Hammond Power Solutions (HPS) Q4 2025 earnings summary

Executive summary

• Revenue for 2025 reached CAD 898.3 million (or $898 million), up 13.9% year-over-year, with strong demand across key markets and significant expansion in manufacturing capacity.

• U.S. and Mexico sales grew 18.1%–24.1%, driven by distribution, private label, and custom-engineered solutions, especially for data centers and infrastructure.

• Backlog at year-end rose 122% year-over-year and 74% sequentially, reaching a record high and providing strong revenue visibility for 2026.

• Acquisition of AEG Power Solutions for CAD 365 million will expand global reach, recurring revenue, and exposure to high-growth markets.

• Growth supported by large multi-year custom projects and expansion in manufacturing capacity.

Financial highlights

• Fourth quarter revenue was CAD 254.1 million ($254.1 million), reflecting robust demand and shipment of delayed projects.

• Gross margin for the year was 30.3%, down from 32.8% last year, impacted by higher input costs, tariffs, and unabsorbed overhead from new capacity.

• Net earnings for 2025 were CAD 72.2 million ($72.2 million); adjusted EBITDA reached CAD 133.3 million ($133.3 million), a 1%–2% increase over 2024.

• SG&A expenses totaled CAD 168 million for the year, with CAD 52 million in Q4, reflecting higher share-based compensation and sales volumes; selling and distribution expenses rose 20.5% to $100.5 million, while G&A fell 11% to $67.8 million.

• Cash generated by operations for the year was $64.8 million; capital expenditures for 2025 were CAD 35.5 million ($35 million), focused on capacity expansion and maintenance.

Outlook and guidance

• Expanded capacity and record backlog position the company for continued momentum and efficient backlog conversion into revenue in 2026.

• Gross margin expected to improve as new facilities ramp up utilization, with Monterrey 4 ramping in Q1 and Monterrey 3 later in the year.

• CapEx for 2026 anticipated to be similar to 2025, with ongoing focus on capacity projects.

• Backlog now includes longer-term projects, with a significant portion extending into 2027.

• Investments in capacity and technology are expected to support continued growth in electrification and digital infrastructure markets.