Q2 2026 Hubbell Inc Earnings Call Transcript
Key Points
- Hubbell Inc (HUBB) delivered strong double-digit growth in sales, adjusted operating profit, and adjusted EPS in Q2 2026, with organic sales up 10%.
- The company raised its full-year 2026 guidance, now expecting organic sales growth of 9% to 11% and adjusted EPS of $20.25 to $20.55, reflecting increased confidence in the second half.
- Strong order momentum, with a book-to-bill ratio of 1.2x in Utility Solutions, provides high visibility into second-half performance and supports a multiyear investment cycle in T&D markets.
- The acquisition of NSI is expected to be accretive, adding approximately $0.20 to adjusted EPS in 2026 and $0.80 in 2027, with targeted sales and cost synergies of 2-3% and 3-5%, respectively.
- Data center sales surged approximately 65% in the quarter, driven by capacity additions, new product introductions, and content gains, positioning Hubbell Inc (HUBB) to capitalize on a high-growth market.
- The company is effectively managing inflation through pricing actions and productivity improvements, with additional price increases implemented in July to offset cost pressures.
- Grid Automation returned to year-over-year growth in Q2, with strong orders in meters and AMI, signaling a recovery in that segment.
- Hubbell Inc (HUBB) is investing in capacity expansion, with CapEx expected to be $175-190 million in 2026, to support long-term growth in high-demand areas.
- The company expects adjusted operating margin expansion of 40-70 basis points for the full year, driven by volume growth and acquisition contributions.
- Free cash flow conversion is on track to be approximately 90% of adjusted net income, with a plan to deleverage the balance sheet over the next 24-30 months.
- Adjusted operating margins contracted modestly in Q2, down 130 basis points in Electrical Solutions due to higher cost inflation and increased restructuring investments.
- Cost inflation remains a headwind, with rising prices for copper, aluminum, and steel, requiring ongoing pricing and productivity actions to mitigate.
- The NSI acquisition increased net debt to approximately 2.9x EBITDA, leading to higher interest expense that partially offsets earnings growth.
- Free cash flow in Q2 was down year-over-year due to working capital timing and acquisition costs, though first-half cash flow improved.
- The company faces a difficult comparison in Q4 for Grid Infrastructure, which could temper growth rates despite strong momentum.
- Increased restructuring investments, particularly in Electrical Solutions, are expected to continue in the second half, weighing on margins.
- The full-year outlook includes a one-time benefit of $20 million from IEPA refunds, which is concentrated in Q3 and may not be repeatable.
- Tariff-related costs, including changes to Section 301, are expected to slightly increase, adding to cost pressures.
- The company anticipates a higher tax rate of approximately 24% in Q3 due to timing of discrete items, which could impact quarterly earnings.
- Capacity expansion investments are expected to keep free cash flow conversion at around 90% for the next couple of years, below historical levels of 100%.
Thank you for standing by, and welcome to the Hubbell Incorporated second quarter 2026 earnings conference call. (Operator Instructions) As a reminder, today's program is being recorded.
And now I'd like to introduce your host for today's program, Dan Innamorato, Vice President, Investor Relations. Please go ahead, sir.
Thanks, operator. Good morning, everyone, and thank you for joining us. Earlier this morning, we issued a press release announcing our results for the second quarter of 2026. The press release and slides are posted to the Investors section of our website at hubbell.com.
I'm 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 as defined by the Private Securities Litigation Reform Act of 1995. Please note the discussion of forward-looking statements in
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