8-K
PIONEER POWER SOLUTIONS, INC. (PPSI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 15, 2022
PIONEER POWER SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-35212 | 27-1347616 |
|---|---|---|
| (State of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
| 400 Kelby Street, 12th Floor<br><br><br><br>Fort Lee , New Jersey | 07024 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
(212) 867-0700
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered |
|---|---|---|
| Common Stock, par value $0.001 per share | PPSI | NASDAQ Stock Market LLC (Nasdaq Capital Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On August 15, 2022, Pioneer Power Solutions, Inc. issued a press release announcing its financial results for the second fiscal quarter ended June 30, 2022 and provided a corporate update. A copy of this press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, that is furnished pursuant to this Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated August 15, 2022* |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL) |
* This exhibit is furnished pursuant to Item 2.02 and shall not be deemed to be “filed.”
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PIONEER POWER SOLUTIONS, inc. | ||
|---|---|---|
| Date: August 15, 2022 | By: | /s/ Walter Michalec |
| Name: | Walter Michalec | |
| Title: | Chief Financial Officer |
Pioneer Power Solutions, Inc. 8-K
Exhibit 99.1
Pioneer Reports Second Quarter 2022 Financial Results
Backlog Increases 98% Year-over-Yearand 5% Sequentially to $25 Million,
Company Reiterates Expectationof 50% Year-over-Year Full Year Revenue Growth for 2022
FORT LEE, N.J., August 15, 2022 /PRNewswire/ -- Pioneer Power Solutions, Inc. (Nasdaq: PPSI) (“Pioneer”, “Pioneer Power” or the “Company”), a leader in the design, manufacture, service and integration of electrical power systems, distributed energy resources, power generation equipment and mobile electric vehicle (“EV”) charging solutions, today provided a business update and announced financial results for the second quarter and six months ended June 30, 2022.
Business Highlights for the Second Quarter of 2022:
| ● | Pioneer continued to expand interest in the e-Bloc solution,<br>increasing the number of potential customers evaluating proposals. Approximately $15.0 million of the backlog reflects e-Bloc orders,<br>bolstering confidence in achieving full-year revenue goals. |
|---|---|
| ● | Pioneer won an initial $1.0 million order to provide its<br>e-Bloc solutions as part of the first phase of an initiative to repower a Hyperscale Data Center in San Jose, California for a major global<br>cloud internet company. This represents Pioneer’s first e-Bloc order for the data center market. |
| --- | --- |
| ● | The Company shipped two e-Boost skid-mounted solutions<br>to the nation’s largest school bus manufacturer related to its electric bus offerings, resulting in the recognition of $129,000<br>of e-Boost revenue during the second quarter. |
| --- | --- |
| ● | Pioneer’s total backlog increased to $25.2 million<br>at June 30, 2022, compared to $24.0 million at March 31, 2022 and $12.7 million at June 30, 2021. The Company’s total backlog at<br>June 30, 2022 was the highest backlog since the Company sold its transformer business units nearly three years ago. |
| --- | --- |
Financial Highlights for the Second Quarter of 2022:
| ● | Revenue decreased 24% to $4.3 million for the three months<br>ended June 30, 2022, as compared to $5.6 million for the three months ended June 30, 2021. Revenue was adversely impacted by delays from<br>one large customer, which was unable to receive completed e-Bloc systems on the original timeframe due to site readiness issues. These<br>issues have been resolved and the customer expects to receive the majority of the promised products during the second half of 2022. |
|---|---|
| ● | Gross profit decreased 84% to $81,000 for the three months<br>ended June 30, 2022, or 1.9% gross margin, as compared to $495,000, or 8.8% gross margin, for the three months ended June 30, 2021. Margins<br>were impacted by the delayed shipments, resulting in lower revenue from the T&D Solutions segment, as well as increase in company-wide<br>overhead costs. |
| --- | --- |
| ● | Total operating loss during the second quarter of 2022<br>was $2.5 million, compared to $745,000 in the second quarter of last year, reflecting investments in the Company’s e-Bloc and e-Boost<br>initiatives. The Company recognized $658,000 of non-cash, stock-based compensation expense |
| --- | --- |
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during the second quarter of 2022, as compared to $38,000 during the second quarter last year, which significantly contributed to the increase in the Company’s operating loss. In addition, the Company invested approximately $607,000 in product development and sales and marketing fees during the second quarter to advance its e-Boost and e-Bloc solutions.
