PIONEER POWER SOLUTIONS, INC. Q3 FY2023 earnings call

• Third quarter revenue was a record since divesting the Transformer business, with $12.4 million in revenue.
• Net earnings were $0.10 per share, up from a loss of $0.13 per share in Q3 2022.
• E-Bloc benefits from distributed generation market growth, with solutions provided to Fortune 500 companies and utilities.
• e-Boost provides mobile high-speed electric charging, with units ranging from 30kW to 400kW, and has charged over 12,000 vehicles year-to-date.
• Expect to achieve full-year 2023 revenue guidance and positive net income, and enter 2024 with accelerating momentum and record backlog.

Third quarter revenue was $12.4 million, a record since divesting the Transformer business in 2019. Revenue from the T&D solution segment (E-Bloc power systems) increased 156% to $9.7 million. Revenue from the critical power segment (e-Boost) was up nearly 13% to $2.8 million. Gross profit for the third quarter was $3.7 million (30% of revenues) compared to $861,000 (14% of revenues) in Q3 2022. Year-to-date revenue was $33.1 million, up 89% from $17.5 million in the prior year. T&D solution segment revenue up 145%, critical power segment up 14%.

• Expect to achieve full-year 2023 revenue guidance and positive net income.
• Plan to announce formal 2024 guidance early in 2024.
• Expect e-Boost revenue to quadruple in 2024.
• Fourth quarter expected to be positive in EPS, though exact figure not specified yet.
• E-Bloc business expects to continue growing, with efforts to subcontract lower value processes to increase capacity.

Q: Congrats on the strong quarter, is the revenue indicative of potential trends?

A: Guidance for rest of year is $9 to $12 million, quarters can be uneven.

Q: Will e-Boost revenue quadrupling sacrifice E-Bloc capacity?

A: e-Boost and E-Bloc are made in different facilities, e-Boost growth can happen without affecting E-Bloc, which is near full capacity and subcontracting is planned.

Q: On e-Boost, are there large runways with existing customers?

A: Yes, from repeating customers in truck/electric bus, new use cases like water utilities and ports, and fleets.

Q: Expectation for EPS in Q4?

A: Expect Q4 to be positive, aiming for full-year positive EPS.

Q: Sustainability of 29% gross margin?

A: Aiming for 25% going forward, e-Boost spend will impact, expected e-Boost to stop being a drag in Q2 2024 and contribute in H2 2024.

Q: End market growth in Q3, especially data centers and water utilities?

A: End markets are positive, data and EV charging strong, water utilities and large automotive projects were key in Q3.

Q: Sales mix trend for Q4 vs Q3?

A: Product mix still beneficial, but specific job profitability not drilled down.

Q: Order delays on macro EV side?

A: Not seeing slowdown in target markets, orders from autonomous vehicle divisions remain strong.

Q: e-Boost revenue and E-Bloc capacity?

A: e-Boost sales ~$8-10M this year, aiming for ~$30-40M in 2024; E-Bloc at ~$35M capacity, subcontracting to increase capacity.

Q: Share count increase from stock-based comp?

A: Stock-based compensation and awards to employees contributed to share count increase.