Exhibit 99.1
(HUBBELL LOGO)
Date: October 19, 2006 NEWS RELEASE
For Release: IMMEDIATELY
HUBBELL INCORPORATED
584 Derby-Milford Road
P. O. Box 549
Orange, CT 06477
203-799-4100
Contact: Thomas R. Conlin
HUBBELL REPORTS THIRD QUARTER RESULTS:
SALES UP 16%, EARNINGS OF $.78 PER DILUTED SHARE
ORANGE, CT. (October 19, 2006) -- Hubbell Incorporated (NYSE: HUBA, HUBB) today
reported earnings per share of $.78 for the third quarter ended September 30,
2006.
Sales in the quarter were $649.0 million, an increase of 16% over sales of
$561.1 million reported for the third quarter of 2005. Net income was $47.6
million and earnings per diluted share were $.78 as compared to $48.5 million
and $.79, respectively, reported in the third quarter of 2005.
For the first nine months of 2006, sales were $1.83 billion, an increase of 16%
over $1.57 billion reported for the same period last year. Net income for the
first nine months was $128.9 million as compared to $113.0 million for the first
nine months of 2005. Earnings per diluted share of $2.10 improved 15% from the
$1.82 per diluted share reported in the same period of 2005.
The Strongwell-Lenoir City acquisition completed on June 1, 2006, and
acquisitions completed in 2005, contributed five percentage points to the
year-over-year sales comparisons for both the third quarter and nine months, and
contributed to operating profit in both periods. Profit comparisons include the
impact of $2.8 million or $.03 per diluted share for stock-based compensation
costs in the third quarter of 2006, and $8.2 million or $.08 per diluted share
recorded for the nine months of 2006.
Cash flow from operations was $82.9 million in the first nine months of 2006
compared to $126.9 million in the equivalent period of 2005. This decrease is
primarily due to the effects of higher working capital related
-continued-
to significant volume growth year-over-year, the introduction of major new
product offerings, and the impact of SAP implementations this year. Capital
expenditures were $67.1 million in the first nine months compared to $46.6
million in the equivalent period of the prior year primarily due to spending on
a new Lighting headquarters which is scheduled for completion in the first
quarter of 2007. In addition, the Company repurchased approximately 1.7 million
shares of its stock during the first nine months of 2006 for $74.4 million.
OPERATIONS REVIEW
"Hubbell is participating fully in the strength of our markets," said Timothy H.
Powers, Chairman, President, and Chief Executive Officer, "with sales up by 16%
in the third quarter and year-to-date.
"We've noted that 2006 is the peak year of initiatives and change for the
Company. We're absorbing substantial investments in our future, but adding new
accomplishments with each successive quarter. In the third quarter just
completed, further progress in resolving production and delivery inefficiencies
in the Electrical Segment improved its operating margin to 10% which had been
our target for year-end.
"Following the close of the quarter, two other achievements occurred that
deserve special note. First, Hubbell Wiring Systems launched homeSELECT(TM)
residential electrical wiring devices and netSELECT(TM) residential
communications, data and structured wiring systems. With more than 1,700 sku's,
these are the largest new product development programs in the Company's history,
and open a $1.4 billion U.S. market new to Hubbell. The substantial costs and
capital investment related to these new product developments and launches have
been absorbed over the last six quarters.
"Secondly, we completed our fourth SAP implementation encompassing the
Industrial Technology segment and most of the remaining Electrical segment
operations. In 2006, we've successfully brought 50% of our Company on to this
enterprise-wide business system and absorbed the costs and capital investment to
substantially complete the domestic implementation."
-continued-
SEGMENT REVIEW
Sales for the Electrical segment were 9% higher while operating income was lower
by 6% in the third quarter of 2006 versus the third quarter of 2005. Each of the
three businesses in the segment - Wiring Systems, Lighting, and Electrical
Products - reported higher sales compared to the equivalent period of the prior
year with double-digit increases for Wiring Systems and Lighting. Most of the
diverse markets served by the segment continued to exhibit good underlying
strength; only the residential products market - served primarily by Progress
Lighting - showed a weakening trend.
On the same year-over-year comparative basis, operating income was negatively
impacted by a number of factors. These factors included incremental support
costs for SAP, cost associated with new product launches, and higher commodity
costs only partially recovered by product price increases.
The Power Systems segment reported sales of $160.3 million, a 27% increase
compared to the third quarter of 2005 while operating income rose by 6% to $23.8
million. The Strongwell-Lenoir City acquisition completed on June 1, 2006, and
the Delmar acquisition in Brazil completed in July 2005, added $21 million in
sales and just under $5 million in operating income to segment results. By
comparison to the third quarter of 2005, negative cost/price impact, lower
storm-related sales volume, and incremental support costs due to the SAP
implementation, dampened third quarter 2006 operating margin.
