Hubbell Lifts Earnings Outlook as Margin Expansion and Cash Flow Outperformance Highlight Q3 Results
Adjusted EPS Surges 12% as Both Segments Deliver Margin Expansion
Hubbell Incorporated delivered a notable performance in the third quarter of 2025, driving adjusted earnings per share (EPS) to $5.17, up 12% from a year ago. Operating margin rose to 22.0% (GAAP) and 23.9% (adjusted), buoyed by robust pricing and productivity, even as cost inflation remained a headwind. These improvements allowed the company to raise its full-year 2025 adjusted EPS outlook to $18.10-$18.30, reflecting management’s confidence in sustained margin expansion and earnings growth through year-end.
| Key Q3 Metrics | Q3 2025 | Q3 2024 | Y/Y Change |
|---|---|---|---|
| Net Sales | $1,502.4M | $1,442.6M | +4% |
| Operating Margin (GAAP) | 22.0% | 21.7% | +0.3 pts |
| Adjusted Operating Margin | 23.9% | 23.8% | +0.1 pts |
| Adjusted Diluted EPS | $5.17 | $4.61 | +12% |
| Free Cash Flow | $253.8M | $188.8M | +34% |
Datacenter, Utility, and Industrial Markets Fuel Top Line; Grid Automation Still Dragging
The Utility Solutions segment grew net sales by 1% to $944 million, with a strong 9% organic gain in Grid Infrastructure offsetting a persistent 18% drop in Grid Automation revenue. CEO Gerben Bakker emphasized that utility hardening and grid investment continue to be major drivers, while grid automation remains pressured by softer metering and project delays. In contrast, the Electrical Solutions segment shined, posting a 10% net sales increase and an 8% organic gain, propelled by rising demand in datacenters and light industrial verticals. Strategic pricing, innovation, and ongoing efficiency gains supported segment margins in both divisions despite raw material and tariff headwinds.
| Segment | Net Sales | Organic Growth | Adjusted Margin |
|---|---|---|---|
| Utility Solutions | $943.8M | +1% | 25.7% |
| Electrical Solutions | $558.6M | +8% | 20.8% |
Free Cash Flow Surges; Balance Sheet Stays Solid
Hubbell’s third-quarter free cash flow reached $253.8 million—up 34% year-over-year and well ahead of capital allocation needs for dividends and buybacks. On a trailing nine-month basis, free cash flow stands at $485.9 million, reflecting improved working capital discipline. Notably, net debt to total capital declined to 21% from 23% at year-end, signaling strong balance sheet management even amid continued investment and share repurchases.
Tax Rate Tailwinds, EPS Outlook Raised—But Automation Remains a Watch Point
A lower effective tax rate (17.5% in Q3 vs. 21% last year, due to international restructuring) provided further EPS upside, contributing to the raised earnings guidance. For the full year, management expects total sales and organic growth in the 3–4% range and continued operating margin gains. However, softness in Grid Automation is still on management’s radar as a potential drag.
| Outlook | 2025E (Prior) | 2025E (Updated) |
|---|---|---|
| Adjusted Diluted EPS | — | $18.10–$18.30 |
| Sales Growth (Organic) | — | 3–4% |
| Adjusted Op. Margin Expansion | — | Continued improvement |
Key Takeaways: Momentum Builds—But Watch the Grid Automation Story
With expanding margins, resilient free cash flow, and rising earnings guidance, Hubbell enters the final quarter with considerable operational and financial momentum. Investors should continue monitoring Grid Automation’s recovery, but strength in utility and datacenter markets appears to provide a durable earnings base for the remainder of 2025. The combination of innovation, operational execution, and solid capital discipline stands out as the major drivers for the company’s outperformance this quarter—and could remain pivotal in the months ahead.
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