FORT LEE, NJ — (Marketwire) — 08/15/11 — Pioneer Power Solutions, Inc. (OTCBB: PPSI) (“Pioneer” or the “Company”), a manufacturer of specialty electrical equipment for the utility, industrial, commercial and wind energy markets, announced its results for the quarter and six months ended June 30, 2011.
Revenue of $16.4 million, up 33% from $12.3 million in Q2 2010
Gross margin was 21.6% of revenue, compared to 24.2% for the same period in the prior year
Adjusted EBITDA of $1.1 million, compared to $1.6 million in Q2 2010
Non-GAAP diluted EPS of $0.10, compared to $0.17 in the comparable prior year period
Revenue of $32.1 million, up 56% from $20.6 million during the first two quarters of 2010
Gross margin was 24.5% of revenue, compared to 23.3% for the same period in the prior year
Adjusted EBITDA of $3.0 million, compared to $2.3 million in the first two quarters of 2010
Non-GAAP diluted EPS of $0.27, compared to $0.24 in the comparable prior year period
Nathan Mazurek, Pioneer–s Chairman and Chief Executive Officer, said, “Pioneer has achieved significant growth across our transformer businesses so far during 2011. Pioneer Transformers and Jefferson Electric each delivered over 20% organic growth this quarter, or 23% overall compared to the first six months of last year.”
Mr. Mazurek continued, “Our results can vary widely on a quarter-to-quarter basis and while our second quarter results came in below our internal profit expectations, we are still very pleased with our progress through the first half of this year. Our Adjusted EBITDA and non-GAAP net earnings per share, which exclude certain non-cash and non-recurring items, grew 31.1% and 12.5%, respectively, in the first two quarters through June 2011 versus the same period last year. In the month of July 2011, our order backlog increased by $5 million, or approximately 30%, which excludes our acquisition of Bemag Transformer on July 1, 2011. These factors should contribute favorably to our quarterly comparisons for the remainder of the year.”
Revenue
For the three months ended June 30, 2011, revenues increased 32.9% to $16.4 million, up from $12.3 million during the three months ended June 30, 2010. For the six months ended June 30, 2011, revenues increased $11.5 million, or 56.0%, to $32.1 million as compared to $20.6 million during the six months ended June 30, 2010. These increases in our revenue were due primarily to the inclusion of four additional months of Jefferson Electric revenue during 2011, combined with core, year-over-year growth exceeding 20% in each of our transformer businesses. Pioneer Wind Energy Systems Inc., which was established in June 2010, made no contribution to our total revenue during either six month period.
Gross Margins
For the three and six month periods ended June 30, 2011, our gross margin percentage was 21.6% and 24.5% of revenues, respectively, as compared to 24.2% and 23.3% during the three and six month periods ended June 30, 2010. The 1.2% gross margin increase during the six months ended June 30, 2011, as compared to the six months ended June 30, 2010, was driven by a more favorable product mix of highly-engineered units produced by our Pioneer Transformers Ltd. business, most of which occurred during the first quarter of 2011. Our Jefferson Electric, Inc. subsidiary experienced a stable gross margin for the first six months of 2011, as compared to the same period of 2010, a result which reflects improvement in Jefferson–s gross margin on a sequential quarter basis during 2011.
Net Earnings and Earnings Per Diluted Share
Including non-recurring charges and income, net earnings for three and six month periods ended June 30, 2011 were $226,000 and $1,189,000, respectively, down from $1,373,000 and $1,763,000 reported in the comparable prior year periods. Earnings per basic and diluted share were $0.04 and $0.20 for the three and six month periods ended June 30, 2011, respectively, as compared to $0.23 and $0.30 per basic and diluted share during the same periods of 2010.
Our GAAP net earnings during the first half of 2011 were negatively impacted by $441,000 of costs primarily associated with a public offering of common stock which was postponed due to market conditions. During the first half of 2010, our net earnings benefitted from a $1,052,000 non-cash gain which was partially offset by $350,000 of transaction expenses related to two acquisitions we completed during the second quarter of 2010. On a non-GAAP basis, reversing these and other non-cash items, we reported net earnings of $569,000 and $1,599,000 during the three and six month periods ended June 30, 2011, respectively, as compared to $1,025,000 and $1,430,000 reported in the comparable prior year periods. Non-GAAP earnings per basic and diluted share were $0.10 and $0.27 for the three and six month periods ended June 30, 2011, respectively, as compared to $0.17 and $0.24 per basic and diluted share during the same periods of 2010. Please refer to the financial tables included below for a reconciliation of GAAP to non-GAAP results.
