Canadian Electrical Industry News Week

May 4, 2022

EIN 35 CS HPS logo 400Hammond Power Solutions Inc. has announced its financial results for the first quarter 2022.

HIGHLIGHTS (First quarter 2022 compared to first quarter 2021)

  • Sales increased 60% to a record $128 million
  • Net Earnings of $8,569, exceeding the first quarter of 2021 by $6,271
  • Earnings per share increased to $0.72, compared with $0.19 in Q1 2021
  • Order backlog increased 92%

“The diversification of geography, channels, markets and products - an important differentiator for HPS - has our business firing on all cylinders. We are seeing record booking rates in both the U.S. and Canada, along with very exciting opportunities in Mexico. In India, we benefited from strong domestic and export demand, which drove our strongest quarter in sales since we acquired our Indian transformer company. Our U.S. distributor channel continues to be the biggest engine of growth, and our OEM business is growing at its fastest pace in 7 years,” said Bill Hammond, CEO and Chairman of Hammond Power. “The fundamentals of our business are driven by demand from a broad range of markets including oil and gas, mining, data centers, hydro generation, solar power, energy storage, electric vehicle recharging stations, micro chip manufacturing, industrial expansion, LNG exports, waste water treatment, and other commercial projects. Our organizational focus on the total customer experience, which includes having the biggest and broadest inventory of products of any dry-type transformer company, providing superior customer service, and offering industry leading support tools to our distributors underpins our growth in market share.”

Sales for the quarter-ended April 2, 2022 were at a record level of $127,782, an increase of $47,661 or 59.5% from Quarter 1, 2021 sales of $80,121. Sales in the United States (“U.S.”) and Mexico increased by $36,606 or 78.7%, finishing at $83,111 for Quarter 1, 2021 compared to $46,505 in Quarter 1, 2021. U.S. and Mexican sales, stated in U.S. dollars, were $65,624 in Quarter 1, 2022 compared to Quarter 1, 2021 sales of $36,665, an increase of $28,959 or 79.0%. Canadian sales increased to $38,154 for the quarter, an increase of $10,353 or 37.2% from Quarter 1, 2021 sales of $27,801. Indian sales for Quarter 1, 2022 finished at $6,517 versus $5,815 in Quarter 1, 2021, an increase of $702 or 12.1%.

The Company’s Quarter 1, 2022 backlog has increased by a record 91.9% as compared to Quarter 1, 2021 and has increased 32.1% from Quarter 4, 2021. The combination of price increases, strong demand in the back half of 2021 and early 2022, and delayed shipments due to material availability contributed to the record-high backlog.

“We are now seeing the full impact of the price increases implemented in 2021. The increase in sales and backlog is driven by significantly higher prices versus a year ago and higher demand, particularly in our OEM markets. Margins were strong in the quarter as pricing caught up to costs, and as we benefitted from strong OEM project margins,” said Richard Vollering CFO of Hammond. “Looking forward in 2022, raw material costs continue to rise and as a result we will continue to monitor our pricing and make adjustments to maintain our margins. In parallel, we continue to see supply chain volatility that will continue to challenge us through the balance of 2022.”

The Company saw a considerable increase in its gross margin rate for Quarter 1, 2022, which was 28.5% compared to the Quarter 1, 2021 margin rate of 24.7%, an improvement of 3.8% of sales. The gross margin rate is strongly impacted through productivity gains, material procurement and engineering cost reduction initiatives. Margin rates can be sensitive to selling price pressures, volatility in commodity costs, customer mix and geographic blend.

Total selling and distribution expenses were $14,471 in Quarter 1, 2022 or 11.3% of sales versus $9,807 in Quarter 1, 2021 or 12.2% of sales, an increase of $4,664 or 47.6%. 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 administrative expenses were $9,247 or 7.2% of sales for Quarter 1, 2022 compared to Quarter 1, 2021 expenses of $6,619 or 8.3% of sales, an increase of $2,628 or 39.7%. The increase is due to our strategic investments in people, resources and incentive plans, Mesta and Mexico general and administrative expenses, higher information technology expenses to support growth, and outside consulting and service costs.

Quarter 1, 2022 earnings from operations were $12,658 compared to $3,402 for the same quarter last year, an increase of $9,256.

Interest expense for Quarter 1, 2022 was $263, an increase of $158 compared to the Quarter 1, 2021 expense of $105. The foreign exchange loss in Quarter 1, 2022 was $124 compared to a loss of $116 in Quarter 1, 2021, a change of $8.

Net earnings for Quarter 1, 2022 finished at $8,569 compared to net earnings of $2,298 in Quarter 1, 2021, an increase of $6,271. The increase in the quarter earnings from operations is primarily a result of significant increases in sales and gross margin dollars offset by higher selling, distribution, general and administrative expenses, as well as higher income tax expense.

