HUBBELL INC - Quarter Report: 2024 September (Form 10-Q)

Commitments and contingencies (Note 15) Noncontrolling interest TOTAL EQUITY TOTAL LIABILITIES AND EQUITY$ $

See notes to unaudited Condensed Consolidated Financial Statements.

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Condensed Consolidated Statements of Cash Flows (unaudited)


	Nine Months Ended September 30,
(in millions)	2024	2023
Cash Flows from Operating Activities
Net income	$	$
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
Deferred income taxes		()
Stock-based compensation
Provision for bad debt expense	()
Loss on disposition of business
Loss on sale of assets
Changes in assets and liabilities, excluding effects of acquisitions:
Increase in accounts receivable, net	()	()
Increase in inventories, net	()	()
(Decrease) increase in accounts payable	()
Decrease in current liabilities	()	()
Changes in other assets and liabilities, net
Contribution to qualified defined benefit pension plans	()	()
Other, net	()	()
Net cash provided by operating activities
Cash Flows from Investing Activities
Capital expenditures	()	()
Acquisitions, net of cash acquired		()
Proceeds from disposal of business, net of cash
Purchases of available-for-sale investments	()	()
Proceeds from available-for-sale investments
Other, net
Net cash provided by (used in) investing activities		()
Cash Flows from Financing Activities
Payment of long-term debt	()
Borrowing (Payment) of short-term debt, net		()
Payment of dividends	()	()
Acquisition of common shares	()	()
Other, net	()	()
Net cash used in financing activities	()	()
Effect of exchange rate changes on cash and cash equivalents	()
Increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents within assets held for sale, beginning of year
Restricted cash, included in other assets, beginning of year
Less: Restricted cash, included in Other Assets

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$ $ $ International Total Utility Solutions$ $ $ $ United States$ $ $ $ International Total Electrical Solutions$ $ $ $ TOTAL$ $ $ $

Contract Balances

Our contract liabilities consist of advance payments for products as well as deferred revenue on service obligations and extended warranties. Deferred revenue is included in Other accrued liabilities in the Condensed Consolidated Balance Sheets.

Contract liabilities were $ million as of September 30, 2024 compared to $ million as of December 31, 2023. The $ million increase in our contract liabilities balance was primarily due to a $ million net increase in current year deferrals primarily due to timing of advance payments on certain orders, partially offset by the recognition of $ million in revenue related to amounts that were recorded in contract liabilities at January 1, 2024. The ending balance of contract assets as of September 30, 2024 and December 31, 2023, was $ million and $ million, respectively, with the decrease being driven by revenue recognized in excess of billings. Impairment losses recognized on our receivables and contract assets were immaterial for the three and nine months ended September 30, 2024.

Unsatisfied Performance Obligations

As of September 30, 2024, the Company had approximately $ million of unsatisfied performance obligations for contracts with an original expected length of greater than one year, primarily relating to long-term contracts of the Utility Solutions segment to deliver and install meters, metering communications and grid monitoring sensor technology. The Company expects that a majority of the unsatisfied performance obligations will be completed and recognized over the next .

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NOTE 4

$ $ $ % %Electrical Solutions % %TOTAL$ $ $ $ % %Nine Months Ended September 30,Utility Solutions$ $ $ $ % %Electrical Solutions % %TOTAL$ $ $ $ % %

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NOTE 5

$ Work-in-process Finished goods Subtotal Excess of FIFO over LIFO cost basis()()TOTAL$ $

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NOTE 6

$ $

Prior year acquisitions(1)

() ()Foreign currency translation () ()BALANCE AT SEPTEMBER 30, 2024$ $ $

(1) Refer to Note 2 - Business Acquisitions for additional information.

$()$ $()Customer relationships, developed technology and other () ()TOTAL DEFINITE-LIVED INTANGIBLES$ $()$ $()Indefinite-lived: Tradenames and other TOTAL OTHER INTANGIBLE ASSETS$ $()$ $()

Amortization expense associated with definite-lived intangible assets was $ million and $ million during the three months ended September 30, 2024 and 2023, respectively, and $ million and $ million during the nine months ended September 30, 2024 and 2023, respectively. Future amortization expense associated with these intangible assets is estimated to be $ million for the remainder of 2024, $ million in 2025, $ million in 2026, $ million in 2027, $ million in 2028, and $ million in 2029. The Company amortizes intangible assets with definite lives using either an accelerated method that reflects the pattern in which economic benefits of the intangible assets are consumed and results in higher amortization in the earlier years of the assets' useful lives, or using a straight line method. Approximately % of the gross value of definite-lived intangible assets follow an accelerated amortization method.

The organizational changes described in Note 3 - Revenue resulted in a change in the Company's reporting units within the Electrical Solutions segment. As a result of the change in reporting units, the Company performed an interim goodwill impairment assessment prior to the change, for the reporting units within the Electrical Solutions segment. Because the changes did not affect the Utility Solutions segment, no interim goodwill impairment assessment was required for that segment.

The Company elected to utilize the quantitative goodwill impairment testing process, as permitted in the accounting guidance, by comparing the estimated fair value of the reporting units to their carrying values. If the estimated fair value of a reporting unit exceeds its carrying value, no impairment exists.

Goodwill impairment testing requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units and determining the fair value of each reporting unit. Significant judgment is required to estimate the fair value of reporting units including estimating future cash flows, determining appropriate discount rates and other assumptions, including assumptions about secular economic and market conditions. The Company uses internal discounted cash flow models to estimate fair value. These cash flow estimates are derived from historical experience, third party end market data, and future long-term business plans and include assumptions of future sales growth, gross margin, operating margin, terminal growth rate, and the application of an appropriate discount rate. Significant changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for each reporting unit. The Company believes that its estimated aggregate fair value of its reporting units is reasonable when compared to the Company's market capitalization on the valuation date.

The impairment testing resulted in implied fair values for each reporting unit that significantly exceeded such reporting unit's carrying value, including goodwill. The Company did not have any reporting units with zero or negative carrying amounts.

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NOTE 7

$ Accrued income taxes Contract liabilities - deferred revenue Customer refund liability

Accrued warranties short-term(1)

Current operating lease liabilities Other TOTAL$ $

(1) Refer to Note 22 - Guarantees, in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information regarding warranties.

