Hammond Power Solutions Taps the Data Center Boom and Pivots to 800V DC with AEG

Record Q2 sales, fully ramped MON IV, and a strategic acquisition position HPS at the intersection of transformers and power conversion as data center architectures evolve.

HPS-A.TO · Earnings Call · 2026-07-31

A Record Quarter, Powered by Data Centers

Hammond Power Solutions delivered its strongest quarter ever, with sales of $324.8 million, up 44.7% year-over-year. The growth was overwhelmingly driven by the U.S. and Mexico, where demand for transformers supporting data centers and critical infrastructure remains robust. CFO Richard Vollering confirmed the acceleration: “It has actually gone a little bit beyond 30% now.” — Richard C. Vollering, Chief Financial Officer · 2026-07-31 That marks a significant shift from just a few quarters ago, when data centers were a smaller slice of the custom business. The record revenue was supported by the successful ramp of MON IV, now operating at full capacity, as CEO Adrian Thomas noted: "We shipped more product than ever before, improved our responsiveness to customers, and converted more backlog into revenue."

Capacity, Pricing, and the Path to $1.3 Billion

With the company's fixed capacity ceiling frequently cited around $1.3 billion, the question is whether pricing power can push that higher. When asked if the data center-heavy mix could allow more aggressive pricing, Thomas pointed to the diversified nature of the business: "We are more than 30% of our revenue is data center, but that means probably 60% to 70% of our revenue is non-data center business, and that is a completely different dynamic." He noted that capacity and lead time give HPS leverage on large projects: “you have seen that we have been able to price up over time.” — Adrian Thomas, Chief Executive Officer · 2026-07-31 The company is also looking at incremental expansions, though as Vollering described, these are typically "measured in the tens of millions."

When we look at expansion, we do not, it is not like one thing. We look at it as more multiple things. You mentioned. Done a lot of footprint optimization. We have now some ability to add additional equipment. And then I think the conversation around footprint expansion is also very active.
Adrian Thomas, Chief Executive Officer · 2026-07-31

AEG: The Strategic Leap into Power Conversion

The late-June acquisition of AEG Power Solutions is the most consequential move in HPS's recent history. It adds UPS systems, battery chargers, rectifiers, and a services business with a global installed base. More strategically, it positions HPS for the emerging 800V DC architecture in data centers. Thomas told analysts: “AEG has power conversion capabilities up to 800 and even up to 1.5 thousand volts DC.” — Adrian Thomas, Chief Executive Officer · 2026-07-31 This is a direct answer to a question from Tomohiro Sano about where HPS will win as data centers evolve. The combination of power magnetics and power electronics could open new opportunities in battery energy storage and other areas. Earlier, when capacity targets were discussed, Vollering had said: “It will be closer to $1.1 billion.” — Richard C. Vollering, Chief Financial Officer (CFO) · 2025-07-25 Now the company is already operating at a $1.3 billion run rate, and with AEG, the addressable market expands well beyond transformers.

Managing Headwinds

Not everything is rosy. Canada was down 23.7% year-over-year, hurt by project timing and competitive pricing. Tariffs remain a complex issue, though the company has not received any refunds and most products are USMCA-compliant. Vollering noted that tariffs are "really very product specific" and impact smaller transformers more. The company's own keyword trajectory shows power conversion and MON IV as the top gainers, underscoring the shifting narrative. The global theme of AI data centers is a tailwind, and HPS is positioning itself as a full-solution provider for the next generation of power-hungry facilities. As Adrian emphasized, "The long-term fundamentals of the business remain attractive."