Q2 2025 Hubbell Inc Earnings Call

Operator: Quarter 2025 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session.

Hello and welcome to Hobo's second quarter 2025 earnings conference call.

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Daniel Innamorato: I would now like to turn the conference over to Dan Innamorato. You may begin. Thanks, Operator.

We ask that you limit yourself to 1 question and 1, follow-up.

I will now like to turn the conference over to Dan and I'm marotta you may begin.

Gerben Bakker: Good morning, everyone, and thank you for joining us.

Daniel Innamorato: Earlier this morning, we issued a press release announcing our results for the second quarter of 2025. The press release and slides are posted to the investor section of our website at hubbell.com.

Daniel Innamorato: We're joined today by our Chairman and President and CEO, Gerben Bakker, our Executive Vice President and CFO, Bill Sperry. 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 our press release considered incorporated by reference to this call.

Daniel Innamorato: 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.

Thanks operator. Good morning, everyone. And thank you for joining us earlier this morning. We should a press release announcing our results. For the second quarter of 2025, the press release and slides are posted to the investor section of our website at hubble.com, join today, by our chairman president CEO gerben Bakker, our Executive Vice President and CFO Bill Sperry, 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 or format of the 1995. Please note the discussion of forward-looking statements in our press release considered Incorporated by reference of this call. Additionally comments may also include non-gaap Financial measures.

Gerben Bakker: Now let me turn the call over to Gerben. Thanks, Dan. Good morning, and thank you for joining us to discuss Hubbell's second quarter 2025 results. Hubbell delivered double-digit adjusted earnings per share growth in the second quarter, driven by strong organic growth in grid infrastructure and electrical solutions, as well as year-over-year adjusted operating margin expansion of 120 basis points.

Now, let me turn the call over to Gervin. Thanks Dan, good morning and thank you for joining us to discuss Hubble's. Second quarter 20125 results.

Hubbell delivered double-digit adjusted earnings per share growth in the second quarter.

Gerben Bakker: We are raising our full year outlook today and we remain confident in our ability to deliver attractive financial performance for our shareholders over the near and long term. As detailed in this morning's press release, our results and outlook this morning are presented on a FIFO basis. Bill will provide you with some additional details in a few minutes, but this transition enables a greater consistency of cost accounting method across our businesses and better matching of expense and revenue recognition, particularly during inflationary periods. While raw material inflation and tariffs are driving incremental cost inflation relative to our initial outlook, you will see throughout today's presentation that we have been proactive in driving price and productivity across our portfolio, and we are well positioned to achieve positive price-cost productivity in 2025.

Driven by strong organic growth and grit in infrastructure and electrical solutions, as well as year-over-year adjusted operating margin expansion of 120 basis points.

We are raising our full-year outlook today, and we remain confident in our ability to deliver attractive financial performance for our shareholders over the near and long term.

As detailed in this morning's press release our results and Outlook this morning are presented on a 5o basis.

Bill will provide you with some additional details in a few minutes but this transition enables a greater consistency of cost accounting method. Across our businesses and better matching of expense and revenue recognition particularly during inflationary periods.

While raw material inflation and terrorists are driving incremental cost inflation relative to our initial Outlook, you will see throughout today's presentation that we have been proactive in driving price and productivity across our portfolio and we are well positioned to achieve positive price cost productivity in 2025.

Gerben Bakker: In utility solutions, performance in the quarter was highlighted by 7% organic growth in grid infrastructure. Transmission and substation markets remain strong as our utility customers invest to interconnect new sources of load and generation on the grid. And distribution markets returned to growth as the recent customer inventory normalization cycle has run its course and our sales growth in the quarter recoupled to reflect solid and market demand driven by grid hardening. Grid infrastructure orders remain strong, up high teens year over year in the first half and supporting our expectation for strong organic growth in the second half.

In utility Solutions performance in the quarter was highlighted by 7% organic growth in Grid infrastructure.

Transmission and substation markets remain strong as our utility customers invest to interconnect new sources of load and generation on the grid.

And distribution markets, return to growth as the recent customer, inventory, normalization cycle has run, its course, and our sales growth in the quarter, recoupled to reflect solid and market demand, driven by grid hardening.

Grid infrastructure, orders, remain strong up high teens year-over-year in the first half and supporting our expectation for strong organic growth in the second half.

Gerben Bakker: While grid automation performance was weaker than anticipated, strong growth in our higher margin T&D components product categories drove favorable mix dynamics in the quarter. In electrical solutions, we delivered mid-single-digit organic growth with continued adjusted operating margin expansion and 9% adjusted operating profit growth. Our segment unification efforts and our strategy to compete collectively are driving outgrowth in key vertical markets. most notably evidenced by strong data center growth in the second quarter. From an operational standpoint, we continue to simplify our business to drive productivity and operating efficiency. which we are confident will drive long-term margin expansion. While the macroeconomic and inflationary environments remain dynamic, Hubbell is well positioned in attractive markets with a leading portfolio of brands, and we are proactively managing our cost structure and pricing actions to drive continued profitable growth.

While grid automation performance was weaker than anticipated, strong growth in our higher margin tnd, components product categories, throw favorable mixed Dynamics in the quarter.

In Electrical Solutions, we delivered mid-single-digit organic growth with continued adjusted operating margin expansion and 9% adjusted operating profit growth.

Our segment unification efforts and our strategy to compete collectively are driving outgrowth in key vertical markets. This is most notably evidenced by strong data center growth in the second quarter.

From an operational standpoint. We continue to simplify our business to drive productivity and operating efficiencies which we are confident will drive long-term margin expansion.

William Sperry: Now let me turn the call over to Bill to provide some more details on our financial results. Thanks Gerben and uh... Welcome, everyone. Thank you for joining us.

While the macroeconomic and inflationary environments remain Dynamic Hubble is well positioned in attractive markets with a leading portfolio of Brands, and we are proactively managing our cost structure and pricing actions to drive continued profitable growth.

Now, let me turn the call over to Bill to provide some more details on our financial results.

Thanks curb. And, uh,

William Sperry: And maybe before my comments If I may be just off a personal note of support, any of you who were in Midtown yesterday, a rifle being discharged at Park and 52nd Street is a pretty disturbing day, and I just hope you and your people are all okay.

Welcome everyone. Thank you for joining us and maybe before my comments.

if I maybe just off of personal note of support, any of you who are in Midtown yesterday, ah, uh,

William Sperry: So I'm going to start my comments on page four of the slides that you hopefully have found and start with our adoption of a unified FIFO-based inventory accounting standard. Our previous state had been roughly, in very rough terms, half LIFO, half FIFO. That was really just an outcome of companies we had bought or companies we had sold. We just brought them on in their prior standards and we thought this was A good time to make the effort to harmonize that with maybe three specific benefits, you know, the first being you know, running the company under a single methodology.

Rightful being discharged that Park in 52 street is pretty disturbing day. And, uh, I just hope uh, you and your people uh, are all, okay. So I'm going to start uh, my comments on page 4 of the slides that you hopefully have found and start with.

Uh our uh adoption of a unified fifo based inventory County standard um our our previous state uh had been roughly uh in very rough terms, Half-Life or half fifo.

and I was really just an outcome of

Companies we had bought or companies we had sold, we just brought them on in their prior standards, and we thought this was.

A good time to make the effort to harmonize that with maybe three specific benefits. You know, the first being...

William Sperry: I think allows us. Simplify Our Business Reviews, and have everybody running the same way. I think secondly, In an inflationary environment, because of the fact that our pricing typically takes about a quarter to get into the revenue stream, we find this creates a better match of the timing of when new higher costs are recognized, and when those new prices are recognized. So previously, we created a distorting lag and asked you to be patient. And I think now we can offer you a more accurate recognition of our margin in the quarter that it's happening. I think third, I'm hoping it puts us from your perspective on the same footing as our reporting peers.

You know, running the company, uh, under a single methodology.

I think um, allows us to to to simplify our business reviews and have everybody uh run running the same way. I think secondly,

In an inflationary environment, uh, because of the fact that our

Takes about a quarter to get into the revenue stream.

Uh, we find this creates a better match, uh, of the timing of when new higher costs are recognized and when those new prices are recognized. So previously we created a a distorting lag and asked you to be patient. And, um, I think now we can offer you a more accurate recognition of our margin in in the quarter that it's happening.

William Sperry: So hopefully make it easier for you all to make comparisons and contrasts and better judgments. So obviously none of this destroys or creates profits during a cycle. It's just. It's just a just a timing of when when the expenses are recognized. So the implications you can see on the right hand side of the page was a $29 million decrease in COGS in the second quarter, and a $20 million decrease in COGS for the first half. So you see... The impact on first half of 25 was about 30 cents.

I think third uh I'm hoping to puts us from your perspective on the same footing as our reporting peers, so hopefully make it easier for you all to make comparisons and contrasts and better judgments. So

Obviously, none of this, uh, destroys or or creates profits during cycle. It's just um,

Uh, just a just a timing uh, of when, when the um, expenses are recognized. So the implications, you can see on the right hand side of the page,

Uh, was it 29 million decrease in cogs in the second quarter?

