GUELPH, ONTARIO--(Marketwired - Oct. 22, 2015) - This document corrects and replaces the press release that was sent on October 22, 2015 at 5:25 pm EDT. The error occurred in the financial table titled Nine Months Ended under the Net Earnings row under the columns September 26, 2015 and Change. The complete and correct release follows below.
(Dollar amounts are in thousands unless otherwise specified)
Hammond Power Solutions Inc. ("HPS") (TSX:HPS.A) a leading manufacturer of dry-type, cast resin transformers and related magnetics, today announced its financial results for the third quarter of 2015.
THIRD QUARTER RESULTS
Sales for the quarter-ended September 26, 2015 were $65,378, an increase of $3,820 or 6.2% over Quarter 3, 2014 sales of $61,558 and year to date were $193,899 compared to $183,227 in 2014, an increase of $10,672 or 5.8%. Sales in the U.S. increased by $3,006 or 8.4%, finishing at $38,614 for Quarter 3, 2015 compared to $35,608 in Quarter 3, 2014. Year-to-date U.S. sales were $115,046 in 2015 and $104,291in 2014, an increase of $10,755 or 10.3%. Canadian sales were $19,675 for the quarter, an increase of $1,357 or 7.4% from Quarter 3, 2014 sales of $18,318. Year-to-date Canadian sales were $55,519 in 2015 compared to 2014 sales of $54,883, an increase of $636 or 1.2%. International sales for Quarter 3, 2015 were $7,089 versus $7,632 in Quarter 3, 2014, a decrease of $543 or 7.1%. Year-to-date international sales were $23,334 in 2015 and $24,053 in 2014, a decrease of $719 or 3.0
The Company increased bookings 18.4% over Quarter 3, 2014 due to stronger bookings in both the distributor and direct channels in North American and International markets. Total booking rates increased 3.7% from Quarter 2, 2015 and on a year-to-date basis overall Company bookings have grown 14.1% over 2014. The Company also realized an increased backlog of 35.0% over Quarter 3, 2014 and growth of 13.9% when compared to Quarter 2, 2015.
Bill Hammond, Chief Executive Officer commented, "our business has picked up gradually across multiple sectors and channels. Both bookings and backlog are up significantly compared to Quarter 3, 2014 despite slow global economic conditions."
Gross margin rates increased in Quarter 3, 2015 finishing at 23.8% compared to Quarter 3, 2014 margin rates of 22.2%, an improvement of 1.6% of sales. Year-to-date, the margin rate was 23.4% in 2015, an improvement of .5% compared to the 2014 rate of 22.9%. The Company's gross margin rates were favourably impacted by customer and market mix, and geographic blend.
Total selling and distribution expenses were $7,286 in Quarter 3, 2015 or 11.1% of sales versus $7,014 in Quarter 3, 2014 or 11.4% of sales, an increase of $272 or 3.9%. Year-to-date selling and distribution expenses were $21,108 or 10.9% of sales in 2015 compared to $21,045 or 11.5% in 2014, a slight increase of $63 or .4%.
The general and administrative expenses for Quarter 3, 2015 totaled $5,794 or 8.9% of sales, compared to Quarter 3, 2014 expenses of $5,710 or 9.3% of sales, a slight increase of $84 or 1.5%. Year-to-date general and administrative expenses were $17,661 or 9.1% of sales in 2015, compared to $16,914 or 9.2% of sales in 2014, an increase of $747 or 4.4%.
Quarter 3, 2015 earnings from operations were $2,475, an increase of $1,560 or 170.5% from $915 for the same quarter last year. The improvement in the quarter is a result of higher sales and a growth in the gross margin rate. The year-to-date earnings from operations were $6,544 in 2015 compared to $3,988 in 2014, an improvement of $2,556 or 64.1%.
Interest expense for Quarter 3, 2015 finished at $296, comparable to the Quarter 3, 2014 expense of $251. Year-to-date interest cost was $676, a decrease of $91 when compared to the 2014 year-to-date expense of $767. Interest expense fluctuations are impacted by changes in the level of the operating lines of credit, vacillation of changes in working capital and interest rates needs.
The foreign exchange gain in Quarter 3, 2015 was $69 compared to a loss of $303 in Quarter 3, 2014. These losses relate primarily to the transactional exchange pertaining to the Company's U.S. dollar trade accounts payable in Canada.
