Hubbell Inc. (NYSE:HUBB)

Inventory Turnover

The inventory turnover ratio exhibited a gradual upward trend from March 2019 through June 2020, peaking at 5.43. Following this peak, there was a consistent decline until December 2021, reaching a low of 4.26. Afterward, the ratio showed some recovery and stabilized around 4.60-4.69 through early 2023, although it slightly declined again toward September 2023 to 4.37. This pattern suggests fluctuations in how efficiently inventory was managed, with a notable slowdown in turnover efficiency after mid-2020.

Receivables Turnover

The receivables turnover experienced some volatility, initially rising from 6.18 in March 2019 to a peak of 6.75 in September 2020. Subsequently, it decreased steadily to 5.18 by December 2021, then improved again through early 2023, reaching a high of 6.67 in March 2023, before mildly declining to 6.15 in September 2023. This indicates variability in the company's effectiveness in collecting receivables, with periods of slower and faster collection throughout the timeline.

Payables Turnover

The payables turnover showed a distinct downward trend from 8.08 in March 2019 to 5.71 in March 2022, highlighting a slower pace in paying off suppliers over this interval. Post this decline, turnover remained stable around 6.0 from mid-2022 onward, suggesting a shift toward longer payment cycles that later partially reversed but did not fully return to previous higher turnover levels.

Working Capital Turnover

This ratio fluctuated significantly, rising to 6.3 in March 2020 but then sharply dropping to 4.76 by September 2020. After this decline, it partially recovered to around 5.15 in December 2021 but decreased again thereafter, reaching 4.21 by September 2023. These fluctuations imply variations in how effectively working capital was utilized to generate sales, with notable inefficiencies emerging from mid-2020 onwards.

Average Inventory Processing Period

The average inventory processing period remained relatively stable between 74 and 75 days until early 2020, where it shortened to approximately 67 days in June 2020, indicating improved inventory turnover speed. However, the period gradually lengthened afterward, reaching 86 days by September 2021 and maintaining a longer duration around 79–83 days through 2023. This suggests slower inventory movement post-2020, aligning with observed declines in inventory turnover ratio.

Average Receivable Collection Period

The receivable collection period showed variability, decreasing from about 59 days in early 2019 to 54 days by March 2020, indicating faster collection. Subsequently, the period lengthened significantly to a peak of 71 days in September 2021. In 2022 and 2023, the collection period stabilized near 55-59 days, reflecting a partial return to quicker receivables management.

Operating Cycle

The operating cycle shortened from roughly 134 days in March 2019 to around 123 days in June 2020, reflecting improved operating efficiency. However, the cycle lengthened considerably afterward, peaking at 157 days in September 2021, before settling into the 133-142 day range through the first half of 2023. This trend indicates periods of efficiency gains followed by a slowdown in the overall process of converting inventory and receivables into cash.

Average Payables Payment Period

The average payables payment period decreased noticeably from around 45 days in early 2019 to 39 days in March 2020, indicating faster payments to suppliers. This period then increased steadily, reaching 64 days by December 2021 and stabilizing around 56-61 days throughout 2022 and 2023, suggesting the company extended its payment terms modestly in recent years.

Cash Conversion Cycle

The cash conversion cycle improved from 89 days in March 2019 to a low of 74 days in December 2021, showing enhanced cash management efficiency during this period. After December 2021, the cycle fluctuated between 77 and 88 days, indicating some loss of efficiency but overall remaining better than the initial observation in 2019.

Cost of Goods Sold

The cost of goods sold (COGS) exhibits a fluctuating trend over the examined periods. Initially, from March 31, 2018, to December 31, 2018, COGS rises from 708,300 to a peak of 830,700 before declining moderately towards the end of 2019. In 2020, COGS decreases significantly mid-year but rebounds in the latter quarters. From 2021 through early 2023, there is a consistent incremental trend with some fluctuations, culminating in a high of 888,400 by September 30, 2023. Overall, the data reflects cyclical changes with an upward tendency in recent quarters.

