Hammond Power Solutions (HPS) Q2 2025 earnings summary

Executive summary

• Achieved record quarterly sales of $224 million in Q2 2025, up 14% year-over-year, with strong growth across all market channels and regions, especially the U.S. market, which grew over 18% compared to Q2 2024.

• Gross margin was 30.7%, historically strong but below expectations due to higher material costs and ramp-up expenses for new Mexican facilities.

• Net earnings for Q2 were $13.4 million, impacted by higher share-based compensation; adjusted EPS was $1.72, basic EPS $1.12.

• New production facility in Mexico completed and ramping up, with shipments to begin later in 2025.

• Recognized for workplace culture and marketing excellence, including Great Place to Work certification and TED Magazine awards.

Financial highlights

• Adjusted EBITDA for Q2 2025 was $33.4 million, up 2–2.5% year-over-year; year-to-date adjusted EBITDA was $64.3 million, up 1%.

• Adjusted EPS was $1.72 for Q2 and $3.32 year-to-date, compared to $3.37 in the first two quarters of 2024.

• Net income for Q2 was $13.4 million; year-to-date net income was $39.6 million, up from $31.5 million in 2024.

• Capital expenditures were $8 million in Q2 and $20 million year-to-date, in line with the annual target of $35–$40 million.

• Working capital increased due to higher sales, inventory, and cash outlays for share-based compensation and taxes.

Outlook and guidance

• Expect to see margin benefits as new Mexican facilities ramp up and cost impacts diminish.

• Annual price increase implemented in April will flow through more fully in Q3 and Q4, helping offset material cost inflation.

• Shipment rates expected to remain consistent for the rest of the year, with additional capacity coming online in 2025.

• Management expects net cash outflow from working capital and capital expenditures to reverse in Q3.

• Continued focus on margin management, prudent overhead control, and working capital reduction below 20% of sales.