0001137091-23-000011 | 10-Q | XBRL Viewer | Power Solutions International INC

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2023

Schedule of Fair Value Measurements at Reporting Date


(in thousands)	As of June 30, 2023
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3
Revolving credit facility	$	110,000	$	—	$	110,000	$	—
Other financing	79,820		—		79,820		—


(in thousands)	As of December 31, 2022
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3
Revolving credit facility	$	130,000	$	—	$	130,000	$	—
Other financing	75,614		—		75,614		—

Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Leases

The Company has obligations under lease arrangements primarily for facilities, equipment and vehicles. These leases have original lease periods expiring between July 2023 and July 2034. The following table summarizes the lease expense by category in the Consolidated Statement of Operations:


(in thousands)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Cost of sales	$	2,069	$	1,524	$	3,971	$	3,135
Research, development and engineering expenses	63		65		126		141
Selling, general and administrative expenses	18		18		37		37
Interest expense	23		22		41		51
Total	$	2,173	$	1,629	$	4,175	$	3,364

The following table summarizes the components of lease expense:


(in thousands)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022

Operating lease cost	$	1,448	$	1,160	$	2,807	$	2,339
Finance lease cost
Amortization of right-of-use (“ROU”) asset	20		40		41		88
Interest expense	4		5		8		12
Short-term lease cost	258		29		401		65
Variable lease cost	442		340		918		720
Sublease income	(264)		(271)		(530)		(536)
Total lease cost	$	1,908	$	1,303	$	3,645	$	2,688

The following table presents supplemental cash flow information related to leases:


(in thousands)	For the Six Months Ended June 30,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows paid for operating leases	$	2,426	$	2,424
Operating cash flows paid for interest portion of finance leases	8		12
Financing cash flows paid for principal portion of finance leases	44		93
Right-of-use assets obtained in exchange for lease obligations
Operating leases	13,986		—

As of June 30, 2023 and December 31, 2022, the weighted-average remaining lease term was 6.6 years and 5.8 years for operating leases and 2.6 years and 3.0 years for finance leases, respectively. As of June 30, 2023 and December 31, 2022, the weighted-average discount rate was 7.5% and 7.1% for operating leases, and 6.5% and 6.6% for finance leases, respectively.

The following table presents supplemental balance sheet information related to leases:


(in thousands)	June 30, 2023		December 31, 2022

Operating lease ROU assets, net 1	$	25,005	$	13,282

Operating lease liabilities, current	2,753		2,894
Operating lease liabilities, non-current	23,316		10,971
Total operating lease liabilities	$	26,069	$	13,865

Finance lease ROU assets, net 1	$	184	$	225

Finance lease liabilities, current	85		90
Finance lease liabilities, non-current	136		170
Total finance lease liabilities	$	221	$	260

1.Included in Other noncurrent assets for operating leases and Property, plant and equipment, net for finance leases on the Consolidated Balance Sheets.

The following table presents maturity analysis of lease liabilities as of June 30, 2023:


(in thousands)	Operating Leases		Finance Leases
Nine months ending December 31, 2023	$	2,183	$	57
Year ending December 31, 2024	5,214		84
Year ending December 31, 2025	5,376		81
Year ending December 31, 2026	5,126		17
Year ending December 31, 2027	5,209		—
Year ending December 31, 2028	4,205		—
Thereafter	6,059		—
Total undiscounted lease payments	33,372		239
Less: imputed interest	7,303		18
Total lease liabilities	$	26,069	$	221

Leases


(in thousands)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Cost of sales	$	2,069	$	1,524	$	3,971	$	3,135
Research, development and engineering expenses	63		65		126		141
Selling, general and administrative expenses	18		18		37		37
Interest expense	23		22		41		51
Total	$	2,173	$	1,629	$	4,175	$	3,364

The following table summarizes the components of lease expense:


(in thousands)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022

Operating lease cost	$	1,448	$	1,160	$	2,807	$	2,339
Finance lease cost
Amortization of right-of-use (“ROU”) asset	20		40		41		88
Interest expense	4		5		8		12
Short-term lease cost	258		29		401		65
Variable lease cost	442		340		918		720
Sublease income	(264)		(271)		(530)		(536)
Total lease cost	$	1,908	$	1,303	$	3,645	$	2,688

The following table presents supplemental cash flow information related to leases:


(in thousands)	For the Six Months Ended June 30,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows paid for operating leases	$	2,426	$	2,424
Operating cash flows paid for interest portion of finance leases	8		12
Financing cash flows paid for principal portion of finance leases	44		93
Right-of-use assets obtained in exchange for lease obligations
Operating leases	13,986		—

The following table presents supplemental balance sheet information related to leases:


(in thousands)	June 30, 2023		December 31, 2022

Operating lease ROU assets, net 1	$	25,005	$	13,282

Operating lease liabilities, current	2,753		2,894
Operating lease liabilities, non-current	23,316		10,971
Total operating lease liabilities	$	26,069	$	13,865

Finance lease ROU assets, net 1	$	184	$	225

Finance lease liabilities, current	85		90
Finance lease liabilities, non-current	136		170
Total finance lease liabilities	$	221	$	260

1.Included in Other noncurrent assets for operating leases and Property, plant and equipment, net for finance leases on the Consolidated Balance Sheets.

The following table presents maturity analysis of lease liabilities as of June 30, 2023:


(in thousands)	Operating Leases		Finance Leases
Nine months ending December 31, 2023	$	2,183	$	57
Year ending December 31, 2024	5,214		84
Year ending December 31, 2025	5,376		81
Year ending December 31, 2026	5,126		17
Year ending December 31, 2027	5,209		—
Year ending December 31, 2028	4,205		—
Thereafter	6,059		—
Total undiscounted lease payments	33,372		239
Less: imputed interest	7,303		18
Total lease liabilities	$	26,069	$	221

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash provided by (used in) operating activities
Net income (loss)	$ 10,141	$ (1,241)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Amortization of intangible assets	873	1,072
Depreciation	1,975	2,393
Stock-based compensation expense	106	253
Amortization of financing fees	694	1,283
Deferred income taxes	87	(225)
Increase in allowance for obsolescence	1,798	0
Other adjustments, net	(6)	482
Changes in operating assets and liabilities:
Accounts receivable	11,697	(21,706)
Inventory	5,547	11,048
Prepaid expenses, right-of-use assets and other assets	510	(1,600)
Accounts payable	(5,433)	(17,406)
Accrued expenses	(1,754)	4,175
Other noncurrent liabilities	339	(8,721)
Net cash provided by (used in) operating activities	26,574	(30,193)
Cash used in investing activities
Capital expenditures	(1,254)	(508)
Net cash used in investing activities	(1,254)	(508)
Cash (used in) provided by financing activities
Repayments of short-term debt and lease liabilities	(20,100)	(165)
Proceeds from short-term financings	0	29,820
Repayment of short-term financings	(594)	0
Payments of deferred financing costs	(984)	(1,786)
Other financing activities, net	0	(2)
Net cash (used in) provided by financing activities	(21,678)	27,867
Net increase (decrease) in cash, cash equivalents, and restricted cash	3,642	(2,834)
Cash, cash equivalents, and restricted cash at beginning of the period	27,900	9,732
Cash, cash equivalents, and restricted cash at end of the period	31,542	6,898
Reconciliation of cash, cash equivalents, and restricted cash to the Consolidated Balance Sheets
Cash and cash equivalents	27,782	3,448
Restricted cash	3,760	3,450
Total cash, cash equivalents, and restricted cash	$ 31,542	$ 6,898