Inventories, net

Net inventories display a gradual decline from early 2018 through 2019, moving from 714,300 to 633,000, signaling possible inventory management or sales changes. In 2020, inventories stabilize somewhat with minor fluctuations. Starting in 2021, net inventories increase steadily, peaking at 794,100 in mid-2023 before a slight drop to 788,400 by September 2023. This increasing inventory level in recent periods may indicate buildup in stock or anticipation of higher sales demand.

Inventory Turnover Ratio

The inventory turnover ratio, available from September 30, 2018, onward, starts at 4.89 and remains relatively stable around 4.9 to 5.1 through 2019. In 2020, the ratio peaks at 5.43 mid-year, suggesting more efficient inventory management or higher sales relative to inventory. However, starting in 2021, the ratio decreases gradually, reaching a low of 4.26 at the end of 2021, before improving slightly to the mid-4 range in subsequent quarters. The downward shift in turnover during 2021 indicates slower movement of inventory relative to sales, which aligns with the observed increase in net inventories over the same period.

Summary of Patterns and Insights

There is a discernible relationship between rising inventories and a declining inventory turnover ratio post-2020, implying a buildup of stock relative to sales velocity. Simultaneously, COGS shows an overall increasing trend with intermittent dips, reflecting fluctuations in production or sales volume. The combination of higher inventory levels and a modest decline in turnover may warrant monitoring for potential impacts on liquidity and working capital efficiency. The recent rise in COGS alongside increasing inventories might suggest anticipation of growth or adjustments in supply chain strategy.

The quarterly financial data reveals several notable trends and patterns across key metrics observed over multiple years.

Net Sales

The net sales exhibited fluctuations with an overall upward trajectory from 2018 through 2023. Beginning at approximately $991.2 million in March 2018, sales peaked in June 2018 and September 2018, surpassing $1.16 billion and $1.18 billion respectively. A noticeable dip occurred in March 2019 and December 2019 periods, with sales decreasing closer to $1.08 billion and $1.10 billion. The year 2020 saw a decline, particularly in the quarters of March and June 2020, coinciding with broader economic challenges, where sales dropped to under $1.1 billion, and even $949.2 million in June 2020—the lowest in the dataset. Recovery began in 2021, with sales steadily climbing again to over $1.1 billion by December 2021. The upward trend accelerated in 2022, with net sales reaching upwards of $1.31 billion to $1.32 billion in some quarters. This growth continued into 2023, where sales further increased, closing at approximately $1.38 billion in September 2023.

Accounts Receivable, Net of Allowances

Accounts receivable show a generally volatile pattern but with a mild increasing trend over the period. Starting near $704 million in March 2018, receivables rose consistently into mid-2018, peaking at $788.2 million in September 2018. This was followed by a decline toward the end of 2018 and throughout 2019, hitting a low of around $683 million in December 2019. The receivables declined further in early 2020, correlating with the period where net sales were also lower. From mid-2020 to the end of 2021, accounts receivable fluctuated but mostly remained between $634 million and $798 million. In 2022 and into 2023, accounts receivable increased notably, reaching highs beyond $850 million by September 2023, indicating an accumulation of credit sales or potentially slower collections during periods where sales were also rising.

Receivables Turnover Ratio

The receivables turnover ratio, which measures the efficiency of collections, exhibits variability over the analyzed quarters. In 2018 and 2019, values ranged from approximately 5.87 to 6.72 times per year, suggesting moderate to healthy collection speeds. A decline is visible in 2020 and 2021 where turnover dropped to around 5.18 at its lowest, implying collections became slower, possibly due to economic uncertainties. The ratio improved somewhat in late 2021 and throughout 2022, oscillating between about 5.65 and 6.67, before stabilizing around 6.15 to 6.52 in 2023. This suggests a rebound in receivables management efficiency accompanying the recovery and growth in sales during these periods.

