Hubbell Inc. (NYSE:HUBB)

Raw Material

The value of raw materials remained relatively stable between 2018 and 2020, fluctuating only slightly around the 217,000 to 220,000 thousand US$ range. However, starting in 2021, there was a notable increase, rising from 241,000 thousand US$ to 302,800 thousand US$ by the end of 2022, reflecting a significant upward trend in raw material inventory levels.

Work-in-Process

Work-in-process inventories experienced a mild decline from 110,300 thousand US$ in 2018 to 101,800 thousand US$ in 2019, followed by recovery and steady growth to 161,700 thousand US$ in 2022. The trend indicates gradual buildup in work-in-process over the most recent years, with a marked increase particularly between 2021 and 2022.

Finished Goods

Finished goods inventory remained quite steady around 400,000 thousand US$ during the initial years, with a brief decline to 366,800 thousand US$ in 2020. Afterwards, there was a consistent increase, peaking at 463,200 thousand US$ in 2022. This suggests an accumulation of finished goods possibly in response to anticipated demand or reduced sales velocity.

Inventories at FIFO

The total inventories measured at FIFO prices showed a downward trend from 732,800 thousand US$ in 2018 to 694,600 thousand US$ in 2020. Starting in 2021, there was a pronounced increase, reaching 927,700 thousand US$ by 2022. This demonstrates an overall growth in inventory holdings when evaluated at FIFO values in the latter years.

Excess of FIFO over LIFO Cost Basis

The excess of FIFO over LIFO cost basis became increasingly negative from -81,800 thousand US$ in 2018 to -187,000 thousand US$ in 2022. The expanding deficit indicates a growing difference between the two inventory valuation methods, likely driven by rising costs under LIFO or changes in cost flow assumptions over time.

Inventories, Net

Net inventories showed a downward trend from 651,000 thousand US$ in 2018 to a low of 607,300 thousand US$ in 2020, followed by a recovery and steady rise reaching 740,700 thousand US$ in 2022. This pattern aligns with the increases seen in raw materials, work-in-process, and finished goods, suggesting overall inventory replenishment and buildup in recent periods.

The analysis of the financial data from 2018 through 2022 reveals several clear trends and adjustments when transitioning from reported to inventory LIFO reserve adjusted figures. These adjustments provide a perspective that accounts for inventory valuation effects and offer a more comprehensive reflection of the company's financial position and performance.

Inventories, Net

Reported inventory values demonstrate a moderate decline from 651 million USD in 2018 to 607.3 million USD in 2020, followed by a recovery to 740.7 million USD in 2022. When adjusted, inventories show consistently higher values, increasing steadily from 732.8 million USD in 2018 to 927.7 million USD in 2022. This upward adjustment trend indicates an increasing reserve related to LIFO accounting and suggests a growing inventory base or inflationary impacts on inventory costs.

Current Assets

Reported current assets show a slight fluctuation, decreasing from 1.6437 billion USD in 2018 to 1.5742 billion USD in 2019, then gradually rising to 2.0214 billion USD by 2022. The adjusted figures follow a similar trajectory but are consistently higher, ranging from 1.7255 billion USD to 2.2084 billion USD over the same period. The growth in adjusted current assets, in particular, highlights that the company's liquidity position, when accounting for inventory adjustments, has improved more significantly than apparent from reported data alone.

Total Assets

The reported total assets increased steadily from 4.8721 billion USD in 2018 to 5.4026 billion USD in 2022. Adjusted total assets consistently exceed reported totals, growing from 4.9539 billion USD to 5.5896 billion USD in the same period. This pattern underscores that inventory LIFO reserve adjustments contribute to a higher asset base, reflecting a substantial component of asset valuation tied to inventory.

Shareholders’ Equity

Reported shareholders’ equity rose from 1.7806 billion USD in 2018 to 2.3609 billion USD in 2022, indicating solid growth in the equity base. Adjusted equity figures are higher, increasing from 1.8624 billion USD to 2.5479 billion USD, which could be attributed to the capitalization of inventory reserves or other valuation adjustments. The consistent margin between reported and adjusted equity suggests the inventory accounting method impacts equity valuation materially.

