Power Solutions International Announces Record Second Quarter 2024 Financial Results
Net Income was
Gross Margin was 31.8%, an increase of 9.7% from a year earlier,
EPS were
Debt decreased
Shareholder Equity increased to
Second Quarter 2024 Results
Today,
Dino Xykis, Chief Executive Officer, commented, "I am pleased to report that in the second quarter, we achieved record-breaking results with a gross margin of 31.8% and net profit of
Xykis continued, “Looking ahead, we remain optimistic about sales increase for the remainder of the year, thanks to the continued robust demand for products in the power systems, especially PSI products serving the growth of Data Center markets that PSI has been actively pursuing since last year. We have successfully secured and are in the process of finalizing several major multi-year sales agreements with key customers for Data Center applications. These strategic partnerships are poised to drive future growth in this segment now and in the future. Our focus remains on leveraging these opportunities to drive further profitable growth and deliver sustained value to our shareholders.”
Sales for the second quarter of 2024 were
Gross profit increased by
Selling, general and administrative expenses decreased during the second quarter of 2024 by
Interest expense was
Net income was
Debt Update
The Company’s total debt was approximately
Outlook for 2024
The Company expects its sales in 2024 to increase by approximately 3% versus 2023 levels, a result of expectations for strong growth in the power systems end market paired with flat sales in the industrial end market and a forecasted reduction in the transportation end markets. Notwithstanding this outlook, which is being driven in part by expectations for continuous improvement in supply chain dynamics, including timelier availability of parts and a continuation of favorable economic conditions within
About Power Solutions International, Inc.
PSI develops and delivers complete power systems that are used worldwide in stationary and mobile power generation applications supporting standby, prime, demand response, microgrid, and co-generation power (CHP) applications; and industrial applications that include forklifts, agricultural and turf, arbor care, industrial sweepers, aerial lifts, irrigation pumps, ground support, and construction equipment. In addition, PSI develops and delivers powertrains purpose-built for medium-duty trucks and buses including school and transit buses, work trucks, terminal tractors, and various other vocational vehicles. For more information on PSI, visit www.psiengines.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements regarding the current expectations of the Company about its prospects and opportunities. These forward-looking statements are entitled to the safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may involve risks and uncertainties. These statements often include words such as “anticipate,” “believe,” “budgeted,” “contemplate,” “estimate,” “expect,” “forecast,” “guidance,” “may,” “outlook,” “plan,” “projection,” “should,” “target,” “will,” “would” or similar expressions, but these words are not the exclusive means for identifying such statements. These statements are not guarantees of performance or results, and they involve risks, uncertainties and assumptions. Although the Company believes that these forward-looking statements are based on reasonable assumptions, there are many factors that could affect the Company’s results of operations and liquidity and could cause actual results, performance or achievements to differ materially from those expressed in, or implied by, the Company’s forward-looking statements.
The Company cautions that the risks, uncertainties and other factors that could cause its actual results to differ materially from those expressed in, or implied by, the forward-looking statements include, without limitation: the impact of the macro-economic environment in both the
The Company’s forward-looking statements are presented as of the date hereof. Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.
Results of operations for the three and six months ended
(in thousands, except per share amounts) | For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||||||||||||||
2024 | 2023 | Change | % Change | 2024 | 2023 | Change | % Change | ||||||||||||||||||||||
Net sales (from related parties |
$ | 110,586 | $ | 121,865 | $ | (11,279 | ) | (9 | )% | $ | 205,826 | $ | 238,334 | $ | (32,508 | ) | (14 | )% | |||||||||||
