HUBB Q2 Deep Dive: Price Discipline and Grid Infrastructure Offset Volume Weakness, Guidance Raised

Electrical and electronic products company Hubbell (NYSE:HUBB) missed Wall Street’s revenue expectations in Q2 CY2025 as sales rose 2.2% year on year to $1.48 billion. Its non-GAAP profit of $4.93 per share was 12.1% above analysts’ consensus estimates.

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StockStory’s Take

Hubbell’s second quarter results saw revenue growth fall short of Wall Street’s expectations, but the company delivered stronger-than-anticipated non-GAAP profitability. Management cited robust performance in Grid Infrastructure and Electrical Solutions, with momentum coming from transmission, substation, and data center markets. CEO Gerben Bakker noted, “Our results were driven by strong organic growth in Grid Infrastructure and Electrical Solutions as well as adjusted operating margin expansion.” Inventory normalization in the utility channel and favorable product mix contributed to margins, even as grid automation lagged.

Looking ahead, management’s raised profit outlook is anchored in expectations for continued strength in grid modernization and electrification, as well as price realization to offset cost inflation from tariffs and raw materials. CFO Bill Sperry emphasized plans to “cover commodity and tariff inflation with price” and described proactive cost management. The company’s updated guidance hinges on sustained demand in high-margin segments and the ability to execute price increases, while investments in new product development and operational efficiency are expected to balance cost pressures.

Key Insights from Management’s Remarks

Management pointed to several operational and market-specific factors that influenced performance, particularly the mix shift toward higher-margin products and continued pricing actions to mitigate input cost inflation.

• Grid Infrastructure Led Growth: The utility segment saw 7% organic growth in grid infrastructure, supported by ongoing investment from customers in transmission and substation projects. Management highlighted a strong order pipeline, with orders up high teens year-over-year in the first half.
• Data Center and Light Industrial Strength: In Electrical Solutions, data center demand and light industrial markets drove mid-single-digit organic growth. CEO Gerben Bakker described data centers as a "star of the show," and noted resilience in connectors and grounding products.
• Grid Automation Weakness: Grid automation, which includes products for monitoring and controlling the electrical grid, experienced a double-digit contraction due to the roll-off of large projects and backlog fulfillment. Management expects stabilization and a return to growth in this category by year-end, primarily from maintenance, repair, and operations (MRO) projects.
• Price Realization and Cost Management: The company continued to push through price increases to counteract rising costs from tariffs and commodities like copper and steel. Management stated they are “slightly ahead of tariffs on a price/cost basis” in the second quarter, with more price actions planned for the second half.
• Segment Unification and Efficiency: Ongoing efforts to unify sales and operations within Electrical Solutions contributed to operating leverage. These changes, including salesforce realignment and vertical market focus, are intended to drive cross-selling and remove structural inefficiencies, supporting multi-year margin expansion.

Drivers of Future Performance

Management’s outlook is shaped by continued grid modernization, strong demand in core markets, and persistent cost inflation from tariffs and raw materials.

• Grid Modernization and Electrification: The company expects secular trends—such as the need to upgrade power transmission and substation infrastructure—to drive sustained growth in its utility and data center offerings. Management believes these markets will underpin high single-digit revenue growth in the coming years.
• Pricing Actions and Tariff Management: Ongoing and incremental price increases are intended to offset anticipated headwinds from tariffs and commodity inflation. Management noted that, although price increases may not be margin-accretive, they are crucial for maintaining operating profit in a dynamic cost environment.
• Operational Efficiency and Investment: The company is investing in new product development, AI-driven productivity improvements, and restructuring projects to enhance long-term efficiency. Management indicated that near-term margin expansion could be muted by these investments, but they are prioritizing structural cost reductions alongside targeted growth initiatives.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be watching (1) the pace and durability of growth in grid infrastructure and transmission projects, (2) the company’s ability to push through further price increases to offset commodity and tariff costs, and (3) the stabilization and recovery of grid automation and related product lines. We will also track execution on operational efficiency initiatives and new product rollouts.

Hubbell currently trades at $432.14, down from $438.01 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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