Hubbell (NYSE:HUBB) held its first-quarter earnings conference call on Thursday. Below is the complete transcript from the call.
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The full earnings call is available at https://edge.media-server.com/mmc/p/z66aupdq/
Summary
Hubbell reported strong financial performance in Q1 2026, with double-digit growth in sales, adjusted operating profit, and EPS, driven by 8% organic growth and strategic acquisitions.
The company has raised its full-year 2026 outlook for total sales growth, organic sales growth, and adjusted EPS, citing confidence in its position in key markets such as electrical solutions and grid infrastructure.
Hubbell highlighted a significant growth opportunity in high-voltage transmission, estimating a $1.5 billion market opportunity over the next decade, driven by the need to efficiently transmit large amounts of power.
Operational highlights include a 21% growth in adjusted operating profit for the Utility Solutions segment, and strong demand in data center and light industrial markets driving Electrical Solutions growth.
Management emphasized ongoing investment in capacity expansion and productivity improvements, maintaining a strong balance sheet to support acquisitions and share repurchases.
Full Transcript
OPERATOR
Good day and thank you for standing by. Welcome to the first quarter 2026 Hubbell Incorporated earnings Conference Call. At this time all participants are in listen only mode. After the speaker’s presentation there will be a question and answer session. To participate you will need to press star 1-1 on your telephone. You will then hear a message advising your hand is raised to withdraw the question. Simply press star 1-1 again. Please be advised that today’s conference is being recorded now. It’s my pleasure to hand the conference over to the Senior Director of Investor Relations, Dan Inamorato. Please proceed.
Dan Inamorato (Senior Director of Investor Relations)
Thanks, Operator. Good morning everyone and thank you for joining us. Earlier this morning we issued a press release announcing our results for the first quarter of 2026. The press release and slides are posted to the Investors section of our website@hubble.com joined today by our Chairman, President and CEO Gerben Bakker and our CFO Joe Capozzoli. Please note our comments this morning may include statements related to the expected future results of our company. These are forward looking statements defined by the Private Securities Litigation Reform act of 1995. Please note the discussion of forward looking statements in our press release and considered incorporated by reference into this call. Additionally, comments may also include non GAAP financial measures. Those measures are reconciled to the comparable GAAP measures which are included in the press release and slides. Now let me turn the call over to Gerben.
Gerben Bakker
Great. Thanks, Dan and good morning everyone and thank you for joining us to discuss Hubble’s first quarter 2026 results. Hubbell delivered strong financial performance to begin the year with double digit growth in sales, adjusted operating profit and adjusted earnings per share. Organic growth of 8% in the first quarter was driven by double digit organic growth in our electrical solutions segment as well as our grid infrastructure businesses. Within the utility solutions segment, our core utility Transmission and Distribution (T&D) markets remained strong with highly visible load growth driving continued strong demand in transmission and substation markets and aging infrastructure resiliency investments driving strong demand in distribution markets. Electrical solutions growth continues to be driven by strength in data center and light industrial markets enabled by our leading brands and continued success in our strategy to compete collectively in high growth verticals. We are raising Our full year 2026 outlook for total sales growth, organic sales growth and adjusted earnings per share. This morning as we are confident Hubbell’s strong position in attractive end markets and continued execution of our long term strategy will enable us to execute through a dynamic operating environment. Before I turn the call over to Joe to walk you through our financial performance in more detail I would like to highlight an emerging growth opportunity for Hubbell in high voltage transmission, a long term megatrend that sits squarely in our core and we are demonstrating early success in a multi year investment cycle. As background, 765kV transmission represents one of the most efficient methods to move large amounts of power over long distances in order to accommodate accelerating electricity demand from electrification and load growth. Operating transmission lines at higher voltages enables utilities to deliver more power per line with lower losses and fewer space requirements. For Hubbell, high voltage transmission represents a significant multi year opportunity which is largely incremental to existing strength in traditional 345kV transmission markets. Our leading position and strong customer relationships position us well to capture this opportunity and we are demonstrating early success with several key project wins supporting this initial phase of high voltage transmission buildup. Additionally, our portfolio depth and breadth positions us as a preferred partner who customers can trust to provide a full package of critical components. This solutions offering enables high service levels and reliability while driving installation efficiency and ease of doing business for our customers. We are actively investing to support future growth in this market including development and testing of new product offerings in collaboration with major customers as well as in capacity expansion investments. Overall, we believe 765kV transmission represents an addressable market opportunity of approximately 1.5 billion over the next 10 years and we believe we are well positioned to serve this attractive long term investment cycle. With that, let me turn the call over to Joe to provide more details on our financial results.
