SOURCE: Pioneer Power Solutions

May 17, 2010 08:30 ET

Pioneer Announces Solid First Quarter 2010 Results

Continues Gross Margin Gains

FORT LEE, NJ--(Marketwire - May 17, 2010) - Pioneer Power Solutions, Inc. (OTCBB: PPSI) ("Pioneer"), a full-line manufacturer of liquid-filled, ventilated and encapsulated electrical transformers for utility, industrial and commercial applications, today announced results for the three months ended March 31, 2010.

Revenues grew 13.3% to $8.3 million for the first quarter of 2010, as compared to $7.3 million for the first quarter of 2009. The effect of currency translation had a significant positive impact to year-over-year revenue growth, as the U.S. dollar averaged a monthly exchange rate of 1.0409 Canadian dollars per U.S. dollar in the first quarter of 2010 versus 1.2453 Canadian dollars per U.S. dollar during the first quarter of 2009. On a constant currency basis, revenues decreased by approximately 5.0% for the first quarter of 2010 compared to the first quarter of 2009.

Pioneer's gross margin increased to 21.9% during the first quarter of 2010, up from 20.0% in the first quarter of 2009. The 1.9% increase was attributable primarily to lower material costs, particularly for those commodities purchased in U.S. dollars, which typically represent approximately half or more of costs of Pioneer's goods sold.

Net earnings increased to $390,000 for the three months ended March 31, 2010, as compared to net earnings of $371,000 for the same period of 2009, an increase of 4.9%. Earnings per basic and diluted share was $0.01 in the first quarter of 2010, compared to $0.02 in the first quarter of 2009 when there were 6.2 million fewer shares outstanding.

At March 31, 2010, the Company had cash and cash equivalents of approximately $3.1 million and no bank debt.

Nathan Mazurek, Chairman and Chief Executive Officer, commented, "I am extremely pleased that Pioneer's profitability grew for the quarter in spite of the challenging economic environment we faced. We owe this achievement to years of continuously improving our operating efficiency and extending our technical capabilities to produce more sophisticated, higher-margin products."

Mr. Mazurek concluded, "These results reinforce our optimism about Pioneer's long-term growth prospects, especially if there is a capital spending recovery in the markets we serve. Furthermore, Pioneer is delivering on the goal we set forth to grow by acquisition. At the end of April, we completed the acquisition of Jefferson Electric, Inc., a Wisconsin-based supplier of dry-type transformers with manufacturing operations in Mexico. We expect the acquisition to increase our annual revenue by approximately 50% and to immediately benefit our earnings per share during the current quarter ending this June."

For more information regarding Pioneer's financial performance during the first quarter of 2010, please refer to the Form 10-Q filed with the Securities and Exchange Commission on May 17, 2010.

    Consolidated Interim Statements of Earnings and Comprehensive Income
                        (Expressed in U.S. Funds)
                                (unaudited)

                                                Three-Month Period
                                                  Ended March 31,
                                            --------------------------
                                                 2010         2009
                                                  $            $
                                            ------------  ------------

Sales                                          8,250,817     7,283,260

Cost of goods sold (including depreciation
 of $43,462 and $30,508, respectively)         6,444,382     5,828,011
                                            ------------  ------------
Gross profit                                   1,806,435     1,455,249

                                            ------------  ------------

Expenses


  Selling, general and administrative          1,103,004       916,372

  Depreciation                                    46,999        38,251

  Foreign exchange (gain) loss                    92,494      (126,462)
                                            ------------  ------------
                                               1,242,497       828,161

                                            ------------  ------------
Operating income                                 563,938       627,088


  Interest and factoring fees                     13,090        83,606
                                            ------------  ------------
Earnings before income taxes                     550,848       543,482
                                            ------------  ------------
Income taxes


  Current income taxes                           156,000       176,000
  Deferred income taxes                            5,000        (4,000)
                                            ------------  ------------

                                                 161,000       172,000
                                            ------------  ------------

Net earnings                                     389,848       371,482

Other comprehensive income

  Foreign currency translation adjustments       332,034        42,202

  Pension adjustment, net of taxes ($1,833
   and $56,768, respectively)                      3,119      (126,131)
                                            ------------  ------------
Comprehensive income                             725,001       287,553

                                            ============  ============

Basic weighted average number of common
 shares                                       29,000,000    22,800,000

Dilutive effect of warrants                       66,398             -

                                            ============  ============

Diluted weighted average number of common
 shares outstanding                           29,066,398    22,800,000
                                            ============  ============

Basic and diluted earnings per common share         0.01          0.02
                                            ============  ============

About Pioneer Power Solutions, Inc.

Through its subsidiaries, Pioneer has been engaged in the design, development and manufacturing of liquid-filled, ventilated and encapsulated electrical transformers for over 50 years. Pioneer serves customers in a variety of industries with particular emphasis on the North American electric utility, industrial and commercial markets. To learn more about Pioneer, please visit our website at www.pioneerpowersolutions.com.

Forward-looking Statements:

This press release contains certain "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) fluctuations in foreign currency exchange rates; (ii) the loss of significant customers; (iii) increases in the prices of raw materials; (iv) development of new products and service offerings; (v) the company's ability to integrate acquisitions; (vi) the effectiveness, profitability, and marketability of the company's current and prospective products and services; (vii) the impact of current, pending, or future legislation and regulation on the company's industry; and (viii) the impact of competitive products, services, pricing or technological changes. 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 April 15, 2010 and Form 10-Q filed with the SEC on May 17, 2010. Investors and security holders are urged to read this document free of charge on the SEC's web site at www.sec.gov. The company does not undertake to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

Contact Information

  • Contact:
    Howard Gostfrand
    American Capital Ventures
    305.918.7000
    Email Contact