Hubbell Reports Strong Fourth Quarter, Full Year 2004 Results.ORANGE, Conn. -- Hubbell Hubbell may refer to: People with the surname Hubbell:
See: New York Stock Exchange : HUBA, HUBB) today reported strong operating results for the fourth quarter and full year ended December December: see month. 31, 2004. The Company cited as contributors another year of accomplishment in its internal productivity and efficiency initiatives and positive trends in its markets. Sales in the fourth quarter 2004 totaled $499.7 million for a 12% increase over $444.7 million reported in the equivalent period last year. Sales for the full year 2004 rose to $1.99 billion, a 13% increase, compared to $1.77 billion reported for 2003. Net income for the fourth quarter 2004 was $47.8 million or a 37% increase over $34.8 million reported last year. Earnings per share, diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. , rose 35% to $.77 as compared to $.57 reported for 2003. Both of the periods included items that affect the year-over-year comparison: --The fourth quarter of 2004 included a $.16 per share benefit related to the completion of IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. examinations for years through 2001, partially offset by expenses of $2.8 million, pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta , or $.03 per share for ongoing charges related to restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). initiatives. --The fourth quarter of 2003 included pre-tax expenses of $0.5 million or $.01 per share for actions under the Company's ongoing program to restructure its Lighting business. Net income for the full year 2004 was $154.7 million or a 34% increase over $115.1 million reported last year. Earnings per share, diluted, rose 31% to $2.51 as compared to $1.91 reported for 2003. Included in these comparable results were: --In 2004, the tax benefit of $.16 per share offset by restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $16.7 million, pre-tax, or $.18 per share, including amounts reported in Cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold . --In 2003, restructuring expenses of $8.1 million, pre-tax, or $.08 per share including amounts reported in Cost of goods sold. OPERATIONS REVIEW "Hubbell's 2004 results, and the accomplishments throughout the Company which drove them, were exceptional," said Timothy H. Powers, Chairman, President, and Chief Executive Officer. "We exceeded our plan for sales, operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. , and net income. Our lean manufacturing Lean manufacturing is the production of goods using less of everything compared to mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. initiative was broadened in several ways: through our supply chain, into product design and development, and adding a Voice of the Customer element. The Hubbell 2006 initiative reached a milestone. This is a new, enterprise-wide business system which had its first "go-live" at the Wiring Systems operations. Restructuring, chiefly within Hubbell Lighting, moved forward. We've we've Contraction of we have. we've have further reduced our plant and equipment footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. even as we achieved 13% more sales. These efforts, and others, are permanently transforming Hubbell into a more flexible, more responsive, and more profitable Company." "The year was challenging as well," Powers continued, "and especially so in materials cost. The rate of cost increases was unprecedented. Metals like steel, copper, and aluminum had successive escalations in cost throughout the year. Oil, which exceeded $50 per barrel at one point, impacted freight costs, feedstock feed·stock n. Raw material required for an industrial process. Noun 1. feedstock - the raw material that is required for some industrial process raw material, staple - material suitable for manufacture or use or finishing for molding plastic parts, and the cost of heating our facilities. All impacted margins of businesses within the Power Systems and Electrical segments which have a high metal content in their product lines. Spending on implementation of Hubbell 2006 also increased. This is a complex system and implementation, but we're we're Contraction of we are. we're we are moving steadily up the learning curve at Wiring Systems which will benefit the next three staged 'go-lives' scheduled in 2005." "Nonetheless, we met our operating goals for the year: higher sales, another year of operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: improvement in every business platform, further gains in asset efficiency, and a strong balance sheet to support future growth as we ended 2004 with cash and investments, net of debt, exceeding $100 million." SEGMENT REVIEW The comments and year-over-year percentage comparisons in this segment review are based on fourth quarter results in 2004 and 2003. In the Electrical Segment, sales improved by 12% and operating profit was level with the prior year. Higher restructuring costs at Lighting operations, higher year-over-year spending on the business system