Uh, $20 million decrease in COGS for the first half.

um, so you see

William Sperry: And that's equivalent Inge Inge, Inge Inge, I think Gerben is going to talk about more at the end of the conversation. The other implication is to accelerate some tax payments to be made over the next several years. And interestingly, those payments will be more than offset by what we're expecting to be cash benefits. from the new Big Beautiful Bill tax legislation that was recently passed in early July.

The impact on first half of 25 uh was about 30 cents. Um, and that's equivalent to the

To the range in guidance that we've made, the government is going to talk about more at the end of the conversation.

um, the other implication is, uh,

Uh, accelerate some tax payments to be made.

Over the next several years.

Uh and interestingly those payments will be more than offset by what we're expecting to be cash benefits.

William Sperry: All of this, we just wanted to remind on the bottom of the page, we feel You know, the obligation to continue to put out a high quality reporting framework. We think a more harmonized standard continues to contribute to that. And we're just calling out here, reminding everybody that We do things like fully burden our segments with corporate costs. include restructuring costs in our results because we feel they're an important part of our ongoing performance, and we as well recognize the benefits.

Uh, from the new big beautiful, Bill tax legislation that was recently passed uh in early July. So

All of this. Um, we just wanted to remind you on, on the bottom of the page. We feel...

You know, the obligation to continue to put out a high quality report reporting framework, we think uh a more harmonized standard continues to contribute to that.

And we're just calling out here, reminding everybody that, uh,

William Sperry: So enough, hopefully, on accounting.

William Sperry: So turning to the performance, I'm on page five. Our sales were up in the quarter 2% to just under $1.5 billion. There was general strength in our electrical segment. And then utility side, the strengths was on the grid infrastructure area and grid automation.

We do things like, fully burden our segments with with corporate costs. We include restructuring costs and our results, because we feel they're important part, uh, of our ongoing performance, um, and we, as well recognized the benefits. So, um, enough, hopefully, uh, on on a, on a county. Um, so turning, uh, to the performance. I'm on page 5,

Our sales were up in the quarter 2% to just under 1.5 billion.

Uh, there was General strength in our electrical segment.

William Sperry: We had a week quarter of double digit contraction. If you put the electrical segment and the infrastructure side together, you'd have a mid single digit growth rate. And that grid automation piece, providing a couple of point drag to the overall Second column, you see adjusted operating profit, the dollar's up 8% in the quarter to 362 million, and the margins widened by 120 basis points. 24.4%. We talked about the drivers there. Interestingly, we tend not to talk about mix very frequently with you all, but it so happens that the area of contraction in grid automation and Claire's towards the lower end of the spectrum of our margin of our portfolio versus the areas of growth.

And in Utility side the strengths was on the grid infrastructure uh area and in the grid automation uh we had a weak quarter of double digit contraction.

um,

If you uh, put the electrical segment and the infrastructure side together, you'd had a mid single digit growth rate. And that grid automation piece uh providing a a couple of Point drag to the overall sales results.

Second column you see adjusted operating profit uh the dollars up 8% in the quarter to 362 uh million and the margins widened by 120 basis points to 24.4% um

if we talked about the drivers there,

Interestingly, we tend not to talk about mix.

Uh, very frequently with you all.

But it so happens that the area of contraction.

William Sperry: namely Burning and Grounding and Connectors. and T and D area of utility happen to be quite high margin areas. And so there is to just the market growth, just a natural, a natural mix benefit. as well continue to manage price cost very well. and as well, the FIFO impact, as we discussed on. The third column there is adjusted earnings per share. C, grew on a dollar basis 11% to $4.93. outgrowing the operating profit growth with some non-op tailwinds. Uh, last year's tax rate, uh, was a little bit higher and. I think as we've been talking about with you all during the first half of the year, we bought some shares, about $225 million of share repurchases.

In Grid Automation and Claris towards the lower end of of the spectrum of our margin of our portfolio, versus the areas of growth.

Namely burning and grounding and connectors.

And, uh, the T&D area of utility happens to be quite high margin areas. And so there is, uh, just the market growth, just a natural, uh, a natural mix benefit as well. We continue to manage price cost very well.

Um,

And, uh, as well, the FIFO impact, uh, as we discussed on the previous page,

The third column there is uh, adjusted earnings per share.

You see grew on a dollar basis 11% to $4.93.

Uh, you outgrowing the operating profit growth with some non-op Tailwind.

last year's tax rate, uh, was a little bit higher and

I think as we've been talking about uh, with you all during the first half of the year

William Sperry: So that creates a little bit of of non-oblige as well. And on the fourth column, you have the free cash flow. Good growth in the quarter. And importantly, we feel continuing to track to the 90% conversion that we're targeting to achieve through the fall.

Uh, we bought some shares, um, about $225 million of share repurchases. So that creates a little bit of a non-op list as well. And on the fourth column, you have the free cash flow.

Uh, good growth in the quarter.

William Sperry: So let's disaggregate the enterprise results into the two segments.

William Sperry: and on page six, we'll start with utility. You see 1% growth there to 936 million, all of that growth being organic.

And uh, importantly we feel uh, continuing to track to uh, the the 90% conversion that we're targeting to achieve, uh, through the operating year of 2025. So let's, uh, disaggregate the Enterprise results into the 2 segments.

And on Page 6, we'll start with utility.

And you see 1% growth there to $936 million.

William Sperry: Inaudible. That unpacks into the two pieces. One is the grid infrastructure, the more hardware side of the business. That's about three quarters of the segment. And you see 7% growth there. And that disaggregates into double-digit growth in transmission and substation. Continued very healthy demand there and the distribution side, that last mile connecting to the house or the building growing at a mid-single-digit rate of sale. It's important to note that year-to-date... orders are up high teams in this area. And I mentioned that importantly, when when Gerben gets to our guidance, and in our outlook for the balance of the year, certainly that order book is influencing very heavily how we think about providing you guys guidance here at the halfway.

All of that growth being organic.

Uh, that unpacks into the 2 pieces, 1 is the grid infrastructure, the more Hardware side of the business.

That's about three-quarters of the segments, and you see 7% growth there.

And that segregates into, uh, double-digit growth in transmission and substation.

Uh, continued, uh, very healthy demand there.

And, uh, the distribution side, that last mile.

Uh, connecting to the house or the building, uh, growing at a mid-single-digit rate of sales. Um, important to note,

Uh, that year to date.

Our order is up uh High Teens in this area.

And I, I mentioned that importantly, when Gerben gets to our guidance and our outlook for the balance of the year, certainly that order book,

William Sperry: So, I think. We continue to see the trends of grid modernization and electrification alive and well. Very good news. I think Additional good news and quite noteworthy to see that as the distribution product Grew, we can say that the Channel D stock has concluded, I'm sure. You are as happy as I am to not have us discuss that any longer with you all. So that feels good to emerge from that.

Uh is influencing very heavily H, how we think about uh providing you guys guidance here at the halfway point.

Um, so I think

We continue to see the trends of grid modernization and electrification alive and well.

Very good news, I think.

Additional good news and and quite noteworthy to see.

That as the distribution products.

Uh, grew.

Uh, we can say.

Uh, that the channel DTO has concluded, I'm sure.

William Sperry: Grid automation at a 13% contraction, about a quarter of the total segment. We've had some roll off of large projects. that were not backfilled. And we really have a situation where we have been coming out of a heavy backlog year that was created when when the chips weren't available the year prior to that. And so we've had some. erratic comparisons to be made.

Uh, you are as happy as I am to, to, uh, not have us, uh, discuss that any any longer with you all. So that feels good, uh, to emerge from that, um, grid automation, uh, at a 13% contraction about a quarter of the total segment.

We've had some role off of large projects that were not back filled.

and, and we really have uh, the situation where uh, we have been um, coming out of a, of a heavy backlog year, uh, that was, uh, created when when the chips were unavailable, the year prior to that,

William Sperry: And I think When we get to that, we'll talk a little bit more about, I think, how grid automation feels to be in a stable and growing environment. And on the operating profit side, on the right-hand side of the page, you see the dollars grow by 7% to $239 million in the quarter, margins up 140 basis points. driven by Continued price realization, managing price costs quite effectively. Again, good mix there between the infrastructure growth. Automation, uh, Traction. So solid bottom line performance for that segment.

Uh, and so we've had some, uh, erratic comparisons to be made, and I think.

When we get to that out, we'll talk a little bit more about I think. How grid on my grid automation feels to be in a in a a stable and growing environment. Finally

um,

on the operating profit side on the right hand side of the page, you see the dollars grow by 7% to 239 million in the quarter.

Margins up 140 basis points.

uh, driven by

continued price realization managing price costs quite effectively.

Again, good good. Mix there, uh, between

Uh, the infrastructure growth and the grid automation, uh, contraction.

William Sperry: Good Growth Trends Inside the Corp.

Um, so solid uh, bottom line, performance, uh, for that segment and good. Growth Trends inside the core piece of, uh, of grid infrastructure,

William Sperry: We'll talk about electrical segment on page 7. The Solid Quarter turned in by the segment, 4% sales growth to $545 million, largely organic, but there was a small contribution from the Ventive acquisition, which you'll remember, which is a wireless infrastructure products. As we think about driving that mid-single-digit growth. Data Centers continues to be a very significant contributor to our balance of systems product portfolio that's exposed there. The light industrial markets were very strong for us. for our connectors and grounding product. heavy industrial, certainly more mixed and non-res. A little bit, a little bit soft. As we look to the right side of the page, on the operating profit, 9% growth in dollars to $124 million, margins up a point to 22.5%.

