Hammond Power Solutions Inc.

Hammond Power Solutions Inc.

July 25, 2005 09:30 ET

Hammond Power Solutions Inc.: Profits Grow with Strong 2005 Second Quarter

GUELPH, ONTARIO--(CCNMatthews - July 25, 2005) - Hammond Power Solutions Inc. (TSX:HPS.SV.A)

Three months ended:

July 2, 2005 July 3, 2004 Change
------------ ------------ ------

Net Sales $24,673,000 $19,904,000 +$4,769,000
Earnings from Operations $1,551,000 $934,000 +$617,000
Gain on Sale of Surplus Property $374,000 $ 0 $374,000
Net Income $934,000 $307,000 +$627,000
Earnings per Share $0.08 $0.03 +$0.05

Six months ended:

July 2, 2005 July 3, 2004 Change
------------ ------------ ------

Net Sales $46,736,000 $39,937,000 +$6,799,000
Earnings from Operations $3,024,000 $1,689,000 +$1,335,000
Gain on Sale of Surplus Property $374,000 $ 0 $374,000
Net Income $1,466,000 $476,000 +$990,000
Earnings per Share $0.13 $0.04 +$0.09
Shares outstanding 11,435,300 11,285,300
Net book value per share
Basic $1.79 $1.58 $0.21
Diluted $1.79 $1.58 $0.21

Hammond Power Solutions Inc., (TSX:HPS.SV.A) today announced results for the Second Quarter 2005 - Second Quarter sales were $24,673,000 up $4,769,000 or 24.0 % over the Second Quarter 2004, and year to date were $46,736,00 up $6,799,000 or 17.0% from 2004. The increase in sales in Quarter 2, 2005, was a result of continuing market growth, particularly in the U.S. electrical distributor channel, as well as the mining equipment, power conditioning and specialty transformer markets in both the United States and Canada.

Mr. Hammond, Chairman & CEO commented, "This is has been very gratifying Quarter, as Hammond Power Solutions Inc., continues to build consistent improving financial performance. The Company is very pleased with the steps it has taken to deliver increases in sales and bookings which are attributed to our focus on market share penetration through new account and organic sales growth. This growth has been further supported by favourable electrical industry market conditions in the United States and Canada."

Earnings from operations for the Quarter jumped by over 66%, finishing at $1,551,000, as compared to $934,000 in Quarter 2, 2005, and were $3,024,000 year to date, up $1,335,000, or 79% from 2004. The increase in sales, stronger gross margins, improved cost structures and sales mix contributed to this growth.

Net income for Quarter 2, 2005, was $934,000 compared to Quarter 2, 2004 net income of $307,000, an increase of $627,000 and year to date was $990,000, higher year than last year, finishing at $1,466,000 versus $476,000. HPS' net income was also bolstered by a $374,000 gain on the sale of its Baraboo, Wisconsin property.

Cash used by operations for Quarter 2, 2005, was $300,000, versus cash provided by operations of $560,000 in Quarter 2, 2004, an increased usage of $860,000. Cash used by operations year to date, was $1,082,000, versus cash provided by operations of $408,000 in 2004, an increased usage of $1,490,000. Working capital requirements to support our sales growth resulted in increased accounts receivable and inventory to date. Capital expenditures were $331,000 for the Quarter compared to $70,000 last year. The sale of our Baraboo, Wisconsin property generated $1,779,000 of cash to the company which was used to retire $1,669,000 of long-term debt.

Mr. Hammond also commented, "I am delighted to report that we have supported our improved liquidity goal by further reducing our Company bank indebtedness." Overall bank indebtedness dropped to $10,246,000 in Quarter 2, 2005, down $4,161,000 compared to the same quarter in 2004.

In addition, Mr. Hammond stated, "This is the seventh consecutive quarter of profitability for Hammond Power Solutions Inc. Despite our accomplishments, we are very aware of the challenges ahead created by escalating material costs and the unpredictable Canadian dollar. We will prudently manage Hammond Power Solutions Inc. and will continue to target sales growth opportunities, focus on profit rates and ensure solid Company liquidity. Hammond Power Solutions is well positioned for the balance if the year."

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 Mexico.

If you would prefer to receive press releases via email contact Investor Relations at: (ir@hammondpowersolutions.com).

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