implementation, and increased commodity costs offset the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. effects of increased volume. Within the segment, Hubbell Lighting reported positive double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. sales comparisons and, excluding restructuring costs, operating profit improvement. Both Commercial/Industrial Products and the Progress brand, the largest supplier of residential fixtures in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , showed another quarter of strong growth. Sales at the Wiring Systems operations improved modestly and profits were even with last year. Electrical Products reported higher sales and operating profits, but margin declined in the quarter chiefly as a result of steel price increases. Steel is the primary component of many of this group's products - Raco switch, junction, and outlet boxes Noun 1. outlet box - (electricity) receptacle consisting of the metal box designed for connections to a wiring system receptacle - an electrical (or electronic) fitting that is connected to a source of power and equipped to receive an insert , as examples -- and the cost of steel continued to escalate es·ca·late v. es·ca·lat·ed, es·ca·lat·ing, es·ca·lates v.tr. To increase, enlarge, or intensify: escalated the hostilities in the Persian Gulf. v.intr. . Price increases on these products were announced to recover higher steel costs, but the lag between announcement and implementation of the product price increase - typically a calendar quarter - impacted profitability in the final period of the year. The Power Systems Segment finished 2004 with another strong quarter. Sales and operating profit both rose although margins were lower due, again, primarily to raw material price increases. Many of the segment's A.B. Chance and Connectors products are metals-based so the impact of higher costs and the lag before price increases were implemented to offset the latest surge in costs impacted margin. Nonetheless, increased orders from utility customers due to a stronger economy, share growth at key distributors, and contract awards won in international markets were all components of the segment's growth. Sales and operating profit totals gained positive comparisons in the Industrial Technology segment. Increased capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. by customers in metals production and other basic industries benefited its Industrial Controls and Gleason Glea·son , Herbert John Known as "Jackie." 1916-1987. American entertainer best remembered for his portrayal of Ralph Kramden on the television comedy The Honeymooners (1952-1957). Reel operations. Internal initiatives helped move the High Voltage The term high voltage characterizes electrical circuits, in which the voltage used is the cause of particular safety concerns and insulation requirements. High voltage is used in electrical power distribution, in cathode ray tubes, to generate X-rays and particle beams, to unit into profitability even though its sales were even with one year ago. Only the GAI-Tronics unit reported lower operating profits, primarily due to an unfavorable product mix in the final quarter of 2004 versus exceptionally strong margins in the same period of 2003. SUMMARY AND OUTLOOK "Our strategy which was the foundation of our excellent year in 2004 remains unchanged," said Powers. "We are focused on operational excellence. We intend to gain greater benefits in 2005 through our lean manufacturing initiative, training our people, extending our product lines and market shares, and seeking complementary acquisitions at reasonable prices." "The economic environment looks promising," Powers added. "Modest recovery in our key markets should continue. Most observers are predicting 2005 GDP GDP (guanosine diphosphate): see guanine. growth in the 3-4% range and we agree with that projection. Capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. should also continue rising, at a modest rate, which should translate into higher capital spending and order input to our businesses. Continued increases in utility spending and an up-tick Noun 1. up-tick - a small increase; "the up-tick in terrorist activity" increment, increase - the amount by which something increases; "they proposed an increase of 15 percent in the fare" in non-residential construction should also be seen. Commodity prices will likely go higher in the near-term near-term adj. Of, for, or involving a short period of time in the near future. but a plateau plateau, elevated, level or nearly level portion of the earth's surface, larger in summit area than a mountain and bounded on at least one side by steep slopes, occurring on land or in oceans. , at the least, appears close. Finally, while the residential market is likely to contract by mid-single digits from the high levels of the past several years, we expect Hubbell's prominent position will generate increased market share and another year of positive comparisons." "In 2005," Powers concluded, "assuming these general economic forecasts prove to be close to the mark, we expect the Company's