Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview of the Business

Hubbell is a global manufacturer of quality electrical products and utility solutions for a broad range of customer and end market applications. The Company's mission is to enable its customers to operate critical infrastructure safely, reliably, and efficiently. Products are either sourced complete, manufactured or assembled by subsidiaries in the United States, Canada, Puerto Rico, Mexico, China, the United Kingdom, Brazil, Australia, Spain and Ireland. The Company also participates in joint ventures in Hong Kong and the Philippines, and maintains offices in Singapore, Italy, China, India, Mexico, South Korea, Chile, and countries in the Middle East. The Company employed approximately 19,400 individuals worldwide as of September 30, 2021.

The Company’s reporting segments consist of the Electrical Solutions segment and the Utility Solutions segment.

Effective January 1, 2021, the Company consolidated the three business groups within its Electrical segment, and renamed the segment as Hubbell Electrical Solutions ("Electrical Solutions"). The Electrical Solutions segment unites businesses with similar operating models, products, and go to market strategies under one operating banner and common leadership to drive synergies and long-term growth opportunities.

Also effective January 1, 2021, the Company moved its Hubbell Gas Connectors and Accessories business, from the Electrical Solutions segment to the Utility Solutions segment to create synergies with the existing gas products offered within the Utility Solutions segment and to better serve its utility customers. The Hubbell Gas Connectors and Accessories business represented approximately $157.1 million of net sales and $19.4 million of operating profit in 2020. The Company began reporting its segment results under this revised reporting structure beginning with the filing of its Quarterly Report on Form 10-Q for the first quarter ended March 31, 2021.

Results for the three and nine months ended September 30, 2021 by segment are included under “Segment Results” within this Management’s Discussion and Analysis.

The Company's long-term strategy is to serve its customers with reliable and innovative electrical and related infrastructure solutions with desired brands and high-quality service, delivered through a competitive cost structure; to complement organic revenue growth with acquisitions that enhance its product offerings; and to allocate capital effectively to create shareholder value.

Our strategy to complement organic revenue growth with acquisitions is focused on acquiring assets that extend our capabilities, expand our product offerings, and present opportunities to compete in core, adjacent or complementary markets. Our acquisition strategy also provides the opportunity to advance our revenue growth objectives during periods of weakness or inconsistency in our end-markets.

Our strategy to deliver products through a competitive cost structure has resulted in past and ongoing restructuring and related activities. Our restructuring and related efforts include the consolidation of manufacturing and distribution facilities, and workforce actions, as well as streamlining and consolidating our back-office functions. The primary objectives of our restructuring and related activities are to optimize our manufacturing footprint, cost structure, and effectiveness and efficiency of our workforce.

Because material costs are approximately two-thirds of our cost of goods sold, volatility in this area can significantly impact profitability. Our goal is to have pricing and productivity programs that offset material and other inflationary cost increases as well as pay for investments in key growth areas. Productivity improvement also continues to be a key area of focus for the Company and efforts to drive productivity complement our restructuring and related activities to minimize the impact of rising material costs and other administrative cost inflation.

Productivity programs affect virtually all functional areas within the Company by reducing or eliminating waste and improving processes. We continue to expand our efforts surrounding global product and component sourcing and supplier cost reduction programs. Value engineering efforts, product transfers and the use of lean process improvement techniques are expected to continue to increase manufacturing efficiency. In addition, we continue to build upon the benefits of our enterprise resource planning system across all functions.

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Impact of the COVID-19 Pandemic

During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (COVID-19). U.S. federal, state, local, and foreign governments reacted to the public health crisis with mitigation measures, creating significant uncertainties in the U.S. and global economies, including the shutdown of large portions of, or imposition of restrictions on, the U.S. and global economies. Notwithstanding a general improvement in conditions and reduction of pandemic effects, as of September 30, 2021 there continues to be significant uncertainty around the scope, severity, and duration of the pandemic, as well as the breadth and duration of business disruptions related to it and the overall impact on the U.S., global economies, and our operating results in future periods.

The COVID-19 pandemic continues to pose the risk that our employees, contractors, suppliers, customers and other business partners may be prevented from conducting business activities, partially or completely, for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities or imposed by our management, or that the pandemic may otherwise interrupt or impair business activities. The Occupational Safety and Health Administration (OSHA) has been directed to develop a rule requiring each employer with 100 or more employees to ensure its workforce is fully vaccinated or require any workers who remain unvaccinated to produce a negative test result on at least a weekly basis before coming to work and President Biden has announced an executive order mandating COVID-19 vaccination of U.S. based employees of companies that work on, or in support for, federal contracts. We cannot currently predict the impact that the OSHA rule, if adopted, and executive order would have on our workforce, our ability to secure skilled labor in the future, or the cost of implementation and compliance with such rule and the executive order.

Additionally, as economies have re-opened, global supply chains have struggled to keep up with increasing demand, and the resulting supply chain disruptions have, in certain cases, affected our ability to ship products in a timely manner. These supply chain disruptions and the increase in demand have also led to increased freight, labor and commodity cost that affected our operating margin in the third quarter of 2021, and those disruptions and increased cost may persist through the fourth quarter of 2021 and into 2022.

Refer to Item 1A, Risk Factors in this Form 10-Q and item 1A, Risk Factors on our 2020 Annual Report on Form 10-K for additional discussion of risks associated with the COVID-19 pandemic.

Results of Operations – Third Quarter of 2021 compared to the Third Quarter of 2020

SUMMARY OF CONSOLIDATED RESULTS (IN MILLIONS, EXCEPT PER SHARE DATA):

			Three Months Ended September 30,
			2021			% of Net sales			2020			% of Net sales
Net sales			$	1,213.6					$	1,108.6
Cost of goods sold			883.3			72.8		%	779.0			70.3		%
Gross profit			330.3			27.2		%	329.6			29.7		%
Selling & administrative ("S&A") expense			175.0			14.4		%	166.7			15.0		%
Operating income			155.3			12.8		%	162.9			14.7		%
Net income attributable to Hubbell Incorporated			108.5			8.9		%	107.1			9.7		%
EARNINGS PER SHARE – DILUTED			$	1.98					$	1.96

In the following discussion of results of operations, we refer to "adjusted" operating measures. We believe those adjusted measures, which exclude the impact of certain costs, gains and losses, may provide investors with useful information regarding our underlying performance from period to period and allow investors to understand our results of operations without regard to items we do not consider a component of our core operating performance.

