(Dollar amounts are in thousands, in Canadian currency unless otherwise specified) GUELPH, Ontario, April 29, 2024 (GLOBE NEWSWIRE) -- Hammond Power Solutions Inc. ("HPS") (TSX:HPS) a leading manufacturer of dry-type transformers, power quality products and related magnetics, today announced its financial results for the first quarter 2024. HIGHLIGHTS Record sales of $190 million in the quarter, a 11.4% increase versus 2023. Adjusted EBITDA of $30,972 in the quarter, or 16% of sales. Adjusted EBITDA is 6% higher than the first quarter of 2023. Gross margin of 31.7% for the quarter. Net Earnings of $7.9 million in the quarter. Earnings per share of $0.67 for the quarter, significantly impacted by share-based compensation. "We begin 2024 at a strong pace as we continued to grow our quarterly sales volumes.  Higher bookings versus 2023 maintained the backlog even with higher shipments, and we are now seeing bookings and shipments somewhat evenly matched.  The distribution network stood out again as a source of strength as more projects continued to flow through this channel.  Canada was also a standout as we shipped several key projects in commercial construction, electric vehicle ("EV") charging, data centres, public infrastructure, oil & gas, mining, and utilities," said Adrian Thomas, CEO of Hammond Power Solutions. "With the strong project demand, we have made further commitments to equipment spending as we forecast demand from emerging market segments to continue. We also implemented a price increase that will take effect in the second quarter of 2024, after having not done so since 2022. The increase was in consideration of persistent inflation and resilient demand. Regarding the Mesta and Power Quality business, a large customer project delay impacted our shipments for the quarter, but we still expect full year shipments to remain close to expectations. We are gaining recognition within the technical community and among our customers, as demonstrated by receiving the Rockwell Automation Technology Partner Innovation award for our Active Harmonic Filter." Geography Q1 2024 Q1 2023   $ Change   % Change   U.S. & Mexico $ 130,732 $ 118,804 $ 11,928   10.0%   Canada   48,296   36,414   11,882   32.6%   India   11,652   15,916   (4,264)   (26.8%)   Total $ 190,680 $ 171,134 $ 19,546   11.4%     The United States ("U.S.") market experienced its strongest growth in the distributor channel as the Company continued to grow sales with existing and new distributors. The Original Equipment Manufacturer ("OEM") channel also grew in the quarter, with strong sales to motor control, mining, and data centres. The Canadian market experienced increases in both distribution and direct sales in commercial construction, EV charging, data centre projects, public infrastructure, oil & gas, mining, and utilities. The Company's Quarter 1, 2024 backlog increased by 11.1% as compared to Quarter 1, 2023. Strong demand in the back half of 2023 contributed to the high backlog increase from prior year. The Company's backlog has decreased 1.1% from the Quarter 4, 2023 value as our quarterly shipments reached record levels. "We began the year continuing with the strong momentum that we were experiencing at the end of 2023. We were able to maintain margins of 31.7% in the quarter despite lower power quality, Induction Heating Inverter ("IHI"), and India sales, which all had very favourable margins in Quarter 1, 2023. Additionally, we are incurring costs in getting our new factory set up in Mexico, which had a slight negative impact on margins. Offsetting this, margins are being positively affected by a higher proportion of custom projects in the quarter," said Richard Vollering, CFO of HPS. "Notably, share-based compensation was $16.8 million in the quarter, which was $12.2 million higher than in Quarter 1, 2023, reflecting the higher share price in 2024, resulting in the decrease in net earnings and EBITDA. A normalized metric for the quarter is adjusted EBITDA, which was was 16% in Quarter 1, 2024. Net cash generation was slightly negative as we invested almost $7.5 million in capex in the quarter, consistent with our capital expansion plans for 2024, and incurred higher working capital requirements as a result of higher sales and significant seasonal payments in the first quarter for bonuses and rebates." The Company saw a slight decrease in its gross margin rate for Quarter 1, 2024 which was 31.7% compared to Quarter 1, 2023 margin rate of 31.8%, a decrease of 0.1% of sales. The stability in gross margin is the result of better operating leverage due to high factory throughput, price maintenance in the market, and stabilizing cost inputs. Higher gross margins were achieved in all channels and are supported by high demand for the Company's products. Margin rates can be sensitive to selling price pressures, volatility in commodity costs, customer mix and geographic blend. Total selling and distribution expenses were $21,067 in Quarter 1, 2024 or 11.0% of sales versus $17,489 in Quarter 1, 2023 or 10.2% of sales, an increase of $3,578 or 0.8% of sales. The year-over-year increase in selling and distribution expenses is a result of higher variable freight and commission expenses attributed to the large increase in sales. General and ...