Hammond Power Solutions Reports Record Q2 Sales Amid Rising Costs

Hammond Power Solutions reported record Q2 2025 sales of approximately $224 million, marking a 14% year-over-year increase driven primarily by strong demand in the U.S. and Mexico markets, especially in private label and OEM channels. Despite this robust top-line growth, gross margins declined due to rising input costs, particularly materials like aluminum wiring and insulation, and investments related to the ramp-up of new production facilities in Mexico. The Mexican expansion, which is expected to enhance operating costs as it scales, contributed an estimated 123 basis point drag on gross margins from training and setup expenses, though management anticipates price adjustments will help mitigate these impacts over time. The company’s backlog decreased 8% from Q1 2025 but remains higher than the end of 2024, reflecting sustained demand amid supply chain uncertainties. Hammond’s shares have surged, trading at elevated multiples based on optimistic growth prospects tied to infrastructure and energy investments in North America, while analysts maintain a generally positive outlook with a Buy rating. Additionally, Hammond Power Solutions earned external accolades, including a 'Great Place to Work' certification, underscoring its employee-focused culture during a period of strategic expansion and operational challenges.