Hubbell Incorporated (HUBB) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates strong financial performance, optimistic guidance, and strategic growth plans, including a raised outlook for 2025 and positive projections for 2026. Additionally, the Q&A section supports these points with expectations of strong organic sales growth and margin expansion. Although there are some uncertainties, such as cost inflation, the overall sentiment is positive, especially with the anticipation of high single-digit growth in key markets and strategic acquisitions.
Key Financial Performance
Total Sales Growth (Q4 2025) 12% increase year-over-year, driven by 9% organic growth and 3% from acquisitions. Growth was supported by strong demand in data center and utility T&D markets, partially offset by softness in grid automation.
Adjusted Operating Margin Expansion (Q4 2025) 140 basis points increase year-over-year. This was achieved through strong sales growth, pricing actions, and productivity improvements, which offset cost inflation.
Adjusted Operating Profit Growth (Q4 2025) 19% increase year-over-year, driven by strong volumes, favorable price/cost productivity, and acquisitions.
Adjusted Earnings Per Share Growth (Q4 2025) 15% increase year-over-year, driven by operating profit growth, partially offset by higher interest expenses and a higher tax rate.
Free Cash Flow (Q4 2025) $389 million, contributing to a full-year free cash flow of $875 million, representing 90% conversion on adjusted net income. This was in line with the company's outlook.
Net Sales (Q4 2025) $1.493 billion, a 12% increase year-over-year, driven by organic growth and acquisitions.
Utility Solutions Segment Sales (Q4 2025) $936 million, a 10% increase year-over-year, with 7% organic growth and 4% from acquisitions. Growth was driven by strong demand in grid infrastructure markets, partially offset by declines in grid automation.
Grid Infrastructure Organic Growth (Q4 2025) 12% increase year-over-year, supported by investments in transmission, substation, and distribution infrastructure.
Grid Automation Sales (Q4 2025) 8% decline year-over-year, due to weaker project activity in meters and AMI, despite growth in grid protections and controls.
Electrical Solutions Segment Sales (Q4 2025) $557 million, with 13% organic growth year-over-year. Growth was driven by strong demand in data center markets (exceeding 60% growth) and light industrial markets, partially offset by softness in heavy industrial and nonresidential markets.
Adjusted Operating Profit (Electrical Solutions, Q4 2025) $114 million, an 18% increase year-over-year, driven by strong volumes and favorable price/cost productivity.
Adjusted Operating Margins (Utility Solutions, Q4 2025) Expanded by 200 basis points year-over-year, driven by strong volumes in grid infrastructure and favorable price/cost productivity.
Adjusted Operating Margins (Electrical Solutions, Q4 2025) Expanded by 60 basis points year-over-year, supported by restructuring investments and productivity improvements.
Return on Invested Capital (2025) 19%, reflecting strong operational performance and capital allocation.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
New Product Launches: Successfully launched new innovative solutions in 2025, contributing to growth and customer recognition.
Market Expansion in Data Centers: Data center growth exceeded 60% in Q4 2025, driven by targeted capacity investments and strong project activity in modular power distribution skid business.
Utility T&D Market Growth: Utility customers aggressively invested in new transmission and substation infrastructure, driving double-digit growth in Grid Infrastructure.
Operational Efficiencies in Electrical Solutions: Integrated solutions-oriented service model and business simplification led to 7% organic growth and 14% adjusted operating profit growth in 2025.
Automation and Productivity Investments: Invested in automation, such as enclosed automation work cells for copper lug production, reducing factory processing time and increasing output.
Acquisition of DMC Power: Acquired DMC Power, a high-growth and margin business, to strengthen market position and expand production capacity.
Focus on High-Return Investments: Continued investments in high-growth areas, including automation and capacity expansion, to drive long-term growth and productivity.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Metering and AMI markets: Full year organic growth was negatively impacted by metering and AMI markets, indicating weaker performance in these areas.
Grid automation: Continued softness in grid automation, with sales down 8% in the quarter, driven by weaker new project activity in meters and AMI.
