Sales increased 17% to $88.3 million in Qtr. 2, 2021 from $75.4 million in Qtr. 2,2020
Order backlog increased 14% over prior year
Earnings per share increase in the Quarter to $0.40 and $0.59 year-to-date
Net Earnings increased 6.1% in the quarter and 6.4% year-to-date
Bookings increased 33% compared to prior year
GUELPH, Ontario, July 22, 2021 (GLOBE NEWSWIRE) — 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 Second Quarter of 2021.
SECOND QUARTER RESULTS
“Over the last five years we have invested heavily in our distributor network, doubling its size, diversifying the product offering and significantly expanding our sectoral reach,” said Bill Hammond, Chairman and CEO of Hammond Power Solutions. “Hammond is experiencing a resurgence in business activity across all sectors which is underpinned by the strength in our network. Our leading market position in this economic recovery phase and focus on quality have accelerated our growth as we gain footholds in new markets including, solar, energy storage, and electric vehicle charging. We are also seeing strength in the more cyclical sectors we have traditionally served, including mining and oil and gas markets, driven higher by the recovering global economy and ongoing consumption of resources.” “Our second quarter financial results were highlighted by an increase in our profitability, through a combination of sales growth, cost reductions, higher manufacturing volumes as well as the ability to realize selling price increases,” said Richard Vollering, CFO of Hammond. “Looking forward, we will continue to implement price increases to meet inflationary pressure that will impact previously booked back log. We expect to see these increases work their way through our back log in the second half of 2021.”
Story continues Sales for the quarter-ended June 26, 2021 were $88,277, an increase of $12,884 or 17.1% from Quarter 2, 2020 sales of $75,393. The sales growth was a result of surging economic activity as business conditions improved, deferred projects were released and companies began to open up as the number of individuals vaccinated against the COVID-19 global pandemic increased. Year-to-date 2021 sales increased $4,585 or 2.8% to $168,398 compared to $163,813 in 2020. Sales in the United States (“U.S.”) stated in Canadian dollars increased by $1,161 or 2.2%, finishing at $53,053 for Quarter 2, 2021 compared to $51,892 in Quarter 2, 2020. Year-to-date U.S. sales were $99,558 in 2021 and $108,223 in 2020, a decline of $8,675 or 8.0%. U.S. sales, when stated in U.S. dollars were $43,100 in Quarter 2, 2021, compared to Quarter 2, 2020 of $37,314, an upsurge of $5,786 or 15.5%. Year-to-date U.S. sales stated in U.S. dollars were $79,765 in 2021 compared to $79,397 in 2020, a small increase of $368 or 0.5%. Canadian sales were $32,667 for the quarter, a significant increase of $10,745 or 49.0% from Quarter 2, 2020 sales of $21,922. Year-to-date Canadian sales were $60,468 in 2021 compared to $49,266 in 2020, an expansion of $11,202 or 22.7%. Indian sales for Quarter 2, 2021 finished at $2,557 versus $1,579 in Quarter 2, 2020, an increase of $978 or 61.9%. Year-to-date Indian sales were $8,372 in 2021 compared to $6,314 in 2020, an increase of $2,058 or 32.6%.
Bookings increased 33.1% from Quarter 2, 2020 due to a rise in general overall economic activity fueled by businesses beginning to open up to pre-pandemic volumes and the impact of higher selling prices. Quarter 2, 2021 U.S. bookings increased 25.4% and Canada bookings have increased 31.2% compared to the prior year quarter. Year-to-date the US bookings increased 16.9% and Canada bookings increased 21.6%. The company was successful at generating an increase in its gross margin rate for Quarter 2, 2021, which was 28.6% compared to a Quarter 2, 2020 gross margin rate of 28.4%, an improvement of 0.2% of sales. The year-to-date gross margin rate was 26.7% in 2021 versus 25.8% in 2020, an increase of 0.9%. The margin rate improvement is attributed to a combination of sales mix, increased selling price realization and the favourable impact of increased manufacturing throughput.
Quarter 2, 2021 earnings from operations escalated to $7,620, an increase of $1,106 or 17.0% from $6,514 for the same quarter last year. The year-to-date earnings from operations were $11,022 in 2021 compared to $9,547 in 2020, an increase of $1,475 or 15.4%. The expansion in the quarter and year-to-date earnings from operations is mainly a result of increased sales, increased gross margin dollars, gross margin rate and higher manufacturing output. This was partially offset by higher foreign exchange expense due to rate fluctuations and increased general and administrative expenses. Interest expense for Quarter 2, 2021 was $519, an increase of $204 or 64.8% compared to the Quarter 2, 2020 expense of $315. Year-to-date interest cost was $624, a decrease of $87 or 12.2% when compared to the 2020 year-to-date expense of $711.
General and administrative expenses for Quarter 2, 2021 were $6,925 or 8.0% of sales, compared to Quarter 2, 2020 expenses of $5,560 or 7.4% of sales, an increase of $1,365 or 0.6% of sales. Year-to-date general and administrative expenses were $13,544 or 8.1% of sales in 2021, compared to $12,261 or 7.5% of sales in 2020, an increase of $1,283 or 0.6% of sales. Total selling and distribution expenses were $10,660 in Quarter 2, 2021 or 12.4% of sales versus $9,351 in Quarter 2, 2020 or 12.4% of sales, an increase of $1,309, although flat as a percentage of sales. Year-to-date selling and distribution expenses were $20,467 or 12.3% of sales in 2021 compared to $20,491 or 12.5% in 2020, a decrease of $24 or 0.1% of sales.