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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 1-2958

hubb-20220630_g1.jpg  
HUBBELL INCORPORATED
(Exact name of registrant as specified in its charter)
 
Connecticut06-0397030
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
40 Waterview Drive
Shelton,CT06484
(Address of principal executive offices)(Zip Code)
(475) 882-4000
(Registrant’s telephone number, including area code)
 
N/A
(Former name, former address and former fiscal year, if changed since last report.)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock - par value $0.01 per shareHUBBNew York Stock Exchange
Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YesNo
whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YesNo
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Accelerated filer 
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act.
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YesNo
 The number of shares outstanding of Hubbell common stock as of July 22, 2022 was 53,677,757.
HUBBELL INCORPORATED-Form 10-Q    1

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Index

HUBBELL INCORPORATED-Form 10-Q    2

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PART I
FINANCIAL INFORMATION

ITEM 1Financial Statements

Condensed Consolidated Statements of Income (unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
(in millions, except per share amounts)2022202120222021
Net sales$1,256.0 $1,054.3 $2,412.1 $2,010.6 
Cost of goods sold872.8 756.0 1,705.8 1,450.1 
Gross profit383.2 298.3 706.3 560.5 
Selling & administrative expenses192.6 156.1 372.8 308.4 
Operating income190.6 142.2 333.5 252.1 
Interest expense, net(12.7)(12.6)(25.8)(27.8)
Loss on disposition of business  (6.8) (6.8)
Loss on extinguishment of debt (16.8) (16.8)
Pension charge (Note 12) (4.4) (4.4) 
Other income, net2.5 0.5 6.1 1.7 
Total other expense(14.6)(35.7)(24.1)(49.7)
Income from continuing operations before income taxes176.0 106.5 309.4 202.4 
Provision for income taxes38.9 16.9 68.5 38.1 
Net income from continuing operations137.1 89.6 240.9 164.3 
Less: Net income from continuing operations attributable to noncontrolling interest(1.5)(0.8)(2.8)(2.2)
Net income from continuing operations attributable to Hubbell Incorporated135.6 88.8 238.1 162.1 
(Loss) income from discontinued operations, net of tax (Note 2)(13.6)7.0 64.1 11.4 
Net Income attributable to Hubbell Incorporated$122.0 $95.8 $302.2 $173.5 
Earnings per share:  
Basic earnings per share from continuing operations$2.52 $1.63 $4.41 $2.97 
Basic earnings per share from discontinued operations(0.25)0.13 1.19 0.22 
Basic earnings per share$2.27 $1.76 $5.60 $3.19 
Diluted earnings per share from continuing operations$2.51 $1.62 $4.39 $2.95 
Diluted earnings per share from discontinued operations(0.25)0.12 1.18 0.21 
Diluted earnings per share$2.26 $1.74 $5.57 $3.16 
Cash dividends per common share$1.05 $0.98 $2.10 $1.96 
See notes to unaudited Condensed Consolidated Financial Statements.
HUBBELL INCORPORATED-Form 10-Q    3

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Condensed Consolidated Statements of Comprehensive Income (unaudited)
 
 Three Months Ended June 30,
(in millions)20222021
Net income$123.5 $96.6 
Other comprehensive (loss) income:  
Currency translation adjustments:
Foreign currency translation adjustments(29.7)9.3 
Reclassification of currency translation losses included in net income  
Defined benefit pension and post-retirement plans, net of taxes of $(1.3) and $(0.7)
3.4 2.1 
Unrealized losses on investments, net of taxes of $0.0 and $0.0
  
Unrealized (losses) gains on cash flow hedges, net of taxes of $(0.2) and $(0.1)
0.5 0.2 
Other comprehensive (loss) income (25.8)11.6 
Comprehensive income97.7 108.2 
Less: Comprehensive income attributable to noncontrolling interest1.5 0.8 
Comprehensive income attributable to Hubbell Incorporated$96.2 $107.4 
See notes to unaudited Condensed Consolidated Financial Statements.






