Hammond Power Solutions Inc. Announces Quarter 4, 2013 Financial
Results Building for the Future
GUELPH, ONTARIO--(Marketwired - Mar 13, 2014) -
(Dollar amounts are
in thousands unless otherwise specified)
NOTE: ALL NUMBERS HAVE BEEN STATED
UNDER IFRS
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 2013.
Bill Hammond,
Chairman & Chief Executive Officer of Hammond Power Solutions
Inc. commented, "Hammond Power Solutions has come through one of
the most challenging years since the recession started in 2008. A
number of unexpected circumstances as well as higher levels of
economic volatility buffeted our sales and profit performance
during 2013. We are confident that our financial strength, core
competencies and long term strategies will accelerate our growth as
the global recovery begins."
FOURTH QUARTER
RESULTS
Sales for the
quarter ended December 31, 2013 were $62,804 a slight increase of
$271 or 0.4% from the comparative quarter last year, which is
reflective of the impact of the continued demand for our product,
market share and favorable product mix. U.S. sales were stable at
$35,201 in Quarter 4, 2013, an increase of $637 or 1.8% from
Quarter 4, 2012. In 2013, sales to the U.S. market of $138,481
decreased by $6,604, or 4.6%, compared to 2012 sales of $145,085.
Canadian sales were $20,081 for the quarter, a decrease over
Quarter 4, 2012, of $4,052 or 16.8%. Year to date Canadian sale
were $79,766 in 2013 compared to $95,467 in 2012 a drop of $15,701
or 16.4%. International sales in Quarter 4, 2013 were $7,522 versus
$3,824 in Quarter 4, 2012, an increase of $3,698 or 96.7%.
International sales were $24,694 in 2013 compared to $16,824 in
2012, an increase of $7,870 or 46.8%.
The Company realized
an increase in bookings of 1.12% over Quarter 3, 2013 and an
increase of 2.7% as compared against Quarter 4, 2012. Due to the
softer North American, European and Asian economies, year-to-date
bookings were lower by 1.1%.
Quarter 4, 2013
gross margin dollars decreased by $529 compared to Quarter 4, 2012.
Gross margin rate decreased to 27.1% in Quarter 4, 2013 versus
28.1% in Quarter 4, 2012 as a result of market pricing pressures
and lower manufacturing throughput and were 25.0% year to date 2013
versus 25.2% year to date 2012.
Bill Hammond further
commented, "We are pleased with our solid gross margin rates for
the year. Despite a slower than expected economy, we continued to
increase our sales and market share through our U.S. distributor
channel. Our expanded channel and geographical presence will
benefit HPS even more as the U.S. economy begins to improve."
Total selling and
distribution expenses were $7,461 in Quarter 4, 2013 versus $6,773
in Quarter 4, 2012, an increase of $688 or 10.2%. These expenses
represent 11.9% of sales in Quarter 4, 2013 and 10.8% of sales in
Quarter 4, 2012. Year-to-date selling and distribution expenses
were $27,156 or 11.2% of sales in 2013, compared to $25,894 or
10.1% of sales in 2012.
The general and
administrative expenses for Quarter 4, 2013 totaled $5,394, a
slight increase of $171 or 3.2% when compared to Quarter 4, 2012
expenses of $5,223. This represents 8.6% of sales in Quarter 4,
2013 as compared to 8.4% of sales in Quarter 4, 2012. Year-to-date
general and administrative expenses were $22,409 or 9.2% of sales
in 2013, compared to $20,714 or 8.0% of sales in 2012.
Earnings from
operations were $4,157 in Quarter 4, 2013 versus $5,545 in Quarter
4, 2013, a decrease of $1,388 or 25.0% and were $11,036
year-to-date in 2013, as compared to $18,180 in 2012, a decrease of
$7,144 or 39.3%.
Interest expense for
Quarter 4, 2013 finished at $155 and was comparable to $146 in
Quarter 4, 2012. Year-to-date interest cost was $860, an increase
of $165 when compared to the 2012 year-to-date expense of $695. The
increase in interest expense year-to-date was a result of higher
operating debt levels related to the assumption of debt associated
with the Italian acquisition in the year.
There was a foreign
exchange gain of $217 in the Quarter 4, 2013 versus $393 in Quarter
4, 2012 and a foreign exchange loss in 2013 of $80 related
primarily to the transactional exchange gain or loss pertaining to
the Company's U.S. dollar trade accounts payable in Canada,
compared to a foreign exchange gain of $775 in 2012.
Net earnings for
Quarter 4, 2013 decreased by $1,835, finishing at $2,895 compared
to net earnings of $4,730 in Quarter 4, 2012. Year-to-date net
earnings were $6,104 in 2013 and $12,611 in 2012, a decrease of
$6,507 or 51.6. This decrease is mostly due to lower sales in the
year.
