HUBBELL INC

Previous wording

Hubbell is a global manufacturer of quality electrical products and utility solutions for a broad range of customer and end market applications. We provide utility and electrical solutions that enable our customers to operate critical infrastructure reliably and efficiently, and we empower and energize communities through innovative solutions supporting energy infrastructure In Front of the Meter, on The Edge, and Behind the Meter. In Front of the Meter is where utilities transmit and distribute energy to their customers. The Edge connects utilities with owner/operators and allows energy and data to be distributed back and forth. Behind the Meter is where owners and operators of buildings and other critical infrastructure consume energy. Products are either sourced complete, manufactured or assembled by subsidiaries in the United States, Canada, Puerto Rico, Mexico, China, the UK, Brazil, Australia, Spain, Ireland and the Republic of the Philippines. The Company also participates in joint ventures in Hong Kong and the Republic of the Philippines, and maintains offices in Singapore, Italy, China, India, Mexico, South Korea, Chile, and countries in the Middle East. The Company employed approximately 18,300 individuals worldwide as of June 30, 2024.

Current wording

Hubbell is a global manufacturer of quality electrical products and utility solutions for a broad range of customer and end market applications. We provide utility and electrical solutions that enable our customers to operate critical infrastructure reliably and efficiently, and we empower and energize communities through innovative solutions supporting energy infrastructure In Front of the Meter, on The Edge, and Behind the Meter. In Front of the Meter is where utilities transmit and distribute energy to their customers. The Edge connects utilities with owner/operators and allows energy and data to be distributed back and forth. Behind the Meter is where owners and operators of buildings and other critical infrastructure consume energy. Products are either sourced complete, manufactured or assembled by subsidiaries in the United States, Canada, Puerto Rico, Mexico, China, the UK, Brazil, Australia, Spain, Ireland and the Republic of the Philippines. The Company also participates in joint ventures in Hong Kong and the Republic of the Philippines, and maintains offices in Singapore, Italy, China, India, Mexico, South Korea, Chile, and countries in the Middle East. The Company employed approximately 18,000 individuals worldwide as of September 30, 2024.

Previous wording

Results for the six months ended June 30, 2024 by segment are included under “Segment Results” within this Management’s Discussion and Analysis.

Current wording

Results for the nine months ended September 30, 2024 by segment are included under “Segment Results” within this Management’s Discussion and Analysis.

Previous wording

Our strategy to deliver products through a competitive cost structure has resulted in past and ongoing restructuring and related activities. Our restructuring and related efforts include the consolidation of manufacturing and distribution facilities, and workforce actions, as well as streamlining and consolidating our back-office functions. The primary objectives of our restructuring and related activities are to optimize our manufacturing footprint, cost structure, and effectiveness and efficiency of our workforce.

Current wording

Our strategy to deliver products through a competitive cost structure has resulted in past and ongoing restructuring and related activities. Our restructuring and related efforts include the consolidation of manufacturing and distribution facilities, and workforce actions, as well as streamlining and consolidating our back-office functions. The primary objectives of our restructuring and related activities are to optimize our manufacturing footprint, cost structure, and the effectiveness and efficiency of our workforce.

Previous wording

Our sales are also subject to market conditions that may cause customer demand for our products to be volatile and unpredictable, particularly in our Electrical Solutions segment. Product demand can be affected by fluctuations in domestic and international economic conditions, as well as currency fluctuations, commodity costs, and a variety of other factors. Since early 2021, we have experienced significant inflationary pressure across much of our business. As a result, we have taken various pricing actions to cover the higher costs and protect our profitability. Although there has been some mitigation in the rate of inflation starting in 2023, we expect inflation to remain a factor for the foreseeable future and we expect to continue to take these pricing actions subject to demand and market conditions. Accordingly, there can be no assurance that we will be able to maintain our margins in response to further changes in inflationary pressures. In addition, macroeconomic effects such as increases in interest rates and other measures taken by central banks and other policy makers could have a negative effect on overall economic activity which could reduce our customers’ demand for our products, and cause the continuation of relatively high market interest rates that increase our borrowing costs.

Current wording

Our sales are also subject to market conditions that may cause customer demand for our products to be volatile and unpredictable. Product demand can be affected by fluctuations in domestic and international economic conditions, as well as currency fluctuations, commodity costs, and a variety of other factors. Since early 2021, we have experienced significant inflationary pressure across much of our business. As a result, we have taken various pricing actions to cover the higher costs and protect our profitability. Although the inflation has moderated considerably since its high point in 2022, we expect inflation to remain a factor for the foreseeable future and we expect to continue to take these pricing actions subject to demand and market conditions. Accordingly, there can be no assurance that we will be able to maintain our margins in response to further changes in inflationary pressures. In addition, macroeconomic effects such as increases in interest rates and other measures taken by central banks and other policy makers could have a negative effect on overall economic activity which could reduce our customers’ demand for our products, and cause the continuation of relatively high market interest rates that increase our borrowing costs. Additionally, international tensions, such as the conflicts in the Middle East and Ukraine, as well as trade and other tensions, including those with China may affect demand for our products, as well as our production costs.

