FORT LEE, N.J., March 28, 2019 /PRNewswire/ -- Pioneer Power
Solutions, Inc. (Nasdaq: PPSI) ("Pioneer" or the "Company"), a
company engaged in the manufacture, sale and service of electrical
transmission, distribution and on-site power generation equipment,
today announced its financial results for the fourth quarter and
full-year periods ended December 31,
2018.
Full-Year 2018 Results:
- Revenue of $106.4 million, down
7.0% compared to $114.4 million in
2017
- Gross margin of 18.1% compared to 15.5%, inclusive of
$873,000 of non-recurring charges in
2017
- Net loss of $5.7 million compared
to a net loss of $9.2 million in
2017
- Cash provided by operating activities of $2.2 million compared to $1.7 million in 2017
- Adjusted EBITDA* of $7.7 million,
down 24.1% compared to $10.1 million
in 2017
Fourth Quarter 2018 Results and Recent Business
Highlights:
- Revenue of $26.5 million,
compared to $26.4 million in Q4
2017
- Gross margin of 16.0% up significantly compared to 0.7% in Q4
2017
- Net loss of $4.4 million, a
narrowing of 55.7% compared to a net loss of $9.8 million in Q4 2017
- Adjusted EBITDA* of $1.6 million
compared to Adjusted EBITDA* of $1.4
million in Q4 2017
- Backlog as of December 31, 2018
was approximately $47.5 million, up
1.4% compared to $46.8 million at
September 30, 2018 and up 34.9%
compared to $35.2 million at
December 31, 2017
Nathan Mazurek, Pioneer's
Chairman and Chief Executive Officer, said, "Subsequent to the end
of the fourth quarter, Pioneer completed the sale of our wholly
owned subsidiary, Pioneer Critical Power, Inc., to CleanSpark, Inc.
for approximately $4.4 million in
CleanSpark shares and warrants, advancing our efforts to monetize
undervalued assets. Based on the current share price at
March 26, 2019, this transaction is
now worth approximately $8.2 million
to Pioneer and its shareholders. Operationally, for the full course
of 2018, we continued to produce positive adjusted EBITDA and
generated more than $2 million in
cash from operations. The weaker fourth quarter primarily reflects
the impact of several large projects that were pushed into the
first half of 2019. We finished the year with a backlog of
$47.5 million, and the timing of
these large projects further supports our optimism for 2019."
"Additionally, in the last 120 days, we have made significant
progress in our efforts to create greater shareholder value through
strategic alternatives, moving well beyond identifying buyers and
evaluating interest in certain Pioneer assets," added Mr. Mazurek.
"Indeed, I expect to have material announcements in this regard
during the second quarter of 2019, and by the end of 2019, we
expect to complete the sale of several business units and currently
plan to dividend the proceeds to shareholders subject to legal and
market conditions."
On May 2, 2018, Pioneer signed a
definitive agreement to sell its PCEP switchgear business. As a
result, this business unit had been reclassified as discontinued
operations for the year ended December 31,
2017. This agreement pertaining to the sale of PCEP
ultimately expired and was mutually terminated by the parties in
January 2019. Consequently, at
December 31, 2018, due to the change
of circumstance, the Company has presented the results of PCEP
within continuing operations and included results of the switchgear
reporting unit in the T&D Solutions Segment for all periods
presented.
"The consequence of not selling the entirety of the PCEP
business, as we initially intended, resulted in the
reclassification of this business as continuing operations for all
periods, and contributed to our net loss," added Mr. Mazurek. "We
continue to explore strategic alternatives related to the PCEP
business with the goal of monetizing this asset as soon as
possible."