NOTE 8

$ Other post-retirement benefits Deferred tax liabilities

Accrued warranties long-term(1)

Non-current operating lease liabilities Other TOTAL$ $

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NOTE 9

$ $ $()$ $ Net income— — — Other comprehensive (loss) income— — — ()()— Stock-based compensation— — — —

Acquisition/surrender of common shares(1)

— ()()— ()—

Cash dividends declared ($ per share)

— — ()— ()— Dividends to noncontrolling interest— — — — — ()Directors deferred compensation— — — — BALANCE AT JUNE 30, 2024$ $ $ $()$ $ Net income— — — Other comprehensive (loss) income— — — — Stock-based compensation— — — —

Acquisition/surrender of common shares(1)

— ()()— ()—

Cash dividends declared ($ per share)

— — ()— ()— Dividends to noncontrolling interest— — — — — ()Directors deferred compensation— — — — BALANCE AT SEPTEMBER 30, 2024$ $ $ $()$ $

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$ $ $()$ $ Net income— — — Other comprehensive (loss) income— — — — Stock-based compensation— — — —

Acquisition/surrender of common shares(1)

— ()()— ()—

Cash dividends declared ($ per share)

— — ()— ()— Dividends to noncontrolling interest— — — — — ()Directors deferred compensation— — — — BALANCE AT JUNE 30, 2023$ $ $ $()$ $ Net income— — — Other comprehensive (loss) income— — — ()()— Stock-based compensation— — — —

Acquisition/surrender of common shares(1)

— ()()— ()—

Cash dividends declared ($ per share)

— — ()— ()— Dividends to noncontrolling interest— — — — — ()Directors deferred compensation— — — — BALANCE AT SEPTEMBER 30, 2023$ $ $ $()$ $

million and $ million in the first nine months of 2024 and 2023, respectively, reflects this accounting treatment.

The detailed components of total comprehensive income are presented in the Condensed Consolidated Statements of Comprehensive Income.

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NOTE 10

)$()$()$()$()Other comprehensive income (loss) before reclassifications ()()Amounts reclassified from accumulated other comprehensive income (loss)() Current period other comprehensive income (loss) ()()BALANCE AT SEPTEMBER 30, 2024$()$ $()$()$()

$ $ $ Net sales Cost of goods sold Other expense, net Total before tax ()()Tax benefit (expense) $ $ $ $ Gain (loss) net of taxAmortization of defined benefit pension and post retirement benefit items: Prior-service costs (a)$()$()$()$() Actuarial gains (losses) (a)()()()() ()()()()Total before tax Tax benefit (expense) $()$()$()$()Gain (loss) net of taxGains (losses) reclassified into earnings$()$()$()$()Gain (loss) net of tax

(a) These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (see Note 12 - Pension and Other Benefits in the Notes to Condensed Consolidated Financial Statements for additional details).

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NOTE 11

$ $ $ Less: Earnings allocated to participating securities()()()()Net income available to common shareholders$ $ $ $ Denominator: Average number of common shares outstanding Potential dilutive common shares Average number of diluted shares outstanding Earnings per share: Basic earnings per share$ $ $ $ Diluted earnings per share $ $ $ $

The Company did not have any significant anti-dilutive securities outstanding during the three and nine months ended September 30, 2024 and 2023.

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NOTE 12

$ $ $ Interest cost Expected return on plan assets()() Amortization of prior service cost Amortization of actuarial losses (gains) ()()NET PERIODIC BENEFIT COST$ $ $ $ Nine Months Ended September 30,Service cost$ $ $ $ Interest cost Expected return on plan assets()() Amortization of prior service cost Amortization of actuarial losses (gains) ()()NET PERIODIC BENEFIT COST$ $ $ $

Employer Contributions

contributions to its qualified domestic defined benefit pension plan and $ million in contributions to its foreign pension plans during the nine months ended September 30, 2024. Although not required by ERISA and the Internal Revenue Code, the Company may elect to make additional voluntary contributions to its qualified domestic defined benefit pension plan in 2024.

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NOTE 13

$ Provision Expenditures/payments/other()()

BALANCE AT SEPTEMBER 30, (a)

$ $

(a) Refer to Note 7 – Other Accrued Liabilities and Note 8 – Other Non-Current Liabilities for a breakout of short-term and long-term warranties.

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NOTE 14

million, net of allowances of $ million. During the nine months ended September 30, 2024, our allowances decreased by approximately $ million.

Investments

At September 30, 2024 and December 31, 2023, the Company had $ million and $ million, respectively, of available-for-sale municipal debt securities. These investments had an amortized cost of $ million and $ million, respectively. allowance for credit losses related to our available-for-sale debt securities was recorded for the nine months ended September 30, 2024 or September 30, 2023. As of September 30, 2024 and December 31, 2023, the unrealized losses attributable to our available-for-sale debt securities were $ million and $ million, respectively. The fair value of available-for-sale debt securities with unrealized losses was $ million at September 30, 2024 and $ million at December 31, 2023.

The Company also had trading securities of $ million at September 30, 2024 and $ million at December 31, 2023 that are carried on the balance sheet at fair value. Unrealized gains and losses associated with available-for-sale debt securities are reflected in Accumulated other comprehensive loss, net of tax, while unrealized gains and losses associated with trading securities are reflected in the Condensed Consolidated Statement of Income.

Fair value measurements

Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The FASB fair value measurement guidance established a fair value hierarchy that prioritizes the inputs used to measure fair value. The three broad levels of the fair value hierarchy are as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – Quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly.

Level 3 – Unobservable inputs for which little or no market data exists, therefore requiring a company to develop its own assumptions.

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$ $ $ Available for sale investments Trading securities Deferred compensation plan liabilities() ()Derivatives:

Forward exchange contracts-(Liabilities)(b)

() ()TOTAL$ $ $ $ Asset (Liability)Quoted Prices in
Active Markets for
Identical Assets
(Level 1)Quoted Prices in
Active Markets for
Similar Assets
(Level 2)Unobservable inputs
for which little or no
market data exists
(Level 3)TotalDecember 31, 2023

Money market funds(a)

$ $ $ $ Available for sale investments Trading securities Deferred compensation plan liabilities() ()Derivatives:

Forward exchange contracts-(Liabilities)(b)

() ()TOTAL$ $ $ $

(a) Money market funds are reflected in Cash and cash equivalents in the Condensed Consolidated Balance Sheets.

(b) Forward exchange contracts-(Liabilities) are reflected in Other accrued liabilities in the Condensed Consolidated Balance Sheets.

The methods and assumptions used to estimate the Level 2 fair values were as follows:

Forward exchange contracts – The fair value of forward exchange contracts was based on quoted forward foreign exchange prices at the reporting date.

