Hubbell Inc. Orange, Conn., reported sales for the first three months of the year $301.7 million versus $344.1 million in 2001, a 12.3 percent drop. “Hubbell made substantial progress during the quarter toward our two primary objectives: reducing costs and building future opportunities,” said Timothy H. Powers, president and CEO. “New initiatives announced earlier this year are on schedule with plant consolidations well underway in the U.S., Mexico and Puerto Rico. The benefits of these cost reductions will begin to appear later in the year. When the restructuring program is complete, we expect annual savings approaching $20 million going forward.
Powers said concurrent with continuing slow demand in today's markets are exceptional acquisition opportunities. “Our objective is to substantially expand Hubbell's leading position in its core markets with accretive acquisitions. Late in 2001, we added MyTech Corp., noted for its technological innovation in occupancy sensing for lighting systems. In March of this year, Hawke International, the global leader in brass cable glands for harsh and hazardous locations, joined Hubbell and is expected to add $20 million in revenues with double-digit profit margins in its first full year.
Most significant will be the addition of the LCA lighting operations. Once completed, this acquisition will bring a group of brand names including Columbia, Dual-Lite, Prescolite, Kim, Spaulding, Architectural Area Lighting and Progress Lighting. Added to the prominence of our Hubbell brand names serving the same markets, this group of operations will move Hubbell into the top tier of lighting fixture suppliers, generate nearly $600 million in annual sales, and immediately add to Hubbell's earnings.”
Sales in the Hubbell's electrical segment declined by 12 percent and operating profit by 18 percent as industrial and commercial markets remained at the lower levels of a recessionary economy. Within the segment, however, some operations reported positive comparisons. The Raco/Bell unit reported modestly higher sales and substantially higher profitability due to increased market share, lower costs, and the unit's emphasis on customer service and delivery. Also impacting segment results, especially at Hubbell Lighting, was a lower level of reported non-residential construction with activity in the first two months of the year. This segment was down by 11 percent compared to the same period last year. Sales and operating profit for the Power Systems segment declined by 9 percent and 16 percent, respectively. Contributing to the quarter was Power Systems' responsiveness following a January 2002, ice storm in the Midwest. Utilizing its pre-planned emergency response program, Power Systems coordinated deliveries — most overnight — from its Centralia, Mo. headquarters and other plants to utilities in seven states. Included were more than 1 million insulators and surge arresters, connectors and splices, and pole line hardware and fastener components.
Hubbell's Industrial Technology segment reported a 23 percent decline in sales and 52 percent lower operating profit. A continuing low level of capital expenditure across most industries depressed order input to the segment. While some macro-economic indicators have begun to show positive trends in recent months, plant capacity utilization, a driver to this segment, stood at 75.4 percent in March versus an average of 81.8 percent during the expansion of the 1990's. Continuing progress for the segment in plant consolidation and cost reductions should help to improve returns even in the current slow markets.
Powers said that while the overall pace of business in the quarter remained weak as Hubbell had expected, some leading indicators did turn positive for the first time in two years. “That may result in a stronger second half for the manufacturers that Hubbell serves,” he said. “We're hopeful, but we remain focused on completing our capacity reductions and other 2002 initiatives. We are also successively implementing our strategic plan with additions to our core business. The LCA acquisition will be a major and immediately accretive step forward. Both programs — repositioning Hubbell's current operations and strategic acquisitions — will position Hubbell for renewed growth.”