Hammond Power Solutions posts record C$325m Q2 on data centre surge
Hammond Power Solutions (TSX: HPS.A) has reported record quarterly sales of C$325 million for the three months ended 27 June 2026, a 44.7% increase on the same period a year earlier. The Guelph, Ontario-based manufacturer of dry-type transformers and power quality products attributed the performance primarily to surging data centre investment in the United States, alongside broader electrification and power infrastructure spending.
Adjusted EBITDA for the quarter reached C$53.2 million, representing a 16.4% margin and a 59.4% increase over Q2 2025. On a statutory basis, net earnings fell 29.8% year-on-year to C$9.4 million, largely because of elevated share-based compensation costs and C$5 million in acquisition-related charges. Adjusted earnings per share of C$2.76 were well ahead of the C$1.72 recorded in Q2 2025.
Data centre demand and backlog
US and Mexico revenues grew 73% year-on-year to C$272.7 million, accounting for the bulk of the group's top line. Chief executive Adrian Thomas said the company's expanded manufacturing footprint was allowing it to capitalise on demand more effectively. "Despite record shipments, our backlog remains at historic levels and supports continued utilisation of our capacity investments," Thomas noted, pointing to a higher proportion of custom product sales as a contributor to margin improvement.
The company's order backlog at the end of Q2 2026 was 96.9% higher than a year earlier, driven largely by large project orders linked to data centre construction. Sequentially, backlog declined 6.9% from Q1 2026 as shipments outpaced new bookings, though management described the remaining backlog as substantial relative to installed capacity.
Gross margin improved 80 basis points year-on-year to 31.5%, and 140 basis points from Q1 2026's 30.1%. Chief financial officer Richard Vollering attributed the sequential improvement to price increases implemented to offset tariff-related input cost pressures, alongside operating leverage from the company's new Mexican manufacturing facility.
AEG acquisition and market context
Hammond completed its acquisition of AEG on 29 June 2026, one day before the quarter closed. No revenue or costs from the acquired business are included in the Q2 figures; the company expects a full quarter of AEG results to be consolidated in Q3. Capital expenditure guidance for the full year remains at C$35 million to C$40 million.
The result reflects a structural shift in power equipment demand driven by the rapid buildout of hyperscale and co-location data centres across North America. Electricity load forecasts from grid operators in several US regions have been revised sharply upward in the past 18 months as cloud providers and AI infrastructure developers commission large campuses, creating a multi-year tailwind for transformer and switchgear manufacturers. Hammond competes in this space with larger electrical equipment groups including Eaton, ABB and Siemens Energy, all of which have reported similar demand patterns.
Canada, by contrast, declined 23.7% in the quarter and 11.1% year-to-date, with Hammond citing a mix of project timing, subdued industrial conditions and intensifying pricing competition. The divergence underscores how concentrated the data centre investment cycle currently is in the US Sun Belt and key technology corridors, rather than being distributed evenly across North American markets.
Looking ahead, Hammond will be focused on integrating AEG, managing working capital discipline and sustaining adjusted EBITDA margins as a stronger US dollar and elevated tariff costs put pressure on input pricing. Working capital as a percentage of sales fell to 17.7% in Q2, which management presented as progress on its efficiency programme.