Cost of sales (from related parties |
75,398 | 94,911 | (19,513 | ) | (21 | )% | 144,882 | 187,911 | (43,029 | ) | (23 | )% | |||||||||||||||||
Gross profit | 35,188 | 26,954 | 8,234 | 31 | % | 60,944 | 50,423 | 10,521 | 21 | % | |||||||||||||||||||
Gross margin % | 31.8 | % | 22.1 | % | 9.7 | % | 29.6 | % | 21.2 | % | 8.5 | % | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||
Research and development expenses | 4,959 | 4,662 | 297 | 6 | % | 10,156 | 9,266 | 890 | 10 | % | |||||||||||||||||||
Research and development expenses as a % of sales | 4.5 | % | 3.8 | % | 0.7 | % | 4.9 | % | 3.9 | % | 1.0 | % | |||||||||||||||||
Selling, general and administrative expenses | 4,520 | 10,550 | (6,030 | ) | (57 | )% | 14,052 | 20,455 | (6,403 | ) | (31 | )% | |||||||||||||||||
Selling, general and administrative expenses as a % of sales | 4.1 | % | 8.7 | % | (4.6)% | 6.8 | % | 8.6 | % | (1.8)% | |||||||||||||||||||
Amortization of intangible assets | 365 | 437 | (72 | ) | (16 | )% | 730 | 873 | (143 | ) | (16 | )% | |||||||||||||||||
Total operating expenses | 9,844 | 15,649 | (5,805 | ) | (37 | )% | 24,938 | 30,594 | (5,656 | ) | (18 | )% | |||||||||||||||||
Operating income | 25,344 | 11,305 | 14,039 | 124 | % | 36,006 | 19,829 | 16,177 | 82 | % | |||||||||||||||||||
Interest expense (from related parties |
2,909 | 4,645 | (1,736 | ) | (37 | )% | 6,255 | 9,310 | (3,055 | ) | (33 | )% | |||||||||||||||||
Income before income taxes | 22,435 | 6,660 | 15,775 | NM | 29,751 | 10,519 | 19,232 | 183 | % | ||||||||||||||||||||
Income tax expense | 895 | 243 | 652 | NM | 1,096 | 378 | 718 | 190 | % | ||||||||||||||||||||
Net income | $ | 21,540 | $ | 6,417 | $ | 15,123 | 236 | % | $ | 28,655 | $ | 10,141 | $ | 18,514 | 183 | % | |||||||||||||
Earnings per common share: | |||||||||||||||||||||||||||||
Basic | $ | 0.94 | $ | 0.28 | $ | 0.66 | NM | $ | 1.25 | $ | 0.44 | $ | 0.81 | 184 | % | ||||||||||||||
Diluted | $ | 0.94 | $ | 0.28 | $ | 0.66 | NM | $ | 1.25 | $ | 0.44 | $ | 0.81 | 184 | % | ||||||||||||||
Non-GAAP Financial Measures: | |||||||||||||||||||||||||||||
Adjusted net income * | $ | 16,559 | $ | 6,357 | $ | 10,202 | 160 | % | $ | 23,600 | $ | 10,168 | $ | 13,432 | 132 | % | |||||||||||||
Adjusted net income per share – diluted * | $ | 0.72 | $ | 0.28 | $ | 0.44 | 157 | % | $ | 1.04 | $ | 0.44 | $ | 0.60 | 136 | % | |||||||||||||
EBITDA * | $ | 26,662 | $ | 12,707 | $ | 13,955 | 110 | % | $ | 38,641 | $ | 22,677 | $ | 15,964 | 70 | % | |||||||||||||
Adjusted EBITDA * | $ | 21,681 | $ | 12,647 | $ | 9,034 | 71 | % | $ | 33,586 | $ | 22,704 | $ | 10,882 | 48 | % | |||||||||||||
NM Not meaningful
* See reconciliation of non-GAAP financial measures to GAAP results below
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands, except par values) | As of 2024 (unaudited) |
As of 2023 |
|||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 28,801 | $ | 22,758 | |||
Restricted cash | 3,191 | 3,836 | |||||
Accounts receivable, net of allowances of |
64,260 | 66,979 | |||||
Income tax receivable | 293 | 550 | |||||
Inventories, net | 93,446 | 84,947 | |||||
Prepaid expenses and other current assets | 41,613 | 26,312 | |||||
Total current assets | 231,604 | 205,382 | |||||
Property, plant and equipment, net | 14,625 | 14,928 | |||||
Right-of-use assets, net | 25,343 | 27,145 | |||||
Intangible assets, net | 3,184 | 3,914 | |||||
29,835 | 29,835 | ||||||
Other noncurrent assets | 2,971 | 3,099 | |||||
TOTAL ASSETS | $ | 307,562 | $ | 284,303 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||
Current liabilities: | |||||||
Accounts payable (to related parties |
$ | 66,945 | $ | 67,355 | |||
Current maturities of long-term debt | 96 | 139 | |||||
Revolving line of credit | 40,000 | 50,000 | |||||
Finance lease liability, current | 77 | 76 | |||||
Operating lease liability, current | 4,246 | 3,912 | |||||
Other short-term financing (from related parties |
94,820 | 94,820 | |||||
Other accrued liabilities (to related parties |
37,659 | 31,999 | |||||
Total current liabilities | 243,843 | 248,301 | |||||
Deferred income taxes | 1,586 | 1,478 | |||||
Long-term debt, net of current maturities | 64 | 90 | |||||
Finance lease liability, long-term | 55 | 94 | |||||
Operating lease liability, long-term | 23,004 | 25,070 | |||||
Noncurrent contract liabilities | 2,042 | 2,401 | |||||
Other noncurrent liabilities | 12,203 | 10,786 | |||||
TOTAL LIABILITIES | $ | 282,797 | $ | 288,220 | |||
