Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Hubbell Inc., solvency ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
An analysis of solvency ratios from 2018 to 2022 reveals a consistent and systemic reduction in financial leverage and a strengthening of the organization's ability to meet its long-term obligations.
- Leverage and Capital Structure
- A steady downward trend is observed across all debt-related leverage metrics. The debt-to-equity ratio decreased from 1.01 in 2018 to 0.61 by the end of 2022. This deleveraging trend is mirrored in the debt-to-capital ratio, which declined from 0.50 to 0.38, and the debt-to-assets ratio, which fell from 0.37 to 0.27. These improvements persist when operating lease liabilities are included in the calculations, indicating a fundamental shift toward a more equity-heavy capital structure.
- Financial Risk Profile
- The financial leverage ratio exhibited a continuous decline from 2.74 in 2018 to 2.29 in 2022, signaling a reduction in the use of debt to amplify returns and a subsequent lowering of the overall financial risk profile. The convergence of these declining ratios suggests a strategic move toward greater financial stability and reduced dependence on external borrowing.
- Debt Service Coverage
- Capacity to service debt obligations has improved significantly over the five-year period. The interest coverage ratio rose from 7.45 in 2018 to 14.25 in 2022, with the most substantial increase occurring between 2021 and 2022. Similarly, the fixed charge coverage ratio increased from 4.98 to 8.70, demonstrating a heightened ability to cover both interest payments and other fixed financial commitments from operating earnings.
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Debt to Equity
Hubbell Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt and current portion of long-term debt | 4,700) | 9,700) | 153,100) | 65,400) | 56,100) | |
| Long-term debt, excluding current portion | 1,437,900) | 1,435,500) | 1,436,900) | 1,506,000) | 1,737,100) | |
| Total debt | 1,442,600) | 1,445,200) | 1,590,000) | 1,571,400) | 1,793,200) | |
| Total Hubbell Incorporated shareholders’ equity | 2,360,900) | 2,229,800) | 2,070,000) | 1,947,100) | 1,780,600) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.61 | 0.65 | 0.77 | 0.81 | 1.01 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 2.33 | 2.29 | — | — | — | |
| Eaton Corp. plc | 0.51 | 0.52 | — | — | — | |
| GE Aerospace | 0.89 | 0.87 | — | — | — | |
| Honeywell International Inc. | 1.17 | 1.06 | — | — | — | |
| Lockheed Martin Corp. | 1.68 | 1.07 | — | — | — | |
| RTX Corp. | 0.44 | 0.43 | — | — | — | |
| Debt to Equity, Sector | ||||||
| Capital Goods | 1.33 | 1.26 | — | — | — | |
| Debt to Equity, Industry | ||||||
| Industrials | 1.42 | 1.37 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to equity = Total debt ÷ Total Hubbell Incorporated shareholders’ equity
= 1,442,600 ÷ 2,360,900 = 0.61
2 Click competitor name to see calculations.
Hubbell Inc. has demonstrated a consistent improvement in its solvency position between 2018 and 2022. This trend is characterized by a simultaneous reduction in total debt and a steady increase in total shareholders' equity, resulting in a significant decrease in overall financial leverage.
- Total Debt Trends
- Total debt decreased from $1.79 billion in 2018 to $1.44 billion by the end of 2022. Despite a marginal increase observed in 2020, the general trajectory indicates a disciplined reduction in borrowed capital over the five-year period.
- Shareholders' Equity Growth
- Shareholders' equity experienced uninterrupted annual growth, rising from $1.78 billion in 2018 to $2.36 billion in 2022. This consistent expansion reflects a strengthening of the internal capital base.
- Debt to Equity Ratio Analysis
- The debt to equity ratio declined steadily from 1.01 in 2018 to 0.61 in 2022. The transition from a ratio exceeding 1.0 to one significantly below 1.0 indicates a strategic shift toward a more conservative capital structure and a reduced reliance on external debt to finance assets.
