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HUBBELL INC (HUBB)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered adjusted EPS of $4.93, up 11% y/y, on net sales of $1.484B (+2% y/y); GAAP operating margin expanded 160 bps to 22.7% and adjusted operating margin to 24.4% .
  • Revenue modestly missed consensus ($1.484B vs $1.507B*), while EPS and EBITDA significantly beat (Adj. EPS $4.93 vs $4.40*, EBITDA $384.6MM vs $347.9MM*) — strength in Grid Infrastructure and data center-exposed products offset weak Grid Automation/meters .
  • Management raised FY25 outlook: diluted EPS to $16.25–$16.75 and adjusted EPS to $17.65–$18.15 (tax rate 22.0–22.5%; organic sales growth 4–6%; ~90% FCF conversion), reflecting price/productivity and FIFO accounting harmonization (+$0.30 first-half EPS impact) .
  • Accounting change to FIFO reduced Q2 COGS by $29MM ($0.42/share) and 1H COGS by $20MM ($0.29/share), improving quarter-to-quarter margin matching amid cost inflation — a transparency and comparability catalyst .
  • Board declared a $1.32 quarterly dividend payable Sept 15, 2025; near-term stock narrative: guidance raise, margin resilience despite tariffs/metals inflation, and data center demand tailwinds vs continued meter softness .

What Went Well and What Went Wrong

What Went Well

  • Grid Infrastructure organic sales +7% with high-teens orders in 1H; distribution returned to growth, supporting H2 trajectory (“we can say that the channel destock has concluded”) .
  • Electrical Solutions organic +4% with margin expansion (Adj. OI +9%; adj. margin 22.5%), driven by data centers and “compete collectively” commercial alignment .
  • Price/productivity exceeded cost inflation; management proactively implemented two price actions, expecting ~3 pts of FY25 price (“we feel we are ahead at this split second”) .

What Went Wrong

  • Grid Automation sales down ~13% as larger AMI projects rolled off; sequential stability only at a lower base, with growth expected to resume in Q4 .
  • Tariff and metals inflation (copper/steel/aluminum) added cost pressure; price covers OP dollar-for-dollar but is “not margin-friendly” in the near term .
  • Revenue slightly below consensus (–$23MM vs*), reflecting metering weakness and timing of price realization; organic growth only +2% for the quarter .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($USD MM)$1,334.3 $1,365.2 $1,484.3
GAAP Diluted EPS ($)$3.64 $3.15 $4.56
Adjusted Diluted EPS ($)$4.10 $3.50 $4.93
GAAP Operating Margin (%)19.3% 17.5% 22.7%
Adjusted Operating Margin (%)21.8% 19.3% 24.4%
Adjusted EBITDA ($USD MM)$309.6 $285.7 $384.6
Free Cash Flow ($USD MM)$364.4 $11.4 $220.7
Consensus vs Actual (S&P Global)Q4 2024Q1 2025Q2 2025
Primary EPS Consensus Mean ($)4.01681*3.72390*4.39682*
Actual Adjusted EPS ($)4.10 3.50 4.93
Revenue Consensus Mean ($MM)1,412.43*1,393.74*1,507.28*
Actual Revenue ($MM)1,334.3 1,365.2 1,484.3
EBITDA Consensus Mean ($MM)323.34*301.63*347.92*
Actual Adjusted EBITDA ($MM)309.6 285.7 384.6

Values retrieved from S&P Global.*

Segment (Q2 2025)Net Sales ($MM)y/y %GAAP OI ($MM)GAAP OI MarginAdjusted OI ($MM)Adj. Margin
Utility Solutions$935.5 +1% $218.2 23.3% $238.7 25.5%
Electrical Solutions$548.8 +4% $118.1 21.5% $123.5 22.5%
Company Total$1,484.3 +2% $336.3 22.7% $362.2 24.4%
KPIsQ4 2024Q1 2025Q2 2025
Organic Net Sales Growth (%)~0% FY; Q4 company (0%) (0.6%) +2.0%
Net Cash from Ops ($MM)$432.4 $37.4 $260.6
Free Cash Flow ($MM)$364.4 $11.4 $220.7
Share Repurchases YTD ($MM)n/a$125.0 $225.0 (H1 cumulative)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Diluted EPSFY 2025$15.95–$16.45 $16.25–$16.75 Raised
Adjusted Diluted EPSFY 2025$17.35–$17.85 $17.65–$18.15 Raised
Total/Organic Sales GrowthFY 20256–8% (incl. pricing for inflation) 4–6% Lowered (volume mix, pricing realization)
Adjusted Tax RateFY 202522.0–22.5% 22.0–22.5% Maintained
FCF Conversion (Adj. NI)FY 2025≥90% ~90% Maintained
Restructuring & Related InvestmentFY 2025~$20MM ~$20MM Maintained
DividendQ3 2025 paymentn/a$1.32 per share (pay 9/15/2025; record 8/29/2025) Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Data center demandMargin-led performance; portfolio mix aided HES HES organic +5% driven by data centers Strong contributor; vertical selling; expect continued strength Strengthening
Grid Infrastructure (T&D, distribution)T&D +12% y/y; distribution soft Grid Infra +1%; distribution improving; orders strong Grid Infra +7%; distribution returned to growth; orders high-teens Improving
Grid Automation/meters–11% y/y –15% y/y; tough comps –13% y/y; sequentially flat, growth expected Q4 Stabilizing at lower base; recovery Q4
Price/cost/productivitySignificant margin expansion Price/productivity favorable; Q1 net headwind from inflation/tariffs Price ahead of tariffs; ~3 pts FY price; OP neutral for tariffs Managing effectively
Tariffs/metals inflationNotable risk factors cited Inflation/tariffs pressured margins More tariff impact in Q3; price actions accepted by market Elevated but covered
Accounting methodn/an/aSwitch to unified FIFO; $29MM COGS/$0.42 EPS Q2; comparability improved Enhances transparency
Capital deploymentStrong FCF; deleveraging Share repo $125MM H1 buybacks $225MM; small bolt-on in water utility enclosures Active, balanced
AI/technology initiativesn/an/aExploring AI for efficiency; continued investment in restructuring/new product development Emerging focus