Fair Value of Financial Instruments - Schedule of Fair Value Measurements at Reporting Date (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	$ 189,820	$ 205,614
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other financing	79,820	75,614
Fair Value, Measurements, Recurring \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other financing	0	0
Fair Value, Measurements, Recurring \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other financing	79,820	75,614
Fair Value, Measurements, Recurring \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other financing	0	0
Fair Value, Measurements, Recurring \| Revolving credit facility
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying Value	110,000	130,000
Fair Value, Measurements, Recurring \| Revolving credit facility \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Revolving credit facility	0	0
Fair Value, Measurements, Recurring \| Revolving credit facility \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Revolving credit facility	110,000	130,000
Fair Value, Measurements, Recurring \| Revolving credit facility \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Revolving credit facility	$ 0	$ 0

Weichai Transactions (Details)		3 Months Ended		6 Months Ended
Weichai Transactions (Details)	Mar. 22, 2023	Jun. 30, 2023 USD ($) agreement	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) agreement	Jun. 30, 2022 USD ($)	Mar. 24, 2023 USD ($)	Dec. 31, 2022 USD ($)
Subsidiary, Sale of Stock [Line Items]
Debt instrument, number of loan agreements \| agreement		4		4
Term of collaborative arrangement	3 years
Company sales		$ 1,000,000	$ 100,000	$ 2,100,000	$ 500,000
Purchased inventory		700,000	$ 2,900,000	3,800,000	$ 7,100,000
Collaborative arrangement, outstanding receivables		2,000,000		2,000,000			$ 2,300,000
Outstanding payables		24,400,000		24,400,000			$ 23,400,000
Revolving credit facility \| First Shareholder's Loan Agreement, Weichai
Subsidiary, Sale of Stock [Line Items]
Maximum borrowing capacity		110,000,000.0		110,000,000.0		$ 130,000,000
Revolving credit facility \| Amended Second Shareholder's Loan Agreement, Weichai
Subsidiary, Sale of Stock [Line Items]
Maximum borrowing capacity		25,000,000		25,000,000
Revolving credit facility \| Third Shareholder's Loan Agreement, Weichai
Subsidiary, Sale of Stock [Line Items]
Maximum borrowing capacity		50,000,000		50,000,000
Revolving credit facility \| Fourth Shareholder's Loan Agreement, Weichai
Subsidiary, Sale of Stock [Line Items]
Maximum borrowing capacity		$ 30,000,000		$ 30,000,000

Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Numerator:
Net income (loss)	$ 6,417	$ 1,358	$ 10,141	$ (1,241)
Shares used in computing net income (loss) per share:
Weighted average basic shares outstanding - basic (in shares)	22,952	22,927	22,952	22,927
Effect of dilutive securities (in shares)	14	13	15	0
Weighted average common shares outstanding - diluted (in shares)	22,966	22,940	22,967	22,927
Earnings (Loss) per common share:
Earnings (Loss) per share of common stock – basic (in dollars per share)	$ 0.28	$ 0.06	$ 0.44	$ (0.05)
Earnings (Loss) per share of common stock – diluted (in dollars per share)	$ 0.28	$ 0.06	$ 0.44	$ (0.05)
Antidilutive shares (in shares)	100	100	100	200

Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Schedule of Common Stock Outstanding Roll Forward

The changes in shares of Common and Treasury Stock are as follows:


(in thousands)	Common Shares Issued	Treasury Stock Shares	Common Shares Outstanding
Balance at December 31, 2022	23,117	166	22,951
Net shares issued for Stock awards	—	(2)	2



Balance as of June 30, 2023	23,117	164	22,953

Summary of Significant Accounting Policies and Other Information - Schedule of Other Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accrued product warranty	$ 12,100	$ 13,037	$ 15,682
Litigation reserves	2,202	2,102
Contract liabilities	2,399	2,256
Accrued compensation and benefits	6,186	7,299
Accrued interest expense	6,692	5,257
Other	3,790	4,158
Total	$ 33,369	$ 34,109