 Six Months Ended June 30,
(in millions)20222021
Net income$305.0 $175.7 
Other comprehensive (loss) income:  
Currency translation adjustment:
Foreign currency translation adjustments(25.1)2.7 
Reclassification of currency translation losses included in net income0.5  
Defined benefit pension and post-retirement plans, net of taxes of $(1.8) and $(1.4)
5.5 4.1 
Unrealized losses on investments, net of taxes of $0.4 and $0.0
(1.2)(0.1)
Unrealized (losses) gains on cash flow hedges, net of taxes of $0.0 and $(0.1)
(0.1)0.3 
Other comprehensive (loss) income (20.4)7.0 
Comprehensive income284.6 182.7 
Less: Comprehensive income attributable to noncontrolling interest2.8 2.2 
Comprehensive income attributable to Hubbell Incorporated$281.8 $180.5 
See notes to unaudited Condensed Consolidated Financial Statements.


HUBBELL INCORPORATED-Form 10-Q    4

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Condensed Consolidated Balance Sheets (unaudited)
 
(in millions)
June 30, 2022December 31, 2021
ASSETS  
Current Assets  
Cash and cash equivalents
$424.2 $286.2 
Short-term investments
13.9 9.4 
Accounts receivable (net of allowances of $13.9 and $10.6)
780.5 675.3 
Inventories, net
719.5 662.1 
   Other current assets96.1 66.8 
Assets held for sale - current 179.5 
Total Current Assets2,034.2 1,879.3 
Property, Plant, and Equipment, net464.8 459.5 
Other Assets  
Investments71.9 69.1 
Goodwill1,859.4 1,871.3 
Other intangible assets, net644.1 681.5 
Other long-term assets163.8 143.7 
Assets held for sale - non-current 177.1 
TOTAL ASSETS$5,238.2 $5,281.5 
LIABILITIES AND EQUITY  
Current Liabilities  
Short-term debt $5.8 $9.7 
Accounts payable
550.7 532.8 
Accrued salaries, wages and employee benefits
91.7 94.7 
Accrued insurance
73.0 73.3 
Other accrued liabilities
281.7 263.4 
Liabilities held for sale - current 91.3 
Total Current Liabilities1,002.9 1,065.2 
Long-Term Debt1,436.7 1,435.5 
Other Non-Current Liabilities530.7 521.3 
Liabilities held for sale - non-current 18.8 
TOTAL LIABILITIES2,970.3 3,040.8 
Hubbell Incorporated Shareholders’ Equity2,256.9 2,229.8 
Noncontrolling interest11.0 10.9 
TOTAL EQUITY2,267.9 2,240.7 
TOTAL LIABILITIES AND EQUITY$5,238.2 $5,281.5 
See notes to unaudited Condensed Consolidated Financial Statements.



















HUBBELL INCORPORATED-Form 10-Q    5

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Condensed Consolidated Statements of Cash Flows (unaudited)
 Six Months Ended June 30,
(in millions)20222021
Cash Flows from Operating Activities of Continuing Operations  
Net income from continuing operations$240.9 $164.3 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
69.4 76.9 
    Deferred income taxes(38.4)6.0 
    Stock-based compensation16.7 12.8 
    Provision for bad debt expense4.4 (0.3)
    Loss on disposition of business 6.8 
    Loss on extinguishment of debt  16.8 
    Pension charge 4.4  
    Loss (gain) on sale of assets1.2 (4.0)
Changes in assets and liabilities, excluding effects of acquisitions: 
    Increase in accounts receivable, net(107.4)(110.9)
    Increase in inventories, net(61.0)(32.6)
    Increase in accounts payable22.0 78.5 
    Increase (decrease) in current liabilities25.3 (18.3)
    Changes in other assets and liabilities, net(1.9)(4.9)
Contribution to qualified defined benefit pension plans(2.5)(0.1)
Other, net1.1 (1.2)
Net cash provided by operating activities from Continuing Operations174.2 189.8 
Cash Flows from Investing Activities of Continuing Operations  
Capital expenditures(41.9)(36.9)
Acquisitions, net of cash acquired 0.1 
Proceeds from disposal of business, net of cash348.6 8.5 
Purchases of available-for-sale investments(23.8)(6.2)
Proceeds from available-for-sale investments9.8 3.3 
Other, net1.1 6.6 
Net cash provided (used in) investing activities from Continuing Operations293.8 (24.6)
Cash Flows from Financing Activities of Continuing Operations 
Issuance of long-term debt 298.7 
Payment of long-term debt (300.0)
Payment of short-term debt, net(3.8)(15.6)
Payment of dividends(113.3)(106.5)
Debt issuance costs (4.5)
Acquisition of common shares(150.0)(11.2)
Other, net(11.1)(39.2)
Net cash used in financing activities from Continuing Operations(278.2)(178.3)
Discontinued Operations:
    Cash (used in) provided by operating activities(44.7)19.5 
    Cash used in investing activities(1.7)(2.2)
Cash (used in) provided by discontinued operations(46.4)17.3 
Effect of exchange rate changes on cash and cash equivalents(6.0)1.7 
Increase in cash and cash equivalents137.4 5.9 
Cash and cash equivalents, beginning of year286.2 259.6 
Cash and cash equivalents within assets held for sale, beginning of year0.7 1.0 
Restricted cash, included in other assets, beginning of year2.7  
Less: Restricted cash, included in Other Assets2.8  
Less: Cash and cash equivalents within assets held for sale, end of period 1.1 
Cash and cash equivalents, end of period$424.2 $265.4 
See notes to unaudited Condensed Consolidated Financial Statements.

