Hubbell (HUBB) J.P. Morgan Industrials Conference 2025 summary

Demand trends and business outlook

• Utility demand has strengthened, with book-to-bill above one for the first time in seven quarters, signaling the end of a prolonged destocking phase and a return to shipments aligning with install rates in 2025.

• Electrical demand remains steady, especially in light industrial segments, while commercial demand is stable but less robust.

• Data center growth is a key driver, with increased emphasis on hardening distribution infrastructure due to more frequent and severe outages.

• Distribution channel destocking is expected to fade in 2025, leading to normalized shipping patterns.

• Telecom sector orders are stabilizing after a challenging year, with modest growth expected from a lower base.

Pricing, tariffs, and cost management

• Exposure to Chinese tariffs has been significantly reduced through divestitures and onshoring; current focus is on compliance with USMCA and managing price increases due to tariffs and rising material costs.

• Price increases have been implemented in response to higher steel and commodity costs, with further step increases anticipated.

• The impact of tariffs and material cost inflation is expected to be more pronounced in the second quarter, with a lag in price realization due to backlog fulfillment.

• Channel partners remain receptive to moderate price increases, with 2024 marking a return to normal pricing dynamics after extraordinary increases in prior years.

• Approximately half of cost of goods sold is material-related, with 40% of that in raw materials, mostly sourced domestically.

Segment performance and growth drivers

• Data center-related products are split between balance-of-system components, which are growing strongly, and modular enclosures, which are rebounding after a redesign; both are expected to grow at mid-teens rates in 2025.

• Metering business faces risk if new projects do not materialize, with current visibility on new orders limited.

• Government programs like IIJA and BEAD are seen as potential upside rather than core to the near- or medium-term outlook.

• Light industrial demand is solid, while commercial and institutional segments are more modest and subject to real estate trends.