ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part II, Item 8 of this Annual Report on Form 10-K. This section of this Form 10-K generally discusses 2025, 2024 and 2023 items and year-to-year comparisons between 2025 and 2024 and between 2024 and 2023.
Executive Overview of the Business
Hubbell is a global manufacturer of quality electrical products and utility solutions for a broad range of customer and end market applications. We provide utility and electrical solutions that enable our customers to operate critical infrastructure reliably and efficiently, and we empower and energize communities through innovative solutions supporting energy infrastructure In Front of the Meter, on The Edge, and Behind the Meter. In Front of the Meter is where utilities transmit and distribute energy to their customers. The Edge connects utilities with owner/operators and allows energy and data to be distributed back and forth. Behind the Meter is where owners and operators of buildings, and other critical infrastructure consume energy. Products are either sourced complete, manufactured or assembled by subsidiaries in the United States, Canada, Puerto Rico, Mexico, China, the UK, Brazil, Australia, Spain, Ireland, and the Republic of the Philippines. The Company also participates in joint ventures in Hong Kong and the Republic of the Philippines, and maintains offices in Singapore, Italy, China, India, Mexico, South Korea, Chile, and countries in the Middle East. The Company employed approximately 18,000 individuals worldwide as of December 31, 2025.
The Company’s reporting segments consist of the Utility Solutions segment and Electrical Solutions segment. The Company’s long-term strategy is to: serve its customers with reliable and innovative electrical and related infrastructure solutions with desired brands and high-quality service, delivered through a competitive cost structure; to complement organic revenue growth with acquisitions that enhance its product offerings; and to allocate capital effectively to create shareholder value.
Our strategy to complement organic revenue growth with acquisitions is focused on acquiring assets that extend our capabilities, expand our product offerings, and present opportunities to compete in core, adjacent or complementary markets. In 2025 we invested $958 million in acquisitions that meet these objectives. Refer to Note 3 - Business Acquisitions and Dispositions in the Notes to Consolidated Financial Statements for further details on these acquisitions.
Our strategy to deliver products through a competitive cost structure has resulted in an ongoing program of restructuring and related activities. Our restructuring and related efforts include the consolidation of manufacturing and distribution facilities, and workforce actions, as well as streamlining and consolidating our back-office functions. The primary objectives of our restructuring and related activities are to optimize our manufacturing footprint, cost structure and effectiveness and the efficiency of our workforce.
Our goal is to have pricing and productivity programs that offset the impact of cost increases as well as pay for investments in key growth areas. Our cost structure may be subject to material and production cost increases from inflationary periods within the U.S. and global economies, and from trade and other tensions. In particular, we have been subject to recent periods of inflationary pressure in the global economy and also subject to cost increases as a result of tariff and other material cost increases from trade actions by the U.S. and other countries. Because material costs are approximately half of our cost of goods sold, volatility in this area can significantly impact profitability. Our pricing and productivity programs are intended to mitigate the risk to our operating margins related to these inflationary pressures and cost increases as a result of tariffs. Refer to our risk factor; Changes in U.S. and international trade policies may adversely impact our business and operating results; changes in U.S. trade policies could have a material adverse effect on us for additional information.
Our sales are subject to market conditions that may cause customer demand for our products to be volatile. Product demand can be affected by fluctuations in domestic and international economic conditions, as well as currency fluctuations, commodity costs, and a variety of other factors. Accordingly, there can be no assurance that we will be able to maintain our margins in response to further changes in inflationary pressures.
HUBBELL INCORPORATED - Form 10-K
Results of Operations
Our operations are classified into two reportable segments: Utility Solutions and Electrical Solutions. For a complete description of the Company’s segments, see Part I, Item 1 of this Annual Report on Form 10-K. Within these segments, Hubbell serves customers in end markets that include utility transmission, substation and distribution markets, data center and industrial markets, as well as markets for utility meters and grid protection and controls, non-residential, telecom and gas distribution products.
In the second quarter of 2025, the Company elected to change its method of accounting for certain inventories in the United States from the last-in, first out (LIFO) method to the first-in, first out (FIFO) method. The change to the FIFO method of accounting for these inventories is preferable because it provides better matching of costs and revenues, conforms the Company's inventory to a single method of accounting and improves comparability with the Company's peers. To provide historical information on a basis consistent with the change to FIFO, the Company has recast certain historical financial information to conform to the updated method of inventory accounting. The recast financial information does not represent a restatement of previously issued financial statements. Refer to Note 1 – Significant Accounting Policies within the Notes to Consolidated Financial Statements for additional information.
Unless specified otherwise, all comparisons of 2025 results are with 2024 results, and all comparisons of 2024 results are with 2023 results.
In 2025, Net sales increased by 3.8% or $216 million and organic Net sales (1) increased by $186 million on favorable price realization and higher unit volumes, as further discussed in segment results below. Operating margin increased in 2025, by 130 basis points and adjusted operating margin (1) increased by 80 basis points, driven by favorable price realization and improved operational productivity. Those increases were partially offset by material and other cost inflation, including tariff expense. Net income attributable to Hubbell increased by 13.9% in 2025 compared to the prior year and diluted earnings per share increased by 14.9%. Adjusted net income attributable to Hubbell (1) increased by 8.8% in 2025 compared to the prior year and adjusted diluted earnings per share (1) increased by 9.8% in 2025.
Operating cash flow increased in 2025 to $1,029.8 million. as compared to $991.2 million in the prior year and free cash flow (2) increased in 2025 to $874.7 million as compared to $810.8 million in the prior year. In 2025 we paid $286.6 million in shareholder dividends, an increase of 7.2% as compared to the prior year. In 2025 we also invested $958.3 million in acquisitions within high growth markets, made $155.1 million of capital expenditures supporting footprint optimization, automation and productivity initiatives, and repurchased $225.0 million of shares.
(1) Organic Net sales, adjusted operating margin, adjusted net income attributable to Hubbell and adjusted diluted earnings per share are non-GAAP financial measures. See “Adjusted Operating Measures” below for a reconciliation to the comparable GAAP financial measures.
(2) Free cash flow is a non-GAAP financial measure. See “Adjusted Operating Measures” and “Financial Condition, Liquidity and Capital Resources - Cash Flow” below for a reconciliation to the comparable GAAP financial measure.
SUMMARY OF CONSOLIDATED RESULTS (IN MILLIONS, EXCEPT PER SHARE DATA)
For the Year Ending December 31,
% of Net sales
% of Net sales
% of Net sales
Net sales
Cost of goods sold
Gross profit
Selling & administrative expenses
Operating income
Net income
Less: Net income attributable to noncontrolling interest
Net income attributable to Hubbell Incorporated
Less: Earnings allocated to participating securities
Net income available to common shareholders
Average number of diluted shares outstanding
DILUTED EARNINGS PER SHARE
Adjusted Operating Measures
In the following discussion of results of operations, we refer to “ adjusted ” operating measures. We believe those adjusted measures, which exclude the impact of certain costs, gains and losses, may provide investors with useful information regarding our underlying performance from period to period and allow investors to understand our results of operations without regard to items that, in management ’ s judgment, significantly affect the comparability of operating results, or we do not consider a component of our core operating performance.
Significant items impacting comparability comprise the following:
Transaction, integration and separation costs
The effect that acquisitions and divestitures may have on our results can fluctuate significantly based on the timing, size and number of transactions, and therefore result in significant volatility in the costs to complete transactions and to integrate or separate the businesses.
Transaction costs are primarily professional services and other fees incurred to complete the transactions. Integration and separation costs are the internal and external incremental costs directly relating to these activities for the acquired or divested business.
The acquisition and integration of DMC Power resulted in significant transaction and integration costs, and the acquisitions and disposition completed by the Company in the fourth quarter of 2023 resulted in a significant increase in transaction, integration and separation costs. As a result, we believe excluding such costs relating to these transactions provides useful and more comparable information for investors to better assess our operating performance from period to period.