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Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 1 Basis of Presentation
 
The accompanying unaudited Condensed Consolidated Financial Statements of Hubbell Incorporated (“Hubbell”, the “Company”, “registrant”, “we”, “our” or “us”, which references include its divisions and subsidiaries) have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by United States of America (“U.S.”) GAAP for audited financial statements. In the opinion of management, all adjustments consisting only of normal recurring adjustments considered necessary for a fair statement of the results of the periods presented have been included. Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2022.

The balance sheet at December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Hubbell Incorporated Annual Report on Form 10-K for the year ended December 31, 2021.

Discontinued Operations

On February 1, 2022, the Company completed the sale of the Commercial and Industrial Lighting business (the "C&I Lighting business") to GE Current, a Daintree Company, for total cash consideration of $350 million, subject to customary adjustments with respect to working capital. The disposal of the Commercial and Industrial Lighting business met the criteria set forth in ASC 205-20 to be presented as a discontinued operation. The Commercial and Industrial Lighting businesses' results of operations and the related cash flows have been reclassified to income from discontinued operations in the Condensed Consolidated Statements of Income and cash flows from discontinued operations in the Condensed Consolidated Statement of Cash Flows, respectively, for all periods presented. For additional information regarding this transaction and its effect on our financial reporting, see Note 2 Discontinued Operations, in the accompanying Condensed Consolidated Financial Statements, which note is incorporated herein by reference.

Impact of the COVID-19 Pandemic

During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (COVID-19). The pandemic has had, and may continue to have, a significant effect on global economic conditions. U.S. Federal, state, local, and foreign governments have reacted to the public health crisis with mitigation measures, creating significant uncertainties in the U.S. and global economies. The extent to which the coronavirus pandemic will continue to affect our business, operations, supply chains, and our financial results will depend on numerous evolving factors that we may not be able to accurately predict and which may cause the actual results to differ from the estimates and assumptions we are required to make in the preparation of financial statements according to GAAP.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are effective for all entities beginning on March 12, 2020 through December 31, 2022. The Company may elect to apply the amendments prospectively through December 31, 2022. The Company has not adopted this ASU as of June 30, 2022. The Company is currently assessing the impact of adopting this standard on its financial statements and the timing of adoption.

In October 2021, the FASB issued ASU No. 2021-08, "Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." ASU 2021-08 requires an acquirer to recognize and measure contract assets and contract liabilities, including deferred revenue, acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606) as if the acquirer had originated the contracts at the date of the business combination. The provisions of ASU 2021-08 are effective for interim periods and fiscal years beginning after December 15, 2022, with early adoption permitted. If early adopted, the provisions of ASU 2021-08 apply retrospectively to all business combinations that occurred on or after the first day of the fiscal year in which the standard is adopted. The Company is currently assessing the impact of adopting this standard on its financial statements and the timing of adoption.
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In November 2021, the FASB issued ASU No. 2021-10, "Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance." This update requires annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This standard is effective for financial statements issued for annual periods beginning after December 15, 2021 and should be applied either prospectively or retrospectively. Early adoption is permitted. The Company is currently assessing the impact of adopting this standard on its financial statements and the timing of adoption.