Pioneer Power Solutions, Inc. is a manufacturer of specialty electrical equipment through its four operating subsidiaries which include: Pioneer Transformers Ltd., Jefferson Electric, Inc., Bemag Transformer Inc. and Pioneer Wind Energy Systems Inc. Pioneer provides a range of highly-engineered solutions for applications in the utility, industrial, commercial and wind energy market segments of the electrical transmission and distribution industry. Pioneer is headquartered in Fort Lee, New Jersey and presently operates from six locations in the U.S., Canada and Mexico for manufacturing, centralized distribution, engineering, sales and administration. To learn more about Pioneer, please visit our website at .
For more information regarding Pioneer–s financial performance during the quarter ended June 30, 2011, please refer to the Form 10-Q filed with the Securities and Exchange Commission on August 15, 2011.
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 expand its business through strategic acquisitions, (ii) the Company–s ability to integrate acquisitions and related businesses, (iii) the fact that many of the Company–s competitors are better established and have significantly greater resources, and may subsidize their competitive offerings with other products and services, which may make it difficult for the Company to attract and retain customers, (iv) the Company–s dependence on Hydro-Quebec Utility Company and Siemens Industry, Inc. for a large portion of its business, and the fact that any change in the level of orders from Hydro-Quebec Utility Company or Siemens Industry, Inc. could have a significant impact on the Company–s results of operations, (v) the potential loss or departure of key personnel, including Nathan J. Mazurek, the Company–s Chairman, President and Chief Executive Officer, (vi) the fact that fluctuations between the U.S. dollar and the Canadian dollar will impact the Company–s revenues, (vii) the Company–s ability to generate internal growth, (viii) market acceptance of existing and new products, (ix) operating margin risk due to competitive pricing and operating efficiencies, supply chain risk, material, labor or overhead cost increases, interest rate risk and commodity risk, (x) restrictive loan covenants or the Company–s ability to repay or refinance debt under its credit facilities that could limit the Company–s future financing options and liquidity position and may limit the Company–s ability to grow its business, (xi) the Company–s ability to develop and grow its wind energy business, (xii) general economic and market conditions in the electrical equipment, power generation, commercial construction, industrial production, oil and gas, marine and infrastructure industries, (xiii) the impact of geopolitical activity on the economy, changes in government regulations such as income taxes, climate control initiatives, the timing or strength of an economic recovery in the Company–s markets and the Company–s ability to access capital markets, (xiv) the fact that unanticipated increases in raw material prices or disruptions in supply could increase production costs and adversely affect the Company–s profitability, (xv) the fact that the Company–s Chairman controls a majority of the Company–s combined voting power, and may have, or may develop in the future, interests that may diverge from yours and (xvi) the fact that future sales of large blocks of the Company–s common stock may adversely impact the Company–s stock price. 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 Form 10-K filed with the SEC on March 31, 2011. Investors and security holders are urged to read these documents free of charge on the SEC–s web site at . The Company assumed no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.
Note: Pioneer has presented non-GAAP measures such as non-GAAP net earnings and Adjusted EBITDA because many of our investors use these non-GAAP measures to monitor the Company–s performance. These non-GAAP measures should not be considered as an alternative to GAAP measures as an indicator of the Company–s operating performance.
Non-GAAP net earnings is defined by the Company as net earnings before amortization of acquisition-related intangibles, stock-based compensation, non-recurring acquisition costs and reorganization expense, impairments, other unusual gains or charges and any tax effects related to these items. The Company defines adjusted EBITDA as net earnings before interest, income tax expense, depreciation and amortization, non-cash compensation and non-recurring acquisition costs and reorganization expenses and other non-recurring or non-cash items.
Generally, a non-GAAP financial measure is a numerical measure of a company–s performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP measures included in this release, however, should be considered in addition to, and not as a substitute for or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of non-GAAP to GAAP net income is set forth in the table above.
Amounts may not foot due to rounding.
Contact:
Howard Gostfrand
American Capital Ventures
305.918.7000