(Dollar amounts are in thousands unless otherwise specified)
NOTE: ALL NUMBERS HAVE BEEN STATED UNDER IFRS
HIGHLIGHTS
-- Net Earnings increase of 110% for the year and 35% for the quarter
-- Continued sales growth
-- Gross margin gains
-- Excellent cash generation
-- Low debt
-- Solid Balance Sheet
Hammond Power Solutions Inc. ("HPS") (TSX:HPS.A), a leading
manufacturer of dry type and cast resin transformers and related
magnetics, today announced its financial results for the fourth
quarter of 2012.
"We are pleased to report strong financial results for Quarter
4, 2012 and the year and take great pride in the significant
accomplishments that we have made. We ended the year with strong
momentum," commented Bill Hammond, Chairman & Chief Executive
Officer of Hammond Power Solutions Inc.
FOURTH QUARTER RESULTS
Sales for the quarter ended December 31, 2012, were $62,533 up
$1,806 or 3.0% from the comparative quarter last year, and were
higher by $36,053 or 16.3% year-to-date, finishing at $257,376
compared to $221,323 last year. Sales in the United States were
consistently strong at $34,564 in Quarter 4, 2012, a decrease of
$1,646 or 4.8% from Quarter 4, 2011. Year-to-date sales in the U.S.
were $145,085, an increase of $14,059 or 10.7%, when compared to
$131,026 last year-to-date. The sales increase can be attributed to
higher shipments in both the Canadian and International markets. A
portion of this increase in sales can be attributed to the
Company's recent acquisition in India and a full year of sales for
Euroelettro Hammond S.p.A., which was acquired in March 2011.
Canadian sales for Quarter 4, 2012 totaled $24,133 compared to
$22,151 in Quarter 4, 2011 an increase of $1,982 or 9.0 % and on a
year-to-date basis were $95,467, an increase of $14,229 or 17.5% as
compared to sales of $81,238 in 2011. The Company realized strong
performance in the Canadian construction industry during the
year.
The Company generated international sales of $3,824 in Quarter
4, 2012 and $16,824 year-to-date. International sales include
revenues of $1,590 for Quarter 4, 2012 and $7,954 year-to-date
derived from the Company's acquisition of Pan-Electro Technic
Enterprises Private Limited ("PETE").
The acquisition of PETE was a driver in our year-over-year
increase in bookings of 1.2%. The impact from PETE was 3.4% on the
year-to-date bookings increase, all realized through the direct
channel. Overall, bookings decreased 2.5% over the prior year on a
direct basis and were up 5.3% through our distributor channel as
compared to 2011.
Due to increased sales, gross margin dollar contribution
increased $1,855 or 11.8% in Quarter 4 and $10,797 or 20.0%
year-to-date finishing 2012 at $64,788 versus $53,991 in 2011. The
Company also realized a net increase in gross margin rates which
were 28.1% for Quarter 4, 2012 compared to 25.8% for Quarter 4,
2011, and 25.2% in 2012 versus 24.4% in 2011, an increase of 0.8%
of sales for the year. This increase in margin rates can be
attributed to a favourable product mix, yielded market specific
pricing gains and increased manufacturing throughput.
Total selling and distribution expenses amounted to $6,773 in
Quarter 4, 2012 versus $6,049 in Quarter 4, 2011, an increase of
$724 or 12.0%. Total selling and distribution expenses were $25,894
for 2012 versus $22,609 in 2011, an increase of $3,285 or 14.5%.
When compared on a percentage of sales, total selling and
distribution costs remained virtually unchanged coming in at 10.1%
for 2012 versus 10.2% for 2011. The increase in selling and
distribution expenses is a result of higher commission expenses, an
increase in strategic recruitment salaries and increased freight
costs.
The general and administrative expenses for Quarter 4, 2012
totaled $5,223, an increase of $1,315 or 33.6% when compared to
Quarter 4, 2011 costs of $3,908. The increase in Quarter 4, 2012
compared to Quarter 4, 2011 is attributed to additional general and
administrative costs related to our India acquisition and increased
costs relating to acquisition activities. Year-to-date general and
administrative expenses in 2012 were higher by $2,371 or 12.9%,
totaling $20,714 when compared to $18,343 for 2011. On a percentage
of sales this cost held relatively flat at 8.0 % in 2012 compared
to 8.3% in 2011. The increase is a result of the additional costs
related to the India acquisition, stock option expense and costs
related to the company's ongoing acquisition activities.
The interest expense for Quarter 4, 2012 finished at $146
compared to $121 in Quarter 4, 2011 an increase of $25.
Year-to-date interest cost was $695, an increase of $390 when
compared to year-to-date 2011 expense of $305.
