Hammond Power Solutions Sees Growth Despite Market Challenges
Hammond Power Solutions Achieves Impressive First Quarter Results
(Dollar amounts are in thousands, in Canadian currency unless otherwise specified)
GUELPH, Ontario — Hammond Power Solutions Inc. (TSX: HPS.A), a notable manufacturer of dry-type transformers, power quality products, and related magnetics, has made a strong statement with its financial results for the first quarter of 2025.
Key Financial Highlights
The company reported sales amounting to $201 million in this quarter, reflecting a robust increase of 5.6% compared to the same period in 2024. The adjusted EBITDA stood at $30,916, contributing to a rate of 15.4% of sales, while the gross margin reached $63.5 million, which is 31.5% of overall sales.
Backlog and Market Performance
Hammond Power Solutions has shown a solid performance with a net earnings of $26.2 million, significantly affected by share-based compensation adjustments. The earnings per share for this quarter was $2.20, with an adjusted earnings per share of $1.60. Furthermore, the backlog at the end of the quarter indicated a healthy increase of 17.7% when compared to the end of 2024.
“We are thrilled to report growth during a quarter riddled with trade-tariff uncertainties. Despite a reduction in custom shipments, demand remains strong in key markets, supported by a remarkable 17.7% surge in backlog compared to the last quarter of 2024. With our new facility ramping up production more quickly than anticipated, we look forward to stronger shipments of custom products as the year unfolds,” said Adrian Thomas, CEO of Hammond Power Solutions.
Geographic Sales Overview
In the U.S. and Mexico, sales totaled $140,906, which marks a notable increase of $10,174 from the previous year, while Canadian sales increased by 6.9%. In contrast, India experienced a decline in sales due to shifting customer demands and project timelines. Overall, total sales reached $201,403, a commendable achievement that showcases Hammond Power Solutions’ adaptation in a competitive landscape.
Sales Growth Drivers
Sales within the stock products category saw an upward trajectory, whereas custom product sales had a downturn largely influenced by the timing of shipments. Noteworthy is the private label sales surge attributed to robust data centre applications. The first quarter results indicate a notable rebound in February and March after a sluggish January, primarily driven by enhanced standard product shipments.
Financial Metrics and Adjustments
While the gross margin decreased slightly compared to the previous year, risk factors such as rising material and labor costs as well as a shift in sales mix have necessitated strategic consideration. In February 2025, a price adjustment was communicated, one that began implementation in April, aimed at counteracting increased costs associated with production.
Total selling and distribution expenditures increased to $22,320, marking 11.1% of sales, primarily due to higher variable freight and commission expenses resulting from escalated sales volumes. Meanwhile, general and administrative expenses saw a stark decrease, reflecting the company’s prudential cost management strategy.
Concluding Financial Results
Hammond Power Solutions reported substantial net earnings of $26,22 compared to $7,952 in the prior year, a significant increase stemming from improved sales and managed operational costs. Adjusting for exchange fluctuations and share-based compensation, the adjusted EBITDA stood at $30,916, reflecting the company’s continued strong performance despite some fluctuations.
The Board of Directors also deemed it suitable to declare a quarterly cash dividend of $0.275 per Class A Subordinate Voting Share and Class B Common Share as a commitment to shareholders, further solidifying their trust in the company’s financial health.
Future Outlook and Opportunities
With a promising backlog driven by substantial data centre projects, Hammond Power Solutions continues to position itself as a pivotal player in the electrical equipment market. The strategic moves involving increased production capacities and enhancements in product offerings suggest a forward-thinking approach amid an evolving marketplace.
Company Overview
Hammond Power Solutions Inc. is dedicated to enabling electrification across diverse industries. Their vast portfolio of transformers, power quality products, and magnetics caters to a wide array of applications, establishing the company as an integral presence within electrical distribution networks worldwide.
Frequently Asked Questions
What are the key financial highlights for Hammond Power Solutions in Q1 2025?
Sales reached $201 million, a 5.6% increase, with net earnings at $26.2 million and an adjusted EBITDA of $30,916.
How did geographic sales perform in the first quarter?
Sales in the U.S. and Mexico increased by 7.8%, while Canada saw a 6.9% rise. However, India faced a decline due to customer demand shifts.
What challenges did Hammond Power Solutions face during the quarter?
The company navigated trade tariff uncertainties, a decline in custom product shipments, and increased operational costs affecting gross margins.
What is the company’s outlook for the rest of 2025?
With a growing backlog and improved production rates, Hammond Power Solutions expects to increase custom product shipments in the latter half of the year.
Who can I contact for more information about the company?
For inquiries, you can contact David Feick, Investor Relations at 519-822-2441 x453 or email ir@hammondpowersolutions.com.
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