NOTE 2 Discontinued Operations
 
On February 1, 2022, the Company completed the sale of the Commercial and Industrial Lighting business to GE Current, a Daintree Company, for total cash consideration of $350 million, subject to customary adjustments with respect to working capital. The sale of this business represents a strategic shift that will have a major effect on our operations and financial results, and as a result, is reported as a discontinued operation in our Condensed Consolidated Financial Statements for all periods presented. The assets and liabilities of this business are also presented as held for sale in the Condensed Consolidated Balance Sheets, in the periods prior to the sale. The Commercial and Industrial Lighting business was previously included in the Electrical Solutions segment.

Under the terms of the transaction, Hubbell and the buyer entered into a transition services agreement ("TSA"), pursuant to which the Company agreed to provide certain administrative and operational services for a period of 12 months or less. Furthermore, we entered into a short-term supply agreement whereby the Company will act as a supplier of finished goods and component parts to the Commercial and Industrial Lighting business after the completion of the sale. Income from the TSA and supply agreement was $4.8 million and $7.6 million, respectively, for the three and six months ended June 30, 2022 and was recorded in Other Income in the Condensed Consolidated Financial Statements.

The following table presents the summarized components of income from discontinued operations, net of income taxes, for the Commercial and Industrial Lighting business:
 Three Months Ended June 30,Six Months Ended June 30,
(in millions)2022202120222021
Net sales$ $137.5 $29.1 $259.6 
Cost of goods sold 105.9 27.7 201.9 
Gross profit 31.6 1.4 57.7 
Selling & administrative expenses4.5 21.9 15.2 41.7 
Operating (loss) income(4.5)9.7 (13.8)16.0 
(Loss) Gain on disposal of business(7.7) 80.7  
Other expense(1.4)(0.8)(1.1)(1.4)
(Loss) income from discontinued operations before income taxes(13.6)8.9 65.8 14.6 
Provision for income taxes 1.9 1.7 3.2 
(Loss) income from discontinued operations, net of taxes$(13.6)$7.0 $64.1 $11.4 

(Loss) income from discontinued operations, net of taxes for the three and six months ended June 30, 2022 includes transaction and separation costs of $4.5 million and $6.7 million, respectively, and the six months ended June 30, 2022 includes a pre-tax gain on the disposal of $80.7 million.

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The following table presents the major classes of assets and liabilities classified as held for sale in the Condensed Consolidated Balance Sheet for the year ended December 31, 2021:

(in millions)December 31, 2021
Cash and cash equivalents$0.7 
Accounts receivable83.1 
Inventories, net89.8 
Other current assets5.9 
Assets held for sale - current$179.5 
Property, Plant, and Equipment, net77.7 
Goodwill50.2 
Other intangible assets, net37.3 
Other long-term assets11.9 
Assets held for sale - non-current$177.1 
Accounts payable50.2 
Accrued salaries, wages and employee benefits8.5 
Accrued insurance3.9 
Other accrued liabilities28.7 
Liabilities held for sale - current$91.3 
Other Non-Current Liabilities18.8 
Liabilities held for sale - non-current$18.8 




NOTE 3 Revenue
 
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, primarily in the Utility Solutions segment, recognized upon delivery of the product at the destination. Revenue from service contracts and post-shipment performance obligations are approximately two 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.

Within the Electrical Solutions segment, 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 Condensed Consolidated Balance Sheets. Once control transfers to the customer and the Company meets the revenue recognition criteria, the deferred revenue is recognized in the Condensed Consolidated Statements of Income. The deferred revenue relating to the annual maintenance service contracts is recognized in the Condensed Consolidated Statements of Income on a straight-line basis over the expected term of the contract.

