PPSI - Earnings call transcript Q3 2018 | Pioneer Power Solutions, Inc.

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Operator

Good day, everyone, and welcome to the Pioneer Power Solutions’ Third Quarter 2018 Earnings Conference Call. Today's conference is being recorded. And at this time, I'd like to turn the call over to Mr. Brett Maas from Hayden IR. Please go ahead.

Brett Maas

welcome. and you, Thank will Officer; by Financial and today and Officer. Mazurek, Chief Executive Tom be call Nathan hosted Chairman The Klink, Chief

open to review Following formal third quarter call. will there the appreciate to results. session We opportunity the the participants the be having financial on discussion, Q&A a

available remind will started, of the the is call on the this text being be a broadcast we get you and of Before over management's recording remarks prepared the made let me website. call the Internet, Company's and

During based management issued prepared Please risks and of materially. actual will are and call. earlier posted statements version to of both the remarks, this cause make the call, differ today contained to cautionary the regarding forward-looking release on assumptions refer These forward-looking statements. in these and subject expectations could text which to this are uncertainties statements that the content apply current of results to that earnings in the

that But Finally, of the discuss will the on sale pending the continued today the the provide business an operations please now not later over Management discontinued to classified Company's the results results call. business I'd Nathan, call Chairman discussed. to ahead. of turn the Mazurek, and as Switchgear like in operations. Nathan note be to update relate CEO. will will management go this please

Nathan Mazurek

you for us joining all thank today conference and afternoon Good call. our Brett. you, Thank for

our last number margin to are than reflect hard while of for earlier our backlog work on we delivering quarter, three results benefit from today quarter, well our and of mix statements The results within a driving business nature improvement. operating projects ensuing on and released All annual Indeed, units manifest types, quarter. financial and These particular, for Pioneer years. the more this past and of only segment our turnaround be well we consecutive build the this that results build few the six completing quarterly In second more of essentially prior our important a this our first continuing would component $XX,XXX operating Critical validate growth, to that year, product backlog and strategic months typical guidance. third contributed three profitably, million that quarter after the Power an sequential the normalized, had quarter, this all poised of performed revenue the to in record is EBITDA adjusted efficiently in generating business. $X.X the EBITDA

comments in I our Let over turn discuss to detail. before results the call in with regarding me overall general more business some the Tom, start order to financial

liquid-filled near business for been all has capacity at running XXXX. of Our

we focus is as here to order in drive best can mix profitability. optimize Our to as

our to product offering with additional beginning We Distribution from are our outsourced increase include other Magnetics to sales. also the partner, dry-type without segment to our enabling us and our Custom both normally segment our CapEx associated these business, OEM In and remained revenue robust. expand Asian risks

expect in to not medium medium rate of of where of EBITDA double Critical XXXX. complete, business than the business most record the quarter from do we revenue be that voltage more segment's has for its from derived related in was move cost incurred work. expect and voltage number the our its this is operation In Power our Mexico new and additional doubled more any the now addition, to we this XXXX, the million location, segment, new relocation-related again order competitive In to In reflect service in future. $X.X

customized the complex. requirement product We and highly are equipment in only where business pursuing instances is

United for systems change. more this this this reflects revenue most a XX customer's our also of the our improvement sequentially. the our remote quarter $XX leading $XX increase, expanded to from and in business monitoring stores short, with home up margins and expand reflect backlog. the we We locations a compared of from to we unit's significantly Concurrently, store last backlog hope expect installation topline entered and States. program revenue year-over-year EBITDA third year. revenue This In program this Our X,XXX of both quarter's and to is quarterly million retailer, a for pilot third quarter the XX% in record million,

a has last and our the record two for in by continuing steadily the backlog increase. absolute our is months, setting nearly $XX backlog last increased consecutive nine numbers new quarters, Over million, backlog to

facilities Canadian mining demand broad-based cannabis-related We with strength seeing projects. particular cryptocurrency are and in

a finalize our the definitive implication for sectors as long-awaited we be over services spread sale the our agreement and U.S. XXXX, would a to oil the is X, payment spending tax tax January demand year. midnight rebound divest products now make year, signed experiencing. in to gas resulting this the the While we're we infrastructure to Government-led to as the Federal In already delays, growth book well Inc. markets, enabling after and in mining a many May just one-time Switchgear revenue end incremental and After of business single CleanSpark, us of to gain in expect and some

in to closing over $X.XX of in value profitable, totality Based In important and price upon this million business. sale shares this approximately $XX share As stock flexible lease price. Pioneer's note additional more the result reflected tranches assets CleanSpark's of transaction divestiture, $X.X of million current It's promissory a Switchgear closing. us would added about or shares, sheet. Clearly, immediately our value receiving million November more equipment in is share per to we on on of the $X result of than of CleanSpark, will X, an for a certain million, financially warrants, and this this two not being balance for million. focused of X for Pioneer note, valued the X will value at be our create business, more exchange totaling will be more

more financial call. report, refrain to CleanSpark me the sales is of not during will comments creating and from the turn remains our more the for intent there other business, I its other we shareholders this will can Until definitive X six-month including on taking value an these the that, all it questions legal believe shares, any lockup further the effectively additional or our tax Once on obligations call grow appropriate to about something results. to to Pioneer. distribute in expires section Tom discuss our million let process transaction CleanSpark this With and shareholders, and Q&A to market account shares M&A, to conditions. into over any manner, transaction or long-term the continue answer We CleanSpark

