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Pioneer Power Solutions, Inc. (PPSI) SEC Filing 10-K Annual report for the fiscal year ending Saturday, December 31, 2016

Pioneer Power Solutions, Inc.

CIK: 1449792 Ticker: PPSI

 

Pioneer Power Solutions, Inc. 8-K

 

Exhibit 99.1

 

 

 

 

 

 

Pioneer Reports Fourth Quarter and Full Year 2016 Financial Results

 

Company Achieves Profitability Guidance, Delivers $7.4 Million Improvement in Operating Income vs. Full Year 2015;

Year-End Backlog of $38.6 Million Reinforces Expectation of Significantly Improved Profitability in 2017

 

Fort Lee, NJ, March 9, 2017 / PRNewswire / –

Pioneer Power Solutions, Inc. (Nasdaq: PPSI) ("Pioneer" or the "Company"), a company engaged in the manufacture, sale and service of electrical transmission, distribution and on-site power generation equipment, today announced its financial results for the fourth quarter and full-year periods ended December 31, 2016.

 

Full-Year 2016 Results:

Revenue of $114.4 million, an increase of 7.4% year-over-year
Gross margin of 21.8%, up year-over-year from 20.4% in 2015
Operating income of $2.1 million, inclusive of $2.4 million in non-recurring charges related to restructuring and integration charges compared to an operating loss of $(5.3) million, inclusive of $5.6 million in non-recurring charges related to restructuring and integration efforts, in 2015
Net loss of $(569,000) compared to $(5.9) million in the year-ago period
Adjusted EBITDA* of $8.8 million compared to $3.8 million in the year-ago period, within the guidance range
Backlog increased 34.5% year-over-year to $38.6 million

 

Fourth Quarter 2016 Results:

Revenue of $28.5 million, an increase of 8.6% over the prior year quarter
Gross margin of 21.0% compared to 23.2% in Q4 2015
Operating loss of $(1.6) million compared to $(1.2) million in Q4 2015
Net loss of $(1.7) million compared to $(1.3) million in Q4 2015
Adjusted EBITDA* of $2.6 million compared to $1.9 million in Q4 2015

 

Nathan Mazurek, Pioneer's Chairman and Chief Executive Officer, said, “This was a highly successful year for Pioneer, benefitting from our continued penetration of fast-growing market segments and our ongoing initiatives to consolidate operations and enhance margins. We delivered a $7.4 million improvement in operating income, and annual adjusted EBITDA was well within our guidance range. In total, we grew our adjusted EBITDA by approximately $5 million for the year, a stable baseline from which we plan to deliver continued profitable growth. These improvements exclude any contribution from the oil and gas sector. We increased sales by 7.4% driven by our growing service business, expanded presence in emerging market segments like distributed generation/microgrid and the incremental contribution from data center equipment customers and other new customers. Looking toward 2017, we expect to see the benefit of increased infrastructure spending, such as Keystone and Dakota pipelines, high-speed electric rail projects and other mass transit projects, and seaport expansion, on top of our solid base of business, we anticipate a meaningful increase in profitability in 2017.”

 

   
 

 

Revenue

Total revenue for the three-month period ended December 31, 2016 increased to $28.5 million, up 8.6% compared to $26.3 million for the fourth quarter of 2015. The increase was the result of increased sales of dry type transformer products, typically utilized for commercial construction and industrial applications, data center expansions and mobile power, as well as custom switchgear products for applications for supermarket chains, waste water treatment plants and U.S. Embassy projects around the world. For the 12 months ended December 31, 2016, total consolidated revenue increased by $7.9 million, or 7.4%, to $114.4 million, up from $106.5 million for the 12 months ended December 31, 2015.

 

Gross Margin

For the fourth quarter of 2016, gross margin was 21.0% of revenues, as compared to 23.2% for the fourth quarter of 2015. For the 12 months ended December 31, 2016, Pioneer’s gross profit was $24.9 million, or 21.8% of revenues, up 14.4% compared to the $21.8 million, or 20.4% gross margin, for the year-ago period. The decrease in gross margin was related to operational challenges in switchgear manufacturing and lower margin switchgear sales during the period.

 

Operating Income (Loss)

Fourth quarter operating loss was $(1.6) million compared to $(1.2) million for the same period last year. For the 12 months ended December 31, 2016, operating income was $2.1 million compared to an operating loss of $(5.3) million for the prior year.

 

Adjusted EBITDA*

 

For the quarter ended December 31, 2016, there were approximately $2.6 million of non-recurring expenses, including $2.2 million in restructuring and integration charges. For the quarter ended December 31, 2015, there were approximately $3.2 million of non-recurring expenses, including $2.1 million in restructuring and integration charges. The fourth quarter of 2016 and 2015 included non-cash expenses consisting of depreciation, amortization of acquisition intangibles, and stock-based compensation for employee and director stock options of $800,000 and $867,000, respectively.

