May 6, 2026

Hammond Power Solutions Inc. has recently announced its financial results for the first quarter 2026.

QUARTERLY HIGHLIGHTS:

Record quarterly sales of $265 million, a 31.5% increase versus Q1 2025;
Gross margin improvement from the fourth quarter of 2025, from 29.2% to 30.1%
Quarterly adjusted EBITDA of $41 million, or 15.5% of sales;
Quarterly adjusted earnings per share of $2.08, an increase of 29.7% versus Q1 2025;
Backlog is 94.6% higher than Q1 2025

“HPS delivered a strong first quarter, with record sales driven by continued strength in the U.S. and Mexico, particularly in custom product shipments and data centre-related activity,” said Adrian Thomas, Chief Executive Officer of HPS. “Demand across our core end markets remained healthy, and even with our record shipments, we maintained backlog growth of 4.1% from year-end 2025, giving us continued visibility as we move through the balance of the year. The start-up of our newest factory in Mexico, which began shipping in the first quarter, is also an important step in supporting future growth and expanding our ability to serve customers across our markets.”

“Profitability and working capital metrics also improved in the quarter,” added Mr. Thomas. “We saw some recovery in our gross margin and adjusted EBITDA margin compared with the fourth quarter of 2025. While tariff-related input cost pressure remained a factor, the quarter reflected continued progress in converting demand into profitable growth and positions HPS to continue supporting customers as electrification and digital infrastructure investment drive demand for resilient and reliable power solutions.”

Sales in the U.S. market grew significantly year-over-year. January sales were unusually low due to fewer shipping days than normal while sales in February and March recovered to achieve record levels. Sales of custom product increased significantly in the first quarter driven by stronger sales to data centre applications. The increase in custom sales offset weakness in standard product sales in the quarter. The Canadian market shipped 3.2% more than the first quarter of 2025, but also slowed versus the fourth quarter of 2025, driven by the timing of some large custom projects. Canada is experiencing general softness and increasingly competitive pricing.

The Company’s Quarter 1, 2026 backlog increased by 94.6% as compared to Quarter 1, 2025, due to large projects largely driven by data centre activity. The Company’s backlog has increased 4.1% from Quarter 4, 2025, for similar reasons. With ongoing capacity expansion in several locations coming into place, we continue to improve competitive lead times, improving our ability to meet our customers’ needs.

The Company saw a slight decrease in its gross margin rate for Quarter 1, 2026 which was 30.1% compared to Quarter 1, 2025 margin rate of 31.5%, a decrease of 140 basis points. Quarter 1 represented an increase in the gross margin rate from 29.2% in Quarter 4, 2025. The decline in gross margin from prior year reflects the impact of tariffs, both direct and indirect, which affects input costs.

“Sales volumes increased versus the first quarter of 2025 due to significantly higher shipments of custom power transformers in the first quarter of 2026, as well as price increases. To a lesser degree, price realization also positively impacted sales versus the fourth quarter of 2025. As anticipated, shipments out of the new plant in Mexico began as scheduled and contributed to the volume increase. We saw an improvement of 90 basis points in the gross margin over the fourth quarter of 2025, growing from 29.2% to 30.1%. The improvement was the result of better price realization and improved factory overhead absorption.”, said Richard Vollering, Chief Financial Officer of HPS.

“We believe these positive sales and margin trajectories over the past two quarters represent a solid base as we move into the remaining quarters of 2026. Working capital increased in the quarter due to strong sales in March and the resulting accounts receivable balances. Our efforts to control inventory levels in the face of higher costs and sales resulted in a relatively small increase in the first quarter. As a result, working capital as a % of sales rose to 20.9% from 19.7% in the fourth quarter. Capital expenditures were $8.7 million in the quarter, in line with our expectations.”

Total selling and distribution expenses were $26,893 in Quarter 1, 2026 or 10.2% of sales versus $22,320 in Quarter 1, 2025 or 11.1% of sales, an increase of $4,573, which is mainly driven by higher sales volumes. The decrease of selling and distribution costs as a percentage of sales by 90 basis points is due to a higher proportion of custom sales in the quarter, which often have lower selling costs attributed to them.

General and administrative expenses and share based compensation were $23,653 or 8.9% of sales for Quarter 1, 2026 compared to Quarter 1, 2025 expenses of $3,745 or 1.9% of sales, an increase of $19,908 or 7.1% of sales. The change is mainly due to an increase in share-based compensation costs, ongoing strategic investments in people and resources to support our growth strategies and higher levels of general business activity.

Net earnings for Quarter 1, 2026 finished at $19,565 compared to net earnings of $26,222 in Quarter 1, 2025, a decrease of $6,657. The decrease in the quarterly earnings from operations is primarily a result of higher sales offset by lower gross margin rate, increased share-based compensation expenses, and higher selling, distribution, general and administrative expenses.

EBITDA for Quarter 1, 2026 was $33,941 versus $40,697 in Quarter 1, 2025, a decrease of $6,756. Adjusted for foreign exchange loss/gain and share-based compensation expenses adjusted EBITDA for Quarter 1, 2026 was $41,041 versus $30,916 in Quarter 1, 2025, an increase of $10,125 or 32.8%.

Basic earnings per share were $1.64 for Quarter 1, 2026 versus $2.20 in Quarter 1, 2025, a decrease of $0.56. Adjusted for foreign exchange loss/gain and share-based compensation expenses adjusted earnings per share² were $2.08 for Quarter 1, 2026 versus $1.60 in Quarter 1, 2025, an increase of $0.48.

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 27, 2026 to shareholders of record at the close of business on March 19, 2026. The ex-dividend date was March 19, 2026.