Hammond Power Solutions Inc. (OTC:HMDPF)

Hammond Power Solutions Inc. (HMDPF) (HPS-A:TO) ($98.5; $1.17B market cap) (Toronto symbol HPS-A.TO) announced Q1 results:

• Sales of $190.6 million vs $171.1 in the prior year, ahead of analyst estimates of $188.3 million
• GAAP EPS of $0.67 vs $1.32 in the prior year, significantly impacted by share-based compensation.
• Adding back the share based comp, EPS would of been $2.07 vs $1.72 in the prior year with analyst estimates at $1.37

“We begin 2024 at a strong pace as we continued to grow our quarterly sales volumes.  Higher bookings versus 2023 maintained the backlog even with higher shipments, and we are now seeing bookings and shipments somewhat evenly matched.  The distribution network stood out again as a source of strength as more projects continued to flow through this channel.  Canada was also a standout as we shipped several key projects in commercial construction, electric vehicle (“EV”) charging, data centers, public infrastructure, oil & gas, mining, and utilities,” said Adrian Thomas, CEO of Hammond Power Solutions. “With the strong project demand, we have made further commitments to equipment spending as we forecast demand from emerging market segments to continue. We also implemented a price increase that will take effect in the second quarter of 2024, after having not done so since 2022. The increase was in consideration of persistent inflation and resilient demand. Regarding the Mesta and Power Quality business, a large customer project delay impacted our shipments for the quarter, but we still expect full year shipments to remain close to expectations. We are gaining recognition within the technical community and among our customers, as demonstrated by receiving the Rockwell Automation Technology Partner Innovation award for our Active Harmonic Filter.”

HMDPF designs, manufactures, and sells custom electrical engineered magnetics, standard electrical dry-types, cast resins, liquid filled transformers, and wound magnetic products for electrical and electronic industries.

Hammond Power Solutions Inc. (HMDPF) (HPS-A:TO) ($44.29; $529.0M market cap) (Toronto symbol HPS-A.TO) announced Q4 and full year 2023 results: 

• Sales of $186.9 million vs $144.2 million in the prior year 
• EPS of $1.68 vs $1.53 in the prior year 
• Full year sales of $710.1 million vs $558.5 million in the prior year
• Full year EPS of $5.33 vs $3.77 in the prior year

“Through 2023, our efforts to build capacity to support demand growth have paid off, as inventory levels recovered and lead times for many facilities came back in line with customer expectations. In 2024, the bulk of our announced capital expenditures will be spent and will provide us with more than $900 million in yearly manufacturing capacity by 2025.”

HMDPF designs, manufactures, and sells custom electrical engineered magnetics, standard electrical dry-types, cast resins, liquid filled transformers, and wound magnetic products for electrical and electronic industries.

Hammond Power Solutions Inc. (HMDPF) (HPS-A:TO) ($29.78; $351.7M market cap) (Toronto symbol HPS-A.TO) designs, manufactures, and sells custom electrical engineered magnetics, standard electrical dry-types, cast resins, liquid filled transformers, and wound magnetic products for electrical and electronic industries. The company announced Q1 2023 results: (Financials are in CAD)

• Sales of $171.1 million vs $127.8 million in the prior year and ahead of analyst estimates of $148.8 million
• EPS of $1.32 vs $0.72 in the prior year and well ahead of analyst estimates of $0.92
• Backlog up 74.1%

“Following a robust 2022, we are starting 2023 off on the right foot with continued growth. Quotation activity is up significantly over both Q4 and the same quarter a year ago, and booking rates remain at or near our highest historical levels in diverse markets like renewable power generation, EV recharging, energy storage, data center construction, silicon carbide processing, industrial expansions, power quality, and large institutional projects like hospitals and industrial buildings,” said Bill Hammond, Chief Executive Officer of Hammond Power Solutions. “Our production capacity expansion plans announced in December 2022 are proceeding as planned. The $40 million dollars of capital investment are expected to accommodate sales growth of $250 million over the next five years.” 

Shares are up ~90% since our reasons for tracking note back in November 2022. 

Hammond Power Solutions Inc. (HMDPF) (Toronto symbol HPS-A.TO) designs, manufactures, and sells custom electrical engineered magnetics, standard electrical dry-types, cast resins, liquid filled transformers, and wound magnetic products for electrical and electronic industries. On November 17, 2022 we issued our brief Reasons For Tracking piece on the company which can be seen here.

On December 20, 2022 the company announced its plans to expand capacity to meet the growing demand it is seeing. 

“HPS continues to experience a very favorable environment where the electrification of our economy continues to drive strong demand in our industry”, said Bill Hammond, CEO of HPS. “These planned capital investments are expected to be made over the course of 2023 and 2024, and when complete, are expected to increase HPS’ overall sales capacity by approximately $180 million.

These planned capital investments are focused on areas targeted to increase capacity and reduce lead times for low voltage, power quality and induction heating products.”

First Quarter 2022 Results:

• Sales of $128 million vs $80.1 million in the prior year
• EPS $0.72 vs $0.19 in the prior year

“We are now seeing the full impact of the price increases implemented in 2021. The increase in sales and backlog is driven by significantly higher prices versus a year ago and higher demand, particularly in our OEM markets. Margins were strong in the quarter as pricing caught up to costs, and as we benefitted from strong OEM project margins,” said Richard Vollering CFO of Hammond. “Looking forward in 2022, raw material costs continue to rise and as a result we will continue to monitor our pricing and make adjustments to maintain our margins. In parallel, we continue to see supply chain volatility that will continue to challenge us through the balance of 2022.”