Skip to main content

Power Solutions International Announces Fourth Quarter and Full Year 2022 Financial Results

WOOD DALE, Ill., March 31, 2023 (GLOBE NEWSWIRE) -- Power Solutions International, Inc. (the “Company” or “PSI”) (OTC Pink: PSIX), a leader in the design, engineering and manufacture of emission-certified engines and power systems, announced fourth quarter and full year 2022 financial results.

Fourth Quarter 2022 Results

Sales for the fourth quarter of 2022 were $137.0 million, an increase of $10.0 million, or 8%, versus the comparable period last year. The improvement in sales is comprised of increases of approximately $19.5 million and $10.0 million in the industrial and power systems end markets, respectively, partially offset by a decrease of $19.5 million in the transportation end market. The increased sales within the industrial end market primarily reflect increased demand for products used in the material handling/forklift markets. Higher power systems end market sales were driven by increases across various categories, including standby and customers that have traditionally served the oil and gas market. The decreased sales within the transportation end market were primarily attributable to lower sales in the medium duty truck market, coupled with lower sales of school bus products.

Gross profit increased by $19.8 million, or 204%, in the fourth quarter of 2022 compared to the same period last year. Gross margin in the fourth quarter of 2022 was 21.5% versus 7.6% last year, primarily due to the impact of higher sales, improved mix and pricing actions, and lower warranty expenses, among other items.   For the fourth quarter of 2022, warranty costs were $1.0 million, a decrease of $7.0 million compared to warranty costs of $8.0 million last year, due largely to a contract revision for the transportation end market engines and decreased charges for adjustments to preexisting warranties during the fourth quarter of 2022. A majority of the warranty activity for the period is attributable to products sold within the transportation end market.

Operating expenses increased by $0.2 million, or 1%, versus the comparable period in 2021, primarily attributable to higher incentive compensation expense which was partially offset by a decrease in severance expenses driven by rightsizing activities during the same period in 2021.

Interest expense was $4.3 million in the fourth quarter of 2022 as compared to $2.1 million for the same period in the prior year, largely due to higher average outstanding debt and a higher overall effective interest rate on the Company’s debt during the fourth quarter of 2022.

Net income in the fourth quarter of 2022 was $9.3 million, or earnings of $0.40 per share, versus a net loss of $7.6 million, or $0.33 per share for the comparable prior year period. Adjusted net income was $10.1 million, or Adjusted earnings per share of $0.44, versus Adjusted net loss of $5.7 million, or Adjusted loss per share of $0.25 for the fourth quarter of 2021. Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) was $16.3 million compared to negative Adjusted EBITDA of $1.9 million in the fourth quarter last year.

Net cash flows provided by operating activities was $8.9 million in the fourth quarter of 2022 as compared to net cash used by operating activities of $22.4 million in the prior year, primarily driven by the increase in earnings and improvements from working capital accounts.

See “Non-GAAP Financial Measures” below for the Company’s definition of total Adjusted net income (loss), Adjusted earnings (loss) per share, EBITDA, Adjusted EBITDA and the financial tables that accompany this release for reconciliations of these measures to their closest comparable GAAP measures.

Debt and Liquidity

The Company’s total debt was approximately $211.0 million at December 31, 2022, while cash and cash equivalents were approximately $24.3 million. This compares to total debt of approximately $211.7 million and cash and cash equivalents of approximately $16.5 million at September 30, 2022. Included in the Company’s total debt at December 31, 2022 were borrowings of $130.0 million under the Uncommitted Revolving Credit Agreement with Standard Chartered Bank (the “Credit Agreement”), borrowings of $25.0 million, $50.0 million, and $4.8 million under the Second, Third and Fourth Shareholder’s Loan Agreements, respectively, with Weichai America Corp. (“Weichai”), the Company’s majority stockholder. The Credit Agreement did not include any financial covenant requirements for the three months ended December 31, 2022.    