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Debt to Equity (including Operating Lease Liability)
Hubbell Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt and current portion of long-term debt | 4,700) | 9,700) | 153,100) | 65,400) | 56,100) | |
| Long-term debt, excluding current portion | 1,437,900) | 1,435,500) | 1,436,900) | 1,506,000) | 1,737,100) | |
| Total debt | 1,442,600) | 1,445,200) | 1,590,000) | 1,571,400) | 1,793,200) | |
| Current operating lease liabilities | 30,500) | 27,100) | 32,100) | 29,600) | —) | |
| Non-current operating lease liabilities | 84,900) | 58,300) | 74,900) | 71,700) | —) | |
| Total debt (including operating lease liability) | 1,558,000) | 1,530,600) | 1,697,000) | 1,672,700) | 1,793,200) | |
| Total Hubbell Incorporated shareholders’ equity | 2,360,900) | 2,229,800) | 2,070,000) | 1,947,100) | 1,780,600) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.66 | 0.69 | 0.82 | 0.86 | 1.01 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 2.37 | 2.33 | — | — | — | |
| Eaton Corp. plc | 0.54 | 0.55 | — | — | — | |
| GE Aerospace | 0.96 | 0.94 | — | — | — | |
| Honeywell International Inc. | 1.23 | 1.11 | — | — | — | |
| Lockheed Martin Corp. | 1.81 | 1.19 | — | — | — | |
| RTX Corp. | 0.47 | 0.46 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Capital Goods | 1.39 | 1.32 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Industrials | 1.59 | 1.54 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Hubbell Incorporated shareholders’ equity
= 1,558,000 ÷ 2,360,900 = 0.66
2 Click competitor name to see calculations.
An analysis of the solvency metrics from 2018 to 2022 reveals a consistent strengthening of the financial position. This improvement is characterized by a simultaneous reduction in total leverage and a steady expansion of the equity base, resulting in a significantly lower risk profile over the five-year period.
- Total Debt Trends
- Total debt, including operating lease liabilities, decreased from US$ 1,793,200 thousand in 2018 to US$ 1,558,000 thousand in 2022. While minor fluctuations occurred in 2020 and 2022, the overall trajectory reflects a general decline in the company's total debt obligations.
- Shareholders' Equity Growth
- Total shareholders' equity exhibited uninterrupted annual growth, rising from US$ 1,780,600 thousand in 2018 to US$ 2,360,900 thousand in 2022. This consistent upward trend indicates a sustained increase in the company's net worth and a strengthening of its internal capital reserves.
- Debt to Equity Ratio Interpretation
- The debt to equity ratio declined steadily every year, falling from 1.01 in 2018 to 0.66 in 2022. This downward trend signifies a transition from a capital structure where debt slightly exceeded equity to one where equity is the primary source of financing. This reduction in the ratio points to improved long-term solvency and a decreased reliance on borrowed funds.
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Debt to Capital
Hubbell Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt and current portion of long-term debt | 4,700) | 9,700) | 153,100) | 65,400) | 56,100) | |
| Long-term debt, excluding current portion | 1,437,900) | 1,435,500) | 1,436,900) | 1,506,000) | 1,737,100) | |
| Total debt | 1,442,600) | 1,445,200) | 1,590,000) | 1,571,400) | 1,793,200) | |
| Total Hubbell Incorporated shareholders’ equity | 2,360,900) | 2,229,800) | 2,070,000) | 1,947,100) | 1,780,600) | |
| Total capital | 3,803,500) | 3,675,000) | 3,660,000) | 3,518,500) | 3,573,800) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.38 | 0.39 | 0.43 | 0.45 | 0.50 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Boeing Co. | 1.39 | 1.35 | — | — | — | |
| Caterpillar Inc. | 0.70 | 0.70 | — | — | — | |
| Eaton Corp. plc | 0.34 | 0.34 | — | — | — | |
| GE Aerospace | 0.47 | 0.47 | — | — | — | |
| Honeywell International Inc. | 0.54 | 0.51 | — | — | — | |
| Lockheed Martin Corp. | 0.63 | 0.52 | — | — | — | |
| RTX Corp. | 0.31 | 0.30 | — | — | — | |
| Debt to Capital, Sector | ||||||
| Capital Goods | 0.57 | 0.56 | — | — | — | |
| Debt to Capital, Industry | ||||||
| Industrials | 0.59 | 0.58 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 1,442,600 ÷ 3,803,500 = 0.38
2 Click competitor name to see calculations.
A consistent improvement in the solvency profile is evident from 2018 to 2022, characterized by a steady reduction in leverage relative to the total capital base.
- Total Debt Trends
- Total debt experienced a general decline over the analyzed period, falling from 1,793,200 thousand US dollars in 2018 to 1,442,600 thousand US dollars by the end of 2022. The most significant reduction occurred between 2018 and 2019, with the balance remaining relatively stable during the 2021 to 2022 period.