Available-for-sale municipal bonds classified in Level 2 – The fair value of available-for-sale investments in municipal bonds is based on observable market-based inputs, other than quoted prices in active markets for identical assets.

Deferred compensation plans

The Company offers certain employees the opportunity to participate in non-qualified deferred compensation plans. A participant’s deferrals are invested in a variety of participant-directed debt and equity mutual funds that are classified as trading securities. The Company purchased $ million and $ million of trading securities related to these deferred compensation plans during the nine months ended September 30, 2024 and 2023, respectively. As a result of participant distributions, the Company sold $ million of these trading securities during the nine months ended September 30, 2024 and $ million during the nine months ended September 30, 2023. The unrealized gains and losses associated with these trading securities are directly offset by the changes in the fair value of the underlying deferred compensation plan obligation.

Long Term Debt

As of September 30, 2024 and December 31, 2023, the carrying value of long-term debt, net of unamortized discount and debt issuance costs, including the $ million and $ million, respectively, current portion of the term loan, was $ million and $ million, respectively. The estimated fair value of the long-term debt as of September 30, 2024 and December 31, 2023 was $ million and $ million, respectively, using quoted market prices in active markets for similar liabilities (Level 2).

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NOTE 15

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NOTE 16

$ $ $ $ $ Electrical Solutions Total Pre-Tax Restructuring Costs$ $ $ $ $ $



	Nine Months Ended September 30,
	2024	2023	2024	2023	2024	2023
	Cost of goods sold		Selling & administrative expense		Total
Utility Solutions	$	$	$	$	$	$
Electrical Solutions
Total Pre-Tax Restructuring Costs	$	$	$	$	$	$

$ $()$ Asset write-downs Facility closure and other costs () Total 2024 Restructuring Actions$ $ $()$ 2023 and Prior Restructuring ActionsSeverance$ $ $()$ Asset write-downs Facility closure and other costs () Total 2023 and Prior Restructuring Actions$ $ $()$ Total Restructuring Actions$ $ $()$

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$ $ $ Electrical Solutions Total 2024 Restructuring Actions$ $ $ $ 2023 and Prior Restructuring ActionsUtility Solutions$ $ $ $ Electrical Solutions Total 2023 and Prior Restructuring Actions$ $ $ $ Total Restructuring Actions$ $ $ $

NOTE 17

%2026$ $

Senior notes at %

2027

Senior notes at %

2028

Senior notes at %

2031

Term loan, net of current portion of $ million and $ million, respectively

2026

TOTAL LONG-TERM DEBT(a)

$ $

Term Loan Agreement

In connection with the December 2023 acquisition of Systems Control, the Company entered into a term loan agreement (the “Term Loan Agreement”) with a syndicate of lenders under which the Company borrowed $ million on an unsecured basis. Borrowings under the Term Loan Agreement bear interest generally at either the adjusted term SOFR rate plus an applicable margin (determined by a ratings based-grid) or the alternative base rate. Currently the loans bear interest based on the adjusted term SOFR rate, which was % as of September 30, 2024. The principal amount of borrowings under the Term Loan Agreement amortizes in equal quarterly installments of % of the original outstanding principal amounts in 2024, % in 2025, and % in 2026, with the remaining outstanding principal amount under the Term Loan Agreement due and payable in full at maturity in December 2026. The Company may make principal payments in excess of the amortization schedule at its discretion. During the nine months ended September 30, 2024 the Company made $ million of principal payments. The sole financial covenant in the Term Loan Agreement requires that total debt not exceed % of total capitalization as of the last day of each fiscal quarter of the Company. The Company was in compliance with this covenant as of September 30, 2024.

2021 Credit Facility

The Company has a credit agreement with a syndicate of lenders and JPMorgan Chase, N.A., as administrative agent, that provides a $ million committed revolving credit facility (the “2021 Credit Facility”). Commitments under the 2021 Credit Facility may be increased to an aggregate amount not to exceed $ billion.

The 2021 Credit Facility contains a financial covenant requiring that, as of the last day of each fiscal quarter, the ratio of total indebtedness to total capitalization shall not be greater than %. The Company was in compliance with this covenant as of September 30, 2024. As of September 30, 2024, the 2021 Credit Facility was undrawn.

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million and $ million of short-term debt and current portion of long-term debt outstanding at September 30, 2024 and December 31, 2023, respectively, composed of the following:

•$ million of commercial paper borrowings outstanding at September 30, 2024, and $ million of commercial paper borrowings outstanding at December 31, 2023, which was used to fund the Systems Control acquisition.

•$ million and $ million of long-term debt classified as current within current liabilities in the Condensed Consolidated Balance Sheets, reflecting maturities within the next 12 months related to borrowing under the Term Loan Agreement at September 30, 2024 and December 31, 2023, respectively.

million and $ million of other short-term debt outstanding at September 30, 2024 and December 31, 2023, respectively, which consisted of borrowings to support our international operations in China and amounts outstanding under our commercial card program.

Note 18

million shares of common stock to settle awards of restricted stock, performance shares, or SARs. The Company issues new shares to settle stock-based awards. During the three months ended March 31, 2024, the Company's grant of stock-based awards included restricted stock, SARs and performance shares. There were no material awards granted during the three months ended September 30, 2024.

Each of the compensation arrangements is discussed below.

Restricted Stock

The Company issues various types of restricted stock, of which the restricted stock awards are considered outstanding at the time of grant, as the award holders are entitled to dividends and voting rights. Unvested restricted stock awards are considered participating securities when computing earnings per share. Restricted stock unit award holders are not entitled to dividends or voting rights until settlement. Restricted stock grants are not transferable and are subject to forfeiture in the event of the recipient’s termination of employment prior to vesting.

Restricted Stock Awards Issued to Employees - Service Condition

Restricted stock awards that vest based upon a service condition are expensed on a straight-line basis over the requisite service period. These awards generally vest either in equal installments on each of the first anniversaries of the grant date or on the third-year anniversary of the grant date. The fair value of these awards is measured by the average of the high and low trading prices of the Company’s common stock on the most recent trading day immediately preceding the grant date (“measurement date”).

In February 2024, the Company granted restricted stock awards with a fair value per share of $.

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equal installments on each of the first anniversaries of the grant date. The fair value of these awards is measured by the average of the high and low trading prices of the Company’s common stock on the measurement date reduced by the present value of dividends expected to be paid during the requisite service period.

In February 2024, the Company granted restricted stock units with a fair value per share of $.

