Hubbell (HUBB) Q4 2023 earnings summary

Executive summary

• Q4 sales rose 10% to $1,345.8M, with 8% organic growth; adjusted operating margin expanded 340 bps to 19.4% and adjusted diluted EPS rose 42% to $3.69.

• Strong volume, price realization and productivity supported results; portfolio strategy prioritized critical infrastructure for grid modernization and electrification.

• FY23 free cash flow was $715.1M; 2024 guidance calls for 8–10% sales growth and adjusted EPS of $16.00–$16.50.

Financial highlights

• Q4 continuing-operations net sales were $1,345.8M, up 10% reported and 8% organic YoY.

• Q4 operating income was $225.6M vs. $172.0M; operating margin was 16.8% vs. 14.1%. Adjusted operating profit rose 34%, with adjusted margin at 19.4%, up 340 bps.

• Q4 diluted EPS was $3.16 vs. $2.27; adjusted diluted EPS was $3.69, up 42%. FY23 adjusted diluted EPS was $15.33.

• FY23 sales were $5,372.9M vs. $4,947.9M; operating income was $1,038.5M vs. $709.1M.

• Q4 free cash flow was $284M vs. $180M; FY23 free cash flow was $715.1M.

Outlook and guidance

• 2024 total sales growth forecast at 8–10%, including 3–5% organic growth; acquisitions net of the pending residential lighting divestiture are expected to add ~5%.

• 2024 diluted EPS guidance is $14.40–$14.90 GAAP and $16.00–$16.50 adjusted; adjusted guidance excludes expected acquisition-related amortization of ~$1.60 per share.

• 2024 free cash flow outlook is ~$800M; adjusted operating profit growth is expected at ~10% at the midpoint. Guidance assumes an adjusted tax rate of ~22.5% and includes ~$0.25 per share of restructuring and related investment.

• EPS bridge assumes 2–4% volume growth, 1% price offset by material inflation, and productivity offsetting other cost inflation; Systems Control, Balestro and EIG add $90M adjusted operating profit, partly offset by ~$20M from the pending residential lighting divestiture.