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Pioneer Power Solutions revenue decreased

Staff writer ▼ | May 16, 2014
Pioneer Power Solutions, Inc. announced its results for the first quarter ended March 31, 2014. Total revenue for the period ended March 31, 2014 decreased to $20.9 million, down 7.4%, from $22.6 million during the same period last year.
Pioneer Power Solutions
Pioneer Power SolutionsPioneer Power Solutions, Inc. announced its results for the first quarter ended March 31, 2014. Total revenue for the period ended March 31, 2014 decreased to $20.9 million, down 7.4%, from $22.6 million during the same period last year.


Approximately $3.4 million of the revenue decrease was from sales of electrical transformers, down 15% on a year-over-year basis (or approximately 10% in constant currency), partially offset by $1.7 million of incremental sales from recently acquired businesses, Pioneer Critical Power and Pioneer CEP, up from $0.5 million of revenue during the prior quarter ended December 31, 2013.

During the first quarter of 2014, the decrease in liquid-filled transformer sales was driven by foreign currency translation (which resulted in a 7% decline) together with, among other factors, the comparative effect of one large project that shipped during the three months ended March 31, 2013 to a user in the Canadian oil & gas sector.

The decrease in dry-type transformer sales resulted mostly from reduced demand in short cycle, standard product sales channels (orders from brand label and Canadian wholesale distributor customers) and to a lesser extent was impacted by foreign currency translation (having a 2% negative effect).

Offsetting these decreases, dry-type transformer sales benefitted from increased shipments of custom-engineered, medium voltage units, together with an increase in OEM sales activity that was led by the addition of a large new customer in the data center sector.

Pioneer Critical Power Inc., which was acquired on March 6, 2013, accounted for the majority of sales of circuit protection and control equipment during the first quarter of 2014, which consisted mostly of two notable projects – one for a wastewater treatment facility and the other at a U.S. military site. Pioneer CEP, which was established in August 2013 to serve electrical distributors in the U.S. Southwest with low voltage, manufactured-to-order equipment solutions, accounted for the remainder of sales of circuit protection and control equipment during the quarter.

The decrease in operating income in the first quarter of 2014 resulted from lower overall sales and higher selling, general and administrative expense which was partially offset by an increase in gross profit margin. Gross margin as a percentage of revenues was 23.5% in the first quarter of 2014 compared to 22.5% in the year ago period. The increase was driven by a sales mix that was more heavily-weighted towards longer cycle, engineered-to-order equipment.

The increase in selling, general and administrative expense was due primarily to new businesses acquired in 2013 and an increase in corporate general and administrative expenses consisting primarily of higher personnel, information technology and public company costs.

First quarter operating income was $996,000, down 34%, or $503,000, from $1.5 million during the first quarter of 2013. Approximately $441,000 of the company's operating expense during the quarter, as compared to $426,000 during the first quarter of 2013, consisted of non-cash expenses including depreciation, amortization of acquisition intangibles and stock-based compensation for employee and director stock options.

Without the effect of these non-cash expenses, the company's Adjusted EBITDA for the quarter ended March 31, 2014 was approximately $1.4 million, compared to $1.9 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 for the quarter ended March 31, 2014 were $590,000 compared to $913,000 in the same period a year ago. Net earnings per basic and diluted share were $0.08 as compared to $0.15 for the three months ended March 31, 2013. The decrease in net earnings was driven mostly by lower project-driven sales volume, which can vary widely from quarter-to-quarter, the effect of foreign currency translation and higher operating expenses which arose from recent acquisitions and investments made to support our future growth.

On a per share basis, net earnings were diluted by a public offering of common stock in September 2013. During the three months ended March 31, 2014 there were approximately 1.3 million additional weighted average diluted shares outstanding, an increase of 22% compared to the same quarter of 2013.

On a non-GAAP basis, excluding non-operating items, Pioneer reported net earnings of $695,000 in the first quarter of 2014, or $0.10 per diluted share, as compared to $0.18 per diluted share, or approximately $1.1 million for the quarter ended March 31, 2013. Please refer to the financial tables below for a reconciliation of GAAP to non-GAAP results and guidance.

The company has not changed its full-year 2014 guidance which, excluding any potential acquisitions, is as follows: revenue between $92 and $96 million, adjusted EBITDA between $9 and $10 million, and non-GAAP diluted EPS between $0.75 and $0.80.


 

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