First Quarter Net sales of $61.8 million
Working Capital Improvement Contributes to Operating Cash Flow of $10.0 million
Net Debt Reduction of $9.7 million
WOOD DALE, Ill., May 09, 2016 (GLOBE NEWSWIRE) -- Power Solutions International, Inc. (Nasdaq:PSIX), a leader in the design,
engineer and manufacture of emissions-certified alternative-fuel and conventional power systems, today announced its financial
results for the first quarter ended March 31, 2016.
“Our first quarter revenues were in line with our expectations and reflected the continued softness in the oil and gas end
market,” commented Gary Winemaster, Chief Executive Officer. “We expect improvements throughout 2016, particularly in the
second half where we anticipate an increased ramp up of on-road volume and a greater contribution from power generation.”
Winemaster continued, “We’ve made meaningful progress with our balance sheet and gained financial flexibility with an amendment
to our debt. Since the fourth quarter of 2015, we’ve lowered our operating expenses, while at the same time increasing
R&D to support the success of our on-road initiatives. We remain enthusiastic in our ability to achieve growth in this
valuable end market in 2016 and well into the future. Further, we reiterate our prior revenue guidance which includes
profitability for the full year.”
First Quarter 2016 Results
Net sales for the first quarter of 2016 were $61,814,000 compared to $86,139,000 in the first quarter of 2015. The sales
decline in the current quarter compared to the first quarter of 2015 was primarily driven by a reduction of approximately $25.6
million from the oil and gas end market partially offset by increased sales in the quarter of approximately $5.4 million in the
Company’s on-road end market.
Operating loss of $8,681,000 in the current quarter compares to operating income of $4,070,000 in the first quarter of 2015 and
operating loss of $738,000 in the fourth quarter of 2015. In 2015, operating expenses included transaction costs of
approximately $200,000 ($120,000 after tax or $0.01 per diluted common share) and $393,000 ($236,000 after tax or $0.02 per diluted
common share) for the first and fourth quarters, respectively. Operating expense in the first quarter of 2016 did not include
any such transaction costs.
Other expense for the first quarter of 2016 includes non-cash income of $1,256,000 resulting from a decrease in the estimated
fair value of the liability associated with the warrants issued in the Company's April 2011 private placement. Other expense
for the first quarter of 2015 included non-cash expense of $3,614,000 resulting from an increase in the estimated fair value of the
warrant liability.
Net loss, which includes the warrant revaluation adjustment, was $5,251,000, or $0.49 per diluted common share for the first
quarter of 2016. This compares to a net loss of $1,456,000 or $0.13 per diluted common share for the first quarter of 2015,
which included a warrant revaluation adjustment and transaction costs.
Net loss, adjusted to remove the warrant revaluation impact, was $6,507,000, or $0.60 per diluted common share for the first
quarter of 2016. This compares to adjusted net income for the first quarter of 2015 of $2,278,000, or $0.20 per diluted
common share, which was adjusted to remove the warrant revaluation impact and transaction costs.
|
Summary of Diluted EPS Attributable to Common
Stockholders
“Adjusted” removes the Q1 2016 and Q1 2015 impact of warrant
revaluation and the Q1 2015 impact of transaction costs |
|
Q1 2016 |
Q1 2015 |
Diluted EPS |
$ |
(0.49 |
) |
$ |
(0.13 |
) |
Adjusted diluted EPS |
$ |
(0.60 |
) |
$ |
0.20 |
|
Diluted shares |
|
10,818,678 |
|
|
10,797,056 |
|
Adjusted diluted shares |
|
10,818,678 |
|
|
11,132,773 |
|
|
|
|
|
|
|
|
2016 Outlook
The Company reiterates the revenue guidance previously provided. The Company anticipates 2016 full year net sales to be in
the range of $350 million to $375 million and expects to be profitable.
The Company cautions that its 2016 outlook reflects its current assessment of a number of factors, including, but not limited
to, the timing of new product ramps, oil and gas pricing and the impact of global economic conditions on demand growth in its
current markets. Please see the "Cautionary Note Regarding Forward-Looking Statements" below for additional risk factors.
