Power Solutions International, Inc. Reports Fourth Quarter and Full Year 2014 Results
Fourth Quarter Net Sales Up 69% Year Over Year, 11% Sequentially
Fourth Quarter Adjusted Net Income of
Fourth Quarter Net Income of
Fourth Quarter 2014 Results
Net sales for the fourth quarter of 2014 were
Operating income was
"Our strong performance in the fourth quarter concludes a year of substantial growth and achievement for PSI," stated
Other income for the fourth quarter includes a non-cash gain of
Net income for the fourth quarter of 2014, which includes the warrant revaluation adjustment and contingent consideration revaluation, was
Net income for the fourth quarter of 2014, adjusted to remove the warrant revaluation impact and contingent consideration revaluation, was
Summary of Diluted EPS Attributable to Common Stockholders | ||
"Adjusted" removes the Q4 2014 contingent consideration revaluation and the Q4 2013 impact of warrant | ||
Q4 2014 | Q4 2013 | |
Diluted EPS | $ 0.48 | $ (0.36) |
Adjusted diluted EPS | $ 0.48 | $ 0.24 |
Diluted shares | 11,151,120 | 10,507,769 |
Adjusted diluted shares | 11,151,120 | 11,023,685 |
Full Year 2014 Results
Net sales for 2014 were
2015 and 2016 Outlook
The Company reiterates its previously issued outlook for sales growth in 2015. The Company continues to expect sales for the year in a range of
The Company cautions that its 2015 and 2016 outlook reflects its current assessment of a number of factors, including, but not limited to, the timing of new product ramps, oil and gas pricing and the impact of global economic conditions on demand growth in its current markets. Please see the "Cautionary Note Regarding Forward-Looking Statements" below for additional risk factors.
Earnings Results Conference Call
The Company will discuss the financial results and outlook on a conference call scheduled for today,
Investors in the U.S. interested in participating in the call should dial +1 (888) 554-1429 and reference passcode 3886176. Those calling from outside the U.S. should dial +1 (719) 325-2228 and reference the same passcode 3886176. A telephone replay will be available approximately two hours after the call concludes through
A simultaneous live webcast will be available on the Investor Relations section of the Company's website at http://www.psiengines.com. The webcast will be archived on the website for one year.
About
PSI develops and delivers complete .97 to 22 liter power systems, including the 8.8 liter engine aimed at the industrial and on-road markets, including medium duty fleets, delivery trucks, school buses and garbage/refuse trucks. PSI power systems are currently used worldwide in power generators, forklifts, aerial lifts, and industrial sweepers, as well as in oil and gas, aircraft ground support, agricultural and construction equipment.
PSI recently acquired 3PI, a leading designer and manufacturer of large, custom engineered integrated electrical power generation systems serving the global diesel and natural gas power generation market. 3PI specializes in power generation systems for both standby and prime power applications.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, regarding the current expectations of
Non-GAAP Financial Measures and Reconciliations
As used herein, "GAAP" refers to generally accepted accounting principles in the United States. The Company uses certain numerical measures in this press release which are or may be considered "Non-GAAP financial measures" under Regulation G. The Company has provided below for your reference supplemental financial disclosure for these measures, including the most directly comparable GAAP measures and associated reconciliations.
