HUBBELL INC earnings calls

2027 growth and pricing plans

Q (Steve Tusa · Wells Fargo): He asked for color on the 2027 bridge and whether growth implies above long-term targets. He also asked if more price is needed to hit that view.

A: Management said they have better visibility into 2027 due to incoming orders and backlog. They are confident 2027 organic is at least their mid-single digit long-term framework, expect PCP neutral to dollar positive, and incrementals of 25%-30%. They are accelerating electrical price increases in November and will set utility price at year-end or early next year to address recent cost inflation.

"We're confident that 2027 sees organic of at least our mid-single digit standing long-term framework." — Joe Capozzoli (CFO)

Utility miss causes and capacity plans

Q (Chad Dillard · Bernstein): He asked which subsegments caused the more conservative Utility outlook. He also asked how capacity adds unlock revenue, timing, and investment amounts.

A: They said two main things caused the pullback: a discrete component shortage in the meters business that slowed production but is now resolved and expected to recover in the fourth quarter, and slower-than-expected ramp of modular control houses in their Systems Control business, which was flat sequentially. On capacity, they add machines and assembly lines, then extend roof lines; about $25 million a quarter of additional capacity comes online this year and they expect that to double to about $50 million per quarter next year.

"The first one is, as we highlighted, a component shortage that we had in our meters business." — Gerben Bakker (CEO·CHAIR)

Q4 operating margins (intro)

Q (Chigusa Katoku · JPMorgan): She opened asking about Q4 (started question on Q4 operating margins).

A: There was no management answer in this brief turn; management addressed the Q4 margin question in the next exchange. See the next entry for the full response on Q4 margins.

Q4 margin headwinds in Utility

Q (Chigusa Katoku · JPMorgan): She asked if Q4 margin pressure is in both segments and what the main headwind is.

A: They said the margin impact is primarily in Utility. In Utility they expect price cost productivity to be neutral in Q4, cited higher inflation in the back half, noted price implemented in July is ramping through backlog, and said they are investing in capacity and new product introductions. They also said $30 million of IEEPA refunds were received in 3Q and about $5 million of expected customer considerations spilled into 4Q.

"First, we're seeing an anticipating price cost productivity neutral in the fourth quarter in Utility." — Joe Capozzoli (CFO)

Backlog, 765 transmission, and Aclara fit

Q (Chris Glynn · Oppenheimer): He asked whether the $500 million-plus backlog build is all Grid Infrastructure and whether there are green shoots in Grid Automation beyond P&C. He also asked about next-gen high-voltage transmission and the fit of Aclara.

A: They said the backlog build is in both Grid Infrastructure and Grid Automation and is about up 30% from the start of the year, which gives higher visibility into 2027. On 765 and high-voltage transmission they said they are experienced in those products, have won a project that will start shipping end of year into next year, and the pipeline is growing though it requires design, testing and investment. On Aclara they said they refocused it on electric meters, muni co-ops, and the FLUX installed base, took structural cost out, and expect more modest growth with improved margins; Aclara is less than 10% of HUS revenue.

"To give maybe some context to that, it's about up 30% from where we were at the beginning of the year, and this is what gives us more confidence as we go into 2027 with just higher visibility to some of that demand." — Gerben Bakker (CEO·CHAIR)

Electrical margin drivers and capacity limits

Q (Tommy Moll · Stephens): He asked what drove Electrical Solutions margin near 25% this quarter beyond NSI and whether any benefits are temporary. He also asked if capacity adds will fully meet demand.

A: They said the anchor of the quarter's margin was strong organic volume, especially in high-margin product lines serving data center, plus the NSI contribution and seasonal strength in Q3. They described a long-term margin expansion program (unification, go-to-market, portfolio management, new products) and said capacity adds are incremental year-to-year so they will need to keep adding capacity in 2027 and beyond rather than solving multi-year demand with a single step.

"I would say the anchor of that margin performance in the quarter was strong organic volume contribution." — Joe Capozzoli (CFO)

Grid Automation $15M and data center size

Q (Alexander Virgo · Evercore): He asked why Grid Automation was flat after adjusting the $15 million, and what the data center business might look like for 2027.

A: They said the $15 million was a timing flip that normalizes 3Q/4Q and would have been consistent with expectations 90 days ago; with that moving into 4Q they expect double-digit growth in Grid Automation in 4Q. For data center they said they expect to exit the year with about 15% of electrical segment revenues tied to data center and will give more 2027 color in January, but they anticipate data center continues to grow at attractive levels off a higher base.

"And that $15 million flip would have been very consistent with our expectation for the back half 90 days ago." — Joe Capozzoli (CFO)