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

Demand trends and market 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 matching 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 major driver, with increased emphasis on grid hardening due to more frequent and severe outages, supporting a bullish medium-term outlook.

• Distribution demand has lagged due to inventory build-up post-COVID, but normalization is expected as backlogs clear through 2024 and into 2025.

• Telecom sector orders are stabilizing after a challenging year, with order books firming and modest growth anticipated.

Pricing, tariffs, and cost management

• Exposure to Chinese tariffs has been reduced significantly through divestitures and onshoring, with current focus on USMCA compliance and price adjustments to offset tariff and material cost increases.

• Price increases have been implemented in response to rising steel and commodity costs, with further step changes expected as tariffs and material inflation take effect, mainly impacting Q2 2025.

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

• Approximately 40% of cost of goods sold is raw materials, mostly sourced domestically, with domestic prices rising in sympathy with global tariffs.

• Decision-making is challenged by policy uncertainty, impacting restructuring and supply chain realignment plans.

Business segment performance and growth

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

• Metering business faces risk if new projects do not materialize, with visibility on future orders still developing.

• Light industrial remains a strong segment, while commercial and institutional demand is more modest and subject to real estate trends.

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