FORT LEE, N.J., May 14, 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 first quarter ended
March 31, 2019.
First Quarter 2019 Results and Recent Business
Highlights:
- Revenue of $24.7 million, down
9.1% compared to $27.2 million in Q1
2018
- Gross margins were 16.6% compared to 19.1% in Q1 2018
- Net income of $5.6 million (which
included a gain on sale of a subsidiary of $4.2 million, and $1.6
million in income taxes accrued for on the sale), up from a
net loss of $574,000 in Q1 2018.
Excluding the gain on sale of the subsidiary, and the associated
income taxes, net income would have been nominally positive
- Adjusted EBITDA* of $9.1 million
compared to Adjusted EBITDA* of $1.3
million in Q1 2018
- Backlog as of March 31, 2019 was
approximately $48.6 million, up 2.4%
compared to $47.5 million at
December 31, 2018, and up 36.0%
compared to $35.7 million at
March 31, 2018
Nathan Mazurek, Pioneer's
Chairman and Chief Executive Officer, said, "The first quarter
demonstrates the progress we have made in streamlining our cost
structure, as we nearly doubled operating income despite lower
revenues and reduced gross profit. We expect revenues to grow as we
move through the year. Our overall business is enjoying record
levels of demand as evidenced by our ever-growing backlog and we
have seen a notable uptick in demand for our transformer
business."
Summary Financial Results
Revenue
Total revenue for the three-month period ended March 31, 2019 was $24.7
million, down 9.1% compared to $27.2
million for the first quarter of 2018. For the three months
ended March 31, 2019, service revenue
decreased by $436,000, or 19.7%, as
compared to the same period in the prior year.
Gross Margin
For the three months ended March 31,
2019, Pioneer's gross profit was $4.1
million, or 16.6% of revenues, compared to $5.2 million, or 19.1% of revenues, for the
year-ago period. The decrease in gross profit was driven primarily
by reduced margins on our switchgear sales and generator service
business, which are anticipated to normalize during the second and
third quarter of 2019.
Operating Income
For the three months ended March 31,
2019, operating income was $0.6
million compared to $0.3
million for the same period last year. These results were
favorably impacted by foreign exchange gains in the first quarter
of 2019 of $632,000 compared to an
unfavorable variance of $74,000 for
the same period in the period year.
Income Taxes
Pioneer's effective income tax rate for the first quarter of
2019 was 25.6% of earnings before income tax compared to 4.7% for
the same quarter last year.
Net Income (Loss)
The Company's net income was $5.6
million, or $0.65 per basic
and diluted share, for the three months ended March 31, 2019 compared to a net loss of
$574,000, or $(0.07) per basic and diluted share, during the
three months ended March 31,
2018.
Adjusted EBITDA*
For the quarter ended March 31,
2019, there were approximately $122,000 of non-recurring expenses from strategic
changes versus $193,000 in the
prior-year period. Non-cash expenses, including depreciation
and amortization and stock-based compensation, for Q1 2019 were
$472,000 and $5,000, respectively. This compares to
depreciation and amortization and stock-based compensation of
$828,000 and $148,000, respectively, in the year-ago
period.
The Company's Adjusted EBITDA* for the quarter ended
March 31, 2019 was $9.1 million compared to $1.3 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 March 31, 2019
was $48.6 million compared to
$47.5 million at December 31, 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.
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)
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
2019
|
|
2018
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
175
|
|
$
|
211
|
Short term
investments
|
|
7,548
|
|
|
-
|
Accounts receivable,
net
|
|
17,383
|
|
|
16,327
|
Inventories,
net
|
|
27,694
|
|
|
27,310
|
Income taxes
receivable
|
|
578
|
|
|
566
|
Prepaid expenses and
other current assets
|
|
2,630
|
|
|
2,510
|
Total current
assets
|
|
56,008
|
|
|
46,924
|
Property, plant and
equipment, net
|
|
5,168
|
|
|
5,284
|
Deferred income
taxes
|
|
3,670
|
|
|
2,971
|
Other
assets
|
|
4,974
|
|
|
5,222
|
Intangible assets,
net
|
|
3,531
|
|
|
3,584
|
Goodwill
|
|
8,527
|
|
|
8,527
|
Total assets
|
$
|
81,878
|
|
$
|
72,512
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Bank
overdrafts
|
$
|
518
|
|
$
|
1,769
|
Revolving credit
facilities
|
|
19,915
|
|
|
20,755
|
Short term
borrowings
|
|
1,785
|
|
|
-
|
Accounts payable and
accrued liabilities
|
|
29,946
|
|
|
27,845
|
Current maturities of
long-term debt
|
|
1,175
|
|
|
1,174
|
Income taxes
payable
|
|
1,262
|
|
|
873
|
Total current
liabilities
|
|
54,601
|
|
|
52,416
|
Long-term debt, net
of current maturities
|
|
2,324
|
|
|
2,619
|
Pension
deficit
|
|
32
|
|
|
148
|
Other long-term
liabilities
|
|
3,648
|
|
|
3,786
|
Deferred income
taxes
|
|
3,892
|
|
|
1,592
|
Total
liabilities
|
|
64,497
|
|
|
60,561
|
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 March 31,
2019 and December 31, 2018
|
|
9
|
|
|
9
|
Additional paid-in
capital
|
|
23,971
|
|
|
23,966
|
Accumulated other
comprehensive loss
|
|
(6,119)
|
|
|
(5,897)
|
Accumulated
deficit
|
|
(480)
|
|
|
(6,127)
|
Total stockholders'
equity
|
|
17,381
|
|
|
11,951
|
Total liabilities and
stockholders' equity
|
$
|
81,878
|
|
$
|
72,512
|
PIONEER POWER
SOLUTIONS, INC.
