SOURCE: Pioneer Power Solutions, Inc.

Pioneer Power Solutions, Inc.

March 31, 2011 14:15 ET

Pioneer Reports 2010 Results, Issues Revenue and Earnings Guidance for 2011

2010 Revenues Rise 16.3% to $47.2 Million; 2011 Revenue Expected Between $66 and $77 Million

FORT LEE, NJ--(Marketwire - March 31, 2011) - Pioneer Power Solutions, Inc. (OTCBB: PPSI) ("Pioneer" or the "Company"), an owner and operator of specialty electrical equipment manufacturing and service businesses for the utility, industrial, commercial and wind energy markets, announced its results for the year ended December 31, 2010 and provided revenue and earnings guidance for the year ending December 31, 2011.


  • 2010 revenue of $47.2 million, up 16.3% from $40.6 million in 2009

  • 2010 non-GAAP diluted EPS of $0.09, compared to $0.22 in 2009

  • 2011 revenue guidance between $66 and $77 million, up 40% to 63%

  • 2011 non-GAAP diluted EPS guidance between $0.14 and $0.18, up 55% to 100%

2010 Results

Nathan Mazurek, Pioneer's Chairman and Chief Executive Officer, said, "2010 was a considerable year of growth for our company as we succeeded in strategically broadening our portfolio of products and markets served. In April 2010, we entered the dry-type transformer market through our acquisition of Jefferson Electric. Jefferson was a key contributor to our operating income and net earnings for the year. We then established Pioneer Wind Energy Systems in June 2010 through the acquisition of a utility-scale wind turbine manufacturer. This acquisition will enable Pioneer to benefit directly from growth in the renewable energy sector, including selling incremental electrical transformers to these renewable power projects. We significantly restructured the wind business we acquired to minimize its fixed expenses and implemented a new strategy for which we are optimistic."


Revenue for the year ended December 31, 2010 was $47.2 million, 16.3% higher than $40.6 million in the comparable year period. The increase was due to the inclusion of $13.2 million of revenue from Jefferson Electric during the eight month period following its acquisition in 2010. Pioneer Transformers, the Company's Canada-based, liquid-filled transformer business, experienced a $6.5 million revenue decline for the year ended December 31, 2010, 16.1% lower than revenue of $40.6 million in the comparable year period. This decline was due to lower unit volume, primarily resulting from weakness in industrial customer demand compared to the prior year. Pioneer Wind Energy Systems did not contribute to consolidated revenue in 2010 or 2009.

Operating Income and Adjusted EBITDA

Consolidated operating income for the year ended December 31, 2010 was $3.7 million, down 53.4%, or $4.2 million, from $7.9 million in the comparable year period. The decrease in 2010 operating income resulted from lower sales volume at Pioneer Transformers ($3.0 million), higher corporate expenses ($1.5 million) and the operating expenses of the Company's newly-established wind energy business ($0.4 million). These decreases in operating income were partially offset by the operating income contribution of Jefferson during 2010 ($0.7 million).

Approximately $1.1 million of the Company's operating expense during 2010 consisted of non-cash expenses including depreciation, amortization of acquisition intangibles, stock-based compensation for employee and director stock options and the issuance of equity securities to service providers in lieu of cash payment. Without the effect of these non-cash expenses, the Company's Adjusted EBITDA for the year ended December 31, 2010 was $4.8 million, 41.0% lower than $8.2 million in the comparable year period. Please refer to the financial tables included below for a reconciliation of GAAP to non-GAAP results and guidance.

Net Earnings and Earnings Per Diluted Share

The Company's net earnings for the year ended December 31, 2010 were $2.9 million, or $0.10 per diluted share. This compares with net earnings for the prior year of $5.1 million, or $0.22 per diluted share. On a non-GAAP basis, Pioneer reported net earnings of $2.6 million, or $0.09 per diluted share, for the year ended December 31, 2010. There were no non-GAAP adjustments to net earnings and diluted earnings per share in 2009. Please refer to the financial tables included below for a reconciliation of GAAP to non-GAAP results and guidance.