On March 24, 2023, PSI entered into an amended $130.0 million Credit Agreement (the “Third Amended and Restated Credit Agreement”) with Standard Chartered Bank, which among other items, extends the maturity date of loans outstanding under the Company’s previous Credit Agreement to the earlier of March 22, 2024 or the demand of Standard Chartered. In connection with the Third Amended and Restated Credit Agreement, on March 24, 2023, the Company also amended two of its four separate shareholder’s loan agreements with its majority stockholder, Weichai, to among other things, extend the maturities thereof. Additional details are available in the Company’s Form 8-K filed on March 30, 2023.

Outlook for 2023

The Company currently projects its sales in 2023 to increase by approximately 3% versus 2022 levels, a result of expectations for strong growth in the power systems end markets partly mitigated by a reduction of sales in the transportation end market. The industrial end market is expected to remain relatively flat as compared to 2022 levels. Notwithstanding this outlook, which is being driven in part by expectations for continued improvement in supply chain dynamics, including timelier availability of parts, and a continuation of favorable economic conditions within the United States and across the Company’s various markets, the Company cautions that significant uncertainty remains as a result of supply chain challenges, inflationary costs, commodity volatility, and the impact on the global economy of the war in Ukraine, among other factors.

Management Comments

Dino Xykis, Interim Chief Executive Officer, commented, “Starting in the second quarter of 2022 we took quick and decisive actions to repair and improve our margins to combat the increased costs experienced by the Company in areas such as raw materials and shipping costs. We also extensively reviewed every department within the organization to ensure we are operating as efficiently and effectively as possible. We have been pleased with the results of these initiatives as well as the overall results of the year.”

Xykis added, “We continue to evaluate our portfolio of products to ensure we focus our efforts and resources on improving profitability while developing new products based on market demand and trends. We are also focusing on the continued growth of our aftermarket business for all of our end markets.”

Xykis continued, “While economic uncertainty continues in 2023, we believe that demand from our customers remains favorable and we will benefit from the actions taken last year as we continue to grow.”

About Power Solutions International, Inc.

Power Solutions International, Inc. (PSI) is a leader in the design, engineering and manufacture of a broad range of advanced, emission-certified engines and power systems. PSI provides integrated turnkey solutions to leading global original equipment manufacturers and end-user customers within the power systems, industrial and transportation end markets. The Company's unique in-house design, prototyping, engineering and testing capabilities allow PSI to customize clean, high-performance engines using a fuel agnostic strategy to run on a wide variety of fuels, including natural gas, propane, gasoline, diesel and biofuels.

PSI develops and delivers complete power systems that are used worldwide in stationary and mobile power generation applications supporting standby, prime, demand response, microgrid, and co-generation power (CHP) applications; and industrial applications that include forklifts, agricultural and turf, arbor care, industrial sweepers, aerial lifts, irrigation pumps, ground support, and construction equipment. In addition, PSI develops and delivers powertrains purpose-built for medium-duty trucks and buses including school and transit buses, work trucks, terminal tractors, and various other vocational vehicles. For more information on PSI, visit

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding the current expectations of the Company about its prospects and opportunities. These forward-looking statements are entitled to the safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may involve risks and uncertainties. These statements often include words such as “anticipate,” “believe,” “budgeted,” “contemplate,” “estimate,” “expect,” “forecast,” “guidance,” “may,” “outlook,” “plan,” “projection,” “should,” “target,” “will,” “would” or similar expressions, but these words are not the exclusive means for identifying such statements. These statements are not guarantees of performance or results, and they involve risks, uncertainties and assumptions. Although the Company believes that these forward-looking statements are based on reasonable assumptions, there are many factors that could affect the Company’s results of operations and liquidity and could cause actual results, performance or achievements to differ materially from those expressed in, or implied by, the Company’s forward-looking statements.

