Pioneer Power Solutions, Inc. (PPSI) research, news, and more from GeoInvesting

Company description

Sun, 28 Feb 2010 05:00:00 GMT

We are a leading North American designer, manufacturer and marketer of liquid-filled electric power, distribution and specialty transformers. We have been in the transformer business for over 50 years and distinguish ourselves by manufacturing a wide range of customized, engineered-to-order equipment for our customers. We serve Canadian and U.S. clients in a variety of industries with particular emphasis on the electric utility, industrial and commercial construction markets.

An electric transformer is used to reduce or increase the voltage of electricity traveling through a wire. This is accomplished by transferring electric energy from one coil or winding to another coil through electromagnetic induction. Electric power plants use generator transformers to "step-up," or increase, voltage that is transferred through power lines in order to transmit the electricity more efficiently and over long distances. When the high voltage electricity reaches a community, a "step-down" transformer reduces its voltage. A distribution transformer makes a final step-down in voltage by diminishing the force of the electricity to a level usable in homes and businesses. Some electrical devices, such as doorbells and small appliances, use additional step-down transformers to decrease voltage even further.

Research

Wed, 30 Oct 2024 17:21:52 GMT

Pioneer Power Solutions Inc. (NASDAQ:PPSI) ($6.33; $69.1 M market cap) has sold its Pioneer Custom Electrical Products (PCEP) business unit, which includes the E-Bloc brand, to Mill Point Capital for $50 million in a cash and equity deal. This sale aligns with Pioneer's focus, initiated in 2022, to concentrate on its Critical Power and eMobility divisions, which it sees as having greater growth potential. Pioneer’s CEO, Nathan Mazurek, emphasized that the divestiture enables Pioneer to advance its solutions for addressing grid challenges in the U.S.

Nathan Mazurek, Pioneer’s Chairman and Chief Executive Officer, commented, “The divestiture of our E-Bloc business is another critical step forward in the strategic transformation process we initiated in 2022. Pioneer is now solely focused on the growth of our Critical Power and eMobility business to fuel its larger potential. With additional capital we are well-positioned to continue to advance innovative solutions that address the growing grid gap challenges across the U.S. and capture an ever-growing share of a massive market that has yet to be fully addressed.

Through this transaction, Pioneer gains a minority stake in Voltaris Power LLC, a new platform created by Mill Point, which combines PCEP and Jefferson Electric to target energy transition markets. Pioneer plans to use the proceeds to support its growth in grid-related solutions and will share further details on strategic directions and financial forecasts during its upcoming quarterly conference call, today at 4:30 PM Eastern Time.

This is an interesting transaction, because it leaves the company with what we believe is the higher margin E-Boost business. Furthermore, we’d like to have the company explicitly say that it doesn't have to raise money through raising equity and cancel its outstanding shelf, which has an ATM attached to it.

To learn more about E-Bloc, you can view related clips, here and here, from our discussion with Mazurek via a Fireside Chat we had with him in April 2023. The entire conversation, which covers the full scope of what PPSI does, Mazurek’s accomplishments, and more, can be found here.

PPSI is engaged in the manufacture, sale and service of electrical transmission, distribution and on-site power generation equipment.

Research

Mon, 29 Jul 2024 19:41:37 GMT

PPSI - Becomes current with its 10K and issues 2024 guidance of year-over-year growth of approximately 30% and EPS of $0.31 to $0.34, based on an anticipated strong first half.

Pioneer Power Solutions, Inc. (NASDAQ:PPSI) ($4.50, $49.4 M market cap) was finally able to get its full year 2023 10-K out, which laid out the following:

Revenue FY 2023: $41.5 million vs. $25.9 million in FY 2022
Earnings Per Share (EPS) FY 2023: ($0.19) vs. ($056) in FY 2022

The most notable portion of the release disclosed the following Outlook for the first half of 2024:

“...

Based on current customer delivery schedules, management expects to have an exceptionally strong second half of 2024 and reaffirms its expectation for revenue of $52 to $54 million for the full year 2024, which represents year-over-year growth of approximately 30% and EPS of $0.31 to $0.34.

…”
PPSI is engaged in the manufacture, sale and service of electrical transmission, distribution and on-site power generation equipment.

Call to Action

Thu, 28 Mar 2024 14:48:58 GMT

Removing PPSI From Buy On Pullback Model Portfolio #11

In early November 2023 we added electrical transmission, distribution and on-site power generation equipment company Pioneer Power Solutions, Inc. (NASDAQ:PPSI) to our Buy on Pullback (BOP) Model Portfolio #11 on the heels of a bullish conversation with management that discussed growing demand for power solutions in diverse markets.

However, we are removing PPSI from our model portfolio ahead of its Q4 report on Monday as the year over year EPS comparison is very challenging with the company reporting $0.10 last year and current analyst estimates calling for $0.02 for this year's Q4.

We need to see the company put up consistent top and bottom line growth before we would reconsider, as PPSI’s financial history has been lumpy.

The stock’s performance during its inclusion in the model portfolio has been quite volatile, ranging from -25.1% to 18.1%.

Overall, BOP #11 is still producing a nice return, currently sitting at an average return of 30.1%

Research

Mon, 14 Aug 2023 04:00:00 GMT

Pioneer Power Solutions Inc. (NASDAQ:PPSI) ($6.36; $63.9 M market cap) a company engaged in the manufacture, sale and service of electrical transmission, distribution and on-site power generation equipment, announced Q2 2023 results:

Sales of $12.1 million vs. $4.9 million in the prior year
Non-GAAP EPS of $0.05 vs. a loss of $0.19 in the prior year

“Both our E-Bloc and e-Boost businesses continue to grow at a rapid pace, with steady margin expansion, supporting our expectations for at least 50% revenue growth and positive earnings per share for the full-year. Excluding one-time non-cash stock-based compensation, we were profitable during the second quarter, marking the third consecutive quarter of operational profitability. We are reiterating our full-year guidance and we have significant momentum as we head into 2024. This progress comes even as we invested approximately $1.4 million in our new e-Boost solutions during the first half of the year to drive further growth."