 

The Company’s Adjusted EBITDA for the quarter ended December 31, 2016 was approximately $2.6 million compared to $1.9 million in the same quarter last year. For the 12 months ended December 31, 2016, the Company’s Adjusted EBITDA was $8.8 million, as compared to $3.8 million last year. Please refer to the financial tables included below for a reconciliation of GAAP to non-GAAP results.

 

* Note: Pioneer has presented non-GAAP measures such as 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 an alternative to GAAP measures as an indicator of the Company's operating performance.

 

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. Please refer to the financial tables included below for a reconciliation of GAAP to non-GAAP results.

  

 2 
 

 

Income taxes

 

Pioneer’s effective income tax rate for the fourth quarter of 2016 was 117% of earnings before tax, as compared to 47% for the same quarter last year. For the 12 months ended December 31, 2016, the effective income tax rate was 200% of earnings before tax, as compared to 31% for the same period last year. The increase in Pioneer’s effective income tax rate during 2016 resulted from recording the reconciliation of the Company’s prior year income tax returns to the financial statements, an audit of the Company’s previously filed income tax returns in Canada, and the permanent benefit resulting from the abatement of payroll tax penalties. Excluding these items, the Company’s tax rate would have been 19% for the year ended December 31, 2016.

 

Net Earnings and Earnings Per Diluted Share

 

The Company generated a net loss of $(1.7) million and $(569,000) for the three and 12 months ended December 31, 2016, respectively, as compared to $(1.3) million and $(5.9) million during the three and 12 months ended December 31, 2015. Net loss per basic and diluted share for the three and 12 months ended December 31, 2016 were $(0.19) and $(0.07), respectively, as compared to $(0.18) and $(0.76) for the three and 12 months ended December 31, 2015, respectively.

 

On a non-GAAP basis, the Company reported net earnings of approximately $1.8 million in the fourth quarter of 2016, or $0.21 per diluted share, as compared to $1.3 million, or $0.15 per diluted share for the quarter ended December 31, 2015. For the 12 months ended December 31, 2016, non-GAAP earnings were $6.3 million, or $0.73 per diluted share, up from $2.8 million, or $0.36 per diluted share, for the 12 months ended December 31, 2015. Please refer to the financial tables included below for a reconciliation of GAAP to non-GAAP results.

 

Backlog

Order backlog at December 31, 2016 was $38.6 million compared to $28.7 million at December 31, 2015. Backlog is based on orders expected to be delivered in the future, most of which is expected to occur during the next 12 months.

 

2017 Outlook

The Company reaffirmed its full-year 2017 guidance which is based on expected business trends and the current composition of the order backlog, excluding the impact of any potential acquisitions, as their timing and investment levels cannot be known with certainty. In addition, this outlook excludes any significant fluctuations in foreign currency exchange rates. Pioneer's 2017 full-year guidance is based on a foreign currency exchange rate of 74 cents U.S. per Canadian Dollar, an effective tax rate at 28% and a share count of approximately 8.7 million shares. In addition, the impact of any restructuring and non-cash charges arising out of Pioneer's cost-optimization plans is excluded.

 

 

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For the full year 2017, the Company expects:

 

Revenue between $120 and $127 million
Net income between $3.5 and $4.1 million
Diluted EPS between $0.40 and $0.47 based on 8.7 million shares

 

This reflects non-GAAP results of:

 

Adjusted EBITDA of $10.0 million to $11.0 million
Non-GAAP EPS between $0.83 to $0.91

 

Conference Call Information

Management will host a conference call at 10 a.m. Eastern Time Friday, March 10, 2017, to discuss the results with the investment community. Details are as follows:

 

Confirmation code 8951049
Dial-in number (toll-free): 1-888-428-9480
Dial-in number (toll/international): 1-719-457-2643
Webcast link: http://public.viavid.com/index.php?id=123068

 

About Pioneer Power Solutions, Inc.

Pioneer Power Solutions, Inc. manufactures, sells and services a broad range of specialty electrical transmission, distribution and on-site power generation equipment for applications in the utility, industrial, commercial and backup power markets. The Company's principal products and services include custom-engineered electrical transformers, low and medium voltage switchgear and engine-generator sets and controls, complemented by a national field-service organization to maintain and repair power generation assets. Pioneer is headquartered in Fort Lee, New Jersey and operates from 13 additional locations in the U.S., Canada and Mexico for manufacturing, centralized distribution, engineering, sales, service and administration. To learn more about Pioneer, please visit its website at www.pioneerpowersolutions.com.

