1.1)
Net income available to common shareholders$199.6 $138.7 $587.4 $440.2 
Denominator:  
Average number of common shares outstanding53.6 53.7 53.6 53.8 
Potential dilutive common shares0.4 0.3 0.4 0.3 
Average number of diluted shares outstanding54.0 54.0 54.0 54.1 
Basic earnings per share:  
Basic earnings per share from continuing operations$3.72 $2.79 $10.96 $7.20 
Basic (loss) earnings per share from discontinued operations— (0.21)— 0.98 
Basic earnings per share$3.72 $2.58 $10.96 $8.18 
Diluted earnings per share:
Diluted earnings per share from continuing operations$3.70 $2.78 $10.89 $7.16 
Diluted (loss) earnings per share from discontinued operations— (0.21)— 0.98 
Diluted earnings per share$3.70 $2.57 $10.89 $8.14 
 
The Company did not have any significant anti-dilutive securities outstanding during the three and nine months ended September 30, 2023 and 2022.
HUBBELL INCORPORATED-Form 10-Q    19
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NOTE 13 Pension and Other Benefits
 
The following table sets forth the components of net pension and other benefit costs for the three and nine months ended September 30, 2023 and 2022 (in millions):
 Pension BenefitsOther Benefits
 2023202220232022
Three Months Ended September 30,    
Service cost$0.2 $0.2 $— $— 
Interest cost8.8 5.4 0.2 0.2 
Expected return on plan assets(7.0)(5.1)— — 
Amortization of prior service cost0.1 0.1 — — 
Amortization of actuarial losses (gains)2.7 2.8 (0.2)— 
Settlement losses— 1.7 — — 
NET PERIODIC BENEFIT COST$4.8 $5.1 $— $0.2 
Nine Months Ended September 30,
Service cost$0.4 $0.6 $— $— 
Interest cost26.3 18.0 0.6 0.4 
Expected return on plan assets(21.0)(21.5)— — 
Amortization of prior service cost0.3 0.3 — — 
Amortization of actuarial losses (gains)7.9 8.0 (0.4)(0.2)
Settlement losses— 7.5 — — 
NET PERIODIC BENEFIT COST$13.9 $12.9