Hubbell Q2 Earnings Call Highlights

Key Points

• Strong Q2 performance: Sales rose 15% to $1.712 billion, while adjusted EPS increased 12% to $5.52, driven by demand from utility transmission and distribution markets and data centers.
• NSI acquisition expands growth opportunities: The $3 billion acquisition added $35 million in June sales and is expected to contribute $0.20 to 2026 adjusted EPS and $0.80 in 2027, with targeted sales and cost synergies.
• 2026 outlook raised: Hubbell now expects sales growth of 16% to 18%, adjusted EPS of $20.25 to $20.55, and approximately 50% growth in data-center sales, while planning to reduce acquisition-related debt over the next 24 to 30 months.

Hubbell NYSE: HUBB reported second-quarter 2026 results marked by double-digit sales, adjusted operating profit and adjusted earnings-per-share growth, citing demand in utility transmission and distribution markets as well as data centers. The company also raised its full-year outlook following the early-June close of its acquisition of NSI.

Second-quarter net sales rose 15% from a year earlier to $1.712 billion, including 10% organic growth and a 5-percentage-point contribution from acquisitions. Adjusted operating profit increased 13% to $409 million, while adjusted operating margin was 23.9%, modestly below the prior-year period. Adjusted diluted earnings per share increased 12% to $5.52.

Chairman, President and CEO Gerben Bakker said the company is seeing continued strength in its order book as investment accelerates in data centers and utility transmission and distribution, or T&D, infrastructure. “Mega trends continue to accelerate, most notably in data center markets and load growth-related investment in utility T&D markets,” Bakker said.

NSI acquisition and capital plans

Hubbell closed its previously announced acquisition of NSI in early June. Bakker said the acquired company adds electrical fittings through the Bridgeport Fittings brand, grounding and connector products through Polaris, and network-infrastructure exposure that can support Hubbell’s datacom, broadband and data-center businesses.

CFO Joe Capozzoli said the $3 billion purchase was financed through a combination of a term loan, bond offering and commercial paper. The transaction increased Hubbell’s pro forma net debt-to-EBITDA leverage to about 2.9 times.

NSI is expected to add about $0.20 to adjusted earnings per share in 2026 and about $0.80 in 2027, Capozzoli said. The company is targeting sales synergies of 2% to 3% over the next three years through channel and vertical-market penetration, along with cost synergies of about 3% to 5% from combined operations, supply chains, IT systems and back-office capabilities.

Hubbell plans to invest in capacity and productivity while continuing dividend growth and modest share repurchases. It also intends to pay down a significant portion of acquisition-related debt over the next 24 to 30 months, according to Capozzoli.

Utility Solutions demand builds

Utility Solutions generated second-quarter sales of $1.026 billion, up 10% year over year, including 6% organic growth and 4% growth from acquisitions. Adjusted operating profit rose 10% to $263 million, with margins slightly higher than the prior-year period.

The company’s grid infrastructure business grew 7% organically, led by double-digit growth in distribution markets. Transmission and substation sales also increased, and management expects double-digit growth in those markets for the full year as larger projects ramp in the second half and capacity investments come online.

Utility Solutions recorded a first-half book-to-bill ratio of about 1.2 times. Bakker said orders were broad-based across T&D markets, with particular strength in transmission and substation projects tied to load growth and data-center development. He added that some transmission and substation orders are now being booked into 2027.

Management said its first 765-kilovolt project is expected to begin shipping in 2027, while 550-kilovolt projects are expected to ship during the second half of 2026. Bakker said project quoting in transmission and substation has approximately doubled over the past couple of years.

Grid automation returned to year-over-year growth during the quarter, aided by protection and controls products. Revenue from meters and advanced metering infrastructure grew sequentially, while orders supported expectations for further recovery in the second half and into 2027.

Electrical Solutions led by data centers

Electrical Solutions posted $686 million in second-quarter sales, up 25% from a year earlier. Organic sales grew 18%, supported by data-center, light-industrial and non-residential markets. Data-center sales increased about 65% during the quarter, driven by added capacity, product introductions and content gains, management said.

NSI contributed $35 million in sales during its partial month of ownership in June, representing roughly 7 percentage points of segment growth. Hubbell said early order activity and customer response have been favorable.

Electrical Solutions adjusted operating profit increased 18% to $146 million. Its adjusted operating margin declined 130 basis points to 21.2%, as higher inflation and restructuring-related investments offset volume growth, pricing, productivity and NSI’s profit contribution. Capozzoli said the company expects Electrical Solutions margins to return to year-over-year expansion in both the third and fourth quarters.

Hubbell said it implemented broad pricing actions in April and additional price increases in July. Capozzoli said the company now expects roughly 3 to 4 percentage points of price realization for the full year, compared with an initial expectation of 2 points, as it responds to higher inflation.

Guidance raised for 2026

Hubbell raised its full-year sales growth outlook to 16% to 18%, from 8% to 11%. The updated forecast includes expected organic growth of 9% to 11%, up from a prior range of 6% to 9%, plus an additional five percentage points of acquisition contribution from NSI.

• Utility Solutions organic growth is projected at 7% to 9%.
• Electrical Solutions organic growth is projected at 12% to 14%.
• Full-year data-center sales are expected to grow approximately 50%.
• Adjusted operating margin is projected at 23.1% to 23.4%, representing 40 to 70 basis points of year-over-year expansion.
• Adjusted diluted EPS is projected at $20.25 to $20.55, up from prior guidance of $19.30 to $19.85.

The outlook includes expected net interest expense of $170 million related to the NSI financing and a full-year adjusted tax rate of 22% to 22.5%. Hubbell expects third-quarter tax rates of about 24% due to the timing of discrete items.

The company expects approximately 90% free-cash-flow conversion of adjusted net income in 2026. Second-quarter free cash flow was $213 million, while first-half free cash flow totaled $259 million, up 12% year over year. Management said elevated capital expenditures, acquisition costs and working-capital needs are expected to keep conversion near 90% over the next several years as it expands capacity.

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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