Gains or losses on disposition of a business
The Company believes excluding these gains or losses will enhance management's and investors' ability to analyze underlying business performance and facilitate comparisons of our financial results over multiple periods. In the first quarter of 2024 the Company recognized a $5.3 million pre-tax loss on the disposition of the residential lighting business and also recognized $6.8 million of income tax expense relating to that transaction, primarily driven by differences between book and tax basis in goodwill. In the second quarter of 2025 the Company recognized a $0.4 million pre-tax loss on the disposition of a product line in the Electrical Solutions segment. Those losses and the related income tax expense are excluded from our adjusted operating measures.
Amortization of intangible assets
Adjusted operating measures also exclude non-cash amortization of all intangible assets associated with our business acquisitions, including inventory step-up amortization associated with those acquisitions. The intangible assets associated with our business acquisitions arise from the allocation of the purchase price using the acquisition method of accounting in accordance with Accounting Standards Codification 805, “Business Combinations.” These assets consist primarily of customer relationships, developed technology, trademarks and tradenames, and patents, as reported in Note 6 – Goodwill and Other Intangible Assets, under the heading “Total Definite-Lived Intangibles ” within the Notes to Consolidated Financial Statements.
The Company believes that the exclusion of these non-cash expenses (i) enhances management’s and investors’ ability to analyze underlying business performance, (ii) facilitates comparisons of our financial results over multiple periods, and (iii) provides more relevant comparisons of our results with the results of other companies as the amortization expense associated with these assets may fluctuate significantly from period to period based on the timing, size, nature, and number of acquisitions. Although we exclude amortization of these acquired intangible assets and inventory step-up from our non-GAAP results, we believe that it is important for investors to understand that revenue generated, in part, from such intangibles is included within revenue in determining adjusted net income attributable to Hubbell Incorporated.
Adjusted results also exclude the income tax effects of the above adjustments which are calculated using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction, unless otherwise noted.
The Company excludes these non-core items because we believe it enhances management ’ s and investors ’ ability to analyze underlying business performance and facilitates comparisons of our financial results over multiple periods. Refer to the reconciliation of non-GAAP measures presented below and Note 3 – Business Acquisitions and Dispositions to the Consolidated Financial Statements for additional information.
HUBBELL INCORPORATED - Form 10-K
Organic net sales (or organic net sales growth), a non-GAAP measure, represents Net sales according to U.S. GAAP, less Net sales from acquisitions and divestitures during the first twelve months of ownership or divestiture, respectively, less the effect of fluctuations in Net sales from foreign currency exchange. The period-over-period effect of fluctuations in Net sales from foreign currency exchange is calculated as the difference between local currency Net sales of the prior period translated at the current period exchange rate as compared to the same local currency Net sales translated at the prior period exchange rate. We believe this measure provides management and investors with a more complete understanding of the underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency as these activities can obscure underlying trends. When comparing Net sales growth between periods, excluding the effects of acquisitions, business dispositions and currency exchange rates, those effects are different when comparing results for different periods. For example, because Net sales from acquisitions are considered inorganic from the date we complete an acquisition through the end of the first year following the acquisition, Net sales from such acquisitions are reflected as organic net sales thereafter.
There are limitations to the use of non-GAAP measures. Non-GAAP measures do not present complete financial results. We compensate for this limitation by providing a reconciliation between our non-GAAP financial measures and the respective most directly comparable financial measure calculated and presented in accordance with GAAP. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. These financial measures should not be considered in isolation from, as substitutes for, or alternative measures of, reported GAAP financial results, and should be viewed in conjunction with the most comparable GAAP financial measures and the provided reconciliations thereto. We believe, however, that these non-GAAP financial measures, when viewed together with our GAAP results and related reconciliations, provide a more complete understanding of our business. We strongly encourage investors to review our consolidated financial statements and publicly filed reports in their entirety and not rely on any single financial measure.
The following table reconciles Adjusted operating income, a non-GAAP measure, to Operating income, the directly comparable GAAP financial measure (in millions):
For the Year Ended December 31,
% of Net sales
% of Net sales
% of Net sales
Operating income (GAAP measure)
Amortization of acquisition-related intangible assets
Transaction, integration & separation costs
Adjusted operating income (non-GAAP measure)
The following table reconciles Adjusted net income attributable to Hubbell Incorporated, Adjusted net income available to common shareholders, and the diluted per share amounts thereof, each a non-GAAP measure, to the directly comparable GAAP financial measures (in millions, except per share data).
For the Year Ended December 31,
Diluted Per Share
Diluted Per Share
Diluted Per Share
Net income attributable to Hubbell Incorporated (GAAP measure)
Amortization of acquisition-related intangible assets
Transaction, integration & separation costs
Loss on disposition of business
Subtotal
Income tax effects (1)
Adjusted net income attributable to Hubbell Incorporated (non-GAAP measure)
Less: Earnings allocated to participating securities
Adjusted net income available to common shareholders (non-GAAP measure)
(1) The income tax effects are calculated using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction, unless otherwise noted.
HUBBELL INCORPORATED - Form 10-K
The following table reconciles our Organic Net sales growth to the directly comparable GAAP financial measure (in millions and percentage change):
For the Year Ended December 31,
Inc/(Dec) %
Inc/(Dec) %
Inc/(Dec) %
Net sales growth (GAAP measure)
Impact of acquisitions
Impact of divestitures
Foreign currency exchange
Organic Net sales growth (non-GAAP measure)
2025 Compared to 2024
Net Sales
Net sales of $5,844.6 million in 2025 increased by $216.1 million, or 3.8%, compared to 2024. Organic net sales increased by 3.3% driven by a low single digit percentage increase in price realization, and a low single digit percentage increase in unit volumes. Acquisitions net of divestitures contributed 0.6% to net sales growth. These changes are discussed in more detail in the Segment Results section below.
Cost of Goods Sold and Gross Profit
As a percentage of net sales, cost of goods sold decreased by 140 basis points to 64.7% and gross profit margin expanded to 35.3% in 2025. The increase in gross profit margin includes approximately four percentage points of margin expansion driven by favorable price realization, improved operational productivity, and lower acquisition-related intangible amortization expense, which was partially offset by three points of margin contraction due to material and other cost inflation, including tariff expense.
Selling & Administrative Expenses
Selling and administrative expense in 2025 was $855.3 million and increased by $42.8 million compared to the prior year. This increase was driven by higher acquisition-related intangible amortization expense and the selling and administration expense added by our 2025 acquisitions, as well as and higher employee compensation and benefits, partially offset by lower transaction, integration and separation costs as compared to the prior year. Selling and administrative expense as a percentage of Net sales increased by 10 basis points to 14.6% in 2025.
Total Other Expense
Total other expense increased by $3.4 million in 2025 to $89.7 million compared to the prior year. That increase is primarily due TSA income in 2024 related to the disposal of the residential lighting business that did not repeat in 2025, higher non-service pension costs in the current year, and the impact of foreign currency exchange. Those drivers were partially offset by a $9.7 million decrease in net interest expense driven by lower average term loan borrowings outstanding in 2025, along with a $4.9 million net decrease on losses recognized on business dispositions, primarily due to the disposal of the residential lighting business in the first quarter of 2024.
Income Taxes
The effective tax rate decreased to 20.3% in 2025 compared to 22.1% in 2024, primarily due to a larger income tax benefit in 2025 from international restructurings as compared to the prior year, as well as the income tax costs from the sale of our residential lighting business in the first quarter of 2024.
Net Income Attributable to Hubbell Incorporated and Earnings Per Diluted Share
Net income attributable to Hubbell Incorporated was $887.1 million in 2025 and increased 13.9% as compared to 2024 . As a result, earnings per diluted share in 2025 increased 14.9% compared to 2024. Adjusted net income attributable to Hubbell Incorporated, which excludes amortization of acquisition-related intangibles, as well as transaction, integration & separation costs, and a loss on disposition of a business, was $976.8 million in 2025 and increased 8.8% as compared to 2024.
