Hammond Power Solutions Reports Fourth Quarter 2024 Financial Results
(Dollar amounts are in thousands, in Canadian currency unless otherwise specified)
GUELPH, Ontario, March 20, 2025 (GLOBE NEWSWIRE) -- Hammond Power Solutions Inc. ("HPS") (TSX:HPS) a leading manufacturer of dry-type transformers, power quality products and related magnetics, today announced its financial results for the fourth quarter 2024.
HIGHLIGHTS
Record sales of $208 million in the quarter, an increase of 11.5% versus 2023. Year-to-date sales were $788 million, an increase of 11% versus 2023.
Adjusted EBITDA of $32,548 in the quarter, or 15.6% of sales.
Year-to-date Adjusted EBITDA is $130,484, or 16.6% of sales.
Gross margin of 32.7% for the quarter, 32.8% year-to-date.
Net earnings of $23.7 million and earnings per share of $1.99 for quarter 4, 2024.
Net earnings of $71.5 million and earnings per share of $6.01 year-to-date 2024.
"We are very pleased that we completed the year with record sales of $208 million. Strong shipments in the quarter were seen in Canada, India, and the United States. Significant Mesta projects also shipped in the quarter, and we reported nearly a full quarter of Micron sales, on track with our expectations" said Adrian Thomas, CEO of Hammond Power Solutions. "As with the previous quarter, there was a notable shift in product mix towards custom and configured products. On a year-to-date basis, sales were up 11%, and backlog remained steady from Q3 to Q4 as we shortened our lead times on custom power products while at the same time shipping more products overall in the quarter. Gross margins remained strong in the quarter and for the year. The high volume drove a record earnings per share of $1.99 for the quarter and $6.01 for the year. 2024 closed as another record year for HPS in terms of profitability, but just as importantly, we were successful at continuing to build a stronger company to continue growth into the future."
Geography
Q4 2024
Q4 2023
$ Change
% Change
2024
2023
$ Change
% Change
U.S. & Mexico
$
140,894
$
123,703
17,191
13.9
%
$
534,888
$
489,579
45,309
9.3
%
Canada
58,324
51,694
6,630
12.8
%
215,394
175,619
39,775
22.6
%
India
9,258
11,561
(2,303)
-19.9
%
38,058
44,866
(6,808)
-15.2
%
Total
$
208,476
$
186,958
21,518
11.5
%
788,340
710,064
78,276
11.0
%
The U.S. market experienced its strongest growth in the distributor channel with growth primarily driven by increasing sales in custom and configured products. General economic conditions in the U.S. deteriorated mid-year with slower industrial and commercial construction markets. The lower sales primarily affected standard stock and flow product, while shipments of custom product remained resilient. The Original Equipment Manufacturer ("OEM") and private label channels grew moderately year-over-year, led by stronger sales to private label, capital equipment, mining and data centres.
The Canadian market was very strong in the year. It continued to achieve year-over-year growth through distribution channels in both stock and flow product and large projects in commercial construction, data centres, public infrastructure, mining and utilities.
The Company's December 31, 2024 backlog decreased by 0.3% as compared to December 31, 2023 and has decreased 0.1% from Quarter 3, 2024. During the second half of the year, commercial construction and industrial markets began to moderate in their growth profile, while our capacity additions allowed us to ship more backlog than previous quarters.
"By most metrics, the fourth quarter was positive." said Richard Vollering, CFO of Hammond Power Solutions. "Favourable sales and margins resulted in record profitability. Offsetting this, there were some late-year charges relating to the Micron acquisition and other investment initiatives that increased general and administrative expenses late in the quarter. Many of these expenses were project specific and we expect that SG&A will moderate to previous levels going forward. Working capital increased significantly, primarily due to a continued build-out of inventory to support our new warehousing initiatives. These levels will remain elevated until the transition is completed in 2025. Capital expenditures were $41 million for the year, related to our capacity expansion projects. The remainder of our program should be completed by the end of 2025, and will bring our total capacity to over $1.1 billion."
The consolidated gross margin in 2024 increased to 32.8% versus 32.5% in 2023, an increase of 30 basis points. The improvement in gross margin was the result of higher volume that resulted in better operating leverage and a higher margin product mix as a result of relatively more custom and configured product sales. These areas of improvement were offset by slightly higher commodity costs and start-up costs at the new factory in Mexico.
Total selling and distribution expenses were $83,412 for 2024 versus $76,283 in 2023, an increase of $7,129 or 9.3%. On a percentage-of-sales basis, total selling and distribution expenses decreased to 10.6% of sales for 2024 from 10.7% in 2023. The year-over-year increase in selling and distribution expenses is a result of higher variable freight and commission expenses attributed to the increase in sales.
General and administrative expenses in 2024 were $76,106 compared to $68,007 for 2023, an increase of ...