Summary Financial Results
Revenue
Total revenue for the three-month period ended December 31, 2018 was $26.5 million, up slightly compared to
$26.4 million for the fourth quarter
of 2017. Excluding PCEP, which had previously been classified as
discontinued operations, total revenue was $23.6 million, essentially flat versus the
year-ago period. For the 12 months ended December 31, 2018, total revenue was $106.4 million compared to $114.4 million for the 12 months ended
December 31, 2017, a decrease of
7.0%. Excluding PCEP, revenue was $97.6
million, a decline of 3.7% over the prior year. For the
three months ended December 31, 2018,
service revenue increased by $138,000, or 6.8%, as compared to the same period
in the prior year. For the 12 months ended December 31, 2018, service revenue increased by
$535,000, or 5.7%, compared to the
same period in 2017.
Gross Margin
For the three months ended December 31,
2018, Pioneer's gross profit was $4.2
million, or 16.0% of revenues, compared to $175,000, or less than one percent of revenues,
for the year-ago period. The increase in gross profit was driven
primarily by improved performance in our T&D segment. Excluding
PCEP, gross profit was $4.1 million,
or 17.5% of revenues, compared to $3.6
million, or 15.4% of revenues for the prior-year period. For
the 12 months ended December 31,
2018, Pioneer's gross profit was $19.3 million, or 18.1% of revenues, compared to
$17.7 million, or 15.5% of revenues,
for the year-ago period. Excluding PCEP, gross profit was
$18.9 million, or 19.4% of revenues,
versus $20.0 million, or 19.8% of
revenues, in the prior-year period.
Operating Income / (Loss)
For the three months ended December 31,
2018, operating loss was $3.6
million compared to an operating loss of $6.7 million for the same period last year. These
results were negatively impacted by an unfavorable currency
variance on the Canadian Dollar of $377,000 in the fourth quarter of 2018 compared
to an unfavorable variance of $141,000 for the same period last year.
Excluding PCEP, operating loss was $706,000, compared to an operating loss of
$593,000 for the prior year
period. For the 12 months ended December 31, 2018, operating loss was
$1.9 million compared to an operating
loss of $3.3 million for the prior
year. Excluding PCEP, operating income was $2.3 million versus $3.4
million in the prior-year period.
Income Taxes
Pioneer's effective income tax rate for the fourth quarter of
2018 was (3.2)% of earnings before income tax compared to (36.8)%
for the same quarter last year. For the 12 months ended
December 31, 2018, the effective
income tax rate was (5.7)% of earnings before income tax compared
to (49.1)% for the same period last year. The decrease in the
income tax rate for the three and 12-month periods ended
December 31, 2018 was primarily due
to a review of the deferred tax assets and liabilities of Pioneer,
including the impact of the U.S. tax code changes from December 2017.
Net Loss
The Company's net loss was $4.4
million, or $(0.50) per basic
and diluted share, for the three months ended December 31, 2018 compared to a net loss of
$9.8 million, or $(1.13) per basic and diluted share, during the
three months ended December 31, 2017.
Net loss for the 12 months ended December
31, 2018 was $5.7 million, or
$(0.65) per basic and diluted share,
compared to a net loss of $9.2
million, or $(1.06) per basic
and diluted share, for the 12 months ended December 31, 2017.
Adjusted EBITDA*
Among other add backs for this calculation, the fourth quarters
of 2018 and 2017 included non-cash expenses consisting of
depreciation, amortization of acquisition intangibles, and
stock-based compensation for employee and director stock options of
$907,000 and $1.0 million, respectively.
The Company's Adjusted EBITDA* for the quarter ended
December 31, 2018 was $1.6 million compared to $1.4 million in the same quarter last year.
Please refer to the financial tables included below for a
reconciliation of GAAP to non-GAAP measures.
* Note: Pioneer has presented non-GAAP measures such as Adjusted
EBITDA because many of our investors use these non-GAAP measures to
monitor the Company's performance. These non-GAAP measures should
not be considered an alternative to GAAP measures as an indicator
of the Company's operating performance.
Generally, a non-GAAP financial measure is a quantitative
assessment of a company's performance, financial position or cash
flow that either excludes or includes amounts that are not normally
excluded or included in the most directly comparable measure
calculated and presented in accordance with GAAP. The non-GAAP
measures included in this release, however, should be considered in
addition to, and not as a substitute for or superior to, operating
income, cash flows, or other measures of financial performance
prepared in accordance with GAAP. Please refer to the financial
tables included below for a reconciliation of GAAP to non-GAAP
measures.