- Total Capital Growth
- Total capital exhibited a gradual upward trajectory, increasing from 3,573,800 thousand US dollars in 2018 to 3,803,500 thousand US dollars in 2022. This indicates an expansion of the overall capital base despite the concurrent reduction in total debt.
- Debt to Capital Ratio Analysis
- The debt to capital ratio demonstrates a continuous downward trend, decreasing from 0.50 in 2018 to 0.38 in 2022. This movement reflects a strategic shift toward a more equity-weighted capital structure, which reduces financial risk and enhances the long-term solvency position of the organization.
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Debt to Capital (including Operating Lease Liability)
Hubbell Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt and current portion of long-term debt | 4,700) | 9,700) | 153,100) | 65,400) | 56,100) | |
| Long-term debt, excluding current portion | 1,437,900) | 1,435,500) | 1,436,900) | 1,506,000) | 1,737,100) | |
| Total debt | 1,442,600) | 1,445,200) | 1,590,000) | 1,571,400) | 1,793,200) | |
| Current operating lease liabilities | 30,500) | 27,100) | 32,100) | 29,600) | —) | |
| Non-current operating lease liabilities | 84,900) | 58,300) | 74,900) | 71,700) | —) | |
| Total debt (including operating lease liability) | 1,558,000) | 1,530,600) | 1,697,000) | 1,672,700) | 1,793,200) | |
| Total Hubbell Incorporated shareholders’ equity | 2,360,900) | 2,229,800) | 2,070,000) | 1,947,100) | 1,780,600) | |
| Total capital (including operating lease liability) | 3,918,900) | 3,760,400) | 3,767,000) | 3,619,800) | 3,573,800) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.40 | 0.41 | 0.45 | 0.46 | 0.50 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | 1.37 | 1.34 | — | — | — | |
| Caterpillar Inc. | 0.70 | 0.70 | — | — | — | |
| Eaton Corp. plc | 0.35 | 0.36 | — | — | — | |
| GE Aerospace | 0.49 | 0.49 | — | — | — | |
| Honeywell International Inc. | 0.55 | 0.53 | — | — | — | |
| Lockheed Martin Corp. | 0.64 | 0.54 | — | — | — | |
| RTX Corp. | 0.32 | 0.31 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Capital Goods | 0.58 | 0.57 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Industrials | 0.61 | 0.61 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 1,558,000 ÷ 3,918,900 = 0.40
2 Click competitor name to see calculations.
An analysis of the solvency metrics from 2018 through 2022 reveals a consistent strengthening of the financial position, characterized by a reduction in leverage relative to the total capital base.
- Total Debt Trends
- Total debt, including operating lease liabilities, exhibited a general downward trajectory over the five-year period. From a peak of 1,793,200 thousand US dollars in 2018, debt levels decreased to 1,558,000 thousand US dollars by 2022. While a slight increase occurred between 2019 and 2020 and again between 2021 and 2022, the overall trend indicates a reduction in absolute debt obligations.
- Total Capital Trends
- Total capital, inclusive of operating lease liabilities, demonstrated steady growth. The capital base expanded from 3,573,800 thousand US dollars in 2018 to 3,918,900 thousand US dollars in 2022. This growth occurred despite the fluctuations in total debt, suggesting an increase in equity or other capital infusions over the period.
- Debt to Capital Ratio Analysis
- The debt to capital ratio shows a continuous and progressive decline, moving from 0.50 in 2018 to 0.40 in 2022. This trend signifies a systematic reduction in the proportion of debt used to finance the organization's assets. The simultaneous decrease in total debt and increase in total capital contributed to a 10-percentage point improvement in the solvency ratio, indicating a lower risk profile and an enhanced capacity to meet long-term obligations.
