(Dollar amounts are in thousands unless otherwise specified)
STRONG QUARTER
- 19% sales increase in the quarter
- Continued margin growth
- Net earnings increased $1,464 from same quarter last year
- Earnings per share up $0.13 from Quarter 3, 2016
GUELPH, Ontario, Oct. 26, 2017 (GLOBE NEWSWIRE) -- Hammond Power Solutions Inc. (“HPS”) (TSX:HPS.A) a leading manufacturer of dry-type and cast resin transformers and related magnetics, today announced its financial results for the Third Quarter of 2017.
THIRD QUARTER RESULTS
Sales for the quarter-ended September 30, 2017 were $74,685, an increase of $11,825 or 18.8% from Quarter 3, 2016 sales of $62,860. Year-to-date 2017 sales were $225,921 compared to $200,720 in 2016, an increase of $25,201 or 12.6%. Sales in the United States (“U.S.”) increased by $5,341 or 14.7%, finishing at $41,691 for Quarter 3, 2017 compared to $36,350 in Quarter 2, 2016. Year-to-date U.S. sales were $129,442 in 2017 and $114,207 in 2016, an increase of $15,235 or 13.3%. Canadian sales were $25,308 for the quarter, surging $6,131 or 32.0% over Quarter 3, 2016 sales of $19,177. Year-to-date Canadian sales were $61,973 in 2017 compared to $59,598 in 2016, an increase of $2,375 or 4.0%. International sales for Quarter 3, 2017 finished at $7,686 versus $7,333 in Quarter 3, 2016, an increase of $353 or 4.8%. Year-to-date international sales were $34,506 in 2017 compared to $26,915 in 2016, an increase of $7,591 or 28.2%.
“I am pleased to report continuing improvement in Hammond Power Solutions Inc.’ financial performance, especially compared to the challenging economic times of 2017,” Bill Hammond commented.
The Company increased bookings 12.9% over Quarter 3, 2016 due to stronger bookings in both the direct and distribution channel in North America. Booking rates in the distributor channel increased by 16.8% over Quarter 3, 2016. On a direct channel basis, bookings were higher than Quarter 3, 2016 by 9.5%.
Gross margin rates for Quarter 3, 2017 were 23.9%, an improvement of 1.2% of sales from the Quarter 3, 2016 margin rate of 22.7%. Year-to-date, the gross margin rate was 24.4% in 2017 versus 23.8% in 2016, an improvement of 0.6%. The improvement in the quarter and year-to-date margin rates can be attributed to a number of impact areas which include market specific pricing gains, product and customer mix, cost reductions, efficiency increases and higher manufacturing throughput.
Total selling and distribution expenses were $8,238 in Quarter 3, 2017 or 11.0% of sales versus $7,131 in Quarter 3, 2016 or 11.3% of sales, an increase of $1,107 and a decrease of 0.3% of sales. Year-to-date selling and distribution expenses were $25,070 or 11.1% of sales in 2017 compared to $22,669 or 11.3% in 2016, an increase of $2,401 and a decrease of 0.2% of sales.
General and administrative expenses for Quarter 3, 2017 totaled $6,269 or 8.4% of sales, compared to Quarter 3, 2016 expenses of $6,145 or 9.8% of sales, a slight increase of $124 but a decrease of 1.4% of sales. Year-to-date general and administrative expenses were $18,635 or 8.2% of sales in 2017, compared to $18,839 or 9.4% of sales in 2016, a decrease of $204 or 1.2% of sales.
Quarter 3, 2017 earnings from operations were $3,338, growing $2,335 or 232.8% from $1,003 for the same quarter last year. The year-to-date earnings from operations were $10,696 in 2017 compared to $6,240 in 2016, an increase of $4,456 or 71.4%.
Interest expense for Quarter 3, 2017 was $330, a decrease of $17 or 4.9% compared to the Quarter 3, 2016 expense of $347. Year-to-date interest cost was $932, an increase of $58 or 6.6% when compared to the 2016 year-to-date expense of $874.
The foreign exchange gain in Quarter 3, 2017 was $97 and relates primarily to the transactional exchange pertaining to the Company’s U.S. dollar trade accounts payable in Canada compared to a foreign exchange gain of $139 in Quarter 3, 2016. The year-to-date foreign exchange gain for 2017 was $52 compared to a loss of $201 for the same period last year.
Net earnings for Quarter 3, 2017 finished at $1,563 compared to net earnings of $99 in Quarter 3, 2016, an increase of $1,464. Year-to-date net earnings were $5.489 in 2017 compared to $1,500 in 2016, a significant increase of $3,989 or 265.9%. The improvement in the quarter and year-to-date earnings is a result of higher sales, sales mix, improved gross margin rate and decreased losses on investment in the joint venture.
