[Management View]
Hubbell's management highlighted significant growth in the electrical solutions segment and grid infrastructure, driven by strong demand in data centers and light industrial markets. The company achieved double-digit adjusted EPS growth and expanded operating margins by 120 basis points. Strategic priorities include proactive cost management, price realization, and investments in restructuring, new product development, and AI initiatives.

[Outlook]
Hubbell raised its full-year adjusted EPS outlook to $17.65–$18.15, expecting 4%-6% organic growth and margin expansion. The company anticipates strong performance in the second half, supported by high-teen growth in grid infrastructure orders and a return to growth in grid automation. The M&A pipeline remains active, focusing on higher-growth portfolio areas.

[Financial Performance]
Sales increased 2% to just under $1.5 billion, led by the electrical segment and grid infrastructure. Adjusted operating profit grew 8% to $362 million, with a 120 basis point margin expansion. Adjusted EPS rose 11% to $4.93. The company is on track to achieve a 90% free cash flow conversion target for the full year.

[Q&A Highlights]
Question 1: Just on electrical distribution, the return to mid-single-digit growth. Is mid-single-digit growth really kind of the sustainable growth rate from here?
Answer: Yes, mid-single-digit is the underlying growth rate. It improves in the second half based on easier comps compared to last year. Fundamentally, longer term, this is a mid-single-digit growth area with a combination of MRO replacement and grid hardening.

Question 2: On the return of growth in Aclara in the fourth quarter, do you actually see a pickup in activity there, project or otherwise, that would create a situation where we could expect some growth out of that business in 2026?
Answer: The trajectory has been quite flat sequentially. It is not unreasonable to think of it as a low single to mid-single-digit growth from this new lower base.

Question 3: Can you share with us what the tariff impact embedded in your results is? How much pricing you are getting against that and maybe just a little bit more color on pricing in the two segments?
Answer: We got a couple of points of price in the first half. We are slightly ahead of tariffs on a price-cost basis. More tariffs and price increases are expected in the third quarter. We feel the market accepted those increases based on the tariff logic, and those prices have stuck reasonably well.

Question 4: Wanted to start with a conversation on copper specifically and commodities more broadly. What, if any, impact do you contemplate for this year's earnings?
Answer: We use the price lever to hedge against commodities and metals. We feel well-covered. Copper, steel, aluminum are our exposures. We are confident we can use price to cover inflation. The FIFO construct gives us time to price for copper cost increases.

Question 5: On the EPS guidance you provided, would you say things have gotten better, worse, same in terms of the earnings expectations for this year?
Answer: We continue to be on track to deliver the operational performance promised at the beginning of the year. Overcoming new costs from tariffs and slightly more challenging first-half volume is an accomplishment. Removing the contingency is good for investor expectations.

Question 6: I wanted to ask for a little bit more color around the end markets. Any other areas of green shoots that have shown up particularly on the electrical side?
Answer: Demand was always in reasonably good shape. We are through the channel overstocking, enabling more shipments. Enclosures area reverted to growth, sequentially up from the first quarter. Light industrial side of electrical is resilient with reshoring projects.

Question 7: On price increases, can you remind us when is it coming? How material could it be when we think about the organic guidance in the back half?
Answer: The price increase was implemented but has not yet shown up. Two points of price in the second quarter should grow incrementally in the second half. We anticipate three points of price in the full year.

Question 8: I wanted to understand better the moving parts around operating margin expansion in the second half. Is the FIFO-related tariff hit coming through? Should we expect better year-on-year margin performance in the fourth quarter?
Answer: Mix will continue to be favorable. Tariff costs will be offset by price, which is OP neutral but not margin friendly. Extra investing in the third quarter in restructuring and other areas. Better margin performance expected in the fourth quarter.

Question 9: Could you talk about the trajectory of growth within grid infrastructure as we move from first half to second half?
Answer: Transmission and substation growth will continue through the year. Distribution will grow above mid-single digits in the second half due to easier comps. Aclara will return to growth in the fourth quarter, contributing to the second-half trajectory.