Previous wording

The following is a discussion and analysis of our business, financial condition and results of operations as of and for the three and six months ended June 30, 2024 and 2023. This discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements and notes thereto in Item 1 of this Quarterly Report on Form 10-Q (the "Condensed Financial Statements"), and the audited consolidated financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Current wording

The following is a discussion and analysis of our business, financial condition and results of operations as of and for the three and nine months ended September 30, 2024 and 2023. This discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements and notes thereto in Item 1 of this Quarterly Report on Form 10-Q (the“Condensed Financial Statements”), and the audited consolidated financial statements, accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Previous wording

Organic growth in the Electrical Solutions segment was strong, led by datacenter and renewables verticals as electrification drives strong project activity. Organic growth was down 1.5% in the Utility Solutions segment as strength in transmission, substation and grid automation markets was offset by continued customer inventory management in distribution markets and weak telcom markets in the quarter. Price realization remains positive in both segments as compared to the second quarter of 2023.

Current wording

Organic net sales growth in the Electrical Solutions segment was strong, led by datacenter and renewables verticals. Organic net sales contracted 4% in the Utility Solutions segment as strength in transmission, substation and grid protection and controls markets was more than offset by weak telcom markets and utility distribution markets continued to reflect the impact of customer inventory normalization in the quarter.

Previous wording

Acquisitions within Utility Solutions contributed to 8% net sales growth driven by our acquisition of Systems Control in the fourth quarter of 2023, while the divestiture of our residential lighting business from the Electrical Solutions segment was completed in the first quarter of 2024 and contributed to a 3.5% decline in net sales as compared to the second quarter of 2023.

Current wording

Acquisitions within Utility Solutions contributed to 9% consolidated net sales growth, driven by our acquisition of Systems Control in the fourth quarter of 2023, while the divestiture of the residential lighting business from the Electrical Solutions segment was completed in the first quarter of 2024 and contributed to a 3% decline in consolidated net sales as compared to the third quarter of 2023.

Previous wording

Operating margin in the second quarter of 2024 was 20.7% and contracted by 40 basis points. Adjusted operating margin, which excludes amortization of acquisition-related intangibles and transaction, integration and separation costs, was 22.8% and expanded by 40 basis points. Margin expansion in the quarter was primarily driven by favorable price realization and benefits from operational productivity, as well as the impact of recent portfolio transformation efforts. Those factors were partially offset by higher material and other cost inflation, and investments. These factors are further described within Segment Results below.

Current wording

Operating margin in the third quarter of 2024 was 21.1% and expanded by 100 basis points. Adjusted operating margin, which excludes amortization of acquisition-related intangibles and transaction, integration and separation costs, was 23.2% and expanded by 180 basis points. Margin expansion in the quarter was primarily driven by favorable price realization and benefits from operational productivity, as well as the impact of recent portfolio transformation efforts, and higher prior year investments in the business. Those factors were partially offset by continued material and other cost inflation. These factors are further described within Segment Results below.

Previous wording

In the following discussion of results of operations, we refer to "adjusted" operating measures. We believe those adjusted measures, which exclude the impact of certain costs, gains and losses, may provide investors with useful information regarding our underlying performance from period to period and allow investors to understand our results of operations without regard to items that, in management's judgement, significantly affect the comparability of operating results, or we do not consider a components of our core operating performance.

Current wording

In the following discussion of results of operations, we refer to “adjusted” operating measures. We believe those adjusted measures, which exclude the impact of certain costs, gains and losses, may provide investors with useful information regarding our underlying performance from period to period and allow investors to understand our results of operations without regard to items that, in management's judgement, significantly affect the comparability of operating results, or that are not considered to be components of our core operating performance.

Previous wording

The acquisition and divestiture actions taken by the Company in the fourth quarter of 2023 resulted in a significant increase in integration and separation costs. As a result, we believe excluding costs relating to these fourth quarter transactions provides useful and more comparable information to investors to better assess our operating performance.

Current wording

The acquisition and divestiture actions taken by the Company in the fourth quarter of 2023 resulted in a significant increase in integration and separation costs. As a result, we believe excluding costs relating to these fourth quarter transactions provides useful and more comparable information for investors to better assess our operating performance.

Previous wording

Net sales of $1,452.5 million in the second quarter of 2024 increased by $86.6 million compared to the second quarter of 2023. Organic net sales increased by 1.9% driven by a low single digit percentage increase in price realization. The impact of volume on net sales was flat quarter over quarter. Acquisitions net of divestitures contributed 4.5% to net sales growth. These changes are discussed in more detail in the Segment Results section below.