The Industrial Technology segment completed another successive quarter of
exceptional growth with sales increasing by 50% and operating income up by 68%
versus the prior year's third quarter. Operating income margin rose by 1.7
percentage points to 16.5%. Strength in the segment's industrial and utility
markets, both in North America and abroad, a leading position in specialty
communications, and 2005 acquisitions -- which contributed 11% of sales growth
- -- were positive contributors.
SUMMARY AND OUTLOOK
"In this peak year of initiatives and change," Powers added, "much of the effort
and attention, and all of the investment in capital and expense, impact our
current results. Most of the resulting benefits are expected to accrue in the
future. This short-term impact on profitability should provide long-term
benefits to the Company's growth. Even with those investments, the Company's
year-to-date diluted earnings per
-continued-
share are 15% above the prior year. With the exception of residential
construction, our markets continue their positive trends, so we are updating
our previous guidance on sales and earnings per diluted share. Total revenues
for the full year 2006 should finish the year closer to a 15% increase over
the prior year. We are also narrowing our previously provided guidance of
earnings per diluted share to $2.80--$2.90 for full year 2006."
Certain statements contained herein may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act 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 words or phrases such
as "may", "projection", "guidance", "potential", "plan", "could", "expect",
"expected", "uncertain", "goal", "should", "probably", "likely", 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 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; general economic
and business conditions; competition; and other factors described in our
Securities and Exchange Commission filings, including the "Business" Section in
the Annual Report on Form 10-K for the year ended December 31, 2005.
Hubbell Incorporated is an international manufacturer of quality electrical and
electronic products for commercial, industrial, residential, utility, and
telecommunications markets. With 2005 revenues of $2.11 billion, Hubbell
Incorporated operates manufacturing facilities in North America, Puerto Rico,
Mexico, Italy, Switzerland, Brazil, and the United Kingdom, participates in
joint ventures in Taiwan and the People's Republic of China and maintains sales
offices in Singapore, Hong Kong, South Korea, People's Republic of China, and
the Middle East. The corporate headquarters is located in Orange, CT.
#####
(Financial Schedules are Attached.)
HUBBELL INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SEPTEMBER 30 NINE MONTHS ENDED SEPTEMBER 30
------------------------------- ------------------------------
2006 2005 2006 2005
------ ------ -------- --------
NET SALES $649.0 $561.1 $1,825.3 $1,569.2
COST OF GOODS SOLD 468.1 396.9(1) 1,320.1(1) 1,125.2(1)
SELLING & ADMINISTRATIVE EXPENSES 107.3 89.9 309.4 270.2(2)
SPECIAL CHARGES 0.7 1.0 3.6 5.2
------ ------ -------- --------
TOTAL OPERATING INCOME 72.9 73.3 192.2 168.6
OPERATING INCOME AS A % OF NET SALES 11.2% 13.1% 10.5% 10.7%
INTEREST EXPENSE, NET (3.1) (2.8) (7.2) (8.4)
OTHER EXPENSE, NET (1.6) (0.2) (0.8) (0.1)
------ ------ -------- --------
INCOME BEFORE INCOME TAXES 68.2 70.3 184.2 160.1
PROVISION FOR INCOME TAXES 20.6 21.8(3) 55.3 47.1(3)
------ ------ -------- --------
NET INCOME $ 47.6 $ 48.5 $ 128.9 $ 113.0
====== ====== ======== ========
EARNINGS PER SHARE:
BASIC $ 0.79 $ 0.80 $ 2.13 $ 1.85
DILUTED $ 0.78 $ 0.79 $ 2.10 $ 1.82
AVERAGE SHARES OUTSTANDING:
BASIC 60.3 60.7 60.5 61.1
DILUTED 61.1 61.5 61.3 62.0
(1) COST OF GOODS SOLD INCLUDES SPECIAL CHARGES OF $0.2 YEAR-TO-DATE 2006, $0.2
IN THE THIRD QUARTER OF 2005 AND $0.7 YEAR-TO-DATE 2005 RELATED TO
ELECTRICAL SEGMENT STREAMLINING.
(2) YEAR-TO-DATE 2005 SELLING & ADMINISTRATIVE EXPENSES INCLUDES $4.6 OF
TRANSACTIONAL EXPENSES IN SUPPORT OF THE COMPANY'S STRATEGIC GROWTH
INITIATIVES.
(3) 2005 THIRD QUARTER AND YEAR-TO-DATE PROVISION FOR INCOME TAXES INCLUDES
$1.9 OF TAX ASSOCIATED WITH ANTICIPATED DIVIDEND REPATRIATIONS UNDER THE
AMERICAN JOBS CREATION ACT OF 2004.