Earnings Results Conference Call
The Company will discuss financial results and its outlook on a conference call scheduled for today, May 9, 2016, at 4:30 p.m.
ET/3:30 p.m. CT. The call will be hosted by Gary Winemaster, Chief Executive Officer, Eric Cohen, Chief Operating Officer,
and Michael Lewis, Chief Financial Officer.
Investors in the U.S. interested in participating in the call should dial +1 (888) 211-4430 and reference
passcode 3496178. Those calling from outside the U.S. should dial +1 (913) 312-0846 and reference the same passcode 3496178.
A telephone replay will be available approximately two hours after the call concludes through May 23, 2016 by dialing +1 (877)
870-5176 from the U.S. or +1 (858) 384-5517 from international locations, with passcode 3496178.
A simultaneous live webcast will be available on the Investor Relations section of the Company's website at www.psiengines.com. A presentation will accompany the live webcast. For those
listening on the webcast, the slides will download automatically. For those dialing in, the presentation can be downloaded
from the Investor Relations section of our website. The webcast will be archived on the website for one year.
About Power Solutions International, Inc.
Power Solutions International, Inc. (PSI or the Company) is a leader in the design, engineer and manufacture of
emissions-certified, alternative-fuel power systems. PSI provides integrated turnkey solutions to leading global original equipment
manufacturers in the industrial and on-road markets. The Company's unique in-house design, prototyping, engineering and testing
capacities allow PSI to customize clean, high-performance engines that run on a wide variety of fuels, including natural gas,
propane, biogas, gasoline and diesel.
PSI develops and delivers complete industrial power systems that are used worldwide in stationary and mobile power generation
applications supporting standby, prime, and Co-generation power (CHP) applications; mobile industrial applications that include
forklifts, aerial lifts, industrial sweepers, aircraft ground support, arbor, agricultural and construction equipment. In addition,
PSI develops and delivers power systems purpose built for the Class 3 through Class 7 medium duty trucks and buses for the North
American and Asian markets.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements, regarding the current expectations of the Company about its prospects
and opportunities, including expectations for sales as set forth under “2016 Outlook” and expectations for profitability for the
2016 full year. These forward-looking statements are covered by the "Safe Harbor for Forward-Looking Statements"
provided by the Private Securities Litigation Reform Act of 1995. The Company has tried to identify these forward looking
statements by using words such as "expect," "contemplate," "anticipate," "estimate," "plan," "will," "would," "should," "forecast,"
"believe," "outlook, " "guidance," "projection," "target" or similar expressions, but these words are not the exclusive means for
identifying such statements. The Company cautions that a number of risks, uncertainties and other factors could cause the Company's
actual results to differ materially from those expressed in, or implied by, the forward-looking statements, including, without
limitation, the continued development and expansion of the market for alternative-fuel power systems; technological and other risks
relating to the Company's development of its 8.8 and 4.3 liter engines, introduction of other new products and entry into on-road
markets (including the risk that these initiatives may not be successful); the timing of new products; the Company's ability to
integrate recent acquisitions into the business of the Company successfully and the amount of time and expense spent and incurred
in connection with the integration; the risk that the economic benefits, cost savings and other synergies that the Company
originally anticipated as a result of recent acquisitions are not fully realized or take longer to realize than expected; the
significant strain on the Company's senior management team, support teams, manufacturing lines, information technology platforms
and other resources resulting from rapid expansion of the Company's operations (including as a result of recent acquisitions);
volatility in oil and gas prices; changes in environmental and regulatory policies; significant competition; global economic
conditions (including their impact on demand growth); and the Company's dependence on key suppliers. For a detailed discussion of
factors that could affect the Company's future operating results, please see the Company's filings with the Securities and Exchange
Commission, including the disclosures under "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in those
filings. Except as expressly required by the federal securities laws, the Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other
reason.