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies Legal Contingencies The legal matters discussed below and others could result in losses, including damages, fines, civil penalties and criminal charges, which could be substantial. The Company records accruals for these contingencies to the extent the Company concludes that a loss is both probable and reasonably estimable. Regarding the matters disclosed below, unless otherwise disclosed, the Company has determined that liabilities associated with these legal matters are reasonably possible; however, unless otherwise stated, the possible loss or range of possible loss cannot be reasonably estimated. Given the nature of the litigation and investigations and the complexities involved, the Company is unable to reasonably estimate a possible loss for all such matters until the Company knows, among other factors, the following: •what claims, if any, will survive dispositive motion practice; •the extent of the claims, particularly when damages are not specified or are indeterminate; •how the discovery process will affect the litigation; •the settlement posture of the other parties to the litigation; and •any other factors that may have a material effect on the litigation or investigation. However, the Company could incur judgments, enter into settlements or revise its expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on the Company’s results of operations in the period in which the amounts are accrued and/or liquidity in the period in which the amounts are paid. Securities and Exchange Commission and United States Attorney’s Office (“USAO”) for the Northern District of Illinois Investigations In September 2020, the Company entered into agreements with the SEC and the USAO to resolve the investigations into the Company’s past revenue recognition practices. Under the settled administrative order with the SEC, the Company committed to remediate the deficiencies in its internal control over financial reporting that constituted material weaknesses identified in its 2017 Form 10-K filed in May 2019 by April 30, 2021 unless an extension was provided by the SEC. On April 12, 2021, the SEC granted the Company’s request for an extension of time until March 31, 2022 in which to comply with the requirements of the administrative order to remediate the remaining outstanding material weaknesses. In April 2022, the SEC granted a further extension of time until March 31, 2023 to fully comply with the administrative order. In May 2023, the Company submitted documentation to the SEC for its review to assess the Company’s compliance with the administrative order. In July 2023, the Company was notified by the SEC that no additional information with respect to the administrative order is required. Jerome Treadwell v. the Company In October 2018, a punitive class-action complaint was filed against the Company and NOVAtime Technology, Inc. (“NOVAtime”) in the Circuit Court of Cook County, Illinois. In December 2018, NOVAtime removed the case to the U.S. District Court for the Northern District of Illinois, Eastern Division under the Class Action Fairness Act. Plaintiff has since voluntarily dismissed NOVAtime from the lawsuit without prejudice and filed an amended complaint in April 2019. The operative, amended complaint asserts violations of the Illinois Biometric Information Privacy Act (“BIPA”) in connection with employees’ use of the time clock to clock in and clock out using a finger scan and seeks statutory damages, attorneys’ fees, and injunctive and equitable relief. An aggrieved party under BIPA may recover (i) $1,000 per violation if the Company is found to have negligently violated BIPA or (ii) $5,000 per violation if the Company is found to have intentionally or recklessly violated BIPA plus reasonable attorneys’ fees. In May 2019, the Company filed its motion to dismiss the plaintiff’s amended complaint. In December 2019, the court denied the Company’s motion to dismiss. In January 2020, the Company moved for reconsideration of the court’s order denying the motion to dismiss, or in the alternative, to stay the case pending the Illinois Appellate Court’s ruling in McDonald v. Symphony Healthcare on a legal question that would be potentially dispositive in this matter. In February 2020, the court denied the Company’s motion for reconsideration, but required the parties to submit additional briefing on the Company’s motion to stay. In April 2020, the court granted the Company’s motion to stay and stayed the case pending the Illinois Appellate Court’s ruling in McDonald v. Symphony Healthcare. In October 2020, after the McDonald ruling, the court granted the parties’ joint request to continue the stay of the case for 60 days. The court also ordered the parties to schedule a settlement conference with the Magistrate Judge in May 2021 which went forward without a settlement being reached. On May 22, 2023, the Company filed the answer to the amended complaint. The case is in discovery proceedings. As of both June 30, 2023 and December 31, 2022, the Company had recorded an estimated liability of $2.0 million, recorded within Other accrued liabilities on the Consolidated Balance Sheet related to the potential settlement of this matter. Mast Powertrain v. the Company In February 2020, the Company received a demand for arbitration from Mast Powertrain, LLC (“Mast”) pursuant to a development agreement entered into in November 2011 (the “Development Agreement”). Mast claimed that it was owed more than $9.0 million in past royalties and other damages for products sold by the Company pursuant to the Development Agreement. The Company disputed Mast’s damages, denied that any royalties are owed to Mast, denied any liability, and counterclaimed for overpayment on invoices paid to Mast. Mast subsequently clarified its claim for past royalties owed to be approximately $4.5 million. In July 2021, the Company reached a settlement with Mast to resolve past claims for royalties owed for $1.5 million which the Company had previously recorded within Selling, general and administrative expenses in the Consolidated Statement of Operations for the year-ended December 31, 2020. The Company fully paid the settlement as of December 31, 2022 and had no recognized liability as of June 30, 2023. Gary Winemaster Litigation v. The Company In August 2021, the Company’s former Chairman of the Board and former Chief Executive Officer and President, Gary Winemaster (“Winemaster”) filed suit in the Court of Chancery of the State of Delaware against the Company and Travelers Casualty and Surety Company of America (“Travelers”) alleging the Company’s breach of its advancement obligations under Winemaster’s indemnification agreement and Travelers’ breach of the side A policy between Traveler’s and the Company of which Winemaster is a beneficiary. In his complaint, Winemaster was seeking reimbursement under his indemnification agreement in excess of $7.2 million of attorney’s fees plus interest incurred by Winemaster in his defense of the Department of Justice (“DOJ”) case, U.S. v. Winemaster et al. Since the filing of the complaint, the Company estimates that Travelers has paid approximately $8.8 million to Winemaster’s attorneys, Latham and Watkins, under the Company’s side A policy to settle existing outstanding attorney’s fees. Travelers is seeking reimbursement from the Company for those advances pursuant to the terms of the side A policy. In October 2021, the Company and Winemaster entered into a Stipulation and Advancement Order to handle all future attorney’s fees relating to his DOJ and SEC cases, to the extent not reimbursed by Travelers under the side A policy. As of both June 30, 2023 and December 31, 2022, the Company has approximately $8.8 million accrued for the reimbursement to Travelers recorded within Accounts payable on the Consolidated Balance Sheet. Jeffrey Ehlers and Rick Lulloff Litigation In September 2021, Jeffrey Ehlers (“Ehlers”) and Rick Lulloff (“Lulloff”), former employees of the Company, made demand against the Company for approximately $2.4 million and $1.2 million, respectively, for alleged wages due and owing under each employee’s employment contract related to “Incentive Bonuses” for revenues generated in the Company’s transportation end market. In November 2021, Ehlers and Lulloff separately filed complaints against the Company in the Circuit Court of Cook County, Illinois, alleging breach of contract and violations of the Illinois Wage and Payment Collection Act incorporating their claims in the above referenced demand letter. The Company filed a notice of removal from the Circuit Court of Cook County, Illinois and has also moved to consolidate the cases which has been granted by the Court. In December 2022, the Company reached a settlement with both Ehlers and Lulloff, for $0.8 million and $0.5 million, respectively. As of June 30, 2023, the Company has recorded the aforementioned settlement liabilities within Other accrued liabilities on the Consolidated Balance Sheet and is paying the settlement amounts in installments. As of June 30, 2023 the Company paid Ehlers and Lulloff, $0.4 million and $0.2 million, respectively. Indemnification Agreements In June 2020, the Company entered into a new directors’ and officers’ liability insurance policy, which has been renewed annually and expires in July 2024. The insurance policy includes standard exclusions including for any ongoing or pending litigation such as the previously disclosed investigations by the SEC and USAO. Other Commitments and Contingencies At June 30, 2023, the Company had five outstanding letters of credit totaling $2.1 million. The letters of credit primarily serve as collateral for the Company for certain facility leases and insurance policies. As discussed in Note 1. Summary of Significant Accounting Policies and Other Information, the Company had restricted cash of $3.8 million as of June 30, 2023 related to these letters of credit and cash held in escrow due to a customer agreement. Other Financial Assets and Liabilities In addition to the methods and assumptions used for the financial instruments discussed above, accounts receivable, net, income tax receivable, and accounts payable and certain accrued expenses are measured at carrying value, which approximates fair value because of the short-term maturities of these instruments.

Income Taxes (Details)	3 Months Ended		6 Months Ended
Income Taxes (Details)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Effective income tax rate	3.60%	(137.80%)	3.60%	24.40%

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net income (loss)	$ 6,417	$ 1,358	$ 10,141	$ (1,241)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(g)(1)(ii))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 323
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481687/323-10-50-3

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 825
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 28
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482907/825-10-50-28

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482765/220-10-50-6

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483443/250-10-50-3

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)(2)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483443/250-10-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 815
-SubTopic 40
-Name Accounting Standards Codification
-Section 65
-Paragraph 1
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480175/815-40-65-1

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 8
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483443/250-10-50-8

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483443/250-10-50-9

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 11
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483443/250-10-50-11

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 11
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483443/250-10-50-11

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147483443/250-10-50-4

Reference 13: http://www.xbrl.org/2003/role/exampleRef
-Topic 946
-SubTopic 830
-Name Accounting Standards Codification
-Section 55
-Paragraph 10
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480167/946-830-55-10

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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Reference 16: http://www.xbrl.org/2003/role/disclosureRef
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Reference 18: http://www.xbrl.org/2003/role/disclosureRef
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Reference 19: http://www.xbrl.org/2003/role/disclosureRef
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Reference 21: http://www.xbrl.org/2003/role/disclosureRef
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Reference 24: http://www.xbrl.org/2003/role/disclosureRef
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Reference 26: http://www.xbrl.org/2003/role/disclosureRef
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Reference 27: http://www.xbrl.org/2003/role/disclosureRef
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Reference 28: http://www.xbrl.org/2003/role/disclosureRef
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Reference 29: http://www.xbrl.org/2003/role/disclosureRef
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Reference 30: http://www.xbrl.org/2003/role/disclosureRef
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Reference 31: http://www.xbrl.org/2003/role/disclosureRef
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Reference 34: http://www.xbrl.org/2003/role/disclosureRef
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Reference 36: http://www.xbrl.org/2003/role/disclosureRef
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Reference 37: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Property, Plant and Equipment

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment by type were as follows:


(in thousands)	As of June 30, 2023		As of December 31, 2022
Property, Plant and Equipment


Leasehold improvements	$	7,189	$	7,107
Machinery and equipment	46,687		45,747
Construction in progress	1,291		467
Total property, plant and equipment, at cost	55,167		53,321
Accumulated depreciation	(41,351)		(39,477)
Property, plant and equipment, net	$	13,816	$	13,844

Leases - Schedule of Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Leases [Abstract]
Operating lease cost	$ 1,448	$ 1,160	$ 2,807	$ 2,339
Finance lease cost
Amortization of right-of-use (“ROU”) asset	20	40	41	88
Interest expense	4	5	8	12
Short-term lease cost	258	29	401	65
Variable lease cost	442	340	918	720
Sublease income	(264)	(271)	(530)	(536)
Total lease cost	$ 1,908	$ 1,303	$ 3,645	$ 2,688

