Pioneer Power Solutions Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 19, 2025

There are 7 speakers on the call.

Operator

Greetings and welcome to the Pioneer Power First Quarter twenty twenty five Earnings Conference Call. At this time, participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brett Maas of Hayden Investor Relations.

Operator

Thank you. You may begin.

Speaker 1

Thank you, operator. The call today will be hosted by Nathan Masaryk, Chairman and Chief Executive Officer Walter McCallick, Chief Financial Officer and Gio Marikin, President of Pioneer eMobility. Following this discussion, there'll be a Q and A session open to participants on the call. We appreciate the opportunity to review the first quarter financial results and recent business highlights. Before we get started, let me remind you this call is being recorded and webcast.

Speaker 1

During this call, management may make forward looking statements. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the cautionary text regarding forward looking statements contained in the earnings release issued last Thursday, May 15, which applies to the content of the call. I'd like to now turn the call over to Nathan Masaryk, Chairman and CEO. Nathan, please go ahead.

Speaker 2

Thank you, Brett. Good afternoon and thank you all for joining us today. We are off to a strong start in 2025 with first quarter revenue more than doubling to 6,700,000 This growth is a clear reflection of the accelerating demand for our on-site power solutions and continued penetration of vertical markets for these solutions. Q1 revenue indeed validates the significant investments we have made to develop and expand the scope of our eBoost solutions. The primary contributor to first quarter revenue was the initial completion of 10 eBoost units to one of the largest public school districts in The United States.

Speaker 2

This order, which was announced in June of twenty twenty four, is for a total of 25 eBoost mobile power units to charge the school district's first two hundred electric school buses. Specifically, this order was a landmark order for Pioneer and represents the largest RFP ever administered and awarded for a mobile EV charging system. The balance of the 25 units are scheduled to be completed and delivered in the current quarter. The project was awarded after a short and intense competitive bidding process. At the time, we made the strategic decision to compete for the project at a highly competitive price in order to secure a marquee customer, improve the value of our technology at scale.

Speaker 2

As a result, our gross margins in Q1 reflected the early cost dynamic of such a large and complicated project. The first units that we developed and produced carried higher costs as we refined our processes and optimized production workflows. As we continue to execute on this order, we see improved efficiencies and benefits. We remain confident that the succeeding units will result in a better gross margin contribution for PIONEER in Q2. At the end of the first quarter, our total backlog was $23,200,000 an increase of 18% compared to the prior quarter.

Speaker 2

In addition to these current orders, our sales pipeline of potential new opportunities continues to expand. We are in active discussions with dozens of municipalities, transit authorities, shipping ports, and with several major national package delivery providers whom have already committed to a multiyear electrical vehicle phasing in with the ultimate objective of 100 fleet electrification. In most instances, these delivery operators have already made the decision to transition to an all electric fleet but lack the requisite charging infrastructure. EBoost offers an off grid, immediately deployable mobile solution that does not rely on extensive permitting, grid upgrades or long lead times. Beyond our core eBoost charging platform, we have developed a residentiallight commercial power system announced in March of twenty twenty four, tentatively named HomeBoost.

Speaker 2

This new platform is a game changing power solution that will revolutionize the way homeowners and small facility owners address energy resilience and fast charging. This cutting edge product integrates a prime rated natural gas engine with optional DC fast charging, providing the facility owner with the ability to generate at their option 100% of their energy and charging needs twenty four hours a day. With its exceptional efficiency, compact and futuristic design, HomeBoost is perfectly positioned to meet the evolving and ever increasing power demand from the residential and light commercial energy market. We are essentially providing the large home and the facility owner with a private power plant to operate independent of their grid connection or in tandem with such connection. Our confidence is burnished by the enthusiastic reception we've already seen from potential customers and channel partners.

Speaker 2

And additionally, in the residential sector and additionally, the light commercial market from medical related businesses like MRI, dialysis, cataract type centers to commercial bakeries and cement producers, where power needs and fast EV charging are critical and increased and reliable grid power availability is somewhat restricted. As we prepare for a dynamic launch in the second half of this year, we're confident that HomeBoost will be a major driver of growth and innovation for our company in 2026 and beyond. With that, I will turn the call over to Walter.