Adjusted operating measures exclude amortization of all intangible assets associated with our business acquisitions, including inventory step-up amortization associated with those acquisitions. The intangible assets associated with our business acquisitions arise from the allocation of the purchase price using the acquisition method of accounting in accordance with Accounting Standards Codification 805, “Business Combinations.” These assets consist primarily of customer relationships, developed technology, trademarks and tradenames, and patents, as reported in Note 6 – Goodwill and Other Intangible Assets, under the heading “Total Definite-Lived Intangibles,” within the Company’s audited consolidated financial statements set forth in its Annual Report on Form 10-K for Fiscal Year Ended December 31, 2020.

The Company believes that the exclusion of these non-cash expenses (i) enhances management’s and investors’ ability to analyze underlying business performance, (ii) facilitates comparisons of our financial results over multiple periods, and (iii) provides more relevant comparisons of our results with the results of other companies as the amortization expense associated with these assets may fluctuate significantly from period to period based on the timing, size, nature, and number of acquisitions.

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Although we exclude amortization of these acquired intangible assets and inventory step-up from our non-GAAP results, we believe that it is important for investors to understand that revenue generated, in part, from such intangibles is included within revenue in determining adjusted net income attributable to Hubbell Incorporated.

Adjusted net income in 2021 also excludes a $16.8 million pre-tax loss on the early extinguishment of long-term debt from the redemption of all of the Company's outstanding 3.625% Senior Notes due 2022 in the aggregate principal amount of $300 million and a $6.9 million loss on the disposal of a business, the sale of which closed during the second quarter of 2021. Adjusted net income in 2020 also excludes a pension settlement charge of $6.6 million that was recorded during the third quarter of 2020. Those items are reported in Total other expense (below Operating income) in the Condensed Consolidated Statement of Income. Refer to the reconciliation of non-GAAP measurers presented below, Note 5 - Goodwill and Other Intangible Assets, net, Note 11 - Pension and Other Benefits, and Note 16 - Debt and Financing Arrangements in the Notes to the Condensed Consolidated Financial Statements, for additional information. The Company excludes these losses because we believe it enhances management's and investors' ability to analyze underlying business performance and facilitates comparisons of our financial results over multiple periods.

Organic net sales, a non-GAAP measure, represent Net sales according to U.S. GAAP, less Net sales from acquisitions and divestitures during the first twelve months of ownership or divestiture, respectively, less the effect of fluctuations in Net sales from foreign currency exchange. The period-over-period effect of fluctuations in Net sales from foreign currency exchange is calculated as the difference between local currency Net sales of the prior period translated at the current period exchange rate as compared to the same local currency Net sales translated at the prior period exchange rate. We believe this measure provides management and investors with a more complete understanding of the underlying operating results and trends of established, ongoing operations by excluding the effect of acquisitions, dispositions and foreign currency as these activities can obscure underlying trends. When comparing Net sales growth between periods excluding the effects of acquisitions, business dispositions and currency exchange rates, those effects are different when comparing results for different periods. For example, because Net sales from acquisitions are considered inorganic from the date we complete an acquisition through the end of the first year following the acquisition, Net sales from such acquisition are reflected as organic net sales thereafter.

There are limitations to the use of non-GAAP measures. Non-GAAP measures do not present complete financial results. We compensate for this limitation by providing a reconciliation between our non-GAAP financial measures and the respective most directly comparable financial measure calculated and presented in accordance with GAAP. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. These financial measures should not be considered in isolation from, as substitutes for, or alternative measures of, reported GAAP financial results, and should be viewed in conjunction with the most comparable GAAP financial measures and the provided reconciliations thereto. We believe, however, that these non-GAAP financial measures, when viewed together with our GAAP results and related reconciliations, provide a more complete understanding of our business. We strongly encourage investors to review our consolidated financial statements and publicly filed reports in their entirety and not rely on any single financial measure.

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The following table reconciles each of our adjusted financial measures to the directly comparable GAAP financial measure (in millions, except per share amounts):

			Three Months Ended September 30,
			2021			% of Net sales			2020			% of Net sales
Gross profit (GAAP measure)			$	330.3		27.2		%	$	329.6		29.7		%
Amortization of acquisition-related intangible assets			5.7			0.5		%	6.1			0.6		%
Adjusted gross profit			$	336.0		27.7		%	$	335.7		30.3		%
S&A expenses (GAAP measure)			$	175.0		14.4		%	$	166.7		15.0		%
Amortization of acquisition-related intangible assets			13.0			1.1		%	12.4			1.1		%
Adjusted S&A expenses			$	162.0		13.3		%	$	154.3		13.9		%
Operating income (GAAP measure)			$	155.3		12.8		%	$	162.9		14.7		%
Amortization of acquisition-related intangible assets			18.7			1.5		%	18.5			1.7		%
Adjusted operating income			$	174.0		14.3		%	$	181.4		16.4		%
Net income attributable to Hubbell Incorporated (GAAP measure)			$	108.5					$	107.1
Amortization of acquisition-related intangible assets			18.7						18.5
Loss on disposition of business			0.1						—
Pension charge			—						6.6
Subtotal			$	18.8					$	25.1
Income tax effects(1)			4.6						6.3
Adjusted net income attributable to Hubbell Incorporated			$	122.7					$	125.9
Less: Earnings allocated to participating securities			(0.4)						(0.5)
Adjusted net income available to common shareholders			$	122.3					$	125.4
Average number of diluted shares outstanding			54.7						54.5
ADJUSTED EARNINGS PER SHARE – DILUTED			$	2.24					$	2.30

(1) The income tax effects are calculated using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction, unless otherwise noted.

The following table reconciles our Organic net sales to the directly comparable GAAP financial measure (in millions and percentage change):

			For the Three Months Ended September 30,
			2021			Inc/(Dec) %			2020			Inc/(Dec) %
Net sales growth (GAAP measure)			$	105.0		9.5			$	(95.4)		(7.9)
Impact of acquisitions			40.7			3.7			11.3			0.9
Impact of divestitures			(2.2)			(0.2)			(4.5)			(0.4)
Foreign currency exchange			6.2			0.6			(3.4)			(0.2)
Organic net sales growth (non-GAAP measure)			$	60.3		5.4			$	(98.8)		(8.2)

Net Sales

Net sales of $1.21 billion in the third quarter of 2021 increased by $105.0 million compared to the third quarter of 2020. Organic net sales increased by 5.4% primarily due to favorable price realization, partially offset by lower volume, along with an increase in Net Sales of 3.5% from acquisitions net of dispositions and a 0.6% increase from foreign exchange. Net Sales volume includes the effect of supply chain disruptions, which limited our ability to ship all of our customer demand.