We'll talk about electrical segment on page 7.

See a solid quarter turned in by the segment 4%, sales growth to 545 million.

Largely organic, but there was, uh, small contribution, uh, from uh, the vent to acquisition. Which you'll remember, which is a

A wireless infrastructure products. Um, as we think about driving that mid single digit growth.

uh, data centers continues to be a very significant uh, contributor

To our balance of systems product portfolio. That's exposed there.

The light industrial markets were very strong for us.

Connectors and grounding products.

Heavy industrial, uh, certainly more mixed and non-res.

Um, a little bit, a little bit soft.

Um, as you look to the right side of the page on the operating profit 9% growth in dollars to 124 million.

William Sperry: They are dropping through incrementals on their volume, managing price costs. and they continue to push projectivity, so.

Uh, margins up a point to 22 and a half percent.

Uh, there are dropping through, uh, increments on their volume managing price cost.

William Sperry: I think you all remember Mark Mikes leading this segment. doing a good job on competing collectively on the top size, working around some Salesforce realignments that we think have been successful in vertical market selling and cross-selling and continuing to work some channel conversions. and on the cost side, continuing to become more and more efficient. as we create a real segment rather than. So what I think Mark's pulling off here and his team is consistent multi-year momentum in the electrical segment. We see it continuing to grind upwards and improve. are pleased with his results. It's got still years to go on that.

Uh, and uh, they continue to push productivity. So

I think you all remember Mark Mike's uh, leading this segment.

doing a good job on on competing collectively uh, on the top side, working around some sales force realignments that we think have been successful in

Vertical markets, selling and and cross-selling and continue to work some Channel conversions.

Uh, and on the cost side, continuing to become more and more efficient.

Uh as as we create a real segment rather than a series of of vertical businesses. So what I think Mark's pulling off here and his team.

There's consistent multi-year momentum in the electrical segment.

And we see it continuing to grind upwards and and improve. Um,

William Sperry: On page eight, I'm going to talk about the markets. as a setup and Gerben's going to come back. talk about our outlook and guidance and kind of have these market perspectives maybe as input into the top line. guidance, comments that he'll share. So what you see in the inside of both of the is roughly 4% to 6% organic sales growth. It's roughly equal between the segments. And it's roughly equal contributions from price and volume, though a little bit price skewed versus volume skewed. Um And so if we started with electrical on the right, we think the second half will be quite similar to the first half.

And um and we're we're very pleased with his results and I think he's got still years to go on that Improvement side.

Um, PJ, I'm going to talk about, uh, the markets.

As a setup. And and girvin is going to come back and talk about our Outlook and guidance and kind of have these this Market perspectives, maybe as as, uh, input into the top line of of his guidance comments that he'll share. So, what you see in the inside of, of both of the

Circles is is roughly 4 to 6% organic sales growth?

Um, it's it's roughly equal between the segments.

And it's roughly equal contributions from price and volume, though a little bit price skewed, uh, versus volume skewed. Their.

um,

and so, if we start with electrical on the right,

William Sperry: You'll see from around 10 o'clock to around three o'clock there in the circle. We're a little more cautious around heavy industrial and non-res. contemplating flat contributions for the year. But as you work down, you start to see light industrial renewables, you're, you're seeing Low and mid-single-digit contributions, clearly the star of the show. continues to be data centers. We're anticipating a 30% The left side, you've got our utility markets. And what you see from about 10 o'clock to four o'clock See the grid protection and the electrical distribution, high singles and mid singles. Again, I'll just note that electrical distribution of mid singles.

Um, we think the second half will be quite similar to the first half.

Um, you'll see from around 10:00.

To around 3:00 there in the circle.

We're a little more cautious around heavy industrial and non-residential.

Contemplating uh, flat uh contributions for the year.

uh, but as you work down, you start to see light Industrial

uh, Renewables your uh, you're seeing

Low and mid single-digit contributions, um, clearly the star of the show.

Uh, continues to be data centers.

And we're anticipating, uh, 30% growth there.

On the left side, you've got our utility markets. Um,

and uh,

What you see, uh, from about 10:00 to 4:00.

William Sperry: It maybe looks modest next to the transmission and substation, but that is an inflection, just to remind us, coming off of its destocking. And so that's quite good for us to see that rebounding. The mid and high teens performance of substation transmission markets . We just see continued strength there. Our positioning is very good. And I think our sales growth is going to continue to be strong. telecoms worth mentioning as another inflection point. I think you all recall us. going through last year with some significant contractions there in the enclosures business driven by telecom. and again quite encouraging to see them finish out any of the overstocking situation plus potentially any market weakness that was combining with that to return to growth.

You see the grid protection and the electrical distribution high, singles and mid singles. Again, I'll just note that the electrical distribution of mid singles.

it maybe looks modest next to the transmission and substation, but

that is an inflection um, just to remind us uh coming

Uh, coming off of, uh, it's destocking, and so that's quite good for us to see that rebounding. Um, the mid and high teens performance of substation and transmission markets.

We just see continued strength there. Our positioning is very good.

Uh, and I think our sales growth is going to continue to be strong.

Telecoms worth mentioning as another inflection point.

I think, um, you all recall us

Uh, going through last year with some significant contractions in the enclosures business driven by telecoms.

William Sperry: So that's quite good. You see the Eclera piece of meters and AMI down 20. I think that's worth maybe some comments. Clearly the large projects and a lot of the backlog that we were fulfilling from That point in time when in the previous year, the chips had become unavailable, it was difficult for us to ship. Those got fulfilled and created quite a difficult compare for last year. We've in response, managed costs. really working to moderate the decrementals there. And I think if I were to describe the position that Eclair is in. I would say the last three quarters have been quite flat sequentially.

Uh and uh again quite encouraging uh to see them finish out. Uh any of the overstocking situation plus potentially, any Market weakness that was combining with that to return to growth. Um, so so that's quite good. Uh you see the the Clara piece of meters and Ami down 20 and

clearly the

the large projects and and and a lot of the uh, backlog that we were fulfilling uh from

That point in time, when in the previous year, the chips had become unavailable, it was difficult for us to ship those, got fulfilled and and created quite a difficult compared, uh, for last year.

um,

We've in response, uh, managed cost.

Really working to moderate the decimals there.

And I think if I were to describe the position that Claire's is in,

William Sperry: We think that's a, we're kind of down to that stable base of Smaller Projects, MRO. Good business with union co-ops and the the more public utilities.

Uh, I would say the last 3 quarters have been quite flat sequentially.

we think that's a um we're kind of down to that stable base of

Smaller projects, mro.

Good business with Moody and co-ops and the.

Gerben Bakker: And we think we're expecting that in the fourth quarter, Clara will return to growth and be able to have a steadier operation moving forward as we sort of absorb With those pieces, I'm going to turn it to Gerben and have him synthesize that into our output. Great. Thanks, Bill.

The more uh, Public Utilities, um and uh we think uh we're expecting that in the fourth quarter.

Uh a CLA will return to growth and and be able to have uh a steadier operation moving forward as we sort of absorbed.

This reaction, um, to that heavy backlog here in the prior year. So uh, with those pieces, I'm going to turn it to gerben and have him synthesize that, uh, into our outlook for you.

Gerben Bakker: We are raising our full year adjusted earnings per share outlook to a range of $17.65 to $18.15. This represents a raise of 30 cents at both the low and high end of our prior outlet range. We anticipate 4% to 6% organic growth and full-year adjusted operating margin expansion to drive high single-digit adjusted earnings per share growth at the midpoint of our range. This outlook is consistent with our long term financial framework, which we believe will deliver differentiated returns for our shareholders over time. We are confident in our ability to navigate through near-term macroeconomic and inflationary uncertainties to deliver on these increased financial commitments in 2025.

Great, thanks Bill. Uh, we are raising our full year, adjusted earnings per share, Outlook to a range of 17.65 cents to $18.15.

This represents a raise of $0.30 at both the low and high end of our prior Outlook range.

We anticipate 4 to 6% organic growth and full year adjusted operating margin expansion to drive high single digits adjusted, earnings per share growth at the midpoint of our range.

This outlook is consistent with our long-term financial framework, which we believe will deliver differentiated returns for our shareholders over time.

We are confident in our ability to navigate through near-term macroeconomic and inflationary uncertainties to deliver on these increased Financial commitments in 2025.

Gerben Bakker: We are seeing strong evidence of secular growth megatrends in the largest, highest margin areas of our portfolio, which we believe will underpin strong performance in the second half of 2025 and over the next several years. We are confident that Hubbell's unique leading positions at the intersection of grid modernization and electrification combined with structural opportunities in our operating model and capital deployment potential will continue to drive long-term shareholder value creation.

We are seeing strong evidence of secular growth mega trends in the largest, highest-margin areas of our portfolio, which we believe will underpin strong performance in the second half of 2025 and over the next several years.