Current wording

Net sales of $1,442.6 million in the third quarter of 2024 increased by $66.8 million compared to the third quarter of 2023. Organic net sales decreased by 1.0% driven by a low single digit percentage decrease in volumes, partially offset by a low single digit increase in price realization. Acquisitions net of divestitures contributed 6.1% to net sales growth. These changes are discussed in more detail in the Segment Results section below.

Previous wording

As a percentage of Net sales, cost of goods sold increased by 130 basis points to 65.0% in the second quarter of 2024, resulting in gross profit margin contracting to 35.0%. Approximately four percentage points of gross profit margin contraction was driven by higher intangible amortization expense, material and other cost inflation, which was partially offset by approximately three percentage points of margin expansion driven by favorable price realization and improved operational productivity.

Current wording

As a percentage of Net sales, cost of goods sold increased by 90 basis points to 65.5% in the third quarter of 2024, resulting in gross profit margin contracting to 34.5%. Approximately four percentage points of gross profit margin contraction was driven by higher intangible amortization expense, material and other cost inflation and lower volume, which was partially offset by approximately three percentage points of margin expansion driven by favorable price realization and improved operational productivity.

Previous wording

S&A expense in the second quarter of 2024 was $207.5 million and decreased by $0.9 million or 0.4% compared to the prior year period. This decrease was driven by lower professional services and employee incentive expense, partially offset by the impact of 2023 acquisitions net of divestitures, including an increase in intangible amortization expense. S&A expense as a percentage of Net sales was 14.3% in the second quarter of 2024, compared to 15.2% in the second quarter of 2023.

Current wording

S&A expense in the third quarter of 2024 was $193.3 million and decreased by $17.8 million or 8.4% compared to the prior year period. This decrease was driven by higher investments in the business in prior year, including professional services, as well as lower employee incentive expense in the current year, partially offset by the impact of the 2023 acquisitions net of divestitures. S&A expense as a percentage of Net sales was 13.4% in the third quarter of 2024, compared to 15.3% in the third quarter of 2023.

Previous wording

Total other expense increased by $7.0 million in the second quarter of 2024 to $21.0 million, primarily due to higher net interest expense of $10.6 million in the second quarter of 2024 compared to the same period in 2023, partially offset by $2.5 million of TSA income related to the disposal of the residential lighting business. The increase in interest expense was primarily attributable to debt incurred in connection with the acquisition of Systems Control and higher market interest rates.

Current wording

Total other expense increased by $13.0 million in the third quarter of 2024 to $24.3 million, primarily due to higher net interest expense of $10.9 million, and a $2.7 million negative impact of foreign exchange in the third quarter of 2024 compared to the same period in 2023. The increase in interest expense was primarily attributable to debt incurred in connection with theacquisition of Systems Control and higher market interest rates.

Previous wording

The effective tax rate in the second quarter of 2024 decreased to 23.2% as compared to 24.0% in the second quarter of 2023, primarilydue to earnings mix offset by lower tax benefit from stock-based compensation in the second quarter of 2024 compared to the second quarter of 2023.

Current wording

The effective tax rate in the third quarter of 2024 decreased to 20.9% as compared to 23.8% in the third quarter of 2023, primarilydue to the tax benefits of an international restructuring completed during the third quarter of 2024.

Previous wording

Net income attributable to Hubbell Incorporated was $213.6 million in the second quarter of 2024 and increased 3.3% as compared to the same period of the prior year, reflecting the factors described above. As a result, earnings per diluted share in the second quarter of 2024 increased 3% as compared to the second quarter of 2023. Adjusted net income attributable to Hubbell Incorporated, which excludes amortization of acquisition-related intangibles from both periods and transaction, integration & separation costs in the second quarter of 2024, was $236.5 million in the second quarter of 2024 and increased by 7% as compared to the second quarter of 2023.

Current wording

Net income attributable to Hubbell Incorporated was $219.4 million in the third quarter of 2024 and increased 9.6% as compared to the same period of the prior year, reflecting the factors described above. As a result, earnings per diluted share in the third quarter of 2024 increased 9% as compared to the third quarter of 2023. Adjusted net income attributable to Hubbell Incorporated, which excludes amortization of acquisition-related intangibles from both periods and transaction, integration & separation costs in the third quarter of 2024, was $242.9 million in the third quarter of 2024 and increased by 13.6% as compared to the third quarter of 2023.

