Hammond Power Solutions (HPS) Q3 2025 earnings summary

Executive summary

• Revenue reached $218 million in Q3 2025, a 14% year-over-year increase, marking the second-best quarter for shipments, driven by strong U.S. market performance and robust data center demand.

• Net earnings were $17.44 million, or $1.46 per share; adjusted EPS was $1.56.

• U.S. shipments grew across all channels, especially private label and distribution, with custom product sales outpacing stock products.

• Significant data center project orders were booked post-quarter, expected to drive future growth.

• Backlog increased 28% since the start of the year, with 53% of Q3 closing backlog from large data center orders, most to be shipped from new Mexico facilities over the next 12–18 months.

Financial highlights

• Gross margin was 30.1% in Q3 2025, down from 33.8% in Q3 2024, due to higher input costs, tariffs, and unabsorbed overheads in new Mexico factories.

• Adjusted EBITDA was $30.29 million, down from $34.38 million in Q3 2024.

• Year-to-date sales reached $644.2 million, up 11.1% from 2024.

• Working capital requirements increased, mainly due to higher inventories from project delays, safety stock, and tariffs.

• General and administrative costs grew more slowly, improving leverage.

Outlook and guidance

• Pricing adjustments implemented in late Q3 are expected to improve margins in Q4 as they take full effect.

• Increased backlog and ramp-up in Mexico facilities are anticipated to alleviate margin pressures and improve absorption in 2026.

• Ongoing strong quotation and order activity, especially for large data center projects, supports a positive outlook.

• Data center activity and orders are expected to support growth into 2026, with new facilities in Mexico being reconfigured for increased volume.

• Pricing actions and supplier negotiations are expected to offset recent tariff impacts.