Pioneer Power Solutions(US:PPSI)2024-10-08 21:20Revenue Performance - For the three months ended June 30, 2024, consolidated revenue decreased by $5,942, or 48.4%, to $6,340, down from $12,282 during the same period in 2023, primarily due to a decrease in sales of equipment from the Electrical Infrastructure segment [66]. - Electrical Infrastructure segment revenue for the three months ended June 30, 2024, was $2,945, a decrease of $6,431 or 68.6% compared to $9,376 in the same period of 2023 [68]. - Critical Power Solutions segment revenue increased by $489, or 16.8%, to $3,395 for the three months ended June 30, 2024, compared to $2,906 in the same period of 2023 [68]. - For the six months ended June 30, 2024, consolidated revenue decreased by $6,908 or 31.6%, to $14,930, down from $21,838 during the same period in 2023, primarily due to a decrease in equipment sales from the Electrical Infrastructure segment [69]. - Revenue from the Critical Power segment increased by $1,057 or 18.7%, to $6,710 for the six months ended June 30, 2024, up from $5,653 during the same period in 2023, driven by increased sales of e-Boost equipment and service sales [70]. Profitability and Expenses - Gross profit for the three months ended June 30, 2024, was $653, down from $3,878 in the same period of 2023 [66]. - Consolidated gross profit for the three months ended June 30, 2024, was $653, a decrease of $3,225 or 83.2% compared to $3,878 in the same period in 2023 [72]. - The consolidated gross margin decreased to 10.3% for the three months ended June 30, 2024, down from 31.6% during the same period in 2023 [72]. - Total operating expenses for the three months ended June 30, 2024, were $2,953, compared to $3,089 in the same period of 2023 [66]. - Selling, general and administrative expenses for the three months ended June 30, 2024, decreased by $370 or 12.1%, to $2,689, compared to $3,059 in the same period in 2023 [76]. - For the six months ended June 30, 2024, consolidated selling, general and administrative expenses increased by $205 or 4.0%, to $5,295, compared to $5,090 during the same period in 2023 [77]. Net Income and Loss - The net loss for the three months ended June 30, 2024, was $(2,283), compared to net income of $848 in the same period of 2023 [66]. - The company generated a net loss of $3,318 during the six months ended June 30, 2024, compared to net income of $1,590 in the same period of 2023 [82]. Backlog and Future Outlook - As of June 30, 2024, total backlog was $66,921, an increase from $45,911 as of March 31, 2024 [67]. - Backlog from E-Bloc power systems and related equipment was approximately $12,523, representing 19% of the total backlog as of June 30, 2024 [67]. - The company anticipates potential risks including fluctuations in sales, competition, and raw material prices that could impact future performance [58]. Segment Performance - Operating income from the Electrical Infrastructure segment decreased by $3,540 during the three months ended June 30, 2024, primarily due to decreased sales and increased expenses [78]. - The gross margin for the Electrical Infrastructure segment decreased to 0.4% for the three months ended June 30, 2024, down from 36.2% in the same period in 2023 [73]. - The gross margin for the Critical Power Solutions segment increased to 18.9% for the three months ended June 30, 2024, up from 16.7% in the same period in 2023 [73]. - Operating income from the Electrical Infrastructure segment decreased by $4,783 during the six months ended June 30, 2024, compared to the same period in 2023 [79]. - Operating loss from the Critical Power segment increased by $228 during the six months ended June 30, 2024, primarily due to increased research and development costs [79]. Cash Flow and Working Capital - Cash used in operating activities was $1,379 during the six months ended June 30, 2024, compared to cash provided of $366 in the same period of 2023 [85]. - Cash provided by financing activities was $4,923 during the six months ended June 30, 2024, compared to cash used of $228 in the same period of 2023 [86]. - As of June 30, 2024, the company had working capital of $11,140, including $6,512 of cash on hand, compared to $9,421 as of December 31, 2023 [86]. - The company had $614 of additions to property and equipment during the six months ended June 30, 2024, down from $810 in the same period of 2023 [89]. Legal and Compliance Issues - The company faced a legal complaint filed by Terrence and Kay Mimick on June 15, 2023, alleging negligent driving and seeking special damages related to injuries sustained in a car accident [99]. - An amended complaint was filed on July 7, 2023, which named Titan Energy Systems, Inc. as a defendant instead of Pioneer Critical Power, Inc. [99]. - A mediation held on October 6, 2023, did not result in a settlement, but a subsequent mediation in June 2024 led to a settlement of all claims, with the case dismissed on July 23, 2024 [99]. - As of the current date, the company is not aware of any other legal proceedings that could materially affect its business or financial condition [100]. - The company reported material weaknesses in internal control over financial reporting as of June 30, 2024, including issues with revenue recognition and inventory accounting [92]. - The company restated its consolidated financial statements for the year ended December 31, 2022, due to errors in revenue recognition related to over-time contracts [92]. - The company is implementing enhancements to its internal controls, including engaging external parties and updating accounting policies [94]. - The company acknowledges that future lawsuits or claims could adversely affect its financial condition and liquidity [100].