Non-GAAP Financial Measures and Reconciliations
As used herein, “GAAP” refers to generally accepted accounting principles in the United States. The Company uses certain
numerical measures in this press release which are or may be considered “Non-GAAP financial measures” under Regulation G. The
Company has provided below for your reference supplemental financial disclosure for these measures, including the most directly
comparable GAAP measures and associated reconciliations.
|
Reconciliation of Net Loss to Adjusted Net (Loss) Income
(Dollar amounts in thousands) |
|
Three
months
ended
March 31,
2016 |
Three
months
ended
March 31,
2015 |
Net
loss |
$ |
(5,251 |
) |
$ |
(1,456 |
) |
Non-cash (income)
expense from warrant revaluation |
|
(1,256 |
) |
|
3,614 |
|
Transaction
costs, net of tax |
|
- |
|
|
120 |
|
Adjusted net
(loss) income |
$ |
(6,507 |
) |
$ |
2,278 |
|
Reconciliation of Diluted EPS to Adjusted Diluted EPS |
|
Three
months
ended
March 31,
2016 |
Three
months
ended
March 31,
2015 |
Earnings per
diluted common share |
$ |
(0.49 |
) |
$ |
(0.13 |
) |
Non-cash (income)
expense from warrant revaluation |
|
(0.11 |
) |
|
0.32 |
|
Transaction
costs, net of tax |
|
- |
|
|
0.01 |
|
Adjusted (loss)
earnings per diluted common share |
$ |
(0.60 |
) |
$ |
0.20 |
|
|
|
|
|
|
|
|
The Company believes supplementing its consolidated financial statements presented in accordance with GAAP with non-GAAP
measures provides investors with useful information regarding the Company's short-term and long-term trends. Adjusted net (loss)
income is derived from GAAP results by excluding the non-cash impact related to the change in the estimated fair value of the
liability associated with the warrants issued in the Company's April 2011 private placement. The Company excludes this
non-operating, non-cash impact, as the Company believes it is not indicative of its core operating results or future performance.
The warrant revaluation results from facts and circumstances that fluctuate in impact and is excluded by management in its forecast
and evaluation of the Company's operational performance. Adjusted (loss) earnings per diluted common share is also derived
from GAAP results by excluding the non-cash impact, even when antidilutive, related to the change in the estimated fair value of
the liability associated with the warrants. Adjusted net (loss) income and adjusted (loss) earnings per diluted common share
also include an adjustment to remove transaction related costs in 2015, recorded in association with acquisition activity.
The Company believes that these costs are not indicative of the Company's core operating results or future performance. These
costs, are excluded by management in its forecast and evaluation of the Company's operational performance.
Adjusted net (loss) income, adjusted (loss) earnings per diluted common share and other non-GAAP financial measures used and
presented by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used
by other companies. Investors should consider non-GAAP measures in addition to, and not as a substitute for, or as superior to,
financial performance measures prepared in accordance with GAAP.
|
|
Power Solutions International,
Inc. |
|
Consolidated Balance Sheets
(Unaudited) |
|