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The following table presents disaggregated revenue by business group. On January 1, 2022, we internally reorganized certain businesses within our Electrical Solutions segment to simplify the organization structure and align the organization to better serve our customers. This change had no impact to our reportable segments. In conjunction with this change, prior period amounts have been reclassified to conform to the organizational changes within the Electrical Solutions segment.
Three Months Ended June 30,Six Months Ended June 30,
in millions2022202120222021
Net sales
   Electrical Products$234.8 $196.6 $462.5 $378.2 
   Connection and Bonding156.4 135.4 300.3 251.5 
   Industrial Controls76.7 64.7 149.7 123.2 
   Retail and Builder59.6 68.8 119.3 136.7 
Total Electrical Solutions$527.5 $465.5 $1,031.8 $889.6 
   Utility T&D Components556.5 421.2 1,048.0 796.1 
   Utility Communications and Controls172.0 167.6 332.3 324.9 
Total Utility Solutions$728.5 $588.8 $1,380.3 $1,121.0 
TOTAL$1,256.0 $1,054.3 $2,412.1 $2,010.6 

The following table presents disaggregated revenue by geographic location (on a geographic basis, the Company defines "international" as operations based outside of the United States and its possessions):
Three Months Ended June 30,Six Months Ended June 30,
in millions2022202120222021
Net sales
   United States$461.4 $396.5 $901.8 $763.3 
   International66.1 69.0 130.0 126.3 
Total Electrical Solutions$527.5 $465.5 $1,031.8 $889.6 
   United States689.9 560.3 1,308.4 1,061.7 
   International38.6 28.5 71.9 59.3 
Total Utility Solutions$728.5 $588.8 $1,380.3 $1,121.0 
TOTAL$1,256.0 $1,054.3 $2,412.1 $2,010.6 

Contract Balances

Our contract liabilities consist of advance payments for products as well as deferred revenue on service obligations and extended warranties. The current portion of deferred revenue is included in Other accrued liabilities and the non-current portion of deferred revenue is included in Other non-current liabilities in the Condensed Consolidated Balance Sheets.

Contract liabilities were $21.9 million as of June 30, 2022 compared to $16.7 million as of December 31, 2021. The $5.2 million increase in our contract liabilities balance was primarily due to a $15.0 million net increase in current year deferrals primarily due to timing of advance payments on certain orders partially offset by the recognition of $9.8 million in revenue related to amounts that were recorded in contract liabilities at January 1, 2022. The Company has an immaterial amount of contract assets relating to performance obligations satisfied prior to payment that is recorded in Other long-term assets in the Condensed Consolidated Balance Sheets. Impairment losses recognized on our receivables and contract assets were immaterial for the three and six months ended June 30, 2022.

Unsatisfied Performance Obligations

As of June 30, 2022, the Company had approximately $390 million of unsatisfied performance obligations for contracts with an original expected length of greater than one year, primarily relating to long-term contracts of the Utility Solutions segment to deliver and install meters, metering communications and grid monitoring sensor technology. The Company expects that a majority of the unsatisfied performance obligations will be completed and recognized over the next two years.


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NOTE 4 Segment Information

The Company's reporting segments consist of the Electrical Solutions segment and the Utility Solutions segment. The Electrical Solutions segment comprises businesses that sell stock and custom products including standard and special application wiring device products, rough-in electrical products, connector and grounding products, lighting fixtures, components and other electrical equipment. The products are typically used in and around industrial, commercial and institutional facilities by electrical contractors, maintenance personnel, electricians, utilities, and telecommunications companies. In addition, certain of our businesses design and manufacture industrial controls and communication systems used in the non-residential and industrial markets. Many of these products are designed such that they can also be used in harsh and hazardous locations where a potential for fire and explosion exists due to the presence of flammable gasses and vapors. Harsh and hazardous products are primarily used in the oil and gas (onshore and offshore) and mining industries. There are also a variety of wiring devices, lighting fixtures and electrical products that have residential and utility applications, including residential products with Internet-of-Things ("IoT") enabled technologies. These products are primarily sold through electrical and industrial distributors, home centers, retail and hardware outlets, lighting showrooms and residential product oriented internet sites. Special application products are primarily sold through wholesale distributors to contractors, industrial customers and OEMs.