HUBBELL INCORPORATED - Form 10-K
Segment Results
Utility Solutions
The following table reconciles our Utility Solutions segment adjusted operating income and adjusted operating margin to the directly comparable GAAP financial measure (in millions and percentage):
For the Year Ended December 31,
(in millions)
Net sales
Operating income (GAAP measure)
Amortization of acquisition-related intangible assets
Transaction, integration & separation costs
Adjusted operating income
Operating margin (GAAP measure)
Adjusted operating margin
The following table reconciles our Utility Solutions segment Organic Net sales growth to the directly comparable GAAP financial measure (in millions and percentage change):
For the Year Ended December 31,
Utility Solutions
Inc/(Dec) %
Inc/(Dec) %
Net sales growth (GAAP measure)
Impact of acquisitions
Impact of divestitures
Foreign currency exchange
Organic Net sales growth (decline) (non-GAAP measure)
Net sales in the Utility Solutions segment in 2025 were approximately $3.7 billion, an increase of 2.0% as compared to 2024. This increase was driven by a 1.1% increase in organic net sales from a low single digit increase in price, partially offset by a low single digit percentage decrease in unit volumes. Acquisitions also added 1.0% to net sales as compared to the prior year. Strong substation, transmission and distribution markets drove volume growth year over year, but that growth was more than offset by a decrease in volume within Grid Automation products from weak advanced metering infrastructure and meter project activity in the year.
Operating income in the Utility Solutions segment in 2025 was $789.9 million an increase of 7.9% compared to 2024. Operating margin increased by 120 basis points to 21.5% in 2025. Excluding amortization of acquisition-related intangibles and transaction, integration & separation costs, the adjusted operating margin increased by 50 basis points to 24.1% as compared to the prior year. The increase in operating margin and adjusted operating margin includes approximately three percentage points of margin expansion from favorable price realization and improved operational productivity. Those factors were partially offset by approximately two percentage points of margin contraction due to material and other cost inflation, including tariff expense.
HUBBELL INCORPORATED - Form 10-K
Electrical Solutions
The following table reconciles our Electrical Solutions segment adjusted operating income and adjusted operating margin to the directly comparable GAAP measure (in million and percentage):
For the Year Ended December 31,
(in millions)
Net sales
Operating income (GAAP measure)
Amortization of acquisition-related intangible assets
Transaction, integration & separation costs
Adjusted operating income
Operating margin (GAAP measure)
Adjusted operating margin
The following table reconciles our Electrical Solutions segment Organic Net sales growth to the directly comparable GAAP financial measure (in millions and percentage change):
For the Year Ended December 31,
Electrical Solutions
Inc/(Dec) %
Inc/(Dec) %
Net sales growth (decline) (GAAP measure)
Impact of acquisitions
Impact of divestitures
Foreign currency exchange
Organic Net sales growth (non-GAAP measure)
Net sales of the Electrical Solutions segment in 2025 were approximately $2.2 billion, an increase of $144.5 million, or 7.1% as compared to 2024. The increase includes 7.2% growth in organic net sales, driven by a mid single digit percentage increase in price realization and a low single digit percentage increase in unit volumes. This was partially offset by a 0.1% decline from foreign currency exchange. Volume growth was driven primarily by strength in the datacenter and light industrial markets, partially offset by softness in the non-residential and heavy industrial markets.
Operating income of the Electrical Solutions segment in 2025 was $418.9 million and increased approximately 15.9% compared to 2024, while operating margin in 2025 increased by 150 basis points to 19.3%. Excluding amortization of acquisition-related intangibles and transaction, integration & separation costs, the adjusted operating margin increased by 120 basis points to 20.2% in 2025. The increase in the operating margin and adjusted operating margin in 2025 was primarily due to approximately six percentage points of margin expansion from favorable price realization, improved operational productivity and higher unit volumes. Those factors were partially offset by approximately five percentage points of margin contraction driven by higher material and other cost inflation, including tariff expense and unfavorable business mix.
HUBBELL INCORPORATED - Form 10-K
2024 Compared to 2023
Net Sales
Net sales of $5,628.5 million in 2024 increased by $255.6 million, or 4.7%, compared to 2023. Organic net sales were flat driven by a low single digit percentage increase in price realization, partially offset by a low single digit percentage decrease in unit volume. Acquisitions net of divestitures contributed 4.8% to net sales growth. These changes are discussed in more detail in the Segment Results section below.
Cost of Goods Sold and Gross Profit
As a percentage of net sales, cost of goods sold increased by 100 basis points to 66.1% and gross profit margin declined to 33.9% in 2024. The decline in gross profit margin includes approximately four percentage points of margin contraction due to higher intangible amortization expense, material and other cost inflation and lower volume, which was partially offset by approximately three percentage points of margin expansion driven by favorable price realization, productivity and cost management.
Selling & Administrative Expenses
S&A expense in 2024 was $812.5 million and decreased by $37.1 million compared to the prior year. This decrease was driven by lower employee incentive costs and lower professional services in 2024, transaction costs in 2023 that did not repeat in 2024, partially offset by the addition of S&A expense including intangible amortization expense related to our 2023 acquisitions. S&A expense as a percentage of Net sales decreased by 130 basis points to 14.5% in 2024.
Total Other Expense
Total other expense increased by $31.1 million in 2024 to $86.3 million compared to the prior year, primarily due to a $37.1 million increase in net interest expense and a $5.3 million loss recognized on the disposition of the residential lighting business in 2024, partially offset by $7.2 million in 2024 of TSA income related to the disposal of the residential lighting business and lower non service pension cost. The increase in interest expense was primarily attributable to debt incurred in connection with the acquisition of Northern Star Holdings, Inc. ("Systems Control").
Income Taxes
The effective tax rate was 22.1% in both 2024 and 2023 as the income tax expense related to the sale of the residential lighting business in the first quarter of 2024, was largely offset by the tax benefit of an international restructuring completed in the third quarter of the year.
Net Income Attributable to Hubbell Incorporated and Earnings Per Diluted Share
Net income attributable to Hubbell Incorporated was $779.0 million in 2024 and increased 3.7% as compared to 2023 . As a result, earnings per diluted share in 2024 increased 3.6% compared to 2023. Adjusted net income attributable to Hubbell Incorporated, which excluded amortization of acquisition-related intangibles and transaction, integration & separation costs in both periods, and a loss on disposition of a business in 2024 was $898.0 million in 2024 and increased 9.4% as compared to 2023.
HUBBELL INCORPORATED - Form 10-K
Segment Results
Utility Solutions
The following table reconciles our Utility Solutions segment adjusted operating income and adjusted operating margin to the directly comparable GAAP financial measure (in millions and percentage):
For the Year Ended December 31,
(in millions)
Net sales
Operating income (GAAP measure)
Amortization of acquisition-related intangible assets
Transaction, integration & separation costs
Adjusted operating income
Operating margin (GAAP measure)
Adjusted operating margin
The following table reconciles our Utility Solutions segment Organic Net sales growth to the directly comparable GAAP financial measure (in millions and percentage change):
For the Year Ended December 31,
Utility Solutions
Inc/(Dec) %
Inc/(Dec) %
Net sales growth (GAAP measure)
Impact of acquisitions
Impact of divestitures
Foreign currency exchange
Organic Net sales (decline) growth (non-GAAP measure)
Net sales in the Utility Solutions segment in 2024 were approximately $3.6 billion , an increase of 10.4% as compared to 2023 . This increase was driven by a 12.9% increase in net sales from acquisitions, partially offset by a 2.4% decrease in organic net sales driven by a mid single digit percentage decrease in unit volumes partially offset by a low single digit increase in price realization. The decrease in unit volume resulted largely from volume declines in enclosures products primarily driven by prior weakness in the telecom market, as well as customer inventory management in distribution markets. These factors were partially offset by strong growth in transmission and substation markets and in grid automation projects.
Operating income in the Utility Solutions segment in 2024 was $731.8 million an increase of 4.8% compared to 2023. Operating margin declined by 110 basis points to 20.3% in 2024. Excluding amortization of acquisition-related intangibles and transaction, integration & separation costs, the adjusted operating margin was flat as compared to the prior year. The decrease in operating margin includes approximately three percentage points of margin expansion from favorable price realization, improved productivity and cost management, but that expansion was more than offset by approximately four percentage points of margin contraction due to material and other cost inflation, higher acquisition-related intangible amortization and lower unit volume. The impact of lower unit volume includes approximately 130 basis points from enclosures products, driven primarily by prior weakness in the telecom market.