Nathan Mazurek, Pioneer’s Chairman and Chief Executive Officer, said, “Timing of customer deliveries was the driving factor in our revenue decline, as approximately $3 million in orders were delayed as a direct result of delays in the customer’s receiving schedule for completed units. We fully expect the majority of these units to ship during the second half of the year and, indeed, fully expect that a portion of these orders will ship in the third quarter. Accordingly, we are reiterating our expectation that we will grow our 2022 revenue by at least 50% over our 2021 revenue and deliver continued margin expansion, enabling us to generate positive operating cash flow for 2022.”
“Separately, our pipeline for e-Boost sales continues to grow dramatically, with a number of electric truck and bus manufacturers evaluating proposals for their own dealerships, as well as direct customers,” added Mr. Mazurek. “This portion of the market represents the most significant near-term potential, but additional markets are being actively pursued such as electric aviation and marine craft automotive dealerships, as well as military applications. Both e-Boost and e-Bloc will contribute to our growth in 2022, a significant achievement considering we only introduced e-Boost in November of last year. We have increased our investments in sales, marketing, manufacturing capacity and product development to support these two new platforms, but despite the increased investments, we are maintaining a relatively low cash utilization, and we believe we have sufficient resources to fund our near-term growth initiatives without considering any dilutive financings.”
Second Quarter 2022 Financial Results
Revenue
Total revenue for the three months ended June 30, 2022 was $4.3 million, a decrease of 24% compared to $5.6 million during the second quarter of last year. The decrease in revenue was primarily due to delayed e-Bloc shipments from one large customer, which was unable to receive completed power systems on the original timeframe due to site readiness issues.
Gross Profit/Margin
Total gross profit for the second quarter of 2022 was $81,000, or 1.9% of revenues, compared to $495,000, or 8.8% of revenues, for the same period in 2021. The decrease in gross profit was primarily due to the decrease in revenue from the T&D Solutions segment related to the delay in e-Bloc shipments, as well as an increase in company-wide overhead costs.
Operating Loss
For the three months ended June 30, 2022, operating loss was $2.5 million as compared to $745,000 during same period in 2021, reflecting the lower gross profit from the Company’s T&D Solutions segment because of the decrease in revenue, recognizing $658,000 of non-cash, stock-based compensation expense during the second quarter and the Company’s ongoing investments in product development and marketing related to our e-Bloc and e-Boost initiatives.
Net Loss
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The Company’s net loss was $2.5 million, or $(0.26) per basic and diluted share, for the three months ended June 30, 2022, compared to a net loss of $686,000, or $(0.08) per basic and diluted share, during the three months ended June 30, 2021. Net loss for the quarter included $658,000 of non-cash, stock-based compensation expense related to a restricted stock unit award and stock options, which were granted during the second quarter.
Year-to-Date 2022 Financial Results
Total revenue for the six months ended June 30, 2022 was $10.3 million, an increase of 13% compared to $9.1 million during the first six months last year. Revenue from the T&D Solutions segment increased 383,000, or 8%, and revenue from the Critical Power segment increased $815,000, or 20%, during the first six months of the 2022 as compared to the same period last year. The increase in the Company’s Critical Power revenue is primarily due to the Company’s e-Boost initiative, which was launched during the fourth quarter of 2021, and recognizing shipments of e-Boost products during the first six months of 2022.
Gross profit for the first six months of 2022 was $956,000, or 9.3% of revenues, compared to gross profit of $654,000, or 7.2% of revenues, for the same period in 2021.
Loss from operations for the first six months of 2022 was $3.4 million as compared to $1.9 million during same period in 2021. The increase in the Company’s loss from operations is primarily due to ongoing investments in product development and marketing costs related to the Company’s e-Bloc and e-Boost initiatives and higher non-cash, stock-based compensation expense.
The Company’s net loss for the first six months of 2022 was $3.3 million, or $(0.34) per basic and diluted share, compared to a net loss of $335,000, or $(0.04) per basic and diluted share, during the same period of 2021. Net loss for the six months ended June 30, 2021 included a gain of $1.4 million for the extinguishment and forgiveness of the PPP Loan.