Cost of Goods Sold

As a percentage of Net sales, cost of goods sold increased by 250 basis points to 72.8% in the third quarter of 2021, as compared to 70.3% in the third quarter of 2020. The increase was primarily driven by material cost inflation that exceeded favorable price realization, and higher freight, logistics and manufacturing costs, partially offset by savings from our restructuring and related actions and productivity initiatives.

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Gross Profit

The gross profit margin in the third quarter of 2021 decreased by 250 basis points to 27.2% as compared to 29.7% in the third quarter of 2020. Excluding amortization of acquisition-related intangible assets, the adjusted gross profit margin was 27.7% in the third quarter of 2021 as compared to 30.3% in the same period of the prior year. The decrease in the adjusted gross profit margin primarily reflects material cost inflation that exceeded favorable price realization, and higher freight, logistics and manufacturing costs, partially offset by savings from our restructuring and related actions and productivity initiatives.

Selling & Administrative Expenses

S&A expense in the third quarter of 2021 was $175.0 million and increased by $8.3 million compared to the prior year period. S&A expense as a percentage of Net sales decreased by 60 basis points to 14.4% in the third quarter of 2021. Excluding amortization of acquisition-related intangible assets, adjusted S&A expense as a percentage of Net sales decreased by 60 basis points to 13.3% in the third quarter of 2021. The decrease in adjusted S&A expense as a percentage of Net sales is primarily due to higher organic sales.

Total Other Expense

Total other expense decreased by $9.1 million in the third quarter of 2021 to $14.8 million, primarily due to a $6.6 million charge associated with pension settlement losses recognized in the third quarter of 2020, and $1.5 million of lower interest expense in the third quarter of 2021.

Income Taxes

The effective tax rate in the third quarter of 2021 decreased to 21.3% as compared to 21.9% in the third quarter of 2020 primarily due to changes to certain tax reserves and unfavorable provision to return adjustments as compared to the same period of the prior year.

Net Income Attributable to Hubbell Incorporated and Earnings Per Diluted Share

Net income attributable to Hubbell Incorporated was $108.5 million in the third quarter of 2021 and increased 1.3% as compared to the same period of the prior year. As a result, earnings per diluted share in the third quarter of 2021 increased 1.0% as compared to the third quarter of 2020. Adjusted net income attributable to Hubbell Incorporated, which excludes amortization of acquisition-related intangibles from both periods, a loss on disposition of business in 2021, and a pension settlement charge in 2020, was $122.7 million in the third quarter of 2021 and decreased by 2.5% as compared to the third quarter of 2020. Adjusted earnings per diluted share in the third quarter of 2021 decreased by 2.6% as compared to the third quarter of 2020.

Segment Results

ELECTRICAL SOLUTIONS

			Three Months Ended September 30,
(In millions)			2021			2020
Net sales			$	611.9		$	551.0
Operating income (GAAP measure)			72.0			65.9
Amortization of acquisition-related intangible assets			4.1			4.2
Adjusted operating income			$	76.1		$	70.1
Operating margin (GAAP measure)			11.8		%	12.0		%
Adjusted operating margin			12.4		%	12.7		%

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The following table reconciles our Organic net sales to the directly comparable GAAP financial measure (in millions and percentage change):

			For the Three Months Ended September 30,
Electrical Solutions			2021			Inc/(Dec) %			2020			Inc/(Dec) %
Net sales growth (GAAP measure)			$	60.9		11.0			$	(86.0)		(13.5)
Impact of acquisitions			7.4			1.3			4.4			0.7
Impact of divestitures			—			—			(4.5)			(0.7)
Foreign currency exchange			4.0			0.7			(0.8)			(0.1)
Organic net sales growth (non-GAAP measure)			$	49.5		9.0			$	(85.1)		(13.4)

Net sales in the Electrical Solutions segment in the third quarter of 2021 were $611.9 million and increased by $60.9 million, or 11.0%, as compared to the third quarter of 2020. The increase resulted from a 9.0% increase in organic net sales in the third quarter of 2021 as compared to the same prior year period, primarily due to favorable price realization and higher unit volume, a 1.3% increase in Net sales from acquisitions, and 0.7% increase from foreign exchange.

Operating income in the Electrical Solutions segment for the third quarter of 2021 was $72.0 million and increased approximately 9.3% compared to the third quarter of 2020, while operating margin in the third quarter of 2021 decreased by 20 basis points to 11.8%. Excluding amortization of acquisition-related intangibles, adjusted operating margin decreased by 30 basis points to 12.4%, as compared to the same prior year period. The decrease in the adjusted operating margin in the third quarter of 2021 is primarily due to material cost inflation that was greater than price realization and higher freight, logistics and manufacturing costs, partially offset by higher sales volume, and savings from restructuring and related actions and productivity initiatives. Acquisitions contributed 30 basis points to adjusted operating margin in the third quarter of 2021 as compared to the same period of the prior year.

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UTILITY SOLUTIONS

			Three Months Ended September 30,
(In millions)			2021			2020
Net sales			$	601.7		$	557.6
Operating income (GAAP measure)			83.3			97.0
Amortization of acquisition-related intangible assets			14.6			14.3
Adjusted operating income			$	97.9		$	111.3
Operating margin (GAAP measure)			13.8		%	17.4		%
Adjusted operating margin			16.3		%	20.0		%

The following table reconciles our Organic net sales to the directly comparable GAAP financial measure (in millions and percentage change):

			For the Three Months Ended September 30,
Utility Solutions			2021			Inc/(Dec) %			2020			Inc/(Dec) %
Net sales growth (GAAP measure)			$	44.1		7.9			$	(9.4)		(1.7)
Impact of acquisitions			33.3			6.0			6.9			1.2
Impact of divestitures			(2.2)			(0.4)			—			—
Foreign currency exchange			2.2			0.4			(2.6)			(0.4)
Organic net sales growth (non-GAAP measure)			$	10.8		1.9			$	(13.7)		(2.5)

Net sales in the Utility Solutions segment in the third quarter of 2021 were $601.7 million, an increase of $44.1 million, or 7.9%, as compared to the third quarter of 2020. This increase was due to a 1.9% increase in organic net sales driven by favorable price realization, partially offset by lower unit volumes, as well as net acquisitions which contributed 5.6% to Net sales growth, and a 0.4% increase in Net sales from foreign exchange. Net Sales volume includes the effect of supply chain disruptions, which limited our ability to ship all of our customer demand.

