Hammond Power Solutions (HPS) Q1 2025 earnings summary

Executive summary

• Q1 2025 sales reached CAD 201 million, up 6% year-over-year, with backlog growth of over 17% indicating robust demand for custom products.

• Net earnings surged to $26.2 million from $8.0 million in Q1 2024, driven by higher sales and recovery of share-based compensation expenses.

• Integration of Micron contributed to growth, expanding product offerings and U.S. manufacturing capabilities.

• Inventory increased in Q1 due to safety stock buildup for upcoming projects, with normalization expected as the year progresses.

• Sustainability initiatives led to a 3.2% improvement in energy efficiency and over 70% waste diversion.

Financial highlights

• Gross margin was 31.5% in Q1 2025, down 20 bps year-over-year due to higher input costs and product mix.

• Adjusted EBITDA was CAD 30.9 million (15.4% of sales), nearly flat year-over-year.

• Adjusted EPS was CAD 1.60, compared to CAD 1.66 in Q1 2024; basic EPS was $2.20, up from $0.67.

• Selling and distribution expenses rose to $22.3 million (11.1% of sales), mainly from higher freight and commissions.

• Cash used in operations was $3.0 million, reflecting increased working capital for raw materials and project delivery.

Outlook and guidance

• Price increase for catalog products implemented in April is expected to support margins in Q2 and beyond.

• Backlog growth, especially in data centers, is expected to drive custom product demand through the year and into 2026.

• No changes to capital expansion plans, but increased vigilance on cost management amid market uncertainty.