Hubbell Inc. (NYSE:HUBB)

The analysis of the financial data over the five-year period from 2018 to 2022 reveals several notable trends in the intangible assets of the company.

Goodwill

Goodwill has generally shown an upward trajectory, increasing from approximately 1,784 million USD in 2018 to 1,970 million USD in 2022. There was a slight dip in 2021, but the overall trend indicates growth in goodwill values over the observed period.

Patents, Tradenames, and Trademarks

This category exhibited some fluctuation. The values slightly decreased from 204.4 million USD in 2018 to 202.7 million USD in 2019, followed by a peak in 2020 at 213.4 million USD. Subsequently, there was a decline in 2021 to 181.3 million USD, with a mild recovery in 2022 to 187.9 million USD. This suggests some volatility in the valuation or acquisition of these intangible assets.

Customer Relationships, Developed Technology, and Other

These intangible assets experienced growth from 833 million USD in 2018 to 958 million USD in 2020. However, they decreased to 901.2 million USD in 2021 before increasing again in 2022 to 955.3 million USD. This pattern indicates variability but overall stability toward the end of the period.

Definite-lived Intangibles, Gross Amount

The gross amount of definite-lived intangible assets increased steadily from 1,037.4 million USD in 2018 to 1,171.4 million USD in 2020. It then declined to 1,082.5 million USD in 2021 but rose again to 1,143.2 million USD in 2022, mirroring fluctuations seen in related asset categories.

Accumulated Amortization

There is a clear trend of increasing accumulated amortization, moving from -271.2 million USD in 2018 to -513.5 million USD in 2022. This represents the systematic expensing of the definite-lived intangible assets over time and reflects ongoing amortization charges.

Definite-lived Intangibles, Net

The net value of definite-lived intangibles declined from 766.2 million USD in 2018 to 629.7 million USD in 2022, suggesting that amortization and asset retirements outweighed acquisitions or revaluations during this period.

Tradenames and Other / Indefinite-lived Intangibles

The values reported for tradenames and other indefinite-lived intangibles remained relatively stable but showed a notable drop from around 53.3-53.6 million USD in 2018-2020 to approximately 40.2 million USD in 2022. This could indicate impairments or disposals.

Other Intangible Assets, Net

This category demonstrated a decline from 819.5 million USD in 2018 to 669.9 million USD in 2022, with a significant decrease occurring mainly between 2020 and 2021. This trend aligns with reductions observed in net definite-lived intangible assets.

Goodwill and Other Intangible Assets, Total

The aggregate of goodwill and other intangible assets peaked at 2,733.9 million USD in 2020, followed by a decline in 2021 to 2,552.8 million USD and a partial recovery to 2,640.4 million USD in 2022. This overall fluctuation reflects the combined changes in goodwill and other intangibles, confirming variability in the company's asset base across the period.

The data reveals notable differences between reported financial figures and those adjusted for goodwill over the five-year period ending in 2022.

Total Assets

Reported total assets exhibit a steady upward trend, increasing from approximately $4.87 billion in 2018 to about $5.40 billion in 2022. This represents a cumulative growth of roughly 10.8% over the five years.

Adjusted total assets, which exclude goodwill, also show an increase but at a more modest pace. The figures rose from about $3.09 billion in 2018 to $3.43 billion in 2022, marking an approximate 11% increase, similar in percentage terms but significantly lower in absolute assets compared to reported totals. The widening gap between reported and adjusted assets underscores a consistent proportion of goodwill in the asset base.

Shareholders’ Equity

Reported shareholders’ equity demonstrates a continuous increase from $1.78 billion in 2018 to $2.36 billion in 2022, equating to around a 32.5% growth over the period. This upward trend suggests improving equity value as reported under standard accounting measures.

Adjusted shareholders’ equity, however, displays a markedly different pattern with initially negative equity in 2018 (-$3.8 million), followed by a significant jump to $135.3 million in 2019. From 2019 onward, adjusted equity rises steadily, reaching $390.4 million in 2022. This progression indicates that when goodwill is excluded, the company’s net asset value starts low but strengthens markedly, reflecting potential underlying asset value improvements.

Insights and Implications

The stable increase in reported total assets and shareholders’ equity suggests healthy nominal growth and an expanding asset base. However, the sizable adjustments for goodwill reveal that a significant portion of reported assets and equity is attributable to intangible assets.

The negative adjusted equity in 2018 followed by progressively increasing adjusted equity indicates possible impairment or heavy goodwill allocation initially, with subsequent improvements in tangible asset quality or reductions in intangible adjustments.

The total asset growth on an adjusted basis aligns closely with reported asset growth in percentage terms but remains substantially lower in absolute terms, reflecting the consistent presence of goodwill on the balance sheet over time. This scenario underscores the importance of considering goodwill adjustments when evaluating the true underlying asset strength of the company.