Within the Utility Solutions segment, Net sales of our Utility T&D components businesses increased by 9.7% in the third quarter of 2021 as compared to the prior year, primarily driven by 4.0% organic net sales growth, a 5.3% increase in Net sales growth from acquisitions and 0.4% favorable impact of foreign exchange. Net sales of our Utility communications and controls businesses increased by 3.5% in the third quarter of 2021 as compared to the prior year period, primarily from an increase in Net sales of 6.3% due to the impact of acquisitions net of dispositions, and an increase of 0.4% from foreign exchange, partially offset by a 3.2% decrease in organic net sales, due to global component constraints that limited our ability to service customer demand.

Operating income in the Utility Solutions segment for the third quarter of 2021 was $83.3 million, down 14.1% compared to the third quarter of 2020. Operating margin decreased to 13.8% as compared to 17.4% in the same period of 2020. Excluding amortization of acquisition-related intangibles, the adjusted operating margin decreased to 16.3%, primarily driven by increased materials costs in excess of price realization, higher freight, logistics and manufacturing costs, as well as lower volumes, partially offset by savings from restructuring and related actions and productivity initiatives. Adjusted operating income from acquisitions was modest, but contributed 90 basis points to the decline in adjusted operating margin, due to higher manufacturing costs.

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Results of Operations – Nine Months Ended September 30, 2021 compared to the Nine Months Ended September 30, 2020

SUMMARY OF CONSOLIDATED RESULTS (IN MILLIONS, EXCEPT PER SHARE DATA):

			Nine Months Ended September 30,
			2021			% of Net sales			2020			% of Net sales
Net sales			$	3,483.8					$	3,148.1
Cost of goods sold			2,532.9			72.7		%	2,224.5			70.7		%
Gross profit			950.9			27.3		%	923.6			29.3		%
Selling & administrative ("S&A") expense			525.3			15.1		%	510.4			16.2		%
Operating income			425.6			12.2		%	413.2			13.1		%
Net income attributable to Hubbell Incorporated			282.0			8.1		%	270.3			8.6		%
EARNINGS PER SHARE – DILUTED			$	5.14					$	4.95

The following table reconciles each of our adjusted financial measures to the directly comparable GAAP financial measure (in millions, except per share amounts):

			Nine Months Ended September 30,
			2021			% of Net sales			2020			% of Net sales
Gross profit (GAAP measure)			$	950.9		27.3		%	$	923.6		29.3		%
Amortization of acquisition-related intangible assets			21.3			0.6		%	19.4			0.7		%
Adjusted gross profit			$	972.2		27.9		%	$	943.0		30.0		%
S&A expenses (GAAP measure)			$	525.3		15.1		%	$	510.4		16.2		%
Amortization of acquisition-related intangible assets			40.1			1.2		%	37.2			1.2		%
Adjusted S&A expenses			$	485.2		13.9		%	$	473.2		15.0		%
Operating income (GAAP measure)			$	425.6		12.2		%	$	413.2		13.1		%
Amortization of acquisition-related intangible assets			61.4			1.8		%	56.6			1.8		%
Adjusted operating income			$	487.0		14.0		%	$	469.8		14.9		%
Net income attributable to Hubbell Incorporated (GAAP measure)			$	282.0					$	270.3
Amortization of acquisition-related intangible assets			61.4						56.6
Loss on disposition of business			6.9						—
Loss on extinguishment of debt			16.8						—
Pension charge			—						6.6
Subtotal			$	85.1					$	63.2
Income tax effects(1)			20.6						15.9
Adjusted net income attributable to Hubbell Incorporated			$	346.5					$	317.6
Less: Earnings allocated to participating securities			(1.1)						(1.1)
Adjusted net income available to common shareholders			$	345.4					$	316.5
Average number of diluted shares outstanding			54.7						54.4
ADJUSTED EARNINGS PER SHARE – DILUTED			$	6.31					$	5.81

(1) The income tax effects are calculated using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction, unless otherwise noted.

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The following table reconciles our Organic net sales to the directly comparable GAAP financial measure (in millions and percentage change):

			For the Nine Months Ended September 30,
			2021			Inc/(Dec) %			2020			Inc/(Dec) %
Net sales growth (GAAP measure)			$	335.7		10.7			$	(339.6)		(9.7)
Impact of acquisitions			109.4			3.5			33.2			1.0
Impact of divestitures			(2.8)			(0.1)			(20.3)			(0.6)
Foreign currency exchange			15.3			0.5			(11.3)			(0.3)
Organic net sales growth (non-GAAP measure)			$	213.8		6.8			$	(341.2)		(9.8)

Net Sales

Net sales of $3.5 billion in the first nine months of 2021 increased by $335.7 million compared to the first nine months of 2020. Organic net sales increased by 6.8% primarily due to favorable price realization along with higher volume, an increase in Net sales of 3.5% from acquisitions and a 0.5% increase from foreign exchange.

Cost of Goods Sold

As a percentage of Net sales, cost of goods sold increased by 200 basis points to 72.7% in the first nine months of 2021, as compared to 70.7% in the first nine months of 2020. The increase was primarily driven by material cost inflation that exceeded favorable price realization, and higher freight, logistics and manufacturing costs, partially offset by higher volumes, savings from our restructuring and related actions and productivity initiatives.

Gross Profit

The gross profit margin in the first nine months of 2021 decreased by 200 basis points to 27.3% as compared to 29.3% in the first nine months of 2020. Excluding amortization of acquisition-related intangible assets, the adjusted gross profit margin was 27.9% in the first nine months of 2021 as compared to 30.0% in the same period of the prior year. The decrease in the adjusted gross profit margin primarily reflects material cost inflation that exceeded favorable price realization, and higher freight, logistics and manufacturing costs, partially offset by higher volumes, savings from our restructuring and related actions and productivity initiatives.