Basic earnings per share were $0.14 for Quarter 3, 2017, an increase of $0.13 from prior year value of $0.01. Year-to-date the basic earnings per share was $0.48 in 2017 and $0.13 in 2016.
Net cash provided by operating activities for Quarter 3, 2017 was $5,918 versus $6,282 in Quarter 3, 2016, a decline of $364 or 5.8%. Year-to-date net cash provided by operating activities was $611 compared to cash used of $2,039 in 2016, an improvement of $2,650.
The Company’s overall operating debt balance net of cash was $16,407 in Quarter 3, 2017 compared to $22,735 in Quarter 3, 2016, a decrease in debt position of $6,328 primarily reflective of increased net income, decreased funding of the joint venture, lower tax payments, partially offset with higher working capital usage.
The Company continued with its regular quarterly dividend program, paying six cents ($0.06) per Class A Subordinate Voting Share of HPS and six cents ($0.06) per Class B Common Share of HPS on September 29, 2017. The Company has paid a cash dividend of eighteen cents ($0.18) per Class A Subordinate Voting Share and eighteen cents ($0.18) per Class B Common Share year-to-date.
Mr. Hammond concluded, “Overall, these are the most robust market and economic conditions that HPS has experienced since 2012 and we are aggressively taking full advantage of these opportunities.”
FINANCIAL RESULTS
THREE MONTHS ENDED:
(dollars in thousands)
| September 30, 2017 | October 1, 2016 | Change | ||||||
| Sales | $ | 74,685 | $ | 62,860 | $ | 11,825 | ||
| Earnings from Operations | $ | 3,338 | $ | 1,003 | $ | 2,335 | ||
| Exchange Gain | $ | 97 | $ | 139 | $ | (42 | ) | |
| Share of loss of investment in joint venture | $ | 188 | $ | 614 | $ | (426 | ) | |
| Net Earnings | $ | 1,563 | $ | 99 | $ | 1,464 | ||
| Earnings per share Basic Diluted | $ $ | 0.14 0.14 | $ $ | 0.01 0.01 | $ $ | 0.13 0.13 | ||
| Cash provided by operations | $ | 5,918 | $ | 6,282 | $ | (364 | ) | |
NINE MONTHS ENDED:
(dollars in thousands)
| September 30, 2017 | October 1, 2016 | Change | ||||||||
| Sales | $ | 225,921 | $ | 200,720 | $ | 25,201 | ||||
| Restructuring Charges | $ | 816 | $ | - | $ | 816 | ||||
| Earnings from Operations | $ | 10,696 | $ | 6,240 | $ | 4,456 | ||||
| Exchange (Gain)Loss | $ | (52 | ) | $ | 201 | $ | (253 | ) | ||
| Share of loss of investment in joint venture | $ | 700 | $ | 1,643 | $ | (943 | ) | |||
| Net Earnings | $ | 5,489 | $ | 1,500 | $ | 3,989 | ||||
| Earnings per share Basic Diluted | $ $ | 0.48 0:48 | $ $ | 0.13 0.13 | $ $ | 0.35 0.35 | ||||
| Cash provided by (used in) operations | $ | 611 | $ | (2,039 | ) | $ | 2,650 | |||
Caution Regarding Forward-Looking Information
This press release contains forward-looking statements that involve a number of risks and uncertainties, including statements that relate to among other things, HPS’ strategies, intentions, plans, beliefs, expectations and estimates, and can generally be identified by the use of words such as “may”, “will”, “could”, “should”, “would”, “likely”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “plan”, “objective” and “continue” and words and expressions of similar import. Although HPS believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from expectations include but are not limited to: general business and economic conditions (including but not limited to currency rates); changes in laws and regulations; legal and regulatory proceedings; and the ability to execute strategic plans. HPS does not undertake any obligation to update publicly or to revise any of the forward-looking statements contained in this document, whether as a result of new information, future events or otherwise, except as required by law.
ABOUT HAMMOND POWER SOLUTIONS INC.
Hammond Power Solutions Inc. (TSX:HPS.A) is a North American leader for the design and manufacture of dry-type standard and custom electrical engineered magnetics, liquid filled and cast resin transformers. Leading edge engineering capabilities, high quality products, and responsive service to customers’ needs have all served to establish HPS as a technical and innovative leader in the electrical and electronic industries.
HPS has operations in Canada, the United States, Mexico, India and Italy.
For further information please contact:
Dawn Henderson
Manager Investor Relations
(519) 822-2441 x414
ir@hammondpowersolutions.com