Debt - Schedule of Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 24, 2023	Dec. 31, 2022
Short-term financing:
Short-term financing	$ 189,820		$ 205,614
Other short-term financing	79,820		75,614
Long-term debt:
Finance leases and other debt	515		619
Total long-term debt and finance leases	515		5,419
Less: Current maturities of long-term debt and finance leases	219		220
Long-term debt	296		5,199
Revolving credit facility
Long-term debt:
Debt issuance costs	700		400
Third Amended And Restated Credit Agreement \| Revolving credit facility
Short-term financing:
Short-term financing	$ 110,000		$ 130,000
Weighted average interest rate	8.44%		7.04%
Amended Shareholder’s Loan Agreement (second) \| Revolving credit facility
Short-term financing:
Weighted average interest rate	9.90%		9.10%
Other short-term financing	$ 25,000		$ 25,000
Amended Shareholder's Loan Agreement (third) \| Revolving credit facility
Short-term financing:
Weighted average interest rate	9.60%		9.01%
Other short-term financing	$ 50,000		$ 50,000
Amended Shareholder's Loan Agreement (fourth) \| Revolving credit facility
Short-term financing:
Weighted average interest rate	9.30%		9.00%
Other short-term financing	$ 4,820		$ 0
Long-term debt:
Amended Shareholder's Loan Agreement (fourth)	0		4,800
Amended Shareholder's Loan Agreement (fourth) \| Revolving credit facility
Short-term financing:
Short-term financing		$ 30,000
Other short-term financing
Short-term financing:
Other short-term financing	$ 0		$ 614

Weichai Transactions

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Weichai Transactions

Weichai Shareholder’s Loan Agreements

The Company is party to four shareholder’s loan agreements with Weichai, including the $130.0 million first Amended Shareholder's Loan Agreement, the $25.0 million second Amended Shareholder's Loan Agreement, the $50.0 million third Amended Shareholder's Loan Agreement, and the $30.0 million fourth Amended Shareholder's Loan Agreement. See additional discussion of these debt agreements in Note 6. Debt.

Weichai Collaboration Arrangement and Related Party Transactions

The Company and Weichai executed a strategic collaboration agreement (the “Collaboration Agreement”) March 2017 in order to achieve their respective strategic objectives and enhance the strategic cooperation alliance to share experiences, expertise and resources. Among other things, the Collaboration Agreement established a joint steering committee, permitted Weichai to select a limited number of certain technical, marketing, sales, procurement and finance personnel to work at the Company and established several collaborations related to stationary natural-gas applications and Weichai diesel engines. The Collaboration Agreement provided for the steering committee to create various sub-committees with operating roles and otherwise governs the treatment of intellectual property of parties prior to the collaboration and the intellectual property developed during the collaboration. On March 22, 2023, the Collaboration Agreement was extended for an additional term of three years.

The Company evaluates whether an arrangement is a collaborative arrangement at its inception based on the facts and circumstances specific to the arrangement. The Company also reevaluates whether an arrangement qualifies or continues to qualify as a collaborative arrangement whenever there is a change in either the roles of the participants or the participants’ exposure to significant risks and rewards dependent on the ultimate commercial success of the endeavor. For those collaborative arrangements where it is determined that the Company is the principal participant, costs incurred and revenue generated from third parties are recorded on a gross basis in the financial statements. For the three and six months ended June 30, 2023, the Company’s sales to Weichai and its subsidiaries were $1.0 million and $2.1 million, respectively. For the three and six months ended June 30, 2022, the Company’s sales to Weichai and its subsidiaries were $0.1 million and $0.5 million, respectively. Purchases of inventory from Weichai were $0.7 million and $3.8 million for the three and six months ended June 30, 2023, respectively. Purchases of inventory from Weichai were $2.9 million and $7.1 million for the three and six months ended June 30, 2022, respectively. As of June 30, 2023 and December 31, 2022, the Company had $2.0 million and $2.3 million receivables from Weichai and its subsidiaries, respectively and outstanding accounts payables to Weichai of $24.4 million and $23.4 million, respectively.

In January 2022, PSI and Baudouin (“Baudouin”), a subsidiary of Weichai, entered into an international distribution and sales agreement which enables Baudouin to bring PSI’s power systems line of products into the European, Middle Eastern, and African markets. In addition to sales, Baudouin will manage service, support, warranty claims, and technical requests. The Baudouin related party amounts are reflected above for the current and prior year reporting periods. Stockholders’ Equity

Common and Treasury Stock

The changes in shares of Common and Treasury Stock are as follows:


(in thousands)	Common Shares Issued	Treasury Stock Shares	Common Shares Outstanding
Balance at December 31, 2022	23,117	166	22,951
Net shares issued for Stock awards	—	(2)	2



Balance as of June 30, 2023	23,117	164	22,953

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147481112/505-10-50-14

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481062/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147480237/815-40-50-6

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
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-URI https://asc.fasb.org//1943274/2147480008/505-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
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-URI https://asc.fasb.org//505/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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-Subparagraph (i)
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-URI https://asc.fasb.org//1943274/2147481112/505-10-50-13

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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Reference 16: http://www.xbrl.org/2003/role/disclosureRef
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Reference 17: http://www.xbrl.org/2003/role/disclosureRef
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Reference 18: http://www.xbrl.org/2003/role/disclosureRef
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Reference 19: http://www.xbrl.org/2003/role/disclosureRef
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

+ Details

Leases - Schedule of Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Operating Leases
Right-of-use assets, net	$ 25,005	$ 13,282
Operating lease liabilities, current	2,753	2,894
Operating lease liability, long-term	23,316	10,971
Total operating lease liabilities	26,069	13,865
Finance Leases
Finance lease ROU assets, net	184	225
Finance lease liability, current	85	90
Finance lease liability, long-term	136	170
Total finance lease liabilities	$ 221	$ 260
Finance ROU assets, net, statement of financial position, extensible list	Property, plant and equipment, net	Property, plant and equipment, net

Debt (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of Debt

The Company’s outstanding debt consisted of the following:


(in thousands)	As of June 30, 2023			As of December 31, 2022
	Amount		Rate (1)	Amount		Rate (1)	Maturity Date
Short-term financing:
Revolving credit facility *	$	110,000	8.44%	$	130,000	7.04%	March 22, 2024
Amended Shareholder’s Loan Agreement (second)	25,000		9.90%	25,000		9.10%	May 20, 2024
Amended Shareholder's Loan Agreement (third)	50,000		9.60%	50,000		9.01%	November 30, 2023
Amended Shareholder's Loan Agreement (fourth)	4,820		9.30%	—			March 31, 2024
Other short-term financing	—			614			Various
Total short-term debt	$	189,820		$	205,614

Long-term debt:
Amended Shareholder's Loan Agreement (fourth)	$	—		$	4,800	9.00%	March 31, 2024


Finance leases and other debt	515		**	619		**	Various

Total long-term debt and finance leases	515			5,419
Less: Current maturities of long-term debt and finance leases	219			220
Long-term debt	$	296		$	5,199


*			Unamortized financing costs and deferred fees on the revolving credit facility are not presented in the above table as they are classified in Prepaid expenses and other current assets on the Consolidated Balance Sheet. Unamortized debt issuance costs, were $0.7 million and $0.4 million as of June 30, 2023 and December 31, 2022, respectively.
**			Finance lease obligations are a non-cash financing activity. See Note 7. Leases.
(1)			Includes the weighted average interest rate.

Subsequent Events (Details) - Subsequent Event	Aug. 14, 2023 day
Subsequent Event [Line Items]
Initial term of lease	88 months
Number of renewal options	1
Length of renewal option	5 years

Summary of Significant Accounting Policies and Other Information

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Significant Accounting Policies and Other Information

Nature of Business Operations

Power Solutions International, Inc. (“Power Solutions,” “PSI” or the “Company”), a Delaware corporation, is a global producer and distributor of a broad range of high-performance, certified, low-emission power systems, including alternative-fueled power systems for original equipment manufacturers (“OEMs”) of off-highway industrial equipment and certain on-road vehicles and large custom-engineered integrated electrical power generation systems.

