Name: HUBBELL INC Q3 2025 Earnings Call
Start: 2025-10-28T14:00:00.000Z

Executive Summary

Q3 2025 delivered an EPS beat with adjusted diluted EPS of $5.17 versus S&P Global consensus of ~$4.98, while revenue of $1.50B came in modestly below consensus of ~$1.53B; operating margin held at 22.0% with adjusted margin of 23.9%. Bold: EPS beat, revenue slight miss . Values retrieved from S&P Global.*
Guidance raised: FY25 diluted EPS to $16.55–$16.75 (from $16.25–$16.75) and adjusted EPS to $18.10–$18.30 (from $17.65–$18.15); adjusted tax rate lowered to 20.5–21.0% (from 22.0–22.5%), offsetting lower sales growth now 3–4% (from 4–6%) .
Utility Solutions showed mixed performance: Grid Infrastructure +9% organic growth and broad T&D strength; Grid Automation -18% with normalization expected in Q4; Electrical Solutions +8% organic growth led by data centers and light industrial, with 140 bps adjusted margin expansion .
Order book acceleration in September–October within T&D and distribution post-destocking supports stronger Q4 organic growth and margin expansion across segments; management flagged a lower year-over-year tax rate as a Q3 tailwind and expects tax rate normalization in 2026 .
Strategic catalysts: completed acquisition of DMC Power (high-margin substation connector technology) financed via $600M term loan; expected to be neutral in Q4 and accretive by ~$0.20 to adjusted EPS in 2026; dividend increased 8% to $5.68 annual rate ($1.42/qtr) .

What Went Well and What Went Wrong

What Went Well

Electrical Solutions delivered 10% sales growth and adjusted operating margin of 20.8% (+140 bps YoY), driven by data center and light industrial demand; management highlighted “compete collectively” initiatives and salesforce realignment as margin drivers .
Utility T&D markets remained robust with Grid Infrastructure achieving ~9% net sales growth; order acceleration in Sep/Oct across transmission, substation, and distribution supports Q4 strength. Quote: “order book…accelerated over the past two months…good sign for 4Q and beyond” .
Price and productivity actions offset cost inflation, sustaining positive price-cost in Q3; tax rate fell to 17.5% (from 21.0% YoY) due to international restructuring, lifting EPS. Quote: “pricing and productivity…more than offsetting these costs…lower tax rate…helped us drive the rate down” .

What Went Wrong

Grid Automation sales declined 18% (AMI/meters weakness), creating a 3–4 pt drag to overall growth; margin pressure from decrementals and restructuring spend persisted though normalization expected in Q4 .
Company lowered FY25 sales growth outlook to 3–4% (from 4–6%), reflecting steadier-than-anticipated Grid Infrastructure inflection and tariff-related price-volume dynamics, even as EPS guidance rose via tax rate .
Cost inflation (raw materials, tariffs) accelerated from H1; operational investments and restructuring increased in Q3, weighing segment margins despite price-cost offsets .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Net Sales ($USD Billions)	$1.3652	$1.4843	$1.5024
Diluted EPS ($)	$3.15	$4.56	$4.77
Adjusted Diluted EPS ($)	$3.50	$4.93	$5.17
Operating Margin (%)	17.5%	22.7%	22.0%
Adjusted Operating Margin (%)	19.3%	24.4%	23.9%
Free Cash Flow ($USD Millions)	$11.4	$220.7	$253.8

Estimates vs Actual (Q3 2025)	Consensus	Actual
Revenue ($USD Billions)	$1.533*	$1.5024
Primary EPS ($)	$4.976*	$5.17
# of Estimates (EPS / Revenue)	13* / 10*	—

Values retrieved from S&P Global.*

Segment (Q3 2025)	Net Sales ($USD Millions)	YoY	Operating Margin (GAAP)	Adjusted Operating Margin
Utility Solutions	$943.8	+1%	23.2%	25.7%
Electrical Solutions	$558.6	+10%	19.9%	20.8%

KPIs	Q3 2025
Cash from Operations ($USD Millions)	$284.3
Effective Tax Rate (%)	17.5%
Net Debt to Total Capital (%)	21% (Net Debt $1,215.6; Total Capital $5,677.6 as of 9/30/25)

Notes:

Utility Solutions detail: Grid Infrastructure +~9%; Grid Automation -~18% in Q3 .
Adjusted EBITDA Q3: $380.0M (+5% YoY) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Diluted EPS	FY 2025	$16.25–$16.75	$16.55–$16.75	Raised (low end)
Adjusted Diluted EPS	FY 2025	$17.65–$18.15	$18.10–$18.30	Raised (range, midpoint +$0.30 per mgmt)
Total Sales Growth	FY 2025	4–6%	3–4%	Lowered
Adjusted Tax Rate	FY 2025	22.0–22.5%	20.5–21.0%	Lowered
FCF Conversion	FY 2025	~90% on adjusted net income	~90% on adjusted net income	Maintained
Restructuring & Related Investment	FY 2025	~$20M	~$20M	Maintained
Dividend	FY 2025	$5.28 annual ($1.32/qtr)	$5.68 annual ($1.42/qtr)	Raised
DMC Power EPS Accretion	FY 2026	N/A	~+$0.20 adjusted EPS	New (acquisition)

