Hubbell Reports In Line - Analyst Blog
29 Janvier 2013 - 3:35PM
Zacks
Hubbell’s (HUB.B) fourth quarter earnings of
$1.20 were in line with the Zacks Consensus Estimate.
Total Revenue
Hubbell reported revenue of $452.5 million for the quarter,
which was down 4.7% sequentially and up 1.7% year over year.
Hubbell’s served end markets are showing signs of improvement.
Non-residential construction was a mixed bag, with the lighting
business the lone bright spot. On the residential side, however,
Hubbell saw good growth in the last quarter.
Utilities were essentially flat, despite the effects of Sandy
because of relatively warmer weather. The industrial market was
slow, as technology providers Linear Technology
(LLTC) and Texas Instruments (TXN) have commented
during their quarterly earnings announcements.
Hubbell has two operating segments—Electrical and Power Systems,
which generated 69% and 31% of revenue, respectively, in the last
quarter.
Revenue by Segment
Electrical revenue was down 5.5% sequentially and up 1.5% year
over year. About 2 percentage points of the year-over-year increase
was due to acquisitions, which was partially offset by notable
weakness in high-voltage test. Sales were helped by improved demand
in the energy and residential markets.
Power Systems sales were down 2.9% sequentially and up 2.1% from
last year. Increased spending on the transmission side and higher
storm spending were almost entirely offset by lower spending on the
distribution side. However, acquisitions contributed 2% growth.
Operating Profit by Segment
The operating margin in the Electrical segment was 13.0%, down
340 bps sequentially and 131 bps year over year. Hubbell stated
that a lower mix of higher-margin high-voltage test business
impacted the margin performance in the last quarter. Additionally,
higher cost (especially pension and benefit-related expenses) was
again a negative.
The Power Systems operating margin of 18.4% was down 27 bps
sequentially and up 245 bps year over year. The improvement from
last year was on account of productivity improvements and better
pricing, as offset by cost increases.
Operating Performance
Hubbell’s gross margin for the quarter was 33.2%, down 80 basis
points (bps) from the previous quarter’s 34.0%. The gross margin
was up 126 bps from the year-ago quarter.
Hubbell’s operating expenses of $139.3 million were higher than
the previous quarter. The operating margin of 14.7% was down 242
bps sequentially, as all costs increased as a percentage of sales.
The operating margin was down 15 bps from the year-ago quarter with
the 126 bp decline in cost of sales offset by a 142 bp decline each
in R&D and SG&A.
Net Income
On a pro forma basis, Hubbell had a net income of $72.9 million,
or a 9.7% net income margin, compared to $87.6 million, or 11.1% in
the previous quarter and a profit of $70.5 million or 9.5% net
income margin in the year-ago quarter. Since there were no one-time
items, the pro forma EPS was the same as the GAAP EPS of $1.20
compared to $1.45 cents in the Sep 2012 quarter and $1.18 in the
same quarter last year.
Balance Sheet
The net debt position (including short-term debt and long term
liabilities) was $3.41 a share. The cash and short-term investments
balance at quarter-end was $653.8 million, up $39.2 million during
the quarter. Cash generated from operations was $192.0 million.
Excluding capex of $31.3 million, Hubbell generated free cash
flow of $160.7 million. Hubbell also spent $53.0 million on
acquisitions, $71.3 million on dividends and $55.6 million on share
repurchases during the quarter.
Inventories were down 4.1% to $341.7 million, with annualized
inventory turns up slightly to 5.9X. Days sales outstanding (DSOs)
were down sequentially to around 49.
Outlook
Management does not provide quarterly guidance and provides only
very limited guidance for the year. Accordingly, the Electrical
segment is expected to be up 3-5% and the Power segment up 4-6%.
The Electrical business will be helped by stronger residential and
industrial markets, offset by softer recovery in non-residential
construction.
The increase in the Power segment will be driven by
acquisitions. Management also stated that the second half is likely
to be stronger than the first.
The utilities market is expected to be up 2-4%, the residential
market is expected to be up 10% and industrial 2%. Management did
not comment on non-residential, but a gradual improvement through
the year is on the cards.
Management expects of an operating margin improvement of 50 bps
for Hubbell.
Recommendation
Hubbell reported a satisfactory quarter that was supported by
improving end markets. While significant uncertainty remains in
non-residential construction markets, the trend is positive and
likely to remain so through the year. Industrial and utility
markets are also expected to have a stronger year. Given Hubbell’s
product breadth and market position, we think that the company will
benefit from a recovery across its served markets.
Hubbell shares currently carry a Zacks Rank #3 (Hold), similar
to peer Ameresco Inc (AMRC).
AMERESCO INC-A (AMRC): Free Stock Analysis Report
HUBBELL INC -B (HUB.B): Free Stock Analysis Report
LINEAR TEC CORP (LLTC): Free Stock Analysis Report
TEXAS INSTRS (TXN): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Hubbell B (NYSE:HUB.B)
Graphique Historique de l'Action
De Août 2024 à Sept 2024
Hubbell B (NYSE:HUB.B)
Graphique Historique de l'Action
De Sept 2023 à Sept 2024