2011 Outlook

Regarding the Company's outlook for 2011, Mr. Mazurek commented, "As we begin 2011, we are encouraged by our pace of shipments and book of orders for the first half of the year. As a reflection of our confidence, we have decided to issue revenue and earnings guidance for the first time."

Andrew Minkow, Pioneer's Chief Financial Officer continued, "Excluding future acquisitions, we expect revenue to increase to between $66 and $77 million, or grow by approximately 50% based on the mid-point of this range. Our electrical transformers segment is expected to account for most of this growth, with approximately 25% generated organically and 15% reflecting the benefit of having Jefferson throughout 2011. Our new wind energy business currently comprises less than 10% of our consolidated revenue guidance."

Mr. Minkow continued, "Based upon the information currently available to us, we expect that our non-GAAP net earnings will increase to between $0.14 and $0.18 per diluted share. Our electrical transformer business units account for most of our expected earnings improvement during 2011. We have been very aggressive in reorganizing Pioneer Wind's historical cost structure and we expect meaningful financial improvement over the near term."

Recent Events

On March 24, 2011, Mr. Ian Ross was appointed to Pioneer's Board of Directors and made chairperson of its newly-formed audit committee. Mr. Ross' career spans 40 years in the electrical transmission and distribution equipment industry, including senior management roles with Schneider Electric S.A. and Federal Electric, Ltd. in North America and the United Kingdom, respectively. He received an MA in Mechanical Sciences (Electrical and Mechanical Engineering) from Cambridge University and subsequently qualified as an accountant ACMA.

Mr. Mazurek commented, "We are extremely pleased that Ian agreed to join Pioneer's Board of Directors and chair our newly-formed audit committee. The appointment and the formation of our audit committee are important milestones for Pioneer as a growing public company. Ian brings a deep understanding of the markets in which we operate, he knows the key participants well and he comprehends how these factors affect the potential for the products and services we offer, or will seek to offer. On behalf of Pioneer, we welcome him and look forward to his contributions."

About Pioneer Power Solutions, Inc.

Pioneer Power Solutions, Inc. is an owner and operator of specialty electrical equipment manufacturing and service businesses. Through its subsidiaries, 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 five 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 year ended December 31, 2010, please refer to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2011.

Forward-looking Statements:

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) general economic conditions and market conditions in the electrical equipment, power generation, commercial construction, industrial production, oil & gas, marine and infrastructure industries, (ii) market acceptance of existing and new products, (iii) successful integration of acquisitions and related restructuring, (iv) operating margin due to competitive pricing and operating efficiencies, supply chain risk, material, labor or overhead cost increases, foreign currency risk, interest rate risk and commodity risk, (v) 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 our markets and the Company's ability to access capital markets, (vi) 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, (vii) unanticipated increases in raw material prices or disruptions in supply which could increase production costs and adversely affect profitability, (viii) fluctuations between the U.S. dollar and the Canadian dollar that could impact revenue, (ix) 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, that may make it difficult for the Company to attract and retain customers, (x) restrictive loan covenants under the Company's credit facilities that could limit future financing options and liquidity position and may limit the Company's ability to grow its business, (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 and (xi) future sales of large blocks of our common stock that 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.