Stock Appreciation Rights

SARs grant the holder the right to receive, once vested, the value in shares of the Company's common stock equal to the positive difference between the grant price, as determined using the mean of the high and low trading prices of the Company’s common stock on the measurement date, and the fair market value of the Company’s common stock on the date of exercise. This amount is payable in shares of the Company’s common stock. SARs vest and become exercisable in equal installments during the first following the grant date and expire from the grant date.

In February 2024, the Company granted SAR awards. The fair value of each SAR award was measured using the Black-Scholes option pricing model.

%%% years$

The expected dividend yield was calculated by dividing the Company’s expected annual dividend by the average stock price for the past three months. Expected volatilities are based on historical volatilities of the Company’s stock for a period consistent with the expected term. The expected term of SARs granted was based upon historical exercise behavior of SARs. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the award.

Performance Shares

Performance shares represent the right to receive a share of the Company’s common stock subject to the achievement of certain market or performance conditions established by the Company’s Compensation Committee and measured over a period. Partial vesting in these awards may occur after separation from the Company for retirement eligible employees. Shares are not vested until approved by the Company’s Compensation Committee.

Performance Shares - Market Condition

In February 2024, the Company granted performance shares that will vest subject to a market condition and service condition through the performance period. The market condition associated with the awards is the Company's total shareholder return (“TSR”) compared to the TSR generated by the companies that comprise the S&P Capital Goods 900 index over a performance period. Performance at target will result in vesting and issuance of the number of performance shares granted, equal to % payout. Performance below or above target can result in issuance in the range of %-% of the number of shares granted. Expense is recognized irrespective of the market condition being achieved.

The fair value of the performance share awards with a market condition for the 2024 grant was determined based upon a lattice model.

%%% years$

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performance shares that will vest subject to an internal Company-based performance condition and service requirement.

percent of these performance shares granted will vest based on Hubbell’s compounded annual growth rate of Net sales as compared to that of the companies that comprise the S&P Capital Goods 900 index. percent of these performance shares granted will vest based on achieved operating profit margin performance as compared to internal targets. Each of these performance conditions is measured over the same performance period. The cumulative result of these performance conditions can result in a number of shares earned in the range of %-% of the target number of shares granted.

The fair value of the award is measured based upon the average of the high and low trading prices of the Company's common stock on the measurement date reduced by the present value of dividends expected to be paid during the requisite service period. for the awards granted during February 2024.

Jan 2024 - Dec 2026

%-%

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ITEM 2			Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview of the Business

Hubbell is a global manufacturer of quality electrical products and utility solutions for a broad range of customer and end market applications. We provide utility and electrical solutions that enable our customers to operate critical infrastructure reliably and efficiently, and we empower and energize communities through innovative solutions supporting energy infrastructure In Front of the Meter, on The Edge, and Behind the Meter. In Front of the Meter is where utilities transmit and distribute energy to their customers. The Edge connects utilities with owner/operators and allows energy and data to be distributed back and forth. Behind the Meter is where owners and operators of buildings and other critical infrastructure consume energy. Products are either sourced complete, manufactured or assembled by subsidiaries in the United States, Canada, Puerto Rico, Mexico, China, the UK, Brazil, Australia, Spain, Ireland and the Republic of the Philippines. The Company also participates in joint ventures in Hong Kong and the Republic of the Philippines, and maintains offices in Singapore, Italy, China, India, Mexico, South Korea, Chile, and countries in the Middle East. The Company employed approximately 18,000 individuals worldwide as of September 30, 2024.

The Company’s reporting segments consist of the Utility Solutions segment and Electrical Solutions segment.

Results for the nine months ended September 30, 2024 by segment are included under “Segment Results” within this Management’s Discussion and Analysis.

The Company's long-term strategy is to serve its customers with reliable and innovative electrical and related infrastructure solutions with desired brands and high-quality service, delivered through a competitive cost structure; to complement organic revenue growth with acquisitions that enhance its product offerings; and to allocate capital effectively to create shareholder value.

Our strategy to complement organic revenue growth with acquisitions is focused on acquiring assets that extend our capabilities, expand our product offerings, and present opportunities to compete in core, adjacent or complementary markets. Our acquisition strategy also provides the opportunity to advance our revenue growth objectives during periods of weakness or inconsistency in our end-markets.

Our strategy to deliver products through a competitive cost structure has resulted in past and ongoing restructuring and related activities. Our restructuring and related efforts include the consolidation of manufacturing and distribution facilities, and workforce actions, as well as streamlining and consolidating our back-office functions. The primary objectives of our restructuring and related activities are to optimize our manufacturing footprint, cost structure, and the effectiveness and efficiency of our workforce.

Productivity improvement also continues to be a key area of focus for the Company and efforts to drive productivity complement our restructuring and related activities to minimize the impact of rising material costs and other administrative cost inflation. Because material costs are approximately half of our cost of goods sold, continued volatility in this area could significantly impact profitability. Our goal is to have pricing and productivity programs that offset material and other inflationary cost increases as well as pay for investments in key growth areas.

Productivity programs affect virtually all functional areas within the Company by reducing or eliminating waste and improving processes. We continue to expand our efforts related to global product and component sourcing, as well as supplier cost reduction programs. Value engineering efforts, product transfers and the use of lean process improvement techniques are expected to continue to increase manufacturing efficiency. In addition, we continue to build upon the benefits of our enterprise resource planning system across all functions.

Our sales are also subject to market conditions that may cause customer demand for our products to be volatile and unpredictable. Product demand can be affected by fluctuations in domestic and international economic conditions, as well as currency fluctuations, commodity costs, and a variety of other factors. Since early 2021, we have experienced significant inflationary pressure across much of our business. As a result, we have taken various pricing actions to cover the higher costs and protect our profitability. Although the inflation has moderated considerably since its high point in 2022, we expect inflation to remain a factor for the foreseeable future and we expect to continue to take these pricing actions subject to demand and market conditions. Accordingly, there can be no assurance that we will be able to maintain our margins in response to further changes in inflationary pressures. In addition, macroeconomic effects such as increases in interest rates and other measures taken by central banks and other policy makers could have a negative effect on overall economic activity which could reduce our customers’ demand for our products, and cause the continuation of relatively high market interest rates that increase our borrowing costs. Additionally, international tensions, such as the conflicts in the Middle East and Ukraine, as well as trade and other tensions, including those with China may affect demand for our products, as well as our production costs.

