SOURCE: Pioneer Power Solutions, Inc.

Pioneer Power Solutions, Inc.

November 15, 2010 09:00 ET

Pioneer Announces Third Quarter 2010 Results

Revenues Rise 18.7% in the Quarter, Major New Business in 2011

FORT LEE, NJ--(Marketwire - November 15, 2010) - Pioneer Power Solutions, Inc. (OTCBB: PPSI) ("Pioneer" or the "Company"), a manufacturer of electrical equipment for utility, industrial, commercial and wind energy applications, announced its results for the three month and nine month periods ended September 30, 2010.

Nathan Mazurek, Pioneer's Chairman and Chief Executive Officer, said, "The third quarter proved challenging for our Pioneer Transformers' business compared to the exceptionally robust and well-scheduled demand we enjoyed during the same period of 2009. Overall, we achieved profitable, double-digit sales growth thanks to our acquisition of Jefferson Electric back in April. However, this was not enough in terms of earnings per share to offset weaker performance at Pioneer Transformers during the quarter."

Third Quarter 2010 Highlights

  • Revenue of $13.8 million, up 18.7% from $11.6 million in the third quarter of 2009
  • Gross margin was 22.0% of revenue, compared to 35.4% for the same period in the prior year
  • Operating income of $0.8 million, compared to $2.9 million in the comparable prior year period
  • Basic and diluted EPS of $0.01, compared to $0.09 in the third quarter of 2009

First Three Quarters 2010 Highlights

  • Revenue of $34.4 million, up 13.2% from $30.4 million for the first three quarters of 2009
  • Gross margin was 22.8% of revenue, compared to 27.4% for the same period in the prior year
  • Operating income of $2.5 million, compared to $5.2 million in the comparable prior year period
  • Basic and diluted EPS of $0.07, compared to $0.15 in the first three quarters of 2009

Contribution By Business Unit

Pioneer Transformers, the Company's Canada-based, liquid-filled transformer business, experienced a $2.5 million revenue decline in the third quarter of 2010, to $9.1 million versus $11.6 million during the comparable quarter of last year. Jefferson Electric, which was acquired on April 30, 2010, contributed $4.7 million in revenue during the quarter. In the nine month reporting period ended September 30, 2010, Pioneer Transformers experienced a $4.5 million revenue decline versus last year, offset by $8.5 million of revenue contributed by Jefferson Electric during the five months since the acquisition. Pioneer Wind Energy Systems, Inc. ("Pioneer Wind"), the Company's renewable energy business formed in June 2010, did not contribute any revenue during the quarter.

Management Outlook

In discussing the remainder of 2010 and the outlook for 2011, Mr. Mazurek commented, "We are not concerned that the sales decline in our liquid-filled transformer business indicates any long-term trends. We are still in the midst of a very long-term, upward cycle in capital spending by our customers and we typically experience demand peaks and troughs along the way for some of our products. For example, this year U.S. shipments of our network transformers reached a new low, whereas quotations and order backlog for wind projects have both picked up dramatically. During the first quarter of 2011 we will begin deliveries to Suncor Energy's 55 turbine Wintering Hills wind project, an order valued at approximately 10% of Pioneer Transformers' annual sales. We are well into the fourth quarter now, our order flow and backlog has grown and we are confident that we will reach our sales goals for this year and next."

On Pioneer's new Jefferson Electric unit, Mr. Mazurek commented, "We couldn't be more pleased with the recent integration and performance of Jefferson. Tom Klink and his team at Jefferson have built a very scalable operation and are reaping the benefits. This week we learned that starting in 2011, the company's key brand label customer is expanding Jefferson's geographic territory and adding new products to the mix, which management believes could increase Jefferson's annual sales run rate by approximately 25%."

Mr. Mazurek continued, "Our renewable energy business, Pioneer Wind, has made great progress recalibrating its business model and securing its supply chain. We are now in a position to fulfill new customer orders with as little as one month's lead time to delivery. For this achievement we owe great thanks to our newly-appointed President of the division, Daniel Charette, a wind energy veteran with over a decade of experience in developing and operating wind farm projects, managing turbine manufacturing operations and most recently, serving in a lead business development and sales role for wind turbines and aftermarket services."

PIONEER POWER SOLUTIONS, INC. Consolidated Interim Statements of Earnings (Unaudited)
 
    Three Months Ended September 30,   Nine Months Ended September 30,
(In thousands, except per share data)   2010     2009   2010     2009
                             
Sales   $ 13,807     $ 11,635   $ 34,408     $ 30,398
Cost of goods sold     10,765       7,511     26,576       22,063
Gross profit     3,042       4,124     7,832       8,335
Operating expenses                            
  Selling, general and administrative     2,323       1,000     5,459       2,837
  Foreign exchange (gain) loss     (41 )     237     (98 )     281
      2,282       1,237     5,361       3,118
Operating income     760       2,887     2,471       5,217
  Interest and bank charges     117       80     211       282
  Other expense (income)     188       0     538       0
  Gain on bargain purchase     (93 )     0     (1,144 )     0
Earnings before income taxes     548       2,807     2,866       4,935
  Provision for income taxes     160       831     715       1,515
Net earnings   $ 388     $ 1,976   $ 2,151     $ 3,420
                             
Earnings per common share                            
  Basic   $ 0.01     $ 0.09   $ 0.07     $ 0.15
  Diluted   $ 0.01     $ 0.09   $ 0.07     $ 0.15
                             
Weighted average number of common shares outstanding                            
  Basic     29,536       22,800     22,304       22,800
  Diluted     29,871       22,800     29,574       22,800

For more information regarding Pioneer's financial performance during the third quarter of 2010, please refer to the Form 10-Q filed with the Securities and Exchange Commission on November 15, 2010.

About Pioneer Power Solutions, Inc.
Pioneer is a manufacturer of electrical equipment with particular emphasis on the North American electric utility, industrial, commercial and wind energy markets. Through its subsidiaries, Pioneer has been in the electrical transformer business for over 90 years, manufacturing a full line of liquid filled, encapsulated and ventilated transformers. Pioneer's wind energy business sells high power wind turbines and provides related aftermarket services, primarily for community wind projects and industrial customers. Pioneer is headquartered in Fort Lee, NJ and operates from five manufacturing, distribution and marketing locations in the U.S., Canada and Mexico. 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, the Post-Effective Amendment to Form S-1 filed with the SEC on June 1, 2010 and the Company's Form 10-Q filed with the SEC on August 16, 2010. 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 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