Power Solutions International, Inc. Reports Third Quarter 2015 Results
Net sales up 19% year over year, 18% sequentially
Adjusted net income of
Net income of
Third Quarter 2015 Results
Net sales for the third
quarter of 2015 were
Operating income of
Operating expense in the third quarter of 2015 includes transaction costs of approximately
Other (income) expense for the third quarter of 2015 includes non-cash income of
Net income for the third quarter of 2015, which includes the warrant revaluation adjustment,
contingent consideration revaluation and transaction costs, was
Net income for the third quarter of 2015, adjusted to remove the warrant revaluation impact, contingent consideration revaluation and transaction costs, was
Summary of Diluted EPS Attributable to Common Stockholders | ||||||
"Adjusted" removes the Q3 2015 impact of transaction costs and contingent consideration revaluation and the Q3 2014 impact of contingent consideration revaluation | ||||||
Q3 2015 | Q3 2014 | |||||
Diluted EPS | $ | 0.03 | $ | 0.56 | ||
Adjusted diluted EPS | $ | 0.04 | $ | 0.39 | ||
Diluted shares | 11,068,925 | 11,167,598 | ||||
Adjusted diluted shares | 11,068,925 | 11,167,598 | ||||
"This quarter was marked by both impressive achievements and opportunities for improvement," commented
Winemaster continued, "Although in the near-term we are facing headwinds in the industries in which we participate, we have never been more enthusiastic about our long-term outlook. We see solid growth next year in a variety of vehicle types, including school buses, RVs, and medium duty trucks to name a few. In addition, activity in
Winemaster added, "We encourage the investment community to attend our inaugural Analyst and Investor Day next week at our headquarters in Wood Dale. It is a great opportunity to meet the operating managers who are working hard to fulfill our vision, and to see first-hand the broad portfolio of equipment and vehicles powered by our engines."
Fourth Quarter 2015 and Full Year Outlook
The Company now expects fourth quarter 2015 revenue to be in the range of
The Company cautions that its outlook reflects its current assessment of a number of factors, including, but not limited to, the timing of new products, the Company's ability to integrate new acquisitions, 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 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) 208-1427 and reference
passcode 687655. Those calling from outside the U.S. should dial +1 (913) 312-1378 and reference the same passcode 687655. 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 www.psiengines.com. The webcast will be archived on the website for one year.
Analyst and Investor Day
The Company will host its Inaugural Analyst and Investor Meeting on
Executive and operations management will conduct a series of presentations to update analysts and investors on the Company's key strategic initiatives, products, markets and long-term goals. The program will include a tour of manufacturing facilities and "hands-on" demonstrations of important product application categories, such as on-road and power generation.
For additional information and to register, please email anna@blueshirtgroup.com or call +1 (212) 871-5566.
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, RV and commercial chassis. 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, arbor, agricultural and construction equipment.
Acquired in
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 to Adjusted Net Income | ||||||
(Dollar amounts in thousands) | ||||||
Three months ended September 30, 2015 | Three months ended September 30, 2014 | |||||
Net income | $ | 9,109 | $ | 7,148 | ||
Non-cash (income) expense from warrant revaluation | (8,750 | ) | (858 | ) | ||
Non-cash (income) expense from contingent consideration revaluation, net of tax | (30 | ) | (1,925 | ) | ||
Transaction costs, net of tax | 158 | - | ||||
Adjusted net income | $ | 487 | $ | 4,365 |
Reconciliation of Diluted EPS to Adjusted Diluted EPS | ||||||
Three months ended September 30, 2015 | Three months ended September 30, 2014 | |||||
Earnings per diluted common share | $ | 0.03 | $ | 0.56 | ||
Non-cash (income) expense from warrant revaluation | - | - | ||||
Non-cash (income) expense from contingent consideration revaluation, net of tax | - | (0.17 | ) | |||
Transaction costs, net of tax | 0.01 | - | ||||
Adjusted earnings per diluted common share | $ | 0.04 | $ | 0.39 | ||
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.