Additional context: Adoption of FIFO inventory accounting in Q2 reduced COGS by $29M ($0.42/diluted share) in Q2 and $20M in 1H; management bridged ~$0.30 H1 benefit within guidance .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025)	Previous Mentions (Q2 2025)	Current Period (Q3 2025)	Trend
Tariffs & Pricing	$135M 2025 inflation/tariff exposure; price actions and $0.50 sensitivity introduced	~2 pts price realized in Q2; ~3 pts full-year; FIFO improves matching; neutralize tariff headwinds	Price/productivity exceeded cost inflation; incremental price in Q4	Improving price-cost, execution holding
Data Center Initiatives	Strong growth (connectors, PCX)	Continued strength; behind-the-meter content detail; vertical selling improvements	Strong Q3 performance; capacity additions; visibility to continued strength	Strengthening
Grid Automation (AMI/meters)	Down ~15%; sequential flattening, MRO base	Down ~13%; headwinds fading, expect YoY flat in Q4	Down 18% in Q3; normalization and return to growth expected in Q4	Bottoming; improvement expected
Utility Distribution Destocking	Emerging from normalization; orders strong	Destocking concluded; return to growth	Orders accelerated in Sep/Oct; broad T&D strength	Improved throughput
Tax Rate	Guide 22–22.5%	Maintained 22–22.5%	Lowered to 20.5–21.0% (Q3 ETR 17.5%); normalize in 2026	Lower in 2025; normalizing 2026
M&A / DMC Power	Pipeline active	Announced acquisition pipeline; small bolt-ons; capital allocation	Closed DMC; substation connectors; neutral Q4, +$0.20 EPS in 2026	Strategic portfolio added
AI/Tech for Efficiency	Not highlighted	“Areas of AI” to gain efficiencies; long-term investment	No new specifics	Early, exploratory
Supply Chain	Not highlighted	FIFO transition; better cost-revenue match	“Supply chain normalization dynamics behind us”	Normalizing

Management Commentary

“Hubbell delivered double digit adjusted earnings per diluted share growth in the third quarter, driven by strong organic growth in Electrical Solutions and Grid Infrastructure…as well as a lower year-over-year tax rate” – Gerben Bakker .
“Order book…accelerated over the past two months in September and October, really releasing some pent-up spending…good sign for 4Q and beyond” – Bill Sperry .
“We are raising our full-year 2025 outlook…lower full-year tax rate drives higher adjusted earnings per share” – Gerben Bakker .
On DMC Power: “highly complementary…unique technical solution in high-growth substation markets…anticipate ~$0.20 of adjusted EPS accretion in 2026” – Gerben Bakker .
“Pricing and productivity actions have been successful in more than offsetting these costs” – Gerben Bakker .

Q&A Highlights

Utility trajectory: Exit rate supports strong 2026 setup, but management remains prudent; Q4 benefits from easier comps and order snapback, particularly in T&D .
Tax rate: 2025 lowered by project-driven restructuring; expected to normalize in 2026 .
Pricing stickiness: Broad acceptance across channel and end markets; small share of total system cost and strong specification positions support stick-rate .
Data center content: Significant behind-the-meter exposure (connectors, grounding, PCX); in-front-of-the-meter investment also a demand driver via utilities .
DMC margins: High-margin substation solution; strong synergy with Hubbell connectors and salesforce scale .

Estimates Context

Q3 2025 EPS beat: Actual adjusted diluted EPS $5.17 vs S&P Global consensus ~$4.98; beat likely driven by lower tax rate and positive price-cost/productivity . Values retrieved from S&P Global.*
Q3 2025 revenue miss: Actual $1.5024B vs S&P Global consensus ~$1.533B; slight miss given Grid Automation weakness and steadier Grid Infrastructure inflection timing . Values retrieved from S&P Global.*
Implications: Consensus EPS for FY25 likely to drift higher on tax rate and margin performance; revenue estimates may adjust modestly lower given updated 3–4% FY25 sales growth outlook .

Key Takeaways for Investors

Q3 quality beat: EPS outperformed consensus on margin discipline and tax rate; revenue modestly below, with clear Q4 visibility from orders and pricing actions—tilts near-term risk/reward favorably into the print cycle .
Segment mix is improving: Electrical Solutions growth and margin expansion, plus broad T&D strength, offset Grid Automation; Q4 comparisons set for normalization in GA (AMI/meters) .
Guidance reset is constructive: Lower sales growth offset by margin/tax benefits; raised FY25 EPS guidance narrows range and improves confidence, with 90% FCF conversion intact .
Structural tailwinds: Grid hardening, load growth, and data center interconnections underpin multi-year T&D demand; Hubbell’s specified positions and portfolio breadth support sustained outgrowth .
Strategic M&A: DMC Power adds high-margin substation connectors, neutral near-term, accretive in 2026; strengthens Hubbell’s substation automation and connector franchises .
Pricing execution: Positive price-cost continues despite tariffs; expect incremental price in Q4; FIFO change improved cost-revenue timing alignment .
Watch 2026 setup: Management cautious near-term but exit rates and demand signals suggest a constructive backdrop; tax rate normalizes and GA headwinds fade—potential for EPS compounding .

HUBBELL INC (HUBB)·Q3 2025 Earnings Summary