Commitments and Contingencies (Note 9) | |||||||
STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||
Preferred stock – |
$ | — | $ | — | |||
Common stock – |
23 | 23 | |||||
Additional paid-in capital | 157,737 | 157,770 | |||||
Accumulated deficit | (132,135 | ) | (160,790 | ) | |||
(860 | ) | (920 | ) | ||||
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | 24,765 | (3,917 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | 307,562 | $ | 284,303 | |||
See Notes to Consolidated Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
(UNAUDITED) | |||||||||||||||
(in thousands) | For the Three Months Ended |
For the Six Months Ended |
|||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Cash provided by operating activities | |||||||||||||||
Net income | $ | 21,540 | $ | 6,417 | $ | 28,655 | $ | 10,141 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Amortization of intangible assets | 365 | 437 | 730 | 873 | |||||||||||
Depreciation | 953 | 965 | 1,905 | 1,975 | |||||||||||
Stock-based compensation expense | 22 | 37 | 48 | 106 | |||||||||||
Amortization of financing fees | 29 | 245 | 273 | 694 | |||||||||||
Deferred income taxes | 54 | 26 | 108 | 87 | |||||||||||
(Credit) for losses in accounts receivable | (109 | ) | (4,114 | ) | (608 | ) | (3,704 | ) | |||||||
Increase in allowance for inventory obsolescence | 405 | 914 | 1,351 | 1,798 | |||||||||||
Other adjustments, net | 51 | (11 | ) | 51 | (8 | ) | |||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | (14,860 | ) | 8,995 | 3,327 | 15,402 | ||||||||||
Inventories | (5,052 | ) | 18,140 | (9,850 | ) | 5,547 | |||||||||
Prepaid expenses, right-of-use assets and other assets | (6,190 | ) | 1,088 | (12,388 | ) | 510 | |||||||||
Accounts payable | (5,883 | ) | (8,872 | ) | (538 | ) | (5,433 | ) | |||||||
Income taxes receivable | 119 | — | 257 | — | |||||||||||
Accrued expenses | 8,986 | (2,220 | ) | 5,458 | (1,754 | ) | |||||||||
Other noncurrent liabilities | 1,104 | (474 | ) | (1,615 | ) | 340 | |||||||||
Net cash provided by operating activities | 1,534 | 21,573 | 17,164 | 26,574 | |||||||||||
Cash used in investing activities | |||||||||||||||
Capital expenditures | (712 | ) | (642 | ) | (1,527 | ) | (1,254 | ) | |||||||
Net cash used in investing activities | (712 | ) | (642 | ) | (1,527 | ) | (1,254 | ) | |||||||
Cash used in financing activities | |||||||||||||||
Repayment of long-term debt and lease liabilities | (51 | ) | (47 | ) | (102 | ) | (100 | ) | |||||||
Repayment of short-term financings | (5,000 | ) | (20,000 | ) | (10,000 | ) | (20,594 | ) | |||||||
Payments of deferred financing costs | 13 | 2 | (117 | ) | (984 | ) | |||||||||
Tax benefit from exercise of stock based compensation | (20 | ) | — | (20 | ) | — | |||||||||
Net cash used in financing activities | (5,058 | ) | (20,045 | ) | (10,239 | ) | (21,678 | ) | |||||||
Net increase in cash, cash equivalents, and restricted cash | (4,236 | ) | 886 | 5,398 | 3,642 | ||||||||||
Cash, cash equivalents, and restricted cash at beginning of the period | 36,228 | 30,656 | 26,594 | 27,900 | |||||||||||
Cash, cash equivalents, and restricted cash at end of the period | $ | 31,992 | $ | 31,542 | $ | 31,992 | $ | 31,542 | |||||||
Non-GAAP Financial Measures
In addition to the results provided in accordance with accounting principles generally accepted in
Non-GAAP Financial Measure | Comparable GAAP Financial Measure |
Adjusted net income | Net income |
Adjusted net income per share – diluted | Net income per share – diluted |
EBITDA | Net income |
Adjusted EBITDA | Net income |
The Company believes that Adjusted net income, Adjusted net income per share – diluted, EBITDA, and Adjusted EBITDA provide relevant and useful information, which is widely used by analysts, investors and competitors in its industry as well as by the Company’s management in assessing the performance of the Company. Adjusted net income is defined as net income as adjusted for certain items that the Company believes are not indicative of its ongoing operating performance. Adjusted net income per share – diluted is a measure of the Company’s diluted earnings per common share adjusted for the impact of special items. EBITDA provides the Company with an understanding of earnings before the impact of investing and financing charges and income taxes. Adjusted EBITDA further excludes the effects of other non-cash charges and certain other items that do not reflect the ordinary earnings of the Company’s operations.