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||||
(Dollar amounts in thousands, except per share amounts) | ||||||||||
ASSETS | ||||||||||
Current assets | ||||||||||
Cash | $ | 12,253 | $ | 6,561 | ||||||
Accounts receivable, net | 96,863 | 81,740 | ||||||||
Inventories, net | 102,754 | 93,903 | ||||||||
Prepaid expenses and other current assets | 5,523 | 4,801 | ||||||||
Deferred income taxes | 3,998 | 3,998 | ||||||||
Total current assets | 221,391 | 191,003 | ||||||||
Property, plant & equipment, net | 25,577 | 20,892 | ||||||||
Intangible assets, net | 33,598 | 21,392 | ||||||||
41,800 | 23,546 | |||||||||
Other noncurrent assets | 7,706 | 5,804 | ||||||||
TOTAL ASSETS | $ | 330,072 | $ | 262,637 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
Current liabilities | ||||||||||
Accounts payable | $ | 43,943 | $ | 60,877 | ||||||
Income taxes payable | - | 779 | ||||||||
Accrued compensation and benefits | 3,927 | 5,983 | ||||||||
Current maturities of long-term debt | - | 1,667 | ||||||||
Other accrued liabilities | 17,655 | 6,742 | ||||||||
Total current liabilities | 65,525 | 76,048 | ||||||||
Long-term obligations | ||||||||||
Revolving line of credit | 99,061 | 78,030 | ||||||||
Deferred income taxes | 3,241 | 3,241 | ||||||||
Private placement warrants | 2,741 | 11,036 | ||||||||
Long-term debt, less current maturities, net | 53,694 | 2,361 | ||||||||
Other noncurrent liabilities | 1,477 | 1,122 | ||||||||
TOTAL LIABILITIES | 225,739 | 171,838 | ||||||||
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: 11,580,608 and 11,562,209 shares at | 12 | 12 | ||||||||
Additional paid-in-capital | 74,919 | 73,959 | ||||||||
Retained earnings | 33,652 | 21,078 | ||||||||
(4,250 | ) | (4,250 | ) | |||||||
TOTAL STOCKHOLDERS' EQUITY | 104,333 | 90,799 | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 330,072 | $ | 262,637 | ||||||
Condensed Consolidated Statements of Operations (Unaudited) | ||||||||||||||||||
(Dollar amounts in thousands, except per share amounts) | ||||||||||||||||||
Three
months ended 2015 | Three months ended 2014 | Nine months ended 2015 | Nine months ended 2014 | |||||||||||||||
Net sales | $ | 112,008 | $ | 93,972 | $ | 292,776 | $ | 244,085 | ||||||||||
Cost of sales | 96,700 | 75,344 | 243,637 | 198,131 | ||||||||||||||
Gross profit | 15,308 | 18,628 | 49,139 | 45,954 | ||||||||||||||
Operating expenses: | ||||||||||||||||||
Research & development and engineering | 5,562 | 4,501 | 16,973 | 11,844 | ||||||||||||||
Selling and service | 2,979 | 2,706 | 8,525 | 6,871 | ||||||||||||||
General and administrative | 4,280 | 3,410 | 10,953 | 9,814 | ||||||||||||||
Amortization of intangible assets | 1,099 | 492 | 2,755 | 492 | ||||||||||||||
Total operating expenses | 13,920 | 11,109 | 39,206 | 29,021 | ||||||||||||||
Operating income | 1,388 | 7,519 | 9,933 | 16,933 | ||||||||||||||
Other (income) expense: | ||||||||||||||||||
Interest expense | 1,374 | 407 | 2,986 | 887 | ||||||||||||||
Contingent consideration | (50 | ) | (3,208 | ) | (50 | ) | (3,782 | ) | ||||||||||
Private placement warrant | (8,750 | ) | (858 | ) | (8,040 | ) | (1,190 | ) | ||||||||||
Other expense, net | 171 | 34 | 260 | 109 | ||||||||||||||
Total other (income) | (7,255 | ) | (3,625 | ) | (4,844 | ) | (3,976 | ) | ||||||||||
Income before income taxes | 8,643 | 11,144 | 14,777 | 20,909 | ||||||||||||||
Income tax (benefit) provision | (466 | ) | 3,996 | 2,203 | 7,504 | |||||||||||||
Net income | $ | 9,109 | $ | 7,148 | $ | 12,574 | $ | 13,405 | ||||||||||
Weighted-average common shares outstanding: | ||||||||||||||||||
Basic | 10,814,765 | 10,794,229 | 10,804,720 | 10,676,792 | ||||||||||||||
Diluted | 11,068,925 | 11,167,598 | 11,120,721 | 11,125,116 | ||||||||||||||