The Company cautions that the risks, uncertainties and other factors that could cause its actual results to differ materially from those expressed in, or implied by, the forward-looking statements, include, without limitation: the impact of the COVID-19 pandemic could have on the Company’s business and financial results; the Company’s ability to continue as a going concern; the Company’s ability to raise additional capital when needed and its liquidity; uncertainties around the Company’s ability to meet funding conditions under its financing arrangements and access to capital thereunder; the potential acceleration of the maturity at any time of the loans under the Company’s uncommitted senior secured revolving credit facility through the exercise by Standard Chartered Bank of its demand right; the impact of rising interest rates; changes in economic conditions, including inflationary trends in the price of raw materials; our reliance on information technology and the associated risk involving potential security lapses and/or cyber attacks; the timing of completion of steps to address, and the inability to address and remedy, material weaknesses; the identification of additional material weaknesses or significant deficiencies; risks related to complying with the terms and conditions of the settlements with the SEC and the United States Attorney's Office for the Northern District of Illinois; variances in non-recurring expenses; risks relating to the substantial costs and diversion of personnel’s attention and resources deployed to address the internal control matters; the Company’s obligations to indemnify past and present directors and officers and certain current and former employees with respect to the investigations conducted by the SEC which will be funded by the Company with its existing cash resources due to the exhaustion of its historical primary directors’ and officers’ insurance coverage; the ability of the Company to accurately forecast sales, and the extent to which sales result in recorded revenues; changes in customer demand for the Company’s products; volatility in oil and gas prices; the impact of U.S. tariffs on imports from China on the Company’s supply chain; impact on the global economy of the war in Ukraine; prospects of a recession, or recent and potential future disruptions in access to bank deposits or lending commitments due to bank failure; the impact of supply chain interruptions and raw material shortages; the potential impact of higher warranty costs and the Company’s ability to mitigate such costs; any delays and challenges in recruiting and retaining key employees consistent with the Company’s plans; any negative impacts from delisting of the Company’s common stock par value $0.001 from the NASDAQ Stock Market and any delays and challenges in obtaining a re-listing on a stock exchange; and the risks and uncertainties described in reports filed by the Company with the SEC, including without limitation its Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and the Company’s subsequent filings with the SEC.

The Company’s forward-looking statements are presented as of the date hereof.   Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.

Results of operations for the three months and year ended December 31, 2022 compared with the three months and year ended December 31, 2021 (UNAUDITED):

(in thousands, except per share amounts)For the Three Months Ended December 31,         For the Year Ended December 31,        
  2022  2021 Change % Change  2022  2021 Change % Change
Net sales
(from related parties $2,749 and $493 for the year ended December 31, 2022 and December 31, 2021, respectively)
$        137,007   $        126,976   $        10,031           8 % $        481,333   $        456,255   $        25,078           5 %
Cost of sales
(from related parties $2,262 and $346 for the year ended December 31, 2022 and December 31, 2021, respectively)
         107,589            117,311            (9,722)          (8)%          392,770            414,984            (22,214)          (5)%
Gross profit         29,418            9,665            19,753           204 %          88,563            41,271            47,292           115 %
Gross margin %         21.5 %          7.6 %          13.9 %              18.4 %          9.0 %          9.4 %
Operating expenses:                       
Research, development and engineering expenses         4,966            4,663            303           6 %          18,896            22,435            (3,539)          (16)%
Research, development and engineering expenses as a % of sales         3.6 %          3.7 %         (0.1)
              3.9 %          4.9 %         (1.0)
Selling, general and administrative expenses         10,019            10,013            6           — %          42,941            57,871            (14,930)          (26)%
Selling, general and administrative expenses as a % of sales         7.3 %          7.9 %         (0.6)
              8.9 %          12.7 %         (3.8)
Amortization of intangible assets         526            634            (108)          (17)%          2,124            2,535            (411)          (16)%
Total operating expenses         15,511            15,310            201           1 %          63,961            82,841            (18,880)          (23)%
Operating income (loss)         13,907            (5,645)           19,552           346 %          24,602            (41,570)           66,172           159 %
Other expense, net:                       
Interest expense         4,299            2,054            2,245           109 %          13,028            7,307            5,721           78 %
Other income, net         —            —            —           — %          —            1            (1)  NM  
Total other expense, net         4,299            2,054            2,245           109 %          13,028            7,308            5,720           78 %
Income (Loss) before income taxes         9,608            (7,699)           17,307   NM            11,574            (48,878)           60,452           124 %
Income tax expense (benefit)         290            (125)           415   NM            304            (406)           710   NM  
New income (loss)$        9,318   $        (7,574)  $        16,892           223 % $        11,270   $        (48,472)  $        59,742           123 %
Earnings (Loss) per common share:                       
Basic$        0.40   $        (0.33)  $        0.73           221 % $        0.49   $        (2.12)  $        2.61           123 %
Diluted$        0.40   $        (0.33)  $        0.73           221 % $        0.49   $        (2.12)  $        2.61           123 %
Non-GAAP Financial Measures:                        
Adjusted net income (loss) *$        10,101   $        (5,733)  $        15,834           276 % $        15,735   $        (26,749)  $        42,484           159 %
Adjusted income (loss) per share *$        0.44   $        (0.25)  $        0.69           276 % $        0.69   $        (1.16)  $        1.85           159 %
EBITDA *$        15,467   $        (3,786)  $        19,253   NM   $        31,292   $        (34,165)  $        65,457           192 %
Adjusted EBITDA *$        16,250   $        (1,945)  $        18,195   NM   $        35,757   $        (12,442)  $        48,199   NM  