The analysis of the financial ratios over the five-year period reveals several noteworthy trends. First, the reported total asset turnover ratio demonstrates a fluctuating pattern, beginning at 0.92 in 2018, peaking at 0.94 in 2019, then declining to a low of 0.79 in 2021 before recovering to 0.92 in 2022. The adjusted total asset turnover ratio follows a similar trend but maintains consistently higher values, starting at 1.45 in 2018 and ending at 1.44 in 2022, with a dip in 2021 to 1.23. This indicates that once goodwill adjustments are made, the efficiency of asset utilization is considerably higher, although affected by a downturn in 2020-2021.

Reported financial leverage has shown a steady decrease from 2.74 in 2018 to 2.29 in 2022, suggesting a gradual reduction in reliance on debt or liabilities to finance assets. Conversely, adjusted financial leverage, where data is available from 2019 onwards, exhibits extremely high values in 2019 and 2020 (22.85 and 21.55 respectively) before a sharp decline to 9.51 in 2021 and further to 8.79 in 2022. This adjustment likely reflects the significant impact of goodwill on the capital structure, highlighting a different leverage perspective when goodwill is excluded or accounted for separately.

Examining profitability, the reported return on equity (ROE) shows a relatively stable trajectory with a slight dip during 2020 and 2021 but rebounds strongly to 23.12% in 2022 from 17.92% in the prior year. In contrast, the adjusted ROE displays exceptionally high values for the years 2019 through 2022, peaking at 296.3% in 2019 and moderating to 139.83% in 2022. This stark difference underscores the considerable influence of goodwill adjustments on equity returns, which amplifies the perceived return on equity dramatically.

The reported return on assets (ROA) remains moderate and stable, rising from 7.39% in 2018 to 10.1% in 2022, with a minor downturn in 2020. Adjusted ROA is consistently higher across the timeframe, starting at 11.67% in 2018 and increasing to 15.91% in 2022, with a slight drop in 2020 as well. This suggests that asset profitability, when adjusted for goodwill, presents a more favorable view, signifying greater operational efficiency or asset performance independently of intangible asset effects.

Overall, the adjusted figures reflect notably enhanced asset efficiency, leverage, and profitability compared to the reported values, which suggests that goodwill significantly affects the financial metrics. Trends in reported data show a company managing to improve profitability and reduce leverage steadily, whereas the adjusted data point to greater volatility and more pronounced financial impacts once goodwill is removed or adjusted for. These insights suggest that while the company is improving its core financial performance, the presence and treatment of goodwill have substantial implications on financial ratios and should be carefully considered in financial analysis.

The data reveals distinct trends in both reported and goodwill-adjusted financial measures over the five-year period ending December 31, 2022.

Total Assets

Reported total assets showed a steady increase from US$4,872,100 thousand in 2018 to US$5,402,600 thousand in 2022, representing moderate asset growth year-over-year.

Adjusted total assets, which exclude goodwill, also increased but at a slower pace—from US$3,087,700 thousand in 2018 to US$3,432,100 thousand in 2022—highlighting that a significant portion of asset growth may be attributable to goodwill or intangible assets that are excluded from the adjustment.

Total Asset Turnover

Reported total asset turnover experienced some volatility. It increased slightly from 0.92 to 0.94 between 2018 and 2019, dropped significantly to 0.82 in 2020 and further declined to 0.79 in 2021, before recovering to 0.92 in 2022. This suggests that, on a reported basis, the company was less efficient in generating sales from its asset base during the 2020-2021 period, possibly influenced by external factors impacting operations.

Adjusted total asset turnover, excluding goodwill, maintained a higher ratio relative to the reported figures throughout the period, indicating more efficient use of tangible and other adjusted assets in generating revenue. This metric peaked at 1.49 in 2019, declined progressively to 1.23 in 2021, and then rebounded to 1.44 in 2022. The pattern closely mirrors the trend seen in the reported turnover but at consistently elevated levels, emphasizing the impact of goodwill on asset base inflation and turnover calculation.

Overall, the adjusted data suggest higher asset utilization efficiency when goodwill is excluded. Both reported and adjusted figures demonstrate a dip in asset turnover during 2020 and 2021, followed by a recovery in 2022, consistent with a resilience or adjustment to prevailing economic conditions. Despite steady asset growth, the fluctuations in turnover ratios indicate varying periods of operational effectiveness in leveraging the asset base to generate sales.

The data reveals several noteworthy trends in the company's financial position over the five-year period.

Total Assets

Reported total assets have shown a steady increase year-over-year, moving from approximately $4.87 billion in 2018 to about $5.40 billion in 2022. This demonstrates consistent asset growth. The adjusted total assets, which presumably exclude goodwill or other adjustments, also increased, albeit from a lower base—rising from around $3.09 billion in 2019 to approximately $3.43 billion in 2022. Notably, the adjusted asset base shows a smaller growth compared to the reported total assets, indicating that goodwill or similar intangible assets might constitute a significant portion of the asset base.