Research

Mon, 22 May 2023 11:56:45 GMT

Pioneer Power Solutions Inc. (NASDAQ:PPSI) a company engaged in the manufacture, sale and service of electrical transmission, distribution and on-site power generation equipment reported Q1 2023 results on May 15, 2023. The results were sequentially down fromQ4 as we had expected, but we wanted to highlight an exchange on the conference call that provides insight on the remaining quarters for 2023.

“Analyst question: With respect to the guidance, Nathan, can we now expect sequentially stronger quarters through the rest of 2023?

Nathan J. Mazurek, Pioneer Power Solutions, Inc. - President, CEO & Chairman - That's the expectation, correct, both in terms of revenue and in terms of EPS.”

Should be noted the comments align with current analyst estimates of sales of $9.7, $11.1 and $12.0 respectively and EPS of $0.00 , $0.03 and $0.05.

PodClips

Wed, 05 Apr 2023 13:28:14 GMT

Yesterday, we conducted a Fireside Chat with Nathan Mazurek, President and CEO of PPSI.

In a PodClip below, Maj discusses a key takeaway from the conversation, which revolves around closely tracking if 2022 Q4 margins can be maintained to some degree on robust 2023 revenue guidance. Will likely require more revenue contribution from e-Boost product line. Thanks!

Research

Fri, 31 Mar 2023 19:57:55 GMT

Pioneer Power Solutions Inc. (NASDAQ:PPSI) ($2.93; $28.9 M market cap) a company engaged in the manufacture, sale and service of electrical transmission, distribution and on-site power generation equipment, announced Q4 2022 results:

Sales of $9.5 million vs. $3.5 million in the prior year but below analyst estimates of $10.9 million
EPS of $0.10 vs. a loss of $0.16 in the prior year and well ahead of analyst estimates of a loss of $0.07
Full year sales of $27.0 million vs. $18.3 million in the prior year
Full year loss of $0.37 vs. a loss of $0.24 in the prior year

Guidance:

"We fully expect this growth to continue based on our firm backlog of over $37.2 million at December 31, specific shipment schedules, and increasing demand. We expect to achieve total revenue between $42 and $45 million in 2023, or at least 50% topline growth, as we continue to benefit from a robust market for our products and solutions."

"In addition, improved utilization of our manufacturing capabilities enabled significant margin expansion ahead of schedule in the fourth quarter, and we now expect to generate positive earnings per share for the full year of 2023," stated Mazurek. "This profitability comes even as we continue to invest in sales, marketing, and product development in order to enhance our already strong competitive position."

While the revenue guidance range is well below current analyst estimates of $54.5 million, analysts were also calling for a loss of $0.14 for the full year 2023. So it seems the company may be focusing on higher margin sales with an emphasis on bottom line improvements.

Investors may have issues coping with the possibility of inconsistent levels of profitability throughout 2023.

This may be a topic we discuss with the CEO in our upcoming Fireside Chat mentioned above.

Research

Mon, 01 Jul 2019 14:57:53 GMT

Pioneer Power Solutions Inc. (NASDAQ:PPSI) ($4.75; $41.4M market cap) a company engaged in the manufacture, sale and service of electrical transmission, distribution and on-site power generation equipment, announced the sale of its liquid filled and dry type transformer businesses to Mill Point Capital, a middle-market private equity firm, for $65.5 million in cash and notes ($60.5 million cash and $5 million in seller’s note).

Nathan Mazurek, Pioneer's Chairman and Chief Executive Officer, said, "Our belief that our assets were worth more individually than the market valuation of our combined organization is validated by this transaction, wherein we will divest a portion of our business for approximately 1.5x our current market capitalization, while retaining two exciting businesses and our status as a publicly traded Nasdaq listed company. Following the closing of this transaction, we plan to focus on streamlining and enhancing our Titan business in Minneapolis and our switchgear business in Los Angeles. With a strong balance sheet, we should be well positioned to assess our retained businesses, potential opportunities and the allocation of resources to best benefit shareholders. I am excited about phase two of Pioneer."

Based on the 8.7 million outstanding shares, this transaction equates to $6.89 in cash ($7.47 cash and sellers note). Investors should note that the segment that PPSI sold accounted for over 90% of total sales last year. It’s not immediately clear to what capacity management will deploy the capital, so it should be important for anyone who is following the PPSI story closely to assess the financial health of the remaining business segments.

Research

Thu, 29 Mar 2018 15:52:15 GMT

Pioneer Power Solutions Inc. (NASDAQ:PPSI) ($6.90; 60.2 M market cap) a company engaged in the manufacture, sale and service of electrical transmission, distribution and on-site power generation equipment, announced Q4 2017 results.

We are removing PPSI from the GeoBargain list and selling our long position to concentrate on stories we believe have a higher growth profile. We are somewhat surprised at the Q4 results and the sudden divestiture of the Switchgear business.

Given that the company has been trying to concentrate on higher-margin backlog, the decrease in gross margins for Q4 require a little more scrutiny on our part. We still like the management team and the long-term opportunity for the business.

Q4 Results

Sales of $23.6 million vs $24.6 million in the prior year and below analyst estimates of $33.6 million
Non-GAAP EPS of $0.05 vs $0.21 in the prior year and below analyst estimates of $0.21

Quotes from management:

"The majority of Pioneer's business segments continue to produce sustainable growth and profitability. Our switchgear segment, despite its exciting growth opportunities and its successful penetration of new and rapidly expanding markets such as distributed generation and energy storage, has compressed Pioneer's overall profitability. Consequently, we have decided to sell this business in a transaction that will allow Pioneer's shareholders to continue to participate in the upside of this business while relieving Pioneer from the costs such dynamic growth extracts. We have successfully identified a buyer and signed a letter of intent with them. We are moving rapidly towards completing a sale, with this business reclassified as discontinued operations during 2017."