Backlog
Sales backlog at December 31, 2018
was $47.5 million compared to
$46.8 million at September 30, 2018. Backlog is based on orders
expected to be delivered in the future, most of which is expected
to be delivered during the next 12 months. Approximately
$9.5 million of this backlog at
December 31, 2018 is related to the
PCEP business, and excluding this amount, the backlog increased by
$797,000, or 2.1%, compared to the
backlog at September 30, 2018.
About Pioneer Power Solutions, Inc.
Pioneer Power Solutions, Inc. manufactures, sells and services a
broad range of specialty electrical transmission, distribution and
on-site power generation equipment for applications in the utility,
industrial, commercial and backup power markets. The Company's
principal products and services include custom-engineered
electrical transformers, low and medium voltage switchgear and
engine-generator sets and controls, complemented by a national
field-service organization to maintain and repair power generation
assets. Pioneer is headquartered in Fort
Lee, New Jersey and operates from 11 additional locations in
the U.S., Canada and Mexico for manufacturing, centralized
distribution, engineering, sales, service and administration. To
learn more about Pioneer, please visit its website at
www.pioneerpowersolutions.com.
Safe Harbor Statement:
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995, as amended. Such statements may be preceded by the words
"intends," "may," "will," "plans," "expects," "anticipates,"
"projects," "predicts," "estimates," "aims," "believes," "hopes,"
"potential" or similar words. Forward-looking statements are not
guarantees of future performance, are based on certain assumptions
and are subject to various known and unknown risks and
uncertainties, many of which are beyond the Company's control, and
cannot be predicted or quantified and consequently, actual results
may differ materially from those expressed or implied by such
forward-looking statements. Such risks and uncertainties include,
without limitation, risks and uncertainties associated with (i) the
Company's ability to expand its business through strategic
acquisitions, (ii) the fact that many of the Company's competitors
are better established and have significantly greater resources,
and may subsidize their competitive offerings, (iii) the Company's
dependence on a few large customers for a material portion of its
sales, (iv) the potential loss or departure of key personnel, (v)
market acceptance of existing and new products, (vi) restrictive
loan covenants or the Company's ability to repay or refinance debt
under its credit facilities that could limit the Company's future
financing options and liquidity position and may limit the
Company's ability to grow its business, (vii) general economic and
market conditions, (viii) unanticipated increases in raw material
prices or disruptions in supply, (ix) the fact that the Company's
Chairman controls a majority of the Company's combined voting
power, and may have, or may develop in the future, interests that
may diverge from yours, and (x) the fact that future sales of large
blocks of the Company's common stock may adversely impact the
Company's stock price. More detailed information about the Company
and the risk factors that may affect the realization of
forward-looking statements is set forth in the Company's filings
with the Securities and Exchange Commission, including the
Company's Annual and Quarterly Reports on Form 10-K and Form 10-Q.
Investors and security holders are urged to read these documents
free of charge on the SEC's web site at www.sec.gov. The Company
assumes no obligation to publicly update or revise its
forward-looking statements as a result of new information, future
events or otherwise.
Contact:
Brett Maas,
Managing Partner
Hayden IR
(646) 536-7331
brett@haydenir.com
Tables Follow
PIONEER POWER
SOLUTIONS, INC.
