Hammond Power Solutions (HPS) investor relations material

Executive summary

• Achieved record quarterly sales of $224M in Q2 2025, up 13.8% year-over-year, led by strong U.S. shipments and growth across all channels.

• Gross margin ended at 30.7% despite material cost headwinds and ramp-up costs for new Mexican facilities.

• Data center demand was the fastest-growing segment, with broad-based support across U.S. and Canadian markets.

• Backlog reduced sequentially due to higher shipments but remains strong year-to-date and 9% higher than year-end 2024.

• New production facility in Mexico completed, with shipments to begin later in 2025 and ongoing equipment installations.

Financial highlights

• Adjusted EBITDA rose 2–2.5% year-over-year to $33.4M (14.9% of sales); year-to-date adjusted EBITDA up 1% to $64.3M.

• Gross margin for Q2 2025 was 30.7%, historically strong but below expectations due to higher material and ramp-up costs.

• Net income reached $13.4M in Q2 and $39.6M year-to-date, impacted by higher share-based compensation.

• Adjusted EPS was $1.72 for Q2 2025 and $3.32 year-to-date, compared to $3.37 in the prior year.

• Capital expenditures totaled $8M in the quarter and $20M year-to-date, in line with annual guidance.

Outlook and guidance

• Expect to see full benefit of April price increases in Q3 and Q4 as they flow through backlog.

• Shipment rates anticipated to remain consistent for the rest of the year; additional capacity from new facilities expected to impact 2026.

• Monitoring margins and overhead closely, aiming to keep working capital below 20% of sales.

• Active M&A pipeline, with continued focus on power quality solutions and potential acquisitions.

• Management expects net cash outflow from working capital and capital expenditures to reverse in Q3.