Selling & Administrative Expenses

S&A expense in the first nine months of 2021 was $525.3 million and increased by $14.9 million compared to the prior year period. S&A expense as a percentage of Net sales decreased by 110 basis points to 15.1% in the first nine months of 2021. Excluding amortization of acquisition-related intangible assets, adjusted S&A expense as a percentage of Net sales decreased by 110 basis points to 13.9% in the first nine months of 2021. The decrease in adjusted S&A expense as a percentage of Net sales is primarily due to higher organic sales and a reduction of bad debt expense in the 2021 nine month period compared to the same period in 2020, partially offset by the impact of compensation actions and other cost reductions in the second quarter of 2020 due to the COVID-19 pandemic that did not repeat in 2021 as operations normalized.

Total Other Expense

Total other expense increased by $6.9 million in the first nine months of 2021 to $68.2 million primarily due to a $16.8 million pre-tax loss on the early extinguishment of long-term debt recognized in the second quarter of 2021 from the redemption of the Company's $300 million long-term notes, which were scheduled to mature in 2022, and a $6.9 million loss on the disposal of a business, partially offset by a $6.6 million charge associated with pension settlement losses recognized in the third quarter of 2020, and $4.4 million decrease in interest expense and lower non-service pension costs.

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Income Taxes

The effective tax rate in the first nine months of 2021 decreased to 19.9% as compared to 22.3% in the first nine months of 2020 primarily due to favorable tax effects from stock based compensation and statute of limitation expirations on certain tax reserves as compared to the same period of the prior year.

Net Income Attributable to Hubbell Incorporated and Earnings Per Diluted Share

Net income attributable to Hubbell Incorporated was $282.0 million for the first nine months of 2021 and increased 4.3% as compared to the same period of the prior year. As a result, earnings per diluted share in the first nine months of 2021 increased 3.8% as compared to the first nine months of 2020. Adjusted net income attributable to Hubbell Incorporated, which excludes amortization of acquisition-related intangibles for both periods, the loss on extinguishment of debt and loss on the disposition of business in the 2021 period, and the loss on a pension charge in 2020, was $346.5 million in the first nine months of 2021 and increased by 9.1% as compared to the first nine months of 2020. Adjusted earnings per diluted share in the first nine months of 2021 increased by 8.6% as compared to the first nine months of 2020.

Segment Results

ELECTRICAL SOLUTIONS

			Nine Months Ended September 30,
(In millions)			2021			2020
Net sales			$	1,761.0		$	1,584.1
Operating income (GAAP measure)			201.3			171.1
Amortization of acquisition-related intangible assets			12.5			13.2
Adjusted operating income			$	213.8		$	184.3
Operating margin (GAAP measure)			11.4		%	10.8		%
Adjusted operating margin			12.1		%	11.6		%

The following table reconciles our Organic net sales to the directly comparable GAAP financial measure (in millions and percentage change):

			For the Nine Months Ended September 30,
Electrical Solutions			2021			Inc/(Dec) %			2020			Inc/(Dec) %
Net sales growth (GAAP measure)			$	176.9		11.2			$	(267.8)		(14.3)
Impact of acquisitions			18.6			1.2			12.4			0.7
Impact of divestitures			—			—			(20.3)			(1.0)
Foreign currency exchange			12.4			0.8			(4.2)			(0.2)
Organic net sales growth (non-GAAP measure)			$	145.9		9.2			$	(255.7)		(13.8)

Net sales in the Electrical Solutions segment in the first nine months of 2021 were $1,761.0 million and increased by $176.9 million, or 11.2%, as compared to the first nine months of 2020. The increase resulted from a 9.2% increase in organic net sales in the first nine months of 2021 as compared to the same prior year period, primarily due to higher unit volume, favorable price realization, a 1.2% increase in Net sales from acquisitions and 0.8% increase from foreign exchange. Higher unit volume was primarily driven by strong growth in the industrial markets during the 2021 period.

Operating income in the Electrical Solutions segment for the first nine months of 2021 was $201.3 million and increased approximately 17.7% compared to the first nine months of 2020, while the segment operating margin in the first nine months of 2021 increased by 60 basis points to 11.4%. Excluding amortization of acquisition-related intangibles, adjusted operating margin increased 50 basis points to 12.1%, as compared to the same prior year period. The increase in the adjusted operating margin in the first nine months of 2021 is primarily due to higher Net sales volume and higher savings from restructuring and related actions in 2021, including a gain on the sale of a facility, and productivity initiatives, partially offset by material cost inflation that was greater than favorable price realization, and higher freight, logistics and manufacturing costs. Acquisitions contributed 30 basis points to adjusted operating margin in the first nine months of 2021 as compared to the same period of the prior year.

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UTILITY SOLUTIONS

			Nine Months Ended September 30,
(In millions)			2021			2020
Net sales			$	1,722.8		$	1,564.0
Operating income (GAAP measure)			224.3			242.1
Amortization of acquisition-related intangible assets			48.9			43.4
Adjusted operating income			$	273.2		$	285.5
Operating margin (GAAP measure)			13.0		%	15.5		%
Adjusted operating margin			15.9		%	18.3		%

The following table reconciles our Organic net sales to the directly comparable GAAP financial measure (in millions and percentage change):

			For the Nine Months Ended September 30,
Utility Solutions			2021			Inc/(Dec) %			2020			Inc/(Dec) %
Net sales growth (GAAP measure)			$	158.8		10.1			$	(71.8)		(4.2)
Impact of acquisitions			90.8			5.8			20.8			1.3
Impact of divestitures			(2.8)			(0.2)			—			—
Foreign currency exchange			2.9			0.2			(7.1)			(0.3)
Organic net sales growth (non-GAAP measure)			$	67.9		4.3			$	(85.5)		(5.2)

Net sales in the Utility Solutions segment in the first Nine months of 2021 were $1,722.8 million, up $158.8 million, or 10.1%, as compared to the first nine months of 2020. The increase was primarily due to acquisitions net of divestitures, which contributed 5.6% to Net sales growth, and by a 4.3% increase in organic net sales, due to favorable price realization and higher unit volume.

Within the Utility Solutions segment, Net sales of our Utility T&D components businesses increased by 13.1% in the first nine months of 2021 as compared to the prior year period, primarily driven by 7.8% organic net sales growth, and 5.3% Net sales growth from acquisitions. Net sales of our Utility communications and controls businesses increased by 3.5% in the first nine months of 2021 as compared to the prior year period primarily due to Net sales growth from acquisitions net of divestitures of 6.7% and a 0.4% increase in Net sales from foreign exchange, partially offset by a 3.6% decline in organic net sales.