Operator: With that, let me turn the call over to Q&A. Thank you. Ladies and gentlemen, as a reminder to ask the question, please first start 1-1 on your telephone, then wait for your name to be announced. To withdraw your question, please press star 11 again. Please limit yourself to one question and one follow-up.

We are confident that Hubble's unique leading positions at the intersection of grid modernization and electrification combined with structural opportunities, in our operating model and capital deployment, potential will continue to drive long-term shareholder value Creation with that. Let me turn the call over to Q&A.

Thank you.

Ladies and gentlemen, as a reminder to ask a question, please press star. 1, 1 on your telephone. Then wait, for your name to be announced.

To withdraw your question. Please press star 1 1 again.

Operator: Please stand by while we compile the Q&A roster.

Please limit yourself to 1 question and 1 follow-up.

Please stand by while we compile the Q&A roster.

Jeffrey Sprague: Our first question comes from the line of Jeffrey Sprague with Vertical Research Partners. Your line is open. Thank you.

Our first question comes from the line of Jeffrey Spriggs with Vertical Research Partners. Your line is open.

Unknown Executive: Good morning, everyone. Just on electrical distribution, the return to mid single digit growth. I'm just wondering if that is your view of what the underlying market is growing. And we should view that as sort of a steady state growth rate from here. Or do in fact, you Unknown Executive, Scott Graham, Charles Tusa, Hubbell Yeah, Jeff, maybe I'll start with I think the short answer is yes, mid single digit is is the underlying growth rate, what what we see reflected of end user demand is what they're actually hanging on on the infrastructure. It does improve on the second half, though, based on just easier comps, right, compared to last year.

Uh, thank you. Good morning everyone. Um, just thought electrical distribution, um, the return to Mid single digit growth. Um, I'm just wondering if that is your view of what the underlying Market is growing. Um and we should view that as sort of a a steady state growth rate from here. Um or do in fact, you think even though you're not talking about inventory in the channel it still might be an issue and it's perhaps you know muting the growth rate. So you grew through it this quarter right but the question is is mid single digit growth. Uh

Really kind of the sustainable growth rate from here.

Unknown Executive: But, but yeah, we believe fundamentally, longer term, this is a mid single digit growth area with with a combination of, you know, MRO, replacement and grid hardening.

Yeah, Jeff, maybe I'll start with. I think the short answer is yes. Uh, mid single digit is, is the on the underlying growth rate? What? What we should reflected of end. User demand is what they're actually hanging on, on the infrastructure. Um, it does improve on the second half, though, based on just easier comps, right? Compared to, uh, to last year. But, but yeah, we believe fundamentally longer term. This is a mid single digit growth, uh, area with, with a combination of, you know, mro replacement and and grid hardening.

Unknown Executive: And then on the return of growth in Eclera in the fourth quarter, I guess that would also mostly just be a comp issue, you know, putting aside comps, do you actually see, you know, a pickup in activity there, project or otherwise that create a situation where we could expect some growth out of that. Yeah, Jeff, the, um, The trajectory in the last few quarters has been quite flat sequentially, so That's the start, you know, to get to get flat. And as you as you look out and you see pipeline, I think it's not, it's not at all unreasonable to think of it.

otherwise that, um, you know, would create a situation where we could expect some growth out of that business in 2026,

yeah, Jeff the um

The trajectory in the last few quarters has been quite flat sequentially. So that's

Unknown Executive: You know, as a low single to mid single digit growth from this kind of new lower.

That's the start you know how to get to get flat. And as you as you look out and and you see pipeline uh I think it's not it's not at all. Unreasonable to think of it.

You know, as a low single to mid single digit growth from this kind of new lower base.

Unknown Executive: And just on tariffs, I'm sorry if I missed it, but can you can you share with us what the tariff impact embedded in your results are? How much price? getting against that. Yeah, so we got a couple points of price, Jeff, in the first half.

And, uh, just on tariffs, I'm sorry if I missed it. But can you, uh, can you share with us, uh, what the Tariff impact, uh, embedded in your results? Are how much pricing you're getting against that? Uh, and maybe just a little bit more color on price in the 2 segments?

Unknown Executive: Thanks, everybody. And we are in the second quarter, slightly ahead. of tariffs on a price-cost basis. We have expecting more tariffs to hit third quarter and more price. to hit so. We feel that we acted pretty early and we feel that the market I've kind of accepted those increases based on the tariff logic. and that those prices have stuck reasonably well. So we're feeling We're feeling good about our ability. There's no question it's a challenging environment and having having the regime change, you know, quickly and with quite little notice. maybe something being put on and being delayed.

Yeah, so, uh, we got a couple points of price, Jeff, uh, in the first half.

um,

and,

We are uh, in in the second quarter, slightly ahead.

Uh, of of terrorists on a price cost basis.

We have expecting more tariffs to hit third quarter, uh and more price to hit. So,

We feel uh, that we acted.

Uh, pretty early.

uh, and we feel that the market

Uh, I kind of accepted those increases based on the tariff logic.

Uh, and that those prices have stuck reasonably well. So we're feeling, um,

We're feeling good about our ability. There's no question. It's a challenging environment and

having uh, having the regime change, you know, quickly and with quite little notice

Unknown Executive: But nonetheless, I think we're managing that quite well using Price and feel we're ahead at this split second.

Maybe something being put on, then being delayed.

Uh, but nonetheless.

Unknown Executive: Yeah, okay, thanks, I'll leave it there. Thank you.

I think we're managing that quite well using price, and we feel we're ahead at the Split Second.

Yeah. Okay. Thanks, I'll leave it there.

Operator: Please stand by for our next question.

Thank you.

Tommy Moll: Our next question comes from the line of Tommy Moll with Stevens. Your line is open. Good morning, and thank you for taking my question. Good morning, Tommy. Wanted to start with a conversation on copper specifically and commodities more broadly, but coppers obviously had a big move here. And the question arises, what if any impact? Do you contemplate for this year's earnings?

Please stand by for our next question.

Our next question comes from the line of Tommy Mall with Stevens. Your line is open.

Good morning, and thank you for taking my questions.

Hi, Tommy morning, Tommy.

Unknown Executive: And if I can just make it a two-parter maybe more broadly, where are you exposed versus well-covered just in terms of the hedge strategy across all the commodities that would be meaningful here? Thank you. Yeah, Tommy. So I would say If I answered it backwards, you know, we use the price lever, you know, as the way to hedge against commodities and metals. And so we feel not exposed. We actually feel well covered. You know, when we introduced this framework last quarter, You know, we were. We're taking your question about the commodities. And even though we may not be paying tariffs.

Wanted to start with a conversation on copper, specifically in commodities more broadly, but copper has obviously had a big move here. The question arises: What, if any, impact do you contemplate for this year's earnings?

And if I can just make it a 2-part, maybe more, broadly. Um where are you exposed versus well covered? Just in terms of the Hedge strategy, across all the Commodities that would be meaningful here. Thank you. Yeah Tommy. So I would say

If I answered it backwards. Um,

You know, we use the price lever, you know, as the way to hedge against commodities and metals. Um, and so we feel not exposed. We actually feel well covered.

um,

you know, when we introduced this this framework, uh,

Last quarter.

you know, we were

We were in, we're taking your question about the commodities.

Unknown Executive: We were considering that metal inflation to be tariff related, because a lot of it was caused, you know, by by producers being able to take advantage of a price umbrella. So there's been movements, our exposure is Copper, Steel, Aluminum, all of those. and I hear you on copper. There is maybe some uncertainty going forward and yet we continue to be confident that we can use Price there, Tommy, and we've got very active ongoing dialogue with all of our customers and distributors talking about that, and I think that that dialogue is being well informed by analytics and price charts and all that.

And even though we may not be paying terrorists,

uh we were considering that metal inflation to be Terror related because a lot of it was caused you know, by by producers being able to take advantage of a price on umbrella. So

Um, there have been movements; our exposure is...

copper.

Steel, aluminum, all of those.

Um, and I I hear you on copper there. There is maybe some uncertainty

Going forward and yet, uh, we continue to be confident that we can use.

Unknown Executive: So, I think the raise to guidance you should assume from us to mean we feel confident that we can cover that kind of inflation with Price. Yeah, maybe more specifically say, right, if copper is up more recently, if that remains a fact, it will require additional pricing, but under the new construct of FIFO, we got the time, right? You'll see a delayed impact of that copper cost coming through and it gives us the time to price for it. And I say, you know, copper is one example, but we continue to see, right, whether it's reciprocal tariffs or whether it's steel and aluminum here recently that went up, just a very dynamic environment and it starts for us on the cost side and what we can do to mitigate this action.

Price there Tommy, and we've got very active ongoing dialogue, with all of our customers and Distributors talking about that. And I think the that dialogue is being well, informed by analytics and, and price charts and all of that. So, um, I think the, the raise to guidance you should assume from us to mean,

Unknown Executive: This is supplier negotiation, both of sharing some of this cost or delaying the impact as supplier moves or reshoring. It's trade organizations that we use to help with exemptions. It's just, you know, all-out effort and it's truthfully a responsibility that we have for our customers to offset some of these costs with, with cost actions and productivity. And then of course, as well, you know, using prices where needed to be priced cost neutral. So I would say very dynamic. Your copper example is just one of, I would say various areas that we're looking at and proactively managing.