 

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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 expand its business through strategic acquisitions, (ii) the fact that many of the Company's competitors are better established and have significantly greater resources, and may subsidize their competitive offerings, (iii) the Company's dependence on a few large customers for a material portion of its sales, (iv) the potential loss or departure of key personnel, (v) the fact that fluctuations between the U.S. dollar and the Canadian dollar will impact the Company's results, (vi) market acceptance of existing and new products, (vii) 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, (viii) general economic and market conditions, (ix) unanticipated increases in raw material prices or disruptions in supply, (x) 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, (xi) reported material weaknesses in the Company's internal control over financial reporting, and (xii) 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 Annual and Quarterly Reports on Form 10-K and Form 10-Q. 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 data)

     
   December 31, 
   2016   2015 
ASSETS        
Current assets          
Cash and cash equivalents  $246   $648 
Accounts receivable, net   17,508    14,223 
Inventories, net   26,528    17,663 
Income taxes receivable   72    576 
Prepaid expenses and other current assets   2,216    1,924 
Total current assets   46,570    35,034 
Property, plant and equipment, net   6,591    7,349 
Deferred income taxes   5,405    3,642 
Other assets   830    827 
Intangible assets, net   8,168    9,956 
Goodwill   9,972    10,068 
Total assets  $77,536   $66,876 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities          
Bank overdrafts  $1,200   $1,923 
Revolving credit facilities   17,689    9,874 
Short term borrowings   3,973     
Accounts payable and accrued liabilities   17,773    20,030 
Current maturities of long-term debt and capital lease obligations   1,379    6,037 
Income taxes payable   1,360    237 
Total current liabilities   43,374    38,101 
Long-term debt, net of current maturities   4,005    165 
Pension deficit   172    63 
Other long-term liability   892    372 
Noncurrent deferred income taxes   2,400    781 
Total liabilities   50,843    39,482 
Stockholders’ equity          
Preferred stock, par value $0.001; 5,000,000 shares authorized; none issued        
Common stock, par value $0.001; 30,000,000 shares authorized; 8,699,712 shares issued and outstanding   9    9 
Additional paid-in capital   23,215    23,153 
Accumulated other comprehensive loss   (5,863)   (5,669)
Retained earnings   9,332    9,901 
Total stockholders’ equity   26,693    27,394 
Total liabilities and stockholders’ equity  $77,536   $66,876 

 

 

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PIONEER POWER SOLUTIONS, INC.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

   Three Months Ended  Year Ended
   December 31,  December 31,
   2016  2015  2016  2015
Revenues  $28,513   $26,251   $114,402   $106,522 
Cost of goods sold   22,514    20,156    89,500    84,753 
  Gross profit   5,999    6,095    24,902    21,769 
Operating expenses                    
  Selling, general and administrative   5,581    5,195    20,737    21,859 
  Restructuring, integration and impairment   2,226    2,138    2,426    5,577 
  Foreign exchange gain   (222)   (40)   (364)   (367)
    Total operating expenses   7,585    7,293    22,799    27,069 
Operating income (loss)   (1,586)   (1,198)   2,103    (5,300)
  Interest expense   585    242    1,736    748 
  Other expense (income)   (759)   1,002    (205)   2,535 
Income (loss) before taxes   (1,412)   (2,442)   572    (8,583)
Income tax (benefit) expense   242    (1,154)   1,141    (2,702)
Net loss  $(1,654)  $(1,288)  $(569)  $(5,881)
                     
Net loss per common share:                    
  Basic  $(0.19)  $(0.18)  $(0.07)  $(0.76)
  Diluted  $(0.19)  $(0.18)  $(0.07)  $(0.76)
                     
Weighted average common shares outstanding:                    
  Basic   8,700    7,222    8,700    7,746 
  Diluted   8,700    7,222    8,700    7,746 

 

 

  

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PIONEER POWER SOLUTIONS, INC.

Reconciliation of GAAP Measures to Non-GAAP Measures

(In thousands, except per share data)

(Unaudited)

       
   Three Months ended  Year Ended
   December 31,  December 31,
   2016  2015  2016  2015
Reconciliation to Adjusted EBITDA and EPS            
Net earnings (loss) (GAAP measure)   (1,654)   (1,288)   (569)   (5,882)
Interest expense   585    242    1,736    748 
Income tax expense (benefit)   241    (1,154)   1,141    (2,702)
Depreciation and amortization   772    810    3,089    3,164 
Restructuring, integration and impairment   2,226    2,138    2,426    5,577 
Non-recurring expenses from strategic changes (a)   1,121    —      1,121    —   
Stock based compensation   28    57    62    231 
Other non-operating expenses (b)   (760)   1,049    (206)   2,703 
Adjusted EBITDA (Non-GAAP measure)   2,559    1,854    8,800    3,839 
Tax effects - 28% rate   (717)   (519)   (2,464)   (1,075)
Non-GAAP net earnings  $1,842   $1,335   $6,336   $2,764 
Non-GAAP net earnings per diluted share  $0.21   $0.15   $0.73   $0.36 
Weighted average diluted shares outstanding   8,700    8,692    8,700    7,746 

 

(a) -  costs incurred prior to implementing the strategic changes to concentrate on service sales in Critical Power Solutions segment and medium voltage switchgear in the Transmission & Distribution Solutions segment.