NMNot meaningful
*See reconciliation of non-GAAP financial measures to GAAP results below




(in thousands, except par values)As of December 31, 2022 As of December 31, 2021
Current assets:   
Cash and cash equivalents$        24,296  $        6,255 
Restricted cash         3,604           3,477 
Accounts receivable, net of allowances of $4,308 and $3,420 as of December 31, 2022 and December 31, 2021, respectively; (from related parties $2,325 and $168 as of December 31, 2022 and December 31, 2021, respectively)         89,894           65,110 
Income tax receivable         555           4,276 
Inventories, net         120,560           142,192 
Prepaid expenses and other current assets         16,364           8,918 
Total current assets         255,273           230,228 
Property, plant and equipment, net         13,844           17,344 
Right-of-use assets, net         13,282           13,545 
Intangible assets, net         5,660           7,784 
Goodwill         29,835           29,835 
Other noncurrent assets         2,019           1,802 
TOTAL ASSETS$        319,913  $        300,538 
Current liabilities:   
Accounts payable (to related parties $23,358 and $12,548 as of December 31, 2022 and December 31, 2021, respectively)$        76,430  $        93,256 
Current maturities of long-term debt         130           107 
Revolving line of credit         130,000           130,000 
Finance lease liability, current         90           147 
Operating lease liability, current         2,894           3,978 
Other short-term financing (from related parties $75,020 and $25,000 as of December 31, 2022 and December 31, 2021, respectively)         75,614           25,000 
Other accrued liabilities (from related parties $5,232 and $385 as of December 31, 2022 and December 31, 2021, respectively)         34,109           30,823 
Total current liabilities         319,267           283,311 
Deferred income taxes         1,278           1,016 
Long-term debt, net of current maturities (from related parties $4,800 and $25,000 as of December 31, 2022 and December 31, 2021, respectively)         5,029           25,376 
Finance lease liability, long-term         170           260 
Operating lease liability, long-term         10,971           10,304 
Noncurrent contract liabilities         3,199           3,330 
Other noncurrent liabilities         10,371           18,964 
TOTAL LIABILITIES$        350,285  $        342,561 
Preferred stock – $0.001 par value. Shares authorized: 5,000. No shares issued and outstanding at all dates.$        —  $        — 
Common stock – $0.001 par value; 50,000 shares authorized; 23,117 and 23,117 shares issued; 22,951 and 22,926 shares outstanding at December 31, 2022 and December 31, 2021, respectively         23           23 
Additional paid-in capital         157,673           157,436 
Accumulated deficit         (187,096)          (198,366)
Treasury stock, at cost, 166 and 191 shares at December 31, 2022 and December 31, 2021, respectively         (972)          (1,116)
TOTAL STOCKHOLDERS’ DEFICIT         (30,372)          (42,023)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT$        319,913  $        300,538 