If if that remains a fact, it will require additional price. But under the new construct of fifo, we got the time, right? You'll see a delayed impact of of that copper cost coming through and it gives us the time to to price for it. And I say, you know, copper is 1 example but we continue to see right whether it's reciprocal terrorists or whether it's steel. And aluminum here recently that went up just a very Dynamic environment and it starts for us on the cost side and what we can do to mitigate these action, this is supplier negotiation, both of sharing some of this cost or delay in the impact the supplier moves or reassuring its trade organizations that we use to help with with exemptions it is just you know all out effort and it's

Truthfully responsibility that we have for our customers to offset some of these costs with with cost actions and and productivity, and then, of course, as well. You know, using prices, um, um, were needed to be priced cost, uh, neutral. So so I would say very Dynamic, your copper example is just 1 of of, I would say various areas that we're looking at and, and proactively managing to

Unknown Executive: Thank you both.

Unknown Executive: And then for my follow up question, I wanted to ask on the EPS guidance you provided. There are some moving pieces this quarter. The LIFO-FIFO discussion has gotten sufficient airtime, but also there was the 50 cent contingency or sensitivity from last quarter that's no longer part of the conversation today.

Thank you both. And then for my follow-up question, I wanted to ask about the EPS guidance you provided.

Unknown Executive: My, my question is, if you think purely from an operational perspective, Would you say things have gotten better or worse? Same in terms of the earnings expectations for Yeah, I think I would say that we continue to be on track to deliver the operational performance that we had promised at the beginning of the year, you know, Tommy, and I would say that implies overcoming, you know, some some new costs from tariffs. And it involves overcoming some slightly more challenging, you know, first half volume, you know, so we view that as a bit of an accomplishment, you know, operationally, to be able to do that.

There are some moving pieces. This quarter, the LIFO, 5O discussion has gotten sufficient air time, but also there was the 50 Cent UM contingency or sensitivity from last quarter. That's no longer part of the conversation today. So

my my question is, if you think purely from an operational perspective,

Would you say things have gotten better or worse? Same in terms of the earnings expectations for this year.

Thank you.

Yeah, I think um, I

I would say that we continue to be on track to deliver.

The operational performance that we had promised at the beginning of the year, you know, Tommy. And I would say

That implies overcoming, you know some some new costs from tariffs.

uh some slightly more challenging, you know, first have volume, you know, so,

Unknown Executive: And to your point of removing that contingency, we also feel is good in, you know, removing that uncertainty from our investors' expectations.

Review that as a bit of an accomplishment, you know, operationally, to be able to do that. Um, and.

to your point of

Removing that contingency.

We also feel it is good and

You know, removing that uncertainty from our investors expectations. So,

Unknown Executive: Thank you.

Operator: I'll turn it back.

Thank you. I'll turn it back.

Operator: Please stand by for our next question.

Please stand by for our next question.

Christopher Glynn: Our next question comes from the line of Chris Snyder with Morgan Stanley. Your line is open. Hi, thank you for the question.

Our next question comes from the line of Chris Snider with Morgan Stanley. Your line is open.

Unknown Executive: This is Toby Okwara on for Chris. I wanted to ask for a little bit more color around the end markets. I know the data center seems like it's remaining strong. We haven't really seen anything negative there. But any other areas of green shoots that have shown up particularly on the electrical side? Thank you. Yes, certainly, I think for us, Greenshoots-wise. You know this, we've been talking I think for the better part of this year and probably extending into last, how we thought demand was always in reasonably good shape. And yet we were seeing some channel Channel Overstocking that was creating us making kind of fewer shipments than was being ultimately installed.

Hi. Thank you for the question. This is Toby Oar on for Chris. Uh wanted to ask for a little bit more color around the end markets. I know that data centers seems like it's remaining strong. We haven't really seen any uh, any anything negative there, but any other areas of green shoots that have uh that have shown on particularly on the electrical side. Thank you.

Yes. Certainly I think um,

for us, green shoots, uh, wise

you know, this we've been talking, I think for the better part of this year and

Probably extending into last how we thought demand was always in reasonably good shape.

And yet we were seeing some Channel.

Um,

Unknown Executive: And so that started for us in wiring device, and we worked our way through that now fully a year plus ago. It felt like the distribution, that last mile of utility product kind of was still working against us and we feel really happy. to say we think we're through that. So it's not a green shoot in that demand has changed and It's just a green shoot in the amount of shipments we'll be able to make to replenish the fact that the channel has kind of right-sized itself. And by channel, I'm extending through a distribution customer to the...

some channel overstocking that was creating us making kind of fewer shipments, uh, than was being ultimately installed. And so, uh, that started for us in wiring device and that's, uh, we worked our way through that. Now fully a year plus ago.

um, it felt like uh the distribution that last mile of of uh, utility product kind of, was still working against us and we feel really happy

Uh, to say we think we're through that. So it's not a green shoot in that demand has changed.

It's just a green shoe in the amount of shipments we will be able to make to replenish, the fact that the channel is kind of right-sized itself. And by channel, I'm extending...

Unknown Executive: I also would point out the enclosures area where Telcom has been creating some static and We've seen that area revert to growth. year over year was flat in the second quarter, but sequentially up from the first quarter and so We're quite confident that bottomed in Q1. So there are some nice Green Shoot improvements in our, where we'll be able to ship, which aren't the exact same as that there's been market inflection, right? It's just the demand needed by the end customers. So we do think.

Through, uh, a distribution. Customer to the end YouTube.

um, I also would point out

um, the enclosures, uh area.

um, some static and

we've seen that area.

Uh, revert to growth.

um, and uh,

year-over-year was flat in the second quarter, but sequentially up from the first quarter and so

We're quite confident that we bottomed in Q1.

So there are some nice, um,

Unknown Executive: things have changed meaningfully here at the midway point of 25. I mean, the only thing I would add to that is on the light industrial side of electrical, that's that's continuing to be very resilient with, you know, some of the projects, some of the reshoring there with the burn, the specific product, the grounding connectors is holding up really nice. Thank you.

Green Chute, uh, improvements in our, where we'll be able to ship, which aren't the exact same as that the there's been Market inflection, right? It's just a demand needed by the End customer. So we do think

Things have have changed meaningfully here at at the Midway point of of 25. I mean the only thing I would add to that is on the light industrial side of electrical. That's that's contained to be very resilient with uh you know, to some of the projects, some of the reshoring there, with the burn, the specific product, the grounding connectors

Is holding up really nicely.

Unknown Executive: This is Chris. I wanted to follow up on price. Last quarter, you guys kind of planned for two price increases. I believe the first was in April, and there was a second one that was expected later in the quarter. I'm assuming that second one maybe didn't go through or got pushed out. So can you just kind of remind us on that second price increase, when is it coming, and I guess how material could it be when we think about the organic guide into the back half?

Um, thank you. This is Chris. I wanted to follow up on price. Um, so I I, um, I, I last quarter. You guys kind of planned for 2 price increases. I believe the first was in April, um, and there was a second 1 that was expected later in the quarter. Um, I'm assuming that second 1, maybe didn't go through or got pushed out. Um, so can you just kind of remind us on that second price, increase? When is it coming? Um, and I guess how

Unknown Executive: Thank you. Yes, so Chris, you broke up a little, but what we heard was a question about the price that was pulled in the second quarter, and was there price pulled maybe towards the middle or end that hasn't yet been seen in shipments? And that is true. I think I might have heard you say, was that price increase delayed? I would say it was not delayed. It was implemented, but it hasn't yet shown up. So the two points of price that we're seeing in the second quarter should actually grow incrementally in the second half due to the phenomenon that you're describing.

Material. Could it be, um, when we think about the organic guide into the back half? Thank you.

Yes, so Chris, you broke up a little but what we heard was questioned about the price that was pulled in the second quarter.

And was their price pulled, maybe towards the middle or end that hasn't yet been seen in shipments. And and that that is true. I think I might have heard you say was that price increased delayed. I would say it was not delayed, it was implemented but it hasn't yet.

Shown up. So the 2 points of price that we're seeing in the second quarter,

Unknown Executive: And just any, could you kind of tell us like where that price ultimately will go to in Q4 as we look at about a fully realized base? Yeah, I mean, I think so we're describing, you know, four to six of sales in the full year. We're anticipating, you know, maybe three points of price in the full year, with two in the first half.

Should actually grow incrementally in the second half due to the phenomenon that you're describing.

And and and and just any um could you kind of tell us like where where that price ultimately will go to in in Q4 as we look out about a fully realized basis. Thank you.

Yeah, I mean, I think so. We're describing, you know, 4 to 6 of sales in the full year.

Unknown Executive: And that's kind of a Thank you.

Uh, we're anticipating, you know, maybe 3 points of price in the full year, with 2 in the first half. Uh, and that's kind of the...

kind of a construct Chris that we've that we've got,

thank you.

Operator: Please stand by for our next question.

Thank you.

Julian Mitchell: Our next question comes from the line of Julian Mitchell with Barclays. Your line is open. Hi, good morning. I think my first question, I just wanted to understand better perhaps the moving parts around operating margin expansion in the second half. It looks like there's not much of an expansion, I think, year-on-year dialed in, and that's presumably that sort of FIFO-related tariff hit coming through. But just wondered if you could confirm that, and is the sort of, when thinking about Q3 versus Q4 dynamics... Anything to call out there. I noticed R and R spend a bit higher in Q3.

