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First Quarter 2013 Earnings Conference Call April 18, 2013.

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Presentation on theme: "First Quarter 2013 Earnings Conference Call April 18, 2013."— Presentation transcript:

1 First Quarter 2013 Earnings Conference Call April 18, 2013

2 Forward Looking Statements Certain statements contained in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as “expects”, “projected”, “scheduled”, “could”, “believe”, “anticipated” and others. Such forward-looking statements involve numerous assumptions, known and unknown risks, uncertainties and other factors which may cause actual and future performance or achievements of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors include: achieving sales levels to fulfill revenue expectations; unexpected costs or charges, certain of which may be outside the control of the Company; general economic and business conditions; and competition. For additional information identifying factors that may cause actual results to vary materially from those stated in the forward-looking statements, refer to our most recent 10-K for the year ended December 31, 2012 that is filed with the SEC and is also available at www.hubbell.com.

3 3 1Q 2013 Summary  Net sales increased 2% Acquisitions contributed 3% Compare against strong 1Q 2012  Operating margin of 13.2% Lower sales of higher margin industrial products Facility consolidation costs  Diluted EPS of $1.10 – up 5% Includes R&D Tax Credit Organic demand weaker as expected on challenging comparison

4 4 1Q 2013 Sales Sales End Markets ($Millions) +2% Non-residential Industrial Utility Residential Increase due to acquisitions +3% Broad based growth Transmission and Distribution Industrial production New construction Renovation and relight Extractive industries High voltage test equipment

5 5 1Q 2013 Gross Margin and S&A Selling and Administrative S&A% Acquisitions Higher employee related costs +5% ($Millions) Gross Margin - 40 bps Lower sales of industrial products Facility consolidation costs Impacted by slow start as expected

6 6 1Q 2013 Operating Profit Operating Profit OP% -4% ($Millions) Drivers YOY Comments Gross MarginDecreased Lower sales of industrial products Consolidation costs S&AIncreased Acquisitions Employee Costs Decrease due to lower sales of industrial products and consolidation costs

7 7 1Q 2013 Total Other Expense and Tax Rate ($Millions) Total Other Expense Tax Rate (%) Higher foreign exchange gains 1Q 2013 R&D credit in 1Q 2013 -8% -600 bps

8 8 1Q 2013 Net Income and EPS Net Income Earnings Per Diluted Share ($Millions except EPS) (a) (a)Net Income in this presentation refers to Net Income attributable to Hubbell Higher net income Lower tax rate Decreased operating profit + 4% + 5% Modest earnings growth on lower organic volume

9 9 1Q 2013 Electrical Segment Results Acquisitions led sales growth Sales Markets Performance Acquisitions added 3% Industrial weak Non-residential mixed Residential strong Lower sales of industrial products Price and productivity offset all cost increases ($Millions) Operating Profit +2% -3%

10 10 1Q 2013 Power Segment Results Margin impacted by facility consolidation costs Sales Markets Performance Acquisitions contributed 3% Distribution and Transmission flat Facility consolidation costs Unfavorable material cost / price Operating Profit ($Millions) +3% -5%

11 11 1Q 2013 Cash Flow ($Millions) Seasonally lowest quarter (a) Non-GAAP Financial measure – see appendix 1 Key Drivers: Increase use of Working Capital in 1Q 2013 due to timing of tax payments

12 Trade Working Capital Continued focus on working capital management Non-GAAP Financial measure – see appendix 1 12

13 2013 Capital Structure Strong capital structure supports investment flexibility ($Millions) (a)Includes unamortized discount (b)Non-GAAP Financial measure – see appendix 1 13

14 14 2013 Outlook – End Market Growth Modest end market growth expected – 2 nd half weighted Residential Nonresidential Industrial Utility 1 to 3% 0 to 2% 2 to 4% 15% Estimated % Hubbell Sales

15 15 2013 Outlook – Segment Sales Growth 3 to 5% sales increase expected Segments (2012 Sales) Power31% Electrical69% 4 to 6%Acquisition contributes 2% Transmission grows modestly Distribution at GDP 3 to 5%Non-residential slow growth Industrial mixed Residential strong

16 16 Outlook – FY 2013  Sales expected to increase 3 to 5% compared to 2012 Completed acquisitions (2012 and 2013) contribute 2% to sales  Margin expected to increase approximately 40 bps More facility related costs expected in 2Q 2013 ~ $0.03-$0.04 impact  Free cash flow expected to equal net income  Tax rate of 31.5% anticipated Planning to deliver strong results in 2013

17 17 Appendix 1 Hubbell Incorporated Reconciliation of Net Cash Provided By Operating Activities (GAAP) to Free Cash Flow Free Cash Flow Notes: Management believes that free cash flow provides useful information regarding Hubbell’s ability to generate cash without reliance on external financings. In addition, management uses free cash flow to evaluate the resources available for investments in the business, strategic acquisitions and further strengthening the balance sheet. Net Debt to Capital Hubbell Incorporated Reconciliation of Net Debt to Capital Notes: Management believes that net debt to capital is a useful measure regarding Hubbell’s financial leverage for evaluating the company’s ability to meet its funding needs. Reconciliation of Non-GAAP Financial Measures

18 18 Appendix 1 Hubbell Incorporated Reconciliation of Trade Working Capital (TWC) % of Sales Trade Working Capital (TWC) % of Sales Notes: Management believes that Trade Working Capital (TWC) % of Sales provides useful information regarding Hubbell’s ability to manage these important elements of cash flow. Reconciliation of Non-GAAP Financial Measures


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