Operating income in the Utility Solutions segment for the first nine months of 2021 was $224.3 million and decreased by 7.4% compared to the first nine months of 2020. Operating margin in the first nine months of 2021 decreased to 13.0% as compared to 15.5% in the same period of 2020. Excluding amortization of acquisition-related intangibles, the adjusted operating margin for the 2021 period decreased by 240 basis points to 15.9%, primarily driven by increased material cost in excess of price realization, higher freight, logistics and manufacturing costs, partially offset by savings from restructuring and related actions and productivity initiatives. Adjusted operating income increased from acquisitions, but contributed 70 basis points to the decline in adjusted operating margin, due to higher manufacturing costs.

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Financial Condition, Liquidity and Capital Resources

Cash Flow

			Nine Months Ended September 30,
(In millions)			2021			2020
Net cash provided by (used in):
Operating activities			$	306.8		$	455.6
Investing activities			(53.5)			(46.4)
Financing activities			(252.4)			(316.1)
Effect of foreign currency exchange rate changes on cash and cash equivalents			(2.6)			(5.9)
NET CHANGE IN CASH AND CASH EQUIVALENTS			$	(1.7)		$	87.2

Cash provided by operating activities for the nine months ended September 30, 2021 was $306.8 million compared to cash provided by operating activities of $455.6 million for the same period in 2020 and decreased primarily due to changes in the components of working capital, including accounts receivable and inventories as we invested in working capital to serve customer demand and growth in our order backlog, partially offset by increases in accounts payable and other current liabilities in the first nine months of 2021 as compared to the same prior year period.

Cash used for investing activities was $53.5 million in the nine months ended September 30, 2021 compared to cash used of $46.4 million during the comparable period in 2020 and was driven by a $14.8 million increase in capital expenditures, partially offset by the proceeds received in conjunction with the disposal of the Consumer Analytics Solutions business.

Cash used by financing activities was $252.4 million in the nine months ended September 30, 2021 as compared to cash used of $316.1 million in the comparable period of 2020. The change in cash flows from financing activities primarily reflects a decrease from net repayments of debt in 2021 compared to 2020, as well as a lower use of cash in 2021 due to a decrease of $30.1 million in share repurchases compared to the same period in 2020. These factors were partially offset by the $16.0 million make whole premium incurred in 2021 due to the redemption of the 2022 Notes (as defined below).

The unfavorable impact of foreign currency exchange rates on cash was $2.6 million for the nine months ended September 30, 2021 and is primarily related to weakening of the Australian Dollar, Mexican Peso and British Pound versus the U.S. Dollar.

Investments in the Business

Investments in our business include cash outlays for the acquisition of businesses as well as expenditures to maintain the operation of our equipment and facilities and invest in restructuring activities.

We continue to invest in restructuring and related programs to maintain a competitive cost structure, to drive operational efficiencies and to mitigate the impact of rising material costs and administrative cost inflation. We expect our investment in restructuring and related activities to continue in 2021 as we continue to invest in previously initiated actions and initiate further footprint consolidation and other cost reduction initiatives.

In connection with our restructuring and related actions, we have incurred restructuring costs as defined by U.S. GAAP, which are primarily severance and employee benefits, asset impairments, accelerated depreciation, as well as facility closure, contract termination and certain pension costs that are directly related to restructuring actions. We also incurred restructuring-related costs, which are costs associated with our business transformation initiatives, including the consolidation of back-office functions and streamlining of our processes, and certain other costs and gains associated with restructuring actions. We refer to these costs on a combined basis as "restructuring and related costs", which is a non-GAAP measure. We believe this non-GAAP measure provides investors with useful information regarding our underlying performance from period to period. Restructuring costs are predominantly settled in cash from our operating activities and are generally settled within one year, with the exception of asset impairments, which are non-cash.

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The table below presents the restructuring and related costs incurred in the first nine months of 2021, additional expected costs, and the expected completion date of restructuring actions that have been initiated as of September 30, 2021 and in prior years (in millions):

			Costs incurred in the nine months ended September 30, 2021			Additional expected costs			Expected completion date
2021 Restructuring Actions			$	0.7		$	1.8		2022
2020 and Prior Restructuring Actions			2.8			3.4			2022
Total Restructuring cost (GAAP measure)			$	3.5		$	5.2
Restructuring-related costs			3.0			0.7
Restructuring and related costs (Non-GAAP)			$	6.5		$	5.9

During the first nine months of 2021, we invested $66.5 million in capital expenditures, an increase of $14.8 million from the comparable period of 2020 as we were selective with our 2020 capital expenditures as a result of the general slowdown in economic activity associated with the COVID-19 pandemic.

Stock Repurchase Program

On October 23, 2020 the Board of Directors approved a new stock repurchase program that authorized the repurchase of up to $300 million of common stock and expires in October 2023 (the "October 2020 program"). In the first nine months of 2021, the Company repurchased $11.2 million of shares of common stock authorized under the October 2020 program. At September 30, 2021, our remaining share repurchase authorization under the October 2020 program is $288.8 million. Subject to numerous factors, including market conditions and alternative uses of cash, we may conduct discretionary repurchases through open market or privately negotiated transactions, which may include repurchases under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended.

Debt to Capital

At September 30, 2021 and December 31, 2020, the Company had $1,434.9 million and $1,436.9 million, respectively, of long-term debt outstanding, net of the unamortized balance of capitalized debt issuance costs.

Revolving Credit Facility

On March 12, 2021, the Company, as borrower, and its subsidiaries Hubbell Power Holdings S.à r.l. and Harvey Hubbell Holdings S.à r.l., each as a subsidiary borrower (collectively, the “Subsidiary Borrowers”) entered into a new five-year credit agreement with a syndicate of lenders and JPMorgan Chase Bank, N.A., as administrative agent, that provides a $750 million committed revolving credit facility (the “2021 Credit Facility"). Commitments under the 2021 Credit Facility may be increased to an aggregate amount not to exceed $1.25 billion. The 2021 Credit Facility includes a $50 million sub-limit for the issuance of letters of credit. The sum of the dollar amount of loans and letters of credits to the Subsidiary Borrowers under the 2021 Credit Facility may not exceed $75 million. There were no borrowings outstanding under the 2021 Credit Facility at September 30, 2021.