HUBBELL INCORPORATED - Form 10-K
Electrical Solutions
The following table reconciles our Electrical Solutions segment adjusted operating income and adjusted operating margin to the directly comparable GAAP measure (in million and percentage):
For the Year Ended December 31,
(in millions)
Net sales
Operating income (GAAP measure)
Amortization of acquisition-related intangible assets
Transaction, integration & separation costs
Adjusted operating income
Operating margin (GAAP measure)
Adjusted operating margin
The following table reconciles our Electrical Solutions segment Organic Net sales growth to the directly comparable GAAP financial measure (in millions and percentage change):
For the Year Ended December 31,
Electrical Solutions
Inc/(Dec) %
Inc/(Dec) %
Net sales (decline) growth (GAAP measure)
Impact of acquisitions
Impact of divestitures
Foreign currency exchange
Organic Net sales growth (decline) (non-GAAP measure)
Net sales of the Electrical Solutions segment in 2024 were approximately $2.0 billion , a decrease of $83.4 million, or 3.9% as compared to 2023. The decrease includes 3.8% growth in organic net sales, that was more than offset by a 7.7% decline in net sales resulting from the disposition of the residential lighting business during the first quarter of 2024. The increase in organic net sales was driven by a low single digit percentage increase in unit volumes and a low single digit percentage increase in price realization. Volume growth was driven primarily by strength in renewables markets and datacenter balance-of-system products, while industrial markets were solid and non residential markets were soft.
Operating income of the Electrical Solutions segment in 2024 was $361.3 million and increased approximately 9.8% compared to 2023, while operating margin in 2024 increased by 220 basis points to 17.8%. Excluding amortization of acquisition-related intangibles and transaction, integration & separation costs, the adjusted operating margin increased by 250 basis points to 19.0% in 2024. The increase in the operating margin and adjusted operating margin in 2024 was primarily due to approximately five percentage points of margin expansion from favorable price realization, improved productivity and higher volume. The disposition of the residential lighting business also contributed to the expansion. Those factors were partially offset by approximately three percentage points of margin contraction driven by higher material and other cost inflation.
HUBBELL INCORPORATED - Form 10-K
Financial Condition, Liquidity and Capital Resources
Cash Flow
For the Year Ended December 31,
(in millions)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Effect of foreign currency exchange rate changes on cash and cash equivalents
NET CHANGE IN CASH AND CASH EQUIVALENTS
The following table reconciles our cash flows from operating activities to free cash flows for 2025 and 2024:
For the Year Ended December 31,
(in millions)
Net cash provided by operating activities (GAAP measure)
Less: Capital expenditures
Free cash flow
Free cash flow as a percent of net income attributable to Hubbell
Free cash flow is a non-GAAP measure that we define as cash flow from operations less capital expenditures. Management believes that free cash flow provides useful information regarding Hubbell’s ability to generate cash without reliance on external financing. In addition, management uses free cash flow to evaluate the resources available for investments in the business, strategic acquisitions and further strengthening the balance sheet.
2025 Compared to 2024
Cash provided by operating activities was $1,029.8 million in 2025 compared to $991.2 million in 2024. The increase was primarily due to higher net income in 2025, partially offset by an increase in cash used for working capital and an increase in cash used for contributions to pension plans in 2025 compared to 2024.
Cash used in investing activities was $1,094.6 million in 2025 compared to cash used of $59.1 million in 2024. That change was driven by $958.3 million of cash used in 2025 to acquire Alliance USAcqCo 2, Inc. ("Ventev"), Nicor, Inc. ("Nicor") and Power Rose Acquisition, Inc. (and together with its subsidiaries, "DMC Power"), as compared to $122.9 million of cash proceeds in 2024 from the disposition of our residential lighting business.
Cash provided by financing activities was $203.6 million in 2025 as compared to $923.4 million of cash used by financing activities in 2024. The change in cash flows reflects $600 million of cash provided in December 2025 from the Term Loan issued to partially fund the acquisition of DMC Power, as compared to cash used in 2024 to repay a previously issued Term Loan, along with an increase in dividends paid and higher share repurchases in 2025 compared to 2024.
The favorable impact of foreign currency exchange rates on cash was $13.9 million in 2025 as compared to an unfavorable effect of $16.4 million in 2024. The favorable impact in 2025 was primarily related to strengthening in the British Pound, Brazilian Real, Mexican Peso, and Canadian Dollar compared to the U.S. Dollar.
HUBBELL INCORPORATED - Form 10-K
Investments in the Business
Investments in our business include cash outlays for the acquisitions of businesses as well as expenditures to maintain the operation of our equipment and facilities and invest in restructuring activities.
In the first quarter of 2025, the Company acquired Ventev for approximately $73 million. Ventev is a leading manufacturer and provider of a complete ecosystem of solutions to power, protect, and connect wireless networks. The Ventev business has been added to the Electrical Solutions segment.
In the third quarter of 2025, the Company acquired Nicor for approximately $56 million. Nicor designs and manufactures water metering endpoint solutions to integrate and optimize advanced metering infrastructure networks. Such solutions include polymer meter box lids and covers. Nicor has been added to the Utility Solutions segment.
On October 1, 2025, the Company acquired DMC Power for approximately $829 million, net of cash acquired, subject to customary purchase price adjustments. DMC Power is a provider of swaged connection systems and tooling for utility substation and transmission markets. DMC Power has been added to the Utility Solutions segment.
For more information related to acquisitions completed in 2025, refer to Note 3 - Business Acquisitions and Dispositions in the Notes to Consolidated Financial Statements, which is incorporated herein by reference.
During 2025, we invested $155.1 million in capital expenditures on automation, productivity initiatives and maintenance, and we also continue to invest in restructuring and related programs to maintain a competitive cost structure, to drive operational efficiencies and to mitigate the impact of rising material costs and administrative cost inflation. We expect investments in restructuring and related activities to continue in 2026 as we continue to invest in previously initiated actions and initiatives, further footprint consolidation, and other cost reduction initiatives.
In connection with our restructuring and related actions, we have incurred restructuring costs as defined by U.S. GAAP, which are primarily severance and employee benefits, asset impairments, and accelerated depreciation, as well as facility closure, contract termination and certain pension costs that are directly related to restructuring actions. We also incurred restructuring-related costs, which are costs associated with our business transformation initiatives, including the consolidation of back-office functions and streamlining of our processes, and certain other costs and gains associated with restructuring actions. We refer to these costs on a combined basis as “ restructuring and related costs”, which is a non-GAAP measure. We believe this non-GAAP measure provides investors with useful information regarding our underlying performance from period to period. Restructuring costs are predominantly settled in cash from our operating activities and are generally settled within one year, with the exception of asset , which are non-cash.
The table below presents the restructuring and related costs incurred in 2025, additional expected costs, and the expected completion date of restructuring actions that had been initiated as of December 31, 2025 and in prior years (in millions):
Costs Incurred in 2025
Additional Expected Costs
Expected Completion Date
2025 Restructuring Actions
2024 and Prior Restructuring Actions
Restructuring cost (GAAP measure)
Restructuring-related costs
Restructuring and related costs (Non-GAAP measure)
Stock Repurchase Program
On October 21, 2022, we announced that the Board of Directors had approved a share repurchase program that authorized the repurchase of up to $300 million of common stock, which expired in October 21, 2025. On February 12, 2025 the Board of Directors approved a stock repurchase program that authorized the repurchase of up to $500 million of common stock and expires in February 2028. We had a total outstanding share repurchase authorization of approximately $500.0 million at December 31, 2025. Subject to numerous factors, including market conditions and alternative uses of cash, we may conduct discretionary repurchases through open market or privately negotiated transactions, which may include repurchases under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended.
HUBBELL INCORPORATED - Form 10-K
Debt to Capital
At December 31, 2025 and 2024, the Company had $2,036.3 million and $1,442.7 million, respectively, of long-term debt outstanding, net of unamortized discount and the unamortized balance of capitalized debt issuance costs. At December 31, 2025, the Company had no long-term debt with maturities due within the next 12 months.