Previous wording

Net sales in the Utility Solutions segment in the second quarter of 2024 were $926.5 million, and increased by $95.7 million, or 11.5%, as compared to the second quarter of 2023. That increase was driven by a 13.1% increase in net sales from acquisitions, partially offset by a 1.5% decrease in organic net sales. The decrease in organic net sales was driven by a low single digit percentage decrease in unit volume, partially offset by a low single digit percentage increase in price realization. The decrease in unit volume was largely driven by volume declines in enclosures products primarily driven by weakness in the telcom markets, as well as continued customer inventory management in distribution markets. These factors were partially offset by robust growth in transmission and substation markets, as well as backlog conversion in meters and AMI products. Favorable price realization was driven by actions to offset inflation, as well as by service levels.

Current wording

Net sales in the Utility Solutions segment in the third quarter of 2024 were $933.1 million, and increased by $95.2 million, or 11.3%, as compared to the third quarter of 2023. That increase was driven by a 15.3% increase in net sales from acquisitions, partially offset by a 3.8% decrease in organic net sales. The decrease in organic net sales was driven by a mid single digit percentage decrease in unit volume, partially offset by a low single digit increase in price realization. The decrease in unit volume resulted largely from volume declines in enclosures products led by a decline in the telcom markets as well as utility distribution markets continued to reflect the impact of customer inventory normalization. This was partially offset by robust growth in transmission and substation markets.

Previous wording

Operating income in the Utility Solutions segment for the second quarter of 2024 was $196.1 million, a decrease of 1.7% compared to the second quarter of 2023. Operating margin decreased by 280 basis points to 21.2% in the second quarter of 2024, as compared to the same period of 2023. Excluding amortization of acquisition-related intangibles and transaction, integration and separation costs, the adjusted operating margin decreased by 160 basis points to 24.0%, as compared to the 2023 period. The decrease in operating margin includes approximately three percentage points of margin expansion primarily due to favorable price realization and improved operational productivity, but that expansion was more than offset by approximately five percentage points of margin contraction primarily due to material and other cost inflation, lower unit volume and higher restructuring and related costs. The acquisition of Systems Control also contributed to second quarter operating margin contraction. The impact of lower unit volume includes an impact of approximately 150 basis points from enclosures products, driven primarily by weakness in the telcom market.

Current wording

Operating income in the Utility Solutions segment for the third quarter of 2024 was $210.5 million, an increase of 12.7% compared to the third quarter of 2023. Operating margin increased by 30 basis points to 22.6% in the third quarter of 2024, as compared to the same period of 2023. Excluding amortization of acquisition-related intangibles and transaction, integration and separation costs, the adjusted operating margin increased by 130 basis points to 25.3%, as compared to the 2023 period. The increase in operating margin includes approximately four percentage points of margin expansion primarily due to favorable price realization, improved operational productivity, and higher prior year investments in the business, partially offset by approximately three percentage points of margin contraction primarily due to material and other cost inflation and lower unit volume. The impact of lower unit volume includes approximately 100 basis points of contraction from enclosures products, driven primarily by weakness in the telcom market.

Previous wording

Net sales in the Electrical Solutions segment in the second quarter of 2024 were $526.0 million and decreased by $9.1 million, or 1.7%, as compared to the second quarter of 2023. That decrease includes 7.2% growth in organic net sales, which was more than offset by an 8.8% decline in net sales resulting from the disposition of our residential lighting business during the first quarter of 2024. The increase in organic net sales was driven by a mid-single digit percentage increase in unit volume and a low single digit percentage increase in price realization. Volume growth in the quarter was driven primarily by strength in datacenter and renewables markets, while broader industrial and electrical markets were steady. Favorable price realization was driven primarily by actions to recover inflationary costs.

Current wording

Net sales in the Electrical Solutions segment in the third quarter of 2024 were $509.5 million and decreased by $28.4 million, or 5.3%, as compared to the third quarter of 2023. That decrease includes 3.4% growth in organic net sales, which was more than offset by an 8.5% decline in net sales resulting from the disposition of the residential lighting business during the first quarter of 2024. The increase in organic net sales was driven by a low single digit percentage increase in unit volume and a low single digit percentage increase in price realization. Volume growth in the quarter was driven primarily by strength in datacenter and renewables markets, while broader industrial markets were steady and commercial markets were softer. Favorable price realization was driven primarily by actions to recover inflationary costs.

Previous wording

Operating income in the Electrical Solutions segment for the second quarter of 2024 was $105.1 million and increased approximately 19.0% compared to the second quarter of 2023, while operating margin in the second quarter of 2024 expanded by 350 basis points to 20.0%. Excluding amortization of acquisition-related intangibles, the adjusted operating margin expanded by 350 basis points to 20.8%. The increase in operating margin was primarily due to approximately six percentage points of margin expansion from favorable price realization, improved operational productivity, higher volume and business mix. The disposition of the residential lighting business also contributed to that expansion. Those factors were partially offset by approximately two percentage points of margin contraction driven by higher material and other cost inflation.