The Utility Solutions segment consists of businesses that design, manufacture, and sell a wide variety of electrical distribution, transmission, substation, and telecommunications products. This includes utility transmission & distribution (T&D) components such as arresters, insulators, connectors, anchors, bushings, and enclosures. The Utility Solutions segment also offers solutions that serve the utility infrastructure, including smart meters, communications systems, and protection and control devices. Hubbell Utility Solutions supports the electrical distribution, electrical transmission, water, gas distribution, telecommunications, and solar and wind markets. Products are sold to distributors and directly to users such as utilities, telecommunication companies, industrial firms, construction and engineering firms.

The following table sets forth financial information by business segment (in millions):
 Net SalesOperating IncomeOperating Income as a % of Net Sales
 202220212022202120222021
Three Months Ended June 30,      
Electrical Solutions$527.5 $465.5 $79.2 $69.3 15.0 %14.9 %
Utility Solutions728.5 588.8 111.4 72.9 15.3 %12.4 %
TOTAL$1,256.0 $1,054.3 $190.6 $142.2 15.2 %13.5 %
Six Months Ended June 30,
Electrical Solutions$1,031.8 $889.6 $134.0 $118.5 13.0 %13.3 %
Utility Solutions1,380.3 1,121.0 199.5 133.6 14.5 %11.9 %
TOTAL$2,412.1 $2,010.6 $333.5 $252.1 13.8 %12.5 %


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NOTE 5 Inventories, net
 
Inventories, net consists of the following (in millions):
 June 30, 2022December 31, 2021
Raw material$277.0 $241.0 
Work-in-process149.3 129.4 
Finished goods429.6 428.6 
Subtotal855.9 799.0 
Excess of FIFO over LIFO cost basis(136.4)(136.9)
TOTAL$719.5 $662.1 
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NOTE 6 Goodwill and Other Intangible Assets, net

Changes in the carrying values of goodwill for the six months ended June 30, 2022, by segment, were as follows (in millions):
 Segment 
 Electrical SolutionsUtility SolutionsTotal
BALANCE DECEMBER 31, 2021$612.5 $1,258.8 $1,871.3 
Foreign currency translation (4.8)(7.1)(11.9)
BALANCE JUNE 30, 2022$607.7 $1,251.7 $1,859.4 

The carrying value of other intangible assets included in Other intangible assets, net in the Condensed Consolidated Balance Sheets is as follows (in millions):
 June 30, 2022December 31, 2021
 Gross AmountAccumulated
Amortization
Gross AmountAccumulated
Amortization
Definite-lived:    
Patents, tradenames and trademarks$180.0 $(71.4)$181.3 $(67.6)
Customer relationships, developed technology and other897.4 (402.4)901.2 (374.0)
TOTAL DEFINITE-LIVED INTANGIBLES$1,077.4 $(473.8)$1,082.5 $(441.6)
Indefinite-lived:  
Tradenames and other40.5 — 40.6 — 
TOTAL OTHER INTANGIBLE ASSETS$1,117.9 $(473.8)$1,123.1 $(441.6)
 
Amortization expense associated with definite-lived intangible assets was $17.4 million and $19.1 million during the three months ended June 30, 2022 and 2021, respectively, and $34.9 million and $39.0 million during the six months ended June 30, 2022 and 2021, respectively. Future amortization expense associated with these intangible assets is estimated to be $34.8 million for the remainder of 2022, $65.3 million in 2023, $61.3 million in 2024, $57.2 million in 2025, $53.7 million in 2026, and $48.6 million in 2027. The Company amortizes intangible assets with definite lives using either an accelerated method that reflects the pattern in which economic benefits of the intangible assets are consumed and results in higher amortization in the earlier years of the asset's useful life, or using a straight line method. Approximately 80% of the gross value of definite-lived intangible assets follow an accelerated amortization method.

The Company completed its annual goodwill impairment test as of April 1, 2022. The Company applied the "Step-zero" test to one of its four reporting units, which allows the Company to first assess qualitative factors to determine whether it is more likely than not that a reporting unit's fair value is greater than its carrying amount. Based on the qualitative assessment, the Company concluded that it was more likely than not that the fair value of this reporting unit substantially exceeded its carrying value and, therefore, further quantitative analysis was not required. For the other three 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. If the estimated fair value exceeds its carrying value, no impairment exists.