Speaker 3

Thank you, Nathan, and good afternoon, everyone. Please be advised that we have included a non GAAP financial measure of operating loss from continuing operations, which excludes corporate overhead expenses, research and development costs, and non recurring professional fees. Please refer to our press release issued on Thursday, May 15, for further information, including a reconciliation between GAAP and non GAAP financial measures. The press release can be found on our website at www.pioneerpowersolutions.com/investors/newsroom. Such non GAAP measures not be used as a substitute or alternative to any measure of financial performance calculated and presented in accordance with U.

Speaker 3

S. GAAP. Instead, we believe this non GAAP measure should be used to supplement our financial measures derived in accordance with U. S. GAAP in order to provide a more complete understanding of the trends affecting the business.

Speaker 3

First quarter revenue was $6,700,000 compared to $3,300,000 in the year ago quarter, an increase of 103%. The increase was primarily due to a significant increase in sales and rentals of our suite of mobile EV charging solutions, eBoost. First quarter gross profit was $148,000 or a gross margin of approximately 2% compared to gross profit of 535,000 or a 16% gross margin in the first quarter of last year. The decrease is primarily due to what Nathan alluded to earlier regarding the completion of the initial 10 units from the large 25 unit order we received in June of twenty twenty four. The first units that we deployed and produced carried higher costs as we refined our processes and optimized production workflows.

Speaker 3

As we continue to execute on this order, we will see improved production efficiencies. We remain confident that the remaining units will result in more positive gross margin contributions for Pioneer. During the first quarter of twenty twenty five, Pioneer incurred an operating loss from continuing operations of $2,300,000 compared to an operating loss from continuing operations of $1,700,000 in the first quarter of last year. The variance was primarily due to the decrease in our gross profit and an increase in selling, general and administrative expense. During the first quarter of twenty twenty five, Pioneer generated a non GAAP operating loss from continuing operations of $989,000 which again excludes corporate overhead expenses, R and D expense, and non recurring professional fees, as compared to a non GAAP operating loss from continuing operations of $319,000 for the same quarter in 2024.

Speaker 3

Net loss from continuing operations for the first quarter of twenty twenty five was $2,100,000 compared to a net loss from continuing operations of $1,700,000 during the first quarter of twenty twenty four. Taking a look at our balance sheet. As of 03/31/2025, we had cash on hand of $25,800,000 0 bank debt and working capital of $26,200,000 compared to $41,600,000 of cash on hand, zero bank debt and working capital of $26,700,000 as of 12/31/2024. The cash on hand as of 03/31/2025 represents cash per share of approximately 2.32 The decrease in our cash on hand during the first quarter is primarily due to the payment of a one time special cash dividend of an aggregate of 16,700,000.0 on 01/07/2025. Today, we are reaffirming our guidance for revenue of $27,000,000 to $29,000,000 for the full year of 2025.

Speaker 3

This concludes my remarks. I will now turn the call back over to Nathan for any questions.

Speaker 2

Operator, you can open the lines for questions,

Operator

Great, thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue.

Operator

First question is from Rob Brown from Lake Street Capital Markets. Please go ahead.

Speaker 3

Good afternoon.

Speaker 2

Good afternoon, Rob.

Speaker 4

On the margin in the quarter, understand the startup kind of margin issue. How do you see margins recovering? And as this sort of goes forward, where do you think you can get the margins to for this product line?

Speaker 2

Yes. So I mean, the last quarter was more indicative of where that's what we shoot for and that's what we get. Especially the eBoost product, it's a super high value integrated special product. On this particular job, when you start, and it's on me at the end, when you start with a lower sales price, only perfect execution will give you any kind of good contribution. Less than perfect execution starts to hurt worse.

Speaker 2

So I think that the second half of the year, where we're not so overwhelmed by all these units, 25 units is a lot. I don't know of any other award that size for this type of the system. They've recovered already for the second quarter. They're not going to be the outsized or outstanding margins that we produced in the fourth quarter, but at least they'll be making better contributions. And as the other products in the third quarter and the other projects really, same product, but the other jobs that we're doing come through in the third and fourth quarter, so the margin should recover to something similar to the fourth of last year.

Speaker 4

Okay, great. Great explanation, thank you. And then on the, I guess, eBoost pipeline in particular, I think you said dozens of quotes and activity, but how do you how do you kinda characterize that as these come in? Is that really building for 2026 revenue? And and when do you sort of need to close those to to get into '26 bookings?