In summary, the data depicts a pattern of interrupted growth in net sales with a dip strongly correlated to the 2020 economic environment, followed by a robust recovery and consistent growth trend through 2022 and into 2023. Accounts receivable trends generally mirror sales movements but with some lag and variability, while the receivables turnover ratio indicates a temporary weakening of collections efficiency during the downward sales period, improving alongside sales recovery. The combined analysis underscores a resilient business performance with gradually improving operational efficiency metrics over the observed timeframe.

The financial data for the periods from the first quarter of 2018 through the third quarter of 2023 show notable trends in cost of goods sold (COGS), accounts payable, and payables turnover ratio.

Cost of Goods Sold (COGS)

Over the observed timeframe, COGS displayed fluctuations with a visible cyclical pattern, generally aligning with seasonal quarterly variations. Initially, COGS increased from 708.3 million USD in Q1 2018 to a peak of approximately 842 million USD in Q3 2019. This was followed by a decline in 2020, reaching lows around 668.7 million USD in Q2 2020, potentially reflecting external factors impacting operations. Thereafter, COGS progressively rose again, hitting a high of 917.7 million USD in Q3 2022, before slightly decreasing towards the most recent quarters. Overall, COGS exhibited a gradual upward trend over the six-year span.

Accounts Payable

Accounts payable generally increased over the period, indicating potentially greater procurement or extended payment terms. Starting at 374.5 million USD in Q1 2018, accounts payable rose steadily with some quarter-to-quarter variation, reaching a maximum level of about 554.8 million USD by Q2 2023. This ascending pattern suggests growth in vendor liabilities consistent with the increasing scale of operations or changes in credit management policies.

Payables Turnover Ratio

The payables turnover ratio is available from Q3 2018 onwards and exhibits a declining trend over time. Early values around 8.0 indicate a relatively faster turnover of payables, while more recent figures near 6.2 suggest slower payments or longer credit terms extended by suppliers. This downward trend might reflect strategic management decisions to optimize working capital by delaying payments or negotiating better terms.

In summary, the data reveal that while cost of goods sold and accounts payable have generally increased, payables turnover has decreased, implying a potential lengthening of supplier payment cycles. The company's procurement scale appears to have grown, accompanied by a change in payment behavior, which may affect cash flow management and vendor relationships.

Working Capital

The working capital values demonstrate considerable fluctuations over the examined periods. Starting at approximately $822.3 million in March 2018, it rises modestly through mid-2019, peaking near $943.7 million in September 2019, before declining to a low around $639.4 million by the end of 2020. From early 2021 onwards, a recovery trend is observable with steady increases, reaching a new high exceeding $1.24 billion by September 2023. This indicates periods of both capital tightening and expansion, with a notable strengthening of liquidity in recent quarters.

Net Sales

Net sales demonstrate cyclical patterns accompanied by an overall increasing trend. Initially, sales peak close to $1.18 billion in the second and third quarters of 2018, followed by a slight dip through late 2018 and most of 2019. The year 2020 is marked by a significant decrease, reaching lows around $949 million in mid-2020. Subsequently, there is a consistent return to growth, with net sales increasing steadily from $956 million in early 2021 to approximately $1.38 billion by late 2023. This recovery and growth phase suggests improving market conditions and possibly increased demand or pricing power in the later periods.

Working Capital Turnover

Working capital turnover ratios, available from March 2019 onwards, reveal variability indicative of operational efficiency changes. The ratio fluctuates between approximately 4.2 and 6.55, with higher turnover ratios generally observed in early 2019 and early 2021, suggesting more efficient usage of working capital to generate sales during these periods. Conversely, dips in the turnover ratio, particularly in late 2019 and at various points in 2022 and 2023, imply periods of reduced efficiency or potentially increased working capital relative to sales. Overall, the ratio exhibits a downward trend from 2019 levels toward mid-decade, indicating changes in working capital management or sales velocity over time.

Summary of Patterns and Insights

The data depicts a business phase characterized by some cyclical volatility in sales and working capital levels, impacted likely by external market factors around 2020. The recovery and upward trends in both working capital and net sales from 2021 to 2023 highlight renewed operational strength and growth potential. However, the declining working capital turnover ratio suggests that despite increasing sales and liquidity, the efficiency of capital deployment varied and at times diminished, possibly due to strategic adjustments, inventory changes, or market dynamics. These insights point to an evolving financial profile with improving financial stability but with room for enhancement in capital utilization efficiency.