Joe Capozzoli (Chief Financial Officer)
Thank you Gerben and good morning everybody. I am starting my comments on slide 5. Hubbell’s first quarter financial performance was strong with double digit growth across sales, adjusted operating profit and adjusted earnings per diluted share. Net sales of $1.517 billion in the first quarter of 2026 increased by 11% compared to the prior year driven by 8% organic growth and acquisitions contributing 3%. Consistent with our fourth quarter 2025 performance, both electrical solutions segment and grid infrastructure products within our utility solutions segment delivered double digit organic growth in the first quarter partially offset by anticipated softness in grid automation. Acquisitions contributed three points to growth in the first quarter with DMC power off to a strong start and integrating nicely within our Transmission and Distribution (T&D) business. From an operational standpoint, Hubbell generated $301 million of adjusted operating profit in the first quarter representing 18% growth versus the prior year with adjusted operating margins expanding 110 basis points year over year. This improvement in adjusted operating profit and adjusted operating margin was primarily driven by strong volume growth in high margin businesses While cost inflation accelerated against 2025 exit rates as anticipated, our pricing and productivity actions continued to keep pace more than offsetting those higher levels of inflation on a dollar for dollar basis in the first quarter. We also accelerated our investment levels in the first quarter as previously communicated, most notably to expand capacity in high growth areas and generate future productivity. And as anticipated, we invested $7 million in our restructuring and related program to further streamline our operational footprint primarily within our Electrical Solutions segment which as a reminder Restructuring and Reinvestment (R&R) is included in our adjusted results. Adjusted earnings per diluted share were $3.93 in the first quarter representing a 16% increase versus the prior year, driven primarily by adjusted operating profit growth below the line. Higher interest expense associated with borrowings from the DMC acquisition and a slightly higher year over year tax rate were partially offset with lower share count as a result of prior repurchase activity. Additionally, we repurchased $168 million worth of shares in the first quarter at a dollar cost average below $500 per share. We expect the net impact of these repurchases to be neutral to 2026 earnings as a lower share count will be offset by higher interest, but the repurchases of shares at attractive valuations is expected to provide us with earnings accretion in 2027. Our balance sheet remains strong and is poised to invest on behalf of our shareholders. Our primary focus remains on internal reinvestments and acquiring differentiated businesses to bolt on to attractive areas of our portfolio. The pipeline of opportunities remains healthy and active and we continue to remain disciplined in our approach. Share repurchases represents an additional lever that we can and will utilize to return cash to shareholders over time. Turning to page six to review our performance by segment, Utility Solutions delivered another strong quarter with double digit growth in sales and adjusted operating profit. First quarter performance overall reflected a continuation of the momentum we realized exiting 2025 with overall drivers very similar across end markets. Utility Solutions generated net sales in the first quarter of $949 million which represented growth of 11% versus the prior year and includes organic growth of 7% and acquisitions contributing 3%. Organic growth of 7% in the first quarter was driven by 12% organic growth in our larger higher margin grid infrastructure business where demand strength was broad based across Transmission and Distribution (T&D)N markets. Utilities are investing at heavy rates and demand for Hubbell Solutions to serve the expanding critical infrastructure needs of our customers is driving continued momentum in orders and providing visibility to further strength over the balance of 2026. As we will highlight in a few minutes. We now anticipate our utility solutions segment to deliver high single digit organic growth on a full year basis outside of our core Transmission and Distribution (T&D) markets. Telecom and gas distribution grew attractively in the first quarter while METERS and AMI markets remained weak as anticipated. While grid Automation organic sales declined 7% year on year in the first quarter sales increased slightly on a sequential basis. We remain confident that Meter and AMI markets have stabilized and we anticipate easing comparisons and continued strength in protection and controls products will enable grid automation organic sales to return to slight year over year growth in the second quarter. Operationally, HUS delivered $207 million of adjusted operating profit in the first quarter representing 21% growth in adjusted operating profit versus the prior year with adjusted operating margins expanding 190 basis points year over year. Operating profit growth was primarily driven by strong volumes in high margin grid infrastructure products, favorable price cost, productivity and acquisitions which were partially offset by grid automation volumes declines. Moving to page 7, electrical solution results were also strong in the quarter with double digit growth in net sales and adjusted operating Profit. For the first quarter, Electrical Solutions generated sales of $568 million which represented growth of 12% versus the prior year. Organic growth of 11% was again driven by strength in data center and light industrial markets as well as solid non residential growth partially offset by softer heavy industrial markets. The electrical solutions segment achieved approximately 40% growth in data center markets in the first quarter driven by strength in both balance of system component demand as well as sales of our modular power distribution skids. Data center order activity remained robust in the first quarter as build out activity continues to accelerate across hyperscaler and colocation customers, providing enhanced visibility for us to increase our full year outlook in data center markets to more than 25%. Broader light industrial markets remain healthy as solid US manufacturing activity generated demand for electrical components and our strategy to compete collectively in vertical markets continues to drive out growth. Operationally, he’s delivered $93 million of adjusted operating profit in the first quarter representing 10% growth in adjusted operating profit versus the prior year reflecting strong volume growth. Adjusted operating margins of 16.4% were down 30 basis points versus the prior year as benefits from volume growth and the associated operating leverage were offset by higher investments in restructuring and growth initiatives as you’ll see in our press release financials. Within the electrical solutions segment, we invested $6 million in restructuring initiatives in the first quarter of 2026 versus only $2 million in the prior year which impacted year over year margins by approximately 80 basis points as we execute on footprint optimization projects which we are confident will continue to drive long term productivity and margin expansion, price realization remains strong which combined with productivity more than offset cost inflation on a dollar for dollar basis in the first quarter. Turning to page eight to discuss our full year outlook, we are raising our full year sales growth outlook to 8 to 11% and our organic sales growth outlook to 6 to 9%. This represents an increase of 1 point to the lower end and 2 points to the higher end of our prior full year outlook and is driven by both incremental price realization to offset increased inflation relative to our initial outlook as well as enhanced visibility to continued demand strength in our Transmission and Distribution (T&D) and data center end markets. Operationally, we anticipate double digit growth and adjusted operating profit at the midpoint of our guidance range for 2026, driven primarily by strong sales growth in high margin areas of our portfolio. We remain confident in managing price cost productivity to neutral or better on a dollar for dollar basis over the full year. So the math on higher inflation as well as planned investments to support accelerated growth initiatives results in a slightly more modest outlook for the full year margin expansion versus our initial outlook. Below the line, we anticipate that lower share count of 53.1 million shares on a full year basis will be fully offset by higher net interest while our assumptions for the other expense and tax rate remain unchanged. Overall, we continue to anticipate at least 90% free cash …
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