Hammond Power Solutions Inc. ("HPS") (TSX:HPS.A) a leading
manufacturer of dry type, cast coil and oil filled transformers and
related magnetics, today announced its financial results for the
first quarter 2012.
"I am pleased with our results for the first quarter of 2012.
The strong momentum of growth that has been building over the last
eight months has generated much improved financial results compared
to the same quarter in 2011" commented Bill Hammond, Chairman &
Chief Executive Officer of Hammond Power Solutions Inc.
FIRST QUARTER RESULTS
Sales for the quarter-ended March 31, 2012, were $65,654 up
$12,877 or 24.4% from the comparative quarter last year, and were
$4,927 higher or 8.1% from Quarter 4, 2011. The sales increase can
be attributed to higher shipments in both the American and Canadian
markets and additional European and Indian market sales attributed
to the Company's acquisitions. Due to increased order booking
activity, sales in the United States in U.S. dollars were $36,571
Quarter 1, 2012, an increase of $6,055 or 19.8% from Quarter 1,
2011, and increased by $1,175 or 3.3% from Quarter 4, 2011.
Canadian sales were $24,970 for the quarter, an increase over
Quarter 1, 2011, of $4,487 or 21.9% and were up by $2,819 or 12.7%
from Quarter 4, 2011. International sales including acquisition
derived sales in Quarter 1 2012, were $4,182 versus Quarter 1, 2011
sales of $ 1,344, an increase of $2,838 or 211%.
Bill Hammond stated, "Our North American OEM markets, along with
our distributor channel, continue to drive solid organic growth.
During the quarter, we have also taken some important strides in
transforming HPS into a global company with the purchase of
Pan-Electro Technic Enterprise ("PETE") located in Hyderabad India
and this acquisition along with the purchase of the Italian
transformer company Euroelettro one year ago, now gives HPS
manufacturing facilities to serve the markets of Europe, India,
Africa, the Middle East, Southeast Asia, as well as Australia.
These companies will not only open the door to many new growth
opportunities for HPS, they will also enable us to better serve the
expanding global needs of our major North American OEM
customers."
Domestic and foreign sales growth strategies along with
moderately improved market conditions were key in delivering an
11.1% increase in bookings as compared to Quarter 1, 2011. By
channel, booking levels were 14.6% higher on a direct basis and
grew 7.3% through the distributor channel, as compared to Quarter
1, 2011. In Quarter 1, 2012, the Company saw a 37.1% increase of
order backlog over Quarter 1, 2010.
Due to increased sales, gross margin dollar contribution
increased $2,593 or 20.0% finishing Quarter 1, 2012 at $15,554
versus $12,961 in Quarter 1, 2011. Gross margin rates were
unfavorably impacted that a stronger Canadian dollar has on U.S.
margins, the depressed margin rates in the electrical market and
product mix. This resulted in Quarter 1, 2012 gross margin rates
finishing at 23.7% versus 24.6% in Quarter 1, 2011, a decrease of
0.9% of sales.
"Sales growth will increase our capacity utilization which will
positively affect gross margin rates and gross margin contribution
dollars." Bill Hammond commented.
Total selling and distribution expenses were $6,259 in Quarter
1, 2012 versus $5,387 in Quarter 1, 2011, an increase of $872 or
16.2%. The Quarter 1, 2012 selling and distribution expenses
include international operations expenses of $258 versus $91 in
Quarter 1, 2011. Due to increased sales in Quarter 1, 2012, there
were higher variable costs relating to freight and commission
expenses in the quarter.
The general and administrative expenses for Quarter 1, 2012
totaled $5,538, an increase of $791 or 16.7% when compared to
Quarter 1, 2011 costs of $4,747. The Quarter 1, 2012 general and
administrative expenses include expenses relating to international
operations of $538 versus $277 in Quarter 1, 2011, an increase of
$261. There were also Quarter 1, 2012 increases in general and
administrative expenses relating to ongoing acquisition activities,
engineering, and international business development expenses.
Earnings from operations increased $930 or 32.9% from the same
quarter last year, finishing at $3,757 in the quarter, as compared
to $2,827 in Quarter 1, 2011 as a result of the strong Quarter 1,
2012 sales and gross margin contribution.
Interest expense for Quarter 1, 2012, finished at $124 compared
to $30 in Quarter 1, 2011, an increase of $94. The increase of
interest expense for the Quarter was as a result of higher net debt
levels relating to the purchase of "PETE" and capital
expenditures.
The foreign exchange gain in Quarter 1, 2012 was $22, relating
primarily to the transactional exchange loss pertaining to the
Company's U.S. dollar trade accounts payable in Canada, compared to
a foreign exchange loss of $302 in Quarter 1, 2011.
In Quarter 1, 2012 the company realized a net gain on copper
forward contracts of $376, compared to a loss of $158 in Quarter 1,
2011, a net gain of $534.