 

(b) - costs incurred from penalties and interest for nonpayment of payroll taxes as well as professional fees and costs incurred in connection with business acquisition activities.

 

Some costs incurred in prior 2016 quarters were reclassified during the current quarter.

 

Tax Rate assumed to be 28%.

 

 8 
 

 

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 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 earnings is set forth in the table above.

 

Amounts may not foot due to rounding.

 

 

 9 


The following information was filed by Pioneer Power Solutions, Inc. (PPSI) on Tuesday, March 14, 2017 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Pioneer Power Solutions, Inc.'s 10-K Annual Report:

Financial Statements, Disclosures and Schedules

Inside this 10-K Annual Report

Document And Entity Information
Consolidated Balance Sheets
Consolidated Balance Sheets (parenthetical)
Consolidated Statements Of Cash Flows
Consolidated Statements Of Comprehensive Loss
Consolidated Statements Of Operations
Consolidated Statements Of Stockholders' Equity
Consolidated Statements Of Stockholders' Equity (parenthetical)
Acquisitions
Acquisitions (details 1)
Acquisitions (details 2)
Acquisitions (details Narrative)
Acquisitions (details)
Acquisitions (tables)
Basic And Diluted Income (loss) Per Common Share
Basic And Diluted Income (loss) Per Common Share (details)
Basic And Diluted Income (loss) Per Common Share (tables)
Basis Of Presentation
Basis Of Presentation (details Narrative)
Business Segment, Geographic And Customer Information
Business Segment, Geographic And Customer Information (details 1)
Business Segment, Geographic And Customer Information (details 2)
Business Segment, Geographic And Customer Information (details Narrative)
Business Segment, Geographic And Customer Information (details)
Business Segment, Geographic And Customer Information (tables)
Commitments And Contingencies
Commitments And Contingencies (details Narrative)
Commitments And Contingencies (details)
Commitments And Contingencies (tables)
Debt
Debt (details 1)
Debt (details Narrative 1)
Debt (details Narrative 2)
Debt (details Narrative)
Debt (details)
Debt (tables)
Goodwill And Other Intangible Assets
Goodwill And Other Intangible Assets (details 1)
Goodwill And Other Intangible Assets (details 2)
Goodwill And Other Intangible Assets (details 3)
Goodwill And Other Intangible Assets (details Narrative)
Goodwill And Other Intangible Assets (details)
Goodwill And Other Intangible Assets (tables)
Income Taxes
Income Taxes (details 1)
Income Taxes (details 2)
Income Taxes (details 3)
Income Taxes (details 4)
Income Taxes (details Narrative)
Income Taxes (details)
Income Taxes (tables)
Inventories
Inventories (details Narrative)
Inventories (details)
Inventories (tables)
Other (income)/expense
Other (income)/expense (details Narrative)
Other (income)/expense (details)
Other (income)/expense (tables)
Other Assets
Other Assets (details Narrative)
Pension Plan
Pension Plan (details 1)
Pension Plan (details 2)
Pension Plan (details 3)
Pension Plan (details 4)
Pension Plan (details 5)
Pension Plan (details 6)
Pension Plan (details 7)
Pension Plan (details 8)
Pension Plan (details 9)
Pension Plan (details Narrative)
Pension Plan (details)
Pension Plan (tables)
Property, Plant And Equipment
Property, Plant And Equipment (details Narrative)
Property, Plant And Equipment (details)
Property, Plant And Equipment (tables)
Restructuring And Impairment
Restructuring And Impairment (details)
Restructuring And Integration (details 1)
Restructuring And Integration (tables)
Stock-based Compensation
Stock-based Compensation (details 1)
Stock-based Compensation (details 2)
Stock-based Compensation (details Narrative)
Stock-based Compensation (details)
Stock-based Compensation (tables)
Stockholders' Equity
Stockholders' Equity (details Narrative)
Subsequent Events
Subsequent Events (details Narrative)
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies (details Narrative)
Summary Of Significant Accounting Policies (policies)
Ticker: PPSI
CIK: 1449792
Form Type: 10-K Annual Report
Accession Number: 0001387131-17-001719
Submitted to the SEC: Wed Mar 29 2017 4:19:20 PM EST
Accepted by the SEC: Wed Mar 29 2017
Period: Saturday, December 31, 2016
Industry: Power Distribution And Specialty Transformers

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