Current wording

Operating income in the Electrical Solutions segment for the third quarter of 2024 was $93.3 million and increased approximately 4.2% compared to the third quarter of 2023, while operating margin in the third quarter of 2024 expanded by 170 basis points to 18.3%. Excluding amortization of acquisition-related intangibles and transaction, integration and separation cost, the adjusted operating margin expanded by 190 basis points to 19.4%. The increase in operating margin was primarily due to approximately five percentage points of margin expansion from favorable price realization, improved operational productivity and higher volume. The disposition of the residential lighting business also contributed to that expansion. Those factors were partially offset by approximately three percentage points of margin contraction driven by higher material and other cost inflation and mix.

Previous wording

Net sales of $2,851.6 million in the first six months of 2024 increased by $200.3 million compared to the same period in 2023. Organic net sales increased by 2.1%, driven by a low single digit percentage increase in price realization. The impact of volume on net sales was flat year over year. Acquisitions net of divestitures contributed 5.4% to net sales growth. These changes are discussed in more detail in the Segment Results section below.

Current wording

Net sales of $4,294.2 million in the first nine months of 2024 increased by $267.1 million compared to the same period in 2023. Organic net sales increased by 1.0%, driven by a low single digit percentage increase in price realization, partially offset by a single digit percentage decrease in unit volume. Acquisitions net of divestitures contributed 5.6% to net sales growth. These changes are discussed in more detail in the Segment Results section below.

Previous wording

As a percentage of net sales, cost of goods sold increased by 210 basis points to 66.5% in the first six months of 2024, resulting in gross profit margin contracting to 33.5%. Approximately five percentage points of gross profit margin contraction was driven by higher intangible amortization expense, material and other cost inflation, higher restructuring and related costs, as well as continued investments in long-term growth and productivity initiatives, which was partially offset by approximately three percentage points of margin expansion driven by favorable price realization and improved operational productivity.

Current wording

As a percentage of net sales, cost of goods sold increased by 180 basis points to 66.2% in the first nine months of 2024, resulting in gross profit margin contracting to 33.8%. Approximately five percentage points of gross profit margin contraction was driven by higher intangible amortization expense, material and other cost inflation, lower volume, as well as continued investments in long-term growth and productivity initiatives, which was partially offset by approximately three percentage points of margin expansion driven by favorable price realization and improved operational productivity.

Previous wording

S&A expense in the first six months of 2024 was $426.7 million and increased by $18.8 million or 4.6% compared to the prior year period. This increase was driven by the impact of 2023 acquisitions net of divestitures, including an increase in intangible amortization expense, partially offset by lower employee incentive cost. S&A expense as a percentage of net sales was 14.9% in the first six months of 2024, as compared to 15.4% in the first six months of 2023.

Current wording

S&A expense in the first nine months of 2024 was $620.0 million and increased by $1.0 million or 0.2% compared to the prior year period. This increase was driven by the impact of the 2023 acquisitions net of divestitures, including an increase in intangible amortization expense, partially offset by lower employee incentive cost. S&A expense as a percentage of net sales was 14.4% in the first nine months of 2024, as compared to 15.4% in the first nine months of 2023.

Previous wording

Total other expense increased by $20.3 million in the first six months of 2024 to $48.1 million, primarily due to a $22.0 million increase in interest expense in the first six months of 2024, along with the $5.3 million loss recognized on the disposition of the residential lighting business, partially offset by $4.5 million of TSA income related to the disposal of the residential lighting business. The increase in interest expense was primarily attributable to debt incurred in connection with the Systems Control acquisition and higher market interest rates.

Current wording

Total other expense increased by $33.3 million in the first nine months of 2024 to $72.4 million, primarily due to a $32.9 million increase in interest expense in the first nine months of 2024, along with the $5.3 million loss recognized on the disposition of the residential lighting business, partially offset by $6.1 million of TSA income related to the disposal of the residential lighting business. The increase in interest expense was primarily attributable to debt incurred in connection with the Systems Control acquisition and higher market interest rates.

Previous wording

The effective tax rate in the first six months of 2024 increased to 24.4% as compared to 23.0% in the first six months of 2023, primarily due to an income tax expense related to the sale of our residential lighting business in the first quarter of 2024, partially offset by a tax benefit from stock-based compensation.

Current wording

The effective tax rate in the first nine months of 2024 decreased to 23.1% as compared to 23.3% in the first nine months of 2023, primarily due to the tax benefits of an international restructuring completed in the third quarter of 2024, largely offset by the income tax expense related to the sale of the residential lighting business in the first quarter of 2024.