Consolidated
Balance Sheets
(In thousands,
except share data)
|
|
|
December
31,
|
|
2018
|
|
2017
|
ASSETS
|
(unaudited)
|
|
(audited)
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
211
|
|
$
|
218
|
Accounts receivable,
net
|
|
16,327
|
|
|
15,000
|
Inventories,
net
|
|
27,310
|
|
|
26,113
|
Income taxes
receivable
|
|
566
|
|
|
743
|
Prepaid expenses and
other current assets
|
|
2,510
|
|
|
3,017
|
Total current
assets
|
|
46,924
|
|
|
45,091
|
Property, plant and
equipment, net
|
|
5,284
|
|
|
6,858
|
Deferred income
taxes
|
|
2,971
|
|
|
2,729
|
Other
assets
|
|
5,222
|
|
|
4,651
|
Intangible assets,
net
|
|
3,584
|
|
|
6,399
|
Goodwill
|
|
8,527
|
|
|
8,527
|
Total
assets
|
$
|
72,512
|
|
$
|
74,255
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Bank
overdrafts
|
$
|
1,769
|
|
$
|
1,181
|
Revolving credit
facilities
|
|
20,755
|
|
|
17,814
|
Short term
borrowings
|
|
-
|
|
|
5,430
|
Accounts payable and
accrued liabilities
|
|
27,845
|
|
|
20,381
|
Current maturities of
long-term debt and capital lease obligations
|
|
1,174
|
|
|
782
|
Income taxes
payable
|
|
873
|
|
|
1,164
|
Total current
liabilities
|
|
52,416
|
|
|
46,752
|
Long-term debt, net
of current maturities
|
|
2,619
|
|
|
4,153
|
Pension
deficit
|
|
148
|
|
|
283
|
Other long-term
liabilities
|
|
3,786
|
|
|
3,853
|
Deferred income
taxes
|
|
1,592
|
|
|
1,665
|
Total
liabilities
|
|
60,561
|
|
|
56,706
|
Stockholders'
equity
|
|
|
|
|
|
Preferred stock,
$0.001 par value, 5,000,000 shares authorized; none
issued
|
|
-
|
|
|
-
|
Common stock, $0.001
par value, 30,000,000 shares authorized;
8,726,045 shares issued and outstanding on December 31, 2018 and
2017
|
|
9
|
|
|
9
|
Additional paid-in
capital
|
|
23,966
|
|
|
23,801
|
Accumulated other
comprehensive loss
|
|
(5,897)
|
|
|
(5,798)
|
Accumulated
deficit
|
|
(6,127)
|
|
|
(463)
|
Total stockholders'
equity
|
|
11,951
|
|
|
17,549
|
Total liabilities and
stockholders' equity
|
$
|
72,512
|
|
$
|
74,255
|
|
|
|
|
|
|
PIONEER POWER
SOLUTIONS, INC.
Consolidated
Statements of Operations
(In thousands,
except per share data)
(Unaudited)
|
|
|
Three Months
Ended
|
|
For the Years
Ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenues
|
$
|
26,508
|
|
$
|
26,438
|
|
$
|
106,390
|
|
$
|
114,391
|
Cost of goods
sold
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods
sold
|
|
22,268
|
|
|
26,263
|
|
|
87,139
|
|
|
95,779
|
Restructuring and
integration
|
|
-
|
|
|
-
|
|
|
-
|
|
|
873
|
Total cost of goods
sold
|
|
22,268
|
|
|
26,263
|
|
|
87,139
|
|
|
96,652
|
Gross
profit
|
|
4,240
|
|
|
175
|
|
|
19,251
|
|
|
17,739
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative
|
|
7,535
|
|
|
6,719
|
|
|
21,465
|
|
|
21,158
|
Restructuring
and integration
|
|
-
|
|
|
59
|
|
|
-
|
|
|
219
|
Foreign
exchange loss (gain)
|
|
277
|
|
|
140
|
|
|
(341)
|
|
|
(325)
|
Total operating expenses
|
|
7,812
|
|
|
6,918
|
|
|
21,124
|
|
|
21,052
|
Operating
loss
|
|
(3,572)
|
|
|
(6,743)
|
|
|
(1,873)
|
|
|
(3,313)
|
Interest
expense
|
|
539
|
|
|
675
|
|
|
2,662
|
|
|
2,462
|
Other expense
(income)
|
|
105
|
|
|
(236)
|
|
|
826
|
|
|
411
|
Loss before
taxes
|
|
(4,216)
|
|
|
(7,182)
|
|
|
(5,361)
|
|
|
(6,186)
|
Income tax
expense
|
|
136
|
|
|
2,643
|
|
|
303
|
|
|
3,039
|
Net loss
|
$
|
(4,352)
|
|
$
|
(9,825)
|
|
$
|
(5,664)
|
|
$
|
(9,225)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.50)
|
|
$
|
(1.13)
|
|
$
|
(0.65)
|
|
$
|
(1.06)
|
Diluted
|
$
|
(0.50)
|
|
$
|
(1.13)
|
|
$
|
(0.65)
|
|
$
|
(1.06)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
8,726
|
|
|
8,717
|
|
|
8,726
|
|
|
8,717
|
Diluted
|
|
8,726
|
|
|
8,717
|
|
|
8,726
|
|
|
8,717
|
|
|
|
|
|
|
|
|
|
|
|
|
PIONEER POWER
SOLUTIONS, INC.