The Company’s customers include large, industry-leading and multinational organizations. The Company’s products and services are sold predominantly to customers throughout North America as well as to customers located throughout the Pacific Rim and Europe. The Company’s power systems are highly engineered, comprehensive systems which, through the Company’s technologically sophisticated development and manufacturing processes, including its in-house design, prototyping, testing and engineering capabilities and its analysis and determination of the specific components to be integrated into a given power system (driven in large part by emission standards and cost considerations), allow the Company to provide its customers with power systems customized to meet specific OEM application requirements, other technical customers’ specifications and requirements imposed by environmental regulatory bodies.

The Company’s power system configurations range from a basic engine integrated with appropriate fuel system components to completely packaged power systems that include any combination of cooling systems, electronic systems, air intake systems, fuel systems, housings, power takeoff systems, exhaust systems, hydraulic systems, enclosures, brackets, hoses, tubes and other assembled componentry. The Company also designs and manufactures large, custom-engineered integrated electrical power generation systems for both standby and prime power applications. The Company purchases engines from third-party suppliers and produces internally designed engines, all of which are then integrated into its power systems.

Of the other components that the Company integrates into its power systems, a substantial portion consist of internally designed components and components for which it coordinates significant design efforts with third-party suppliers, with the remainder consisting largely of parts that are sourced off-the-shelf from third-party suppliers. Some of the key components (including purchased engines) embody proprietary intellectual property of the Company’s suppliers. As a result of its design and manufacturing capabilities, the Company is able to provide its customers with a power system that can be incorporated into a customer’s specified application. In addition to the certified products described above, the Company sells diesel, gasoline and non-certified power systems and aftermarket components.

Stock Ownership and Control

Weichai America Corp., a wholly-owned subsidiary of Weichai Power Co., Ltd. (HK2338, SZ000338) (herein together referred to as “Weichai”) owns a majority of the outstanding shares of the Company’s Common Stock. As a result, Weichai is able to exercise control over matters requiring stockholders’ approval, including the election of directors, amendment of the Company’s Certificate of Incorporation (the “Charter”) and approval of significant corporate transactions. This control could have the effect of delaying or preventing a change of control of the Company or changes in management and will make the approval of certain transactions impractical without the support of Weichai.

Weichai also entered into an Investor Rights Agreement (the “Rights Agreement”) with the Company upon execution of the Share Purchase Agreement (the “SPA”) by and between the Company and Weichai. The Rights Agreement provides Weichai with representation on the Company’s Board of Directors (the “Board”) and management representation rights. Weichai currently has four representatives on the Board, which constitutes the majority of the directors serving on the Board. According to the Rights Agreement, during any period when the Company is a “controlled company” within the meaning of the NASDAQ Stock Market (“NASDAQ”) Listing Rules, it will take such measures as to avail itself of the “controlled company” exemptions available under Rule 5615 of the NASDAQ Listing Rules of Rules 5605(b), (d) and (e).

Going Concern Considerations

Uncertainties exist about the Company’s ability to refinance, extend, or repay its outstanding indebtedness and maintain compliance with the covenants and other requirements under the Company’s debt arrangements, however the Company’s cash flows have continued to increase during the first half of 2023. As of June 30, 2023 and December 31, 2022, the Company’s total outstanding debt obligations under the Third Amended and Restated Uncommitted Revolving Credit Agreement (the “Credit Agreement”), its second Amended Shareholder's Loan Agreement, its third Amended Shareholder's Loan Agreement, its fourth Amended Shareholder's Loan Agreement and for finance leases and other debt were $190.3 million and $211.0 million in the aggregate, respectively, and its cash and cash equivalents were $27.8 million and $24.3 million, respectively. See Note 6. Debt, for further information regarding the terms and conditions of the Company’s debt agreements.

Without additional financing, the Company anticipates that it will not have sufficient cash and cash equivalents to repay amounts owing under its existing debt arrangements as they become due. In order to provide the Company with a more permanent source of liquidity, management plans to seek an extension and amendment and/or replacement of its existing debt agreements or seek additional liquidity from its current or other lenders before the maturity dates in the second half of 2023 and 2024. There can be no assurance that the Company’s management will be able to successfully complete an extension and amendment of its existing debt agreements or obtain new financing on acceptable terms, when required or if at all. These consolidated financial statements do not include any adjustments that might result from the outcome of the Company’s efforts to address these issues.

Furthermore, if the Company cannot raise capital on acceptable terms, it may not, among other things, be able to do the following:

•continue to expand the Company’s research and product investments and sales and marketing organization;

•continue to fund and expand operations both organically and through acquisitions; and

•respond to competitive pressures or unanticipated working capital requirements.

Macroeconomic volatility and uncertainties further increase the potential for continued supply chain disruptions, economic uncertainty, and unfavorable oil and gas market dynamics which may continue to have a material adverse impact on the results of operations, financial position and liquidity of the Company.

Lastly, national inflationary pressures have continued to cause interest rates to increase. As a result, the Company’s interest expense has increased and is subject to further increases. Accordingly, the above challenges may continue to have a material adverse impact on the Company’s future results of operations, financial position, and liquidity.

The Company’s management has concluded that, due to uncertainties surrounding the Company’s future ability to refinance, extend and amend, or repay its outstanding indebtedness under its existing debt arrangements, maintain compliance with the covenants and other requirements under the Credit Agreement and other outstanding debt in the future, substantial doubt exists as to its ability to continue as a going concern within one year after the date that these financial statements are issued. The Company’s plans to alleviate the substantial doubt about its ability to continue as a going concern may not be successful, and it may be forced to limit its business activities or be unable to continue as a going concern, which would have a material adverse effect on its results of operations and financial condition.

The consolidated financial statements included herein have been prepared assuming that the Company will continue as a going concern and contemplating the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company’s ability to continue as a going concern is dependent on generating profitable operating results, having sufficient liquidity, maintaining compliance with the covenants and other requirements under the Credit Agreement and other outstanding debt, in the future, and extending and amending, refinancing or repaying the indebtedness outstanding under the Company’s existing debt arrangements.

Basis of Presentation and Consolidation

The Company is filing this Form 10-Q for the quarterly period ended June 30, 2023, which contains unaudited condensed consolidated financial statements as of June 30, 2023 and for the three and six months ended June 30, 2023 and 2022.

The condensed consolidated financial statements include the accounts of Power Solutions International, Inc. and its wholly-owned subsidiaries and majority-owned subsidiaries in which the Company exercises control. The foregoing financial information was prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and rules and regulations of the SEC for interim financial reporting. All intercompany balances and transactions have been eliminated in consolidation.

Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X and include all of the information and disclosures required by U.S GAAP for interim financial reporting. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements of the Company and related footnotes for the year ended December 31, 2022, included in the 2022 Annual Report filed with the SEC on April 14, 2023 (the “2022 Annual Report”). The Company’s significant accounting policies are described in the aforementioned 2022 Annual Report. The accompanying interim financial information is unaudited; however, the Company believes the financial information reflects all adjustments (consisting of items of a normal recurring nature) necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. GAAP. Operating results for interim periods are not necessarily indicative of annual operating results.

Segments

The Company operates as one business and geographic operating segment. Operating segments are defined as components of a business that can earn revenue and incur expenses for which discrete financial information is available that is evaluated on a regular basis by the chief operating decision maker (“CODM”). The Company’s CODM is its principal executive officer, who decides how to allocate resources and assess performance. A single management team reports to the CODM, who manages the entire business. The Company’s CODM reviews consolidated statements of operations to make decisions, allocate resources and assess performance, and the CODM does not evaluate the profit or loss from any separate geography or product line.