Previous wording

Net income attributable to Hubbell Incorporated was $361.4 million in the first six months of 2024 and decreased 7.0% as compared to the same period of the prior year, reflecting the factors described above. As a result, earnings per diluted share in the first six months of 2024 decreased 7.3% as compared to the first six months of 2023. Adjusted net income attributable to Hubbell Incorporated, which excludes amortization of acquisition-related intangibles from both periods and transaction, integration & separation costs and a loss on disposition of a business in the first six months of 2024, was $431.7 million in the first six months of 2024 and was $415.7 million in the first six months of 2023.

Current wording

Net income attributable to Hubbell Incorporated was $580.8 million in the first nine months of 2024 and decreased 1.4% as compared to the same period of the prior year, reflecting the factors described above. As a result, earnings per diluted share in the first nine months of 2024 decreased 1.5% as compared to the first nine months of 2023. Adjusted net income attributable to Hubbell Incorporated, which excludes amortization of acquisition-related intangibles from both periods and transaction, integration & separation costs and a loss on disposition of a business in the first nine months of 2024, was $674.6 million in the first nine months of 2024 and was $629.7 million in the first nine months of 2023.

Previous wording

Net sales in the Utility Solutions segment in the first six months of 2024 were $1,820.5 million, and increased by $208.1 million, or 12.9%, as compared to the first six months of 2023. That increase was driven by a 13.5% increase in net sales from acquisitions offset by a 0.6% decrease in organic net sales. The decrease in organic net sales was driven by a low single digit percentage decrease in unit volume, partially offset by a low single digit percentage increase in price realization. The decrease in unit volume was largely driven by volume declines in enclosures products primarily driven by weakness in the telcom markets, as well as continued customer inventory management in distribution markets. These factors were partially offset by robust growth in transmission and substation markets, as well as backlog conversion in meters and AMI products. Favorable price realization was driven by actions to offset inflation, as well as by our service levels.

Current wording

Net sales in the Utility Solutions segment in the first nine months of 2024 were $2,753.6 million, and increased by $303.3 million, or 12.4%, as compared to the first nine months of 2023. That increase was driven by a 14.1% increase in net sales from acquisitions offset by a 1.7% decrease in organic net sales. The decrease in organic net sales was driven by a mid-single digit percentage decrease in unit volume, partially offset by a low single digit percentage increase in price realization. The decrease in unit volume resulted largely from volume declines in enclosures products primarily driven by weakness in the telcom markets, as well as continued customer inventory management in distribution markets. These factors were partially offset by robust growth in transmission and substation markets, as well as backlog conversion in meters and AMI products. Favorable price realization was driven by actions to offset inflation, as well as by our service levels.

Previous wording

Operating income in the Utility Solutions segment for the first six months of 2024 was $353.6 million, a decrease of 6.2% compared to the first six months of 2023. Operating margin declined by 400 basis points to 19.4% in the first six months of 2024, as compared to the same period of 2023. Excluding amortization of acquisition-related intangibles and transaction, integration and separation costs, the adjusted operating margin declined by 210 basis points to 22.9% as compared to the 2023 period. The decrease in operating margin includes approximately three percentage points of margin expansion primarily due to favorable price realization and improved operational productivity, but that expansion was more than offset by approximately five percentage points of margin contraction primarily due to material and other cost inflation, lower unit volume and continuing investments in long-term growth and productivity initiatives. The acquisition of Systems Control also contributed to 2024 operating margin contraction. The impact of lower unit volume includes approximately 150 basis points from enclosures products, driven primarily by weakness in the telcom market.

Current wording

Operating income in the Utility Solutions segment for the first nine months of 2024 was $564.1 million, an increase of 0.1% compared to the first nine months of 2023. Operating margin declined by 250 basis points to 20.5% in the first nine months of 2024, as compared to the same period of 2023. Excluding amortization of acquisition-related intangibles and transaction, integration and separation costs, the adjusted operating margin declined by 100 basis points to 23.7% as compared to the 2023 period. The decrease in operating margin includes approximately three percentage points of margin expansion primarily due to favorable price realization and improved operational productivity, but that expansion was more than offset by approximately four percentage points of margin contraction primarily due to material and other cost inflation, lower unit volume and continuing investments in long-term growth and productivity initiatives. The impact of lower unit volume includes approximately 130 basis points from enclosures products, driven primarily by weakness in the telcom market.

Previous wording

Net sales in the Electrical Solutions segment in the first six months of 2024 were$1,031.1 million and decreased by$7.8 million, or 0.8%, as compared to the first six months of 2023. That decrease was driven by a 7.3% decline in net sales resulting from the disposition of our residential lighting business in the first quarter of 2024, offset by a 6.3% increase in organic net sales. The increase in organic net sales was driven by a mid-single digit percentage increase in unit volume and a low single digit percentage increase in price realization. Volume growth was driven primarily by strength in datacenter and renewables markets, while broader industrial and electrical markets were steady. Favorable price realization was driven primarily by actions to recover inflationary costs.

