Hubbell Inc. Q1 2010 Earnings Call Transcript

Hubbell Inc. Q1 2010 Earnings Call Transcript
By Seeking Alpha ,

Hubbell Inc. (HUB.B)

Q1 2010 Earnings Call

April 22, 2010 10:00 am ET

Executives

Tim Powers - Chairman, President & CEO

Dave Nord - Chief Financial Officer

Bill Sperry - Vice President, Corporate Strategy & Development

Jim Farrell - Director of Investor Relations

Analysts

Bob Cornell - Barclays Capital

Jeff Beach - Stifel Nicolaus

Jeff Sprague - Vertical Research Partners

Christopher Glynn - Oppenheimer

Presentation

Operator

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Good day, everyone. Welcome to the Hubbell Incorporated first quarter results conference call. Today’s call is being recorded. Now, for opening remarks and introductions, I would like to turn the call over to Mr. Bill Sperry. Please go ahead, sir.

Bill Sperry

Thank you and good morning, everyone. Thanks for joining Hubbell’s first quarter 2010 earnings call. Here with me today are Tim Powers, our Chairman, President and Chief Executive Officer; Dave Nord, our Chief Financial Officer; and Jim Farrell, our Director of Investor Relations.

Hubbell announced its first quarter earnings this morning and hopefully you’ve found the press release off of the wires or on our website. You can also find presentation materials on our website that Tim and Dave will be referring to on our call today.

Let me refer everyone to the paragraph in our press release and in the materials regarding forward-looking statements. The press release and materials may contain expectations based on assumptions and Hubbell’s performance in the future, particularly regarding our earnings. We also may make some comments here today on this call or answer questions, which may include forward-looking statements.

All of these involve inherent assumptions with known and unknown risks, and other factors that can cause our actual or future results to differ, perhaps materially from what we may discuss or project today. So please note that paragraph in our release and I’d like to consider it incorporated by reference into the call this morning.

In addition, we may make reference to non-GAAP financial measures. Those measures are reconciled to comparable GAAP measures in the Appendix of the presentation materials.

With that, I will turn it over to Tim.

Tim Powers

Thanks, Bill. Welcome everybody and thank you for joining us this morning. As this our usual practice with these call, I’m going to provide you with some of our review commentary on the results we announced this morning and then Dave will walk you through a more detailed discussion of our financial performance. I will conclude with my perspective on the outlook for the reminder of 2010 and some closing remarks. Then we will open it up and take some questions from you.

We will refer this morning to presentations material you have hopefully found on our website, I’m starting on page three. Our first quarter results are reflective of some of the cross currents we are feeling in our end markets, where we are facing volume pressures from weak trends continuing in non-residential construction.

Utilities are continuing to fall their cautious pathway began in the second half of last year that are showing signs of improvement on a sequential basis. We are beginning to see indications of growth in residential construction sector. Our industrial markets have demonstrated some rebound due to growth in output capacity utilization and spending on capital equipment.

Energy efficient buildings have driven growth in a couple of key areas including building automation and retrofit re-like market, where for example we have seen orders increase over 30% from last year. In this tight market our focus continues to be in managing price, cost and productivity.

Despite a slight decline in sales for the quarter, we were able to increase operating margins by a 170 basis points primarily through productivity gains. It is also worth noting that we had a book-to-bill ratio above one as we built over $30 million of backlog and playing the market is a bit stronger than our quarterly sales results would indicate.

The markets are consistent with our expectations and our financial performance for the quarter was inline with our internal plans. The quarter began slowly and picked up noticeably in March. I believe we have seen the bottoming in sales, where we ran our backlog down at the end of the year and built it up during the first quarter.

Beyond the financials, we also continue to focus on serving our customers and providing them with the best new products. So I am please to highlight that EC&M Magazine named our Prescolite brand retrofitting in LED downlight as the 2010 LED product of the year. The recognition for our design and engineering capabilities demonstrates the importance of continuing to invest in future growth.

With that, let me turn it over to Dave Nord, he’ll discuss the financials in more detail.

Dave Nord

Thanks Tim. Good morning everybody. I’m going to start on page four our company materials and walk you through some of the details in the quarter. Let’s start first on the sales side, as Tim mentioned, reporting sales of $570.5 million, which is down 3% from the first quarter of last year, two big divers in there were continuing market weakness specifically in the non-residential market where by example our C&I lighting business, show their volumes down 17%, but on the positive side, we had the impact of Burndy’s results, which contributed 7% to year-over-year growth.

Some of the other elements in the sales comparisons so we had foreign currency translation benefit of about two points, which offsets two points combined price and lower storm volume, so those are net to zero the two big drivers again being the C&I lighting business and Burndy.

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