Power Solutions International, Inc 10-Q for FY2022 Q2

Power Solutions International, Inc. (PSIX)

10-Q 2022-08-11 For: 2022-06-30

Added on April 06, 2026

About this 10-Q

Power Solutions International, Inc filed this 10-Q on August 11, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $120.48M; up 8.1% from $111.48M a year earlier
Net income: $1.36M; compared with a net loss of $15.57M a year earlier
Diluted EPS: $0.06; compared with -$0.68 a year earlier

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Delaware		33-0963637
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)
201 Mittel Drive, Wood Dale, IL		60191
(Address of Principal Executive Offices)		(Zip Code)
(630) 350-9400
(Registrant’s Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
None	—	—
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001 per share


		Page
PART I – FINANCIAL INFORMATION
	Forward-Looking Statements	3
Item 1.	Financial Statements	4
	Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021	4
	Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021 (Unaudited)	5
	Consolidated Statements of Stockholders’ (Deficit) Equity for the three and six months ended June 30, 2022 and 2021 (Unaudited)	6
	Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
	Signatures	41


(in thousands, except par values)	As of June 30, 2022 (unaudited)		As of December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	3,448	$	6,255
Restricted cash	3,450		3,477
Accounts receivable, net of allowances of $3,103 and $3,420 as of June 30, 2022 and December 31, 2021, respectively	86,804		65,110
Income tax receivable	3,098		4,276
Inventories, net	131,129		142,192
Prepaid expenses and other current assets	13,859		8,918

Total current assets	241,788		230,228
Property, plant and equipment, net	15,028		17,344
Intangible assets, net	6,712		7,784
Goodwill	29,835		29,835

Other noncurrent assets	13,686		15,347
TOTAL ASSETS	$	307,049	$	300,538

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	75,875	$	93,256
Current maturities of long-term debt	200		254
Revolving line of credit	130,000		130,000
Other short-term financing	79,820		25,000
Other accrued liabilities	38,963		34,801
Total current liabilities	324,858		283,311

Deferred income taxes	791		1,016
Long-term debt, net of current maturities	536		25,636
Noncurrent contract liabilities	3,654		3,330
Other noncurrent liabilities	20,223		29,268
TOTAL LIABILITIES	$	350,062	$	342,561





STOCKHOLDERS’ DEFICIT
Preferred stock – $0.001 par value. Shares authorized: 5,000. No shares issued and outstanding at all dates.	$	—	$	—
Common stock – $0.001 par value; 50,000 shares authorized; 23,117 shares issued; 22,928 and 22,926 shares outstanding at June 30, 2022 and December 31, 2021, respectively	23		23
Additional paid-in capital	157,689		157,436
Accumulated deficit	(199,607)		(198,366)
Treasury stock, at cost, 189 and 191 shares at June 30, 2022 and December 31, 2021, respectively	(1,118)		(1,116)
TOTAL STOCKHOLDERS’ DEFICIT	(43,013)		(42,023)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	307,049	$	300,538


(in thousands, except per share amounts)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Net sales	$	120,479	$	111,478	$	219,426	$	211,649
Cost of sales	102,158		98,284		184,388		191,385
Gross profit	18,321		13,194		35,038		20,264
Operating expenses:
Research, development and engineering expenses	4,554		6,111		9,113		12,335
Selling, general and administrative expenses	9,995		21,089		21,380		36,900

Amortization of intangible assets	531		633		1,072		1,267
Total operating expenses	15,080		27,833		31,565		50,502
Operating income (loss)	3,241		(14,639)		3,473		(30,238)
Other expense, net:
Interest expense	2,670		1,469		5,115		3,630



Other expense, net	—		1		—		1
Total other expense, net	2,670		1,470		5,115		3,631
Income (Loss) before income taxes	571		(16,109)		(1,642)		(33,869)
Income tax benefit	(787)		(538)		(401)		(148)
Net income (loss)	$	1,358	$	(15,571)	$	(1,241)	$	(33,721)



Weighted-average common shares outstanding:
Basic	22,927		22,893		22,927		22,893
Diluted	22,940		22,893		22,927		22,893
Earnings (Loss) per common share:
Basic	$	0.06	$	(0.68)	$	(0.05)	$	(1.47)
Diluted	$	0.06	$	(0.68)	$	(0.05)	$	(1.47)


(in thousands)	For the Three Months Ended
	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Treasury Stock		Total Stockholders’ Deficit
Balance at March 31, 2022	$	23	$	157,639	$	(200,965)	$	(1,116)	$	(44,419)
Net income	—		—		1,358		—		1,358







Stock-based compensation expense	—		50		—		—		50
Common stock issued for stock-based awards, net	—		—		—		(2)		(2)







Balance at June 30, 2022	$	23	$	157,689	$	(199,607)	$	(1,118)	$	(43,013)


Balance at March 31, 2021	23		157,371		(168,044)		(1,295)		(11,945)
Net loss	—		—		(15,571)		—		(15,571)







Stock-based compensation expense	—		23		—		100		123
Common stock issued for stock-based awards, net	—		—		—		(3)		(3)






Balance at June 30, 2021	$	23	$	157,394	$	(183,615)	$	(1,198)	$	(27,396)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


(in thousands)	For the Six Months Ended
	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Treasury Stock		Total Stockholders’ Deficit
Balance at December 31, 2021	$	23	$	157,436	$	(198,366)	$	(1,116)	$	(42,023)
Net loss	—		—		(1,241)		—		(1,241)







Stock-based compensation expense	—		253		—		—		253
Common stock issued for stock-based awards, net	—		—		—		(2)		(2)