Net Income Attributable to Hubbell Incorporated

Reported net income exhibits fluctuations with growth from 360.2 million USD in 2018 to a peak of 545.9 million USD in 2022, although a notable decline occurred in 2020. The adjusted net income displays a similar pattern but with generally higher values, especially during later periods (456.3 million USD in 2021 and 596 million USD in 2022), implying that inventory adjustments positively affect income recognition, particularly in recent years.

Overall, the data indicate that LIFO reserve adjustments have a significant impact on inventory valuation, asset size, equity, and reported profitability. The upward adjustments reveal growing inventory costs or increased inflationary pressure on inventory valuation that affects all related financial statement categories. The trends suggest improved liquidity and financial strength when adjustments are incorporated, providing a more favorable view of the company's financial health. Profitability trends, despite fluctuations, end in a marked improvement by 2022 under both reported and adjusted measures.

Current Ratio

The reported current ratio exhibits a general decline from 1.96 in 2018 to 1.67 in 2020, followed by a gradual recovery to 1.86 in 2022. When adjusted for inventory LIFO reserve, the current ratio follows a similar pattern but consistently registers slightly higher values, starting at 2.06 in 2018 and rising to 2.03 by 2022. This suggests improved short-term liquidity under the adjusted measure, reflecting more conservative inventory accounting assumptions having a positive impact on perceived liquidity.

Net Profit Margin

Both reported and adjusted net profit margins show an overall increasing trend throughout the period. The reported margin rises from 8.04% in 2018 to 11.03% in 2022, while the adjusted margin similarly climbs from 8.49% to 12.05% by 2022. The adjusted net profit margin stays consistently above the reported margin, indicating that the LIFO reserve adjustment enhances profitability metrics. The upward trend signals improving operational efficiency or favorable market conditions contributing to higher profitability.

Total Asset Turnover

The asset turnover ratios, both reported and adjusted, indicate a decline from 2018 to 2021 before showing signs of recovery in 2022. Reported turnover decreases from 0.92 in 2018 to a low of 0.79 in 2021, then rebounds to 0.92 in 2022. Adjusted turnover exhibits a parallel trend but at slightly lower values, ranging from 0.9 in 2018 to 0.77 in 2021 and increasing to 0.89 in 2022. This pattern suggests that the company’s efficiency in utilizing assets to generate revenue weakened mid-period but improved again by the end of the timeframe.

Financial Leverage

Financial leverage shows a steady reduction over the five-year span. Reported leverage falls from 2.74 in 2018 to 2.29 in 2022, while adjusted leverage decreases from 2.66 to 2.19 within the same period. This downward trend indicates a gradual reduction in the company’s reliance on debt financing, suggesting a stronger equity base or debt repayment over time. The adjustment consistently presents slightly lower leverage ratios, implying the LIFO reserve affects the equity or asset base considered in the calculation.

Return on Equity (ROE)

ROE trends reveal some volatility but ultimately show an increase. Reported ROE starts at 20.23% in 2018, declines notably to 16.97% in 2020, and then recovers sharply to 23.12% in 2022. The adjusted ROE follows a similar trajectory, starting at 20.43%, dipping to 16.16% in 2020, and rising to 23.39% in 2022. This pattern mirrors the influences seen in profit margin and asset turnover, with adjustments for LIFO reserve lightly elevating the ROE figures, indicating more favorable returns on equity when accounting for inventory valuation differences.

Return on Assets (ROA)

The ROA metrics parallel the ROE trends, starting with moderate values, experiencing a mid-cycle dip, and rising significantly by the end of 2022. Reported ROA progresses from 7.39% in 2018 to 10.1% in 2022, while adjusted ROA moves from 7.68% to 10.66% over the same period. The higher adjusted ROA consistently suggests that asset profitability is better represented after LIFO reserve adjustments, reinforcing the pattern of operational improvements or asset utilization gains.