Inventory turnover ratio trends

The inventory turnover ratio exhibits a generally stable to slightly declining trend over the observed periods. Starting with values around 4.89 to 4.96 in early 2019, the ratio peaks at 5.43 during the second quarter of 2020, indicating a period of increased efficiency in managing inventory. However, following this peak, the ratio declines gradually through 2021 and into 2023, settling near the 4.3 to 4.6 range in the most recent quarters. This decrease suggests a reduction in the frequency with which inventory is sold and replaced over the year, potentially indicating slower inventory movement or increased inventory levels relative to sales.

Average inventory processing period trends

The average inventory processing period, measured in days, displays an inverse relationship with the inventory turnover ratio as expected. Initially recorded at approximately 75 days in early 2019, the processing period decreases steadily to a low of around 67 days by mid-2020, aligning with the peak in turnover ratio. This implies more rapid inventory clearance during this time. Subsequently, the processing period lengthens notably, rising through 2021 and reaching a high of approximately 86 days by the end of 2021. From 2022 onward, it stabilizes around 79 to 83 days. The extended processing period reflects slower inventory turnover and longer holding times, consistent with the observed decline in turnover ratio.

Overall implications

The observed data indicate that inventory management was most efficient around 2020, with the highest turnover and shortest processing periods. After this peak, there is a trend towards reduced turnover and longer inventory holding times, which may suggest challenges such as demand fluctuations, supply chain issues, or strategic decisions to hold more inventory. These patterns warrant closer examination to identify underlying causes and to assess any potential impacts on working capital and operational efficiency.

Receivables Turnover

The receivables turnover ratio commenced at 6.18 in March 2018 and demonstrated a varying pattern over the quarters. It reached a high of 6.75 in September 2020 and showed some decline afterward, hitting a low of 5.18 in December 2021. Following this trough, the ratio recovered and fluctuated around the mid-6 range, ending at 6.15 in September 2023. Overall, the turnover ratio indicates cyclical fluctuations but maintains an average level close to 6 times per year, suggesting consistent efficiency in managing receivables.

Average Receivable Collection Period

The average receivable collection period showed an inverse pattern relative to the receivables turnover ratio, starting at 59 days in March 2018. It improved to approximately 54 days by March 2020, indicating faster collections. However, this metric lengthened to a peak of 71 days by December 2021, implying slower collections during this period. Post that peak, there was a recovery with the period reducing back to around 55-59 days by mid to late 2023. This trend highlights fluctuations in collection efficiency, with a temporary decline in the ability to collect receivables rapidly followed by improvement in recent periods.

Overall Insights

The inverse correlation between the receivables turnover ratio and the average collection period is evident, as expected. Periods of increased turnover correspond to shorter collection periods and vice versa. The data suggests that while receivable management was relatively stable with some operational challenges around late 2021, the company managed to restore efficiency levels closer to prior periods by 2023. The fluctuations could reflect broader economic conditions or internal credit policy adjustments impacting customer payment behaviors.

Average Inventory Processing Period

Starting from March 31, 2019, the average inventory processing period shows a moderate fluctuation over the quarters. Initially, it remained stable around 74-75 days for several quarters through 2019. Moving into 2020, there was a decline to as low as 67 days by mid-year, suggesting improved inventory turnover. However, this trend reversed in 2021 with a gradual increase, peaking at 86 days by the end of that year. Subsequently, the period stabilized in the low 80s throughout 2022 and into 2023, indicating a longer inventory holding period compared to earlier years.

Average Receivable Collection Period

The receivable collection period displays more variability across the same timeframe. Starting around 59 days in early 2019, it initially decreased slightly to the mid-50s during 2019 and early 2020, which points to faster collections. Yet, in 2021, this period notably increased, reaching up to 71 days in the third quarter, indicating slower customer payments. During 2022 and 2023, the collection period moderated back to a range between 55 and 62 days, suggesting improved but fluctuating efficiency in receivables management.