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The following is a discussion and analysis of our business, financial condition and results of operations as of and for the three and nine months ended September 30, 2024 and 2023. This discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements and notes thereto in Item 1 of this Quarterly Report on Form 10-Q (the “Condensed Financial Statements”), and the audited consolidated financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Results of Operations – Third Quarter of 2024 compared to the Third Quarter of 2023

Overview

Third quarter 2024 net sales were $1,442.6 million and grew by 5%, including 6% growth from acquisitions net of divestitures, partially offset by a 1% contraction of organic net sales driven by lower volume.

Organic net sales growth in the Electrical Solutions segment was strong, led by datacenter and renewables verticals. Organic net sales contracted 4% in the Utility Solutions segment as strength in transmission, substation and grid protection and controls markets was more than offset by weak telcom markets and utility distribution markets continued to reflect the impact of customer inventory normalization in the quarter.

Acquisitions within Utility Solutions contributed to 9% consolidated net sales growth, driven by our acquisition of Systems Control in the fourth quarter of 2023, while the divestiture of the residential lighting business from the Electrical Solutions segment was completed in the first quarter of 2024 and contributed to a 3% decline in consolidated net sales as compared to the third quarter of 2023.

Operating margin in the third quarter of 2024 was 21.1% and expanded by 100 basis points. Adjusted operating margin, which excludes amortization of acquisition-related intangibles and transaction, integration and separation costs, was 23.2% and expanded by 180 basis points. Margin expansion in the quarter was primarily driven by favorable price realization and benefits from operational productivity, as well as the impact of recent portfolio transformation efforts, and higher prior year investments in the business. Those factors were partially offset by continued material and other cost inflation. These factors are further described within Segment Results below.

In December 2023, the Company entered into a definitive agreement to sell its residential lighting business for a cash purchase price of $131 million, subject to customary adjustments. The Company concluded the business met the criteria for classification as held for sale in the fourth quarter of 2023. The residential lighting business was reported within the Electrical Solutions Segment. The transaction closed in the first quarter of 2024 and the Company recorded a pre-tax loss on the sale of $5.3 million in the first quarter of 2024, which is recorded within Total other expense in the Company's Condensed Consolidated Statement of Income.

In addition, during 2023, the Company completed a number of acquisitions that affect the comparability of current period results of operations to those of prior year periods. For additional information regarding such transactions, see Note 2, Business Acquisitions and Dispositions in the notes to the Condensed Financial Statements.

SUMMARY OF CONDENSED CONSOLIDATED RESULTS (IN MILLIONS, EXCEPT PER SHARE DATA):


	Three Months Ended September 30,
	2024		% of Net sales		2023		% of Net sales
Net sales	$	1,442.6			$	1,375.8
Cost of goods sold	945.5		65.5	%	888.4		64.6	%
Gross profit	497.1		34.5	%	487.4		35.4	%
Selling & administrative (“S&A”) expense	193.3		13.4	%	211.1		15.3	%
Operating income	303.8		21.1	%	276.3		20.1	%
Net income	221.0		15.3	%	202.0		14.6	%
Less: Net income attributable to non-controlling interest	(1.6)		(0.1)	%	(1.9)		(0.1)	%
Net income attributable to Hubbell Incorporated	219.4		15.2	%	200.1		14.5	%
Less: Earnings allocated to participating securities	(0.4)				(0.5)
Net income available to common shareholders	$	219.0			$	199.6
Average number of diluted shares outstanding	54.0				54.0
DILUTED EARNINGS PER SHARE	$	4.05			$	3.70

HUBBELL INCORPORATED-Form 10-Q 32

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In the following discussion of results of operations, we refer to “adjusted” operating measures. We believe those adjusted measures, which exclude the impact of certain costs, gains and losses, may provide investors with useful information regarding our underlying performance from period to period and allow investors to understand our results of operations without regard to items that, in management's judgement, significantly affect the comparability of operating results, or that are not considered to be components of our core operating performance.

Significant items impacting comparability comprise the following:

Transaction, integration and separation costs

The effects that acquisitions and divestitures may have on our results fluctuate significantly based on the timing, size and number of transactions, and therefore result in significant volatility in the costs to complete transactions and to integrate or separate the businesses.

Transaction costs are primarily professional services and other fees incurred to complete the transactions. Integration and separation costs are the internal and external incremental costs directly relating to these activities for the acquired or divested business.

The acquisition and divestiture actions taken by the Company in the fourth quarter of 2023 resulted in a significant increase in integration and separation costs. As a result, we believe excluding costs relating to these fourth quarter transactions provides useful and more comparable information for investors to better assess our operating performance.

Gains or losses on disposition of a business

Certain of the Company's adjusted measures exclude these gains or losses because we believe it enhances management's and investors' ability to analyze underlying business performance and facilitates comparisons of our financial results over multiple periods. In the first quarter of 2024 the Company recognized a $5.3 million pre-tax loss on the disposition of the residential lighting business.

Certain of the Company's adjusted measures also exclude the income tax effect directly related to the disposition of the residential lighting business. In the first quarter of 2024, the Company recognized $6.8 million of income tax expense on the sale of the residential lighting business, primarily driven by differences between book and tax basis in goodwill.

Amortization of intangible assets

Adjusted operating measures exclude amortization of all intangible assets associated with our business acquisitions, including inventory step-up amortization associated with those acquisitions. The intangible assets associated with our business acquisitions arise from the allocation of the purchase price using the acquisition method of accounting in accordance with Accounting Standards Codification 805, “Business Combinations.” These assets consist primarily of customer relationships, developed technology, trademarks and tradenames, and patents, as reported in Note 7 – Goodwill and Other Intangible Assets, under the heading “Total Definite-Lived Intangibles,” within the Company’s audited consolidated financial statements set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

The Company believes that the exclusion of these non-cash expenses (i) enhances management’s and investors’ ability to analyze underlying business performance, (ii) facilitates comparisons of our financial results over multiple periods, and (iii) provides more relevant comparisons of our results with the results of other companies as the amortization expense associated with these assets may fluctuate significantly from period to period based on the timing, size, nature, and number of acquisitions. Although we exclude amortization of these acquired intangible assets and inventory step-up from our non-GAAP results, we believe that it is important for investors to understand that revenue generated, in part, from such intangibles is included within revenue in determining adjusted net income attributable to Hubbell Incorporated.

Adjusted results also excluded the income tax effects of the above adjustments which are calculated using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction, unless otherwise noted.