Concentrations

The following table presents customers individually accounting for more than 10% of the Company’s net sales:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Customer A	14	%	18	%	15	%	17	%
Customer B	10	%	**		11	%	**

The following table presents customers individually accounting for more than 10% of the Company’s accounts receivable:


	As of June 30, 2023		As of December 31, 2022
Customer A	23	%	30	%
Customer B	14	%	**

The following table presents suppliers individually accounting for more than 10% of the Company’s purchases:


	For the Three Months Ended June 30,			For the Six Months Ended June 30,
	2023	2022		2023		2022


Supplier C	**	14	%	10	%	**

**Less than 10% of the total

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions include the valuation of allowances for uncollectible receivables, inventory reserves, warranty reserves, stock-based compensation, evaluation of goodwill, other intangibles, property, plant and equipment for impairment, and determination of useful lives of long-lived assets. Actual results could materially differ from those estimates.

Research and Development

Research and development (“R&D”) expenses are expensed when incurred. R&D expenses consist primarily of wages, materials, testing and consulting related to the development of new engines, parts and applications. These costs were $4.7 million and $4.5 million for three months ended June 30, 2023 and 2022, respectively. These costs were $9.3 million and $9.1 million for the six months ended June 30, 2023 and 2022, respectively. From time to time, the Company enters into agreements with its customers to fund a portion of the research, development and engineering costs of a particular project. These reimbursements are accounted for as a reduction of the related research, development and engineering expenses.

Restricted Cash

Restricted cash consists of funds that are contractually restricted as to usage or withdrawal due to required minimum levels of cash collateral for letters of credits and contractual agreements with customers. As of June 30, 2023 and December 31, 2022, the Company had restricted cash of $3.8 million and $3.6 million, respectively, which includes $1.3 million restricted cash held in escrow which could be required to be refunded to a customer if conditions occur as defined in such certain agreement with such customer. The Company has not recognized revenue associated with the restricted cash. The deferred revenue is included within Noncurrent Contract Liabilities on the Consolidated Balance Sheet.

Inventories

The Company’s inventories consist primarily of engines and parts. Engines are valued at the lower of cost plus estimated freight-in or net realizable value. Parts are valued at the lower of cost or net realizable value. Net realizable value approximates replacement cost. Cost is principally determined using the first-in, first-out method and includes material, labor and manufacturing overhead. It is the Company’s policy to review inventories on a continuing basis for obsolete, excess and slow-

moving items and to record valuation adjustments for such items in order to eliminate non-recoverable costs from inventory. Valuation adjustments are recorded in an inventory reserve account and reduce the cost basis of the inventory in the period in which the reduced valuation is determined. Inventory reserves are established based on quantities on hand, usage and sales history, customer orders, projected demand and utilization within a current or future power system. Specific analysis of individual items or groups of items is performed based on these same criteria, as well as on changes in market conditions or any other identified conditions.

Inventories consisted of the following:


(in thousands) Inventories	As of June 30, 2023		As of December 31, 2022
Raw materials	$	92,363	$	101,566
Work in process	1,516		3,073
Finished goods	25,038		19,825
Total inventories	118,917		124,464
Inventory allowance	(5,702)		(3,904)
Inventories, net	$	113,215	$	120,560

Activity in the Company’s inventory allowance was as follows:


(in thousands)	For the Six Months Ended June 30,
Inventory Allowance	2023		2022
Balance at beginning of period	$	3,904	$	3,370
Charged to expense	2,179		163
Write-offs	(381)		(592)
Balance at end of period	$	5,702	$	2,941

Other Accrued Liabilities

Other accrued liabilities consisted of the following:


(in thousands) Other Accrued Liabilities	As of June 30, 2023		As of December 31, 2022
Accrued product warranty	$	12,100	$	13,037
Litigation reserves *	2,202		2,102
Contract liabilities	2,399		2,256
Accrued compensation and benefits	6,186		7,299


Accrued interest expense	6,692		5,257

Other	3,790		4,158
Total	$	33,369	$	34,109

*As of June 30, 2023 and December 31, 2022 litigation reserves related to various ongoing legal matters including associated legal fees.

Warranty Costs

The Company offers a standard limited warranty on the workmanship of its products that in most cases covers defects for a defined period. Warranties for certified emission products are mandated by the U.S. Environmental Protection Agency (the “EPA”) and/or the California Air Resources Board (the “CARB”) and are longer than the Company’s standard warranty on certain emission-related products. The Company’s products also carry limited warranties from suppliers. The Company’s warranties generally apply to engines fully manufactured by the Company and to the modifications the Company makes to supplier base products. Costs related to supplier warranty claims are generally borne by the supplier and passed through to the end customer.

Warranty estimates are based on historical experience and represent the projected cost associated with the product. A liability and related expense are recognized at the time products are sold. The Company adjusts estimates when it is determined that actual costs may differ from initial or previous estimates. The Company’s warranty liability is generally affected by failure rates, repair costs and the timing of failures. Future events and circumstances related to these factors could materially change the estimates and require adjustments to the warranty liability. In addition, new product launches require a greater use of judgment in developing estimates until historical experience becomes available.

The Company has approximately $1.2 million accrued for a specific warranty-related matter as of June 30, 2023. During the first quarter, the Company concluded it is reasonably possible that future warranty claims for this matter may exceed current estimates that are based upon historical claims experience. The impact could be material to the financial statements.

Accrued product warranty activities are presented below:


(in thousands)	For the Six Months Ended June 30,
Accrued Product Warranty	2023		2022
Balance at beginning of period	$	21,550	$	32,947
Current period provision *	3,491		4,170

Changes in estimates for preexisting warranties **	5,662		115
Payments made during the period	(8,477)		(11,442)

Balance at end of period	22,226		25,790
Less: current portion	12,100		15,682
Noncurrent accrued product warranty (included with Other Noncurrent liabilities)	$	10,126	$	10,108

*Warranty costs for claims received, net of supplier recoveries, and other adjustments, were a cost of $8.5 million and a cost of $1.9 million for the six months ended June 30, 2023 and 2022, respectively. Supplier recoveries were $0.7 million and $2.1 million for the six months ended June 30, 2023 and 2022, respectively.

**Changes in estimates for preexisting warranties reflect changes in the Company’s estimate of warranty costs for products sold in prior periods. Such adjustments typically occur when claims experience deviates from historical and expected trends. During the six months ended June 30, 2023, the Company recorded a cost for changes in estimates of preexisting warranties of $5.7 million, or $0.25 per diluted share. During the six months ended June 30, 2022, the Company recorded a cost of $0.1 million, or $0.01 per diluted share, which includes a favorable experience for preexisting warranties attributable to a contract revision executed during the quarter ended March 31, 2022.