Current wording

Net sales in the Electrical Solutions segment in the first nine months of 2024 were$1,540.6 million and decreased by$36.2 million, or 2.3%, as compared to the first nine months of 2023. That decrease was driven by a 7.6% decline in net sales resulting from the disposition of the residential lighting business in the first quarter of 2024, offset by a 5.3% increase in organic net sales. The increase in organic net sales was driven by a low single digit percentage increase in price realization and a low single digit percentage increase in unit volume. Volume growth was driven primarily by strength in datacenter and renewables markets, while broader industrial and electrical markets were steady. Favorable price realization was driven primarily by actions to recover inflationary costs.

Previous wording

Operating income in the Electrical Solutions segment for the first six months of 2024 was $176.1 million and increased approximately 10.3% compared to the first six months of 2023, while operating margin in the first six months of 2024 increased by 170 basis points to 17.1%. Excluding amortization of acquisition-related intangibles and transaction, integration and separation costs, the adjusted operating margin increased by 210 basis points to 18.3%. The increases are primarily due to approximately five percentage points of margin expansion from favorable price realization, improved operational productivity and higher volume. The disposition of the residential lighting business also contributed to that expansion. Those factors were partially offset by approximately three percentage points of margin contraction driven by, higher material and other cost inflation.

Current wording

Operating income in the Electrical Solutions segment for the first nine months of 2024 was $269.4 million and increased approximately 8.1% compared to the first nine months of 2023, while operating margin in the first nine months of 2024 increased by 170 basis points to 17.5%. Excluding amortization of acquisition-related intangibles and transaction, integration and separation costs, the adjusted operating margin increased by 200 basis points to 18.7%. The increases are primarily due to approximately five percentage points of margin expansion from favorable price realization, improved operational productivity and higher volume. The disposition of the residential lighting business also contributed to that expansion. Those factors were partially offset by approximately three percentage points of margin contraction driven by higher material and other cost inflation and continuing investments in long-term growth and productivity initiatives.

Previous wording

Cash provided by operating activities for the six months ended June 30, 2024 was$331.8 million compared to cash provided by operating activities of $341.4 million for the same period in 2023. The decrease was primarily due lower net income in the current year, and an increase in investments in working capital to serve customer demand, partially offset by higher adjustments to net income for amortization and depreciation expense in 2024.

Current wording

Cash provided by operating activities for the nine months ended September 30, 2024 was$558.8 million compared to cash provided by operating activities of $535.3 million for the same period in 2023. The increase in cash provided by operations is due to higher income, after adjusting for the effect of non-cash items, primarily depreciation and amortization expense. That increase was partially offset by higher investments in working capital to serve customer demand.

Previous wording

Cash provided by investing activities was $56.1 million in the six months ended June 30, 2024 compared to cash used of $128.2 million during the comparable period in 2023. This change was driven by $122.9 million cash proceeds in 2024 from the disposition of our residential lighting business as compared to a $60.0 million cash outflow in 2023 for the acquisition of EIG.

Current wording

Cash provided by investing activities was $20.0 million in the nine months ended September 30, 2024 compared to cash used of $161.4 million during the comparable period in 2023. This change was driven by $122.9 million of cash proceeds in 2024 from the disposition of our residential lighting business as compared to a $60.0 million cash outflow in 2023 for the acquisition of EIG.

Previous wording

Cash used in financing activities was $319.3 million in the six months ended June 30, 2024 as compared to cash used of $165.9 million in the comparable period of 2023. The increase in cash used primarily reflects higher payments against long and short-term borrowings in the first six months of 2024 compared to the same prior year period.

Current wording

Cash used in financing activities was $476.4 million in the nine months ended September 30, 2024 as compared to cash used of $241.7 million in the comparable period of 2023. The increase in cash used primarily reflects higher repayments of long and short-term borrowings in the first nine months of 2024 compared to the same prior year period.

Previous wording

The unfavorable impact of foreign currency exchange rates on cash was $8.0 million for the six months ended June 30, 2024 and the change compared to prior year is primarily related to strengthening of the U.S. Dollar against the Brazilian Real, Canadian Dollar and Mexican Peso.

Current wording

The unfavorable impact of foreign currency exchange rates on cash was $3.2 million for the nine months ended September 30, 2024 and the change compared to prior year is primarily related to strengthening of the U.S. Dollar against the Mexican Peso, Brazilian Real and Canadian Dollar.

Previous wording

During the first six months of 2024, we invested $74.2 million in capital expenditures, an increase of $5.3 million from the comparable period of 2023, as we continue to invest in footprint optimization, automation and productivity initiatives.

Current wording

During the first nine months of 2024, we invested $112.4 million in capital expenditures, an increase of $8.6 million from the comparable period of 2023, as we continue to invest in footprint optimization, automation and productivity initiatives.