Current Assets Trends

The reported current assets demonstrated a modest fluctuation over the analyzed five-year period. Beginning at $1,643,700 thousand in 2018, the figure declined slightly in 2019 to $1,574,200 thousand, before recovering somewhat in 2020 to $1,587,600 thousand. A more notable increase occurred in 2021 and 2022, reaching $1,879,300 thousand and $2,021,400 thousand, respectively. When considering inventory LIFO reserve adjustments, the adjusted current assets follow a similar pattern but consistently exceed the reported figures. The adjusted assets increased from $1,725,500 thousand in 2018 to $2,208,400 thousand in 2022, indicating the LIFO reserve adjustment contributes a significant upward impact on current asset measurement.

Current Ratio Trends

The reported current ratio declined from 1.96 in 2018 to a low of 1.67 in 2020, reflecting a compression of current assets relative to current liabilities during this interval. However, a rebound is noticeable in subsequent years, with ratios increasing to 1.76 in 2021 and further to 1.86 in 2022, signaling improved liquidity conditions in the later periods. The adjusted current ratio presents a higher liquidity profile across all years compared to the reported ratio, starting at 2.06 in 2018 and decreasing to 1.77 in 2020. This ratio also demonstrated recovery with increases to 1.89 in 2021 and 2.03 in 2022, consistent with the reported ratio trend but reflecting the broader asset base after LIFO reserve adjustment.

Overall Observations

The data reveals cyclical trends in both asset values and liquidity ratios over the timeframe, with a noted dip around 2019-2020 followed by a recovery through 2022. The inventory LIFO reserve adjustments consistently increase both current asset values and the current ratio, suggesting that inventory accounting methods materially affect perceived liquidity and asset strength. The improvement in adjusted liquidity ratios towards the end of the period may imply enhanced working capital management or favorable shifts in inventory valuation affecting the balance sheet positively.

Net Income Trends

The reported net income attributable to Hubbell Incorporated showed a generally increasing trend over the five-year period. Starting at 360,200 thousand USD in 2018, it increased to 400,900 thousand USD in 2019, then slightly decreased to 351,200 thousand USD in 2020. Subsequently, it rose to 399,500 thousand USD in 2021 and increased significantly to 545,900 thousand USD in 2022.

The adjusted net income, which likely accounts for inventory LIFO reserve adjustments and other factors, follows a similar pattern. It increased from 380,400 thousand USD in 2018 to 408,900 thousand USD in 2019, then fell to 348,700 thousand USD in 2020. Afterward, it rose notably to 456,300 thousand USD in 2021, and further increased to 596,000 thousand USD in 2022. The adjustment tends to slightly elevate the net income figures compared to reported values.

Net Profit Margin Analysis

The reported net profit margin improved steadily over the period. It started at 8.04% in 2018, increased to 8.73% in 2019, dipped in 2020 to 8.39%, then rose to 9.53% in 2021, and further improved substantially to 11.03% in 2022. This indicates enhanced profitability relative to revenue, especially in the last two years.

The adjusted net profit margin, reflecting adjustments similar to those in net income, followed a comparable trajectory. It began at 8.49% in 2018, increased slightly to 8.91% in 2019, declined marginally to 8.33% in 2020, then rose sharply to 10.88% in 2021, and reached 12.05% in 2022. The adjusted margins exceed the reported values consistently, suggesting that the adjustments yield a more favorable profitability assessment.

Insights on 2020 Dip and Recovery

The year 2020 shows a noticeable dip in both net income and profit margins in both reported and adjusted figures. This decline may correspond to external factors affecting operational efficiency or market conditions during that time. However, the recovery in 2021 and strong performance in 2022 indicate improved operational results and enhanced profitability, demonstrating resilience and effective management during challenging times.

Impact of Inventory LIFO Reserve Adjustments

The adjusted figures, accounting for inventory LIFO reserve changes, consistently show higher net income and profit margins compared to reported results. This suggests that the LIFO adjustments positively affect profitability metrics, potentially reflecting more accurate cost matching or valuation approaches. The adjustments amplify the profitability trends, reinforcing an improved financial performance perspective.