Net earnings for Quarter 3, 2015 increased by $832 or 320.0% and finished at $1,092 compared to net earnings of $260 in Quarter 3, 2014. This growth in the quarter earnings is a result of higher sales, improved gross margin rates and a foreign exchange gain this quarter compared to Quarter 3, 2014. Year-to-date net earnings were $2,969 in 2015 and $1,716 in 2014, an increase of $1,253 or 73.0%.
Net cash provided by operating activities for Quarter 3, 2015 was $6,077 versus $11,415 in Quarter 3, 2014, a decrease of $5,338. Year-to-date cash generated by operating activities was $6,958 in 2015 and $13,662 in 2014, a difference of $6,704. The decrease in both the quarter and year-to-date cash provided by operating activities was a result of a lower reduction in working capital.
During the quarter, non-cash working capital generated cash of $1,998 compared to generating cash of $9,189 for the same quarter last year. The year-to-date change in non-cash working capital was a usage of cash of $3,426 in 2015 compared to a generation of $5,736 in 2014.
The Company's overall operating debt balance net of cash was $18,866 in Quarter 3, 2015 compared to $14,976 in Quarter 3, 2014, an increase in debt position of $3,890 primarily reflecting cash used in operations during the year as well as joint venture investment and capital expenditures.
In Quarter 1, 2015, the Company announced that it had completed the formation of a new joint venture company, Corefficient S. de R.L. de C.V. ("Corefficient"). Corefficient will design, manufacture and market energy efficient electrical cores, a major component used in the manufacture of dry type and liquid filled transformers. Corefficient will be based out of Monterrey, Mexico, where a state of the art manufacturing facility is currently under construction and will be fully operational Quarter 4, 2015.
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 24, 2015.
Mr. Hammond concluded, "We are confident that our positive momentum will continue into the last quarter. This muddling period of economic recovery has created the most interesting business environment in terms of both challenges and opportunities. We remain steadfast that our financial strength, core competencies and long term strategies will accelerate our growth and financial performance as markets start to improve."
| FINANCIAL RESULTS | |||||||||
| THREE MONTHS ENDED: | |||||||||
| (dollars in thousands) | |||||||||
| September 26, 2015 | September 27, 2014 | Change | |||||||
| Sales | $ | 65,378 | $ | 61,558 | $ | 3,820 | |||
| Earnings from Operations | $ | 2,475 | $ | 915 | $ | 1,560 | |||
| Exchange (Gain)Loss | $ | (69 | ) | $ | 303 | $ | (372 | ) | |
| Net Earnings | $ | 1,092 | $ | 260 | $ | 832 | |||
| Earnings per share | |||||||||
| Basic | $ | 0.10 | $ | 0.02 | $ | 0.08 | |||
| Diluted | $ | 0.10 | $ | 0.02 | $ | 0.08 | |||
| Cash provided by operations | $ | 6,077 | $ | 11,415 | $ | (5,338 | ) | ||
| NINE MONTHS ENDED: | ||||||||
| (dollars in thousands) | ||||||||
| September 26, 2015 | September 27, 2014 | Change | ||||||
| Sales | $ | 193,899 | $ | 183,227 | $ | 10,672 | ||
| Earnings from Operations | $ | 6,544 | $ | 3,988 | $ | 2,556 | ||
| Exchange Loss | $ | 117 | $ | 240 | $ | 123 | ||
| Net Earnings | $ | 2,969 | $ | 1,716 | $ | 1,253 | ||
| Earnings per share | ||||||||
| Basic | $ | 0.25 | $ | 0.14 | $ | 0.11 | ||
| Diluted | $ | 0.25 | $ | 0.14 | $ | 0.11 | ||
| Cash provided by operations | $ | 6,958 | $ | 13,662 | $ | (6,704 | ) | |
TELECONFERENCE
Hammond Power Solutions Inc. will hold a conference call on Monday, October 26, 2015 at 10:00 a.m. EST, to discuss the Company's financial results for the third quarter 2015.
| Listeners may attend the conference by dialing: | |
| 1-416-340-8530 / | 1-800-769-8320 |
| Instant Replay | |
| Dial in numbers | 905-694-9451 or 1-800-408-3053 |
| Pass code | 1439352 |
| End date | October 30, 2015 |
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 custom electrical engineered magnetics, electrical dry-type 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.
Contact Information:
Dawn Henderson
Manager Investor Relations
(519) 822-2441 x414
ir@hammondpowersolutions.com