Consolidated
Statements of Cash Flows
(In thousands,
except per share data)
|
|
|
For the Year
Ended
|
|
December
31,
|
|
2018
|
|
2017
|
|
(unaudited)
|
|
(audited)
|
Operating
activities
|
|
|
|
|
|
Net loss
|
$
|
(5,664)
|
|
$
|
(9,225)
|
Depreciation
|
|
1,222
|
|
|
1,285
|
Amortization of
intangible assets
|
|
1,460
|
|
|
1,774
|
Amortization of
right-of-use assets
|
|
622
|
|
|
535
|
Amortization of debt
issuance cost
|
|
75
|
|
|
205
|
Deferred income tax
(benefit) expense
|
|
(329)
|
|
|
2,201
|
Change in receivable
reserves
|
|
(350)
|
|
|
239
|
Change in inventory
reserves
|
|
241
|
|
|
(102)
|
Inventory write
off
|
|
-
|
|
|
2,642
|
Accrued
pension
|
|
(55)
|
|
|
(8)
|
Stock-based
compensation
|
|
165
|
|
|
466
|
Loss on disposition
of fixed assets
|
|
21
|
|
|
40
|
Intangible asset
impairment
|
|
1,350
|
|
|
-
|
Goodwill
impairment
|
|
-
|
|
|
1,445
|
Foreign currency
remeasurement loss (gain)
|
|
42
|
|
|
(27)
|
Changes in current
operating assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
(1,373)
|
|
|
2,594
|
Inventories
|
|
(2,118)
|
|
|
(1,975)
|
Prepaid expenses and
other assets
|
|
(708)
|
|
|
(256)
|
Income
taxes
|
|
(93)
|
|
|
(923)
|
Accounts payable and
accrued liabilities
|
|
7,645
|
|
|
790
|
Net cash provided by
operating activities
|
|
2,153
|
|
|
1,700
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Additions to
property, plant and equipment
|
|
(589)
|
|
|
(1,450)
|
Proceeds from sale of
fixed assets
|
|
762
|
|
|
22
|
Net cash provided by
(used in) investing activities
|
|
173
|
|
|
(1,428)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Bank
overdrafts
|
|
699
|
|
|
(61)
|
Short term
borrowings
|
|
(5,430)
|
|
|
1,457
|
Borrowing under debt
agreement
|
|
40,599
|
|
|
40,481
|
Repayment of
debt
|
|
(38,848)
|
|
|
(40,993)
|
Payment of debt
issuance cost
|
|
(18)
|
|
|
(61)
|
Net proceeds from the
exercise of options for common stock
|
|
-
|
|
|
120
|
Principal repayments
of financing leases
|
|
(414)
|
|
|
(301)
|
Net cash (used in)
provided by financing activities
|
|
(3,412)
|
|
|
642
|
|
|
|
|
|
|
(Decrease) Increase
in cash and cash equivalents
|
|
(1,086)
|
|
|
914
|
Effect of foreign
exchange on cash and cash equivalents
|
|
1,079
|
|
|
(942)
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
|
Beginning of
period
|
|
218
|
|
|
246
|
End of
period
|
$
|
211
|
|
$
|
218
|
Supplemental cash
flow information:
|
|
|
|
|
|
Interest
paid
|
$
|
2,603
|
|
$
|
2,087
|
Income taxes paid,
net of refunds
|
|
587
|
|
|
1,725
|
PIONEER POWER
SOLUTIONS, INC.