Operating Cycle

The operating cycle, representing the total time to convert inventory and receivables into cash, combines the trends of inventory and receivable periods. The cycle decreased from around 136 days in early 2019 to a low of approximately 123 days in mid-2020, suggesting efficiency gains. Nevertheless, from 2021 onwards, the operating cycle experienced a notable increase, peaking at 157 days by the end of 2021. This indicates longer capital being tied up in operations. The operating cycle subsequently stabilized around 140-146 days during 2022 and 2023, which remains elevated relative to earlier periods.

Overall Insights

The data reflects an improvement in operating efficiency during 2019 and early 2020, driven mainly by reductions in inventory processing and receivable collection periods. However, from 2021, the upward trends in both inventory holding and collection times imply increasing operational delays or challenges. The elevated operating cycle during this later period signals higher working capital demands and potentially tighter liquidity management. Stabilization in 2022 and 2023 suggests the company may have adjusted processes but has not yet returned to prior efficiency levels.

Payables Turnover Ratio

The payables turnover ratio demonstrates a decreasing trend over the observed periods from March 31, 2018, to September 30, 2023. Initially, the ratio fluctuates around the 8.0 mark, peaking at 9.31 in March 31, 2020. However, subsequent quarters show a general decline, with occasional minor recoveries, reaching approximately 6.22 by September 30, 2023. This suggests a slowing in the frequency with which the company is paying off its suppliers over time.

Average Payables Payment Period (Days)

The average payables payment period exhibits an inverse pattern to the payables turnover ratio. Beginning with approximately 45 days in early 2018, the period shortens to a low of 39 days by March 31, 2020, corresponding with the peak in turnover ratio. Following this, there is a consistent and gradual increase in the payment period, reaching a peak around 64 days at March 31, 2022. Thereafter, a slight decline occurs but the period remains elevated, ending near 59 days by September 30, 2023. This indicates the company has been taking longer to settle its payables in recent years compared to earlier periods.

Overall Observations

The presented data collectively indicates a shift toward a longer payables cycle. The declining payables turnover ratio, alongside the increasing average payment period, suggests that the company is managing its payables more slowly. This could imply strategic changes in payment policies, cash flow management considerations, or altered supplier terms. The pattern shows a sustained adjustment rather than short-term fluctuations, highlighting an operating trend over multiple years.

Average inventory processing period

The average inventory processing period remained relatively stable around the mid-70s range from March 2019 through March 2021. There was a noticeable increase from 74 days in late 2019 to a peak of 86 days by the end of 2021. After this peak, the period declined to about 79-81 days throughout 2022 but slightly increased again towards the end of 2023, stabilizing at approximately 83 days. Overall, this indicates some fluctuations with a general tendency toward longer inventory holding times in recent quarters.

Average receivable collection period

The receivable collection period showed moderate variability over the observed timeline. From 2019 through early 2021, the period oscillated between mid-50s to low 60s. Starting in mid-2021, there was a rising trend peaking at 71 days at the end of 2021, indicating slower collection. Subsequently, this period decreased gradually through 2022 and early 2023, returning to approximately 55-59 days by late 2023. This suggests a recent improvement in the speed of receivables collection.

Average payables payment period

There was a consistent upward trend in the average payables payment period from 2019 through late 2021, increasing from the mid-40s to around 60 days. This reflects extended payment terms or delayed payments to suppliers during that time. In 2022 and into 2023, the payment period somewhat stabilized, hovering in the upper 50s range, signaling a maintenance of longer payment periods compared to earlier years.

Cash conversion cycle

The cash conversion cycle remained fairly stable, ranging from mid-80s to high 80s between 2019 and early 2021. A notable peak occurred at 97 days by the end of 2021, reflecting an elongation in the company's net operating cycle. After this peak, the cycle shortened noticeably to 74 days in early 2022 but then fluctuated around the high 70s to low 80s through 2023. This pattern indicates some volatility but generally a moderating trend in cash cycle duration post-2021 peak.