Hammond Power Solutions (HPS) Q4 2024 earnings summary

Executive summary

• Achieved double-digit revenue growth: Q4 revenues up 11.5% year-over-year to $208 million; full-year sales reached $788 million, up 11% for 2024.

• Expanded manufacturing capacity, including a new factory in Mexico and a $20 million investment, with a program to increase total capacity to over $1.1 billion by end of 2025.

• Completed the acquisition of Micron, strengthening OEM and industrial automation market presence, with nearly a full quarter of Micron sales contributing to results.

• Diversified sales channels, with 64% of sales through distribution partners and strong growth in Canada, India, and the U.S.

• Recognized for workplace culture and sustainability initiatives.

Financial highlights

• Net income for 2024 was $71.5 million, up from $63 million in 2023; Q4 net earnings were $23.7 million.

• Adjusted EBITDA reached $130.5 million (16.6% of sales) for 2024; Q4 Adjusted EBITDA was $32.5 million (15.6% of sales).

• EPS was $1.99 for Q4 and $6.01 for the year, both record highs.

• Gross margin for the year increased 30 basis points to 32.8%; Q4 gross margin was 32.7%.

• Cash generated by operations for the year was $64.8 million, up $20.6 million from 2023.

Outlook and guidance

• Expect continued strong demand in custom business, especially from emerging sectors like renewables and data centers.

• Inventory and working capital levels to remain elevated until warehousing transition completes in 2025.

• Capital expenditures projected at $40 million for 2025, with expansion program to finish by end of 2025.

• EBITDA margins expected in the 16-17% range, with one-time items from 2024 not recurring.

• Confident in adapting to tariff impacts and maintaining margins.