Balance Sheet
As of June 30, 2022, the company had $9.8 million in cash, compared to $11.7 million in cash and restricted cash as of December 31, 2021. Additionally, the Company expects to receive approximately $6.2 million in cash by December 31, 2022 from the maturity of its notes receivable related to the sale of the transformer business units.
Earnings Conference Call:
Management will host a conference call later today, August 15, 2022 at 5 p.m. Eastern Time to discuss the Company’s 2022 second quarter financial results with the investment community.
Anyone interested in participating should call 1-800-289-0720 if calling within the United States or
1-323-701-0160 if calling internationally. When asked, please reference confirmation code 9383194.
The call will also be accompanied live by webcast over the Internet and accessible at https://viavid.webcasts.com/starthere.jsp?ei=1562210&tp_key=532cb770c2.
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A replay will be available until August 22, 2022 which can be accessed by dialing 1-844-512-2921 if calling within the United States or 1-412-317-6671 if calling internationally. Please use passcode 9383194 to access the replay.
About Pioneer Power Solutions, Inc.
Pioneer Power Solutions, Inc. is a leader in the design, manufacture, integration, refurbishment, service and distribution of electric power systems, distributed energy resources, power generation equipment and mobile EV charging solutions for applications in the utility, industrial and commercial markets. To learn more about Pioneer, please visit its website at www.pioneerpowersolutions.com.
Safe Harbor Statement:
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be preceded by the words “intends,” “may,” “will,” “plans,” “expects,” “anticipates,” “projects,” “predicts,” “estimates,” “aims,” “believes,” “hopes,” “potential” or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company’s control, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) the Company’s ability to successfully increase its revenue and profit in the future, (ii) general economic conditions and their effect on demand for electrical equipment, (iii) the effects of fluctuations in the Company’s operating results, (iv) the fact that many of the Company’s competitors are better established and have significantly greater resources than the Company, (v) the Company’s dependence on two customers for a large portion of its business, (vi) the potential loss or departure of key personnel, (vii) unanticipated increases in raw material prices or disruptions in supply, (viii) the Company’s ability to realize revenue reported in the Company’s backlog, (ix) future labor disputes, (x) changes in government regulations, (xi) the liquidity and trading volume of the Company’s common stock and (xii) an outbreak of disease, epidemic or pandemic, such as the global coronavirus pandemic, or fear of such an event.
More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual and Quarterly Reports on Form 10-K and Form 10-Q, respectively. Investors and security holders are urged to read these documents free of charge on the SEC’s web site at www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.
Contact:
Brett Maas, Managing Partner
Hayden IR
(646) 536-7331
brett@haydenir.com
Tables Follow
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PIONEER POWER SOLUTIONS, INC.
Consolidated Balance Sheets
(In thousands, except share amounts)
| December 31, | |||||
|---|---|---|---|---|---|
| 2021 | |||||
| ASSETS | |||||
| Current assets | |||||
| Cash | 9,785 | $ | 9,924 | ||
| Restricted cash | — | 1,775 | |||
| Notes receivable and accrued interest | 5,993 | 5,778 | |||
| Accounts receivable, net | 5,211 | 2,429 | |||
| Inventories | 9,017 | 4,160 | |||
| Prepaid expenses and other current assets | 1,074 | 1,069 | |||
| Total current assets | 31,080 | 25,135 | |||
| Property and equipment, net | 619 | 516 | |||
| Right-of-use assets | 2,337 | 2,237 | |||
| Other assets | 80 | 39 | |||
| Total assets | 34,116 | $ | 27,927 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
| Current liabilities | |||||
| Accounts payable and accrued liabilities | 6,407 | $ | 4,159 | ||
| Deferred revenue | 9,289 | 2,423 | |||
| Total current liabilities | 15,696 | 6,582 | |||
| Other long-term liabilities | 1,440 | 1,793 | |||
| Total liabilities | 17,136 | 8,375 | |||
| Commitments | |||||
| Stockholders’ equity | |||||
| Preferred stock, 0.001 par value, 5,000,000 shares authorized; none issued | — | — | |||
| Common stock, 0.001 par value, 30,000,000 shares authorized; 9,644,545 and 9,640,545 shares issued and outstanding on June 30, 2022 and December 31, 2021, respectively | 10 | 10 | |||
| Additional paid-in capital | 32,573 | 31,840 | |||
| Accumulated other comprehensive income | 14 | 14 | |||
| Accumulated deficit | (15,617 | ) | (12,312 | ) | |
| Total stockholders’ equity | 16,980 | 19,552 | |||
| Total liabilities and stockholders’ equity | 34,116 | $ | 27,927 |
All values are in US Dollars.