2025 Term Loan
On September 29, 2025, the Company entered into a Term Loan Agreement (the "2025 Term Loan Agreement") with a syndicate of lenders and JPMorgan Chase Bank, N.A., as administrative agent. On October 1, 2025, the Company borrowed $600 million under the 2025 Term Loan Agreement (the "2025 Term Loan") on an unsecured basis to finance a portion of the DMC Power purchase price. The 2025 Term Loan was made in a single borrowing and will be due and payable on September 29, 2028. The 2025 Term Loan bears interest based on the Term SOFR Rate (as defined in the 2025 Term Loan Agreement), plus an applicable interest addition based on Hubbell's credit ratings. The interest rate on the 2025 Term Loan as of December 31, 2025 was 4.99%. Hubbell also paid the lenders certain customary fees in connection with the 2025 Term Loan Agreement.
The 2025 Term Loan Agreement contains representations and warranties and affirmative and negative covenants customary for unsecured financing of this type, as well as a financial covenant requiring that, as of the last day of each fiscal quarter, the ratio of total indebtedness to total capitalization shall not be greater than 65%. The Company was in compliance with this covenant as of December 31, 2025.
2023 Term Loan
In connection with the December 2023 acquisition of Systems Control, the Company entered into a Term Loan Agreement (the “2023 Term Loan Agreement”) with a syndicate of lenders under which the Company borrowed $600 million on an unsecured basis (the "2023 Term Loan"). Borrowings under the 2023 Term Loan Agreement bore interest generally at either the adjusted term SOFR rate plus an applicable margin (determined by a ratings based grid) or the alternative base rate. The outstanding principal amount under the 2023 Term Loan Agreement was due and payable in full at maturity in December 2026. During the fourth quarter of 2024, the Company repaid the remainder of the 2023 Term Loan and no balance was outstanding at December 31, 2025 or December 31, 2024.
2025 Credit Facility
On March 25, 2025, the Company, as borrower, and each foreign subsidiary borrower from time to time party thereto (collectively, the “Foreign Subsidiary Borrowers”) entered into a five-year credit agreement with a syndicate of lenders and JPMorgan Chase Bank, N.A., as administrative agent, that provides for a $1.0 billion committed unsecured revolving credit facility (the “Revolving Credit Agreement”). The obligations of the Foreign Subsidiary Borrowers (if any) under the Revolving Credit Agreement are guaranteed by the Company.
Commitments under the Revolving Credit Agreement may be conditionally increased to an aggregate amount not to exceed $1.5 billion. The Revolving Credit Agreement includes a $50.0 million sub-limit for the issuance of letters of credit. The sum of the dollar amount of loans and letters of credit to the Foreign Subsidiary Borrowers under the Revolving Credit Agreement may not exceed $100.0 million.
The interest rate applicable to borrowings under the Revolving Credit Agreement is either (i) the alternate base rate (as defined in the Revolving Credit Agreement) or (ii) the term SOFR rate (as defined in the Revolving Credit Agreement) plus an applicable margin based on the Company's credit ratings.
All revolving loans outstanding under the Revolving Credit Agreement will be due and payable on March 25, 2030. The Revolving Credit Agreement provides for up to two one-year maturity extensions. As of December 31, 2025, the credit facility was undrawn.
The Revolving Credit Agreement contains a sole financial covenant requiring that, as of the last day of each fiscal quarter, the ratio of total indebtedness to total capitalization shall not be greater than 65%. The Company was in compliance with this covenant as of December 31, 2025.
Unsecured Senior Notes
On November 14, 2025, the Company completed a public offering of $400 million aggregate principal amount of its 4.800% Senior Notes due 2035 (the “2035 Notes”). The net proceeds from the offering were approximately $392.7 million after deducting the underwriting discount and estimated offering expenses payable by the Company. The 2035 Notes bear interest at a rate of 4.800% per annum from November 14, 2025. Interest on the 2035 Notes is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2026. The 2035 Notes will mature on November 15, 2035.
HUBBELL INCORPORATED - Form 10-K
The Company used the net proceeds from the offering of the 2035 Notes, together with cash on hand, on December 1, 2025 to redeem in full all of the Company’s outstanding 3.350% Senior Notes due in 2026 for an aggregate principal amount of $400 million, which had a stated maturity date of March 1, 2026 (the "2026 Notes"), and to pay the accrued interest in respect thereof.
At December 31, 2024, the Company had an outstanding principal amount of $400 million in 2026 Notes and other unsecured, senior notes in principal amounts of $300 million due in 2027 (the "2027 Notes"), $450 million due in 2028 (the "2028 Notes"), and $300 million due in 2031 (the "2031 Notes'). At December 31, 2025 the 2027 Notes, 2028 Notes, and 2031 Notes remained outstanding in addition to the 2035 Notes.
The carrying value of the unsecured, senior notes (the "Notes"), net of unamortized discount and the unamortized balance of capitalized debt issuance costs, was $2,036.3 million and $1,442.7 million at December 31, 2025 and December 31, 2024, respectively.
The Notes are callable at any time at specified prices and are only subject to accelerated payment prior to maturity upon customary events of default, or upon a change in control triggering event as defined in the indenture governing the Notes, as supplemented. The Company was in compliance with all covenants (none of which are financial) as of December 31, 2025.
Short-term Debt
At December 31, 2025 and 2024, the Company had $289.1 million and $125.4 million, respectively, of short-term debt is composed of:
◦ $287.0 million of commercial paper borrowings outstanding at December 31, 2025, and $123.0 million of commercial paper borrowings outstanding at December 31, 2024. The increase in commercial paper during 2025 was used for the repurchase of $225.0 million of treasury stock and to partially fund the acquisitions of Ventev, Nicor and DMC Power.
◦ The Company had $2.1 million and $2.4 million of short-term debt outstanding at December 31, 2025 and December 31, 2024, respectively, which consisted of amounts outstanding under our commercial card program.
Net debt, defined as total debt less cash and investments, is a non-GAAP measure that may not be comparable to definitions used by other companies. We consider net debt to be a useful measure of our financial leverage for evaluating the Company’s ability to meet its funding needs.
The following table sets forth the reconciliation of net debt at December 31, 2025 and 2024:
December 31,
(in millions)
Total Debt (GAAP measure)
Total Hubbell Incorporated Shareholders’ Equity
TOTAL CAPITAL (GAAP measure)
Total Debt to Total Capital (GAAP measure)
Cash and Investments
NET DEBT (non-GAAP measure)
Net Debt to Total Capital (non-GAAP measure)
Liquidity
We measure liquidity on the basis of our ability to meet short-term and long-term operational funding needs, to fund additional investments, including acquisitions, and to make dividend payments to shareholders. Significant factors affecting the management of liquidity are cash flows from operating activities, capital expenditures, cash dividend payments, stock repurchases, access to bank lines of credit and our ability to attract long-term capital with satisfactory terms.
In 2025, we returned capital to our shareholders through dividends and share repurchases. These activities were funded primarily with cash flows from operations.
◦ In 2025, cash used for share repurchases was $225.0 million.
◦ Dividends paid on our common stock in 2025 were $286.6 million.
HUBBELL INCORPORATED - Form 10-K
We also require cash outlays to fund our operations, capital expenditures, and working capital requirements to accommodate anticipated levels of business activity, as well as our rate of cash dividends and potential future acquisitions. We have contractual obligations for long-term debt, operating leases, purchase obligations, and certain other long-term liabilities, including defined benefit retirement obligations and other benefits. Refer to Note 12 - Debt and Note 23 - Leases in the Notes to the Consolidated Financial Statements for further details on anticipated cash outflows. Contractual purchase obligations as of December 31, 2025 are approximately $570 with the vast majority expected to be satisfied in 2026 .
Our purchase obligations include amounts committed under legally enforceable contracts or purchase orders for goods and services with defined terms as to price, quantity, delivery and termination liability. These obligations primarily consist of inventory purchases made in the normal course of business to meet operational requirements and commitments for equipment purchases. As of December 31, 2025, we have $58.9 million of uncertain tax positions reflected in our Consolidated Balance Sheet. We are unable to make a reasonable estimate regarding the timing of settlement of these uncertain tax positions and, as a result, they have been excluded from the disclosure. See Note 13 — Income Taxes in the Notes to Consolidated Financial Statements.
Our sources of funds and available resources to meet these funding needs are as follows:
◦ Cash flows from operating activities and existing cash resources: In addition to our cash flows from operating activities, we also had $482.5 million of cash and cash equivalents at December 31, 2025 , of which approximately 12% was held inside the United States and the remainder held internationally.
