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Press release from Marketwire

Hammond Power Solutions Inc. Quarter 4, 2012, Financial Results

Net Earnings Double

Tuesday, March 12, 2013

Hammond Power Solutions Inc. Quarter 4, 2012, Financial Results16:01 EDT Tuesday, March 12, 2013GUELPH, ONTARIO--(Marketwire - March 12, 2013) -(Dollar amounts are in thousands unless otherwise specified) NOTE: ALL NUMBERS HAVE BEEN STATED UNDER IFRS HIGHLIGHTSNet 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 SheetHammond 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 RESULTSSales 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, 2012December 31, 2011ChangeSales$62,533$60,727$1,806Earnings from Operations$5,545$5,729$(184)Exchange Gain$(393)$(327)$66Copper forward unrealized/realized gain$-$(365)$(365)Net Earnings$4,730$3,569$1,161Earnings per shareBasic0.410.310.10Diluted0.410.310.10Cash Provided by Operations$10,461$10,741$(280)TWELVE MONTHS ENDED:(dollars in thousands)December 31, 2012December 31, 2011ChangeSales$257,376$221,323$36,053Earnings from Operations$18,180$13,039$5,141Exchange Loss/(Gain)$(775)$382$(1,157)Copper forward unrealized/realized loss/(Gain)$(301)$1,943$2,244Net Earnings$12,611$5,993$6,618Earnings per shareBasic1.080.520.56Diluted1.080.510.57Cash Provided by Operations$21,370$6,592$14,778TELECONFERENCEHammond 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 ReplayDial in numbers905-694-9451 or 1-800-408-3053Pass code1338265End dateMarch 26, 2013ABOUT 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.FOR FURTHER INFORMATION PLEASE CONTACT: Contact Information: Hammond Power Solutions Inc.Dawn HendersonManager Investor Relations(519) 822-2441 x414ir@hammondpowersolutions.com