Reconciliation of Net Income (Loss) to Adjusted Net Income | ||
(Dollar amounts in thousands) | ||
Three months ended December 31, 2014 |
Three months ended December 31, 2013 |
|
Net income (loss) | $ 10,321 | $ (3,752) |
Non-cash (income) expense from warrant revaluation | (4,979) | 6,373 |
Non-cash (income) expense from contingent consideration revaluation, net of tax | (35) | -- |
Adjusted net income | $ 5,307 | $ 2,621 |
Reconciliation of Diluted EPS to Adjusted Diluted EPS | ||
Three months ended December 31, 2014 |
Three months ended December 31, 2013 |
|
Earnings (loss) per diluted common share | $ 0.48 | $ (0.36) |
Non-cash (income) expense from warrant revaluation | -- | 0.60 |
Non-cash (income) expense from contingent consideration revaluation, net of tax | -- | -- |
Adjusted earnings per diluted common share | $ 0.48 | $ 0.24 |
Reconciliation of Net Income (Loss) to Adjusted Net Income | ||
(Dollar amounts in thousands) | ||
Twelve months ended December 31, 2014 |
Twelve months ended December 31, 2013 |
|
Net income (loss) | $ 23,726 | $ (18,760) |
Non-cash (income) expense from warrant revaluation | (6,169) | 28,031 |
Non-cash (income) expense from contingent consideration revaluation, net of tax | (2,305) | -- |
PPPI transaction costs, net of tax | 487 | -- |
Loss on debt extinguishment, net of tax | -- | 162 |
Adjusted net income | $ 15,739 | $ 9,433 |
Reconciliation of Diluted EPS to Adjusted Diluted EPS | ||
Twelve months ended December 31, 2014 |
Twelve months ended December 31, 2013 |
|
Earnings (loss) per diluted common share | $ 1.58 | $ (1.92) |
Non-cash (income) expense from warrant revaluation | -- | 2.82 |
Non-cash (income) expense from contingent consideration revaluation, net of tax | (0.22) | -- |
PPPI transaction costs, net of tax | 0.05 | -- |
Loss on debt extinguishment, net of tax | -- | 0.02 |
Adjusted earnings per diluted common share | $ 1.41 | $ 0.92 |
The Company believes supplementing its consolidated financial statements presented in accordance with GAAP with non-GAAP measures provides investors with useful information regarding the Company's short-term and long-term trends. Adjusted net income is derived from GAAP results by excluding the non-cash impact related to the change in the estimated fair value of the liability associated with the warrants issued in the Company's
Adjusted net income, adjusted earnings per diluted common share and other non-GAAP financial measures used and presented by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Investors should consider non-GAAP measures in addition to, and not as a substitute for, or as superior to, financial performance measures prepared in accordance with GAAP.
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Condensed Consolidated Balance Sheets (Unaudited) | ||
(Dollar amounts in thousands, except per share amounts) | ||
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ASSETS | ||
Current assets | ||
Cash | $ 6,561 | $ 6,306 |
Accounts receivable, net | 81,740 | 42,730 |
Inventories, net | 93,903 | 55,986 |
Prepaid expenses and other current assets | 4,801 | 2,173 |
Deferred income taxes | 3,998 | 2,811 |
Total current assets | 191,003 | 110,006 |
Property, plant & equipment, net | 20,892 | 13,104 |
Intangible assets, net | 21,392 | -- |
Goodwill | 23,546 | -- |
Other noncurrent assets | 5,804 | 3,509 |
TOTAL ASSETS | $ 262,637 | $ 126,619 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current liabilities | ||
Accounts payable | $ 60,877 | $ 24,444 |
Income taxes payable | 779 | 167 |
Accrued compensation and benefits | 5,983 | 3,758 |
Current maturities of long-term debt | 1,667 | -- |
Other accrued liabilities | 6,742 | 4,016 |
Total current liabilities | 76,048 | 32,385 |
Long-term obligations | ||
Revolving line of credit | 78,030 | 17,933 |
Deferred income taxes | 3,241 | 304 |
Private placement warrants | 11,036 | 24,525 |
Long-term debt, less current maturities | 2,361 | -- |
Other noncurrent liabilities | 1,122 | 1,051 |
TOTAL LIABILITIES | 171,838 | 76,198 |
COMMITMENTS AND CONTINGENCIES | -- | -- |
STOCKHOLDERS' EQUITY | ||
Series A convertible preferred stock—$0.001 par value. Authorized: 114,000 shares. Issued and outstanding: -0- shares at |
-- | -- |
Common stock—$0.001 par value. Authorized: 50,000,000 shares. Issued: 11,562,209 and 11,352,812 shares at |
12 | 11 |
Additional paid-in-capital | 73,959 | 57,308 |
Retained earnings (accumulated deficit) | 21,078 | (2,648) |
Treasury stock, at cost, 830,925 shares at |
(4,250) | (4,250) |
TOTAL STOCKHOLDERS' EQUITY | 90,799 | 50,421 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 262,637 | $ 126,619 |
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Condensed Consolidated Statements of Operations (Unaudited) | ||||