HUBBELL INCORPORATED
SEGMENT INFORMATION
(UNAUDITED)
(IN MILLIONS)
THREE MONTHS ENDED SEPTEMBER 30 NINE MONTHS ENDED SEPTEMBER 30
------------------------------- ------------------------------
2006 2005 2006 2005
------ ------ -------- --------
NET SALES
ELECTRICAL $431.8 $396.6 $1,242.2 $1,126.4
POWER 160.3 126.6 426.9 335.2
INDUSTRIAL TECHNOLOGY 56.9 37.9 156.2 107.6
------ ------ -------- --------
TOTAL NET SALES $649.0 $561.1 $1,825.3 $1,569.2
====== ====== ======== ========
OPERATING INCOME
ELECTRICAL $ 43.2 $ 46.5 $ 115.0 $ 115.2
SPECIAL CHARGES (0.7) (1.2) (3.8) (5.9)
------ ------ -------- --------
TOTAL ELECTRICAL 42.5 45.3 111.2 109.3
POWER 23.8 22.4 63.3 49.3
INDUSTRIAL TECHNOLOGY 9.4 5.6 25.9 14.6
------ ------ -------- --------
SUBTOTAL 75.7 73.3 200.4 173.2
STOCK-BASED COMPENSATION (2.8) -- (8.2) --
UNUSUAL ITEM -- -- -- (4.6)(1)
------ ------ -------- --------
TOTAL OPERATING INCOME $ 72.9 $ 73.3 $ 192.2 $ 168.6
------ ------ -------- --------
(1) YEAR-TO-DATE 2005 UNUSUAL ITEM OF $4.6 REPRESENTS TRANSACTIONAL EXPENSES IN
SUPPORT OF THE COMPANY'S STRATEGIC GROWTH INITIATIVES, INCLUDED IN SELLING
& ADMINISTRATIVE EXPENSES.
HUBBELL INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN MILLIONS)
SEPTEMBER 2006 DECEMBER 2005
-------------- -------------
ASSETS
CASH AND CASH EQUIVALENTS $ 54.9 $ 110.6
SHORT-TERM INVESTMENTS -- 121.3
ACCOUNTS RECEIVABLE, NET 411.2 310.4
INVENTORIES, NET 341.6 237.1
DEFERRED TAXES AND OTHER 37.0 40.7
-------- --------
TOTAL CURRENT ASSETS 844.7 820.1
PROPERTY, PLANT AND EQUIPMENT, NET 311.0 267.8
INVESTMENTS 35.4 78.8
GOODWILL 419.9 351.5
INTANGIBLE ASSETS AND OTHER 180.1 148.8
-------- --------
TOTAL ASSETS $1,791.1 $1,667.0
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
SHORT-TERM DEBT $ 13.9 $ 29.6
ACCOUNTS PAYABLE 212.2 159.5
ACCRUED SALARIES, WAGES AND EMPLOYEE BENEFITS 48.3 41.4
ACCRUED INCOME TAXES 27.9 20.0
DIVIDENDS PAYABLE 19.9 20.2
OTHER ACCRUED LIABILITIES 111.2 89.8
-------- --------
TOTAL CURRENT LIABILITIES 433.4 360.5
LONG-TERM DEBT 199.3 199.2
OTHER NON-CURRENT LIABILITIES 120.2 109.2
-------- --------
TOTAL LIABILITIES 752.9 668.9
SHAREHOLDERS' EQUITY 1,038.2 998.1
-------- --------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $1,791.1 $1,667.0
======== ========
HUBBELL INCORPORATED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN MILLIONS)
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
2006 2005
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME $128.9 $113.0
DEPRECIATION AND AMORTIZATION 41.2 36.7
STOCK-BASED COMPENSATION EXPENSE 8.2 --
TAX BENEFIT FROM EXERCISE OF STOCK OPTIONS (3.8) --
CHANGES IN WORKING CAPITAL (106.3) (26.9)
CONTRIBUTION TO DOMESTIC PENSION PLANS -- (10.0)
OTHER, NET 14.7 14.1
------ ------
NET CASH PROVIDED BY OPERATING ACTIVITIES 82.9 126.9
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES
CAPITAL EXPENDITURES (67.1) (46.6)
ACQUISITION OF BUSINESSES, NET OF CASH ACQUIRED (117.4) (53.2)
NET PROCEEDS FROM INVESTMENTS 164.9 100.1
OTHER, NET 2.3 4.8
------ ------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (17.3) 5.1
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES
BORROWINGS/REPAYMENTS OF SHORT-TERM DEBT (16.0) 6.8
PAYMENT OF DIVIDENDS (60.2) (60.5)
ACQUISITION OF COMMON SHARES (74.4) (59.1)
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 24.5 19.6
TAX BENEFIT FROM EXERCISE OF STOCK OPTIONS 3.8 --
------ ------
NET CASH USED IN FINANCING ACTIVITIES (122.3) (93.2)
------ ------
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 1.0 (0.8)
------ ------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (55.7) 38.0
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD 110.6 139.9
------ ------
END OF PERIOD $ 54.9 $177.9
====== ======
CERTAIN PRIOR YEAR AMOUNTS HAVE BEEN RECLASSIFIED TO CONFORM WITH THE CURRENT
YEAR PRESENTATION.