Please stand by for our next question.

Our next question comes from the line of Julian Mitchell with Barklay. Your line is open.

Hi, good morning. Um, I think, um, my first question, um, I just wanted to understand, um, better perhaps the moving parts around um operating margin expansion in the second half.

Um it it looks like there's not much of an expansion I think year on year dialed in. Um and that's presumably that sort of fifo related tariff, hit coming through but just wondered if, if you could confirm that and is the sort of when thinking about Q3 versus Q4 Dynamics,

Unknown Executive: So should we expect a sort of better year-on-year margin performance in the fourth quarter because of price and less R and R...

Unknown Executive: Yeah, Julian, that's, you made a number of good points. And, and first of all, we are expecting, you know, our mix to continue to be favorable in the second half. We are anticipating, as you mentioned, several things you mentioned. One is the, some of those tariff costs coming through, being offset by price dollar for dollar. Unfortunately, that's not always... that's not margin-friendly, but it's OP neutral, but not margin-friendly. And thirdly, we are anticipating some extra investing in the third quarter, both in restructuring and other investment areas. So you actually called out a number of the drivers there, and I agree with your analysis is exactly how I see it.

Is there anything to call out there? I know this RNR spend is a bit higher in Q3, so should we expect a sort of better year-on-year margin performance in the fourth quarter because of price and less RNR spend?

Yeah, Julian, that's, um, you made a number of good points. Um.

And and first of all, we we are expecting, you know, our mix to continue to be favorable in in the second half.

Um, we are anticipating. As you mentioned several things, you mentioned, uh, 1 is the uh, some of those tariff costs coming through.

Unknown Executive: Yeah, it's actually a very good representation of exactly what's going to happen. Maybe the only point I'd make a comment on is on the investment, because clearly we're very, very focused on our cost to manage through this dynamic environment. But I'd also say we're not losing focus on our long-term needs and ambitions and the investments that we're making. So whether it's in restructuring, whether it's in new product development, whether it's in some of the areas of AI, where we're looking at how can we gain efficiencies in our business longer term, where we're really balancing areas where we're taking costs out of this system, both structurally and shorter term actions against where we need to continue to make investments.

Presentation of exactly what's going to happen. I maybe the only point I'd make a comment on is on the investment, because clearly we're very, very focused on our cost to manage through this dynamic environment. But I'd also say we're not losing focus on our long-term.

Unknown Executive: And so you'll see some of those in the second half.

Uh, needs and ambitions and the investments that we're making. So, you know, whether it's in restructuring, whether it's in new product development, whether it's in some of the areas of AI where we're looking at how we can gain efficiencies in our business longer term. Um, we were really balancing, you know, our efforts to take cost out of this system, both structurally and shorter-term actions against where we need to continue to make investments. And so, you'll see some of those in the second half.

Unknown Executive: That's helpful, thank you. And then just maybe looking out a little bit further, I think you mentioned just now, the Full Year Organic Sales Guide embeds a low single-digit volume increase and a sort of faster pace of volume growth in the second half of the year. As we sort of look out beyond this year, it is that low single-digit volume increase. that the right sort of placeholder, or do you think that you can sort of sustain that second half exit rate for some time into 2026? Yeah, I would say it's consistent. Think about it as consistent with what we provided in the Invest Today framework, which is kind of mid single digit for a portfolio, you know, longer term.

Its helpful. Thank you. And, and then, just, maybe looking out a little bit further. I think you mentioned just now, um, the full year, organic sales, guide embeds, a low single digit, um, volume increase.

Um, and a sort of faster pace of volume growth in the second half of the year. Um, as we sort of look out beyond this year, it's at low single-digit volume increase. Um,

With the right sort of placeholder, you can sort of sustain that second half exit rate for some time into 2026.

Yeah, I, I would say it's a consistent, think about it as consistent with what we provided in the investor day framework, which is kind of a mid single digit, uh, for a portfolio, you know, longer term.

Operator: Great. Thank you.

Great. Thank you.

Joe O'dea: Please stand by for our next question. Our next question comes from a line of Joe O'Dea with Wells Fargo. Your line is open. Hi, good morning.

Thank you.

Please stand by for our next question.

Our next question comes from the line of Joe O'Dell with Wells Fargo. Your line is open.

Unknown Executive: Could you Let's talk about the trajectory of growth within grid infrastructure as we move from first half to second half and coming off of first half orders up high teens and so as we look Unknown Executive, Scott Graham, Charles Tusa, Hubbell Distribution to get to something that seems like it would be a low double digit organic growth rate in the back. Yeah, Joe. You know, I think it starts with continued strength. and we showed you those pie slices on page eight. But transmission and substation has been growing, and we just see that just continuing through the balance of the year.

Hi, good morning.

Um could you just could you just talk about the trajectory of growth within grid infrastructure as we move from from first half to second half and coming off a first half orders up high teens and so as as we look at you know what, I guess easier comps and distribution and and the order strength, just how you're thinking about the the back half growth rates and things like transmission substation distribution to to get to something that seems like it would be a low double digit. Organic growth rate in the back half of the year for utility.

Yeah, Joe. Um, you know, I think it starts with, uh, continued strengths.

Uh, and we showed you those Pi slices uh on page 8.

But transmission and substation has been growing.

Unknown Executive: So you've got a really nice contribution in the mid and high teens there from a very substantial. part of the business. I think secondly, as you noted, for distribution to now have started growing. and because of their.

And and we we just see that just continuing through the balance of the year. So you've got a really nice contribution in the mid and High Teens there. From a very substantial, um, part uh, of the business.

I think, secondly as you noted, um, for distribution to now,

Uh, ha have started growing.

And because of the DTO dynamic, they're starting to face some easier comps.

that D, you know, will, um, you know, if it gets to

Unknown Executive: I think, you know, the more wild card is Clara, and the third quarter will be the fourth quarter of its contractions, so as it hits the fourth quarter of 25. to the point in time, and that was what Jeff Sprague was asking about, right? But that now allows it to return to growth even on sequentially kind of flat. And so all of those things are coming together where you see. You know, you see teens' order books. and you start to see easier compares for Clara. And it starts to create, you know, Joe, that kind of second half.

Mid single digits for the year. It's it's going to have above that uh in in in the second half of of the year and um I think you know, the more wildcard is is a Clara.

And, uh, the third quarter will be, say, the confused. The third quarter will be the fourth quarter of its contractions. So, as it hits the fourth quarter of 2025, it's the point in time, and that was what Jeffrey was asking about. Right? But that now allows it.

To return to growth, even on sequentially. Kind of

Flat and, and so, um,

All of those things are coming together, where you see,

You know, you see, teens order book.

And you start to see easier compares for Clara.

Uh, and it starts to create, you know, Joe, that kind of second half, uh,

Unknown Executive: Trajectory that you cited. Got it. That's helpful.

Uh, trajectory that that you cited.

Unknown Executive: And then I'm just going to shift to capital deployment. Robert Fumar, Office of Strategicummer, Current & Future Experience Yeah. and...

Got it, and that's helpful. And then, I just wanted to shift to capital deployment. We, you know, see continued activity on the repo front, but just in terms of the M&A pipeline side of things, any characterization of how that looks, how you think about the likelihood of any activity there, um, you know, the back half of this year?

Yeah. Um,

Unknown Executive: Your question is timed to the hour or so we just closed this morning on a small bolt-on acquisition. It's in the utility space. It makes enclosures for water utilities and helps them collect and sense data and communicate that data. Small, but a good sign to your question.

and uh,

Uh, to the hour or so, we just.

Just closed this morning on a small, bolt-on acquisition. It's in the utility space.

Uh, it, uh, it, it makes enclosures for water utilities and helps them, uh, collect and sense data, and communicate that data. Uh,

Unknown Executive: We also, in the quarter, we sold a small business that was not... There's not really contributing to the growth and margin profile that we aspire to. And so I use those as two small examples of us continuing to tend to the portfolio and weed out and add, even if it's small, we think those are good moves to make. They end up not creating a huge financial contribution to this year, but we think are good for us in the long run.

Small, uh, but a good sign to your question.

Uh, we also in the quarter. Uh, we sold a small business uh uh. That was not um, was not really contributing to the growth in margin profile, that we aspire to

and so,

Uh, I use those as too. Small examples of us continuing to tend to the portfolio and and weed, uh, weed out and add even if even if it's small. We think those are good moves to make.

They end up, uh, not creating a huge financial contribution to this year, but we think.

Unknown Executive: I think maybe more generally, the pipeline continues to be quite active. There are a number of private equity firms who've invested in our space. And, you know, one thing we probably can all count on is. know, as soon as they buy something, you know, in that, whether it's three, four year timeframe, they'll be looking to sell. And so that creates some opportunity for us. And I would say our business development teams are quite busy looking at things. And obviously, to the extent We have something to talk about. We would, but it certainly is our intention to continue to invest In acquisitions, we, the pipeline has businesses and assets that we find attractive.

are good for us in the long run.

I think maybe more generally.

Uh, the pipeline continues to be, uh, quite active.