Cost inflation: Cost inflation accelerated in the fourth quarter, though pricing and productivity actions offset these costs.
Higher interest expense: Higher interest expense associated with the DMC Power acquisition impacted financial performance.
Tax rate: A higher year-over-year tax rate partially offset strong operating profit growth.
Nonresidential and heavy industrial markets: Softer growth in nonresidential and heavy industrial markets was noted, impacting the Electrical Solutions segment.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
2026 Organic Growth: Anticipated 5% to 7% organic growth across the portfolio, driven by strength in utility T&D, data center, and light industrial end markets.
Utility Solutions Growth: Expected 5% to 7% organic growth in 2026, with strong demand in transmission and substation markets, driven by grid interconnections and aging infrastructure upgrades.
Grid Automation Outlook: Modernization initiatives in Protection & Controls Solutions expected to offset modest outlook for meters and AMI markets.
Electrical Solutions Growth: Anticipated 4% to 6% organic growth in 2026, led by mid-teens expansion in data center markets and solid growth in light industrial and renewable markets.
Total Sales Growth: Projected 7% to 9% total sales growth in 2026, supported by organic growth and contributions from the DMC Power acquisition.
Adjusted Earnings Per Share: Guidance for adjusted EPS in 2026 is $19.15 to $19.85, reflecting approximately 10% year-over-year growth in adjusted operating profit.
Free Cash Flow Conversion: Approximately 90% free cash flow conversion on adjusted net income expected in 2026.
Margin Expansion: Another year of margin expansion anticipated in 2026, driven by price and productivity management to offset inflation and reaccelerated investment in the business.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
The selected topic was not discussed during the call.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Can you provide more details on the recent order momentum and its impact on the business?
A:The recent order momentum has been strong, particularly in T&D and data center areas. The order strength in Q4 drove organic sales growth, and some backlog was built in businesses like T&D. The visibility for 2026 is positive, though being a book-and-bill business, visibility doesn't extend throughout the year. CapEx investments are strong, and materials supplied are fungible between CapEx and OpEx. Investments in generation, transmission, and distribution are supportive of long-term growth.
Q:What is happening with the meters and AMI business?
A:The meters and AMI business has stabilized at a lower base after working through a large project backlog in 2025. The business is now focused on smaller projects and replacement products. Sequential growth is expected from this point, though year-over-year comparisons will be challenging in Q1 due to prior declines.
Q:Is Q1 expected to be tougher than usual?
A:Q1 is expected to be strong year-over-year compared to the start of last year. However, the percentage of annual performance in Q1 should not be used as the sole determinant due to sensitivity in percentage calculations.
Q:What is the outlook for operating margin expansion in 2026?
A:The company expects about 50 basis points of operating margin expansion for 2026, with a seasonal head-and-shoulders shape throughout the year. Restructuring investments of $15-20 million will be front-end loaded, and the tax rate will be higher in Q1.
Q:What is the expectation for organic sales growth and EPS in Q1?
A:Organic sales growth is expected to be strong in Q1 due to favorable year-over-year comparisons. EPS for Q1 is expected to be around 20% of the year's total, though this percentage is sensitive to small changes.
Q:What is the outlook for margins in Q1 and throughout 2026?
A:Solid margin expansion is expected throughout 2026, including Q1. Both company-wide and segment-specific margins are anticipated to improve.
Q:What are the expectations for pricing and cost inflation in 2026?
A:Incremental price actions were implemented in Q4 2025, and wraparound price effects will carry into 2026. Cost inflation is expected to be mid-single digits, and the company anticipates managing price/cost productivity to be neutral to positive.
Q:What are the assumptions for raw material prices in 2026?
A:The company assumes raw material prices will remain around year-end 2025 levels, with mid-single-digit cost inflation expected. Price and productivity actions are planned to address this inflation.
Q:What is the growth outlook for grid infrastructure, particularly transmission and substation?
A:Transmission and substation markets are expected to grow in the high single to low double digits, while distribution is expected to grow in the mid-single digits. Backlogs and visibility support this growth outlook.
Q:What is the free cash flow outlook for 2026, and how will it be deployed?