Earnings per common share: | ||||||||||||||||||
Basic | $ | 0.84 | $ | 0.66 | $ | 1.16 | $ | 1.26 | ||||||||||
Diluted | $ | 0.03 | $ | 0.56 | $ | 0.41 | $ | 1.10 | ||||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||||
(Dollar amounts in thousands) | ||||||||||
Nine months ended 2015 | Nine months ended 2014 | |||||||||
Cash flows from operating activities | ||||||||||
Net income | $ | 12,574 | $ | 13,405 | ||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||||
Depreciation | 3,067 | 1,799 | ||||||||
Amortization | 3,464 | 1,333 | ||||||||
Deferred income taxes | - | 1,512 | ||||||||
Non-cash interest expense | 305 | 62 | ||||||||
Share-based compensation expense | 854 | 982 | ||||||||
Increase (decrease) in accounts receivable allowances | 625 | (250 | ) | |||||||
Increase in inventory reserves | 698 | 615 | ||||||||
Amortization of inventory step up to fair value | 453 | 482 | ||||||||
Decrease in valuation of private placement warrants liability | (8,040 | ) | (1,190 | ) | ||||||
Decrease in valuation of contingent consideration liability | (50 | ) | (3,782 | ) | ||||||
Loss on investment in joint ventures | 260 | 136 | ||||||||
Loss on disposal of assets | 142 | 77 | ||||||||
(Increase) decrease in operating assets, net of effects of business combinations: | ||||||||||
Accounts receivable | (10,605 | ) | (21,917 | ) | ||||||
Inventories | 589 | (23,398 | ) | |||||||
Prepaid expenses and other assets | (1,795 | ) | (2,342 | ) | ||||||
Increase (decrease) in operating liabilities, net of effects of business combinations: | ||||||||||
Accounts payable | (23,659 | ) | 19,549 | |||||||
Accrued compensation and benefits and other accrued liabilities | (1,046 | ) | (133 | ) | ||||||
Income taxes payable | (779 | ) | (27 | ) | ||||||
Other noncurrent liabilities | 355 | (363 | ) | |||||||
Net cash used in operating activities | (22,588 | ) | (13,450 | ) | ||||||
Cash flows from investing activities | ||||||||||
Purchases of property, plant & equipment | (6,661 | ) | (4,749 | ) | ||||||
Business combination, net of cash acquired | (34,396 | ) | (44,122 | ) | ||||||
Investment in joint ventures | (1,000 | ) | (350 | ) | ||||||
Net cash used in investing activities | (42,057 | ) | (49,221 | ) | ||||||
Cash flows from financing activities | ||||||||||
Advances from revolving line of credit - noncurrent obligation | 85,180 | 67,946 | ||||||||
Repayments of revolving line of credit - noncurrent obligation | (64,149 | ) | (11,831 | ) | ||||||
Proceeds from long-term debt | 55,000 | 5,000 | ||||||||
Proceeds from exercise of private placement warrants | 65 | 1,425 | ||||||||
Excess tax benefit from exercise of share-based awards | 102 | 2,469 | ||||||||
Payment of withholding taxes from net settlement of share-based awards | (316 | ) | (361 | ) | ||||||
Payments on long-term debt | (4,028 | ) | (555 | ) | ||||||
Cash paid for financing and transaction fees | (1,517 | ) | (126 | ) | ||||||
Net cash provided by financing activities | 70,337 | 63,967 | ||||||||
Increase in cash | 5,692 | 1,296 | ||||||||
Cash at beginning of period | 6,561 | 6,306 | ||||||||
Cash at end of period | $ | 12,253 | $ | 7,602 | ||||||
Contact:Source:Power Solutions International, Inc. Michael P. Lewis Chief Financial Officer +1 (630) 451-2290 Michael.Lewis@psiengines.comThe Blueshirt Group Gary T. Dvorchak , CFA Managing Director +1 (323) 240-5796 gary@blueshirtgroup.com Analyst Day Registration:Power Solutions International, Inc. Jeremy Lessaris Vice President of Marketing +1 (630) 350-9400 jeremy.lessaris@psiengines.comThe Blueshirt Group Anna Joelsson Director +1 (212) 871-5566 anna@blueshirtgroup.com
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