"With this business divested and our final payments for our legacy tax issues scheduled in the second quarter, the new, more streamlined Pioneer is poised to generate significant profitability and free cash flow in 2018 and beyond," continued Mr. Mazurek. "During 2017, Pioneer generated $1.4 million in free cash flow from operations even as we supported the switchgear business and continued to make significant tax payments relating to issues in 2014 and 2015. With these challenges behind us, we expect to apply our strong free cash primarily to debt reduction for the balance of 2018."

2018 Outlook:

Management expects the Company to generate high-single-digit growth in revenues from continuing operations. In addition, management expects to increase Adjusted EBITDA for the full year of 2018 compared to 2017.

We disclosed our long postioin in PPSI in March 2016 when the stock was trading at $4.60. Shares reached a high of $9.40 or slightly over 100% return during its tenure.

Research

Tue, 06 Feb 2018 17:14:24 GMT

GB Pioneer Power Solutions Inc. (NASDAQ:PPSI) ($7.5; 65.4M market cap) announced a new five year contract for network transformers with a electric and gas utility company. The Company expects the contract, which became effective January 19, 2018, to generate annual revenue of approximately $2 million. PPSI manufactures, sells and services a range of specialty electrical transmission, distribution and on-site power generation equipment for applications in the utility, industrial, commercial and backup power markets.

Nathan Mazurek, Pioneer's Chairman and Chief Executive Officer, said:

"As a provider of transformers to a number of nationally-recognized and regional utilities, we are pleased to add this major regional utility to our growing portfolio of major utilities and support the delivery of reliable power to its customers. Our ability to win this contract through a competitive bidding process validates our confidence in our solutions and our reputation for outstanding customer service. This new award reinforces our outlook for continued profitable growth in 2018 and beyond."

Research

Fri, 10 Nov 2017 16:28:35 GMT

GB Pioneer Power Solutions Inc. (NASDAQ:PPSI) ($7.53; mc $65.6m) announced Q3 2017 results:

Sales $29.8 million vs $29.4 million in the prior year
Company reported non-GAAP EPS of $0.21 vs $0.17 in the prior year

2017 Outlook:

Revenue between $120 and $127 million (believes will be at low end)
GAAP EPS of $0.18 to $0.23
Non GAAP EPS of $0.83 to $0.93

Quotes from management:

"We continue to expect to reach the low-end of our revenue guidance for the full-year, suggesting a record top-line for the fourth quarter due in large part to hurricane-related orders," added Mr. Mazurek. "In addition, we expect to achieve our guidance for Adjusted EBITDA, suggesting record profits in the fourth quarter. Lastly, our dry type distribution transformer operation in Canada incurred $873,000 in non-recurring charges related to the write-off of raw material inventory for finished products we are now sourcing from our partner in Asia, at much lower costs than we can achieve by producing them ourselves in North America. This charge resulted in a one-time, 293-basis point negative impact on our reported gross margin as well as a negative impact on our net income. As a result, we are adjusting our full-year outlook for net income. We fully expect our gross margins to return to their historical levels in the fourth quarter."

Comments & Business Outlook

Fri, 11 Aug 2017 14:53:17 GMT

GB PPSI ($5.90) announced Q2 2017 results:

Sales of $30.9 million vs $29.9 million in the prior year and ahead of analyst estimates of $29.3 million
Geo calculated Non-GAAP EPS of $0.14 vs $0.06 in the prior year and ahead of analyst estimates of $0.13
Company’s non-GAAP EPS $0.21 vs $0.18
Reaffirmed 2017 guidance of sales between $120 and $127 million and non-GAAP EPS of $0.83 to $0.93

Quotes from management:

“The significant changes we have made in this business to rationalize expenses and refocus on higher margin opportunities have enabled us to reach a revenue level that should support consistent profitability, a significant change from last year."

"Finally, subsequent to the end of the quarter, we launched a new line of power generation equipment to be sold exclusively in eight states and non-exclusively in the rest of the country," concluded Mazurek. "This exciting launch significantly broadens our opportunities for generator sales and expands our margins on these products. We expect this to be a material contributor to our 2018 results."

Research

Fri, 30 Jun 2017 04:00:00 GMT

Pioneer Power Solutions Inc. (NASDAQ:PPSI) ($6.45) announced today that it received a new 30-month contract for liquid-filled network transformers, which became effective June 26, 2017, and is expected by management to generate annualized revenues of up to $2 million through 2019.

Nathan Mazurek, Pioneer's Chairman and Chief Executive Officer, said,

"This agreement adds a new, large utility to our customer list. Pioneer continues to benefit from increasing demand for electricity, as well as increased infrastructure spending. This new customer and incremental order is an encouraging win for us, demonstrating our growing presence among major utilities and bolstering our optimism as we look into 2018 and beyond."

PPSI, a company that manufactures, sells and services a range of specialty electrical transmission, distribution and on-site power generation equipment for applications in the utility, industrial, commercial and backup power markets, is currently featured on Executive Casts. Mr. Mazurek talks about many aspects of the business, and if you have not had a chance to view the series, please do so here.

Comments & Business Outlook

Fri, 12 May 2017 16:22:19 GMT

PPSI ($6.85) reported Q1 2017 results:

Sales of $27.3 million vs $26.6 million in the prior year; below analyst estimates of $29 million
Non-GAAP EPS of $0.17 vs $0.17 in the prior year; ahead of analyst estimates of $0.12 (we plan to confirm how analysts calculate non-GAAP EPS)
Reaffirmed 2017 revenue and non-gaap EPS guidance of $120 to $127 million and $0.83 to $0.93 respectively.