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PIONEER POWER SOLUTIONS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Revenues | $ | 4,289 | $ | 5,625 | $ | 10,325 | $ | 9,127 | ||||
| Cost of goods sold | 4,208 | 5,130 | 9,369 | 8,473 | ||||||||
| Gross profit | 81 | 495 | 956 | 654 | ||||||||
| Operating expenses | ||||||||||||
| Selling, general and administrative | 2,585 | 1,240 | 4,331 | 2,506 | ||||||||
| Total operating expenses | 2,585 | 1,240 | 4,331 | 2,506 | ||||||||
| Loss from operations | (2,504 | ) | (745 | ) | (3,375 | ) | (1,852 | ) | ||||
| Interest income | (104 | ) | (95 | ) | (206 | ) | (189 | ) | ||||
| Other expense (income), net | 117 | 36 | 129 | (1,307 | ) | |||||||
| Loss before taxes | (2,517 | ) | (686 | ) | (3,298 | ) | (356 | ) | ||||
| Income tax expense (benefit) | — | — | 7 | (21 | ) | |||||||
| Net loss | $ | (2,517 | ) | $ | (686 | ) | $ | (3,305 | ) | $ | (335 | ) |
| Loss per share: | ||||||||||||
| Basic | $ | (0.26 | ) | $ | (0.08 | ) | $ | (0.34 | ) | $ | (0.04 | ) |
| Diluted | $ | (0.26 | ) | $ | (0.08 | ) | $ | (0.34 | ) | $ | (0.04 | ) |
| Weighted average common shares outstanding: | ||||||||||||
| Basic | 9,728 | 8,726 | 9,685 | 8,726 | ||||||||
| Diluted | 9,728 | 8,726 | 9,685 | 8,726 |
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PIONEER POWER SOLUTIONS, INC.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Six Months Ended | ||||||
|---|---|---|---|---|---|---|
| June 30, | ||||||
| 2022 | 2021 | |||||
| Operating activities | ||||||
| Net loss | $ | (3,305 | ) | $ | (335 | ) |
| Depreciation | 73 | 74 | ||||
| Amortization of right-of-use finance leases | 124 | 156 | ||||
| Amortization of imputed interest | (214 | ) | (214 | ) | ||
| Interest expense from PPP Loan | — | 4 | ||||
| Gain on forgiveness of PPP Loan | — | (1,417 | ) | |||
| Amortization of right-of-use operating leases | 328 | 262 | ||||
| Change in receivable reserves | (141 | ) | 43 | |||
| Proceeds from insurance receivable | — | 95 | ||||
| Stock-based compensation | 716 | 71 | ||||
| Changes in current operating assets and liabilities: | ||||||
| Accounts receivable | (2,642 | ) | (1,423 | ) | ||
| Inventories | (4,857 | ) | (910 | ) | ||
| Prepaid expenses and other assets | (67 | ) | 118 | |||
| Income taxes | 27 | 403 | ||||
| Accounts payable and accrued liabilities | 1,796 | 1,053 | ||||
| Deferred revenue | 6,866 | 1,839 | ||||
| Principal repayments of operating leases | (325 | ) | (252 | ) | ||
| Net cash used in operating activities | (1,621 | ) | (433 | ) | ||
| Investing activities | ||||||
| Additions to property and equipment | (174 | ) | (62 | ) | ||
| Net cash used in investing activities | (174 | ) | (62 | ) | ||
| Financing activities | ||||||
| Net proceeds from the exercise of options for common stock | 17 | — | ||||
| Principal repayments of financing leases | (136 | ) | (163 | ) | ||
| Net cash used in financing activities | (119 | ) | (163 | ) | ||
| Decrease in cash and restricted cash | (1,914 | ) | (658 | ) | ||
| Cash, and restricted cash, beginning of year | 11,699 | 7,567 | ||||
| Cash, and restricted cash, end of period | $ | 9,785 | $ | 6,909 | ||
| Non-cash investing and financing activities: | ||||||
| Acquisition of right-of-use assets and lease liabilities | 551 | — | ||||
| Declared dividend unpaid | — | 1,047 |
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