HUBBELL INCORPORATED-Form 10-Q 33

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Organic net sales (or organic net sales growth), a non-GAAP measure, represents Net sales according to U.S. GAAP, less Net sales from acquisitions and divestitures during the first twelve months of ownership or divestiture, respectively, less the effect of fluctuations in Net sales from foreign currency exchange. The period-over-period effect of fluctuations in Net sales from foreign currency exchange is calculated as the difference between local currency Net sales of the prior period translated at the current period exchange rate as compared to the same local currency Net sales translated at the prior period exchange rate. We believe this measure provides management and investors with a more complete understanding of the underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency as these activities can obscure underlying trends. When comparing Net sales growth between periods, excluding the effects of acquisitions, business dispositions and currency exchange rates, those effects are different when comparing results for different periods. For example, because Net sales from acquisitions are considered inorganic from the date we complete an acquisition through the end of the first year following the acquisition, Net sales from such acquisition are reflected as organic net sales thereafter.

There are limitations to the use of non-GAAP measures. Non-GAAP measures do not present complete financial results. We compensate for this limitation by providing a reconciliation between our non-GAAP financial measures and the respective most directly comparable financial measure calculated and presented in accordance with GAAP. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. These financial measures should not be considered in isolation from, as substitutes for, or alternative measures of, reported GAAP financial results, and should be viewed in conjunction with the most comparable GAAP financial measures and the provided reconciliations thereto. We believe, however, that these non-GAAP financial measures, when viewed together with our GAAP results and related reconciliations, provide a more complete understanding of our business. We strongly encourage investors to review our consolidated financial statements and publicly filed reports in their entirety and not rely on any single financial measure.

The following table reconciles Adjusted operating income, a non-GAAP measure, to Operating income, the directly comparable GAAP financial measure (in millions):


	Three Months Ended September 30,
	2024		% of Net sales			2023		% of Net sales
Operating income (GAAP measure)	$	303.8	21.1		%	$	276.3	20.1		%
Amortization of acquisition-related intangible assets	28.1		1.9		%	18.4		1.3		%

Transaction, integration & separation costs	2.9		0.2		%	—		—		%
Adjusted operating income (non-GAAP measure)	$	334.8	23.2		%	$	294.7	21.4		%






The following table reconciles Adjusted net income attributable to Hubbell Incorporated, Adjusted net income available to common shareholders, and the diluted per share amounts thereof, each a non-GAAP measure, to the directly comparable GAAP financial measures (in millions, except per share data).


	Three Months Ended September 30,
	2024		Diluted Per Share			2023		Diluted Per Share
Net income attributable to Hubbell Incorporated (GAAP measure)	$	219.4	$	4.05		$	200.1	$	3.70
Amortization of acquisition-related intangible assets	28.1		0.53			18.4		0.34


Transaction, integration & separation costs	2.9		0.05			—		—

Subtotal	$	250.4	$	4.63		$	218.5	$	4.04
Income tax effects(1)	7.5		0.13			4.6		0.08
Adjusted net income attributable to Hubbell Incorporated (non-GAAP measure)	$	242.9	$	4.50		$	213.9	$	3.96
Less: Earnings allocated to participating securities	(0.4)		(0.01)			(0.5)		(0.01)
Adjusted net income available to common shareholders (non-GAAP measure)	$	242.5	$	4.49		$	213.4	$	3.95

Net Sales

Net sales of $1,442.6 million in the third quarter of 2024 increased by $66.8 million compared to the third quarter of 2023. Organic net sales decreased by 1.0% driven by a low single digit percentage decrease in volumes, partially offset by a low single digit increase in price realization. Acquisitions net of divestitures contributed 6.1% to net sales growth. These changes are discussed in more detail in the Segment Results section below.

Cost of Goods Sold and Gross Profit

As a percentage of Net sales, cost of goods sold increased by 90 basis points to 65.5% in the third quarter of 2024, resulting in gross profit margin contracting to 34.5%. Approximately four percentage points of gross profit margin contraction was driven by higher intangible amortization expense, material and other cost inflation and lower volume, which was partially offset by approximately three percentage points of margin expansion driven by favorable price realization and improved operational productivity.

Selling & Administrative Expenses

S&A expense in the third quarter of 2024 was $193.3 million and decreased by $17.8 million or 8.4% compared to the prior year period. This decrease was driven by higher investments in the business in prior year, including professional services, as well as lower employee incentive expense in the current year, partially offset by the impact of the 2023 acquisitions net of divestitures. S&A expense as a percentage of Net sales was 13.4% in the third quarter of 2024, compared to 15.3% in the third quarter of 2023.

Total Other Expense

Total other expense increased by $13.0 million in the third quarter of 2024 to $24.3 million, primarily due to higher net interest expense of $10.9 million, and a $2.7 million negative impact of foreign exchange in the third quarter of 2024 compared to the same period in 2023. The increase in interest expense was primarily attributable to debt incurred in connection with the acquisition of Systems Control and higher market interest rates.

Income Taxes

The effective tax rate in the third quarter of 2024 decreased to 20.9% as compared to 23.8% in the third quarter of 2023, primarily due to the tax benefits of an international restructuring completed during the third quarter of 2024.

Net Income Attributable to Hubbell Incorporated and Earnings Per Diluted Share

Net income attributable to Hubbell Incorporated was $219.4 million in the third quarter of 2024 and increased 9.6% as compared to the same period of the prior year, reflecting the factors described above. As a result, earnings per diluted share in the third quarter of 2024 increased 9% as compared to the third quarter of 2023. Adjusted net income attributable to Hubbell Incorporated, which excludes amortization of acquisition-related intangibles from both periods and transaction, integration & separation costs in the third quarter of 2024, was $242.9 million in the third quarter of 2024 and increased by 13.6% as compared to the third quarter of 2023.

HUBBELL INCORPORATED-Form 10-Q 35

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Segment Results

UTILITY SOLUTIONS

The following table reconciles our Utility Solutions segment adjusted operating income and adjusted operating margin to the directly comparable GAAP financial measure (in millions and percentage change):


	Three Months Ended September 30,
(In millions)	2024			2023
Net sales	$	933.1		$	837.9
Operating income (GAAP measure)	210.5			186.8
Amortization of acquisition-related intangible assets	24.1			13.9
Transaction, integration & separation costs	1.4			—
Adjusted operating income	$	236.0		$	200.7
Operating margin (GAAP measure)	22.6		%	22.3		%
Adjusted operating margin	25.3		%	24.0		%

The following table reconciles our Utility Solutions segment organic net sales to the directly comparable GAAP financial measure (in millions and percentage change):


	Three Months Ended September 30,
Utility Solutions	2024		Inc/(Dec) %	2023		Inc/(Dec) %
Net sales growth (GAAP measure)	$	95.2	11.3	$	63.4	8.2
Impact of acquisitions	128.6		15.3	8.0		1.0
Impact of divestitures	—		—	—		—
Foreign currency exchange	(1.4)		(0.2)	2.2		0.3
Organic net sales growth (decline) (non-GAAP measure)	$	(32.0)	(3.8)	$	53.2	6.9

Net sales in the Utility Solutions segment in the third quarter of 2024 were $933.1 million, and increased by $95.2 million, or 11.3%, as compared to the third quarter of 2023. That increase was driven by a 15.3% increase in net sales from acquisitions, partially offset by a 3.8% decrease in organic net sales. The decrease in organic net sales was driven by a mid single digit percentage decrease in unit volume, partially offset by a low single digit increase in price realization. The decrease in unit volume resulted largely from volume declines in enclosures products led by a decline in the telcom markets as well as utility distribution markets continued to reflect the impact of customer inventory normalization. This was partially offset by robust growth in transmission and substation markets.

