Hubbell Incorporated Q4 FY2025 earnings call

• Hubbell delivered strong fourth quarter results with 12% total sales growth, 140 basis points of adjusted operating margin expansion, 19% adjusted operating profit growth, and 15% adjusted earnings per share growth.
• Organic growth of 9% in the fourth quarter was driven by double-digit organic growth in Electrical Solutions and Grid Infrastructure within Utility Solutions.
• In Electrical Solutions, significant progress was made in unifying the segment, with 7% organic growth and 14% adjusted operating profit growth for the full year, and full-year adjusted operating margins at HES reaching 20% for the first time.
• In Utility Solutions, despite metering and AMI market challenges, grid infrastructure businesses had double-digit growth, and the company closed on the high-growth and margin acquisition of DMC Power.
• The company invested in automation, expanded production capacity, repositioned the sales force, launched new innovative solutions, and continued to be recognized for industry-leading service levels.

Utility Solutions: Fourth quarter net sales were $936 million, a 10% growth vs prior year, with 7% organic growth and 4% from acquisitions. Grid infrastructure, making up approximately three-quarters of the segment sales, saw 12% organic growth. Adjusted operating profit was $235 million in the fourth quarter, a 20% growth with adjusted operating margins expanding 200 basis points year over year. Electrical Solutions: Fourth quarter net sales were $557 million, with 13% organic growth driven by strong data center (over 60% growth in the quarter) and light industrial markets. Adjusted operating profit was $114 million, a 18% growth with adjusted operating margins expanding 60 basis points year over year.

• Anticipate 5% to 7% organic growth across the portfolio in 2026.
• Utility Solutions anticipates 5% to 7% organic growth for the full year, with strong transmission and substation demand and healthy distribution activity.
• Electrical Solutions anticipates 4% to 6% organic growth, led by data center mid-teens growth, with light industrial and renewable markets also showing solid growth.
• Total sales growth expected to be 7% to 9%, adjusted earnings per share in the range of $19.15 to $19.85, and approximately 90% free cash flow conversion on adjusted net income.

• Cost inflation accelerated in the fourth quarter, though pricing and productivity actions aimed to offset these costs.
• Softness in grid automation, particularly in meters and AMI markets, though declines have moderated.
• Tariff impacts, with previous discussions of tariff-related costs and the need to react to potential changes.

Q: There was a comment about orders in the prepared remarks. Can you give more color on orders and MRO activity?

A: Gerben Bakker mentioned strong order momentum, especially in T&D and data center areas, with order strength in the fourth quarter driving organic sales growth and a good start to 2026. On MRO activity, he discussed the impact of CapEx vs OpEx and the softness in grid automation meters/AMI markets but expected modest growth from a lower base.

Q: Comment on margin expansion and first quarter expectations?

A: Joe Capazzoli said margin expansion for 2026 is about 50 basis points, with a normal seasonal shape in mind, and expected a strong start to the year from an organic and margin expansion perspective. He also mentioned anticipating solid margin expansion throughout the year, including the first quarter.

Q: Comment on price cost productivity and raw materials prices?

A: Joe Capazzoli said there were incremental price actions in the fourth quarter, anticipating about three points of price for the full year, and expecting mid-single digits of cost inflation in 2026. He also discussed watching raw materials prices closely, including metals like copper, aluminum, and steel, and managing price and productivity to address cost inflation.