Reconciliation of
GAAP Measures to Non-GAAP Measures
(In thousands,
except per share data)
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
For the Years
Ended
|
|
|
December
31,
|
|
December
31,
|
|
|
2018
|
2017
|
|
2018
|
|
2017
|
Reconciliation to
Adjusted EBITDA and EPS
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings loss
(GAAP measure)
|
|
$
|
(4,352)
|
$
|
(9,825)
|
|
$
|
(5,664)
|
|
$
|
(9,225)
|
|
|
|
|
|
|
|
|
|
|
|
|
Addbacks:
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
539
|
|
675
|
|
|
2,662
|
|
|
2,462
|
Income tax
expense
|
|
|
136
|
|
2,643
|
|
|
303
|
|
|
3,039
|
Depreciation and
amortization
|
|
|
902
|
|
852
|
|
|
3,303
|
|
|
3,593
|
Restructuring and
integration
|
|
|
-
|
|
59
|
|
|
-
|
|
|
219
|
Non-recurring
expenses from strategic changes
|
|
|
1,098
|
|
610
|
|
|
1,098
|
|
|
1,483
|
Switchgear operations
previously classified as discontinued operations
|
|
|
3,200
|
|
6,438
|
|
|
4,988
|
|
|
7,669
|
Stock-based
compensation
|
|
|
5
|
|
148
|
|
|
165
|
|
|
466
|
Other non-operating
expense (income)
|
|
|
105
|
|
(236)
|
|
|
826
|
|
|
411
|
Adjusted EBITDA
(Non-GAAP measure)
|
|
|
1,633
|
|
1,364
|
|
|
7,681
|
|
|
10,117
|
Tax effects - 21%
rate
|
|
|
(343)
|
|
(286)
|
|
|
(1,613)
|
|
|
(2,125)
|
Non-GAAP net
earnings
|
|
$
|
1,290
|
$
|
1,078
|
|
$
|
6,068
|
|
$
|
7,992
|
Non-GAAP net earnings
per diluted share
|
|
$
|
0.15
|
$
|
0.12
|
|
$
|
0.70
|
|
$
|
0.92
|
Weighted average
diluted shares outstanding
|
|
|
8,726
|
|
8,717
|
|
|
8,726
|
|
|
8,717
|
|
|
Tax Rate changed to 21% pursuant to U.S. Tax Reform enacted in
December 2017
Note: Pioneer has presented non-GAAP measures such as
non-GAAP net earnings and Adjusted EBITDA because many of our
investors use these non-GAAP measures to monitor the Company's
performance. These non-GAAP measures should not be considered an
alternative to GAAP measures as an indicator of the Company's
operating performance.
Non-GAAP net earnings is defined by the Company as net
earnings before interest, income tax expense, depreciation and
amortization, non-cash compensation and non-recurring acquisition
costs and reorganization expenses and other non-recurring or
non-cash items and any tax effects related to these items. The
Company defines Adjusted EBITDA as net earnings before interest,
income tax expense, depreciation and amortization, non-cash
compensation and non-recurring acquisition costs and reorganization
expenses and other non-recurring or non-cash items.
Generally, a non-GAAP financial measure is a numerical
measure of a company's performance, financial position or cash flow
that either excludes or includes amounts that are not normally
excluded or included in the most directly comparable measure
calculated and presented in accordance with GAAP. The non-GAAP
measures included in this release, however, should be considered in
addition to, and not as a substitute for or superior to, operating
income, cash flows, or other measures of financial performance
prepared in accordance with GAAP. A reconciliation of non-GAAP to
GAAP net earnings is set forth in the table above.
Amounts may not foot due to rounding.
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SOURCE Pioneer Power Solutions, Inc.