Previous wording

The table below presents the restructuring and related costs incurred in the first six months of 2024, additional expected costs, and the expected completion date of restructuring actions that have been initiated as of June 30, 2024 and in prior years (in millions):

Current wording

The table below presents the restructuring and related costs incurred in the first nine months of 2024, additional expected costs, and the expected completion date of restructuring actions that have been initiated as of September 30, 2024 and in prior years (in millions):

Previous wording

In October 2022, the Board of Directors approved a share repurchase program that authorized the repurchase of up to $300 million of common stock, which expires in October 2025. In the firstsix months of 2024, the Company repurchased$20.0 million of shares of common stock authorized under the October 2022 program. At June 30, 2024, our remaining share repurchase authorization was $280.0 million. Subject to numerous factors, including market conditions and alternative uses of cash, we may conduct discretionary repurchases through open market or privately negotiated transactions, which may include repurchases under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended.

Current wording

In October 2022, the Board of Directors approved a share repurchase program that authorized the repurchase of up to $300 million of common stock, which expires in October 2025. In the first nine months of 2024, the Company repurchased$30.0 million of shares of common stock authorized under the October 2022 program. At September 30, 2024, our remaining share repurchase authorization was $270.0 million. Subject to numerous factors, including market conditions and alternative uses of cash, we may conduct discretionary repurchases through open market or privately negotiated transactions, which may include repurchases under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended.

Previous wording

At June 30, 2024 and December 31, 2023, the Company had $1,892.7 million and $2,023.2 million, respectively, of long-term debt outstanding, net of the unamortized balance of capitalized debt issuance costs. The Company had $18.7 million and $15.0 million at June 30, 2024 and December 31, 2023 respectively of maturities due within the next 12 months related to the Term Loan Agreement described below, which were classified within short term debt in the Consolidated Balance Sheet.

Current wording

At September 30, 2024 and December 31, 2023, the Company had $1,640.3 million and $2,023.2 million, respectively, of long-term debt outstanding, net of the unamortized balance of capitalized debt issuance costs. The Company had $15.0 million and $15.0 million at September 30, 2024 and December 31, 2023, respectively, of maturities due within the next 12 months related to the Term Loan Agreement described below, which were classified within short term debt in the Consolidated Balance Sheet.

Previous wording

In connection with the December 2023 acquisition of Systems Control, the Company entered into a Term Loan Agreement with a syndicate of lenders under which the Company borrowed $600 million on an unsecured basis. Borrowings under the Term Loan Agreement bear interest generally at either the adjusted term SOFR rate plus an applicable margin (determined by a ratings based grid) or the alternative base rate. Currently, the loans bear interest based on the adjusted term SOFR rate. The principal amount of borrowings under the Term Loan Agreement amortize in equal quarterly installments of 2.5% of the original outstanding principal amount in 2024, 2.5% in 2025, and, 5% in 2026, with the remaining outstanding principal amount under the Term Loan Agreement due and payable in full at maturity in December 2026. The Company may make principal payments in excess of the amortization schedule at its discretion. During the six months ended June 30, 2024, the Company made $128.8 million of principal payments. The sole financial covenant in the Term Loan Agreement requires that total debt not exceed 65% of total capitalization as of the last day of each fiscal quarter of the Company. The Company was in compliance with this covenant as of June 30, 2024.

Current wording

In connection with the December 2023 acquisition of Systems Control, the Company entered into a Term Loan Agreement with a syndicate of lenders under which the Company borrowed $600 million on an unsecured basis. Borrowings under the Term Loan Agreement bear interest generally at either the adjusted term SOFR rate plus an applicable margin (determined by a ratings based grid) or the alternative base rate. Currently, the loans bear interest based on the adjusted term SOFR rate. The principal amount of borrowings under the Term Loan Agreement amortize in equal quarterly installments of 2.5% of the original outstanding principal amount in 2024, 2.5% in 2025, and, 5% in 2026, with the remaining outstanding principal amount under the Term Loan Agreement due and payable in full at maturity in December 2026. The Company may make principal payments in excess of the amortization schedule at its discretion. During the nine months ended September 30, 2024, the Company made $386.3 million of principal payments. The sole financial covenant in the Term Loan Agreement requires that total debt not exceed 65% of total capitalization as of the last day of each fiscal quarter of the Company. The Company was in compliance with this covenant as of September 30, 2024.

Previous wording

The carrying value of the Notes, net of unamortized discount and the unamortized balance of capitalized debt issuance costs, was $1,441.6 million and $1,440.3 million at June 30, 2024 and December 31, 2023, respectively.

Current wording

The carrying value of the Notes, net of unamortized discount and the unamortized balance of capitalized debt issuance costs, was $1,442.1 million and $1,440.3 million at September 30, 2024 and December 31, 2023, respectively.