Hubbell Q1 Earnings Call Highlights

Key Points

• Hubbell reported double-digit Q1 growth in sales, adjusted operating profit and adjusted EPS (Q1 sales $1.517B; adj. EPS $3.93) and raised full‑year guidance to 8–11% sales growth with adj. EPS of $19.30–$19.85.
• Segment results were mixed: Utility Solutions benefited from broad-based T&D and 12% grid infrastructure growth that offset a 7% decline in grid automation that management expects to stabilize, while Electrical Solutions saw roughly 40% data center growth but margin pressure from increased restructuring and growth investments.
• Management flagged a strategic long‑term opportunity in 765 kV high‑voltage transmission (roughly $1.5B addressable over 10 years) and continued capital returns, repurchasing $168M of shares in Q1 that should be neutral to 2026 but accretive in 2027 despite higher interest from acquisition financing.

Hubbell NYSE: HUBB reported strong first-quarter 2026 results and raised its full-year outlook, citing broad-based demand in utility transmission and distribution (T&D) markets as well as accelerating activity in data centers.

Chairman, President and CEO Gerben Bakker said the company opened the year with “double-digit growth in sales, adjusted operating profit, and adjusted earnings per share,” supported by 8% organic growth. Bakker said growth was driven by double-digit organic gains in the Electrical Solutions segment and in Hubbell’s grid infrastructure businesses within Utility Solutions, partially offset by weaker grid automation.

First-quarter results show double-digit growth and margin expansion

CFO Joe Capozzoli reported first-quarter net sales of $1.517 billion, up 11% year over year, driven by 8% organic growth and 3% from acquisitions. Adjusted operating profit rose 18% to $301 million, and adjusted operating margin expanded 110 basis points year over year. Adjusted earnings per diluted share increased 16% to $3.93.

Capozzoli attributed margin improvement primarily to “strong volume growth in high-margin businesses.” He also said that while cost inflation accelerated versus late 2025 levels, pricing and productivity actions “continued to keep pace,” offsetting higher inflation “on a dollar-for-dollar basis” in the quarter.

The company accelerated investments in the quarter, including $7 million in restructuring and related actions “to further streamline our operational footprint,” primarily within Electrical Solutions, Capozzoli said. He added that restructuring and related costs are included in Hubbell’s adjusted results.

Below the operating line, Capozzoli said higher interest expense tied to borrowings for the DMC Power acquisition and a slightly higher tax rate were partly offset by a lower share count from repurchases. Hubbell repurchased $168 million of shares in the first quarter at a dollar cost average below $500 per share. Capozzoli said management expects the repurchases to be neutral to 2026 earnings because lower share count will be offset by higher interest expense, but “expected to provide us with earnings accretion in 2027.”

Utility Solutions: grid infrastructure strength offsets grid automation weakness

Utility Solutions posted net sales of $949 million, up 11% year over year, including 7% organic growth and 3% from acquisitions. Capozzoli said organic growth was led by 12% growth in the segment’s larger grid infrastructure business, with demand described as “broad-based across T&D end markets.”

Adjusted operating profit in Utility Solutions rose 21% to $207 million, with adjusted operating margin up 190 basis points year over year. Capozzoli cited volume growth in high-margin grid infrastructure products, favorable price/cost/productivity, and acquisitions, partially offset by a decline in grid automation volumes.

Grid automation organic sales declined 7% year over year in the first quarter, though Capozzoli said sales increased slightly sequentially. He said the company believes meter and AMI markets have stabilized and expects grid automation organic sales to return to “slight year-over-year growth” in the second quarter, helped by easier comparisons and continued strength in protection and controls products.

On Aclara, which sits within grid automation, Bakker said the business remained down year over year in the first quarter but that the decline has been “get[ting] smaller and smaller.” He said utilities have been “deselecting” AMI spending relative to other investment priorities, but added that the company is seeing more project discussions and quoting activity and recently won a multi-year piece of business. Bakker said Hubbell expects “modest growth” going forward and believes the business has stabilized.

