Hammond Power Solutions Inc. Announces Quarter 1 2013 Financial Results, Consistent Performance

GUELPH, ONTARIO--(Marketwired - April 24, 2013) - Hammond Power Solutions Inc. ("HPS") (TSX:HPS.A) -

(Dollar amounts are in thousands unless otherwise specified)

NOTE: ALL NUMBERS HAVE BEEN STATED UNDER IFRS

HIGHLIGHTS

• International sales growth
• Gross margin growth
• Decrease in net cash used in operating activities
• Solid Balance Sheet

Hammond Power Solutions Inc. ("HPS"), a leading manufacturer of dry-type and cast resin transformers and related magnetics, today announced its financial results for the first quarter of 2013.

"Our strong core capabilities, financial strength, as well as our broad geographical and market diversification will serve HPS in weathering the current economic turbulence," commented Bill Hammond, Chairman & Chief Executive Officer of Hammond Power Solutions Inc.

FIRST QUARTER RESULTS

Sales for the quarter-ended March 30, 2013 were $63,672, a slight decline of $1,982 or 3.0% from the Quarter 1, 2012 sales of $65,654. As a result of softer booking and sales activity in the quarter, sales in the U.S., were $35,185 in Quarter 1, 2013 a small decrease of $1,317 or 3.6% from Quarter 1, 2012. Canadian sales were $21,272 for the quarter, a decrease over Quarter 1, and 2012 of $3,698 or 14.8%. The Company realized International sales of $7,215 versus $4,182 in Quarter 1, 2012, an increase of $3,033 or 72.5%. International sales include revenues from our recent Italian acquisition, Marnate Trasformatori s.r.l. ("Marnate") of $1,068 for the quarter.

The Company was not immune to the sluggish North American, European and Asian economies. The Company's bookings for Quarter 1, 2013 decreased by 12.1% from Quarter 4, 2012 and were 13.2% lower than Quarter 1, 2012.

Gross margin rates for Quarter 1, 2013 finished at 24.0% versus 23.7% in Quarter 1, 2012, an increase of 0.3% of sales.

Bill Hammond further commented, "Despite market pressures, the Company was effective at growing margin rates this Quarter. This is notable as we were able to make these gains in several of our markets."

Total selling and distribution expenses were $6,542 in Quarter 1, 2013 versus $6,259 in Quarter 1, 2012 - an increase of $283 or 4.5%. These expenses represent 10.2% of sales in Quarter 1, 2013 and 9.5% of sales in Quarter 1, 2012. The Quarter 1, 2013 selling and distribution expenses include international operation expenses of $307 versus $258 in Quarter 1, 2012. Freight expenses for the quarter increased due to increased transportation costs caused by higher fuel costs.

The general and administrative expenses for Quarter 1, 2013 totaled $5,395, a decrease of $143 or 2.6% when compared to Quarter 1, 2012 expenses of $5,538. This represents 8.5% of sales in Quarter 1, 2013 as compared to 8.4% of sales in Quarter 1, 2012. The Quarter 1, 2013 general and administrative expenses include international operation expenses of $729 versus $538 in Quarter 1, 2012. Quarter 1, 2013 general and administrative expenses were lowered as a result of reduced quarter stock option expense and bad debt provisions compared to the same quarter in 2012.

Interest expense for Quarter 1, 2013 finished at $169 compared to $124 in Quarter 1, 2012 an increase of $45. The increase in interest expense for the quarter was a result of higher operating debt levels related to the assumption of debt associated with the purchase of Marnate.

Net earnings for Quarter 1, 2013 decreased by $611, finishing at $1,907 compared to net earnings of $2,518 in Quarter 1, 2012. Net earnings were lowered by having no realized and unrealized gains on copper forwards in the quarter as compared to a $376 gain in Quarter 1, 2012 and a slightly higher consolidated effective tax rate for Quarter 1, 2013 at 39.7% versus 37.0% for Quarter 1, 2012, an increase of 2.7%.

Net cash used in operating activities for Quarter 1, 2013 was $1,011 versus cash used of $3,330 in Quarter 1, 2012 a decrease of $2,319 as a result of a decrease in non-cash working capital and lower net earnings.

The Company's overall debt, net of cash was $18,934 in Quarter 1, 2013 compared to a net overall debt position of $19,338 in Quarter 1, 2012, a reduction in debt position of $404. This debt position change was a result of the purchase of Marnate including the deferred purchase agreement of its properties and the change in non-cash working capital.

Mr. Hammond concluded, "We remain focused on our 2013 financial performance. The global economic recovery will be weaker than originally expected, nonetheless, we believe that our results will gain momentum through the year as most of our markets, particularly in the United States, accelerate. In addition to this, new business and increased market share will add to our financial results in the later quarters."

THREE MONTHS ENDED:

(dollars in thousands)

	March 30, 2013			March 31, 2013			Change
Sales	$	63,672		$	65,654			(1,982	)
Earnings from Operations	$	3,359		$	3,757		$	(398	)
Exchange Gain	$	(8	)	$	(22	)	$	(14	)
Copper forward unrealized/realized gain	$	-		$	(376	)	$	(376	)
Net Earnings	$	1,907		$	2,518		$	(611	)
Earnings per share
Basic	$	0.16		$	0.22		$	(0.06	)
Diluted	$	0.16		$	0.22		$	(0.06	)
Cash Used in Operations	$	1,011		$	3,330		$	(2,319	)

TELECONFERENCE

Hammond Power Solutions Inc. will hold a conference call on Thursday, April 25, 2013 at 10:00 a.m. EST, to discuss the Company's financial results for the first quarter 2013.

Listeners may attend the conference by dialing: 1-416-340-2216 or 1-866-226-1792

Instant Replay
Dial-in numbers	905-694-9451 or 1-800-408-3053
Pass code	1338265
End date	May 8, 2013

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's 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.