Quotes from management:

"I am encouraged by the progress we made in the first quarter, particularly in our switchgear business which generated a modest profit after losing money last year. We delivered $2.1 million in Adjusted EBITDA, while facing the typical seasonality which impacts our first quarter, and based on our backlog and scheduled deliveries, I am increasingly confident in our ability to achieve our full-year guidance…

...Pioneer is well-positioned for profitable growth...

...we are extending and expanding our portfolio of products manufactured in India, and expect significant orders in 2017 that will help drive further growth in 2018 and beyond."

We believe the Company will need to increase its topline growth rate in order for its valuation multiples to expand.

Research

Fri, 31 Mar 2017 17:35:03 GMT

PPSI ($7.30) announced a service agreement renewal and expansion with a global digital communications provider. Annual billings for the extension are expected to be approximately $3.0 million per year.

Quote from management:

"This agreement extends and expands our relationship with one of the country's premier, global telecommunications providers and represents incremental growth of our higher margin services business. The additional 430 site locations over two states significantly expands our relationship with this important client, and we are poised to effectively leverage the service and support teams already in place to increase our efficiency. We are pleased this customer recognizes the value we add to its operations and entrusts us with additional scope of work to support its power systems."

In related news, $TRR ($11.95, was marked up 45% premarket), a stock from our Infrastructure Overhaul screen was acquired this morning for a 45% premium, nearly 28 times its forward 2017 EPS estimates. We feel it is possible that this acquisition could temporarily propel other stocks in the sector.

Research

Fri, 10 Mar 2017 16:14:12 GMT

PPSI ($7.15) is engaged in the manufacture, sale and service of electrical transmission, distribution and on-site power generation equipment. PPSI announced Q4 2016 results:

Sales of $28.5 million vs $26.3 million in the prior year and below analyst estimates of $31.0 million
Company reported non-GAAP EPS of $0.21 vs $0.15 in the prior year and ahead of analyst estimates of $0.15
Backlog of $38.6 million vs $28.7 million in the prior year

Quotes from management:

“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."

Maintains previously issued 2017 guidance:

Revenue between $120 and $127 million
Adjusted EBITDA of $10.0 million to $11.0 million
Non-GAAP EPS between $0.83 to $0.91

Guidance is based on unexciting top line growth as the company continues to transition its backlog to higher margin products. Guidance could prove to be conservative if the company can accelerate its revenue growth. It is also worth noting, that the quote we referenced above clearly shows PPSI is indeed an infrastructure play that could benefit from Trump’s policies.

We first highlighted PPSI on March 22, 2016 when the stock was trading at $4.20. We disclosed our long position on March 30, 2016, when the stock was trading at $4.60. You can see our full coverage on PPSI here.

Research

Thu, 02 Feb 2017 18:57:46 GMT

GeoBargain $PPSI ($8.50) signed a long term contract extension with a major utility customer valued at $4 million annually for 5 years. Management stated:

"This award reinforces our confidence in our 2017 outlook and is included in the preliminary guidance we recently provided," continued Mr. Mazurek.

Recall, the company recently issued its 2017 outlook on January 10, 2017:

Revenues between $120 million and $127 million vs analyst estimates of $124.8 million
Adjust Sales ed Ebitda of $10 million to $11 million
Non-GAAP EPS between $0.83 to $0.91, well ahead of analyst estimates of $0.52

Please note that the contract award was already baked into the guidance.

Research

Tue, 10 Jan 2017 16:08:50 GMT

PPSI ($5.75) provided its 2017 outlook. For the full year of 2017, the Company expects:

Revenues between $120 million and $127 million vs analyst estimates of $124.8 million
Adjust Sales ed Ebitda of $10 million to $11 million
Non-GAAP EPS between $0.83 to $0.91, well ahead of analyst estimates of $0.52

Quotes from management:

"This outlook represents continued margin expansion and further improvement in profitability, as we continue to benefit from the operational improvements we have made and continue to make. We remain focused on higher margin opportunities, resulting in targeted growth. We see continued strong demand for our solutions, as evidenced by our solid backlog of $39.6 million as of December 31, 2016, up from $28.7 million in backlog at December 31, 2015. In particular, we are expanding our presence in the areas of microgrids, distributed generation, on-site generation service and data center solutions. The continued bottom-line improvements are due to our ability to extract operational leverage from our business, and we are confident we can further expand profitability and cash generation as we scale the business."

We recently had a discussion with PPSI CEO Nathan Mazurek via Executive Casts, where he cleared up some confusion on 2016 guidance and inferred some strong guidance for 2017.

Research

Wed, 21 Dec 2016 14:01:51 GMT

PPSI ($5.45) announced $1.8 million in sales through collaboration with major engineering firm. Comments from management:

"This ongoing collaboration between Jefferson Electric and a large, global engineering firm is driving new opportunities for Pioneer. In addition to these three wins, additional collaboration opportunities are moving through our sales pipeline. As a result, we are serving an increasingly wide array of end customers, representing diversified and growing demand for our customized solutions. Our backlog, which reached record levels at the end of the third quarter, has grown since then. These wins, along with our expanding backlog and growing demand for our solutions, bolster our confidence as we look into 2017 and beyond and we believe we can improve profitability as we more effectively leverage our streamlined manufacturing organization."