Management Commentary

  • “Hubbell delivered double digit adjusted earnings per share growth in the second quarter, driven by strong organic growth in Grid Infrastructure and Electrical Solutions, as well as year-over-year margin expansion.” — Gerben Bakker, CEO .
  • “Our adoption of a unified FIFO-based inventory accounting standard… creates a better match of timing of higher costs and pricing… $29 million decrease in COGS in Q2 and $20 million decrease in 1H.” — Bill Sperry, CFO .
  • “Data centers continues to be a very significant contributor… margins up a point to 22.5%… consistent multi-year momentum in the electrical segment.” — Bill Sperry .
  • “Price and productivity exceeded cost inflation across both segments in the quarter.” — Gerben Bakker .

Q&A Highlights

  • Distribution recovery and sustainability: Channel destock “has concluded”; distribution mid-single-digit growth seen as sustainable; easier comps in H2 .
  • Tariffs and metals: Price actions ahead of tariffs; ~2 pts price in 1H and ~3 pts FY; OP dollars neutral but margin-dilutive; copper/steel/aluminum covered via pricing .
  • Grid Automation trajectory: Sequentially flat for three quarters; expecting growth in Q4 as comps ease; low-to-mid single-digit growth off lower base in 2026 .
  • H2 margin dynamics: Mix favorable; tariffs offset with price; higher restructuring in Q3; better y/y margin performance likely in Q4 .
  • Capital deployment: H1 repurchases $225MM; closed a small bolt-on for water utility enclosures; pipeline active across T&D/data centers/light industrial .

Estimates Context

  • Q2 2025: Adjusted EPS beat by ~$0.53 ($4.93 vs $4.40*); revenue missed by ~$23MM ($1,484.3MM vs $1,507.3MM*); EBITDA beat by ~$36.8MM ($384.6MM vs $347.9MM*) — highlighting margin resilience despite topline miss .
  • FY 2025 EPS consensus is 18.20*, above updated guidance range ($17.65–$18.15); models may need to balance higher price realization and FIFO benefit against continued tariff/metals inflation and metering softness .
  • With ~3 pts FY price and high-teens T&D orders, consensus revenue ($5.84B*) versus company’s 4–6% organic growth suggests estimates near the top of guidance are plausible if Grid Automation stabilizes and H2 mix remains favorable .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Mixed print with quality: modest revenue miss but strong EPS/EBITDA beat; margin execution and mix (T&D components, data centers) are carrying the story .
  • Narrative catalysts: unified FIFO improves comparability and margin timing; guidance raise (+$0.30) despite tariff/metal headwinds underpins confidence .
  • H2 setup: High-teens T&D orders, distribution growth, and incremental price realization point to stronger volumes/mix in Q4; watch Q3 for tariff absorption and higher restructuring spend .
  • Risk monitor: Grid Automation/meters remains the swing factor; sequential stability at lower base with expected Q4 return to growth — track RFPs and project awards .
  • Capital allocation: Ongoing buybacks ($225MM H1) and active M&A pipeline (utility/data center adjacency) support EPS durability and strategic positioning .
  • Trading implications: Favor near-term on margin resilience and guidance raise; tactically monitor Q3 margins (tariff-induced) and Q4 volume/mix inflection for upside to the high end of guidance .
  • Medium-term thesis: Structural tailwinds from grid modernization/electrification and data center build-outs, combined with commercial unification and productivity initiatives, support sustained margin expansion and cash generation .
Non-GAAP and accounting notes: Adjusted EPS excludes amortization and transaction costs; FIFO change reduced Q2 COGS by $29MM ($0.42/share) and 1H by $20MM ($0.29/share). Guidance based on 22.0–22.5% adjusted tax rate and ~$20MM restructuring & related investment; expected ~90% FCF conversion **[48898_e5dc982ba235429f97592c2015239e5b_0]** **[48898_e5dc982ba235429f97592c2015239e5b_2]** **[48898_e5dc982ba235429f97592c2015239e5b_3]** **[48898_e5dc982ba235429f97592c2015239e5b_18]**.