◦ Our Revolving Credit Agreement provides a $1.0 billion committed revolving credit facility and commitments under the Revolving Credit Agreement may be increased (subject to certain conditions) to an aggregate amount not to exceed $1.5 billion. Annual commitment fees to support availability under the Revolving Credit Agreement are not material. Although not the principal source of liquidity, we believe our Revolving Credit Agreement is capable of providing significant financing flexibility at reasonable rates of interest and is an attractive alternative source of funding in the event that commercial paper markets experience disruption. However, an increase in usage of the Revolving Credit Agreement related to growth or a significant deterioration in the results of our operations or cash flows could cause our borrowing costs to increase and/or our ability to borrow could be restricted. We have not entered into any guarantees that could give rise to material unexpected cash requirements. The full $1.0 billion of borrowing capacity under the Revolving Credit Agreement was available to the Company at December 31, 2025 .
◦ In addition to our commercial paper program and existing revolving credit facility, we also have the ability to obtain additional financing through the issuance of long-term debt. Considering our current credit rating, historical earnings performance, and financial position, we believe that we would be able to obtain additional long-term debt financing on attractive terms.
◦ The Company also maintains other lines of credit that are primarily used to support the issuance of letters of credit. Interest rates and other terms of borrowing under these lines of credit vary from country to country, depending on local market conditions. At December 31, 2025 and 2024, total availability under these lines was $58.2 million and $55.3 million, respectively, of which $21.5 million and $41.1 million was utilized to support letters of credit and the remaining amount was unused. The annual commitment fees associated with these lines of credit are not material.
Pension Funding Status
We have a number of funded and unfunded non-contributory U.S. and foreign defined benefit pension plans. Benefits under these plans are generally provided based on either years of service and final average pay or a specified dollar amount per year of service. The funded status of our qualified, defined benefit pension plans is dependent upon many factors including future returns on invested pension assets, the level of market interest rates, employee earnings and employee demographics.
Changes in the value of the defined benefit plan assets and liabilities will affect the amount of pension expense ultimately recognized. Although differences between actuarial assumptions and actual results are no longer deferred for balance sheet purposes, deferral is still permitted for pension expense purposes. Unrecognized gains and losses in excess of an annual calculated minimum amount (the greater of 10% of the projected benefit obligation or 10% of the market value of assets) have been amortized and recognized in net periodic pension cost. Effective January 1, 2020, the amortization of unrecognized gains and losses of all of the Company’s qualified defined benefit pension plans is recognized over the remaining life expectancy of participants, as all participants are considered inactive as a result of plan amendments. During 2025 and 2024, we recorded $11.3 million and $9.9 million, respectively, of pension expense related to the amortization of these unrecognized losses.
In 2025 and 2024, we contributed $41.4 million and $1.3 million , respectively, to our qualified foreign and domestic defined benefit pension plans. These contributions have improved the funded status of those plans. The anticipated level of pension funding in 2026 is not expected to have a significant impact on our overall liquidity.
HUBBELL INCORPORATED - Form 10-K
Assumptions
The following assumptions were used to determine projected pension and other benefit obligations at the measurement date and the net periodic benefit costs for the year:
Pension Benefits
Other Benefits
Weighted-average assumptions used to determine benefit obligations at December 31,
Discount rate
Rate of compensation increase
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31,
Discount rate
Expected return on plan assets
Rate of compensation increase
At the end of each year, we estimate the expected long-term rate of return on pension plan assets based on the strategic asset allocation for our plans. In making this determination, we utilize expected rates of return for each asset class based upon current market conditions and expected risk premiums for each asset cla ss. A one percentage point change in the expected long-term rate of return on our pension fund assets would have an impact of approxi mately $5.1 million on 2026 pretax pension expense. The expected long-term rate of return is applied to the fair market value of pension fund assets to produce the expected return on fund assets that is included in pension expense.
The difference between this expected return and the actual return on plan assets was recognized at December 31, 2025 for balance sheet purposes, but continues to be deferred for expense purposes. The net deferral of past asset gains (losses) ultimately affects future pension expense through the amortization of gains (losses) with an offsetting adjustment to Hubbell shareholders’ equity through Accumulated other comprehensive loss.
At the end of each year, we determine the discount rate to be used to calculate the present value of our pension plan liabilities. For our U.S. and Canadian pension plans, this discount rate is determined by matching the expected cash flows associated with our benefit obligations to the expected cash flows of a hypothetical portfolio of high quality, fixed income debt instruments with maturities that closely match the expected funding period of our pension liabilities. As of December 31, 2025, we used a discount rate of 5.50% for our U.S. pension plans compared to a discount rate of 5.60% used in 2024. For our Canadian pension plan, we used a discount rate of 4.86% in 2025, compared to a 4.58% discount rate used in 2024.
For our UK pension plan the discount rate was derived using a full yield curve and uses plan specific cash flows. The derived discount rate is the single discount rate equivalent to discounting these liability cash flows at the term-dependent spot rates of AA corporate bonds. This methodology resulted in a December 31, 2025 discount rate for the UK pension plan of 5.55% as compared to a discount rate of 5.60% used in 2024.
A decrease of one percentage point in the discount rate would increase our 2026 pretax pension expense by approximately $0.2 million. A discount rate increase of one percentage point would decrease our 2026 pretax pension expense by $0.4 million.
In 2025 and 2024 we used the Pri-2012 mortality table and the MP-2021 projection scale from 2012 to calculate the present value of our pension plan liabilities in the U.S. In 2024, the Pri-2012 mortality table was adjusted to reflect plan specific geospatial characteristics as appropriate. The plan specific adjusted Pri-2012 mortality table with generational projection from 2012 using Scale MP-2021 was chosen as the best estimate based on the observed and anticipated experience of the plans after considering alternative tables.
Other Post-Employment Benefits (“OPEB”)
The Company also has a number of health care and life insurance benefit plans covering eligible employees who reached retirement age while working for the Company. These benefits have been discontinued for substantially all future retirees. These plans are not funded and, therefore, no assumed rate of return on assets is required. We use a similar methodology to derive the discount rate for our post employment benefit plan obligations that we use for our pension plans. As of December 31, 2025, the Company used a discount rate of 5.50% to determine the projected benefit obligation compared to a discount rate of 5.60% used in 2024.
In accordance with the accounting guidance for retirement benefits, we recorded to Accumulated other comprehensive loss, within Hubbell shareholders’ equity, a benefit, net of tax, of $6.9 million in 2025 and $6.1 million in 2024, respectively, related to the annual remeasurement of the OPEB plans and the amortization of prior service credits and net actuarial gains.
HUBBELL INCORPORATED - Form 10-K
Off-Balance Sheet Arrangements
Off-balance sheet arrangements are defined as any transaction, agreement or other contractual arrangement to which an entity that is not included in our consolidated results is a party, under which we, whether or not a party to the arrangement, have, or in the future may have: (1) an obligation under a direct or indirect guarantee or similar arrangement, (2) a retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets, (3) an obligation or liability, including a contingent obligation or liability, under a contract that would be accounted for as a derivative instrument, except that it is excluded from the scope of FASB ASC Topic 815, or (4) an obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by, and material to, the Company, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with, the Company.
We do not have any off-balance sheet arrangements (as defined above), which have or are likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures, capital resources or cash flows.
HUBBELL INCORPORATED - Form 10-K
Critical Accounting Estimates
Note 1 — Significant Accounting Policies in the Notes to Consolidated Financial Statements describes the significant accounting policies used in the preparation of our financial statements.
Use of Estimates
We are required to make assumptions and estimates and apply judgments in the preparation of our financial statements that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors deemed relevant by management, such as projections of future performance. We continually review these estimates and their underlying assumptions to ensure they are appropriate for the circumstances. Changes in estimates and assumptions used by us could have a material impact on our financial results, and actual results could differ significantly from those estimates. We believe that the following estimates are among the most critical in fully understanding and evaluating our reported financial results. These items utilize assumptions and estimates about the effect of future events that are inherently uncertain and are based on our judgment.
