Hammond Power Solutions Adds a Texas Plant. Canada Is Now 14% of Its Sales
Hammond Power Solutions has signed a long-term lease for a new manufacturing facility in Fort Worth, Texas, and expects to invest about $50 million to equip and commission the initial production phase. The Guelph, Ontario company announced the expansion on September 22, 2026, in a release reported by The Canadian Press. HPS had not posted the release to its own investor site at the time of writing.
Production is expected to start in stages beginning in the fourth quarter of 2027. Once that initial phase is running, the facility is expected to add about $250 million in annual manufacturing capacity, based on anticipated demand. The company says the new operation will expand its ability to serve its US-based customers. Chief executive Adrian Thomas said demand for the transformers the company produces continues to increase, particularly from large projects tied to data centres, electrification and power infrastructure.
One note on the figures. The coverage available does not state a currency for either the $50 million or the $250 million, and HPS reports in Canadian dollars. Every figure in this article is Canadian unless stated otherwise, and the comparisons below should be read as approximate for that reason.
How much capacity this actually adds
Second-quarter sales were $324.8 million, which annualise to roughly $1.30 billion. An addition of about $250 million a year is therefore roughly a fifth on top of what the company is currently selling at an annual rate. It is also not a 2026 event, or a 2027 event in full: the plant produces nothing until the fourth quarter of next year, and then only in stages.
A newer investor might reasonably ask why a commitment whose first unit ships in late 2027 should move a share price today, and our guide to what moves a stock price works through how markets price expected future earnings rather than current ones.
Why Texas: the sales map already moved
The strategic logic is in the company’s own regional numbers, and it is the part of this announcement that says the most.
Here is the second quarter beside the same quarter a year earlier, from the company’s Q2 2026 results release.
| Region | Q2 2026 | Q2 2025 | Change | Share of Q2 2026 sales |
|---|---|---|---|---|
| United States and Mexico | $272.7M | $157.6M | +73.0% | 84.0% |
| Canada | $44.7M | $58.6M | -23.7% | 13.8% |
| India | $7.4M | $8.3M | -9.9% | 2.3% |
| Total | $324.8M | $224.4M | +44.7% | 100% |
Source: Hammond Power Solutions second-quarter 2026 results release, July 30, 2026. Regional shares computed from the company’s table.
A year earlier the mix was different enough to be a different company. Canada was 26.1% of sales in the second quarter of 2025 and is 13.8% now. The United States and Mexico were 70.2% and are 84.0%. A Toronto-listed manufacturer saw its home-market sales fall by nearly a quarter in a year while its American sales rose by nearly three quarters, and its next plant is going to Fort Worth.
The company attributes the US growth to data centre activity, citing “increases in data centre shipments” and “large project orders driven by data centre activity.” Transformers are not the most obvious way to hold the AI-infrastructure trade, which is why it is worth checking which Toronto-listed companies actually move with data centre spending. Our ranking of Canadian AI stocks on measured AI exposure scores names on that basis, and HPS.A is not currently on it.
Reported earnings fell. Adjusted earnings per share rose
The second quarter produced two earnings numbers that point in opposite directions, and both are real.
Reported net earnings were $9.4 million, down 29.8% year over year. Basic earnings per share were $0.79, against $1.12 a year earlier. Adjusted earnings per share were $2.76, against $1.72, an increase of 60%.
What separates them is spelled out in the release. The company attributes the decline to “higher share-based compensation expenses, increased selling, distribution, general and administrative expenses, and acquisition-related costs of $4,992, partially offset by higher sales and increased gross margin dollars.” Selling and distribution expenses rose $11.6 million to $36.3 million. General and administrative expenses rose $18.5 million to $43.0 million. Acquisition-related costs were $5.0 million. Foreign exchange losses rose $0.9 million to $1.5 million. The adjusted figure, in the company’s words, “excludes the impact of foreign exchange losses, share-based compensation expense and acquisition-related costs.”
Gross margin moved the other way over the same period, to 31.5% from 30.7%, and adjusted EBITDA was $53.2 million on a 16.4% margin. When sales rise 44.7% and reported earnings fall 29.8%, what a shareholder is really asking is what happened per share, which is the measure our ranking of Canadian growth stocks on growth per share is built on.
The backlog cuts both ways
Here is the tension the company put in its own release. Backlog is 96.9% higher than in the second quarter of 2025. It also “decreased 3.1% from Quarter 4, 2025 and 6.9% from Quarter 1, 2026, as shipments exceeded new order bookings during the period.” Management’s framing: “Despite record shipments, our backlog remains at historic levels and supports continued utilization of our capacity investments.”
Both halves are true at once. The order book is far larger than it was a year ago, and it has drawn down over two sequential quarters because the company shipped faster than it booked. Both sit alongside a capacity commitment that does not start producing until late 2027.
What changes from the third quarter
Comparisons are about to stop being like for like. HPS agreed in February 2026 to acquire AEG Power Solutions for a $365 million enterprise value, all cash. AEG makes mission-critical industrial power electronics, including industrial uninterruptible power supplies and power conversion systems, operates five manufacturing facilities primarily across Europe and Asia, and had approximately $326 million of revenue in 2025.
The deal closed June 29, 2026. Second-quarter results exclude AEG revenue and costs, and the company has said “The third quarter will include a full quarter of AEG results.”
The market repriced this some time ago
Shares closed Monday, September 21, 2026 at $255.11, up 3.38% on the day, for a market capitalisation of roughly $3.0 billion. Data as of the close on September 21, 2026, from Yahoo Finance. The stock is up 60.0% year to date from the 2025 year-end close of $159.48, up 114.4% over one year from $119.01, and up 392.4% over three years from $51.81. It also sits 29.1% below its 52-week high of $359.85, set June 22, 2026.
On September 1 the company raised its quarterly dividend to $0.29 per share from $0.275, an increase of $0.015 or 5.5%, payable September 24, 2026. Annualised at $1.16 against Monday’s close, that is a yield of 0.45%, which is to say this has been a growth holding rather than an income one. On September 9, HPS said it had been included in the TSX30 ranking published by the Toronto Stock Exchange for a third consecutive year. The TSX30 is an annual ranking of the 30 top-performing companies on three-year dividend-adjusted share price performance.
Where that leaves things
The announcement is a capacity commitment sized at roughly a fifth on top of the current annualised sales rate, aimed at the market that is now 84% of sales, with first output more than a year away. Set against it: a backlog that has slipped for two straight quarters, an expense base growing fast enough to pull reported earnings down while sales rose 44.7%, and a share price that has more than doubled in a year and then given back 29% from its June high. The next data point is the third quarter, the first to include AEG, and the one that will show whether bookings have caught back up with shipments.
Disclaimer
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Company financials are from Hammond Power Solutions’ own press releases distributed via GlobeNewswire: the second-quarter 2026 results release of July 30, 2026, the AEG Power Solutions acquisition release of February 17, 2026, the dividend increase release of September 1, 2026 and the TSX30 inclusion release of September 9, 2026. HPS reports in Canadian dollars. The Fort Worth announcement of September 22, 2026 is cited from The Canadian Press report carried by BNN Bloomberg, and did not state a currency for the $50 million investment or the $250 million of capacity. Share prices and market capitalisation are from Yahoo Finance as of the close on Monday, September 21, 2026, and are used for market data only.