Thomas Klink

and everyone. you, Thank Nathan, afternoon, good

Switchgear to XX.X% of profit also that products driven or a down a and percentage press reflects these XXXX. of year-ago was our by XXXX $XX.X sequential a both unprofitable continuing expenses on quarter compares I'm quarter increase a which of discussed, second continuing focus gain down business. partially basis. to second results revenue I May and benefited year-over-year revenues revenues, The our increase of year, $XX basis from of $XXX,XXX in million third Before Year-over-year, we third quarter this $X.X the sales, resulting million by were get increased on gross significant basis a improvement In quarter year-ago sequential the on from in an third transformer compared X.X% XXXX. period. down $X.XX third revenue only. income revenue sell on third reporting. we $X.X general a were XXXX been this of and or administrative the and dollar of lower quarter generator Revenues the started, to sales equipment, a the compared sales reduced compared XXXX in up operations quarter higher $X.X quarter XXXX, the increased quarter third the release revenues, SG&A Company's has XXXX. an $X.X the for up significantly quarter of as a were XX.X% continuing liquid-filled year-to-date for Gross percentage operations revenues of from business or service of from $XXX,XXX dollar the expenses reclassified of $XXX,XXX in the a quarter $X offset third revenues quarter to million of XXXX, of million million $X.XX in X.X%. about the compared of and to Operating of second of was operations quarter Operating discontinued The as portion to XX.X% service of of agreement by XX.X% was or in Sequentially, generators Accordingly, million, XXXX, the of million XXXX of Selling, operations quarter. revenues from and presented X.X% the third in in as basis Sequentially, the discuss third gain maintenance revenues XXXX. in of Nathan exchange compared year-over-year. or foreign revenue XX.X% was signed for of XXXX. million million were compared our the in million profit for income of from or marginally for of of of was to to $X.X of third a on quarter XX.X% of to as

was Year-over-year, continuing share from decreased compared loss the the as of EBITDA XXXX. for second to specifically to $X.XX was or third share per compared the $XXX,XXX XXXX continuing it quarter third Adjusted of December in the of $X.XX was or and third effective for XXXX, XXX.X% $X loss quarter net the year-ago the expense. $X.XX XXXX the Sequentially, income diluted last per rate and of in compared continuing XXXX. from diluted net quarter. $X.X our The quarter second compared Net same XXXX the basic a income share third the in code million down third enabled tax from For diluted $XX,XXX relates $X.XX to the quarter as operations in of interest the was income quarter primarily to in XX.X% quarter $X.XX changes XX%, operations third from operation XXXX of of $X.X of XXXX. continuing year. quarter the basic the basic of continuing of operations, due loss diluted per net change favorably to million for deductibility $XXX,XXX income to compares to of tax sequentially or income for EBITDA taxation tax adjusted million quarter in Non-GAAP second foreign-earned the U.S. to quarter EPS and of income operations XXXX a increased from loss in XXXX. pretax in quarter a rate and of

XX, to September $XX.X ended Now Revenues nine the Critical to period million XXXX. XXXX. turning strategic nine for months comparable compared financial results sales. at $XX million from no These to our the is Power were were for segment This million the reduction focus in $X.X change generator longer on equipment sales down of the the months year-over-year. mostly equipment period

September nine XX% profit XXXX, compared months $XX.X XX, XXXX. or million XX.X% were XX.X% months our Operating to revenues compared nine the compared continuing million period. first of revenues income year-ago nine in ended Year-to-date, million of the revenues the first down $XX.X $X $X XXXX months million gross $XX.X to the the in million revenues of $XX.X in expenses was to For X% of operations to of or year-ago of XX.X% or was period. million SG&A for from or

September was rate $X.XX per to XXXX, nine as $X.XX Our basic income the year-ago of $XXX,XXX first in period. diluted million the tax compared before XX.X% was compared XX.X% XXXX. ended of tax and and share operations nine months or diluted Net income the XX, share for or from continuing per months basic effective for $X.X to

XXXX the compared for EBITDA $X million of nine million adjusted months $X.X first to Our for was XXXX. first the months of nine

share was Lastly, our diluted in non-GAAP period. the EPS per XXXX $X.XX to share compared $X.XX comparable per diluted

million $XX.X XXXX. sheet our total balance XX, and at December the statement flows, debt $XX.X September cash million was compared to XXXX, at interest-bearing to XX, of Turning

the $XXX,XXX of to $XXX,XXX. operations when XXXX, months For we generated first the from September of XXXX, cash of nine ended cash we used XX, from nine compared months operations

and quarter XXXX. the made XXXX liabilities, the for had initially of second were installments final greater than million, tax which payroll balances $X of during XXXX Our

to from We continue revenues to to year in over concludes adjusted continuing turn my growth the the single-digit compared to increase for call to XXXX and operations expect back Nathan. I now EBITDA high This generate of XXXX. remarks.