The interest rate applicable to borrowings under the 2021 Credit Facility is (i) either the alternate base rate (as defined in the 2021 Credit Facility) or (ii) the adjusted LIBOR rate (as defined in the 2021 Credit Facility) plus an applicable margin based on the Company’s credit ratings. All revolving loans outstanding under the 2021 Credit Facility will be due and payable on March 12, 2026.

The 2021 Credit Facility contains a financial covenant requiring that, as of the last day of each fiscal quarter, the ratio of total indebtedness to total capitalization shall not be greater than 65%. The Company was in compliance with this covenant as of September 30, 2021. As of September 30, 2021, the 2021 Credit Facility was undrawn.

In connection with entry into the 2021 Credit Facility, the Company terminated all commitments under the existing credit facility dated as of January 31, 2018 (the "2018 Credit Facility"). In March 2020, the Company borrowed $100.0 million under the 2018 Credit Facility and subsequently repaid those borrowings in the second quarter of 2020.

Term Loan Agreement

The Company was also party to a Term Loan Agreement (the “Term Loan Agreement”) with a syndicate of lenders under which the Company borrowed $500 million on an unsecured basis to partially finance the Aclara acquisition on February 2, 2018. During the third quarter of 2020, the Company repaid in full the remaining principal outstanding under the Term Loan Agreement.

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Unsecured Senior Notes

On March 12, 2021, the Company completed a public offering of $300 million aggregate principal amount of its 2.300% Senior Notes due 2031 (the “2031 Notes” and collectively with those described below, the "Notes"). The net proceeds from the offering were approximately $295.5 million after deducting the underwriting discount and estimated offering expenses payable by the Company. The 2031 Notes bear interest at a rate of 2.300% per annum from March 12, 2021. Interest on the 2031 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2021. The 2031 Notes will mature on March 15, 2031.

The Company used the net proceeds from the offering of the 2031 Notes, together with cash on hand, on April 2, 2021 to redeem in full all of the Company’s outstanding 3.625% Senior Notes due in 2022 for an aggregate principal amount of $300 million, which had a stated maturity date of November 15, 2022, and to pay the premium and accrued interest in respect thereof. The redemption of the 2022 Notes resulted in a $16.8 million loss on extinguishment that was recognized in the second quarter of 2021.

At December 31, 2020, the Company had outstanding unsecured, senior notes in principal amounts of $300 million due in 2022 (the "2022 Notes"), $400 million due in 2026, $300 million due in 2027, and $450 million due in 2028. At September 30, 2021 the 2026, 2027 and 2028 notes were still outstanding in addition to the principal amounts of the 2031 Notes of $300 million.

The carrying value of the Notes, net of unamortized discount and the unamortized balance of capitalized debt issuance costs, was $1,434.9 million and $1,436.9 million at September 30, 2021 and December 31, 2020, respectively.

The Notes are callable at any time at specified prices and are only subject to accelerated payment prior to maturity upon customary events of default, or upon a change in control triggering event as defined in the indenture governing the Notes, as supplemented. The Company was in compliance with all covenants (none of which are financial) as of September 30, 2021.

Short-term Debt

At September 30, 2021 and December 31, 2020 the Company had $128.9 million and $153.1 million, respectively, of short-term debt outstanding composed of:

◦$127.0 million of commercial paper borrowings outstanding at September 30, 2021 and $150.0 million of commercial paper borrowings outstanding at December 31, 2020.

◦$1.9 million at September 30, 2021 and $3.1 million at December 31, 2020, respectively, of borrowings to support our international operations in China.

Net debt, defined as total debt less cash and investments, is a non-GAAP measure that may not be comparable to definitions used by other companies. We consider net debt to be a useful measure of our financial leverage for evaluating the Company’s ability to meet its funding needs.

(In millions)			September 30, 2021			December 31, 2020
Total Debt			$	1,563.8		$	1,590.0
Total Hubbell Incorporated Shareholders’ Equity			2,168.8			2,070.0
TOTAL CAPITAL			$	3,732.6		$	3,660.0
Total Debt to Total Capital			42		%	43		%
Cash and Investments			339.9			340.0
Net Debt			$	1,223.9		$	1,250.0
Net Debt to Total Capital			33		%	34		%

Liquidity

We measure liquidity on the basis of our ability to meet short-term and long-term operational funding needs, to fund additional investments, including acquisitions, and to make dividend payments to shareholders. Significant factors affecting the management of liquidity are cash flows from operating activities, capital expenditures, cash dividend payments, stock repurchases, access to bank lines of credit and our ability to attract long-term capital with satisfactory terms. In the first nine months of 2021, we returned capital to our shareholders by paying $159.8 million of dividends on our common stock and using $11.2 million of cash for share repurchases.

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We also require cash outlays to fund our operations, capital expenditures, and working capital requirements to accommodate anticipated levels of business activity, as well as our rate of cash dividends, and potential future acquisitions. We have contractual obligations for long-term debt, operating leases, purchase obligations, and certain other long-term liabilities that are summarized in the table of Contractual Obligations in our Annual Report on Form 10-K for the year ended December 31, 2020. As a result of the Tax Cuts and Jobs Acts of 2017 (the "TCJA"), we also have an obligation to fund, by annual installments through 2025, the Company's liability for the transition tax on the deemed repatriation of foreign earnings.

Our sources of funds and available resources to meet these funding needs are as follows:

◦Cash flows from operating activities and existing cash resources: In addition to cash flows from operating activities, we also had $257.9 million of cash and cash equivalents at September 30, 2021, of which approximately 10% was held inside the United States and the remainder held internationally.

◦Our 2021 Credit Facility provides a $750.0 million committed revolving credit facility and commitments under the 2021 Credit Facility may be increased (subject to certain conditions) to an aggregate amount not to exceed $1.250 billion. Annual commitment fees to support availability under the 2021 Credit Facility are not material. Although not the principal source of liquidity, we believe our 2021 Credit Facility is capable of providing significant financing flexibility at reasonable rates of interest and is an attractive alternative source of funding in the event that commercial paper markets experience disruption. However, an increase in usage of the 2021 Credit Facility related to growth or a significant deterioration in the results of our operations or cash flows could cause our borrowing costs to increase and/or our ability to borrow could be restricted. We have not entered into any guarantees that could give rise to material unexpected cash requirements. The full $750.0 million of borrowing capacity under the 2021 Credit Facility was available to the Company at September 30, 2021.