performance to be better than 2004. We are focused on further accomplishments in all of our initiatives: lean manufacturing, focus on working capital efficiency, Hubbell 2006, restructuring, and others. Our continuing restructuring will entail entail, in law, restriction of inheritance to a limited class of descendants for at least several generations. The object of entail is to preserve large estates in land from the disintegration that is caused by equal inheritance by all the heirs and by the ordinary expense -- $20-30 million, pre-tax, primarily in lighting operations - and that initiative should continue to improve our operating results. In all, sales and net income should reach new levels for the Company and earnings per share excluding restructuring expense is expected to be in the $2.65 -- $2.95 range." Certain statements contained herein may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These include statements about capital resources, performance and results of operations and are based on the Company's reasonable current expectations. These statements may be identified by the use of forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. words or phrases such as "assuming", "growth", "expect", "extending", "should", "intend", "will likely", "transforming", "achieving", "progress", "continue", "ongoing", "projection," "predicting", "rising", "appears", "generate", "seeking", "looks"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, but are not limited to: achieving sales levels to fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. revenue expectations; unexpected costs or charges, certain of which may be outside the control of the Company; expected benefits of process improvement and other lean initiatives; the effect and costs of the ongoing Hubbell 2006 business information system initiative and restructuring programs; the availability and costs of raw materials and purchased components; realization of price increases; the ability to achieve projected levels of efficiencies and cost reduction measures; 2005 general economic projections and business conditions; and competition. Hubbell Incorporated is an international manufacturer of quality electrical and electronic products for commercial, industrial, residential, utility, and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. markets. With 2004 revenues of $2.0 billion, Hubbell Incorporated operates manufacturing facilities in North America, Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. , Italy Italy (ĭt`əlē), Ital. Italia, officially Italian Republic, republic (2005 est. pop. 58,103,000), 116,303 sq mi (301,225 sq km), S Europe. , Switzerland Switzerland (swĭt`sərlənd), Fr. Suisse, Ger. Schweiz, Ital. Svizzera, officially Swiss Confederation, federal republic (2005 est. pop. 7,489,000), 15,941 sq mi (41,287 sq km), central Europe. , and the United Kingdom, participates in a joint venture in Taiwan Taiwan (tī`wän`), Portuguese Formosa, officially Republic of China, island nation (2005 est. pop. 22,894,000), 13,885 sq mi (35,961 sq km), in the Pacific Ocean, separated from the mainland of S China by the 100-mi-wide (161-km) Taiwan , and maintains sales offices in Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km). , Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. , South Korea, People's Republic People's Republic n. A political organization founded and controlled by a national Communist party. of China, and the Middle East. The corporate headquarters is located in Orange, CT.
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF EARNINGS
(in millions, except per share data)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
(UNAUDITED) (UNAUDITED) (UNAUDITED)
------ ------- --------- ---------
2004 2003 2004 2003
------ ------ -------- --------
Net Sales $499.7 $444.7 $1,993.0 $1,770.7
Cost of goods sold 358.2 316.8 (2) 1,431.1 (1) 1,289.2 (2)
------ ------ -------- --------
Gross Profit 141.5 127.9 561.9 481.5
Selling & administrative
expenses 86.6 76.5 333.9 303.9
Special charges, net 2.8 - 15.4 5.7
------ ------ -------- --------
Total Operating Income 52.1 51.4 212.6 171.9
Investment income 2.9 0.9 6.5 3.7
Interest expense (5.2) (5.1) (20.6) (20.6)
Other income (expense),
net (1.4) (0.2) (1.2) 0.5
------ ------ -------- --------
Total Other Expense, net (3.7) (4.4) (15.3) (16.4)
------ ------ -------- --------
Income Before Income
Taxes 48.4 47.0 197.3 155.5
Provision for income
taxes 0.6 (3) 12.2 42.6 (3) 40.4
------ ------ -------- --------
NET INCOME $ 47.8 $ 34.8 $ 154.7 $ 115.1
====== ====== ======== ========
Earnings Per Share -
Diluted $ 0.77 $ 0.57 $ 2.51 $ 1.91
====== ====== ======== ========
Average Shares Outstanding
- Diluted 62.1 60.9 61.6 60.1
(1) 2004 Cost of goods sold includes a special charge of $1.3 for
Lighting business restructuring.
(2) 2003 Cost of goods sold includes special charges of $0.5 and $2.4
for Lighting business restructuring in the fourth quarter and full
year, respectively.
(3) 2004 Provision for income taxes reflects a benefit of $10.2
related to completion of IRS examinations for years through 2001.
