Hammond Power Solutions Inc.

Hammond Power Solutions Inc.

March 10, 2005 09:00 ET

Hammond Power Solutions Inc., Finishes 2004 With Another Strong Quarter




MARCH 10, 2005 - 09:00 ET

Hammond Power Solutions Inc., Finishes 2004 With
Another Strong Quarter

GUELPH, ONTARIO--(CCNMatthews - March 10, 2004) - Hammond Power
Solutions Inc., (TSX:HPS.SV.A) -

Three months ended:

Dec 31, 2004 Dec 31, 2003 Change
------------ ------------ ------------

Net Sales $20,494,000 $18,623,000 +$1,871,000
Earnings from Operations $1,392,000 $859,000 +$533,000
Net Income $391,000 $256,000 +$135,000
Earnings per Share $0.04 $0.02 +$0.02

Twelve months ended:

Dec 31, 2004 Dec 31, 2003 Change
------------ ------------ ------------

Net Sales $81,349,000 $73,408,000 +$7,941,000
Earnings from Operations $4,627,000 $209,000 +$4,418,000
Net Income (Loss) $1,449,000 ($875,000) +$2,324,000
Earnings (Loss) per Share $0.13 ($0.08) +$0.21
Shares outstanding 11,285,300 11,285,300 -
Net book value per share $1.67 $1.54 +$0.13

Hammond Power Solutions Inc., (TSX:HPS.SV.A) today announced results
for the Fourth Quarter 2004 - Fourth Quarter sales were $20,494,000, up
$1,871,000 or 10 % over Fourth Quarter 2003 and year-to-date, were
$81,349,000 versus $73,408,000 or up $7,941,000 or 11% from last year.
Sales increases are a result of growth in the mining, oil and gas
industries and increased market share in the U.S. and Canadian
distributor channels.

Mr. Hammond, Chairman & CEO commented, "the last quarter in 2004
finished strongly for Hammond Power Solutions Inc., in spite of some
economic and industry head winds. Our U.S. business continued on a
strong positive trend as we increased our market share through
distribution as well as a direct basis. This is indicated in higher
booking rates and sales levels in Fourth Quarter 2004. Through our cost
reduction projects, product design initiatives and short lead-time
manufacturing capabilities, we were successful in sustaining our margin
rates, despite the negative effect of the stronger Canadian dollar and
the upward commodity cost pressures due to the global demand for raw
materials, particularly from China.

Earnings from operations in Quarter 4, 2004, were $1,392,000, as
compared to $859,000 in Quarter 4, 2003, and were up $533,000 from the
same quarter last year and increased $4,418,000 on a year-to-date basis
finishing at $4,627,000 versus $209,000 in 2003. Increases in sales,
stronger gross margins, improved cost structures and sales mix were
conducive in creating this gain.

Net earnings for Quarter 4, 2004, were $391,000 compared to Quarter 4,
2003 earnings of $256,000 and were $1,449,000 year-to-date as compared
to a Quarter 4, 2003, year-to-date loss of $875,000. The year-to-date
net earnings were also positively impacted by reduced selling, general
and administrative expenses and interest costs.

Cash provided by operations was $1,956,000 for the Quarter compared to
$2,344,000 for the corresponding period last year and were $4,980,000 on
a year-to-date basis, up $1,466,000 from year-to-date 2003, which
finished at $3,514,000. Total bank indebtedness was reduced by
$1,730,000 in Quarter 4, 2004, due to increased net income, reductions
in working capital and lower capital expenditures.

Mr. Hammond also stated, "Looking forward into 2005, we are cautiously
confident about our abilities to increase both sales and profits. For
the second year in a row, the general economic indicators remain
positive for our largest market, the United States. The mining and
petroleum sectors in both Canada and the U.S. should continue to be
strong given global growth. We are however; very mindful of the
challenges ahead created by surging material costs and the inflationary
impact this will have on our selling prices. We are concerned that
further upward appreciation of the Canadian dollar will put more
negative pressures on the Canadian manufacturing sector.
Our resolve to reduce costs, improve productivity, and grow targeted
market segments of our business combined with our broad product
capabilities, channel development, multi-national manufacturing presence
and service capabilities will enable Hammond Power Solutions Inc., to
maintain its positive momentum."

About Hammond Power Solutions Inc.

Hammond Power Solutions Inc. (the "Company") is the North American
stand-alone leader for the design and manufacture of 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

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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
    (519) 822-4366 (FAX)