Hammond Power Solutions Reports First Quarter 2025 Financial Results

May 2, 2025

Hammond Power Solutions Inc. has recently announced its financial results for the first quarter 2025.

HIGHLIGHTS

• Sales of $201 million in the quarter, a 5.6% increase versus Quarter 1, 2024.
• Adjusted EBITDA of $30,916 in the quarter, or 15.4% of sales.
• Gross margin was $63.5 million or 31.5% of sales in Quarter 1, 2025, versus $60.5 million or 31.7% in Quarter 1, 2024.
• Net earnings of $26.2 million in the quarter, significantly impacted by share-based compensation.
• Earnings per share of $2.20. Adjusted earnings per share of $1.60.
• Backlog at the end of the quarter increased by 17.7% versus December 31, 2024.

“We are pleased to report that same‑quarter sales grew 5.6% to $201 million, underscoring the resilience of our business in a period marked by trade‑tariff uncertainty,” said Adrian Thomas, CEO of Hammond Power Solutions. “While we experienced lower custom shipments this quarter, we continue to see strong demand in certain markets and we finished with a 17.7% increase in backlog over Q4 2024. When combined with our new factory coming online faster than planned, we can anticipate a favorable shift towards more custom product shipments in the latter half of the year.”

	Q1 2025	Q1 2024	$ Change	% Change
U.S. & Mexico	$140,906	$130,732	$10,174	7.8%
Canada	51,635	48,296	3,338	6.9%
India	8,862	11,6562	(2,790)	(23.9%)
Total	$201,403	$190,680	$10,723	5.6%

Sales in the U.S. market grew slightly year-over-year but slowed in the first quarter of 2025 versus the fourth quarter of 2024, mainly due to lower induction heating (“IHI”), Latam, and OEM sales. January sales were unusually low, while sales in February and March recovered to expected levels. Sales of stock products grew versus the fourth quarter, while sales of custom products declined, primarily due to the shipment timing. Private label sales grew considerably year- over-year, with growth led by stronger sales to data centre applications. The Canadian market shipped 6.9% more than the first quarter of 2024, but also slowed versus the fourth quarter of 2024, also driven by the timing of some large custom projects.

The Company’s Quarter 1, 2025 backlog increased by 18.9% as compared to Quarter 1, 2024, due to large projects driven mostly by data centre activity. The Company’s backlog has increased 17.7% from Quarter 4, 2024, for similar reasons.

“While January started off slow, sales momentum picked up in February and March, notably driven by increasing standard product shipments. The quarterly gross margin was lower than Quarter 4, 2024 at 31.5% and consequently the adjusted EBITDA margin was 15.4%,” said Richard Vollering, CFO of Hammond Power Solutions. “Working capital requirements increased in the quarter mainly as a result of a build-up of raw materials to meet upcoming project delivery requirements, as well as typically higher first quarter accrual disbursements.”

The Company saw a slight decrease in its gross margin rate for Quarter 1, 2025 which was 31.5% compared to Quarter 1, 2024 margin rate of 31.7%, a decrease of 20 basis points. The decline in gross margin reflects increased material and labour costs, and a shift in product mix to relatively more standard products. The company announced a price increase in February, which began to take effect for catalogue-based products in April of 2025, which should offset these higher costs.

Total selling and distribution expenses were $22,320 in Quarter 1, 2025 or 11.1% of sales versus $21,067 in Quarter 1, 2024 or 11.0% of sales, an increase of $1,253 or 0.1% of sales. The year-over-year increase in selling and distribution expenses is a result of higher variable freight and commission expenses attributed to the large increase in sales.

General and administrative expenses were $3,745 or 1.9% of sales for Quarter 1, 2025 compared to Quarter 1, 2024 expenses of $29,139 or 15.3% of sales, a decrease of $25,394 or 13.4% of sales. The decrease is mainly due to recovery of share-based compensation costs offset by ongoing strategic investments in people and resources to support HPS’ growth strategies as well as supporting higher levels of general business activity.

Net earnings for Quarter 1, 2025 finished at $26,222 compared to net earnings of $7,952 in Quarter 1, 2024, an increase of $18,270. The increase in the quarterly earnings from operations is primarily a result of higher sales offset by a lower gross margin rate, and a recovery of share-based compensation expenses offset by higher selling, distribution, general and administrative expenses.

EBITDA for Quarter 1, 2025 was $40,697 versus $14,999 in Quarter 1, 2024, an increase of $25,698. Adjusted for foreign exchange loss/gain and share-based compensation expenses adjusted EBITDA for Quarter 1, 2025 was $30,916 versus $30,972 in Quarter 1, 2024, a decrease of $56 or 0.2%.

Basic earnings per share were $2.20 for Quarter 1, 2025 versus $0.67 in Quarter 1, 2024. Adjusted for foreign exchange loss/gain and share-based compensation expenses adjusted earnings per share were $1.60 for Quarter 1, 2025 versus $1.66 in Quarter 1, 2024.

The Board of Directors of HPS declared a quarterly cash dividend of twenty-seven and a half cents ($0.275) per Class A Subordinate Voting Share of HPS and a quarterly cash dividend of twenty-seven and a half cents ($0.275) per Class B Common Share of HPS paid on March 28, 2025.

THREE MONTHS ENDED:
(dollars in thousands)

* EBITDA adjusted for foreign exchange gain or loss and share based compensation

Exercise caution with regards to forward-looking information. Such information represents current views within an organization, but no assurance is given that such views will remain accurate moving forward as outcomes may prove different than expected or stated.

For more information, visit the Hammond Power Solutions website HERE.