Total Assets

The reported total assets display a consistent upward trend over the five-year period, increasing from approximately 4.87 billion USD in 2018 to 5.40 billion USD in 2022. Similarly, the adjusted total assets, which account for the inventory LIFO reserve, also show a steady increase, ranging from about 4.95 billion USD in 2018 to nearly 5.59 billion USD in 2022. The adjustment for the inventory reserve consistently raises the asset base across all years, with the difference between reported and adjusted total assets widening slightly over time.

Total Asset Turnover

The reported total asset turnover ratio begins at 0.92 in 2018 and slightly increases to 0.94 in 2019. However, it experiences a notable decline in 2020 and 2021, dropping to 0.82 and 0.79 respectively, before recovering back to 0.92 in 2022. This indicates that asset efficiency in generating revenue weakened during the 2020 and 2021 periods and improved again by 2022.

The adjusted total asset turnover ratio follows a similar pattern. It starts at 0.90 in 2018, slightly increases to 0.92 in 2019, then decreases to 0.81 in 2020 and further to 0.77 in 2021, before recovering to 0.89 in 2022. The ratio consistently remains slightly below the reported turnover figures, reflecting the impact of the inventory LIFO reserve adjustment on total assets and turnover efficiency.

Overall Trends and Insights

Over the five years, total assets, both reported and adjusted, have expanded steadily, indicating asset growth. The increase in adjusted assets suggests that the inventory LIFO reserve adjustment adds a rising proportion to the asset base. Meanwhile, the total asset turnover ratios reveal a dip in asset utilization efficiency in the middle years (2020 and 2021), potentially due to operational challenges or market conditions during that period, followed by a recovery in 2022. The consistent gap between reported and adjusted turnover ratios illustrates the effect of inventory valuation methods on performance metrics.

The analysis of the financial data over the period from 2018 to 2022 reveals several notable trends in asset base, equity, and financial leverage when considering both reported and inventory LIFO reserve adjusted figures.

Total Assets

The reported total assets showed a steady increase each year, rising from approximately $4.87 billion in 2018 to about $5.40 billion in 2022. The adjusted total assets, which factor in the inventory LIFO reserve, display a higher base in each corresponding year, starting at approximately $4.95 billion in 2018 and growing to nearly $5.59 billion in 2022. This adjustment consistently adds about $80 million to $185 million to the total assets, reflecting the impact of inventory valuation on the asset base. The growth trend in assets is consistent and gradual, indicating ongoing asset accumulation over the five-year period.

Shareholders’ Equity

Reported shareholders’ equity also demonstrates a positive upward trajectory, increasing from around $1.78 billion in 2018 to roughly $2.36 billion in 2022. When adjusted for the inventory LIFO reserve, the equity values are higher throughout the years, starting at approximately $1.86 billion and reaching about $2.55 billion by 2022. The equity adjustment ranges from an addition of about $80 million to $190 million, mirroring the upward adjustment trend in total assets. The consistent increase in equity suggests strengthened capital position and retained earnings over the period.

Financial Leverage

Financial leverage ratios, which measure the degree of company’s financial risk by comparing total assets to shareholders’ equity, show a declining trend from 2018 to 2022 in both reported and adjusted figures. The reported financial leverage decreases from 2.74 to 2.29, while the adjusted financial leverage decreases from 2.66 to 2.19. This downward trend suggests a gradual reduction in reliance on debt relative to equity, pointing to a potential improvement in financial stability and reduced exposure to financial risk over time. The adjusted leverage is consistently lower than the reported leverage, reflecting the equity and asset base increments due to inventory valuation adjustments.

Overall, the data reflects steady growth in both assets and equity alongside a controlled decrease in financial leverage, suggesting a company that is expanding its balance sheet while simultaneously improving its risk profile. The inventory LIFO reserve adjustments consistently increase the stated values of assets and equity, which modestly influence the financial leverage calculations by indicating a stronger equity base than the reported figures alone.