(Dollar amounts in thousands, except per share
amounts) |
|
|
|
|
|
|
March 31,
2016 |
|
December 31,
2015 |
|
ASSETS |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash |
$ |
1,495 |
|
|
$ |
8,445 |
|
|
|
Accounts receivable, net |
|
63,163 |
|
|
|
104,365 |
|
|
|
Inventories, net |
|
120,735 |
|
|
|
130,347 |
|
|
|
Prepaid expenses and other current assets |
|
9,496 |
|
|
|
9,518 |
|
|
|
Total current assets |
|
194,889 |
|
|
|
252,675 |
|
|
|
|
Property, plant & equipment, net |
|
24,289 |
|
|
|
26,001 |
|
|
|
|
Intangible assets, net |
|
30,316 |
|
|
|
31,745 |
|
|
|
|
Goodwill |
|
41,466 |
|
|
|
41,466 |
|
|
|
|
Deferred income taxes, net |
|
819 |
|
|
|
819 |
|
|
|
Other noncurrent assets |
|
7,181 |
|
|
|
7,230 |
|
|
TOTAL ASSETS |
$ |
298,960 |
|
|
$ |
359,936 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
$ |
41,491 |
|
|
$ |
76,078 |
|
|
|
|
Accrued compensation and benefits |
|
3,649 |
|
|
|
4,009 |
|
|
|
Other accrued liabilities |
|
16,043 |
|
|
|
19,175 |
|
|
|
Total current liabilities |
|
61,183 |
|
|
|
99,262 |
|
|
|
Long-term obligations |
|
|
|
|
|
Revolving line of credit |
|
80,568 |
|
|
|
97,299 |
|
|
|
Private placement warrants |
|
226 |
|
|
|
1,482 |
|
|
|
|
Long-term debt, net |
|
53,946 |
|
|
|
53,820 |
|
|
|
Other noncurrent liabilities |
|
1,670 |
|
|
|
1,776 |
|
|
TOTAL LIABILITIES |
|
197,593 |
|
|
|
253,639 |
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
Series A convertible preferred stock—$0.001 par value. Authorized: 114,000
shares. Issued and outstanding: -0- shares at March 31, 2016 and December 31,
2015. |
|
- |
|
|
|
- |
|
|
|
Common stock—$0.001 par value. Authorized: 50,000,000 shares. Issued:
11,583,831 shares at March 31, 2016 and December 31, 2015. Outstanding:
10,752,906 shares at March 31, 2016 and December 31, 2015. |
|
12 |
|
|
|
12 |
|
|
|
Additional paid-in-capital |
|
75,500 |
|
|
|
75,179 |
|
|
|
Retained earnings |
|
30,105 |
|
|
|
35,356 |
|
|
|
Treasury stock, at cost, 830,925 shares at March 31, 2016 and December 31, 2015. |
|
(4,250 |
) |
|
|
(4,250 |
) |
|
TOTAL STOCKHOLDERS' EQUITY |
|
101,367 |
|
|
|
106,297 |
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
298,960 |
|
|
$ |
359,936 |
|
|
|
|
|
|
|
|
|
|
|
Power Solutions International,
Inc. |
|
Consolidated Statements of Operations
(Unaudited) |
|
(Dollar amounts in thousands, except per share
amounts) |
|
|
|
|
|
|
Three months
ended March
31, 2016 |
|
Three months
ended March
31, 2015 |
|
Net sales |
|
$ |
61,814 |
|
|
$ |
86,139 |
|
|
Cost of goods sold |
|
|
57,758 |
|
|
|
69,682 |
|
|
Gross profit |
|
|
4,056 |
|
|
|
16,457 |
|
|
Operating expenses: |
|
|
|
|
|
|
Research & development and engineering |
|
|
5,250 |
|
|
|
5,168 |
|
|
|
Selling |
|
|
2,609 |
|
|
|
2,750 |
|
|
|
General and administrative |
|
|
3,449 |
|
|
|
3,655 |
|
|
|
Amortization of intangible assets |
|
|
1,429 |
|
|
|
814 |
|
|
Total operating expenses |
|
|
12,737 |
|
|
|
12,387 |
|
|
Operating (loss) income |
|
|
(8,681 |
) |
|
|
4,070 |
|
|
Other (income) expense: |
|
|
|
|
|
|
Interest expense |
|
|
1,421 |
|
|
|
489 |
|
|
|
Private placement warrant (income) expense |
|
|
(1,256 |
) |
|
|
3,614 |
|
|
|
Other expense, net |
|
|
85 |
|
|
|
39 |
|
|
Total other expense |
|
|
250 |
|
|
|
4,142 |
|
|
Loss before income taxes |