A:Free cash flow is expected to be $900 million to $1 billion. The company plans to deploy it in high-quality CapEx, bolt-on M&A, and share repurchases. The M&A pipeline includes bolt-ons and larger deals focused on T&D and core electrical markets.
Q:What is the outlook for data center growth in 2026?
A:Data center growth is expected to be in the mid to high teens, driven by modular power distribution skids and connectors/grounding products. Growth rates will step down from 2025 levels due to a heavy project load in 2025.
Q:What is the status of the Aclara business and its long-term fit in the portfolio?
A:Aclara has been reshaped to focus on munis and co-ops, where it has a strong position. Costs have been reduced, and the business is expected to improve margins and grow modestly. It remains a small part of the overall utility business.
Q:What is the outlook for nonresidential and heavy industrial markets?
A:Nonresidential and heavy industrial markets are expected to remain flattish with low growth. Mega projects are more impactful on the light industrial side, which has been a source of strength.
Q:What is the outlook for the Electrical Distribution business?
A:The Electrical Distribution business has normalized, with channel inventories at target levels. Mid-single-digit growth is expected, reflecting underlying demand without restocking effects.
Q:What is the outlook for M&A activity in 2026?
A:The M&A pipeline is active, with bolt-ons and larger deals focused on complementary areas. Multiples have increased, but returns remain attractive due to strong growth rates and synergies.
Q:What is the outlook for restructuring investments and their payback?
A:Restructuring investments of $15-20 million are planned for 2026, with 2-3 year paybacks. These investments are self-funding and provide tailwinds for future years.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer to questions about the exact percentage of Q1's contribution to annual EPS, emphasizing the sensitivity of such calculations. Additionally, they provided limited detail on the specific impact of mega projects on nonresidential and heavy industrial markets, as well as the exact breakdown of cost inflation components.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AMI HUS
AMI market
Bakker CFO
CFO Capozzoli
Capozzoli measure
DMC Power
Grid Infrastructure
HES basis
HES history
HES segment
HUS basis
HUS portfolio
Incorporated
Infrastructure business
Slide
Solutions sale
Solutions segment
TD market
capacity
center market
component solution
decline
demand
digit sale
example
factory
grid automation
manufacturing
model
output
point volume
product line
production
project activity
quality
resiliency
sale acquisition
service level
strength
transmission substation
HUBB Transcript
Hubbell Incorporated (HUBB) Q4 2025 Earnings Call Transcript
Positive2-3
The earnings call summary indicates strong financial performance, optimistic guidance, and strategic growth plans, including a raised outlook for 2025 and positive projections for 2026. Additionally, the Q&A section supports these points with expectations of strong organic sales growth and margin expansion. Although there are some uncertainties, such as cost inflation, the overall sentiment is positive, especially with the anticipation of high single-digit growth in key markets and strategic acquisitions.
Hubbell Incorporated (HUBB) Q3 2025 Earnings Call Transcript
Positive10-28
The earnings call summary indicates strong growth prospects with raised EPS guidance, organic growth in key segments, and margin expansion. The Q&A section highlights broad-based order strength and price realization, despite some cautiousness in specific markets. Adjustments for partnership announcements, shareholder returns, and optimistic guidance suggest a positive sentiment. The overall outlook supports a positive stock price movement.
Hubbell Incorporated (HUBB) Presents At Morgan Stanley's 13th Annual Laguna Conference Transcript
Neutral9-11
Hubbell Incorporated (HUBB) Q2 2025 Earnings Call Transcript
Unknown7-29
The earnings call reflects mixed sentiments: strong performance in Electrical Solutions and Grid Infrastructure, but weakness in Grid Automation. Positive aspects include strategic cost management, price adjustments, and favorable long-term growth outlooks. However, uncertainties in grid automation and lack of specific guidance details temper the overall sentiment. Analysts seem cautiously optimistic, but the absence of clear guidance and larger project details introduces uncertainty. Overall, the sentiment is neutral, with balanced positive and negative factors.
HUBB Slides
HUBB Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