Recently Issued Accounting Pronouncements – Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The standard replaces the incurred loss impairment methodology under current U.S. GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. The standard requires a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The new standard is effective for non-public companies, and public business entities that meet the definition of a smaller reporting company as defined by the SEC, for interim and annual periods beginning after December 15, 2022. The Company adopted this guidance effective January 1, 2023. The adoption of the standard did not have a material impact on the Company’s consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Treasury Stock Shares
Beginning balance at Dec. 31, 2021	$ (42,023)	$ 23	$ 157,436	$ (198,366)	$ (1,116)
Increase (Decrease) in Stockholders' Equity
Net income (loss)	(1,241)			(1,241)
Stock-based compensation expense	253		253
Common stock issued for stock-based awards, net	(2)				(2)
Ending balance at Jun. 30, 2022	(43,013)	23	157,689	(199,607)	(1,118)
Beginning balance at Mar. 31, 2022	(44,419)	23	157,639	(200,965)	(1,116)
Increase (Decrease) in Stockholders' Equity
Net income (loss)	1,358			1,358
Stock-based compensation expense	50		50
Common stock issued for stock-based awards, net	(2)				(2)
Ending balance at Jun. 30, 2022	(43,013)	23	157,689	(199,607)	(1,118)
Beginning balance at Dec. 31, 2022	(30,372)	23	157,673	(187,096)	(972)
Increase (Decrease) in Stockholders' Equity
Net income (loss)	10,141			10,141
Stock-based compensation expense	106		158		(52)
Ending balance at Jun. 30, 2023	(20,125)	23	157,831	(176,955)	(1,024)
Beginning balance at Mar. 31, 2023	(26,579)	23	157,742	(183,372)	(972)
Increase (Decrease) in Stockholders' Equity
Net income (loss)	6,417			6,417
Stock-based compensation expense	37		89		(52)
Ending balance at Jun. 30, 2023	$ (20,125)	$ 23	$ 157,831	$ (176,955)	$ (1,024)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

- Definition

Amount of equity (deficit) attributable to parent. Excludes temporary equity and equity attributable to noncontrolling interest.

+ References

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+ Details

Leases - Narrative (Details)	Jun. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Weighted-average remaining lease term, operating leases	6 years 7 months 6 days	5 years 9 months 18 days
Weighted-average remaining lease term, financing leases	2 years 7 months 6 days	3 years
Weighted-average discount rate for operating leases	7.50%	7.10%
Weighted-average discount rate for financing leases	6.50%	6.60%

Stockholders' Equity

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Stockholders' Equity

Weichai Transactions

Weichai Shareholder’s Loan Agreements

Weichai Collaboration Arrangement and Related Party Transactions

Common and Treasury Stock

The changes in shares of Common and Treasury Stock are as follows:


(in thousands)	Common Shares Issued	Treasury Stock Shares	Common Shares Outstanding
Balance at December 31, 2022	23,117	166	22,951
Net shares issued for Stock awards	—	(2)	2



Balance as of June 30, 2023	23,117	164	22,953

- Definition

The entire disclosure for equity.

+ References

+ Details

Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Revolving credit facility
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Debt issuance costs	$ 0.7	$ 0.4

Stockholders' Equity (Details) shares in Thousands	6 Months Ended
Stockholders' Equity (Details) shares in Thousands	Jun. 30, 2023 shares
Common Shares Issued
Beginning balance (in shares)	23,117
Ending balance (in shares)	23,117
Treasury Stock Shares
Balance at beginning of period (in shares)	166
Balance at end of period (in shares)	164
Common Shares Outstanding
Balance at beginning of period (in shares)	22,951
Balance at end of period (in shares)	22,953
Common Stock
Common Shares Issued
Beginning balance (in shares)	23,117
Ending balance (in shares)	23,117
Treasury Stock Shares
Net shares issued for Stock Awards (in shares)	(2)
Common Shares Outstanding
Balance at beginning of period (in shares)	22,951
Net shares issued for Stock Awards (in shares)	2
Balance at end of period (in shares)	22,953
Treasury Stock Shares
Treasury Stock Shares
Balance at beginning of period (in shares)	166
Net shares issued for Stock Awards (in shares)	(2)
Balance at end of period (in shares)	164
Common Shares Outstanding
Net shares issued for Stock Awards (in shares)	2

Revenue - Schedule of Contract Balances (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Short-term contract assets (included in Prepaid expenses and other current assets)	$ 11,342	$ 3,620
Short-term contract liabilities (included in Other accrued liabilities)	(2,399)	(2,256)
Long-term contract liabilities (included in Noncurrent contract liabilities)	(2,836)	(3,199)
Net contract liabilities	$ 6,107	$ (1,835)

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Goodwill and Other Intangibles

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangibles

Goodwill

The carrying amount of goodwill at both June 30, 2023 and December 31, 2022 was $29.8 million.

Other Intangible Assets

Components of intangible assets are as follows:


(in thousands)	As of June 30, 2023
	Gross Carrying Value		Accumulated Amortization		Net Book Value

Customer relationships	$	34,940	$	(30,361)	$	4,579
Developed technology	700		(700)		—
Trade names and trademarks	1,700		(1,492)		208
Total	$	37,340	$	(32,553)	$	4,787


(in thousands)	As of December 31, 2022
	Gross Carrying Value		Accumulated Amortization		Net Book Value

Customer relationships	$	34,940	$	(29,527)	$	5,413
Developed technology	700		(700)		—
Trade names and trademarks	1,700		(1,453)		247
Total	$	37,340	$	(31,680)	$	5,660

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Net sales (from related parties $1,000 and $75 for the three months ended June 30, 2023 and June 30, 2022, respectively, $2,100 and $513 for the six months ended June 30, 2023 and June 30, 2022, respectively)	$ 121,865	$ 120,479	$ 238,334	$ 219,426
Cost of sales (from related parties $600 and $69 for the three months ended June 30, 2023 and June 30, 2022, respectively, and $1,500 and $410 for the six months ended June 30, 2023 and June 30, 2022, respectively)	94,911	102,158	187,911	184,388
Gross profit	26,954	18,321	50,423	35,038
Operating expenses:
Research, development and engineering expenses	4,662	4,554	9,266	9,113
Selling, general and administrative expenses	10,550	9,995	20,455	21,380
Amortization of intangible assets	437	531	873	1,072
Total operating expenses	15,649	15,080	30,594	31,565
Operating income	11,305	3,241	19,829	3,473
Interest expense	4,645	2,670	9,310	5,115
Income (Loss) before income taxes	6,660	571	10,519	(1,642)
Income tax expense (benefit)	243	(787)	378	(401)
Net income (loss)	$ 6,417	$ 1,358	$ 10,141	$ (1,241)
Weighted-average common shares outstanding:
Basic (in shares)	22,952	22,927	22,952	22,927
Diluted (in shares)	22,966	22,940	22,967	22,927
Earnings (Loss) per common share:
Basic (in dollars per share)	$ 0.28	$ 0.06	$ 0.44	$ (0.05)
Diluted (in dollars per share)	$ 0.28	$ 0.06	$ 0.44	$ (0.05)

Revenue - Narrative (Details) - USD ($) $ in Millions	6 Months Ended
Revenue - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2023	Jun. 30, 2022
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue recognized	$ 0.9	$ 0.4
Revenue, remaining performance obligation, amount	3.8
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 0.6
Revenue, remaining performance obligation, period	6 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 1.0
Revenue, remaining performance obligation, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 0.5
Revenue, remaining performance obligation, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 0.8
Revenue, remaining performance obligation, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 0.8
Revenue, remaining performance obligation, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2028-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, amount	$ 0.1
Revenue, remaining performance obligation, period