Operating income in the Utility Solutions segment for the third quarter of 2024 was $210.5 million, an increase of 12.7% compared to the third quarter of 2023. Operating margin increased by 30 basis points to 22.6% in the third quarter of 2024, as compared to the same period of 2023. Excluding amortization of acquisition-related intangibles and transaction, integration and separation costs, the adjusted operating margin increased by 130 basis points to 25.3%, as compared to the 2023 period. The increase in operating margin includes approximately four percentage points of margin expansion primarily due to favorable price realization, improved operational productivity, and higher prior year investments in the business, partially offset by approximately three percentage points of margin contraction primarily due to material and other cost inflation and lower unit volume. The impact of lower unit volume includes approximately 100 basis points of contraction from enclosures products, driven primarily by weakness in the telcom market.

HUBBELL INCORPORATED-Form 10-Q 36

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ELECTRICAL SOLUTIONS

The following table reconciles our Electrical Solutions segment adjusted operating income and adjusted operating margin to the directly comparable GAAP financial measure (in millions and percentage change):


	Three Months Ended September 30,
(In millions)	2024			2023
Net sales	$	509.5		$	537.9
Operating income (GAAP measure)	93.3			89.5
Amortization of acquisition-related intangible assets	4.0			4.5
Transaction, integration & separation costs	1.5			—
Adjusted operating income	$	98.8		$	94.0
Operating margin (GAAP measure)	18.3		%	16.6		%
Adjusted operating margin	19.4		%	17.5		%

The following table reconciles our Electrical Solutions segment organic net sales to the directly comparable GAAP financial measure (in millions and percentage change):


	Three Months Ended September 30,
Electrical Solutions	2024		Inc/(Dec) %	2023		Inc/(Dec) %
Net sales growth (decline) (GAAP measure)	$	(28.4)	(5.3)	$	(3.8)	(0.7)
Impact of acquisitions	—		—	0.3		—
Impact of divestitures	(45.6)		(8.5)	—		—
Foreign currency exchange	(1.0)		(0.2)	2.5		0.5
Organic net sales growth (decline) (non-GAAP measure)	$	18.2	3.4	$	(6.6)	(1.2)

Net sales in the Electrical Solutions segment in the third quarter of 2024 were $509.5 million and decreased by $28.4 million, or 5.3%, as compared to the third quarter of 2023. That decrease includes 3.4% growth in organic net sales, which was more than offset by an 8.5% decline in net sales resulting from the disposition of the residential lighting business during the first quarter of 2024. The increase in organic net sales was driven by a low single digit percentage increase in unit volume and a low single digit percentage increase in price realization. Volume growth in the quarter was driven primarily by strength in datacenter and renewables markets, while broader industrial markets were steady and commercial markets were softer. Favorable price realization was driven primarily by actions to recover inflationary costs.

Operating income in the Electrical Solutions segment for the third quarter of 2024 was $93.3 million and increased approximately 4.2% compared to the third quarter of 2023, while operating margin in the third quarter of 2024 expanded by 170 basis points to 18.3%. Excluding amortization of acquisition-related intangibles and transaction, integration and separation cost, the adjusted operating margin expanded by 190 basis points to 19.4%. The increase in operating margin was primarily due to approximately five percentage points of margin expansion from favorable price realization, improved operational productivity and higher volume. The disposition of the residential lighting business also contributed to that expansion. Those factors were partially offset by approximately three percentage points of margin contraction driven by higher material and other cost inflation and mix.

HUBBELL INCORPORATED-Form 10-Q 37

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Results of Operations - Nine months ended September 30, 2024 compared to the Nine months ended September 30, 2023

SUMMARY OF CONDENSED CONSOLIDATED RESULTS (IN MILLIONS, EXCEPT PER SHARE DATA):


	Nine Months Ended September 30,
	2024		% of Net sales		2023		% of Net sales
Net sales	$	4,294.2			$	4,027.1
Cost of goods sold	2,840.7		66.2	%	2,595.2		64.4	%
Gross profit	1,453.5		33.8	%	1,431.9		35.6	%
Selling & administrative (“S&A”) expense	620.0		14.4	%	619.0		15.4	%
Operating income	833.5		19.4	%	812.9		20.2	%
Net income	585.3		13.6	%	593.6		14.7	%
Less: Net income attributable to non-controlling interest	(4.5)		(0.1)	%	(4.8)		(0.1)	%
Net income attributable to Hubbell Incorporated	580.8		13.5	%	588.8		14.6	%
Less: Earnings allocated to participating securities	(1.1)				(1.4)
Net income available to common shareholders	$	579.7			$	587.4
Average number of diluted shares outstanding	54.0				54.0
DILUTED EARNINGS PER SHARE	$	10.73			$	10.89

The following table reconciles Adjusted operating income, a non-GAAP measure, to Operating income, the directly comparable GAAP financial measure (in millions):


	Nine Months Ended September 30,
	2024		% of Net sales			2023		% of Net sales
Operating income (GAAP measure)	$	833.5	19.4		%	$	812.9	20.2		%
Amortization of acquisition-related intangible assets	96.0		2.2		%	54.3		1.3		%

Transaction, integration & separation costs	11.9		0.3		%	—		—		%
Adjusted operating income (non-GAAP measure)	$	941.4	21.9		%	$	867.2	21.5		%






The following table reconciles Adjusted net income attributable to Hubbell Incorporated, Adjusted net income available to common shareholders, and the diluted per share amounts thereof, each a non-GAAP measure, to the directly comparable GAAP financial measures (in millions, except per share data).