Speaker 2

Yeah, probably by the June. It's a little bit arbitrary. But something like that, then we're really just talking about '26 afterwards. Of course, there are exceptions. We happen to have everything in stock.

Speaker 2

Then it's on the smaller size and so forth, less customization and so forth and so on. But those also don't produce the same revenue that the larger units do. So the June is kind of a reasonable cutoff. After that, everything is 26 oriented.

Speaker 4

Okay, good. And then HomeBoost, think you talked about a fair amount of progress on the channel But how's the pipeline shaping up there? And are you kind of able to receive orders headers that product still launching in the back half and that's when you'll start to see the order?

Speaker 2

Yeah, it's still launching the back half. Just, and it's all on me too. We redesigned its look, its mechanical fit and form, its colors, even internally, did

Speaker 5

a lot to

Speaker 2

eliminate excessive costs that we think we could do without. At the same time, it's a premium product. So we wanted to really be that premium product, not just in look, but in function for the user. So I think we're essentially complete. We're pushing internally.

Speaker 2

Everybody is gearing up for a very, very strong and dynamic launch second half of the year. As we've said on other calls, but it bears repeating, home boost doesn't factor into any of the guidance that we gave for '25. We're hoping to be successful from an order rate in the second half of twenty five, only with delivery into '26. So none of the guidance is impacted by its rollout for '25.

Speaker 4

Okay, great. Congratulations on all the progress. I'll turn it over.

Speaker 2

Thank you, Rob.

Operator

Next question here is from Heresto Vakkowski, a private investor. Please go ahead.

Speaker 6

Good afternoon, and thanks for taking my question. My questions were, of course, about the margins, and you answered those, and thanks for that. About Home Boost, you would that be suitable for people with solar panels for them to become able to completely disconnect from the grid?

Speaker 2

If they chose to do that, whether they have solar panels or not, they would be able to go on island mode, you know, they'd be able to

Speaker 2

would they wanted to go on to island mode, yes, they can go off the grid completely as long as they have a natural gas connection.

Speaker 6

But would it be able to kind of do the, I guess, the variable production that's required for solar panels, you know, the fact that solar panels will kind of drop off in the evenings and so on, will it be able to intermittently start and stop?

Speaker 2

It can intermittently start and stop, yes.

Speaker 6

Alright. And I wanted to ask you, and this is an argument I've been having with my investors about your company, and it's a bit of a devil's advocate argument in that one may say that eBoost is kind of like a temporary solution for people that cannot yet connect to the grid and that nobody moves to electric just so they can generate electricity through a propane engine. And how do you view this? Like, how long will this market last? I mean, I know you're doing great right now.

Speaker 6

Does it have legs?

Speaker 2

Yeah, so that is the ultimate question. So, there's two parts to it. One is that this grid gap or this period of time, which people three years ago thought wouldn't be more than three years is going into, I can't see it stopping for the next five years. It just keeps growing because of the difficulty that businesses are having in getting these kinds of connections. They've also seen the value as we put more units out there, more school districts, more municipalities, they see the value and the optionality of mobility.

Speaker 2

And they look at it as that, why am I spending all this money on fixed infrastructure when I can have a mobile solution for essentially the same price, and then have the optionality of moving it, not moving it. If I lease the facility, I can still take it with me, and things like that. In addition, is even if somebody can get connection, and that's what the school district that we're delivering right now, their issue, and they're a major city, and you would think that utility is kowtowing to a major, one of the country's largest cities, is that they can't get enough power, even if they had a connection. They don't want to just trickle charge their buses. Then they're having buses sit for forty hours to recharge themselves.

Speaker 2

That's not a tenable, That's not a solution for them. Their utilization rate plummets. So for them to fast charge as many buses as they want as quickly as they can. In the case of this particular system, they're doing eight buses at a time. We have eight chargers hanging off the trailer with our really large unit producing power on a mobile off grid way.

Speaker 2

So they're not beholden to the utility at all. I don't know if that answers it for you, but that's the reality that we're finding.

Speaker 6

Okay, Nia, that does answer it. And just to be clear, I think I know the answer to that, but I want you on the record. I mean, even if they do have your solution that does have an internal combustion engine, there's still significant savings compared to diesel, right? I mean, natural gas is just cheaper in terms of energy per dollar.

