Hammond Power Solutions Inc.

Hammond Power Solutions Inc.

October 24, 2005 10:25 ET

Hammond Power Solutions Inc., Announces Profits up 64% in Quarter

GUELPH, ONTARIO--(CCNMatthews - Oct. 24, 2005) -

Three months ended:

Oct 1, 2005 Oct 2, 2004 Change

Net Sales $24,678,000 $20,918,000 +$3,760,000
Earnings from Operations $ 1,719,000 $ 1,546,000 +$173,000
Net Income $957,000 $582,000 +$375,000
Earnings per Share $0.08 $0.05 +$0.03

Nine months ended:

Oct 1, 2005 Oct 2, 2004 Change

Net Sales $71, 414,000 $60,855,000 +$10,559,000
Earnings from Operations $4,743,000 $3,235,000 +$1,508,000
Gain on Sale of Surplus
Property $374,000 $ 0 $374,000
Net Income $2,423,000 $1,058,000 +$1,365,000
Earnings per Share $0.21 $0.09 +$0.12
Shares outstanding 11,435,300 11,285,300
Net book value per share
Basic $1.87 $1.63 $0.21
Diluted $1.87 $1.63 $0.21

Hammond Power Solutions Inc. (HPS)(TSX:HPS.SV.A) today announced results for the Third Quarter 2005 - Third Quarter sales were $24,678,000 up $3,760,000, or 18.0 % over the Third Quarter 2004, and year to date were $71,414,00 up $10,559,000, or 17.4% from 2004. The Quarter 3, 2005, boost in sales, was a result of HPS market growth and increased penetration in the electrical distribution channel in both Canada and the U.S. and expanded sales in our strategic market segments.

Mr. Hammond, Chairman & CEO commented, "We continue to experience strong sales growth, particularly in the United States; attributed in part to strong activity in the mining, oil pumping, and alternative energy markets. Our traditional customer base is also quite solid as the global economy continues to expand; now in its second consecutive year of rising momentum, which is also reflected in our escalating booking rates and backlog levels."

Earnings from operations for Quarter 3, 2005, grew by over 11% or $173,000, from the same quarter last year, finishing at $1,719,000, as compared to $1,546,000. On a year to date basis sales were up 46.6% or $1,508,000, finishing at $4,743,000, as compared to $3,235,000 last year. Although there has been some margin pressure in the quarter, year to date margin rates are up 1%, as a result of the escalated sales, selling price increases, improved cost structures and sales mix.

Net income for Quarter 3, 2005, was $957,000, up 64% or $375,000, as compared to a Quarter 3, 2004, net income of $582,000. On a year to date basis net income was $2,423,000, up 229%, or up $1,365,000, as compared to $1,058,000, in 2004. Year to date income was favourably impacted by a $374,000 gain on the sale of its surplus property as reported in the previous quarter.

Cash provided by operations for Quarter 3, 2005, was $2,454,000, as compared to $2,616,000 in Quarter 3, 2004. Cash provided by operations year to date, was $1,372,000, versus $3,024,000 in 2004. Despite working capital required to support our sales growth, HPS was able to reduce its networking capital in the quarter by $540,000, coming from reductions in accounts receivable. Capital expenditures were $138,000 for the Quarter compared to $189,000 last year, and year to date were $784,000, against $360,000 last year. Operating bank indebtedness for the quarter decreased by $2,136,000, compared to $2,100,000 in the last year. Overall bank indebtedness dropped to $7,985,000 in Quarter 3, 2005, down $4,134,000, compared to Quarter 3, 2004, and was down $2,402,000 from December 31, 2004.

Mr. Hammond stated, "I am proud of our financial results and the sales growth we have realized over the last two year period, especially given the long and extremely challenging recession we have endured. I acknowledge that the collective efforts of our employees have been, and are, paramount to achieving our goals of improved profitability and solid company liquidity."

In addition, Mr. Hammond further commented "This is the eighth consecutive quarter of profitability for Hammond Power Solutions Inc. We continue to be optimistic given our positive momentum, but are mindful of the volatility and unpredictability of the global economies, the Canadian dollar, and escalating raw material costs.
Moving forward, HPS will be persistent in implementing its progressive strategies and remains committed to managing the company judiciously."

About Hammond Power Solutions Inc.

Hammond Power Solutions Inc. (the "Company") is the North American stand-alone leader for the design and manufacture of dry-type custom electrical engineered magnetics and is also a leading manufacturer of standard electrical dry-type transformers. Leading edge engineering capabilities, high quality products, and fast, responsive service to customers' needs have all served to establish HPS as a technical and innovative leader in the electrical and electronic industries. The Company has two manufacturing plants in Canada, one in the United States and one in Mexico.

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Contact Information

  • Hammond Power Solutions Inc.
    W.G. (Bill) Hammond
    Chairman & CEO
    (519) 822-2441
    Hammond Power Solutions Inc.
    Chris R. Huether
    VP Finance & Secretary
    (519) 822-2441