	Nine Months Ended September 30,
	2024		Diluted Per Share			2023		Diluted Per Share
Net income attributable to Hubbell Incorporated (GAAP measure)	$	580.8	$	10.73		$	588.8	$	10.89
Amortization of acquisition-related intangible assets	96.0		1.79			54.3		1.02


Transaction, integration & separation costs	11.9		0.22			—		—
Loss on disposition of business	5.3		0.10			—		—
Subtotal	$	694.0	$	12.84		$	643.1	$	11.91
Income tax effects(1)	19.4		0.35			13.4		0.24
Adjusted net income attributable to Hubbell Incorporated (non-GAAP measure)	$	674.6	$	12.49		$	629.7	$	11.67
Less: Earnings allocated to participating securities	(1.3)		(0.03)			(1.5)		(0.03)
Adjusted net income available to common shareholders (non-GAAP measure)	$	673.3	$	12.46		$	628.2	$	11.64

The following table reconciles our Utility Solutions segment organic net sales to the directly comparable GAAP financial measure (in millions and percentage change):


	Nine Months Ended September 30,
Utility Solutions	2024		Inc/(Dec) %	2023		Inc/(Dec) %
Net sales growth (GAAP measure)	$	303.3	12.4	$	295.5	13.7
Impact of acquisitions	345.9		14.1	23.3		1.1
Impact of divestitures	—		—	—		—
Foreign currency exchange	(1.1)		—	(0.2)		—
Organic net sales growth (decline) (non-GAAP measure)	$	(41.5)	(1.7)	$	272.4	12.6

Net sales in the Utility Solutions segment in the first nine months of 2024 were $2,753.6 million, and increased by $303.3 million, or 12.4%, as compared to the first nine months of 2023. That increase was driven by a 14.1% increase in net sales from acquisitions offset by a 1.7% decrease in organic net sales. The decrease in organic net sales was driven by a mid-single digit percentage decrease in unit volume, partially offset by a low single digit percentage increase in price realization. The decrease in unit volume resulted largely from volume declines in enclosures products primarily driven by weakness in the telcom markets, as well as continued customer inventory management in distribution markets. These factors were partially offset by robust growth in transmission and substation markets, as well as backlog conversion in meters and AMI products. Favorable price realization was driven by actions to offset inflation, as well as by our service levels.

Operating income in the Utility Solutions segment for the first nine months of 2024 was $564.1 million, an increase of 0.1% compared to the first nine months of 2023. Operating margin declined by 250 basis points to 20.5% in the first nine months of 2024, as compared to the same period of 2023. Excluding amortization of acquisition-related intangibles and transaction, integration and separation costs, the adjusted operating margin declined by 100 basis points to 23.7% as compared to the 2023 period. The decrease in operating margin includes approximately three percentage points of margin expansion primarily due to favorable price realization and improved operational productivity, but that expansion was more than offset by approximately four percentage points of margin contraction primarily due to material and other cost inflation, lower unit volume and continuing investments in long-term growth and productivity initiatives. The impact of lower unit volume includes approximately 130 basis points from enclosures products, driven primarily by weakness in the telcom market.

HUBBELL INCORPORATED-Form 10-Q 40

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ELECTRICAL SOLUTIONS


	Nine Months Ended September 30,
(In millions)	2024			2023
Net sales	$	1,540.6		$	1,576.8
Operating income (GAAP measure)	269.4			249.1
Amortization of acquisition-related intangible assets	12.3			13.5
Transaction, integration & separation costs	6.3			—
Adjusted operating income	$	288.0		$	262.6
Operating margin (GAAP measure)	17.5		%	15.8		%
Adjusted operating margin	18.7		%	16.7		%

The following table reconciles our Electrical Solutions segment organic net sales to the directly comparable GAAP financial measure (in millions and percentage change):


	Nine Months Ended September 30,
Electrical Solutions	2024		Inc/(Dec) %	2023		Inc/(Dec) %
Net sales growth (decline) (GAAP measure)	$	(36.2)	(2.3)	$	3.3	0.2
Impact of acquisitions	—		—	43.8		2.8
Impact of divestitures	(120.9)		(7.6)	—		—
Foreign currency exchange	0.7		—	(0.9)		(0.1)
Organic net sales growth (decline) (non-GAAP measure)	$	84.0	5.3	$	(39.6)	(2.5)

Net sales in the Electrical Solutions segment in the first nine months of 2024 were $1,540.6 million and decreased by $36.2 million, or 2.3%, as compared to the first nine months of 2023. That decrease was driven by a 7.6% decline in net sales resulting from the disposition of the residential lighting business in the first quarter of 2024, offset by a 5.3% increase in organic net sales. The increase in organic net sales was driven by a low single digit percentage increase in price realization and a low single digit percentage increase in unit volume. Volume growth was driven primarily by strength in datacenter and renewables markets, while broader industrial and electrical markets were steady. Favorable price realization was driven primarily by actions to recover inflationary costs.

Operating income in the Electrical Solutions segment for the first nine months of 2024 was $269.4 million and increased approximately 8.1% compared to the first nine months of 2023, while operating margin in the first nine months of 2024 increased by 170 basis points to 17.5%. Excluding amortization of acquisition-related intangibles and transaction, integration and separation costs, the adjusted operating margin increased by 200 basis points to 18.7%. The increases are primarily due to approximately five percentage points of margin expansion from favorable price realization, improved operational productivity and higher volume. The disposition of the residential lighting business also contributed to that expansion. Those factors were partially offset by approximately three percentage points of margin contraction driven by higher material and other cost inflation and continuing investments in long-term growth and productivity initiatives.

HUBBELL INCORPORATED-Form 10-Q 41

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Financial Condition, Liquidity and Capital Resources

Cash Flow


	Nine Months Ended September 30,
(In millions)	2024		2023
Net cash provided by (used in):
Operating activities	$	558.8	$	535.3
Investing activities	20.0		(161.4)
Financing activities	(476.4)		(241.7)
Effect of foreign currency exchange rate changes on cash and cash equivalents	(3.2)		0.3
NET CHANGE IN CASH AND CASH EQUIVALENTS	$	99.2	$	132.5

HUBBELL INCORPORATED-Form 10-Q 50

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: October 30, 2024

HUBBELL INCORPORATED

/s/ William R. Sperry

/s/ Jonathan M. Del Nero

William R. Sperry

Jonathan M. Del Nero

Executive Vice President and Chief Financial Officer

Vice President, Controller (Principal Accounting Officer)

HUBBELL INCORPORATED-Form 10-Q 51

HUBBELL INC - Quarter Report: 2024 September (Form 10-Q)

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