Hammond Power Solutions Achieves Record Sales in 2025
Hammond Power Solutions Reports Strong Financial Performance
(Dollar amounts are in thousands, in Canadian currency unless otherwise specified)
Hammond Power Solutions Inc. (TSX: HPS.A), a leader in manufacturing dry-type transformers and related power quality products, recently announced impressive financial results for the second quarter of 2025. The company achieved record sales of approximately $224 million, reflecting a substantial growth of 13.8% compared to the same quarter in 2024.
Financial Highlights From Q2 2025
During this quarter, the financial highlights were remarkable:
- Sales reached $224 million, marking a 13.8% increase compared to Q2 2024.
- Adjusted EBITDA stood at $33 million, accounting for 14.9% of total sales.
- The gross margin was recorded at $68 million, representing 30.7% of sales.
- Net earnings reached $13.4 million, with adjustments due to share-based compensation.
- Adjusted earnings per share were $1.72, while earnings per share were $1.12.
- Despite a decrease in backlog by 8% from the previous quarter, it remains 9% higher year-over-year.
Management Comments
Adrian Thomas, CEO of Hammond Power Solutions, expressed pride in the company's performance, stating, "This quarter has shown our resilience in overcoming challenges. The completion of our new production facility in Mexico will further strengthen our operations as we begin shipments soon. Additionally, being recognized as a Great Place to Work across our global facilities is a true testament to our team's dedication. Our employees are fundamental to our success."
Market Performance Insights
The U.S. market displayed significant growth, particularly within the private label channel, contributing to stable revenue increases from existing customers as well as attracting new ones. The OEM and private label segments showcased robust performance alongside notable advancements in markets like mining, data centers, and commercial construction projects.
In Canada, the distribution channels also saw steady growth due to ongoing large projects in electric vehicle charging, public infrastructure, and other essential sectors.
Backlog and Supply Chain Dynamics
As reported for Q2 2025, the backlog showed an 8.4% increase year-over-year, though it decreased 8% from the previous quarter. The management noted ongoing uncertainties within supply chains but indicated that the impact on overall performance was manageable.
Challenges and Responses
Richard Vollering, CFO, noted the challenges faced in maintaining gross margins amid rising material costs and inflationary pressures. These issues led to a decline below expectations. However, the adjusted EBITDA margins remained healthy. Continuous capital investment due to expansion strategies might lead to short-term cash outflows but is expected to stabilize in the following quarters.
Profitability Metrics
Quarterly net earnings amounted to $13 million, down from $23 million in the same quarter last year. Despite this, year-to-date earnings show an increase, marking a positive trend. The basic earnings per share decreased to $1.12 from $1.98, yet the year-to-date earnings suggest an overall improvement within the Company's financial trajectory.
Dividends and Shareholder Returns
Hammond Power Solutions declared a quarterly cash dividend of $0.275 per Class A and Class B shares. The company remains committed to returning value to its shareholders through consistent dividend payments, amounting to a total of $0.55 year-to-date for both classes of shares.
Outlook for Future Quarters
Looking ahead, the company aims to leverage its existing strengths and optimize operations within its new facility in Mexico. The focus remains on maintaining strong customer relationships while adapting to market demands and cost structures. The fundamentals of the business remain strong, with executives optimistic about entering the third quarter.
Frequently Asked Questions
What financial results did Hammond Power Solutions report for Q2 2025?
Hammond Power Solutions reported record sales of $224 million in Q2 2025, alongside adjusted EBITDA of $33 million.
How did the company's backlog change in Q2 2025?
The backlog decreased by 8% compared to the first quarter of 2025 but was 9% higher than in Q2 2024.
What challenges did Hammond Power Solutions face in Q2 2025?
The company faced issues related to rising material costs and uncertainty in supply chains, which impacted gross margins.
What is the outlook for Hammond Power Solutions in future quarters?
The company anticipates leveraging new capabilities from its Mexico facility to enhance operational efficiency and maintain strong market relationships.
How has the stock performed in recent times?
While specific stock performance figures are not provided, the overall financial metrics suggest a stable and positive trajectory for Hammond Power Solutions moving forward.
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