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Debt to Assets
Hubbell Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt and current portion of long-term debt | 4,700) | 9,700) | 153,100) | 65,400) | 56,100) | |
| Long-term debt, excluding current portion | 1,437,900) | 1,435,500) | 1,436,900) | 1,506,000) | 1,737,100) | |
| Total debt | 1,442,600) | 1,445,200) | 1,590,000) | 1,571,400) | 1,793,200) | |
| Total assets | 5,402,600) | 5,281,500) | 5,085,100) | 4,903,000) | 4,872,100) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.27 | 0.27 | 0.31 | 0.32 | 0.37 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Boeing Co. | 0.42 | 0.42 | — | — | — | |
| Caterpillar Inc. | 0.45 | 0.46 | — | — | — | |
| Eaton Corp. plc | 0.25 | 0.25 | — | — | — | |
| GE Aerospace | 0.17 | 0.18 | — | — | — | |
| Honeywell International Inc. | 0.31 | 0.30 | — | — | — | |
| Lockheed Martin Corp. | 0.29 | 0.23 | — | — | — | |
| RTX Corp. | 0.20 | 0.20 | — | — | — | |
| Debt to Assets, Sector | ||||||
| Capital Goods | 0.28 | 0.28 | — | — | — | |
| Debt to Assets, Industry | ||||||
| Industrials | 0.31 | 0.30 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 1,442,600 ÷ 5,402,600 = 0.27
2 Click competitor name to see calculations.
A consistent improvement in the company's solvency position is evident between 2018 and 2022. This improvement is characterized by a simultaneous reduction in total debt and a steady expansion of the total asset base, which has resulted in a diminished reliance on borrowed capital to finance assets.
- Total Debt Trend
- Total debt experienced a general downward trajectory, decreasing from US$ 1,793,200 thousand in 2018 to US$ 1,442,600 thousand by 2022. Despite a marginal increase observed in 2020, the overall trend indicates a sustained reduction in total liabilities over the five-year period.
- Total Asset Growth
- Total assets demonstrated uninterrupted annual growth, rising from US$ 4,872,100 thousand in 2018 to US$ 5,402,600 thousand in 2022. The continuous increase in the asset base suggests steady corporate expansion or investment.
- Debt to Assets Ratio Analysis
- The debt to assets ratio declined steadily from 0.37 in 2018 to 0.27 in 2022. The most pronounced contraction occurred between 2018 and 2019, followed by further gradual declines until the ratio stabilized at 0.27 in 2021 and 2022. This downward trend reflects a strengthening of the solvency profile and a reduction in financial leverage.
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Debt to Assets (including Operating Lease Liability)
Hubbell Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt and current portion of long-term debt | 4,700) | 9,700) | 153,100) | 65,400) | 56,100) | |
| Long-term debt, excluding current portion | 1,437,900) | 1,435,500) | 1,436,900) | 1,506,000) | 1,737,100) | |
| Total debt | 1,442,600) | 1,445,200) | 1,590,000) | 1,571,400) | 1,793,200) | |
| Current operating lease liabilities | 30,500) | 27,100) | 32,100) | 29,600) | —) | |
| Non-current operating lease liabilities | 84,900) | 58,300) | 74,900) | 71,700) | —) | |
| Total debt (including operating lease liability) | 1,558,000) | 1,530,600) | 1,697,000) | 1,672,700) | 1,793,200) | |
| Total assets | 5,402,600) | 5,281,500) | 5,085,100) | 4,903,000) | 4,872,100) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.29 | 0.29 | 0.33 | 0.34 | 0.37 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | 0.43 | 0.43 | — | — | — | |
| Caterpillar Inc. | 0.46 | 0.46 | — | — | — | |
| Eaton Corp. plc | 0.26 | 0.27 | — | — | — | |
| GE Aerospace | 0.19 | 0.19 | — | — | — | |
| Honeywell International Inc. | 0.33 | 0.32 | — | — | — | |
| Lockheed Martin Corp. | 0.32 | 0.26 | — | — | — | |
| RTX Corp. | 0.21 | 0.21 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Capital Goods | 0.30 | 0.29 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Industrials | 0.34 | 0.34 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 1,558,000 ÷ 5,402,600 = 0.29
2 Click competitor name to see calculations.
Between 2018 and 2022, a consistent improvement in the solvency profile is observed, characterized by a reduction in total liabilities paired with a steady expansion of the asset base.
- Total Debt Trajectory
- Total debt, including operating lease liabilities, exhibited a general downward trend, decreasing from US$ 1,793.2 million in 2018 to US$ 1,558.0 million in 2022. While minor increases were noted in 2020 and 2022, the absolute debt level remained significantly lower at the end of the period than at the beginning.
- Asset Base Expansion
- Total assets grew consistently every year throughout the analyzed period. Assets rose from US$ 4,872.1 million in 2018 to US$ 5,402.6 million by 2022, representing a steady increase in the organization's total resource base.
