Hammond Power Solutions (HPS) Q4 2025 earnings summary

Executive summary

• Revenue for 2025 reached CAD 898.3 million (or $898 million), up 13.9% year-over-year, with strong demand in the U.S. and Mexico and moderate growth in Canada.

• Backlog at year-end rose 122% year-over-year and 74% sequentially, reaching a record high, driven by large multi-year custom projects, especially in data centers.

• Net earnings were CAD 72.2 million for 2025, with adjusted EBITDA at CAD 133.3 million, a 2% increase over 2024.

• Major investments included over CAD 100 million in new capacity at Monterrey 4 and the acquisition agreement for AEG Power Solutions for CAD 365 million.

• The company expanded its logistics network and fully integrated Micron Industries, enhancing efficiency and service.

Financial highlights

• Fourth quarter revenue was CAD 254.1 million, reflecting robust demand and shipment of delayed projects.

• Gross margin for the year was 30.3%, down from 32.8% in 2024, mainly due to higher input costs, tariffs, and unabsorbed overhead from new capacity.

• SG&A expenses totaled CAD 168 million for the year, with CAD 52 million in Q4; excluding share-based compensation, Q4 SG&A was CAD 43 million.

• Net debt improved to CAD 15 million at year-end, down from CAD 28 million in Q3, aided by a CAD 9.5 million working capital improvement in Q4.

• Cash from operations was CAD 32 million in Q4; annual capital expenditures were CAD 35.5 million.

Outlook and guidance

• Expanded capacity and record backlog position the company for continued momentum into 2026.

• Gross margin is expected to improve as new facilities ramp up utilization, with Monterrey 4 ramping in Q1 and Monterrey 3 later in the year.

• CapEx for 2026 is expected to be similar to 2025, with ongoing focus on capacity projects.

• Backlog tenor is lengthening, with a significant portion extending into 2027 due to larger projects.

• Investments in capacity and technology are expected to support continued growth in electrification and digital infrastructure markets.