Hammond Power Solutions (HPS) Q3 2025 earnings summary

Executive summary

• Revenue reached $218 million in Q3 2025, a 14% year-over-year increase, marking the second-best quarter for shipments, driven by strong U.S. demand and significant data center orders.

• Net earnings were $17.44 million, or $1.46 per share; adjusted EPS was $1.56.

• U.S. shipments grew across all channels, with private label and distribution channels showing notable strength, especially in data centers, switchgear, motor control, and mining.

• Significant data center project orders were booked post-quarter, expected to drive future growth.

• Expansion of manufacturing capacity in Mexico is underway, with Monterrey IV and additional equipment expected to bring total capacity to $1.2 billion by 2027.

Financial highlights

• Gross margin was 30.1% in Q3 2025, down from 33.8% in Q3 2024, due to higher input costs, tariffs, and unabsorbed overheads in new Mexican factories.

• Adjusted EBITDA was $30.29 million, down from $34.38 million in Q3 2024; EBITDA was $28.7 million, up 5.6%.

• Year-to-date sales reached $644.2 million, up 11.1% from 2024.

• Working capital requirements increased, mainly due to higher inventories from project delays, safety stock, and tariffs.

• General and administrative costs grew more slowly, improving leverage.

Outlook and guidance

• Backlog increased by 28% since the start of the year, with large post-quarter data center orders representing 53% of Q3 closing backlog, to be shipped mainly from new Mexico facilities over the next 12-18 months.

• Pricing adjustments implemented in late Q3 are expected to improve margins in Q4 as they take full effect.

• Increased backlog and ramp-up of new facilities are expected to alleviate absorption challenges and support margin recovery in 2026.

• Data center activity and orders are expected to support growth into 2026, with new facilities in Mexico being reconfigured for increased volume.

• Ongoing production initiatives and capital expansion are expected to position the company for sustained growth, especially in data-driven sectors.