(Dollar amounts in thousands, except per share amounts) | ||||
Three months ended 2014 |
Three months ended 2013 |
Twelve months ended 2014 |
Twelve months ended 2013 |
|
Net sales | $ 103,910 | $ 61,500 | $ 347,995 | $ 237,842 |
Cost of sales | 82,819 | 49,699 | 280,950 | 193,316 |
Gross profit | 21,091 | 11,801 | 67,045 | 44,526 |
Operating expenses: | ||||
Research & development and engineering | 5,056 | 3,129 | 16,900 | 10,439 |
Selling and service | 2,844 | 1,735 | 9,715 | 7,545 |
General and administrative | 4,080 | 3,012 | 14,386 | 11,575 |
Total operating expense | 11,980 | 7,876 | 41,001 | 29,559 |
Operating income | 9,111 | 3,925 | 26,044 | 14,967 |
Other (income) expense: | ||||
Interest expense | 444 | 87 | 1,331 | 657 |
Loss on debt extinguishment | -- | -- | -- | 270 |
Contingent consideration | (58) | -- | (3,840) | -- |
Private placement warrant (income) expense | (4,979) | 6,373 | (6,169) | 28,031 |
Other expense, net | 74 | 46 | 183 | 10 |
Total other (income) expense | (4,519) | 6,506 | (8,495) | 28,968 |
Income (loss) before income taxes | 13,630 | (2,581) | 34,539 | (14,001) |
Income tax provision | 3,309 | 1,171 | 10,813 | 4,759 |
Net income (loss) | $ 10,321 | $ (3,752) | $ 23,726 | $ (18,760) |
Weighted-average common shares outstanding: | ||||
Basic | 10,796,744 | 10,507,769 | 10,706,780 | 9,779,457 |
Diluted | 11,151,120 | 10,507,769 | 11,131,617 | 9,779,457 |
Earnings (loss) per common share: | ||||
Basic | $ 0.96 | $ (0.36) | $ 2.22 | $ (1.92) |
Diluted | $ 0.48 | $ (0.36) | $ 1.58 | $ (1.92) |
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Condensed Consolidated Statements of Cash Flows (Unaudited) | ||
(Dollar amounts in thousands) | ||
Twelve months ended 2014 |
Twelve months ended 2013 |
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Cash flows from operating activities | ||
Net income (loss) | $ 23,726 | $ (18,760) |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
Depreciation | 2,562 | 1,528 |
Amortization | 2,147 | 40 |
Deferred income taxes | 1,011 | (467) |
Non-cash interest expense | 87 | 64 |
Share-based compensation expense | 1,254 | 1,268 |
Increase in accounts receivable allowances | 204 | 160 |
Increase in inventory reserves | 679 | 649 |
Inventory step up to fair value | 482 | -- |
(Decrease) increase in valuation of private placement warrants liability | (6,169) | 28,031 |
Decrease in valuation of contingent consideration liability | (3,840) | -- |
Loss on investment in joint venture | 209 | 39 |
Loss on disposal of assets | 284 | 72 |
Loss on debt extinguishment | -- | 270 |
(Increase) decrease in operating assets, net of effects of business acquisition: | ||
Accounts receivable | (35,225) | (5,410) |
Inventories | (34,125) | (16,667) |
Prepaid expenses and other assets | (4,492) | (1,849) |
Increase (decrease) in operating liabilities, net of effects of business acquisition: | ||
Accounts payable | 34,140 | (3,687) |
Accrued compensation and benefits and other accrued liabilities | 667 | 2,763 |
Income taxes payable | 585 | (445) |
Other noncurrent liabilities | 129 | (34) |
Net cash used in operating activities | (15,685) | (12,435) |
Cash flows from investing activities | ||
Purchases of property, plant, equipment and other assets | (7,239) | (6,007) |
Acquisition, net of cash acquired | (44,122) | -- |
Investment in joint venture | (350) | (500) |
Increase in cash surrender value of life insurance | (2) | (7) |
Net cash used in investing activities | (51,713) | (6,514) |
Cash flows from financing activities | ||
Proceeds from stock offering | -- | 36,750 |
Advances from revolving line of credit - noncurrent obligation | 82,402 | 74,841 |
Repayments of revolving line of credit - noncurrent obligation | (22,305) | (87,900) |
Initial proceeds from borrowings under revolving line of credit | -- | 38,995 |
Repayment of prior revolving line of credit | -- | (38,945) |
Proceeds from long-term debt | 5,000 | -- |
Proceeds from exercise of private placement warrants | 1,425 | 4,412 |
Excess tax benefit from exercise of share-based awards | 2,704 | 1,642 |
Payment of withholding taxes from net settlement of share-based awards | (430) | (2,063) |
Payments on long-term debt | (972) | -- |
Cash paid for financing and transaction fees | (171) | (3,020) |
Net cash provided by financing activities | 67,653 | 24,712 |
Increase in cash | 255 | 5,763 |
Cash at beginning of the year | 6,306 | 543 |
Cash at end of the year | $ 6,561 | $ 6,306 |
CONTACT:Source:Power Solutions International, Inc. Daniel P. Gorey Chief Financial Officer +1 (630) 451-2290 dan.gorey@psiengines.comICR, LLC Gary T. Dvorchak , CFA Senior Vice President +1 (310) 954-1123 gary.dvorchak@icrinc.com
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