Consolidated Statements of Earnings  
(In thousands, except per share data)  
    Year Ended December 31,  
    2010     2009  
Revenues   $ 47,236     $ 40,599  
Cost of goods sold     35,637       28,734  
  Gross profit     11,599       11,865  
Operating expenses                
  Selling, general and administrative     8,048       4,220  
  Foreign exchange loss     (139 )     (272 )
    Total operating expenses     7,909       3,948  
Operating income     3,690       7,917  
  Interest and bank charges     183       312  
  Other expense (income)     884       0  
  Gain on bargain purchase     (650 )     0  
Earnings before income taxes     3,273       7,605  
  Provision for income taxes     327       2,490  
Net earnings   $ 2,946     $ 5,115  
Earnings per common share                
  Basic   $ 0.10     $ 0.22  
  Diluted   $ 0.10     $ 0.22  
Weighted average number of common shares outstanding                
  Basic     29,362       23,293  
  Diluted     29,655       23,293  
Consolidated Balance Sheets  
(In thousands)  
    December 31,  
    2010     2009  
Current assets                
  Cash and cash equivalents   $ 516     $ 1,560  
  Accounts receivable     5,358       5,492  
  Inventories     7,814       6,433  
  Income taxes receivable     1,191       -  
  Deferred income taxes     245       -  
  Prepaid expenses and other current assets     575       103  
    Total current assets     15,699       13,588  
Property, plant and equipment     5,123       987  
Noncurrent deferred income taxes     1,311       20  
Intangible assets     4,436       -  
Goodwill     5,534       -  
  Total assets   $ 32,103     $ 14,595  
Current liabilities                
  Accounts payable and accrued liabilities     7,442       2,567  
  Current maturities of long-term debt and capital lease obligations     6,063       134  
  Income taxes payable     161       1,775  
  Advances from limited partners of a shareholder     -       150  
    Total current liabilities     13,666       4,626  
Long-term debt and capital lease obligations, net of current maturities     17       -  
Pension deficit     308       362  
Noncurrent deferred income taxes     2,320       -  
Deferred credit     700       -  
  Total liabilities     17,011       4,988  
Shareholders' equity                
  Preferred stock, par value $0.001; 5,000,000 shares authorized; none issued     -       -  
  Common stock, par value $0.001; 75,000,000 shares authorized; 29,536,275 and 29,000,000 shares issued and outstanding, respectively     30       29  
  Additional paid-in capital     7,517       5,365  
  Accumulated other comprehensive income loss     (305 )     (691 )
  Accumulated retained earnings     7,850       4,904  
    Total shareholders' equity     15,092       9,607  
  Total liabilities and shareholders' equity   $ 32,103     $ 14,595  
(In thousands, except per share data)  
    Years Ended December 31,  
    2008     2009   2010  
Reconciliation to Non-GAAP Net Earnings and Diluted EPS                      
Net Earnings (GAAP Measure)   $ 2,138     $ 5,115   $ 2,946  
  Amortization of Acquisition Intangibles     0       0     144  
  Stock-Based Compensation Expense     0       0     161  
  Stock and Warrant Issuance Expense for Services     0       0     232  
  Non-Recurring Acquisition Costs and Reorganization Expense     0       0     884  
  Impairment Charges     700       0     0  
  Gain on Bargain Purchase     0       0     (650 )
  Canadian Tax Recovery     0       0     (831 )
  Tax Adjustments     (209 )     0     (323 )
Non-GAAP Net Earnings   $ 2,629     $ 5,115   $ 2,562  
Non-GAAP Net Earnings Per Diluted Share   $ 0.12     $ 0.22   $ 0.09  
Weighted Average Diluted Shares Outstanding     22,800       23,293     29,655  
Reconciliation to Adjusted EBITDA:                      
Net Earnings (GAAP Measure)   $ 2,138     $ 5,115   $ 2,946  
  Interest and Bank Charges     512       312     183  
  Provision for Income Taxes     1,357       2,490     327  
  Depreciation and Amortization     292       307     767  
  Gain on Bargain Purchase     0       0     (650 )
  Non-Recurring Acquisition Costs and Reorganization Expense     0       0     884  
  Impairment Charges     700       0     0  
EBITDA     4,999       8,224     4,457  
Adjustments to EBITDA:                      
  Stock-Based Compensation Expense     0       0     161  
  Stock and Warrant Issuance Expense for Services     0       0     232  
Adjusted EBITDA (Non-GAAP Measure)   $ 4,999     $ 8,224   $ 4,849  

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 Information

  • Contact:
    Howard Gostfrand
    American Capital Ventures
    Email Contact