EBITDA for Quarter 1, 2022 was $14,458 versus $5,349 in Quarter 1, 2021, an increase of $9,109 or 170.3%. Basic earnings per share were $0.72 for Quarter 1, 2022 versus $0.19 in Quarter 1, 2021.

Cash generated by operating activities for Quarter 1, 2022 was $537 versus cash used in operations of $6,854 in Quarter 1, 2021, an increase in cash generated of $7,391. Cash used in investing activities were consistent year-over-year with cash used of $1,527 in Quarter 1, 2022 versus $1,581 in Quarter 1, 2021. The overall operating debt balance net of cash was $905, a decrease of $2,543 from the net operating cash balance of $1,638 at December 31, 2021.

The Company continued with its regular quarterly dividend program in the fourth quarter, paying eight and a half cents ($0.085) per Class A Subordinate Voting Share of HPS and eight and a half cents ($0.085) per Class B Common Share of HPS on March 24, 2022.

The Company and National Material L.P. (“National”) have operated the joint venture in Monterrey, Mexico under the name Corefficient S. de R.L. de C.V. Effective February 28, 2022, the Company and National have amicably agreed to divide the operations, with HPS retaining certain equipment, employees, obligations, and other financial assets and liabilities, and National withdrawing certain assets and capital in exchange for redeeming their ownership interest. The Corefficient name was also retained by National. The operation continues to produce transformer cores to supply the Group’s facilities in Mexico.

THREE MONTHS ENDED:
(dollars in thousands)

  April 2, 2022   March 27, 2021 Change
Sales $ 127,782 $ 80,121   $ 47,661
Earnings from operations $ 12,658 $ 3,402   $ 9,256
Exchange loss $ 124 $ 116   $ 8
Net earnings $ 8,569 $ 2,298   $ 6,271
Earnings per share
Basic
Diluted

$
$
0.72
0.72
$
$
0.19
0.19
  $
$
0.53
0.53
Cash generated by (used in) operations $ 537 $ (6,854 ) $ 7,391

        

Source

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2021 Canadian Electrical Code Overview of Changes

EIN CSA Group Logo 2022 400CSA C22.1:21, Canadian Electrical Code, Part I contains many updates and changes that are potentially significant to electrical professionals. This online, self-guided course provides the key changes and impacts to the industry presented in an easy-to-follow format.

 Designed for professionals with a good working knowledge of the Code and who solely need the key changes including general updates or those made for clarification, safety, and new products and systems. Key changes due to Rule relocation or deletion are also noted.

This course may help save valuable time to help keep electrical projects safe and in compliance. This training is developed with input from a broad cross-section of electrical industry experts and with cooperation from all provinces, territories and several key jurisdictions across Canada. 

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Government of CanadaThe federal governemnt has officially launched a call for proposals (CFP) for the Zero-Emission Vehicle Awareness Initiative (ZEVAI). The initiative’s 2022 CFP will help fund new and innovative projects that aim to increase awareness and knowledge of ZEVs and charging and refueling infrastructure thereby increasing public confidence in these vehicles and their economic and environmental benefits.


Natural Resources Canada will provide funding through non-repayable contributions of between 50 and 75 percent of the total eligible project costs, with a maximum funding of up to $300,000 per project. The CFP will close on August 18, 2022.

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Omnicable joins ETIMETIM North America announced that OmniCable has joined the product classification standards organization. Headquartered in West Chester, PA, OmniCable has 24 locations throughout North America, and also owns Houston Wire & Cable (HWC). The company partners with many electrical manufacturers and only sells to distributors.

According to John Dean, Director of Marketing & E-Commerce, OmniCable/HWC, “The wire and cable industry is often called commodities, but there are very distinct features and attributes for the different products our manufacturers produce. 

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Atkore United Poly SystemsAtkore Inc. announced that it has acquired United Poly Systems, a manufacturer of High Density Polyethylene (HDPE) pressure pipe and conduit, primarily serving telecom, water infrastructure, renewables, and energy markets.

“We are pleased to complete the acquisition of United Poly Systems, which strengthens Atkore’s product portfolio, expands our manufacturing capacity and further enables us to meet HDPE customers’ needs,” stated John Pregenzer, President of Atkore’s Electrical business. “HDPE pipe and conduit is a growing market that is expected to benefit from U.S. infrastructure legislation, and United Poly Systems is a great addition to Atkore. We welcome these employees and look forward to working together to continue to serve and support our customers.”

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Canadian Electrical Contractor Discussion Group: Can You Count the Deficiencies?

EIN CECD 400Have you ever been called to fix the work of a 'handyman'?

"Was supposedly done by a"certified ' electrician....told the homeowner that he got a $266 permit....no record at TSBC. Can you count the deficiencies?"

"There is a second panel change in the triplex also.......even more deficiencies. Think the guy was a glorified handyman. Ones not obvious: 240 BB heat hooked up 120....drier on 2p20....range on 2p50....water heater fed with 2c14 Bx on 2p15."

Go HERE to join the discussion

 


 

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