The foreign exchange gain in Quarter 4, 2012 was $393 compared
to a foreign exchange gain of $327 in Quarter 4, 2011. The majority
of the Quarter 4, 2012 foreign exchange gain is a result of
transactional gain in Canada due to the strengthening of the U.S.
dollar relative to the Canadian dollar in the quarter. The exchange
gain was $775 year-to-date 2012 compared to a foreign exchange loss
of $382 for the same period of 2011.
The net earnings for Quarter 4, 2012, finished at $4,730
compared to net earnings of $3,569 in Quarter 4, 2011 an increase
of $1,161 or 32.5%. On a year-to-date basis net earnings finished
at $12,611 an increase of $6,618 when compared to year-to-date 2011
net earnings of $5,993.
Net cash provided by operating activities for Quarter 4, 2012
was $10,461 versus cash provided of $10,741 in Quarter 4, 2011 a
slight decrease of $280. Year-to-date cash provided by operations
during 2012 was $21,370 versus $6,592 in 2011 an increase in cash
generated from operations of $14,778. This increase is mostly due
to higher net earnings.
The Company's overall cash balances net of bank operating lines
of credit and long-term debt resulted in a net debt position of
$990 as at December 31, 2012 versus a net cash position of $1,681
as at December 31, 2011. This is primarily reflecting acquisition
activity and debt repayment during the year.
Mr. Hammond concluded, "I am very proud of the effort our team
has made during 2012 and we remain focused on financial success in
2013, however guarded going forward as the North American and
European economies remain slow. In this current environment we are
fortunate to be a company built on a number of tremendous
strengths. From a technology standpoint, innovation and customer
support have remained HPS hallmarks, and we have built the most
trusted brand in the dry transformer industry."
THREE MONTHS ENDED:
(dollars in thousands)
----------------------------------------------------------------------------
December 31, December 31,
2012 2011 Change
----------------------------------------------------------------------------
Sales $ 62,533 $ 60,727 $ 1,806
----------------------------------------------------------------------------
Earnings from Operations $ 5,545 $ 5,729 $ (184)
----------------------------------------------------------------------------
Exchange Gain $ (393) $ (327) $ 66
----------------------------------------------------------------------------
Copper forward
unrealized/realized gain $ - $ (365) $ (365)
----------------------------------------------------------------------------
Net Earnings $ 4,730 $ 3,569 $ 1,161
----------------------------------------------------------------------------
Earnings per share
Basic 0.41 0.31 0.10
Diluted 0.41 0.31 0.10
----------------------------------------------------------------------------
Cash Provided by Operations $ 10,461 $ 10,741 $ (280)
----------------------------------------------------------------------------
TWELVE MONTHS ENDED:
(dollars in thousands)
----------------------------------------------------------------------------
December 31, December 31,
2012 2011 Change
----------------------------------------------------------------------------
Sales $ 257,376 $ 221,323 $ 36,053
----------------------------------------------------------------------------
Earnings from Operations $ 18,180 $ 13,039 $ 5,141
----------------------------------------------------------------------------
Exchange Loss/(Gain) $ (775) $ 382 $ (1,157)
----------------------------------------------------------------------------
Copper forward
unrealized/realized loss/(Gain) $ (301) $ 1,943 $ 2,244
----------------------------------------------------------------------------
Net Earnings $ 12,611 $ 5,993 $ 6,618
----------------------------------------------------------------------------
Earnings per share
Basic 1.08 0.52 0.56
Diluted 1.08 0.51 0.57
----------------------------------------------------------------------------
Cash Provided by Operations $ 21,370 $ 6,592 $ 14,778
----------------------------------------------------------------------------
TELECONFERENCE
Hammond Power Solutions Inc. will hold a conference call on
Wednesday, March 13, 2013 at 10:00 a.m. EST, to discuss the
Company's financial results for the fourth quarter 2012.
Listeners may attend the conference by dialing: 1-416-340-2216
or 1-866-226-1792.
Instant Replay
Dial in numbers 905-694-9451 or 1-800-408-3053
Pass code 1338265
End date March 26, 2013
ABOUT HAMMOND POWER SOLUTIONS INC.
Hammond Power Solutions Inc. (TSX:HPS.A) is a North American
leader for the design and manufacture of dry-type custom electrical
engineered magnetics, electrical dry-type and cast resin
transformers. Leading edge engineering capabilities, high quality
products, and responsive service to customers' needs have all
served to establish HPS as a technical and innovative leader in the
electrical and electronic industries.
HPS has operations in Canada, the United States, Mexico, India
and Italy.
Contacts: Hammond Power Solutions Inc. Dawn Henderson Manager
Investor Relations (519) 822-2441
x414ir@hammondpowersolutions.com
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