Question 10: Characterization of the M&A pipeline and likelihood of any activity in the back half of this year?
Answer: We closed a small bolt-on acquisition in the utility space. Sold a small non-core business. The pipeline is active with private equity firms looking to sell. We continue to invest in acquisitions, focusing on higher growth areas like T&D, data centers, and light industrial markets.

Question 11: Encouraging to see sequential improvement in grid automation. Are you beginning to see some RFPs ramp back up on new projects for next year?
Answer: The business is stable with ongoing MRO and smaller projects. Larger projects are in the pipeline, but guidance is based on a stable business with ongoing MRO and projects.

Question 12: Can you sustain double-digit growth in electric transmission and substation into next year based on current visibility?
Answer: Our position in transmission and substation markets is strong with multiyear visibility. High single-digit growth is expected in the next few years.

Question 13: Bridge the old versus new earnings guidance. How much is the FIFO versus LIFO transition? Anything to call out on the core business?
Answer: Operationally, we are getting to the same point as January. Overcoming tariffs with more price, at the expense of a little volume. 30¢ benefit from FIFO transition added to guidance.

Question 14: How does the change in tax laws impact your content as a share of the project?
Answer: Systems control type business would be higher than the low single-digit percentage of cost. Substation space would make up more than the low single-digit if systems control is included.

Question 15: Continued progress with Salesforce alignments and channel conversions. Are you suggesting channel share and distribution pickup runway has several years of progression?
Answer: Realigning Salesforce by geography for cross-selling and creating vertical teams around specialty verticals like data centers. Successful initiatives with years ahead for improvement. Efficiency improvements in staffing and infrastructure.

Question 16: Help envision organic volumes ramping at the utility segment in the second half of the year.
Answer: Volumes will ramp through the year, particularly in the fourth quarter on easier comps. Price will be a steady incremental contributor.

Question 17: Margin guide for the year, expansion of 50 basis points? Should electrical be above that rate and utility below that?
Answer: You are in the ballpark for the full year. Segment drivers impacted by FIFO and LIFO transition. Electrical likely above and utility below the rate.

Question 18: EPS growth in the back half of the year split between third quarter and fourth quarter?
Answer: Based on volume discussion, the biggest driver will be volume ramping through the year.

[Sentiment Analysis]
Analysts and management maintained a positive tone throughout the call, expressing confidence in Hubbell's ability to navigate macroeconomic challenges and deliver strong financial performance. Analysts were particularly interested in the company's pricing strategies, growth in key segments, and M&A activities.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | Q2 2024 |
|-------------------------------|---------|---------|---------|
| Sales | $1.5B | $1.47B | $1.47B |
| Adjusted Operating Profit | $362M | $342M | $335M |
| Adjusted Operating Margin | 24.4% | 23.3% | 23.2% |
| Adjusted EPS | $4.93 | $4.45 | $4.44 |
| Free Cash Flow Conversion | 90% | 88% | 87% |

[Risks and Concerns]
- Tariff impacts and inflationary pressures could affect cost management and pricing strategies.
- Grid automation performance has been weaker than anticipated, with potential volatility in project roll-offs and backlog normalization.
- Commodity price fluctuations, particularly in copper, steel, and aluminum, may require additional pricing actions.

[Final Takeaway]
Hubbell's Q2 2025 performance demonstrated strong growth in electrical solutions and grid infrastructure, supported by proactive cost management and strategic investments. The company raised its full-year adjusted EPS outlook, reflecting confidence in its ability to navigate macroeconomic uncertainties and deliver attractive financial performance. Analysts and management maintained a positive sentiment, highlighting the company's strong position in key markets and active M&A pipeline. While risks related to tariffs, inflation, and commodity prices remain, Hubbell's strategic priorities and operational efficiencies are expected to drive long-term shareholder value creation.