Revenue Recognition
The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied, which generally occurs, for products, upon the transfer of control in accordance with the contractual terms and conditions of the sale. The majority of the Company’s revenue associated with products is recognized at a point in time when the product is shipped to the customer, with a relatively small amount of transactions in the Utility Solutions segment recognized upon delivery of the product at the contractually specified destination.
The Company also has performance obligations, primarily within the Utility Solutions segment, that are recognized over-time due to the customized nature of the product and the Company’s enforceable right to receive payment for work performed to date in the event of a cancellation. The Company uses an input measure to determine the extent of progress towards completion of the performance obligation, which the Company believes best depicts the transfer of control to the customer. Under this method, revenue recognition is based upon the ratio of costs incurred to date compared with estimated total costs to complete.
Revenue from service contracts and post-shipment performance obligations is approximately one percent of total annual consolidated net revenue and those service contracts and post-shipment obligations are primarily within the Utility Solutions segment. Revenue from service contracts and post-shipment performance obligations is recognized when or as those obligations are satisfied. The Company primarily offers assurance-type standard warranties that do not represent separate performance obligations and on occasion will separately offer and price extended warranties that are separate performance obligations for which the associated revenue is recognized over-time based on the extended warranty period. The Company records amounts billed to customers for reimbursement of shipping and handling costs within revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are included in cost of goods sold. Sales taxes and other usage-based taxes are excluded from revenue.
Certain businesses require a portion of the transaction price to be paid in advance of transfer of control. Advance payments are not considered a significant financing component as they are received less than one year before the related performance obligations are satisfied. In addition, in the Utility Solutions segment, certain businesses offer annual maintenance service contracts that require payment at the beginning of the contract period. These payments are treated as a contract liability and are classified in Other accrued liabilities in the Consolidated Balance Sheet. Once control transfers to the customer and the Company meets the revenue recognition criteria, the deferred revenue is recognized in the Consolidated Statement of Income. The deferred revenue relating to the annual maintenance service contracts is recognized in the Consolidated Statement of Income on a straight line basis over the expected term of the contract.
The Company has certain arrangements that require us to estimate at the time of sale the amounts of variable consideration that should not be recorded as revenue as certain amounts are not expected to be collected from customers, as well as an estimate of the value of the product to be returned. The Company principally relies on historical experience, specific customer agreements and anticipated future trends to estimate these amounts at the time of shipment and to reduce the transaction price. These arrangements include sales discounts and allowances based on sales volumes, specific programs and special pricing allowances, and returned goods, as are customary in the electrical products industry. Customer returns have historically been approximately one percent of gross sales.
Inventory Valuation
Inventories are stated at the lower of cost and net realizable value. The cost is primarily determined utilizing average cost or first-in, first-out (FIFO) methods of inventory accounting. We routinely evaluate the carrying value of our inventories to ensure they are carried at the lower of FIFO or average cost or market value. Such evaluation is based on our judgment and use of estimates, including sales forecasts, gross margins for particular product groupings, planned dispositions of product lines, technological events and overall industry trends. In addition, the evaluation is based on changes in inventory management practices which may influence the timing of exiting products and method of disposing of excess inventory.
HUBBELL INCORPORATED - Form 10-K
Excess inventory is generally identified by comparing future expected inventory usage to actual on-hand quantities. Inventory values are reduced for on-hand inventory in excess of pre-defined usage forecasts. Forecast usage is primarily determined by projecting historical (actual) sales and inventory usage levels forward to future periods. Changes in these estimates may necessitate future adjustments to inventory values.
Employee Benefits Costs and Funding
We sponsor domestic and foreign defined benefit pension, defined contribution and other postretirement plans. Significant assumptions used in the accounting for these employee benefit plans include the discount rate, expected return on the pension fund assets, rate of increase in employee compensation levels and health care cost increase projections. These assumptions are determined based on Company data and appropriate market indicators, and are evaluated each year as of the plans’ measurement dates. Further discussion o f the assumptions used in 2025 and 2024 are included above under “Pension Funding Status” and in Note 11 — Retirement Benefits in the Notes to Consolidated Financial Statements.
Taxes
We account for income taxes in accordance with the applicable accounting guidance which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. Additionally, deferred tax assets are required to be reduced by a valuation allowance if it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized. The factors used to assess the likelihood of realization of deferred tax assets are the forecast of future taxable income, available tax planning strategies that could be implemented to realize the net deferred tax assets, and future reversals of deferred tax liabilities. Failure to achieve forecasted taxable income can affect the ultimate realization of net deferred tax assets.
We operate within multiple taxing jurisdictions and are subject to audit in these jurisdictions. The Internal Revenue Service (“IRS”) and other tax authorities routinely review our tax returns. These audits can involve complex issues, which may require an extended period of time to resolve. The Company records uncertain tax positions when it has determined that it is more-likely-than-not that a tax position will not be sustained upon examination by taxing authorities based on the technical merits of the position. The Company uses the criteria established in the accounting guidance to determine whether an item meets the definition of more-likely-than-not. The Company’s policy is to recognize these uncertain tax positions when the more-likely-than-not threshold is met, when the statute of limitations has expired or upon settlement. In management’s opinion, adequate provision has been made for potential adjustments arising from any examinations. See Note 13 — Income Taxes in the Notes to Consolidated Financial Statements.
Valuation of Long-Lived Assets, Goodwill, and Indefinite-Lived Intangible Assets
Our long-lived assets include land, buildings, equipment, molds and dies, software, goodwill and other intangible assets. Long-lived assets, other than land, goodwill and indefinite-lived intangibles, are depreciated over their estimated useful lives. The assets and liabilities of acquired businesses are recorded under the acquisition method of accounting at their estimated fair values at the dates of acquisition. Goodwill represents purchase price in excess of fair values assigned to the underlying identifiable net assets of acquired businesses. Intangible assets primarily consist of patents, tradenames, developed technology and customer related intangibles.
Goodwill and indefinite-lived intangible assets are reviewed annually for impairment unless circumstances dictate the need for more frequent assessment. We perform our annual goodwill impairment testing as of April 1 st of each year. The accounting guidance provides entities an option of performing a qualitative assessment (the “Step-zero ” test) before performing a quantitative analysis. If the entity determines, on the basis of certain qualitative factors, that it is more-likely-than-not that the goodwill is not impaired, the entity would not need to proceed to the quantitative goodwill impairment testing process as prescribed in the guidance. If the Company does not elect to complete the qualitative assessment, the Company completes the quantitative assessment whereby the estimated fair value of each reporting unit is compared to its carrying value.
The Company completed its annual goodwill impairment test as of April 1, 2025. For each of the Company’s reporting units, the Company elected to utilize the quantitative goodwill impairment testing process, as permitted in the accounting guidance, by comparing the estimated fair value of the reporting units to their carrying values. As of April 1, 2025, the impairment testing resulted in implied fair values for each reporting unit that significantly exceeded such reporting unit’s carrying value, including goodwill. The Company did not have any reporting units with zero or negative carrying amounts.
HUBBELL INCORPORATED - Form 10-K
The organizational changes described in Note 2 - Revenue resulted in a change in the Company’s reporting units within the Electrical Solutions segment. As a result of the change in reporting units, the Company performed an interim goodwill impairment assessment during the third quarter of 2025, for the reporting units within the Electrical Solutions segment. Because the changes did not affect the Utility Solutions segment, no interim goodwill impairment assessment was required for that segment. For this interim assessment, the Company elected to utilize the quantitative goodwill impairment testing process, as permitted in the accounting guidance, by comparing the estimated fair value of the reporting units to their carrying values. The interim impairment testing resulted in implied fair values for each reporting unit that significantly exceeded such reporting unit’s carrying value, including goodwill. The Company did not have any reporting units with zero or negative carrying amounts.
The goodwill impa irment test requires judgment, including the identification of reporting u nits, assigning assets and liabilities to reporting units, and determining the fair value of each reporting unit. Significant judgments required to estimate the fair value of reporting units include estimating future cash flows, determining appropriate discount rates and other assumptions, including assumptions about secular economic and market conditions. The Company uses internal discounted cash flow models to estimate fair value. These cash flow estimates are derived from historical experience, third-party end market data, and future long-term business plans and include assumptions of future sales growth, gross margin, operating margin, terminal growth rate, and the application of an appropriate discount rate. Significant changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for each reporting unit. We corroborate the values determined from our discounted cash flow models by reconciling the sum of the estimated fair values of each reporting unit to our market capitalization at the testing date, including consideration of a control premium. We have not recorded any goodwill impairments since the initial adoption of the accounting guidance in 2002.