- Debt to Assets Ratio Analysis
- The debt to assets ratio declined from 0.37 in 2018 to 0.29 in 2021, remaining stable at 0.29 in 2022. This contraction indicates a reduced dependency on borrowed funds to finance assets. The simultaneous effect of decreasing total debt and increasing total assets resulted in a strengthened solvency position, reducing the financial risk associated with leverage.
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Financial Leverage
Hubbell Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 5,402,600) | 5,281,500) | 5,085,100) | 4,903,000) | 4,872,100) | |
| Total Hubbell Incorporated shareholders’ equity | 2,360,900) | 2,229,800) | 2,070,000) | 1,947,100) | 1,780,600) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.29 | 2.37 | 2.46 | 2.52 | 2.74 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 5.16 | 5.02 | — | — | — | |
| Eaton Corp. plc | 2.06 | 2.07 | — | — | — | |
| GE Aerospace | 5.16 | 4.93 | — | — | — | |
| Honeywell International Inc. | 3.73 | 3.47 | — | — | — | |
| Lockheed Martin Corp. | 5.71 | 4.64 | — | — | — | |
| RTX Corp. | 2.19 | 2.21 | — | — | — | |
| Financial Leverage, Sector | ||||||
| Capital Goods | 4.71 | 4.55 | — | — | — | |
| Financial Leverage, Industry | ||||||
| Industrials | 4.65 | 4.52 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Financial leverage = Total assets ÷ Total Hubbell Incorporated shareholders’ equity
= 5,402,600 ÷ 2,360,900 = 2.29
2 Click competitor name to see calculations.
A consistent deleveraging trend is observed between 2018 and 2022, characterized by a steady reduction in the financial leverage ratio alongside a continuous increase in both total assets and shareholders' equity.
- Asset and Equity Expansion
- Total assets grew from US$ 4,872,100 thousand in 2018 to US$ 5,402,600 thousand by 2022. During the same period, shareholders' equity experienced a more pronounced increase, rising from US$ 1,780,600 thousand to US$ 2,360,900 thousand. This indicates that the expansion of the asset base was supported by a substantial increase in equity.
- Financial Leverage Trend
- The financial leverage ratio exhibits a persistent downward trajectory, decreasing from 2.74 in 2018 to 2.29 in 2022. This decline confirms that equity grew at a faster relative pace than total assets, leading to a reduction in the multiplier effect of debt on the balance sheet.
- Solvency and Risk Profile
- The reduction in the leverage ratio indicates a decreased reliance on borrowed funds to finance assets. This shift suggests an improvement in the overall solvency position, as the company has strengthened its equity cushion, thereby reducing financial risk and increasing long-term stability.
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Interest Coverage
Hubbell Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Hubbell Incorporated | 545,900) | 399,500) | 351,200) | 400,900) | 360,200) | |
| Add: Net income attributable to noncontrolling interest | 5,500) | 6,100) | 4,800) | 6,500) | 5,900) | |
| Less: Income from discontinued operations, net of tax | 34,600) | 34,500) | —) | —) | —) | |
| Add: Income tax expense | 140,200) | 88,200) | 97,500) | 113,100) | 100,900) | |
| Add: Interest expense, net | 49,600) | 54,700) | 60,300) | 69,400) | 72,400) | |
| Earnings before interest and tax (EBIT) | 706,600) | 514,000) | 513,800) | 589,900) | 539,400) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 14.25 | 9.40 | 8.52 | 8.50 | 7.45 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Boeing Co. | -0.98 | -0.88 | — | — | — | |
| Caterpillar Inc. | 20.80 | 17.88 | — | — | — | |
| Eaton Corp. plc | 21.22 | 21.11 | — | — | — | |
| GE Aerospace | 1.88 | -0.96 | — | — | — | |
| Honeywell International Inc. | 16.41 | 22.09 | — | — | — | |
| Lockheed Martin Corp. | 11.72 | 14.27 | — | — | — | |
| RTX Corp. | 5.64 | 4.71 | — | — | — | |
| Interest Coverage, Sector | ||||||
| Capital Goods | 4.84 | 3.98 | — | — | — | |
| Interest Coverage, Industry | ||||||
| Industrials | 4.98 | 5.14 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= 706,600 ÷ 49,600 = 14.25
2 Click competitor name to see calculations.
A consistent strengthening of solvency is observed over the five-year period from 2018 to 2022. The company has demonstrated an increasing capacity to meet its interest obligations, characterized by a steady upward trajectory in the interest coverage ratio.