|
Consolidated
Statements of Operations
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2019
|
|
2018
|
Revenues
|
$
|
24,699
|
|
$
|
27,177
|
Cost of goods
sold
|
20,600
|
|
21,994
|
Gross profit
|
4,099
|
|
5,183
|
Operating
expenses
|
|
|
|
Selling, general and
administrative
|
4,139
|
|
4,828
|
Foreign exchange (gain)
loss
|
(632)
|
|
74
|
Total operating
expenses
|
3,507
|
|
4,902
|
Operating
income
|
592
|
|
281
|
Interest
expense
|
499
|
|
649
|
Other (income)
expense
|
(3,295)
|
|
234
|
Gain on sale of
subsidiary
|
(4,207)
|
|
-
|
Income (loss) before
taxes
|
7,595
|
|
(602)
|
Income tax expense
(benefit)
|
1,948
|
|
(28)
|
Net income
(loss)
|
$
|
5,647
|
|
$
|
(574)
|
|
|
|
|
Net income (loss) per
common share:
|
|
|
|
Basic
|
$
|
0.65
|
|
$
|
(0.07)
|
Diluted
|
$
|
0.65
|
|
$
|
(0.07)
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
Basic
|
8,726
|
|
8,726
|
Diluted
|
8,730
|
|
8,726
|
PIONEER POWER
SOLUTIONS, INC.
|
Consolidated
Statements of Cash Flows
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2019
|
|
2018
|
Operating
activities
|
|
|
|
|
|
Net income
(loss)
|
$
|
5,647
|
|
$
|
(574)
|
Depreciation
|
|
205
|
|
|
310
|
Amortization of
intangible assets
|
|
54
|
|
|
383
|
Amortization of
right-of-use assets
|
|
213
|
|
|
135
|
Amortization of debt
issuance cost
|
|
8
|
|
|
22
|
Deferred income tax
expense (benefit)
|
|
1,577
|
|
|
(193)
|
Change in receivable
reserves
|
|
(74)
|
|
|
(156)
|
Change in inventory
reserves
|
|
32
|
|
|
17
|
Gain on sale of
subsidiary
|
|
(4,207)
|
|
|
-
|
Unrealized gain on
short term investments
|
|
(3,341)
|
|
|
-
|
Accrued
pension
|
|
(30)
|
|
|
8
|
Stock-based
compensation
|
|
5
|
|
|
148
|
Other
|
|
-
|
|
|
12
|
Foreign currency
remeasurement loss
|
|
-
|
|
|
36
|
Changes in current
operating assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
|
(885)
|
|
|
210
|
Inventories
|
|
(238)
|
|
|
(1,297)
|
Prepaid expenses and
other assets
|
|
(120)
|
|
|
(906)
|
Income
taxes
|
|
12
|
|
|
1
|
Accounts payable and
accrued liabilities
|
|
2,013
|
|
|
2,900
|
Net cash provided by
operating activities
|
|
871
|
|
|
1,056
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Additions to property,
plant and equipment
|
|
(56)
|
|
|
(152)
|
Net cash used in
investing activities
|
|
(56)
|
|
|
(152)
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
Bank
overdrafts
|
|
(1,294)
|
|
|
(160)
|
Short term
borrowings
|
|
1,785
|
|
|
(2,045)
|
Borrowing under debt
agreement
|
|
5,259
|
|
|
11,347
|
Repayment of
debt
|
|
(6,403)
|
|
|
(9,881)
|
Payment of debt
issuance cost
|
|
-
|
|
|
6
|
Principal repayments of
financing leases
|
|
(128)
|
|
|
(124)
|
Net cash used in
financing activities
|
|
(781)
|
|
|
(857)
|
|
|
|
|
|
|
Increase in cash and
cash equivalents
|
|
34
|
|
|
47
|
Effect of foreign
exchange on cash and cash equivalents
|
|
(70)
|
|
|
3
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
|
|
Beginning of
period
|
|
211
|
|
|
218
|
End of
period
|
$
|
175
|
|
$
|
268
|
PIONEER POWER
SOLUTIONS, INC.
|
Reconciliation of
GAAP Measures to Non-GAAP Measures
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
March
31,
|
|
2019
|
|
2018
|
Reconciliation to
Adjusted EBITDA and EPS
|
|
|
|
Net earnings (loss)
(GAAP measure)
|
$
|
5,647
|
|
$
|
(574)
|
|
|
|
|
Addbacks:
|
|
|
|
Interest
expense
|
499
|
|
649
|
Income tax expense
(benefit)
|
1,948
|
|
(28)
|
Depreciation and
amortization
|
472
|
|
828
|
Non-recurring expenses
from strategic changes
|
122
|
|
193
|
Switchgear operations
previously classified as discontinued operations
|
454
|
|
55
|
Stock-based
compensation
|
5
|
|
148
|
Adjusted EBITDA
(Non-GAAP measure)
|
9,147
|
|
1,271
|
Tax effects - 21%
rate
|
(1,921)
|
|
(267)
|
Non-GAAP net
earnings
|
$
|
7,226
|
|
$
|
1,004
|
Non-GAAP net earnings
per diluted share
|
$
|
0.83
|
|
$
|
0.11
|
Weighted average
diluted shares outstanding
|
8,730
|
|
8,726
|
|
|
|
|
Tax Rate changed to
21% pursuant to US 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 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.
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.