Goodwill impairment testing requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units and determining the fair value of each reporting unit. Significant judgment is required to estimate the fair value of reporting units including estimating future cash flows, determining appropriate discount rates and other assumptions, including assumptions about secular economic and market conditions, such as the potential continuing effects of the COVID-19 pandemic, impacts to the supply chain and higher inflation. 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 affect the determination of fair value and/or goodwill impairment for each reporting unit. The Company believes that its estimated aggregate fair value of its reporting units is reasonable when compared to the Company's market capitalization on the valuation date.

As of April 1, 2022, 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 at risk of failing the quantitative impairment test as the excess of the implied fair value significantly exceeded the carrying value of each of the reporting units. Additionally, the Company did not have any reporting units with zero or negative carrying amounts.



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The Company performs its impairment assessment of indefinite-lived intangible assets as of April 1st of each year, unless circumstances dictate the need for more frequent assessments. For the 2022 test, the Company elected to utilize the quantitative impairment testing process as permitted in the accounting guidance, by comparing the estimated fair value of the indefinite-lived intangible assets to their carrying values. If the estimated fair value of the indefinite-lived intangible assets exceeds their carrying value, no impairment exists. 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, such as the potential continuing effects of the COVID-19 pandemic. Significant changes in these estimates and assumptions could affect the determination of fair value and/or impairment for each indefinite-lived intangible asset. As of April 1, 2022, the impairment 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 failing the quantitative impairment test.
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NOTE 7 Other Accrued Liabilities

Other accrued liabilities consists of the following (in millions):
 June 30, 2022December 31, 2021
Customer program incentives$53.6 $67.3 
Accrued income taxes11.0 4.8 
Contract liabilities - deferred revenue21.9 16.7 
Customer refund liability 15.3 16.7 
Accrued warranties(1)
36.0 36.7 
Current operating lease liabilities29.4 27.1 
Other114.5 94.1 
TOTAL$281.7 $263.4 
(1) Refer to Note 22 - Guarantees, in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information regarding warranties.



NOTE 8 Other Non-Current Liabilities

Other non-current liabilities consists of the following (in millions):
 June 30, 2022December 31, 2021
Pensions$187.5 $189.8 
Other post-retirement benefits17.0 17.0 
Deferred tax liabilities102.2 114.7 
Accrued warranties long-term(1)
30.1 29.4 
Non-current operating lease liabilities82.6 58.3 
Other111.3 112.1 
TOTAL$530.7 $521.3 
(1) Refer to Note 22 - Guarantees, in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information regarding warranties.
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NOTE 9 Total Equity

A summary of changes in total equity for the three and six months ended June 30, 2022 and the three and six months ended June 30, 2021 is provided below (in millions, except per share amounts):
Common StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total Hubbell
Shareholders'
Equity
Non-
controlling
interest
BALANCE AT DECEMBER 31, 2021$0.6 $ $2,560.0 $(330.8)$2,229.8 $10.9 
Net income— — 180.2 — 180.2 1.3 
Other comprehensive (loss) income— — — 5.4 5.4 — 
Stock-based compensation— 11.1 — — 11.1 — 
Acquisition/surrender of common shares(1)
— (11.2)(145.2)— (156.4)— 
Cash dividends declared ($1.05 per share)
— — (56.9)— (56.9)— 
Dividends to noncontrolling interest— — — — — (1.1)
Directors deferred compensation— 0.1 — — 0.1 — 
BALANCE AT MARCH 31, 2022$0.6 $ $2,538.1 $(325.4)$2,213.3 $11.1 
Net income— — 122.0 — 122.0 1.5 
Other comprehensive (loss) income— — — (25.8)(25.8)— 
Stock-based compensation— 5.6 — — 5.6 — 
Acquisition/surrender of common shares(1)
— (1.9)— — (1.9)— 
Cash dividends declared ($1.05 per share)
— — (56.5)— (56.5)— 
Dividends to noncontrolling interest— — — — — (1.6)
Directors deferred compensation— 0.2 — — 0.2 — 
BALANCE AT JUNE 30, 2022$0.6 $3.9