Shareholders’ Equity

The reported shareholders’ equity exhibited a steady upward trend, increasing from about $1.78 billion in 2018 to roughly $2.36 billion in 2022. This growth suggests a strengthening equity base. However, when adjusted for goodwill or other modifications, shareholders’ equity figures differ significantly. The adjusted equity turned positive starting 2019, growing markedly from $135.3 million in 2019 to $390.4 million in 2022, after an initial negative value in 2018. This pattern might indicate the impact of goodwill impairments or other accounting adjustments affecting equity.

Financial Leverage

The reported financial leverage ratio, which measures the extent of debt financing relative to equity, has consistently decreased from 2.74 in 2018 to 2.29 in 2022. This indicates a trend towards reduced reliance on debt or increased equity capitalization. The adjusted financial leverage gives a contrasting perspective, with very high ratios above 20 in 2019 and 2020 that sharply decline to single digits in 2021 and 2022—ending at about 8.79. The elevated adjusted leverage in earlier years might reflect diminished adjusted equity values, which improve significantly in later years. This suggests an improvement in the adjusted capital structure over time.

Overall, the company shows a positive trajectory in asset growth and equity enhancement on a reported basis. The adjusted figures, while initially reflecting weaker equity and higher leverage, demonstrate continuous improvement, indicating strengthening financial health after accounting for goodwill and other adjustments. The declining financial leverage ratios across both reported and adjusted measures suggest strategic efforts to optimize capital structure and reduce risk exposure over the analyzed time frame.

The financial data over the five-year period reveals several notable trends in shareholders’ equity and return on equity (ROE) for the company.

Shareholders’ Equity

The reported total shareholders’ equity shows a consistent upward trend from 1,780,600 thousand US dollars at the end of 2018 to 2,360,900 thousand US dollars by the end of 2022. This growth is steady and indicates a strengthening equity base over the period.

In contrast, the adjusted total shareholders’ equity, which likely accounts for goodwill adjustments, starts with a negative figure of -3,800 thousand US dollars in 2018 but rises significantly to 390,400 thousand US dollars in 2022. This suggests that adjustments related to goodwill had a substantial corrective effect, turning an initial deficit into a substantial positive equity adjustment by the end of the period.

Return on Equity (ROE)

The reported ROE remains relatively stable with a minor fluctuation, starting at 20.23% in 2018, peaking slightly in 2019 at 20.59%, then declining to 16.97% in 2020, followed by a moderate recovery to 17.92% in 2021 and a notable increase to 23.12% in 2022. This demonstrates an overall positive performance in terms of profitability on reported equity.

The adjusted ROE, however, displays extremely high values compared to the reported ROE, beginning with a missing value in 2018, then spiking at 296.3% in 2019 and gradually declining to still very elevated levels, 139.83% by 2022. These elevated adjusted ROE percentages reflect significant profitability relative to the adjusted equity base, which suggests that removing goodwill has shrunk the equity denominator and therefore magnified the ROE ratio.

Overall, the data indicate a robust equity growth and profitability trend on a reported basis. The adjusted figures reveal the impact of goodwill adjustments, showing an initial negative adjustment turning strongly positive, and an amplified ROE metric suggesting that adjusted equity is a much smaller base, thereby inflating returns measured on this adjusted equity basis. Such differences emphasize the importance of considering both reported and adjusted measures for a comprehensive understanding of financial performance and equity strength.

Total Assets

Reported total assets show a steady increase from 4,872,100 thousand USD in 2018 to 5,402,600 thousand USD in 2022, demonstrating a consistent growth trend over the five-year period. Adjusted total assets, which exclude goodwill, also increase but at a slower pace, rising from 3,087,700 thousand USD in 2018 to 3,432,100 thousand USD in 2022. The disparity between reported and adjusted assets indicates a significant portion of the assets are related to goodwill.

Return on Assets (ROA)

Reported ROA exhibits some fluctuation, starting at 7.39% in 2018, peaking at 8.18% in 2019, declining to 6.91% in 2020, then recovering to 7.56% in 2021 and showing a notable increase to 10.1% in 2022. This suggests improving profitability relative to total assets, particularly in the most recent period.

Adjusted ROA, which considers assets net of goodwill, consistently remains higher than the reported ROA throughout the entire period. It begins at 11.67% in 2018, rises to 12.97% in 2019, drops to 11.11% in 2020, slightly rebounds to 11.71% in 2021, and increases sharply to 15.91% in 2022. This trend indicates that the core asset base excluding goodwill yields higher returns and that profitability on this adjusted basis has also improved markedly in the latest year.

Overall Insights

The growth in reported and adjusted total assets suggests sustained expansion in the asset base, with a notable portion attributable to goodwill assets. The return on assets, both reported and adjusted, indicates strong operational improvements, especially in 2022. The adjusted ROA’s higher levels compared to reported ROA highlight the impact of goodwill on overall asset valuation and suggest the underlying business is generating robust returns on tangible assets. The 2022 increase in ROA metrics may reflect enhanced operational efficiency or profitability improvements not solely dependent on asset growth.