Research

Tue, 15 Nov 2016 18:28:51 GMT

PPSI ($5.15) reported Q3 2016 results:

Sales of $29.4 million vs $24.9 million in the prior year; below analyst estimates of $32 million
Non-GAAP EPS of $0.10 vs $0.03 in the prior year; below analyst estimates of $0.16
Maintained full year 2016 guidance:
- Revenue between $117 and $127 million
- Adjusted EBITDA between $8.0 and $9.5 million
- Non-GAAP diluted EPS between $0.55 and $0.66 based on 8.7 million shares

It appears a delay in project commitments negatively impacted third quarter financial results. However, it seems that the shortfall will be made up in Q4 which should end up being a huge quarter for the company. Guidance implies that:

Sales range will be $31.1 to $41.1 million vs $26.5 in the prior year; analyst estimates are for $32 million
EPS will be in the range of $0.26 to $0.37 vs $0.16 in prior year; analyst estimates are for $0.17
Shares on now trading a P/E of 8.5 on the midpoint of 2016 EPS guidance

Quotes from management:

"The operational improvements we made in recent quarters to expand the profitability of our business drove a $4.5 million improvement in operating income, and a $2.1 million in Adjusted EBITDA. We are focused on further improving the profitability of the company and have identified additional efficiencies to deliver on this initiative. We are relocating our remaining dry type transformer manufacturing business operation in Canada to our lower-cost facility in Mexico, which will improve both gross and operating margin and expand our opportunities to drive revenue growth in this product line as well. Simultaneously, we are focusing on higher margin opportunities, and working to further improve efficiency, capacity utilization and overall operations in our other divisions, to drive further profit enhancement. We expect to recognize the benefits of these initiatives in 2017 and beyond."

Comments & Business Outlook

Fri, 28 Oct 2016 18:31:13 GMT

FORT LEE N.J., Oct. 28, 2016 /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 that the Internal Revenue Service has granted an abatement for $1.2 million in previously accrued penalties related to the Company's delinquent federal payroll tax obligations. The abatement covers 100% of the accrued penalties from Pioneer Power Solutions (Corporate), Pioneer CEP, and Jefferson Electric, with accrued penalties for Pioneer Critical Power, Inc. still being reviewed by the IRS for potential abatement. The remaining accrued penalty represents less than $100,000.

As previously disclosed, beginning in the third quarter of 2015 and in future quarters, Pioneer recognized charges of approximately $1.8 million for estimated accrued interest and potential penalties for failure to timely file, deposit and pay employer's federal tax returns and make associated payroll tax payments, while seeking abatement with the IRS. Subsequently, the Company negotiated installment agreements to pay all taxes and interest. The abatement notifications were received on October 24, 2016.

Mr. Thomas Klink, Pioneer's Chief Financial Officer, said, "We are glad to resolve this issue, and pleased the IRS was willing to grant this abatement. The reversal of the accrued penalties will be recognized by Pioneer during our fourth fiscal quarter, the period ending December 31, 2016."

Research

Fri, 07 Oct 2016 15:33:04 GMT

Added to Our PPSI Position

In yesterday’s email we highlighted some companies whose business prospects can be impacted when natural disasters affect the U.S. mainland. We mentioned some names whose businesses could be positively affected and some property and casualty insurers who could suffer adversely, depending on the storm's damage.

Late in the trading day, we added some shares to our $PPSI ($5.89) position.

We felt comfortable adding to PPSI since it was already a GeoBargain and a core long position. If there is no uptick from the Hurricane Matthew effect, we have no problem holding the shares as part of our core position.

Early indications seem to show that the storm may not have caused as much damage as expected. In yesterday’s email we noted some property and casualty insurers who may suffer if the storm’s damages were severe. Most of those companies are trading higher in the pre-market, presumably from investors realizing that damages would not be as severe as was being portrayed by the media. We have added a column to yesterday’s table showing roughly were these stocks were trading prior to the initial hurricane fear. Traders may assume that prices could gravitate back to or surpass those levels if damage from the storm is limited.

Symbol	Price (pre-market)	Only In Florida	% in Florida	Price/Book	P/E (ttm)	Price prior Hurricane Fears
$UVE	$21.91	No	“a substantial majority”	2.22	6.71	$25.00
$UIHC	$15.74	No	About 50% of all premiums are in Florida	1.35	10.12	$17.00
$HCI	$27.40	Yes	100%	1.19	9.3	$30.00
$FNHC	$17.24	No	About 75%	0.99	8.15	$18.75

Comments & Business Outlook

Fri, 12 Aug 2016 15:48:39 GMT

PPSI (5.43) reported Q2 2016results:

Sales of $29.9 million vs $26.5 million in the prior year and ahead of analyst estimates of $28.0 million
Non-GAAP EPS of $0.08 vs a non-GAAP loss of $0.05 in the prior year but below analyst estimates of $0.11
Order backlog of $37.8 million compared to $32.8 million in prior year period
Maintained full year guidance:
- Revenue between $117 and $127 million
- Adjusted EBITDA between $8.0 and $9.5 million
- Non-GAAP diluted EPS between $0.55 and $0.66 based on 8.7 million shares

Quotes from management:

We achieved a double-digit increase in sales in the second quarter, and our strong backlog supports our expectations for continued growth. Our operating income and Adjusted EBITDA both improved by $2.1 million compared to the second quarter of 2015. This improvement over the past year is the direct result of specific actions to eliminate losses at two divisions, putting us back on the right path for growth and improved profitability. As a result, we continue to advance towards achieving our full-year 2016 guidance."

We ended the second quarter with a record $37.8 million backlog," continued Mr. Mazurek. "Demand for our solutions is strong, and we are encouraged by the level of sales activity that has continued into the start of the third quarter. Our primary focus is on expanding profit margins, improving overall efficiency and increasing our profitability and cash flows. We are increasingly well positioned to deliver on these goals."

Research

Tue, 12 Jul 2016 15:47:21 GMT

PPSI ($5.09) announced a three year $7 million service agreement with one of the largest department store chains in the United States. Management states the contract bolsters its full year revenue and EBITDA outlook. Quotes from management include:

"Maintenance of emergency backup systems is mission critical for retailers. Pioneer will be an integral part of this customer's enterprise infrastructure, ensuring power redundancy to enable the smooth continuation of operations, the safety of the retailer's customers and the preservation of perishable inventory items in the event of a temporary power loss. Even a momentary power outage at one location could have a profound impact on a company's financial performance, customer loyalty or brand reputation. We are pleased to have been selected to maintain power backup systems to fill this critical need."