The identification and measurement of impairment of indefinite-lived intangible assets involves either an assessment of qualitative factors to determine whether events or circumstances indicate that it is more-likely-than-not that an indefinite-lived intangible asset is impaired or a quantitative assessment whereby the estimated fair value of each indefinite-lived intangible asset is compared to its carrying value. If it is more-likely-than-not that the asset is impaired, the estimated fair value of the indefinite-lived intangibles will be determined using discounted cash flow estimates. If the carrying value of these assets exceeds the estimated fair value, the carrying value will be reduced to the estimated fair value. For the Company’s annual impairment test as of April 1, 2025, the Company elected to utilize the quantitative impairment testing process as permitted in the accounting guidance. The estimated fair value was determined utilizing an income approach (relief from royalty method). Significant judgment is required to estimate the fair value of the indefinite-lived intangible assets including assumptions for future revenues, discount rates, royalty rates, and other assumptions, including assumptions about secular economic and market conditions. Significant changes in these estimates and assumptions could affect the determination of fair value and/or for each indefinite-lived intangible asset. As of April 1, 2025, the testing resulted in estimated fair values for each indefinite-lived intangible asset that significantly exceeded the carrying values and there were no indefinite-lived intangible assets at risk of the quantitative test. We did not record any related to indefinite-lived intangible assets in 2025, 2024, or 2023.
HUBBELL INCORPORATED - Form 10-K
Forward-Looking Statements
Some of the information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Form 10-K, contain “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. These statements generally relate to our expectations and beliefs regarding our financial results, condition and outlook, projections of future performance, anticipated growth and end markets, changes in operating results, market conditions and economic conditions, expected capital resources, liquidity, financial performance, pension funding and results of operations, plans, strategies, opportunities, developments and productivity initiatives, competitive positioning, and trends in particular markets or industries. In addition, all statements regarding the expected financial impact of the integration of acquisitions, adoption of updated accounting standards and any expected effects of such adoption, and intent to continue repurchasing shares of common stock, as well as other statements that are not strictly historic in nature, are forward-looking. Forward-looking statements may be identified by the use of words, such as “believe”, “expect”, “anticipate”, “intend”, “depend”, “should”, “plan”, “estimated”, “predict”, “could”, “may”, “subject to”, “continues”, “growing”, “prospective”, “forecast”, “projected”, “purport”, “might”, “if”, “contemplate”, “potential”, “pending,” “target”, “goals”, “scheduled”, “will”, “will likely be”, and similar words and phrases. Such forward-looking statements are based on our current expectations and involve numerous assumptions, known and unknown risks, uncertainties and other factors, which may cause actual and future performance or the Company’s to be materially different from any future results, performance, or expressed or implied by such forward-looking statements. Such factors include, but are not limited to:
• Impact of trade tariffs, import quotas or other trade actions, restrictions or measures taken by the United States, China, Mexico, the United Kingdom, member states of the European Union, and other countries, including the recent and ongoing potential changes in U.S. trade policies, that may be made by the current or a future presidential administration and changes in trade policies in other countries made in response to changes in the U.S. trade policies.
• The general impact of inflation on our business, including the impact on raw materials costs, elevated interest rates and increased energy costs and our ability to implement and maintain pricing actions that we have taken to cover higher costs and protect our margin profile.
• Economic and business conditions in particular industries, markets or geographic regions, as well the potential for macro-economic effects of the U.S. government federal deficit, and continued inflation, a significant economic slowdown, stagflation or recession.
• Effects of unfavorable foreign currency exchange rates and the potential use of hedging instruments to hedge the exposure to fluctuating rates of foreign currency exchange on inventory purchases.
• Supply chain disruptions and availability, costs and quantity of raw materials, purchased components, energy and freight.
• Changes in demand for our products, market conditions, product quality, or product availability adversely affecting sales levels.
• Ability to effectively develop and introduce new products.
• Changes in markets or competition adversely affecting realization of price increases.
• Continued softness in the grid automation market of Utility Solutions and residential market of Electrical Solutions.
• Failure to achieve projected levels of efficiencies, and maintain cost savings and cost reduction measures, including those expected as a result of our lean initiatives and strategic sourcing plans.
• Failure to comply with import and export laws.
• Changes relating to impairment of our goodwill and other intangible assets.
• Inability to access capital markets or failure to maintain our credit ratings.
• Changes in expected or future levels of operating cash flow, indebtedness and capital spending.
• Regulatory issues, and extensive worldwide changes to the taxation of multinational enterprises, including global minimum tax rules under the OECD’s Pillar Two initiative and potential modifications to corporate taxation by the U.S. government, including adjustments to tax rates, deduction limitations, cross-border tax provisions, and administrative guidance.
• A major disruption in one or more of our manufacturing or distribution facilities or headquarters, including the impact of plant consolidations and relocations.
• Changes in our relationships with, or the financial condition or performance of, key distributors and other customers, agents or business partners which could adversely affect our results of operations.
• Impact of productivity improvements on lead times, quality and delivery of product.
• Anticipated future contributions and assumptions including increases in interest rates and changes in plan assets with respect to pensions and other retirement benefits, as well as pension withdrawal liabilities.
• Adjustments to product warranty accruals in response to claims incurred, historical experiences and known costs.
• Unexpected costs or charges, certain of which might be outside of our control.
• Changes in strategy due to economic conditions or other conditions outside of our control affecting anticipated future global product sourcing levels.
• Ability to carry out future acquisitions and strategic investments in our core businesses as well as the acquisition related costs.
• Ability to successfully manage and integrate acquired businesses, such as the acquisitions of Systems Control, Ventev, Nicor and DMC Power, as well as the failure to realize expected synergies and benefits anticipated when we make an acquisition due to potential adverse reactions or changes to business or employee relationships resulting from completion of the transaction, competitive responses to the transaction, the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of an acquired business, diversion of management’s attention from ongoing business operations and opportunities, and litigation relating to the transaction.
HUBBELL INCORPORATED - Form 10-K
• The impact of certain divestitures, including the benefits and costs of the sale of the residential lighting business.
• The ability to effectively implement Enterprise Resource Planning systems without disrupting operational and financial processes.
• The ability of government customers to meet their financial obligations.
• Political unrest and military actions in foreign countries, including the conflicts in Ukraine and the Middle East and trade tensions with China, as well as the impact on world markets and energy supplies and prices resulting therefrom.
• The impact of potential natural disasters or additional public health emergencies on our financial condition and results of operations.
• Failure of information technology systems, cybersecurity breaches, cyber threats, malware, phishing attacks, break-ins and similar events resulting in unauthorized disclosure of confidential information or disruptions or damage to information technology systems that could cause interruptions to our operations or adversely affect our internal control over financial reporting.
• Incurring significant and/or unexpected costs to avoid manage, defend and litigate intellectual property matters.
• Future repurchases of common stock under our common stock repurchase program.
• Changes in accounting principles, interpretations, or estimates.
• Failure to comply with any laws and regulations, including those related to data privacy and information security, environmental and conflict-free minerals.
• The outcome of environmental, legal and tax contingencies or costs compared to amounts provided for such contingencies, including contingencies or costs with respect to pension withdrawal liabilities.
• Improper conduct by any of our employees, agents or business partners that damages our reputation or subjects us to civil or criminal liability.
• Our ability to hire, retain and develop qualified personnel.
• Adverse changes in foreign currency exchange rates and the potential use of hedging instruments to hedge the exposure to fluctuating rates of foreign currency exchange on inventory purchases.
• Other factors described in our Securities and Exchange Commission filings, including the “Business”, “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosures about Market Risk” sections in this Annual Report on Form 10-K for the year ended December 31, 2025.
Any such forward-looking statements are not guarantees of future performances and actual results, developments and business decisions may differ from those contemplated by such forward-looking statements. The Company disclaims any duty to update any forward-looking statement, all of which are expressly qualified by the foregoing, other than as required by law.