Net Income Trends

Reported net income attributable to Hubbell Incorporated showed fluctuations over the five-year period. It increased from $360.2 million in 2018 to $400.9 million in 2019, followed by a decline to $351.2 million in 2020. The figure then rose again to $399.5 million in 2021 and further increased significantly to $545.9 million in 2022. The adjusted net income, which accounts for inventory LIFO reserve adjustments, generally followed a similar pattern but was slightly higher each year, reflecting adjustments that positively impacted reported profitability. Notably, adjusted net income peaked at $596.0 million in 2022, indicating an improvement beyond the reported figures.

Shareholders’ Equity Trends

Reported shareholders’ equity exhibited a consistent upward trend, beginning at $1.78 billion in 2018 and rising steadily each year to reach $2.36 billion by 2022. The adjusted shareholders’ equity values, which incorporate inventory reserve adjustments, were higher than the reported figures across all years, starting at $1.86 billion in 2018 and increasing to $2.55 billion in 2022. This steady increase in equity suggests growth in the company's net assets, possibly from retained earnings and other comprehensive income items.

Return on Equity (ROE) Patterns

Reported ROE experienced variability during the period, initially rising from 20.23% in 2018 to 20.59% in 2019, before declining to 16.97% in 2020. It partially recovered to 17.92% in 2021 and then improved notably to 23.12% in 2022. The adjusted ROE showed a similar trajectory but generally presented slightly different percentages, reflecting the adjustments made to net income and equity. Notable is the sharp rise in adjusted ROE to 23.39% in 2022, underscoring a strong return performance when accounting for the LIFO reserve effect.

Overall Observations

The data reveals an overall positive financial performance trend in recent years, particularly accelerating in 2022. Both net income and shareholders’ equity grew steadily, with adjustments for the inventory LIFO reserve consistently enhancing the financial measures. The improvement in ROE toward the end of the period indicates more efficient utilization of equity to generate earnings. The dip observed in 2020 may reflect external challenges impacting profitability, but subsequent recovery and growth suggest resilience and enhanced operational efficiency.

The financial data reveals several key trends over the five-year period ending in 2022. The net income attributable to the company, both reported and adjusted for inventory LIFO reserve, shows a generally positive trajectory with some variability. Reported net income increased from approximately $360 million in 2018 to around $546 million in 2022, with a notable dip in 2020. Adjusted net income follows a similar pattern but indicates a higher base and greater overall growth, reaching nearly $596 million in 2022, suggesting adjustments significantly impact profitability measures.

Total assets, reported and adjusted, consistently increased each year, reflecting growth in the company's asset base. Reported total assets rose from about $4.9 billion in 2018 to $5.4 billion in 2022. The adjusted total assets are consistently higher than reported values each year, starting at approximately $4.95 billion and ending near $5.59 billion, indicating that inventory LIFO adjustments result in a higher asset valuation.

Return on assets (ROA) shows an improvement trend, with both reported and adjusted figures increasing over time. Reported ROA moved from 7.39% in 2018 to 10.1% in 2022, while adjusted ROA increased from 7.68% to 10.66% over the same period. The adjusted ROA is consistently higher than the reported figure, suggesting that removing the LIFO reserve effects provides a more favorable view of asset efficiency and profitability.

Net Income Trends

Both reported and adjusted net income exhibit growth with a dip in 2020, likely reflecting external challenges during that year. Adjusted net income surpasses reported values, highlighting the impact of inventory accounting adjustments.

Total Assets Trends

The asset base expanded steadily each year, with adjusted total assets consistently exceeding reported amounts, suggesting that LIFO reserve adjustments materially affect asset valuation.

Return on Assets Trends

ROA improved over the period, indicating enhanced asset profitability and operational efficiency. Adjusted ROA figures are higher than reported, underscoring the beneficial impact of inventory adjustments on profitability metrics.

Overall, the data indicates a company experiencing growth in profitability and asset size, with inventory accounting adjustments playing a significant role in financial reporting and performance ratios. The adjustment for the LIFO reserve generally leads to higher asset values and improved profitability indicators.