Um,

there are, uh,

uh, number of private Equity firms, who have invested in our space and, um,

you know, 1 thing, we probably can all count on is

You know, as soon as they buy something, you know, in that whether it's 3 4 year, time frame, they'll be looking to to sell. And so that creates some opportunity for us and uh I would say our business development teams are quite busy uh looking at things. Um,

And, uh, obviously it's the extent.

Uh, we have something to talk about uh we we would. Um but it certainly is Our intention.

Unknown Executive: Um, and at the same time, um, I think, uh, you know, our cash flow continues to grow. So you did see us. I think to prevent the balance sheet from getting a little lazy, it did see us buy $225 million of shares in the first half of the year, so. You probably would have seen that average more in the 40-ish, 50-ish dollars a year range. So it's a slightly maybe more balanced capital allocation than in the past, but we continue to be quite interested in acquisitions, Joe. Yeah, and maybe the only thing I would add, our focus for these deals is in the higher growth areas of our portfolio that we've aligned on.

Um, to uh, continue to invest in Acquisitions. We the pipeline has businesses and assets that we find attractive

um, and at the same time, um, I think, uh,

You know, our cash flow continues to grow.

So you did see us.

I think to prevent the balance sheet from getting a little lazy. You did see us buy 225 million shares in the first half of the year. So

You probably would have seen that average more in the $40 to $50 per year range.

Unknown Executive: So, you know, think T&D, think data centers, think, you know, light industrial, all those markets that are growing higher. There's a good pipeline of deal that I think there's, you know, reasonably good availability of deals. They're both on the bolt-on as well as, you know, some larger ones in there. So, you know, I feel good that we have availability of these deals and that it continues to be focused on. you know, becoming more important, increasing our portfolio to the customers we serve in these attractive markets.

So it's a slightly, maybe more balanced Capital allocation than than in the past, but um, we continue, uh, to be quite interested in Acquisitions Joe. Yeah. And maybe the other thing, I I would add a focus for these deals is in the in the higher growth areas of our portfolio that we've aligned on. So, you know, think P and D think data centers, think, you know, light industrial all all those markets that are growing higher there. There's a good pipeline of the other. I think there's, you know, reasonably good availability of deals. They're both on the bolt on as well as you know, some larger ones in there. Um, so you know, I feel good that we're we have availability of, of these deals and that it continues to be focused on

You know, becoming more important is increasing our portfolio to the customers we serve in these attractive markets.

Brett Linzey: Appreciate the details. Thanks.

I appreciate the details, thanks.

Operator: Please stand by for our next question.

Please stand by for our next question.

Unknown Executive: Our next question comes from the line of Brett Linzey with Mizzou. Your line is open. Hey, good morning. Yeah, just want to follow up on the grid automation and specifically the meter side. So encouraging to see that sequential improvement. But I guess, as you think about that stability you're pointing to, is it mostly just the MRO side? Or are you beginning to see some RFPs start to ramp back up on new projects that could be slated for next year? Yeah, I'd say where the business is now, it's, you know, mostly on the MRO and smaller projects, I would say.

Our next question comes from the line of Brett Lindsay with Mizzou. Your line is open.

Hey, good morning. Um yeah. Just wanted to follow up on on the grid Automation and and specifically the meter side so encouraging to see that sequential Improvement, but I guess as you think about that stability you're pointing to is it mostly just the mro side or are you beginning to see some rfps start to ramp back up on on new projects that could be slated for next year?

Unknown Executive: This business is, you know, very highly focused, has always been on the more public power market, the co-ops and the muni. So I would say both in MRO as well as the more traditional projects. We are seeing some larger projects in the pipeline right now. We're quoting those. So, you know, that remains to be seen if whether we win these or, you know, when they will hit.

Yeah, yeah. I'd say the big where the business is now it's it's you know, mostly on the mro and and smaller projects. I would say this business is is you know, very highly focused. And has always been on the on the more Public Power Market, the co-ops and the mun. So, I would say both in mro, as well as the at some more traditional projects.

Unknown Executive: But I think as we provide certainly the guidance here for the balance of the year and our comments into next year, it's a much more stable business. It's more the ongoing MRO and projects that we're seeing. Great.

we are seeing uh some larger projects and and in the pipeline right now, we're we're quoting those so you know that that remains to be seen if if whether we win these or or you know, when they will hit but

By certainly the guidance uh here for the balance of the year and our comments into next year, it's a much more stable business. It's more the ongoing mro and and projects that we're seeing.

Unknown Executive: And then just shifting back over to the electric transmission and the substation piece, very strong growth. You talked about the, you know, the good run rate into the back half, but thinking about the bouncing off point, as you assess some of the project queues and then your win rate separately on these projects, can you sustain that double digit growth range into next year based on your current visibility in those businesses? Yeah, maybe I'll start with just our position in these markets, right? If you think about our portfolio in transmission and substation, I mean, this is where, you know, some of our core strength comes from, you know, both the offering that we have, the portfolio that we have, you know, the relationship and the specifications that we have.

Great. And then just shifting back over to the electric transmission and, and the substation piece, uh, very strong growth. You you talked about the, you know, the good run rate into the back half, but thinking about the bouncing off point, as you assess some of the project cues and then your your win rate separately, um, on these projects, can you sustain that double digit growth range into next year? Based on your current visibility in those businesses?

Yeah. Maybe maybe I'll start with just our position in these markets, right? If you think about our our portfolio in transmission and substation, I mean this this is where, you know, some of our core strengths come from, you know, both the offering that we have

Unknown Executive: So we see these projects, I mean, we've once, you know, some of the largest transmission projects that, you know, are being built in the US, we, you know, are, you know, Hubble as a supplier. So, you know, the visibility, I would say is good. And it's, you know, out there, it's multi-year that we're seeing there. So, you know, this concept of high single digit growth that we said in investor day, we see visibility to that, you know, certainly in the next few years.

Um uh the portfolio that we have the, you know, the relationship and the specifications.

Uh, that we have. So, so, we see these projects, I mean, we've we've once, you know, some of the largest transmission projects that that, you know, are being built in the US, we, you know, our our, you know, Hubble as, as a supplier. So, um, you know, the visibility I would say, is good and it's, it's, you know, out there it's multi-year that we're seeing there. So, you know, this, this concept of high single digits growth that we set.

Unknown Executive: Okay, great. Thanks for the color. Thank you.

An investor day. We will see visibility to that, you know, certainly in the next few years.

Okay, great. Thanks for the color.

Unknown Executive: Please stand by for our next question. The next question comes from the line of Chad Dillard with Bernstein. Your line is open. All right, guys. Um, so I was hoping you could bridge the old versus I think you had 50 cents of tariff before, where does that go? How much is a FIFO versus LIFO transition and anything you can call out on the core business or anything else? Yeah, so let's, let's just use page nine as the way to bridge. So. the very beginning, you know, the year in January, we had a four to 5% growth rate.

Thank you.

Please stand by for our next question.

Next question comes from the line of Chad Dillard, with Bernstein. Your line is open.

All right. Good morning guys.

Um, so I was hoping you could bridge the old versus new earnings guidance. Um, if you had $0.50 of tariff before, where does that go? Uh, how much is a $5,000 transition? And, you know, anything you can call out on the core business? So, or anything else? Thanks.

Yeah, so let's, uh, let's just use page 9 as the way to bridge.

so,

at the very, um,

beginning, you know, the year in January

Unknown Executive: with a point of price. So there was three to four of volume. Now we're four to six percent of growth. kind of three points of pride. kind of two points of volume. So we're getting to to our goal with a little bit less, less volume chat, right. So that's really the first point of Secondly, all that contingency from, you know, tariff risk has been removed. I think that's important to note. Thirdly, there's been 30 cents in the first half of the year of benefit to switch to FIFO, and that's been added to the guidance. So, you know, I think the way I would bridge it is saying.

We had a 4% to 5% growth rate.

With a point of price, so there was 3 to 4 of volume.

Um, now

For 4% to 6% growth with kind of 3 points of price.

So kind of 2 points of volume. So we're getting to

Uh, to our goal.

With a little bit um less less volume chat, right? So that's really the first point of note.

Um, secondly.

Uh, all that contingency from, you know, tariff risk has been removed. I think that's important to note. Uh, thirdly.

uh, there's been

uh, 30 cents in the first half of the year.

Of benefit to switch to FIFA, and that's been added to the guidance. So

Unknown Executive: We're operationally getting to the same point in January, as we said. We've overcome, you know, tariffs and doing that through getting a little more price. come at the expense, perhaps, of a little bit of volume. But the margin and price-cost management is allowing us to get there. And so. I think that's how. That's how I would, that's how I would bridge.

You know, I think the way I would bridge it is saying.

for operationally, getting to the same point in January as we said,

We've overcome, you know, the tariffs and doing that through getting a little more price.

Come at the expense, perhaps, of a little bit of volume.

Uh, but the margin and price cost management is allowing us, you know, to get there. Uh, and so

um,

I think that's how.

That's how I would, that's how I would Bridge the pieces.

Unknown Executive: Great, that's that's really helpful.