Electrical Solutions: data center growth accelerates; restructuring weighs on margins

Electrical Solutions sales increased 12% year over year to $568 million, including 11% organic growth. Capozzoli said gains were driven by data center and light industrial markets and “solid non-residential growth,” partially offset by softer heavy industrial markets.

The segment delivered roughly 40% growth in data center markets during the quarter, driven by “balance of system component demand” and sales of modular power distribution skids, Capozzoli said. He noted that data center order activity “remained robust” as build-outs accelerate across hyperscaler and colocation customers, prompting Hubbell to raise its full-year outlook for data center markets to “more than 25%” growth.

Adjusted operating profit in Electrical Solutions rose 10% to $93 million. Adjusted operating margin was 16.4%, down 30 basis points year over year. Capozzoli said margin pressure reflected higher investments in restructuring and growth initiatives. Within the segment, Hubbell invested $6 million in restructuring initiatives in the first quarter versus $2 million a year earlier, which he said impacted year-over-year margins by about 80 basis points as Hubbell executes footprint optimization projects.

High-voltage transmission emerges as a long-term growth opportunity

Bakker highlighted an “emerging growth opportunity” in 765 kV high-voltage transmission, which he described as “one of the most efficient methods to move large amounts of power over long distances” to support rising electricity demand from electrification and load growth. He said the market opportunity is largely incremental to Hubbell’s existing strength in traditional 345 kV transmission markets.

Hubbell estimates an addressable market of approximately $1.5 billion over the next 10 years for 765 kV transmission, Bakker said, adding that the company is seeing early success with “several key project wins.” He said Hubbell is investing in new product development and testing with major customers, as well as capacity expansion.

In response to analyst questions, Bakker said the opportunity is “incremental” and could add “a point of growth above what we’re currently projecting with transmission already.” He also said Hubbell does not see high-voltage projects crowding out other areas of spending, noting utilities “need it both” and that utility capital budgets appear to be increasing.

Bakker later explained that the $1.5 billion estimate reflects roughly 7,000 miles of high-voltage transmission and Hubbell’s expected content, and reiterated that it could provide an incremental lift above the company’s high single-digit growth expectations for transmission and substations absent the high-voltage buildout.

Outlook raised on demand visibility, pricing actions, and execution

Capozzoli said Hubbell is raising full-year 2026 sales growth guidance to 8% to 11% and organic sales growth to 6% to 9%, reflecting improved visibility in T&D and data center markets and incremental price realization to offset higher inflation than initially expected. Hubbell also raised its adjusted EPS outlook to $19.30 to $19.85.

Capozzoli said the full-year organic growth outlook includes about three points of price, with the balance driven by volume. He added that price contribution is expected to fade later in the year as comparisons wrap, while volume contribution increases sequentially.

On margins, Capozzoli said Hubbell expects about 20 basis points of margin expansion for the full year at the midpoint, leaning more toward Utility Solutions, with Electrical Solutions expected to be roughly flat for the year. He also noted that higher inflation and related price/cost math is margin dilutive, and that within the midpoint margin outlook there is “about one point of dilution just from that price cost math.”

Regarding tariffs, Capozzoli said changes during the first quarter—including Section 232-related updates, the repeal of IEEPA, and Section 122 coming online—were “about neutral” for the year and not significant overall for Hubbell.

Bakker said that while macroeconomic and geopolitical uncertainty remains, Hubbell is positioned with more than 90% of sales exposure to the U.S. and more than two-thirds of its portfolio exposed to secular growth markets in data centers and utilities. He said customer conversations, recent order patterns, and project wins are supporting management’s confidence in the higher outlook.

About Hubbell NYSE: HUBB

Hubbell Incorporated NYSE: HUBB is an industrial manufacturer and distributor of electrical and electronic products serving a range of end markets including commercial and residential construction, industrial, and utility customers. Founded in 1888 by Harvey Hubbell, the company has a long history in electrical innovation and product development and is headquartered in Connecticut. Hubbell designs, manufactures and sells components and systems that enable the distribution and control of electrical power and provide lighting solutions for indoor and outdoor environments.

The company's offerings span a broad portfolio of products used by contractors, utilities, original equipment manufacturers and facility owners.

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