|
|
(8,931 |
) |
|
|
(72 |
) |
|
Income tax (benefit) provision |
|
|
(3,680 |
) |
|
|
1,384 |
|
|
Net loss |
|
$ |
(5,251 |
) |
|
$ |
(1,456 |
) |
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
Basic |
|
|
10,818,678 |
|
|
|
10,797,056 |
|
|
|
Diluted |
|
|
10,818,678 |
|
|
|
10,797,056 |
|
|
|
|
|
|
|
|
|
Loss per common share: |
|
|
|
|
|
|
Basic |
|
$ |
(0.49 |
) |
|
$ |
(0.13 |
) |
|
|
Diluted |
|
$ |
(0.49 |
) |
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
|
|
|
Power Solutions International,
Inc. |
|
Consolidated Statements of Cash Flows
(Unaudited) |
|
(Dollar amounts in
thousands) |
|
|
|
|
|
|
Three months
ended March
31, 2016 |
|
Three months
ended March
31, 2015 |
|
Cash flows from operating activities |
|
|
|
|
|
Net loss |
$ |
(5,251 |
) |
|
$ |
(1,456 |
) |
|
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities: |
|
|
|
|
|
Depreciation |
|
1,270 |
|
|
|
833 |
|
|
|
Amortization |
|
1,429 |
|
|
|
850 |
|
|
|
Non-cash interest expense |
|
149 |
|
|
|
25 |
|
|
|
Share-based compensation expense |
|
321 |
|
|
|
305 |
|
|
|
Increase in accounts receivable allowances |
|
62 |
|
|
|
163 |
|
|
|
Increase in inventory reserves |
|
219 |
|
|
|
225 |
|
|
|
(Decrease) increase in valuation of private placement warrants liability |
|
(1,256 |
) |
|
|
3,614 |
|
|
|
Loss on investment in joint ventures |
|
85 |
|
|
|
47 |
|
|
|
Loss on disposal of assets |
|
- |
|
|
|
18 |
|
|
|
(Increase) decrease in operating assets, net of effects of business
combination: |
|
|
|
|
|
|
Accounts receivable |
|
41,140 |
|
|
|
6,251 |
|
|
|
|
Income tax receivable |
|
5,230 |
|
|
|
- |
|
|
|
|
Inventories |
|
9,393 |
|
|
|
(18,059 |
) |
|
|
|
Prepaid expenses and other assets |
|
(3,924 |
) |
|
|
672 |
|
|
|
Increase (decrease) in operating liabilities, net of effects of business
combination: |
|
|
|
|
|
|
Accounts payable |
|
(35,274 |
) |
|
|
(4,820 |
) |
|
|
|
Accrued compensation and benefits and other accrued liabilities |
|
(517 |
) |
|
|
568 |
|
|
|
|
Income taxes payable |
|
- |
|
|
|
812 |
|
|
|
|
Other noncurrent liabilities |
|
(3,081 |
) |
|
|
221 |
|
|
Net cash provided by (used in) operating activities |
|
9,995 |
|
|
|
(9,731 |
) |
|
Cash flows from investing activities |
|
|
|
|
|
Purchases of property, plant & equipment |
|
(214 |
) |
|
|
(806 |
) |
|
|
Business combination |
|
- |
|
|
|
(9,735 |
) |
|
Net cash used in investing activities |
|
(214 |
) |
|
|
(10,541 |
) |
|
Cash flows from financing activities |
|
|
|
|
|
Advances from revolving line of credit - noncurrent obligation |
|
46,902 |
|
|
|
32,363 |
|
|
|
Repayments of revolving line of credit - noncurrent obligation |
|
(63,633 |
) |
|
|
(8,000 |
) |
|
|
Payments on long-term debt |
|
- |
|
|
|
(417 |
) |
|
Net cash (used in) provided by financing
activities |
|
(16,731 |
) |
|
|
23,946 |
|
|
(Decrease) increase in cash |
|
(6,950 |
) |
|
|
3,674 |
|
|
Cash at beginning of period |
|
8,445 |
|
|
|
6,561 |
|
|
Cash at end of period |
$ |
1,495 |
|
|
$ |
10,235 |
|
|
|
|
|
|
Contact: Power Solutions International, Inc. Michael P. Lewis Chief Financial Officer +1 (630) 451-2290 Michael.Lewis@psiengines.com Power Solutions International, Inc. Philip Kranz Director of Investor Relations +1 (630) 451-5402 Philip.Kranz@psiengines.com