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Publicly Held Electrical Manufacturers Report Average Growth in 2Q 2014

Aug. 8, 2014
"Based on our first half performance, we continue to expect overall sales to increase in the 5% to 6% range with balanced growth from acquisitions and organic volume." David Nord, Hubbell Inc.

It’s earnings season, and quite a few publicly held electrical manufacturers and distributors have been releasing their 2Q 2014 financial reports. For the most part, sales increases from 1Q 2014 and YOY from 2Q 2013 are in the low- to mid-single digits. Following are the highlights of a few of the reports.

Hubbell

Hubbell Inc., said its net sales for 2Q 2014 ending June 30 were $855.8 million, an increase of 7% compared to the $801.3 million reported in the second quarter of 2013.  Net income in the second quarter of 2014 was $90.2 million, an increase of 10% compared to the $82.1 million reported in the second quarter of 2013. For the first six months of 2014 net sales were $1.6 billion, an increase of 5% compared to the same period last year.  Electrical segment net sales in the second quarter of 2014 increased 8% to $612.4 million compared to $564.5 million reported in the second quarter of 2013.  Acquisitions added five percentage points to the sales increase in the quarter.

David Nord, chairman, president and CEO, said, “The second quarter results reflect good operational execution on improving order trends. After a slower-than-planned start to the year, we were encouraged by the broad based strengthening of underlying demand experienced during the quarter.

“We continued to make progress on our growth initiatives by completing two acquisitions in the second quarter and another small but important acquisition in July which will be added to the electrical segment. We have invested $147 million on six acquisitions so far this year. Based on our first half performance, we continue to expect overall sales to increase in the 5% to 6% range with balanced growth from acquisitions and organic volume. From a profitability standpoint, operating margins are expected to expand in the 20 to 30 basis points range.”

Generac

At Generac, second-quarter results for residential products were seasonally higher as the company saw shipments increase as compared to the first quarter of 2014 due to strength in home standby generators. “We remain focused on a number of key initiatives to continue to grow the market, further building on our leadership position in this product category,” said Aaron Jagdfeld, president and CEO. “C&I products continue to represent a growing portion of our sales as we have recently increased our exposure to new markets such as oil & gas, broadened our industrial product line, and strengthened our industrial distribution network to further diversify our business. We also continue to convert a significant amount of our earnings to free cash flow, providing us with the flexibility to drive our Powering Ahead strategic plan forward.

“We remain excited about the compelling penetration opportunities for our residential and light commercial standby generators as we continue to focus our efforts on several high impact initiatives to increase the adoption for these products.

“We also believe the overall secular trends toward natural gas generators, rental of mobile power equipment, and the penetration of certain end markets such as telecommunications and oil & gas will continue to drive additional growth.”

Eaton

Sales for the Electrical Products segment were $1.8 billion, up 4% over 2013, and sales for the Electrical Systems and Services segment were $1.6 billion, the same as in the second quarter of 2013. Alexander Cutler, Eaton chairman and CEO, said, “Our second-quarter results, adjusted for unusual items, were above the midpoint of our original guidance for the quarter. Revenue came in as we expected, with core sales growth of 3% in the quarter, following 4% core growth in the first quarter of 2014.

“Our bookings in the second quarter in the Electrical Products segment were up 6% over the second quarter a year ago, continuing our strong momentum of the past several quarters. We were pleased with our strong bookings during the quarter in both of our Electrical segments. For all of 2014, we continue to believe our Electrical markets will grow 3%.”

Rockwell Automation

Rockwell Automation Inc., Milwaukee, Wis., reported fiscal 2014 third quarter sales of $1,649.5 million, up 2 percent from $1,624.2 million in the third quarter of fiscal 2013. Organic sales also grew 2%. Commenting on the results, Keith Nosbusch, chairman and CEO, said, “Sales and earnings came in as expected this quarter. We experienced strong year-over-year growth in Architecture & Software, while sales in Control Products & Solutions declined modestly, primarily due to very strong sales in our solutions and services businesses last year. Given our year-to-date performance and with one quarter remaining in the fiscal year, we are narrowing the fiscal 2014 guidance for organic sales growth to 4% to 6%.”

Encore Wire

At Encore Wire Corp., net sales for the second quarter ended June 30 were $307.1 million compared to $289.5 million during the second quarter of 2013. Copper unit volume, measured in pounds of copper contained in the wire sold, increased 10% in the second quarter of 2014 versus the second quarter of 2013, accounting for most of the increase in net sales dollars. Aluminum building wire sales also contributed to the increased sales, constituting 8.9% of net sales dollars for the second quarter of 2014 versus 6.6% in the second quarter of 2013. The average selling price of wire per copper pound sold dropped 6% in the second quarter of 2014 versus the second quarter of 2013, somewhat offsetting the increase in sales dollars.

Net sales for the six months ended June 30 were $584.3 million compared to $554.8 million during the same period in 2013. Copper unit volume in the six months ended June 30, 2014 increased 9.6% versus the same period in 2013, offset by a 6.2% drop in average sales prices. Aluminum building wire sales contributed to the increased sales, constituting 8.4% of net sales dollars for the six months ended June 30.