Nathan Mazurek

improvements our very the a I Thank would that half, proving bullish I'd a expect expectations is better and about accurate. am We of and our for Pioneer. optimistic revenue you, profit like continued our and demand to we XXXX now be Tom. record record first business, Pioneer's With year potential. backlog, than call backlog, significantly at a the that stated open be sequential are Based for growing that on record solutions will half the XXXX projection for Operator, and questions. profitable second

Operator

Thank Partners. you, And take from Instructions] Capital Matt first we ROTH sir. our with Koranda [Operator will question

Unidentified Analyst

Mike is Matt. This on for

with Can So provide first, housekeeping off Solutions item? revenue and start breakdown a just Critical Power? I can the between you T&D

Thomas Klink

Sure. months? want or it quarter Do for you nine for the the

Unidentified Analyst

quarter, the For please.

Thomas Klink

All right.

T&D for million. Power So months with was Solutions $X.X was ended, million, $XX Critical the million, rounding, $XX.X three it's

Unidentified Analyst

side and that the strong during bookings Critical and then how book-to-bill with the up out calculating quarter-over-quarter. on versus your you year-over-year the some I'm puts T&D quarter? Could of versus Okay, the played implied And and a flat great. one, for over takes Power quarter, characterize expectations

Nathan Mazurek

for dollars mean, I everywhere. has The played the Power, the it's at Solutions, business. very profit active All is really out and with only the high be. of and to a of of the our dry-type overall line us much have on really business. been sales end down exit exit side that that money really was spread strong. service general in, basis, Critical commercial on outcome on Really reflected I taken we markets really Critical us million it backwards, rate losing The in sort both eventually of for – this quarter generator in we're utility, liquid-filled markets. that was our T&D almost equipment to it where weaker the industrial, kinds very the book-to-bill of completely and the in line not several companywide Yes. that's side essentially what the generator with area but business, is reformatting We've of part comparison a first pure Power's go been expectations. and was and of that the mean, service-related markets expected

Unidentified Analyst

helpful. there yet? improvement is that's backlog to And any revenue And growth, great, growth cadence expect and at revenue still from Okay, margin XXXX visibility – can QX of looking QX? we and the an into

Nathan Mazurek

Right.

of long-term So of business, – is in is part now under that Critical right the service A Power Solutions, the T&D a business it the steady. agreement. lot pretty

its over because of see and although what it you don't quarterly weather play where that done have stuff quarter, next side. the but own Critical of retailers downs So Christmas-related this how has it ups during of several quarters out time, and the on issues, Power period kind that's should

On about for liquid-filled, T&D visibility the less than of robust where of the and we're – or strong the have very XXXX, and on XXXX. first for strong pretty we so quarter first Solutions business, so into already the business side, half the and of quarter the fourth quarter the April half

visibility. have dry-type don't of that the side, kind On we

in about think last business, it's medium now the is voltage rate book-to-bill, it booking year. talked for example, at prior – I that remarks, I mentioned double as you the did our booking Although is

year, three of into So this at about, a was million, It's double to under to last $X booked point year time, it at and $X further quarters even we in continue million. that expect XXXX. little up the

revenue itself lends sequential All the support of growth. continued that and

Unidentified Analyst

you color the gross Can give in what just one the on sequential quarter? drove decline me. Okay, And then for last great. from a little margins

Thomas Klink

dry-type brand traditionally declines other so segment, that with, They really from and there. to label being margins in being compared segments least outsized profitable sold have segment, are were The different they three segments Yes. our the gross the was group. deal

bigger a has of largest become that portion do, we the a dry-type bigger and impact that up, had on So those. negative what ends division as

gross do expect around costs also has quarter amount We as then as margins, as SG&A greater the that traditionally which well of our the to segment, forward increase medium turn well. on as some we voltage but the we that and fourth OEM has activity going greater in pickups

Unidentified Analyst

me. great. my That’s from Thanks right, for All questions. it taking

Thomas Klink

Mike. End right, All of Q&A

Operator

at and appears gentlemen, like it further time, And back no remarks. management Instructions] to for questions I'd [Operator to are over phone closing this there it turn

Nathan Mazurek

Thank you. updating next you to for look right. time your we all you call. and forward Thank all our again All and on support,

Operator

Thank today's your And conference concludes participation. call. this for you

may You disconnect. now

Pioneer Power Solutions (PPSI) 12 Nov 182018 Q3 Earnings call transcript