Balance at June 30, 2022	$	23	$	157,689	$	(199,607)	$	(1,118)	$	(43,013)

Balance at December 31, 2020	$	23	$	157,262	$	(149,894)	$	(1,294)	$	6,097
Net loss	—		—		(33,721)		—		(33,721)
Stock-based compensation expense	—		132				100		232






Common stock issued for stock-based awards, net	—		—		—		(4)		(4)








Balance at June 30, 2021	$	23	$	157,394	$	(183,615)	$	(1,198)	$	(27,396)


(in thousands)	As of June 30,
	2022		2021
Reconciliation of cash, cash equivalents, and restricted cash to the Consolidated Balance Sheets
Cash and cash equivalents	$	3,448	$	5,503
Restricted cash	3,450		2,949
Total cash, cash equivalents, and restricted cash	$	6,898	$	8,452


	As of June 30, 2022		As of December 31, 2021
Customer A	23	%	24	%
Customer B	11	%	**


(in thousands) Inventories	As of June 30, 2022		As of December 31, 2021
Raw materials	$	107,913	$	120,130
Work in process	5,437		8,923
Finished goods	20,720		16,509
Total inventories	134,070		145,562
Inventory allowance	(2,941)		(3,370)
Inventories, net	$	131,129	$	142,192


(in thousands) Other Accrued Liabilities	As of June 30, 2022		As of December 31, 2021
Accrued product warranty	$	15,682	$	15,830
Litigation reserves *	1,698		894
Contract liabilities	1,586		1,819
Accrued compensation and benefits	4,734		4,397
Operating lease liabilities	4,122		3,978

Accrued interest expense	2,278		625

Other	8,863		7,258
Total	$	38,963	$	34,801


(in thousands)	As of June 30, 2022
	Gross Carrying Value		Accumulated Amortization		Net Book Value

Customer relationships	$	34,940	$	(28,520)	$	6,420
Developed technology	700		(700)		—
Trade names and trademarks	1,700		(1,408)		292
Total	$	37,340	$	(30,628)	$	6,712


(in thousands)	June 30, 2022		December 31, 2021

Operating lease ROU assets, net 1	$	11,776	$	13,545

Operating lease liabilities, current 2	4,122		3,978
Operating lease liabilities, non-current 3	8,211		10,304
Total operating lease liabilities	$	12,333	$	14,282

Finance lease ROU assets, net 1	$	277	$	364

Finance lease liabilities, current 2	99		147
Finance lease liabilities, non-current 3	215		260
Total finance lease liabilities	$	314	$	407


(in thousands)	Operating Leases		Finance Leases
Six months ending December 31, 2022	$	2,434	$	64
Year ending December 31, 2023	3,347		103
Year ending December 31, 2024	1,815		84
Year ending December 31, 2025	1,851		81
Year ending December 31, 2026	1,515		17
Thereafter	4,023		—
Total undiscounted lease payments	14,985		349
Less: imputed interest	2,652		35
Total lease liabilities	$	12,333	$	314


(in thousands)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
Geographic Area	2022		2021		2022		2021
United States	$	85,955	$	99,958	$	160,365	$	189,552
North America (outside of United States)	4,309		1,911		7,720		4,232
Pacific Rim	22,675		5,420		36,516		10,948
Europe	3,637		1,958		6,759		3,568
Other	3,903		2,231		8,066		3,349
Total	$	120,479	$	111,478	$	219,426	$	211,649


	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2022				2021				2022				2021
Geographic Area			% of Total				% of Total				% of Total				% of Total
United States	$	85,955	71	%	$	99,958	90	%	$	160,365	73	%	$	189,552	90	%
North America (outside of United States)	$	4,309	3	%	$	1,911	2	%	$	7,720	3	%	$	4,232	2	%
Pacific Rim	22,675		19	%	5,420		4	%	36,516		17	%	10,948		5	%
Europe	3,637		4	%	1,958		2	%	6,759		3	%	3,568		2	%
Others	3,903		3	%	2,231		2	%	8,066		4	%	3,349		2	%
Total	$	120,479	100	%	$	111,478	100	%	$	219,426	100	%	$	211,649	100	%


(in thousands)	As of June 30, 2022
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3
Revolving credit facility	$	130,000	$	—	$	130,000	$	—
Other financing	79,820		—		79,820		—


(in thousands)	Common Shares Issued	Treasury Stock Shares	Common Shares Outstanding
Balance at December 31, 2021	23,117	191	22,926
Net shares issued for Stock awards	—	(2)	2



Balance as of June 30, 2022	23,117	189	22,928


(in thousands, except per share basis)	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Numerator:
Net income (loss)	$	1,358	$	(15,571)	$	(1,241)	$	(33,721)





Denominator:
Shares used in computing net income (loss) per share:
Weighted-average common shares outstanding – basic	22,927		22,893		22,927		22,893
Effect of dilutive securities	13		—		—		—
Weighted-average common shares outstanding – diluted	22,940		22,893		22,927		22,893

Earnings (Loss) per common share:
Earnings (Loss) per share of common stock - basic	$	0.06	$	(0.68)	$	(0.05)	$	(1.47)
Earnings (Loss) per share of common stock - diluted	$	0.06	$	(0.68)	$	(0.05)	$	(1.47)


Non-GAAP Financial Measure			Comparable GAAP Financial Measure
Adjusted net income (loss)			Net income (loss)
Adjusted earnings (loss) per share			Earnings (loss) per common share – diluted
EBITDA			Net income (loss)
Adjusted EBITDA			Net income (loss)