Hammond Power Solutions (HPS) 2024 Southwest IDEAS Conference summary

Company overview and market positioning

• Over 100 years in business, evolved from consumer radios to a leading manufacturer of dry-type transformers and power quality equipment, with a focus on custom solutions for B2B markets.

• Operates globally with 22+ locations and 2,000+ employees, leveraging a network of nearly 3,000 distributors for broad market access.

• Focuses on commercial, industrial, and renewable sectors, with products supporting electrification, data centers, e-mobility, and microgrids.

• Holds a strong position in North America, especially in dry-type transformers, and is expanding in India and Southeast Asia through targeted acquisitions and exports.

• Competes with global players by excelling in customization, scale, and distribution, and also private labels for major industry names.

Industry trends and growth drivers

• Electrification and rising power demand are major tailwinds, with global transformer market estimated at $50B and North America at $7B, 30% of which is dry-type.

• Key growth drivers include government infrastructure spending, reshoring, data center expansion, and renewable energy projects.

• Aging infrastructure in the U.S. and the need for upgrades are fueling demand for new electrical systems and transformers.

• Company benefits from industry constraints, high demand, and the logistical challenges of shipping heavy transformers, creating geographic moats.

• Market share is gained through both standard and custom products, with ongoing CapEx projects to expand capacity for large custom orders.

Business model and operational strengths

• Distribution through electrical wholesalers and OEMs provides access to diverse sectors; private label manufacturing extends reach.

• Scale enables purchasing power, supply chain resiliency, and manufacturing flexibility, with 55% of revenue from custom products.

• Customization is supported by deep engineering expertise and proprietary software for design and cost optimization.

• U.S. market entry was accelerated by 2016 DOE efficiency changes, leveraging engineering depth to redesign products and gain share.

• India operations focus on exports, renewables, and service, while North America remains the core market.