(in thousands)For the Three Months Ended December 31, For the Year Ended December 31,
  2022   2021   2022   2021 
Cash used in operating activities       
Net income (loss)$        9,319  $        (7,574) $        11,270  $        (48,472)
Adjustments to reconcile net income (loss) to net cash used in operating activities:       
Amortization of intangible assets         526           634           2,124           2,535 
Depreciation         1,034           1,224           4,566           4,871 
Stock-based compensation expense         70           60           385           394 
Amortization of financing fees         448           717           2,178           2,819 
Deferred income taxes         164           (150)          189           29 
Other adjustments, net         846           289           1,746           941 
Changes in operating assets and liabilities:       
Accounts receivable         (7,161)          (10,563)          (24,796)          (4,952)
Inventory, net         5,878           2,327           20,426           (34,840)
Prepaid expenses, right-of-use assets and other assets         2,038           2,394           (4,251)          (103)
Accounts payable         3,182           3,307           (17,004)          62,105 
Income taxes refundable         11           —           3,721           — 
Accrued expenses         (5,695)          (15,848)          2,107           (42,759)
Other noncurrent liabilities         (1,798)          806           (11,506)          (4,046)
Net cash used in operating activities         8,862           (22,377)          (8,845)          (61,478)
Cash (used in) provided by investing activities       
Capital expenditures         (363)          188           (1,354)          (1,968)
Return of investment in joint venture         —           —           —           2,263 
Other investing activities, net         —           15           —           103 
Net cash (used in) provided by investing activities         (363)          203           (1,354)          398 
Cash (used in) provided by financing activities       
Repayments of long-term debt and lease liabilities         (53)          (94)          (256)          (380)
Proceeds from short-term financings         —           25,000           31,582           51,309 
Repayment of short-term financings         (587)          (472)          (1,168)          (1,180)
Payments of deferred financing costs         —           (600)          (1,787)          (3,162)
Other financing activities, net         (1)          (2)          (4)          (42)
Net cash (used in) provided by financing activities         (641)          23,832           28,367           46,545 
Net increase (decrease) in cash, cash equivalents, and restricted cash         7,858           1,658           18,168           (14,535)
Cash, cash equivalents, and restricted cash at beginning of the period         20,042           8,074           9,732           24,267 
Cash, cash equivalents, and restricted cash at end of the period$        27,900  $        9,732  $        27,900  $        9,732 

Non-GAAP Financial Measures

In addition to the results provided in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) above, this press release also includes non-GAAP (adjusted) financial measures. Non-GAAP financial measures provide insight into selected financial information and should be evaluated in the context in which they are presented. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP, and non-GAAP financial measures as reported by the Company may not be comparable to similarly titled measures reported by other companies. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated below.

Non-GAAP Financial MeasureComparable GAAP Financial Measure
Adjusted net income (loss)Net income (loss)
Adjusted earnings (loss) per shareEarnings (loss) per common share – diluted
EBITDANet income (loss)
Adjusted EBITDANet income (loss)

The Company believes that Adjusted net income (loss), Adjusted earnings (loss) per share, EBITDA, and Adjusted EBITDA provide relevant and useful information, which is widely used by analysts, investors and competitors in its industry as well as by the Company’s management in assessing the performance of the Company. Adjusted net income (loss) is defined as net income (loss) as adjusted for certain items that the Company believes are not indicative of its ongoing operating performance. Adjusted earnings (loss) per share is a measure of the Company’s diluted earnings (loss) per common share adjusted for the impact of special items. EBITDA provides the Company with an understanding of earnings before the impact of investing and financing charges and income taxes. Adjusted EBITDA further excludes the effects of other non-cash charges and certain other items that do not reflect the ordinary earnings of the Company’s operations.