◦In addition to our commercial paper program and existing revolving credit facility, we also have the ability to obtain additional financing through the issuance of long-term debt. Considering our current credit rating, historical earnings performance, and financial position, we believe that we would be able to obtain additional long-term debt financing on attractive terms.

Critical Accounting Estimates

A summary of our critical accounting estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2020. We are required to make estimates and judgments in the preparation of our financial statements that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures. We continually review these estimates and their underlying assumptions to ensure they are appropriate for the circumstances. Changes in the estimates and assumptions we use could have a material impact on our financial results. During the nine months ended September 30, 2021, there were no material changes in our estimates and critical accounting policies.

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Forward-Looking Statements

Some of the information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Form 10-Q, contain “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. These include statements about our expectations regarding our financial results, condition and outlook, anticipated end markets, expected capital resources, liquidity, financial performance, pension funding, and results of operations and are based on our reasonable current expectations. In addition, all statements regarding the anticipated effects of the COVID-19 pandemic and the responses thereto, including the pandemic’s impact on general economic and market conditions, as well as on our business, customers, end markets, results of operations and financial condition and anticipated actions to be taken by management in response to the pandemic and related governmental and business actions, as well as other statements that are not strictly historic in nature are forward looking. In addition, all statements regarding anticipated growth, changes in operating results, market conditions and economic conditions, adoption of updated accounting standards and any expected effects of such adoption, restructuring plans and expected associated costs and benefits, intent to repurchase shares of common stock, and changes in operating results, anticipated market conditions and productivity initiatives, including those regarding the adverse impact of the COVID-19 pandemic on the Company's end markets, are forward looking. Forward-looking statements may be identified by the use of words, such as “believe”, “expect”, “anticipate”, “intend”, “depend”, “should”, “plan”, “estimated”, “predict”, “could”, “may”, “subject to”, “continues”, “growing”, “prospective”, “forecast”, “projected”, “purport”, “might”, “if”, “contemplate”, “potential”, “pending,” “target”, “goals”, “scheduled”, “will likely be”, and similar words and phrases. Discussions of strategies, plans or intentions often contain forward-looking statements. Important factors, among others, that could cause our actual results and future actions to differ materially from those described in forward-looking statements include, but are not limited to:

• Availability, costs and quantity of raw materials, purchased components, energy and freight, particularly as global economic activity recovers from the effects of the COVID-19 pandemic.

• The scope, duration, or resurgence of the COVID-19 pandemic and its impact on global economic systems, our employees, sites, operations, customers, and supply chain.

• Changes in demand for our products, market conditions, product quality, or product availability adversely affecting sales levels.

• Ability to effectively develop and introduce new products.

• Changes in markets or competition adversely affecting realization of price increases.

• Failure to achieve projected levels of efficiencies, cost savings and cost reduction measures, including those expected as a result of our lean initiatives and strategic sourcing plans.

• Impacts of trade tariffs, import quotas or other trade restrictions or measures taken by the U.S., U.K. and other countries, including the recent and potential changes in U.S. trade policies.

• Failure to comply with import and export laws.

• Changes relating to impairment of our goodwill and other intangible assets.

• Inability to access capital markets or failure to maintain our credit ratings.

• Changes in expected or future levels of operating cash flow, indebtedness and capital spending.

• General economic and business conditions in particular industries, markets or geographic regions, as well as inflationary trends.

• Regulatory issues, changes in tax laws, including revisions or clarifications of the TCJA, or changes in geographic profit mix affecting tax rates and availability of tax incentives.

• A major disruption in one or more of our manufacturing or distribution facilities or headquarters, including the impact of plant consolidations and relocations.

• Changes in our relationships with, or the financial condition or performance of, key distributors and other customers, agents or business partners which could adversely affect our results of operations.

• Impact of productivity improvements on lead times, quality and delivery of product.

• Anticipated future contributions and assumptions including changes in interest rates and plan assets with respect to pensions and other retirement benefits, as well as pension withdrawal liabilities.

• Adjustments to product warranty accruals in response to claims incurred, historical experiences and known costs.

• Unexpected costs or charges, certain of which might be outside of our control.

• Changes in strategy, economic conditions or other conditions outside of our control affecting anticipated future global product sourcing levels.

• Ability to carry out future acquisitions and strategic investments in our core businesses as well as the acquisition related costs.

• Ability to successfully execute, manage and integrate key acquisitions, mergers, and other transactions, as well as the failure to realize expected synergies and benefits anticipated when we make an acquisition.

• Unanticipated difficulties integrating acquisitions as well as the realization of expected synergies and benefits anticipated when we make an acquisition.

• The ability to effectively implement Enterprise Resource Planning systems without disrupting operational and financial processes.

• The ability of government customers to meet their financial obligations.

• Political unrest in foreign countries.

• The impact of Brexit and other world economic and political issues.

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• The impact of natural disasters or public health emergencies, such as the COVID-19 global pandemic, on our financial condition and results of operations.

• Failure of information technology systems, security breaches, cyber threats, malware, phishing attacks, break-ins and similar events resulting in unauthorized disclosure of confidential information or disruptions or damage to information technology systems that could cause interruptions to our operations or adversely affect our internal control over financial reporting.

• Incurring significant and/or unexpected costs to avoid, manage, defend and litigate intellectual property matters.

• Future repurchases of common stock under our common stock repurchase program.

• Changes in accounting principles, interpretations, or estimates.

• Failure to comply with any laws and regulations, including those related to data privacy and information security, environmental and conflict-free minerals.

• The outcome of environmental, legal and tax contingencies or costs compared to amounts provided for such contingencies, including contingencies or costs with respect to pension withdrawal liabilities.

• Improper conduct by any of our employees, agents or business partners that damage our reputation or subjects us to civil or criminal liability.

• Our ability to hire, retain and develop qualified personnel.

• Adverse changes in foreign currency exchange rates and the potential use of hedging instruments to hedge the exposure to fluctuating rates of foreign currency exchange on inventory purchases.

• Transitioning from LIBOR to a replacement alternative reference rate.

• Other factors described in our Securities and Exchange Commission filings, including the “Business”, “Risk Factors” and “Quantitative and Qualitative Disclosures about Market Risk” sections in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and in the Company's Quarterly Reports on Form 10-Q.

Any such forward-looking statements are not guarantees of future performances and actual results, developments and business decisions may differ from those contemplated by such forward-looking statements. The Company disclaims any duty to update any forward-looking statement, all of which are expressly qualified by the foregoing, other than as required by law.