Summary of Significant Accounting Policies and Other Information (Policies)	6 Months Ended
	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Consolidation	The condensed consolidated financial statements include the accounts of Power Solutions International, Inc. and its wholly-owned subsidiaries and majority-owned subsidiaries in which the Company exercises control. The foregoing financial information was prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and rules and regulations of the SEC for interim financial reporting. All intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation	Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X and include all of the information and disclosures required by U.S GAAP for interim financial reporting. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements of the Company and related footnotes for the year ended December 31, 2022, included in the 2022 Annual Report filed with the SEC on April 14, 2023 (the “2022 Annual Report”). The Company’s significant accounting policies are described in the aforementioned 2022 Annual Report. The accompanying interim financial information is unaudited; however, the Company believes the financial information reflects all adjustments (consisting of items of a normal recurring nature) necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. GAAP. Operating results for interim periods are not necessarily indicative of annual operating results.
Segments	The Company operates as one business and geographic operating segment. Operating segments are defined as components of a business that can earn revenue and incur expenses for which discrete financial information is available that is evaluated on a regular basis by the chief operating decision maker (“CODM”). The Company’s CODM is its principal executive officer, who decides how to allocate resources and assess performance. A single management team reports to the CODM, who manages the entire business. The Company’s CODM reviews consolidated statements of operations to make decisions, allocate resources and assess performance, and the CODM does not evaluate the profit or loss from any separate geography or product line.
Use of Estimates	The preparation of consolidated financial statements in conformity with U.S. GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions include the valuation of allowances for uncollectible receivables, inventory reserves, warranty reserves, stock-based compensation, evaluation of goodwill, other intangibles, property, plant and equipment for impairment, and determination of useful lives of long-lived assets. Actual results could materially differ from those estimates.
Research and Development	Research and development (“R&D”) expenses are expensed when incurred. R&D expenses consist primarily of wages, materials, testing and consulting related to the development of new engines, parts and applications.From time to time, the Company enters into agreements with its customers to fund a portion of the research, development and engineering costs of a particular project. These reimbursements are accounted for as a reduction of the related research, development and engineering expenses.
Restricted Cash	Restricted cash consists of funds that are contractually restricted as to usage or withdrawal due to required minimum levels of cash collateral for letters of credits and contractual agreements with customers.
Inventories	Inventories The Company’s inventories consist primarily of engines and parts. Engines are valued at the lower of cost plus estimated freight-in or net realizable value. Parts are valued at the lower of cost or net realizable value. Net realizable value approximates replacement cost. Cost is principally determined using the first-in, first-out method and includes material, labor and manufacturing overhead. It is the Company’s policy to review inventories on a continuing basis for obsolete, excess and slow- moving items and to record valuation adjustments for such items in order to eliminate non-recoverable costs from inventory. Valuation adjustments are recorded in an inventory reserve account and reduce the cost basis of the inventory in the period in which the reduced valuation is determined. Inventory reserves are established based on quantities on hand, usage and sales history, customer orders, projected demand and utilization within a current or future power system. Specific analysis of individual items or groups of items is performed based on these same criteria, as well as on changes in market conditions or any other identified conditions.
Warranty Costs	Warranty Costs The Company offers a standard limited warranty on the workmanship of its products that in most cases covers defects for a defined period. Warranties for certified emission products are mandated by the U.S. Environmental Protection Agency (the “EPA”) and/or the California Air Resources Board (the “CARB”) and are longer than the Company’s standard warranty on certain emission-related products. The Company’s products also carry limited warranties from suppliers. The Company’s warranties generally apply to engines fully manufactured by the Company and to the modifications the Company makes to supplier base products. Costs related to supplier warranty claims are generally borne by the supplier and passed through to the end customer. Warranty estimates are based on historical experience and represent the projected cost associated with the product. A liability and related expense are recognized at the time products are sold. The Company adjusts estimates when it is determined that actual costs may differ from initial or previous estimates. The Company’s warranty liability is generally affected by failure rates, repair costs and the timing of failures. Future events and circumstances related to these factors could materially change the estimates and require adjustments to the warranty liability. In addition, new product launches require a greater use of judgment in developing estimates until historical experience becomes available. The Company has approximately $1.2 million accrued for a specific warranty-related matter as of June 30, 2023. During the first quarter, the Company concluded it is reasonably possible that future warranty claims for this matter may exceed current estimates that are based upon historical claims experience. The impact could be material to the financial statements.
Recently Issued Accounting Pronouncements - Adopted	Recently Issued Accounting Pronouncements – Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). The standard replaces the incurred loss impairment methodology under current U.S. GAAP with a methodology that reflects expected credit losses and requires the use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. The standard requires a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The new standard is effective for non-public companies, and public business entities that meet the definition of a smaller reporting company as defined by the SEC, for interim and annual periods beginning after December 15, 2022. The Company adopted this guidance effective January 1, 2023. The adoption of the standard did not have a material impact on the Company’s consolidated financial statements.
Fair Value of Financial Instruments	Current Assets Cash and cash equivalents are measured at carrying value, which approximates fair value because of the short-term maturities of these instruments. Debt The Company measured its revolving credit facility and other short-term financing at original carrying value. Unamortized financing costs and deferred fees of $0.7 million and $0.4 million as of June 30, 2023 and December 31, 2022, respectively, on the revolving credit facility are classified in Prepaid expenses and other current assets on the Consolidated Balance Sheet. The fair value of the revolving credit facility and other short-term financing approximated carrying value, as it consisted primarily of short-term variable rate loans.

Debt - Narrative (Details)			3 Months Ended	6 Months Ended
Debt - Narrative (Details)	May 12, 2023 USD ($)	Mar. 24, 2023 USD ($) agreement	Jun. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)	Jun. 30, 2022 USD ($)
Debt Instrument [Line Items]
Number of amended agreements \| agreement		2
Number of agreements \| agreement		4
Short-term financing			$ 189,820,000	$ 189,820,000	$ 205,614,000
Debt, long-term and short-term, combined amount			190,300,000	190,300,000	211,000,000
Cash and cash equivalents			27,782,000	27,782,000	24,296,000	$ 3,448,000
Accrued unpaid interest			6,700,000	6,700,000	5,300,000
Revolving credit facility
Debt Instrument [Line Items]
Debt issuance costs			700,000	700,000	400,000
First Shareholder's Loan Agreement, Weichai \| Revolving credit facility
Debt Instrument [Line Items]
Short-term financing			0	0
Third Amended And Restated Credit Agreement \| Revolving credit facility
Debt Instrument [Line Items]
Short-term financing			110,000,000	$ 110,000,000	$ 130,000,000
Third Amended And Restated Credit Agreement \| Revolving credit facility \| SOFR
Debt Instrument [Line Items]
Basis spread on variable rate		3.35%
Fourth Shareholder's Loan Agreement, Weichai \| Revolving credit facility
Debt Instrument [Line Items]
Short-term financing		$ 30,000,000.0
Second, Third, And Fourth Shareholder's Loan Agreement, Weichai
Debt Instrument [Line Items]
Debt instrument, incremental borrowing cost				1.00%
Second Shareholder's Loan Agreement, Weichai \| SOFR
Debt Instrument [Line Items]
Basis spread on variable rate	4.05%
Revolving credit facility \| First Shareholder's Loan Agreement, Weichai
Debt Instrument [Line Items]
Maximum borrowing capacity		130,000,000	110,000,000.0	$ 110,000,000.0
Paydown related to credit agreement			20,000,000.0
Revolving credit facility \| Second Standard Chartered Bank Credit Agreement
Debt Instrument [Line Items]
Debt issuance costs		$ 1,000,000.0
Revolving credit facility \| Fourth Shareholder's Loan Agreement, Weichai
Debt Instrument [Line Items]
Maximum borrowing capacity			30,000,000	$ 30,000,000
Revolving credit facility \| Fourth Shareholder's Loan Agreement, Weichai \| SOFR
Debt Instrument [Line Items]
Basis spread on variable rate				4.05%
Revolving credit facility \| Second Shareholder's Loan Agreement, Weichai
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 25,000,000		50,000,000	$ 50,000,000
Revolving credit facility \| Second Shareholder's Loan Agreement, Weichai \| SOFR
Debt Instrument [Line Items]
Basis spread on variable rate				4.65%
Revolving credit facility \| Third Shareholder's Loan Agreement, Weichai
Debt Instrument [Line Items]
Maximum borrowing capacity			$ 50,000,000	$ 50,000,000
Revolving credit facility \| Third Shareholder's Loan Agreement, Weichai \| SOFR
Debt Instrument [Line Items]
Basis spread on variable rate				4.65%