- Earnings Before Interest and Tax (EBIT)
- Operational earnings exhibited volatility during the mid-period, with a peak of 589.9 million in 2019 followed by a contraction to 513.8 million in 2020. After a period of stagnation in 2021, a significant increase was recorded in 2022, reaching 706.6 million, representing the highest EBIT level within the analyzed timeframe.
- Net Interest Expense
- A continuous downward trend is evident in net interest expenses. Costs declined every consecutive year, starting at 72.4 million in 2018 and reducing to 49.6 million by the end of 2022. This persistent reduction suggests either a decrease in total debt load or a successful refinancing of debt at lower interest rates.
- Interest Coverage Ratio
- The interest coverage ratio improved from 7.45 in 2018 to 14.25 in 2022. The growth was steady between 2018 and 2021, despite the dip in EBIT, because the reduction in interest expenses offset the earnings decline. The sharp increase in 2022 was driven by the dual impact of peak EBIT and the lowest recorded interest expenses, indicating a substantially enhanced margin of safety for debt servicing.
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Fixed Charge Coverage
Hubbell Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Hubbell Incorporated | 545,900) | 399,500) | 351,200) | 400,900) | 360,200) | |
| Add: Net income attributable to noncontrolling interest | 5,500) | 6,100) | 4,800) | 6,500) | 5,900) | |
| Less: Income from discontinued operations, net of tax | 34,600) | 34,500) | —) | —) | —) | |
| Add: Income tax expense | 140,200) | 88,200) | 97,500) | 113,100) | 100,900) | |
| Add: Interest expense, net | 49,600) | 54,700) | 60,300) | 69,400) | 72,400) | |
| Earnings before interest and tax (EBIT) | 706,600) | 514,000) | 513,800) | 589,900) | 539,400) | |
| Add: Rent expense for operating leases | 35,700) | 34,100) | 37,100) | 39,100) | 44,800) | |
| Earnings before fixed charges and tax | 742,300) | 548,100) | 550,900) | 629,000) | 584,200) | |
| Interest expense, net | 49,600) | 54,700) | 60,300) | 69,400) | 72,400) | |
| Rent expense for operating leases | 35,700) | 34,100) | 37,100) | 39,100) | 44,800) | |
| Fixed charges | 85,300) | 88,800) | 97,400) | 108,500) | 117,200) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 8.70 | 6.17 | 5.66 | 5.80 | 4.98 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Boeing Co. | -0.70 | -0.64 | — | — | — | |
| Caterpillar Inc. | 14.92 | 12.73 | — | — | — | |
| Eaton Corp. plc | 10.01 | 10.40 | — | — | — | |
| GE Aerospace | 1.35 | -0.22 | — | — | — | |
| Honeywell International Inc. | 11.00 | 13.67 | — | — | — | |
| Lockheed Martin Corp. | 8.44 | 9.95 | — | — | — | |
| RTX Corp. | 4.40 | 3.66 | — | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Capital Goods | 3.61 | 3.06 | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Industrials | 3.30 | 3.44 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 742,300 ÷ 85,300 = 8.70
2 Click competitor name to see calculations.
The analysis of solvency ratios from 2018 to 2022 reveals a consistent strengthening of the capacity to meet fixed financial obligations. The fixed charge coverage ratio experienced a significant overall increase, rising from 4.98 in 2018 to 8.70 by the end of 2022, signifying a substantial improvement in the financial cushion available to service fixed costs.
- Fixed Charge Coverage Ratio Trends
- The ratio demonstrated a generally positive trajectory, with a marginal contraction in 2020 before accelerating upward. The most pronounced growth occurred between 2021 and 2022, where the ratio rose from 6.17 to 8.70. This suggests a marked enhancement in the ability to cover fixed obligations relative to operating earnings.
- Earnings Before Fixed Charges and Tax (EBFCT)
- Operating earnings exhibited volatility over the five-year period. Following an initial increase in 2019, earnings declined through 2021, reaching a low of 548,100 thousand US dollars. However, a sharp recovery was recorded in 2022, with earnings increasing to 742,300 thousand US dollars, marking the peak for the analyzed period.
- Fixed Charge Obligations
- A steady and uninterrupted downward trend is observed in the total fixed charges. Obligations decreased annually from 117,200 thousand US dollars in 2018 to 85,300 thousand US dollars in 2022. This systematic reduction in fixed costs contributed significantly to the improvement of the coverage ratio, providing a stabilizing effect during periods of fluctuating earnings.
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