Net cash used in
operating activities for Quarter 4, 2013 was $2,819 versus cash
generated of $10,461 in Quarter 4, 2012, a decrease of $13,280 as a
result of lower net earnings. Year-to-date cash generated by
operating activities was $620 in 2013 and $21,371 in 2012, a change
of $20,751.
Overall cash
balances net of debt bank lines of credit resulted in net debt of
$15,959 as at December 31 2013, a decrease of $17,111 as compared
to a net cash balance of $1,152 as at December 31, 2012. This is
primarily reflecting acquisition activity, capital investment and
debt repayment in the year.
The Company
continued with its regular quarterly dividend program, paying five
cents ($0.05) per Class A Subordinate Voting Share of HPS and five
cents ($0.05) per Class B Common Share of HPS on December 30, 2013.
Year to date, the Company has paid a quarterly cash dividend of
twenty cents ($0.20) per Class A Subordinate Voting Share and
twenty cents ($0.20) per Class B Common Share.
Mr. Hammond
concluded, "We continue to implement operational and strategic
initiatives to grow our sales, control our expenses, manage the
company and build for the future."
FINANCIAL
RESULTS
| THREE MONTHS ENDED: |
| (dollars in thousands) |
|
|
|
|
December 31, 2013 |
|
December 31, 2012 |
|
Change |
|
Sales |
$ |
62,804 |
|
$ |
62,533 |
|
$ |
271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from Operations |
$ |
4,157 |
|
$ |
5,545 |
|
$ |
(1,388 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Gain |
$ |
(217 |
) |
$ |
(393 |
) |
$ |
(176 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings |
$ |
2,895 |
|
$ |
4,730 |
|
$ |
(1,835 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.25 |
|
$ |
0.41 |
|
$ |
(0.16 |
) |
|
Diluted |
$ |
0.25 |
|
$ |
0.41 |
|
$ |
(0.16 |
) |
|
Cash (used) generated by Operations |
$ |
(2,819 |
) |
|
$10,461 |
|
$ |
(13,280 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| TWELVE MONTHS ENDED: |
|
| (dollars in thousands) |
|
|
|
|
|
|
December 31, 2013 |
|
December 31, 2012 |
|
Change |
|
Sales |
$ |
242,941 |
|
$ |
257,376 |
|
$ |
(14,435 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from Operations |
$ |
11,036 |
|
$ |
18,180 |
|
$ |
(7,144 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Loss/(Gain) |
$ |
80 |
|
$ |
(775 |
) |
$ |
(855 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings |
$ |
6,104 |
|
$ |
12,611 |
|
$ |
(6,507 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.52 |
|
$ |
1.08 |
|
$ |
(0.56 |
) |
|
Diluted |
$ |
0.52 |
|
$ |
1.08 |
|
$ |
(0.56 |
) |
|
Cash generated by Operations |
$ |
620 |
|
$ |
21,371 |
|
$ |
(20,751 |
) |
|
|
|
|
|
|
|
|
|
|
|
TELECONFERENCE
Hammond Power
Solutions Inc. will hold a conference call on Friday, March 14,
2014 at 10:00 a.m. EST, to discuss the Company's financial results
for the fourth quarter 2013.
Listeners may attend
the conference by dialing:
| 1-416-340-2216 / 1-866-226-1792 / 1-800-9559-6849 |
|
|
Instant Replay |
|
|
| Dial
in numbers |
|
905-694-9451 or 1-800-408-3053 |
| Pass
code |
|
7239947 |
| End
date |
|
March
28, 2014 |
Caution Regarding
Forward-Looking Information
This press release
contains forward-looking statements that involve a number of risks
and uncertainties, including statements that relate to among other
things, HPS' strategies, intentions, plans, beliefs, expectations
and estimates, and can generally be identified by the use of words
such as "may", "will", "could", "should", "would", "likely",
"expect", "intend", "estimate", "anticipate", "believe", "plan",
"objective" and "continue" and words and expressions of similar
import. Although HPS believes that the expectations reflected in
such forward-looking statements are reasonable, such statements
involve risks and uncertainties, and undue reliance should not be
placed on such statements. Certain material factors or assumptions
are applied in making forward-looking statements, and actual
results may differ materially from those expressed or implied in
such statements. Important factors that could cause actual results
to differ materially from expectations include but are not limited
to: general business and economic conditions (including but not
limited to currency rates); changes in laws and regulations; legal
and regulatory proceedings; and the ability to execute strategic
plans. HPS does not undertake any obligation to update publicly or
to revise any of the forward-looking statements contained in this
document, whether as a result of new information, future events or
otherwise, except as required by law.
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.
Hammond Power Solutions Inc.Dawn HendersonManager Investor
Relations(519) 822-2441 x414ir@hammondpowersolutions.com
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