Courtesy of GeoInvesting.com

Our main takeaway from this press release is that it removes some uncertainty from Company's outlook it provided in its Q1 release. Per the Q1 2016 conference call (but not in release), management had stated it had good visibility for Q2 and Q3 but Q4 was not as clear. We think this is why shares had a relatively muted reaction to Q1 numbers. It seems this contract in addition to recent months of operations have bolstered management's confidence for its previously issued full year guidance.

Research

Fri, 13 May 2016 15:19:53 GMT

PPSI ($5.71) -Reported Q1 2016 results:

Sales of $26.6 million vs $28.8 million in the prior year and in-line with analyst estimates of $26.0 million
Non-GAAP EPS of $0.11 vs $0.03 in the prior year and in-line with analyst estimates of $0.11
Reaffirms 2016 guidance of revenues between $117 and $127 million and non-GAAP EPS between $0.55 and $0.66

Quotes from management:

"The first quarter results were consistent with our strategic plan for 2016 and reflect the benefit of the assertive actions taken in the latter half of 2015 to eliminate drags on our earnings and reposition Pioneer for profitable growth. We delivered positive operating income and net income, expanding our operating income by $2.3 million sequentially and $1.2 million year-over-year as we saw most of the benefit of the cost reduction initiatives, including the consolidation of six manufacturing facilities to three and the rationalization of our Canadian dry-type transformer operations. We continue to expect further improvements in our bottom line as the year progresses, taking advantage of economies of scale and operational efficiencies, and we expect incremental improvements in our Adjusted EBITDA over the rest of this year."

"We expanded our backlog by approximately $7.0 million from December 31 to March 31, with further bookings during April, setting the stage for growth in 2016 and 2017," continued Mr. Mazurek. "Demand for our solutions remains strong and is growing, as businesses look for innovative ways to more effectively and efficiently manage electricity. We have exited certain low margin market segments, impacting revenue in the short term but significantly helping our profitability. With a more stable and sustainable cost structure, and a more efficient operation, we are positioned for predictable and profitable growth going forward."

PPSI’s Q1 2016 results were in line with our expectations. We feel confident the Company will be able to post strong financial results for the rest of fiscal 2016. Applying a P/E multiple of 15 on the midpoint of its non-GAAP EPS guidance of $0.60 equates to a near term price target of $9.00. It is unclear how investors will react to today’s results since Q1 2016 revenues were down vs. last year due to the Company's plan to focus less on lower margin projects, an intention they had already disclosed. We will look to buy the dips if shares fall in today’s session.

Research

Mon, 09 May 2016 14:54:21 GMT

GeoBargain PPSI ($5.45) is one of our favorite stock selections for 2016. We feel with a recent stock offering behind it and the successful integration of the August 2015 0f Pacific Power acquisition, that PPSI should post strong growth in 2016. The Company issued strong fiscal 2016 guidance of:

Revenue between $117 and $127 million
Adjusted EBITDA between $8.0 and $9.5 million
Non-GAAP diluted EPS between $0.55 and $0.66 based on 8.7 million shares

Still, investors need to be cognizant that management missed its guidance in 2015 due to the unexpected weakness in the oil and gas sector and longer than anticipated successful integration of its Pacific Power acquisition. Furthermore, its low outstanding share count combined with timing of orders could create some quarterly volatility in EPS, making it susceptible to missing quarterly analyst estimates. PPSI is slated to report its earnings pre market on May 13, 2016. We firsthighlighted PPSI on March 22, 2016 when the stock was trading at $4.20. We disclosed our long position on March 30, 2016, when the stock was trading at $4.60.

Research

Thu, 21 Apr 2016 14:05:41 GMT

We Have Added To Our Long Position In PPSI

Over the last several days, we have added to our long position in $PPSI ($5.00). We firsthighlighted PPSI on March 22, 2016 as a stock we were tracking due to a recent acquisition strategy, restructuring plans, strong 2016 guidance and increasing infrastructure spending in the U.S. The stock was trading at $4.20 at that time.

Research

Thu, 31 Mar 2016 14:48:31 GMT

Initiated Long Position In PPSI

Yesterday via premium tweet we coded $PPSI ($4.90) as a GeoBargain and stated we were initiating a long position. In yesterday’s morning email we discussed the Company’s Q4 2015 results and bullish conference call commentary, noting that it offered a bit of information arbitrage on the 2016 outlook. We had one reservation regarding the non-GAAP calculations, which we wanted to clear with management. As we stated in our tweet, after further discussions with management, we were able to confirm that our non-GAAP calculations are near that of which management reported, $0.16 for Q4 2015.

We first highlighted PPSI on March 22, 2016 as a stock we are tracking due to a recent acquisition strategy, restructuring plans, strong 2016 guidance and increasing infrastructure spend in the U.S. The stock was trading at $4.20 at that time.

Research

Wed, 30 Mar 2016 15:42:15 GMT

PPSI ($4.39) - On March 22 we highlighted PPSI as a stock we are tracking due to a recent acquisition strategy, restructuring plans, strong 2016 guidance and increasing infrastructure spend in the U.S. The company released preliminary Q4 results on March 16, 2016.

Yesterday, the company reported actual Q4 2015 results:

Sales of $26.3 million vs $24.1 million in the prior year and in-line with analyst estimates
Non-GAAP EPS of $0.16 vs a loss of $0.18 in the prior year and ahead of analyst estimates of $0.13

Management commentary:

"We entered 2016 in a far stronger position from where we were just 90 days ago, with a streamlined cost structure driving improved gross margins and greater adjusted EBITDA generation. We began to see the partial benefit of our cost reduction efforts in the fourth quarter, and we expect incremental benefit in the first quarter, driving greater profitability as we move through 2016…

... Even without the full benefit of these cost reduction efforts, our adjusted EBITDA for the fourth quarter puts us ahead of the run-rate necessary to meet our 2016 guidance, and we expect further improvements in 2016, particularly in the second-half of 2016."