Unknown Executive: And then, you know, with with the change in tax laws, I think one of the offshoots is that there's gonna be a lot more manufacturing construction. So I think you've talked about your your content, you know, as a share of the project being, I think, somewhere around like mid single So how does that change if you're going to be moving into more manufacturing versus I guess, like the I'm not sure we understand the question there, Chad. You talking about like systems control type applications? Yeah, systems control. Yeah, I mean, traditionally, we said it's a low single digit percentage of cost in terms of components and what we traditionally make a systems control type business would be higher than that, obviously.

Great, that's that's really helpful. Um, and then, you know, with with the change in tax laws, uh, I think like 1 of the offshoots is that there's going to be a lot more manufacturing construction. Um, so I think you've talked about your, your content, you know, as a share of the project being I think somewhere around the mid single digits. So how does that change? If you're going to be moving into more manufacturing versus the I guess like the the Baseline,

Not sure. We understand the question there, Chad.

You talking about like systems control type applications?

Yeah, systems control.

Yeah. I mean traditionally we said it's a low single digit percentage of costs in terms of components and and what we traditionally make a systems control type business would be

Unknown Executive: I'm not sure it changes the overall blended rate for the segment. But certain businesses, yeah, I'll be at the higher end of that. So if you're looking at the substation space, for instance, we'd make up more than that in that low single digit if you include systems control. Thank you.

Higher than that, obviously. Um, I'm not sure it changes, the overall Blended rate for the segment but

Um, certain businesses. Yeah, I'll be at the higher end of that.

The substation space, for instance, would make up more than that low single digit if you include systems control.

Christopher Glynn: Please stand by for our next question. Our next question comes from the line of Christopher Glynn with Oppenheimer. Your line is open. Thanks. Good morning, guys. Curious about an HES question, you talked about, you know, continued progress with the Salesforce alignments and some channel conversions with years to go. Just looking to elaborate on that a little bit. And specifically, are you suggesting that channel share and distribution pickup runway is has, you know, several years of progression there?

Thank you.

Please stand by for our next question.

Our next question comes from the line of Christopher Glenn with Oppenheimer. Your line is open.

Thanks. Good morning guys. Um, I'm curious about uh an his question you talked about, you know, continued progress with the sales force alignments, and some Channel conversions with years to go, uh, just looking to elaborate on that a little bit. And specifically, are you suggesting that uh, Channel share and distribution pickup? Runway is uh, has you know, several years of progression there?

Unknown Executive: Yeah, just I think, starting with sort of the journey that we're on, Chris, in mourning. You know, so so Mark, as you'll recall, you know, helped us really take the utility segment and take a number of acquisitions and really create a business out of it rather than a series of verticals. And he's now had a couple of years in the electrical segment leadership role. And he's, he's really doing the same thing. And One of the things, you know, that he first initiatives that was pretty important was was realigning the sales force. So rather than have sales force dedicated by product It's not dedicated by geography.

Yeah, just I think starting with, um, sort of the journey that we're on. Chris, and good morning. Um,

You know. So, so Mark, as you'll recall, you know, helped us really take the the utility segment and take a number of Acquisitions and really create a business out of it rather than a series of verticals and he's now had a couple of years in the electrical segment leadership role and he's he's really doing the same thing and 1 of the things you know, that he

First initiatives that were pretty important were realigning the sales force.

Unknown Executive: And so there's more cross selling. And we think, you know, that's leading to a really good customer response. and they find it easier to do business with us and it's better for us because we get more selling time in front of the customer that's that's kind of crossing. Part of that also included creating some vertical teams around specialty verticals data centers being the most obvious and we found those to have been successful rather than us selling a product. through distribution to data science. We're now, you know, more aware and can sell a broader basket of products.

So, rather than have Salesforce dedicated by product, it's not dedicated by geography. And and so there's more cross-selling

Um, we think, you know, that's leading to a really good customer response.

Um, and, uh, they find it easier to do business with us, and it's better for us because we get more selling time in front of the customer. That's, uh, that's kind of cross-selling.

Part of that also included creating some vertical teams around specialty verticals, data centers being the most obvious. We found those to have been successful rather than us selling a product.

Unknown Executive: And so to us, You know, that initiative on the commercial end. has been successful to date. And I'm saying it's still immature in its implementation and will get better and will improve, I think. And that's why I said, I do think there's years ahead. And my years ahead also implied some of the efficiency things that Mark's doing, taking out redundancies and staffing and the like. So there's both. There's both kind of a commercial front-facing element to what he's doing as well as a back-end infrastructure overhead kind of element to what he's doing. And we're sort of ...

Through distribution to data centers, we're now more aware and can sell a broader basket of products. And so,

To us. Um,

You know, that initiative on the commercial end.

Uh, has been successful today.

And I'm saying it's still immature in its implementation, and we'll get better and improve. I think, and that's why I said, I do think there's years ahead. My "years ahead" also implied some of the efficiency things that March is doing: taking out redundancies and staffing and the like. So there's both.

Unknown Executive: It's just not a silver bullet, boom, we grinded upward. And that's ... I think you've seen an example ... You've seen it in evidence already. last year. Agreed. Great description. Thanks, Bill.

There's both kind of a commercial front-facing element to what he's doing, as well as a back-end infrastructure, overhead kind of element to what he's doing. And, um, we're sort of, it's just not a silver bullet. Boom, it's kind of a, we grind it upward, you know? And that's, um, I think you've seen examples; you've seen it in evidence already over the last.

Last year or 2.

Agreed great description. Thanks Bill.

Okay.

Patrick Ballman: Can we take one more question and then close it out? Sorry, I've got some technical difficulties on my end, so take one more and then close it out. All right. Our final question comes from the line of Patrick Ballman with J.P. Morgan. Your line is open. Oh, hi, good morning. Thanks for taking my questions. On the on the second half of the year, I was wondering if you could help help me think through how to how to envision organic volumes ramping up the utility segment. Does it go from like, I don't know, low single digit organic volume growth in the third quarter to something that double digits in the fourth quarter year over year?

Please. Can we take a, can we take 1 more question, and then close it out. Sorry, I have some technical difficulties on my end, so let's take 1 more and then close it out. All right.

Our final question comes from Milan, uh, Patrick Bowman with JP Morgan. Your line is open.

Oh hi. Good morning. Thanks for taking my question. Um,

Honey. Um, on the second half of the year. I was wondering if if you could help help me think through how to how to, um, uh, Envision organic volumes, ramping at the utility segment does, does it go from? Like, I don't know, low single digit organic volume growth in the third quarter to Something in the double digits, in the fourth quarter year over year.

Unknown Executive: So certainly not on a volume basis, Pat, if you're talking organically, again, you can kind of do the math on first half, second half, but volumes will ramp through the year, and particularly get in the fourth quarter on some easier compares and then price will be a steady incremental contributor as the year progresses. Okay, so so volumes in the fourth quarter don't get up to double digits. Yeah, that wouldn't be reflected in guidance. Okay, maybe I'm just doing the math wrong on the price and organic growth stuff. Sorry if I missed this, this is a clean up, I'm just backing into a margin guide for the year expansion of 50 basis points, is that in the ballpark?

so certainly not on a volume basis Pat if you if you're talking organically again you can kind of do the math on first half second half but uh volume is all ramped through the year and particularly again on the fourth quarter on some easier Compares and then price will be a steady

Um, incremental contributor as the year progresses.

Okay, so so volumes in the fourth quarter don't get up to double digits.

Yeah, that wouldn't be reflected in that itself.

Unknown Executive: And then on the segment, should we think about electrical being above that rate and utility below that? Yeah, you're in the ballpark for for the full year. And again, the segment drivers are going to be Both impacted by the FIFO and LIFO transition, but yes, probably a little bit more analogical than you'd think. And then maybe just last one, sorry, another cleanup. So I think the EPS is a little bit shifted last year. And with the accounting changes this year, any way to think about, you know, the EPS growth in the back half of the year, split between third quarter, fourth quarter, any call you want to give on that?

Sorry, if I missed this, this is a cleanup. I'm just backing into a margin guide for the year. Expansion of 50 basis points is in that ballpark.

And then on the segments, should we, think about electrical being above that rate and utility below that?

Yeah, you're in the ballpark for for the full year. Um and and again it it the segment drivers are going to be

Both impacted by the 5 phone LIFO transition. Um, but yes, probably a little bit more in electrical and utility.

And and then maybe just last 1, sorry, another word clean up. Um, so I think the EPS is a little bit um, shifted last year. Um, and with the accounting changes this year, um, anyway, to think about, you know, the EPS growth

um, in the back half of the Year split between third quarter, fourth quarter,

Any color you want to give on that?

Unknown Executive: Not not really again, it's going to be based on the volume discussion we just had will probably be the biggest driver. Okay, I'll leave it there. Thanks a lot for the time. Thank you.

No, not really. Again, it's going to be based on the the volume discussion. We just had, it'll probably be the biggest driver.

Okay, I'll leave it there. Thanks a lot for the time.

Daniel Innamorato: At this time, I would like to call turn the call back over to Dan for closing remarks. Great. Thanks, LaWanda. I'll be around all day for follow-up calls. Thanks, everybody, for joining us.

Thank you.

At this time, I would like to call turn the call back over to Dan for closing remarks.

Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

Great. Thanks to you, I’ll be around all day for follow-up calls. Thanks, everybody, for joining us.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect