Hubbell Incorporated (NYSE:HUBB) Q4 2022 Earnings Call Transcript

Josh Pokrzywinski: Got it. That’s helpful. And then, Bill, your comment there on the destock. And then the order rebound. Seems like a lot of that is maybe washed out, but any more detail you can give on kind of portfolio breath that was impacted and sort of order of magnitude on size. Was it like, a five-point correction on inventory? Or like a 20 that came down sharply, and then came right back up?

Bill Sperry : Yes, I mean, I think it was fairly broad based. I think if you interviewed our customers, they were feeling a little overstocked. I think, Josh, some of that, driven by when promise dates were extended, they had customers who wanted materials. So they were just making sure their shelves were stocked, I think there’s also been places where they may be bundling or kidding something, and they may have a decent chunk of inventory that needs one last part to the bundle, and then that’ll get shipped. And so I think what we care a lot about is our orders going to come to a sustainable level through a nice, orderly overtime process as promised delivery dates get shorter. Or is there going to be something a little more sharp or reactionary.

And I think through the fourth quarter, and now through one month in the third, the first quarter of New Year that feels, it just feels manageable. So the breath that you’re talking about is preventing any real spiky kind of problematic situation right now. So for us the way that it’s kind of evolving here is it feels manageable to us right now.

Operator: Our next question comes from Brad Lindsey with Mizuho.

Brad Lindsey: Good morning, all. Hey, I just want to come back to the communications controls business. So down 10% driven by chip supply, could you just talked about the timing of the chip situation improving, and really anything the team is doing in terms of redesigns or reengineering to help monetize some of that backlog?

Gerben Bakker: Yes, let me provide some content, maybe Bill, fill in as well. But chip availability has been the Achilles heel, throughout the pandemic, and we’re all aware of that. So we pretty early on realized that there just wasn’t going to be a short-term turnaround. So to your point of redesign, we have — we’ve been very active in that, as a matter of fact, it’s what had taken a good part of the engineering resources of a Clara to do. This isn’t a simple chip replacement. And you go there’s a ton of design in it, and then a lot of testing to make sure that this product functions in the field. So we right now have a product out in the field, that’s being tested. And if that continues, as we expect, we will be able in the second quarter to substitute chips.

And that’s part of the reason we believe that even if the supply chain is still a challenge, we should be able to start seeing growth back into that business. And the other thing is we read about chip availability getting better. And of course, we track this very closely as well with our suppliers and it’s really the types of chips that matter and we’ve certainly I’ve learned a lot about chips over the last year, but the memory chip, those kinds of chips that are used in phones have become much more available. The types of chips the microprocessor types of chips that we use in our products have been the one they’d have been still more challenged from our supply perspective. We do anticipate that improved throughout this year. And the combination of just a general improvement with our redesign is why we’re optimistic and confident we can grow throughout 23.