Net earnings for Quarter 1, 2012, increased by $947 or 60.3%,
finishing at $2,518 compared to $1,571 in Quarter 1, 2011. Net
earnings were positively impacted by the 24% growth in sales and
resultant 20% increase in gross margin dollars as compared to
Quarter 1, 2011.
Net cash used in operating activities for Quarter 1, 2012 was
$3,330 versus cash used of $2,317 in Quarter 1, 2011, an increase
of $1,013. Non-cash operating working capital usage was $7,339
compared to a $5,794 for the same quarter last year, an increase of
$1,545. The Quarter 1, 2012 usage was primarily as a net result of
an increase in accounts receivable of attributed to higher sales in
the quarter.
Total cash provided by financing activities for Quarter 1, 2012
was $14,330 as compared to $915 used in Quarter 1, 2011. The major
cause of this change was advances from bank operating lines of
$14,706, primarily as a result of the purchase of PETE.
Bank operating lines of credit finished Quarter 1, 2012 at
$16,778 compared to $2,952 at the end of Quarter 1, 2011, an
increase of $13,826. This increase was caused by the purchase of
the Indian company, PETE, for $15,410.
The Company's overall debt, net of cash was $19,338 in Quarter
1, 2012 compared to a net cash position of $320 in Quarter 1, 2011,
a reduction in cash position of $19,658. This debt position change
was a result of assumed debt relating to the purchase of PETE and
the change in non-cash working capital.
Mr. Hammond concluded, "2012 has started out with a decidedly
positive momentum for both sales and profits. We are indeed mindful
of the lingering risks and uncertainties hanging over the global
economy and guardedly we believe that the worst is behind us and
the dawn of more prosperous times for HPS in a global marketplace
is emerging".
THREE MONTHS ENDED:
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March 31, April 2,
2012 2011 Change
----------------------------------------------------------------------------
Sales $ 65,654 $ 52,777 $ 12,877
----------------------------------------------------------------------------
Earnings from Operations $ 3,757 $ 2,827 $ 930
----------------------------------------------------------------------------
Exchange Loss /(gain) $ (22) $ 302 $ (324)
----------------------------------------------------------------------------
Copper forward unrealized/realized
loss/(gain) $ (376) $ 158 $ (534)
----------------------------------------------------------------------------
Net Earnings $ 2,518 $ 1,571 947
----------------------------------------------------------------------------
Earnings/(Loss) per share
Basic $ 0.22 $ 0.14 $ 0.08
Diluted $ 0.22 $ 0.14 $ 0.08
----------------------------------------------------------------------------
Cash Used by Operations $ (3,330) $ (2,317) $ (1,013)
----------------------------------------------------------------------------
Hammond Power Solutions Inc. will hold a conference call today
April 27, 2012 at 4:00 p.m. EST, to discuss the Company's financial
results for the First Quarter, 2012.
Listeners may attend the conference by dialing:
1-416-340-2218 or 1-866-226-1793
Instant replay Access Information:
Local access: 905-694-9451
Toll Free access: 800-408-3053
Pass code: 2842120
Caution Regarding Forward-Looking Information
This press release contains "forward-looking information" within
the meaning of applicable securities laws. The forward-looking
information contained in this press release is subject to known and
unknown risks, uncertainties and other factors that are not within
the control of HPS. Generally, this forward-looking information can
be identified by the use of forward-looking terminology such as
"outlook", "anticipate", "project", "target", "believe",
"estimate", "expect", "intend", "should", "scheduled", "will",
"plan" and similar expressions. Forward-looking information is
subject to known and unknown risks, uncertainties and other factors
that may cause HPS's actual results, level of activity, performance
or achievements to be materially different from those expressed or
implied by such forward-looking information and developed based on
assumptions about such risks, uncertainties and other factors set
out herein.
A discussion of factors that may affect HPS' actual results,
performance, achievements or financial position is contained in the
filings by HPS with the Canadian securities regulatory authorities,
including HPS' Annual Information Form. This list is not exhaustive
of the factors that may affect our forward-looking information.
These and other factors should be considered carefully and readers
should not place undue reliance on such forward-looking
information. HPS disclaims any intent or obligations to update or
revise publicly any forward- looking statements whether as a result
of new information, estimates or options, future events or results
or otherwise, unless required to do so by law.
About Hammond Power Solutions Inc.
Hammond Power Solutions Inc., is a leading manufacturer of dry
type, cast coil and oil filled transformers and related magnetic.
Advanced engineering capabilities, high quality products and fast
responsive service to customers' needs have established the
Company, as a technical and innovative leader in the electrical and
electronic industries. The Company has manufacturing plants in
Canada, the United States, Mexico, Italy and India.
Contacts: Hammond Power Solutions Inc. Dawn Henderson Manager
Investor Relations (519) 822-2441
x414ir@hammondpowersolutions.com
Hammond Power Solutions (TSX:HPS.A)
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