On guidance:

"As part of our business strategy, we also have been looking carefully at our project pipeline and turning down certain lower-margin projects that do not offer the growth potential or the profitability of the majority of our business," added Mr. Mazurek. "In addition, we have been selectively raising prices on certain lower-margin, low-volume business. As a result, we have adjusted our revenue expectation for 2016, but expect higher profit margins.

Management offered updated 2016 guidance:

Revenue between $117 and $127 million (Prior guidance range of $130 to $140 million)
Adjusted EBITDA between $8.0 and $9.5 million (Prior guidance range of $7.0 to $9.0 million)
Non-GAAP diluted EPS between $0.55 and $0.66 based on 8.7 million shares (Prior guidance range of $0.55 to $0.65)

Conference Call Information Arbitrage

Here is some commentary from the conference call that some investors may not have picked up on yet. Finding this kind of information before the masses is a competitive investing advantage we call “Information Arbitrage,” or Info. Arb.

“We expect our first quarter to show meaningful improvement compared to the first quarter last year consistent with typical seasonality in some of our businesses and do good compensation of the projects in our backlog we expect our financial results to show further improvement as we move through 2016.

We expect the first quarter to be the lowest in terms of profitability and we expect that profitability to accelerate as we move through the year. The project oriented nature of our business particularly our Pacific Power business and lower service revenue from Titan in the first quarter due to weather constraints leads to non-linear results and several of the larger projects are expected to kick in during the second quarter and benefit to second half of the year as well. We do expect each quarter in 2016 will be better in terms of revenue and profits than the same quarter in 2015.”

We are still not long PPSI. We are taking a closer look at non-GAAP calculations. If our non-GAAP calculations match the Company’s we will be buyer's this morning. We are having a hard time reaching management to discuss our calculations.

Research

Tue, 22 Mar 2016 16:29:18 GMT

PPSI ($4.20) is engaged in the manufacturing, selling, and servicing of specialty electrical transmission, distribution, and on-site power generation equipment. A recent acquisition strategy, restructuring plans, strong 2016 guidance and increasing infrastructure spend in the U.S. have placed PPSI on our watch-list.

We have been tracking companies that contribute to rebuilding the U.S. infrastructure for some time. We recently highlighted NVEE, WLDN and SMID. Our research analysis on those companies can be found here, here and here respectively.

PPSI bottom line performance has been sporadic over the last few years. (All EPS figures are non-GAAP as reported by the company.)

Fiscal Quarter

2015 FY

2014 FY

2013 FY

2012 FY

2011 FY

March

REV

EPS

$28.3

$0.03

$20.8

$0.10

$22.5

$0.18

$20.3

$0.16

$15.7

$0.03

June

REV

EPS

$26.4

($0.05)

$21.1

$0.06

$21.9

$0.24

$21.8

$0.17

$16.4

$0.10

Sept.

REV

EPS

$24.9

$0.03

$26.1

$0.28

$22.4

$0.21

$19.2

$0.13

$17.9

$0.09

Dec.

REV

EPS

$26.2*

TBA

$24.1

($0.18)

$21.1

$0.18

$22.7

$0.24

$18.8

$0.34

Totals

REV

EPS

$106.5*

TBA

$92.1

$0.26

$88.1

$0.81

$84.0

$0.70

$68.8

$0.56

*Preliminary announcement

Please note that we have not purchased any stock since we are in the early stages of our due diligence process.

Despite the sporadic financial performance, we still think the company is worth tracking. Some of our best stock selections are those of companies that are on the cusp of showing improved financial results after years of subpar performance.

Our reasons for optimism for PPSI are:

Recent acquisition of Pacific Power Systems has been fully integrated and is expected to begin to positively impact financials. The company closed the acquisition on August 3, 2015, and stated it expects the acquisition to be approximately $0.05 to $0.10 accretive to non-GAAP earnings.

In the Q3 2015 conference call, management discussed the positive effects it expects from its restructuring plan. The company consolidated its manufacturing facilities, outsourced low margin work and reduced headcount. Quote from the Q3 call shows the benefits from these restructuring efforts started to be felt in Q4 2015.

“I would point out that most of the savings we expect from the restructuring plan have not yet been reflected in our results which leaves me more encouraged about the $1 million sequential improvement in our EBITDA this quarter.”

In the Q3 2015 earnings released the company offered full year 2015 and 2016 guidance:
- 2015 revenues to be between $105 and $110 million
- 2015 non-GAAP EPS between $0.07 and $0.09
- 2016 revenues to be between $130 and $140 million
- 2016 non-GAAP EPS to be between $0.55 and $0.65
Tailwinds from continued focus on billions of dollars of infrastructure spending in the U.S. The company stated it sees significant opportunity with the aging North American electrical infrastructure needing to be replaced as well as increasing demand and requirements from grid system stability and efficiency. Here are some stats we wrote referenced in the past (GV)) or look for new ones…
Large insider ownership. As of March 2016 insiders owned 58.4%, the majority owned by CEO Nathan Mazurek.
Using a conservative forward P/E multiple of 10 on the midpoint of the company’s 2016 non-GAAP EPS guidance would translate to a near term price target of $6.00, or 50% higher than current prices.

