Pioneer Reports First Quarter 2019 Financial Results
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; 9 9
8,726,045 shares issued and outstanding on March 31, 2019 and December 31, 2018
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 (602)
7,595
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.
