Hammond Power Solutions Inc. Class A · TSX:HPS.A
Hammond Power Solutions Inc. Class A — Q3 2023 Earnings Presentation
21 slides from Hammond Power Solutions Inc. Class A's earnings presentation, October 2023
Slide 1: Passionate people energizing a better world
Passionate people energizing a better world
Slide 2: 100 Years of Hammond
100 Years of Hammond Inquisitive, Innovative, Industrious 2
Slide 3: The Hammond Way
The Hammond Way REPUTATION/ CULTURE RELATIONSHIPS FOCUS EXPERTISE/ CUSTOMIZATION We invest in relationships and our reputation 3
Slide 4: Relentless electrification of the planet
Relentless electrification of the planet WORLD NET ELECTRICITY GENERATION* 50 Trillion 25,700,000,000,000 Kilowatt hours 12 Trillion HISTORY PROJECTION 1990 2000 2010 2020 2030 2040 2050 * www.eia.gov 4
Slide 5: Transformers
Transformers $50B $6B www.eia.gov 5
Slide 6: Markets we serve
Markets we serve • Industrial: Oil & Gas, Mining, Steel, Pulp & Paper, General • Data Centres: Web Giants + Others • Commercial Construction: Institutional, Waste/water, Hospitals • Mobility/ Transportation: EV Charging, Marine/ Shore-To-Ship, Hydrogen • Renewables: Solar, Wind, Battery/ Energy Stor
Slide 7: The move from hydrocarbon-based to electrical based power system realities
The move from hydrocarbon-based system to electrical based power system realities Voltage Harmonic Frequency Regulation: Mitigation: Conversion: Demand Degradation Usage Based application 7
Slide 8: Transformers are essential/multi-purpose/ubiquitous in all electrical grids
Transformers are essential/multi-purpose/ubiquitous in all electrical grids COMMERICAL Change voltage levels to supply electrical loads required GENERATION TRANSMISSION DISTRIBUTION Transformers step up Transmission may Electricity is stepped power for long require several down for delivery along di
Slide 9: 20-year CAGR, market share, gross margin target
9% 20-year CAGR Shareholder equity (since IPO) 25% market share (North America) 28% gross margin target 9
Slide 10: Hard to pay someone to think like an owner
Limited number of competitors/no other independent with our scale 25% OTHERS MARKET SHARE 60% 2022 15% REX Hard to pay someone to think like an owner 10
Slide 11: Customization
Customization STANDARD CUSTOM 48% 52% This is how we say yes to our customers 40 design engineers 11
Slide 12: Channels to Market
Channels to Market PRIVATE LABEL 15% DISTRIBUTOR 62% OEM 23% This is how we say yes to our customers $50 Million with competitors 12
Slide 13: Industry leading manufacturing capacity
Industry leading manufacturing capacity times 3,000 21 1,600 ~400,000 Global customers Global locations Employees Installed units/year 13
Slide 14: Our Infrastructure
Our Infrastructure SALES BY GEOGRAPHIC SEGMENT INDIA 5% CANADA U.S. & 30% MEXICO 65% MANUFACTURING WAREHOUSING BUSINESS DEVELOPMENT 14
Slide 15: Durable & Diverse Business
Durable & Diverse Business 3,000 SALES BY MARKET SEGMENT OTHER UTILITIES 5% 5% PUBLIC customers RENEWABLE INFRASTRUCTURE 25% 8,000 ENERGY 10% OIL, GAS & PETROCHEMICAL 6% sku’s + custom MINING 5% $200,000 average customer spend/y (TTM) INDUSTRIAL 20% COMMERCIAL CONSTRUCTION 24% Cyclical resistance 15
Slide 16: Track record of profitable growth
Track record of profitable growth CONSOLIDATED SALES VS EBITDA GROSS MARGIN % OF SALES ($millions) ($millions) 600 32% 75.0 558 69.7 69.2 70.0 523 31% 65.0 GROSS MARGIN % OF SALES 500 30% 60.0 55.0 29% 400 380 50.0 359 28% 45.0 314 322 302 40.0 300 275 27% 35.0 28.2 29.5 30.1 30.0 26% 25.0 200 19.6
Slide 17: Robust Financial Platform
Robust Financial Platform USES OF CASH $50M FUNDING GROWTH credit line $9.9M 2022 capex TERM DEBT REPAYMENT $374M total assets $0 $34M Free cash flow 2022 DIVIDEND 0.06 $4.7M net debt per year ~1.2% yield to equity 17
Slide 18: Increased Capital Program for 2023-24 of $52 million
Increased Capital Program for 2023-24 of $52million NORTH AMERICA INDIA ACQUISITIONS/BD $8.0 Million $1.9 Million $50 Million capex 2022 capex 2022 credit line • ERP development • Capacity • Power system • Capacity expansion expansion solutions Mexico • Product • Utility market • Infrastructure Cana
Slide 19: Strong Global Currents
Strong Global Currents Manufacturing capacity accessing Electrification of Greening and Utility scale SE Asia transportation upgrading global renewable electrical grid Data center and build-out AI development Hammond Power is playing a key role in the transformation to cleaner energy 19
Slide 20: Passionate people energizing a better world
Passionate people energizing a better world 20
Slide 21: Capital Markets Overview
Capital Markets Overview HPS.A MARKET DATA (10.27.2023) ANNUAL DIVIDEND HISTORY 9.13M Class A Common shares $0.40 2.78M $0.38 Class B Common Shares $0.34 $0.34 (4 votes /Share) $0.28 ~1.2% $0.24 $0.24 $0.24 $0.24 Dividend Yield ~$779M Market Capitalization $65.50/$17.05 2015 2016 2017 2018 2019 2020
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