HUBBELL INCORPORATED
CONSOLIDATED STATEMENT OF EARNINGS BY SEGMENT
(in millions, except per share data)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
(UNAUDITED) (UNAUDITED) (UNAUDITED)
-------- -------- -------- --------
2004 2003 2004 2003
------ ------ -------- --------
Net Sales
Electrical $369.9 $331.0 $1,476.8 $1,313.7
Power 95.9 82.7 386.2 332.5
Industrial
Technology 33.9 31.0 130.0 124.5
------------ ----------- ------------ ---------
Total Net Sales $499.7 $444.7 $1,993.0 $1,770.7
====== ====== ======== ========
Operating Income
Electrical $ 41.9 $ 39.6 $ 173.4 $ 136.3
Special charges,
net (2.8) (0.5) (16.7) (8.1)
------ ------ -------- --------
Total Electrical 39.1 39.1 156.7 128.2
Power 9.1 8.8 41.2 32.9
Industrial
Technology 3.9 3.5 14.7 10.8
------ ------ -------- --------
Total Operating
Income 52.1 51.4 212.6 171.9
------ ------ -------- --------
Other expense, net (3.7) (4.4) (15.3) (16.4)
------ ------ -------- --------
Income Before Income
Taxes 48.4 47.0 197.3 155.5
Provision for income
taxes 0.6 12.2 42.6 40.4
------ ------ -------- --------
NET INCOME $ 47.8 $ 34.8 $ 154.7 $ 115.1
====== ====== ======== ========
Earnings Per Share -
Diluted $ 0.77 $ 0.57 $ 2.51 $ 1.91
====== ====== ======== ========
Average Shares
Outstanding - Diluted 62.1 60.9 61.6 60.1
HUBBELL INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in millions)
(UNAUDITED) (UNAUDITED)
DECEMBER SEPTEMBER DECEMBER
2004 2004 2003
---------- ---------- ---------
ASSETS
Cash and temporary cash
investments $ 324.3 $ 310.7 $ 220.8
Short-term investments 17.2 17.2 -
Accounts receivable (net) 288.5 297.3 227.1
Inventories (net) 216.1 212.4 207.9
Deferred taxes and other 46.3 53.5 53.5
-------- -------- --------
CURRENT ASSETS 892.4 891.1 709.3
Property, plant and equipment
(net) 261.8 264.7 295.8
Investments 65.7 60.7 80.1
Goodwill 326.6 322.9 322.7
Intangible assets and other 95.9 89.4 91.5
-------- -------- --------
TOTAL ASSETS $1,642.4 $1,628.8 $1,499.4
======== ======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current portion of long-term debt $ 99.9 $ - $ -
Accounts payable 132.1 120.9 103.6
Accrued salaries, wages and
employee benefits 46.8 66.3 51.1
Accrued income taxes 24.4 54.2 34.9
Dividends payable 20.2 20.1 19.9
Other accrued liabilities 85.9 89.0 78.9
-------- -------- --------
CURRENT LIABILITIES 409.3 350.5 288.4
Long-term debt 199.1 299.0 298.8
Other non-current liabilities 89.7 83.3 82.5
-------- -------- --------
TOTAL LIABILITIES 698.1 732.8 669.7
SHAREHOLDERS' EQUITY 944.3 896.0 829.7
-------- -------- --------
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $1,642.4 $1,628.8 $1,499.4
======== ======== ========
HUBBELL INCORPORATED
CONDENSED CONSOLIDATED CASH FLOWS FROM OPERATING ACTIVITIES
AND SUPPLEMENTARY CASH FLOW INFORMATION
(in millions)
(unaudited)
TWELVE MONTHS ENDED
DECEMBER 31
------ ------
2004 2003
------ ------
Operating Activities
Net Income $154.7 $115.1
Depreciation and amortization 48.9 52.6
Non-cash special charges 8.3 3.4
Changes in working capital (23.0) 74.1
Contribution to domestic, qualified, defined
benefit pension plans (25.0) (25.0)
Other, net 21.1 22.0
------ ------
Net cash provided by operating activities 185.0 242.2
Supplementary Cash Flow Information
Capital expenditures $(39.1) $(27.6)
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