Caveats:

Roughly 35% of revenues are generated in Canada. The Canadian economy has been struggling with the decline in oil prices. However, management has taken a conservative approach with its 2016 guidance. It is factoring in zero growth in its Canadian operations and a CAD/US exchange of $0.72 which is below current rate of $0.77.
Its secondary offering which was completed in September 2015, was not very shareholder friendly. The company offered 1.1 million shares at $4.00. The stock was trading at $5.80 when the proposed secondary was announced just 5 days prior to the pricing. While this certainly is a cause for concern on a go forward basis, our due diligence concludes that the Company will not have to raise capital in the near to mid-term.
Although we are fairly confident that management can hit its 2016 financial guidance, we think there is some risk in quarterly variability in sales and EPS due to the timing of orders, lending to the possibility that the company could miss analyst quarterly estimates from time to time (especially early in the year as business ramps up). Short-term investors should be cognizant of this risk.

Reasons For Tracking

Tue, 22 Mar 2016 04:00:00 GMT

PPSI bottom line performance has been sporadic over the last few years. (All EPS figures are non-GAAP as reported by the company.)

Fiscal Quarter

2015 FY

2014 FY

2013 FY

2012 FY

2011 FY

March

REV

EPS

$28.3

$0.03

$20.8

$0.10

$22.5

$0.18

$20.3

$0.16

$15.7

$0.03

June

REV

EPS

$26.4

($0.05)

$21.1

$0.06

$21.9

$0.24

$21.8

$0.17

$16.4

$0.10

Sept.

REV

EPS

$24.9

$0.03

$26.1

$0.28

$22.4

$0.21

$19.2

$0.13

$17.9

$0.09

Dec.

REV

EPS

$26.2*

TBA

$24.1

($0.18)

$21.1

$0.18

$22.7

$0.24

$18.8

$0.34

Totals

REV

EPS

$106.5*

TBA

$92.1

$0.26

$88.1

$0.81

$84.0

$0.70

$68.8

$0.56

*Preliminary announcement

Please note that we have not purchased any stock since we are in the early stages of our due diligence process.

Our reasons for optimism for PPSI are:

Recent acquisition of Pacific Power Systems has been fully integrated and is expected to begin to positively impact financials. The company closed the acquisition on August 3, 2015, and stated it expects the acquisition to be approximately $0.05 to $0.10 accretive to non-GAAP earnings.

In the Q3 2015 conference call, management discussed the positive effects it expects from its restructuring plan. The company consolidated its manufacturing facilities, outsourced low margin work and reduced headcount. Quote from the Q3 call shows the benefits from these restructuring efforts started to be felt in Q4 2015.

“I would point out that most of the savings we expect from the restructuring plan have not yet been reflected in our results which leaves me more encouraged about the $1 million sequential improvement in our EBITDA this quarter.”

In the Q3 2015 earnings released the company offered full year 2015 and 2016 guidance:
- 2015 revenues to be between $105 and $110 million
- 2015 non-GAAP EPS between $0.07 and $0.09
- 2016 revenues to be between $130 and $140 million
- 2016 non-GAAP EPS to be between $0.55 and $0.65
Tailwinds from continued focus on billions of dollars of infrastructure spending in the U.S. The company stated it sees significant opportunity with the aging North American electrical infrastructure needing to be replaced as well as increasing demand and requirements from grid system stability and efficiency. Here are some stats we wrote referenced in the past (GV)) or look for new ones…
Large insider ownership. As of March 2016 insiders owned 58.4%, the majority owned by CEO Nathan Mazurek.
Using a conservative forward P/E multiple of 10 on the midpoint of the company’s 2016 non-GAAP EPS guidance would translate to a near term price target of $6.00, or 50% higher than current prices.

Caveats:

Roughly 35% of revenues are generated in Canada. The Canadian economy has been struggling with the decline in oil prices. However, management has taken a conservative approach with its 2016 guidance. It is factoring in zero growth in its Canadian operations and a CAD/US exchange of $0.72 which is below current rate of $0.77.
Its secondary offering which was completed in September 2015, was not very shareholder friendly. The company offered 1.1 million shares at $4.00. The stock was trading at $5.80 when the proposed secondary was announced just 5 days prior to the pricing. While this certainly is a cause for concern on a go forward basis, our due diligence concludes that the Company will not have to raise capital in the near to mid-term.
Although we are fairly confident that management can hit its 2016 financial guidance, we think there is some risk in quarterly variability in sales and EPS due to the timing of orders, lending to the possibility that the company could miss analyst quarterly estimates from time to time (especially early in the year as business ramps up). Short-term investors should be cognizant of this risk.

Reverse Merger Activity

Sun, 28 Feb 2010 05:00:00 GMT

On November 30, 2009 Sierra Concepts, Inc. (“Sierra”), a Nevada corporation, was merged with and into Pioneer Power Solutions, Inc., a Delaware corporation (“Pioneer Power”), for the purpose of changing its state of incorporation to Delaware from Nevada and changing its name, in each case pursuant to a Certificate of Ownership and Merger and Articles of Merger, each dated November 30, 2009 and approved by stockholders on November 30, 2009.

Demand for our electrical power and distribution transformers results primarily from spending by electric utilities for replacements, expansions and efficiency improvements. Demand is also sensitive to overall economic conditions, particularly with respect to the level of industrial production and investment in commercial and residential construction. Other market factors include voltage conversion, voltage unit upgrades, electrical equipment failures, higher energy costs and stricter environmental regulations.

We believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the cyclical nature of the transformer industry and the markets for our products. Our operating results could also be impacted by a weakening of the Canadian dollar, changing customer requirements and exposure to fluctuations in prices of important raw supplies, such as copper, steel and aluminum. We attempt to minimize these increases through the inclusion of escalation clauses with respect to commodities in our customer contracts. In addition to these measures, we attempt to recover other cost increases through improvements to our manufacturing efficiency and through increases in prices where competitively feasible. Lastly, other economic conditions we cannot foresee may affect customer demand. We predominately sell to customers in the utility market. Accordingly, changes in the condition of any of our customers may have a greater impact than if our sales were more evenly distributed between different end markets.