(Dollar amounts are in thousands, in Canadian currency unless otherwise specified)
GUELPH, Ontario, Oct. 29, 2024 (GLOBE NEWSWIRE) -- Hammond Power Solutions Inc. ("HPS” or the "Company”) (TSX: HPS.A) a leading manufacturer of dry-type transformers, power quality products and related magnetics, today announced its financial results for the third quarter 2024.
HIGHLIGHTS
- Sales of $192 million in the quarter, a 6.9% increase versus 2023.
- Adjusted EBITDA of $34,377 in the quarter, or 17.9% of sales.
- Gross margin of 33.8% for the quarter.
- Net earnings of $16.3 million in the quarter. Earnings per share of $1.37 for the quarter, significantly impacted by share-based compensation.
- Backlog increased by 4% over the second quarter of 2024.
| Geography | Quarter 3, 2024 | Quarter 3, 2023 | $ Change | %
Change | YTD 2024 | YTD 2023 | $
Change | % Change | |||||||||
| US & Mexico* | $ | 130,086 | $ | 129,762 | $ | 324 | 0.2 | % | $ | 393,994 | $ | 365,876 | $ | 28,118 | 7.7 | % | |
| Canada | 52,916 | 41,969 | 10,947 | 26.1 | % | 157,070 | 123,925 | 33,145 | 26.7 | % | |||||||
| India | 8,970 | 7,790 | 1,180 | 15.1 | % | 28,800 | 33,305 | (4,505 | ) | (13.5 | %) | ||||||
| Total | $ | 191,972 | $ | 179,521 | $ | 12,451 | 6.9 | % | $ | 579,864 | $ | 523,106 | $ | 56,758 | 10.9 | % | |
The U.S. distribution channel was up year-over-year, but down from the second quarter of 2024. The decline was due to weaker commercial construction and industrial markets over the summer, and primarily affected standard products while shipments of custom products remained resilient. Sales in the OEM and private label channels were slightly lower in the quarter compared to the prior year. The Canadian market was also lower versus the second quarter of 2024, but still achieved significant growth versus the prior year quarter through the distribution channel in both stock and flow product and large projects in commercial construction, electric vehicle charging, data centres, public infrastructure, mining, and utilities. As anticipated, Mesta sales increased in the quarter versus the second quarter of 2024 as a large order for induction heating products began to ship. India sales increased year-over-year in the quarter and were up by 10% versus the second quarter of 2024.
The Company's Quarter 3, 2024 backlog increased by 0.7% as compared to Quarter 3, 2023. Sequentially, the Company's backlog increased by 4.2% from Quarter 2, 2024 value even as our quarterly shipments continued at strong levels.
"We believe that slowing sales in standard, stocked product is a result of weaker economic conditions over the summer that affected electrical components markets broadly. We are pleased that margins continued to expand in the quarter, mainly due to a favourable product mix in both low voltage distribution and induction heating products. As a result, adjusted EBITDA reached a record 17.9% of sales in the quarter and 16.8% on a year-to-date basis,” said Richard Vollering, Chief Financial Officer of HPS. "Our cash position remained strong in the quarter, even with capital expenditures exceeding $13 million to support our capacity expansion programs. Inventory levels increased in the quarter partially as a result of slower standard product shipments, and partially due to higher carrying levels as we transition to a new consolidated warehousing strategy. We were pleased to announce that the acquisition of Micron assets was completed as of the second week of October, and are expected to contribute to the fourth quarter results.”
The Company saw an increase in its gross margin rate for the three months of Quarter 3, 2024 which was 33.8% compared to Quarter 3, 2023 margin rate of 31.7%, an increase of 220 basis points. The year-to-date gross margin rate has increased from 31.5% in 2023 to 32.8% in 2024, an increase of 130 basis points. Gross margins improved in the quarter due to a more favourable product mix.
Total selling and distribution expenses were $20,252 in Quarter 3, 2024 or 10.5% of sales versus $19,856 in Quarter 3, 2023 or 11.1% of sales, an increase of $396 or a decrease of 60 basis points. The quarter and year-to-date 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 were $21,024 or 11.0% of sales for Quarter 3, 2024 compared to Quarter 3, 2023 expenses of $16,504 or 9.2% of sales, an increase of $4,520 or 180 basis points. The increase is mainly due to higher share-based compensation costs, but also due to our ongoing strategic investments in people and resources to support our growth strategies as well as supporting higher levels of general business activity.
Net earnings for Quarter 3, 2024 finished at $16,311 compared to net earnings of $14,437 in Quarter 3, 2023, an increase of $1,874. The increase in the quarterly and year-to-date earnings is a result of higher sales and gross margin dollars, offset by an increase in share-based compensation expenses, general and administrative expenses, selling and distribution expenses and income tax expense.
EBITDA for Quarter 3, 2024 was $27,229 versus $23,657 in Quarter 3, 2023, an increase of $3,572 or 15.1%. Adjusted for foreign exchange loss/gain and share-based compensation expenses Adjusted EBITDA for Quarter 3, 2024 was $34,377, or 17.9% of sales, versus $25,688, or 14.3% of sales in Quarter 3, 2023, an increase of $8,689 or 33.8%.
Basic earnings per share was $1.37 for Quarter 3, 2024 versus $1.21 in Quarter 3, 2023, an increase of $0.16.
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 September 27, 2024 to shareholders of record at the close of business on September 20, 2024.
THREE MONTHS ENDED:
(dollars in thousands)
| September 28, 2024
| September 30, 2023 | Change | |||||||||
| Sales | $ | 191,972 | $ | 179,521 | $ | 12,451
| |||||
| Earnings from operations | $ | 23,665 | $ | 20,480 | $ | 3,185 | |||||
| Exchange loss (gain) | $ | 237 | $ | (725 | ) | $ | 962 | ||||
| Net earnings | $ | 16,311 | $ | 14,437 | $ | 1,874
| |||||
| Earnings per share Basic Diluted | $
$ | 1.37
1.37 | $ $ | 1.21 1.21 | $ $ | 0.16 0.16 | |||||
| Cash generated by operations | $ | 17,397 | $ | 22,159 | $ | (4,762 | ) | ||||
| EBITDA | $ | 27,229 | $ | 23,657 | $ | 3,572 | |||||
| Adjusted EBITDA* | $ | 34,377 | $ | 25,688 | $ | 8,689 | |||||
| Capital Spending | $ | 13,531 | $ | 9,231 | $ | 4,300 | |||||
NINE MONTHS ENDED:
(dollars in thousands)
| September 28, 2024 | September 30, 2023 | Change | ||||||||
| Sales | $ | 579,864 | $ | 523,106 | $ | 56,758 | ||||
| Earnings from operations | $ | 69,054 | $ | 62,060 | $ | 6,994 | ||||
| Exchange (gain) loss | $ | 1,442 | $ | (313 | ) | $ | 1,755 | |||
| Net earnings | $ | 47,853 | $ | 43,496 | $ | 4,357 | ||||
| Earnings per share Basic Diluted | $ $ | 4.02 4.02 | $ $ | 3.65 3.65 | $ $ | 0.37 0.37 | ||||
| Cash generated by (used in) operations | $ | 42,338 | $ | 23,988 | $ | 18,350 | ||||
| EBITDA | $ | 78,939 | $ | 69.246 | $ | 9,693 | ||||
| Adjusted EBITDA* | $ | 97,936 | $ | 80,147 | $ | 17,789 | ||||
| Capital Spending | $ | 30,886 | $ | 15,550 |
| |||||