Adjusted net income (loss), Adjusted earnings (loss) per share, EBITDA, and Adjusted EBITDA are used by management for various purposes, including as a measure of performance of the Company’s operations and as a basis for strategic planning and forecasting. Adjusted net income (loss), Adjusted earnings (loss) per share, and Adjusted EBITDA may be useful to an investor because these measures are widely used to evaluate companies’ operating performance without regard to items excluded from the calculation of such measures, which can vary substantially from company to company depending on the accounting methods, the book value of assets, the capital structure and the method by which the assets were acquired, among other factors. They are not, however, intended as alternative measures of operating results or cash flow from operations as determined in accordance with U.S. GAAP.

The following table presents a reconciliation from Net income (loss) to Adjusted net income (loss) earnings for the three and twelve months ended December 31, 2022 and 2021 (UNAUDITED):

(in thousands)For the Three Months Ended December 31, For the Year Ended December 31,
  2022   2021   2022   2021 
Net income (loss)$        9,318  $        (7,574) $        11,270  $        (48,472)
Stock-based compensation 1         70           60           385           394 
Severance 2         —           905           462           1,595 
Internal control remediation 3         19           312           467           1,283 
Governmental investigations and other legal matters 4         694           564           3,151           18,451 
Adjusted net income (loss)$        10,101  $        (5,733) $        15,735  $        (26,749)

The following table presents a reconciliation from Loss per common share – diluted to Adjusted (loss) earnings per share for the three and twelve months ended December 31, 2022 and 2021 (UNAUDITED):

 For the Three Months Ended December 31, For the Year Ended December 31,
  2022   2021   2022   2021 
Income (loss) per common share – diluted$        0.40  $        (0.33) $        0.49  $        (2.12)
Stock-based compensation 1         0.01           —           0.02           0.02 
Severance 2         —           0.04           0.02           0.07 
Internal control remediation 3         —           0.01           0.02           0.06 
Governmental investigations and other legal matters 4         0.03           0.03           0.14           0.81 
Adjusted income (loss) per share – diluted$        0.44  $        (0.25) $        0.69  $        (1.16)
Diluted shares (in thousands)         22,960           22,926           22,948           22,908 

The following table presents a reconciliation from Net income (loss) to EBITDA and Adjusted EBITDA for the three and twelve months ended December 31, 2022 and 2021 (UNAUDITED):

(in thousands)For the Three Months Ended December 31, For the Year Ended December 31,
  2022   2021   2022   2021 
Net income (loss)$        9,318  $        (7,574) $        11,270  $        (48,472)
Interest expense         4,299           2,054           13,028           7,307 
Income tax expense (benefit)         290           (125)          304           (406)
Depreciation         1,034           1,225           4,566           4,871 
Amortization of intangible assets         526           634           2,124           2,535 
EBITDA         15,467           (3,786)          31,292           (34,165)
Stock-based compensation 1         70           60           385           394 
Severance 2         —           905           462           1,595 
Internal control remediation 3         19           312           467           1,283 
Government investigations and other legal matters 4         694           564           3,151           18,451 
Adjusted EBITDA$        16,250  $        (1,945) $        35,757  $        (12,442)
  1. Amounts reflect non-cash stock-based compensation expense.
  2. Amounts represent severance and other post-employment costs for certain former employees of the Company.
  3. Amounts represent professional services fees related to the Company’s efforts to remediate internal control material weaknesses including certain costs to upgrade IT systems.
  4. For the three and twelve months ended December 31, 2022, the amounts include a benefit of less than $(0.1) million and an expense of $0.1 million, respectively, and expense of $0.5 million and $15.7 million, for the three and twelve months ended December 31, 2021, respectively, for professional services fees related to costs to indemnify certain former officers and employees of the Company. The Company is obligated to pay legal costs of certain former officers and employees in accordance with Company bylaws and certain indemnification agreements. As further discussed in Note 10. Commitments and Contingencies of Item 8. Financial Statements and Supplementary Data, the Company fully exhausted its historical primary directors’ and officers’ insurance coverage in connection with these matters during the first quarter of 2020. Also included are professional services fees and reserves related to certain other legal matters.



Power Solutions International, Inc.
Matt Thomas
Corporate Controller
(630) 542-2805

Primary Logo

Data & News supplied by
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.