Hubbell Q3 2025: Electrical Segment Growth & Key FIFO Accounting Change

Hubbell Inc., a key manufacturer of electrical and utility products, recently released its financial results for the third quarter of 2025. For anyone interested in the health of the industrial and utility sectors, this latest 10-Q filing offers a valuable look into the company's performance and market dynamics. Let's break down the key numbers.

Overall, Hubbell reported a solid quarter. Net sales grew 4.1% to $1.5 billion compared to the same period last year. This top-line growth translated into a stronger bottom line, with net income attributable to the company increasing by 13% to $255.5 million, or $4.77 per diluted share.

A visual breakdown of the company's quarterly revenue and expenses can help clarify where the money came from and where it went.

A Tale of Two Segments

Hubbell's performance this quarter was a story of two distinct business segments moving at different speeds.

• Utility Solutions, the larger of the two segments, saw relatively flat performance. It generated $943.8 million in sales, a modest 1.2% increase from the prior year. Operating income was virtually unchanged at $219.3 million. This segment, which provides essential components for the electrical grid, appears to be navigating a stable but slower-growth environment, with the company noting "continued softness in the grid automation market" as a potential headwind.

• Electrical Solutions, on the other hand, was the engine of growth. This segment, which serves industrial and commercial customers, posted a strong 9.6% increase in net sales to $558.6 million. More impressively, its operating income jumped by nearly 19% to $111.3 million. This performance highlights robust demand in the non-residential electrical products market.

An Important Accounting Shift

One of the most significant developments in this filing was a change in inventory accounting. Hubbell switched from the Last-In, First-Out (LIFO) method to the First-In, First-Out (FIFO) method.

What does this mean in simple terms? FIFO assumes that the first inventory items purchased are the first ones sold. In periods of rising costs, this method typically results in a lower reported cost of goods sold and, therefore, a higher reported profit. Hubbell stated the change is preferable because it provides a "better matching of costs and revenues" and improves comparability with industry peers.

The impact was not trivial. For the third quarter of 2025 alone, this change decreased the Cost of Goods Sold by $24.8 million and increased net income by $18.5 million. While the company's operational performance was strong, it's crucial for investors to recognize that a portion of the reported profit growth is attributable to this accounting adjustment.

Financial Health and Outlook

Hubbell's balance sheet remains solid. The company generated $582.3 million in cash from operations through the first nine months of the year. It has been actively deploying this cash, spending $129.1 million on acquisitions and $225 million on share repurchases, signaling management's confidence in the business's long-term value.

In conclusion, Hubbell's Q3 results paint a picture of a company capitalizing on strength in its electrical business to offset flatness in its utility segment. While the strategic shift to FIFO accounting boosted its reported profitability, the underlying growth in the Electrical Solutions segment is a clear positive. As a critical supplier to sectors benefiting from electrification and infrastructure upgrades, Hubbell is well-positioned, but investors will be watching to see if its larger utility segment can regain momentum in the coming quarters.