Adjusted net income, Adjusted net income per share – diluted, EBITDA, and Adjusted EBITDA are used by management for various purposes, including as a measure of performance of the Company’s operations and as a basis for strategic planning and forecasting. Adjusted net income, Adjusted net income per share – diluted, and Adjusted EBITDA may be useful to an investor because these measures are widely used to evaluate companies’ operating performance without regard to items excluded from the calculation of such measures, which can vary substantially from company to company depending on the accounting methods, the book value of assets, the capital structure and the method by which the assets were acquired, among other factors. They are not, however, intended as alternative measures of operating results or cash flow from operations as determined in accordance with
The following table presents a reconciliation from Net income to Adjusted net income for the three and six months ended
(in thousands) | For the Three Months Ended |
For the Six Months Ended |
|||||||||||||
2024 |
2023 |
2024 |
2023 |
||||||||||||
Net income | $ | 21,540 | $ | 6,417 | $ | 28,655 | $ | 10,141 | |||||||
Stock-based compensation 1 | 22 | 37 | 48 | 106 | |||||||||||
Other legal matters 2 | (5,003 | ) | 3 | (5,103 | ) | 21 | |||||||||
Insurance proceeds 3 | — | (100 | ) | — | (100 | ) | |||||||||
Adjusted net income | $ | 16,559 | $ | 6,357 | $ | 23,600 | $ | 10,168 | |||||||
The following table presents a reconciliation from Net income per share – diluted to Adjusted net income per share – diluted for the three and six months ended
For the Three Months Ended |
For the Six Months Ended |
||||||||||||
2024 |
2023 | 2024 |
2023 | ||||||||||
Net income per share – basic | $ | 0.94 | $ | 0.28 | $ | 1.25 | $ | 0.44 | |||||
Other legal matters2 | (0.22 | ) | — | (0.21 | ) | — | |||||||
Adjusted net income per share – diluted | $ | 0.72 | $ | 0.28 | $ | 1.04 | $ | 0.44 | |||||
Diluted shares (in thousands) | 22,993 | 22,966 | 22,983 | 22,967 | |||||||||
The following table presents a reconciliation from Net income to EBITDA and Adjusted EBITDA for the three and six months ended
(in thousands) | For the Three Months Ended |
For the Six Months Ended |
|||||||||||||
2024 |
2023 |
2024 |
2023 |
||||||||||||
Net income | $ | 21,540 | $ | 6,417 | $ | 28,655 | $ | 10,141 | |||||||
Interest expense | 2,909 | 4,645 | 6,255 | 9,310 | |||||||||||
Income tax expense | 895 | 243 | 1,096 | 378 | |||||||||||
Depreciation | 953 | 965 | 1,905 | 1,975 | |||||||||||
Amortization of intangible assets | 365 | 437 | 730 | 873 | |||||||||||
EBITDA | 26,662 | 12,707 | 38,641 | 22,677 | |||||||||||
Stock-based compensation 1 | 22 | 37 | 48 | 106 | |||||||||||
Other legal matters 2 | (5,003 | ) | 3 | (5,103 | ) | 21 | |||||||||
Insurance proceeds 3 | — | (100 | ) | — | (100 | ) | |||||||||
Adjusted EBITDA | $ | 21,681 | $ | 12,647 | $ | 33,586 | $ | 22,704 | |||||||
- Amounts reflect non-cash stock-based compensation expense and have no material impact on the Adjusted net income per share – diluted for the three and six months ended
June 30, 2024 and 2023. - Amounts include legal settlements for the three and six months ended
June 30, 2024 and 2023. - Amounts include insurance recoveries related to a prior year incident and have no material impact on the Adjusted net income per share – diluted for the three and six months ended
June 30, 2024 and 2023.
Contact:Power Solutions International, Inc. Randall D. Lehner General Counsel 630-373-1637 rlehner@psiengines.com
Source: Power Solutions International, Inc.