Speaker 2

You know, we never, I want to say never, because rarely, we never get it compared to diesel, really. It's compared to what if we had a connection to the grid, what would it be? And this is still much cheaper. Gas is producing your own power on-site. I mean, there's no transmission charges.

Speaker 2

There's no delivery charge of the power is for sure cheaper. Those that are coming up with this solution, diesel defeats any kind of purpose, meaning if I spent the money to have an electric bus or a van to reduce emissions, it's kind of optically and realistically a little hypocritical to use diesel to charge it.

Speaker 6

Well, what I meant is that it's cheaper than having diesel trucks and putting diesel in

Speaker 2

the

Speaker 2

cheaper than having diesel trucks, that's correct, by far.

Speaker 6

And diesel buses and so on.

Speaker 2

Correct, You are 100 correct. Yes. Thank you for clarifying. Okay.

Speaker 6

You've answered all my questions and good luck.

Speaker 2

Thank you.

Operator

Next question is from Howard Root, a private investor. Please go ahead.

Speaker 5

Good afternoon, and congrats on the excellent progress. Thank you, have two questions. One is on the distribution network. I mean, me, it's impressive on these large orders you've gotten so quickly out of the box with a new product. It means that you've got credibility established.

Speaker 5

And your distribution, it seems like it's multilayered with distributors and other people outside the company working with it. Can you talk a little bit about how you see that growing and how you see that changing when you get the home e Boost or the home boost out there as well?

Speaker 2

Yes. So thank you, Howard. That's true. I mean, evolved as well. I don't want to say it's impossible, but it's close to impossible for us to cover everything with our sales force.

Speaker 2

So we would never see the city of X on our own. We just don't have enough personnel out there. So we use a lot of channel partnersdistributors that act as the feet on the street. We do a lot of things directly as well. When it comes specifically to municipalities and states and things like that, we use a variety of distributors, or sometimes it's the bus dealers, the truck dealers themselves with corporate approval and confidence in the solutions that they're offering.

Speaker 2

It helps them move more electric trucks and buses. In the case of the investor owned businesses, that's so far to date a more direct approach. Need probably we have some intermediaries. We need more intermediaries and channel partners who are doing I don't even know if there's a real name for what they're doing energy development or things like that, charging development, integrators, one stop solutions, turnkey people, and so forth. We need more of them because it's impossible.

Speaker 2

I mean, unless we hire 100 people to work all day, all night, we can't see everything. On the home thing, that's a little bit of a work in progress. I have some ideas, our team has some ideas of how best we've sort of already tested the product from a marketing point of view with these different types of I don't want to reveal too much distributors and dealers within that industry. But I think like the original Homeboost product, the market is going to move us and shift us in ways that I can't anticipate right now from a distribution point of view.

Speaker 5

Okay, thanks. That's helpful. Then my second question is kind of looking into 2026. And I know it's early, and you guys got a lot of stuff on your plate. But as you look, you've got this rapidly growing eBoost product line out there, and then you're adding something that I would say has even more potential with HomeBoost, and you've got pinch points all along the process from manufacturing, management time, marketing, sales, all of that.

Speaker 5

How do you see your focus in 2026? How big do you see HomeBoost being as a percentage of your attention or percentage of your kind of your push in next year's efforts?

Speaker 2

Yeah, so that's a great question. We're struggling with that all the time. So just to take some of it off the table, we've already, because HomeBoost will only be in, call it, in our minds, and again, it's arbitrary, four versions of it. So it's a much more standard product than we're used to on the traditional e Boost side. So we've already contracted sort of with another manufacturer close to us to make these for us initially at size and scale without duplicating.

Speaker 2

Because otherwise, then we're just adding on capital expenditures and so forth and so on. So that's kind of a little bit off the table, which is helpful to us at price points that we think are favorable for everybody to be able to bring this product out to market. So we can really concentrate on design engineering and marketing and selling of this particular product. As far as management time, I would say that really starting now, it's occupying for me, for Walter, for GeoMarikin, it's occupying probably 50% of our mind space. Because we believe the same thing that you just highlighted.

Speaker 2

We believe it could be a far larger, even more profitable product for us. So we're very excited. But the proof is always in the pudding, so we've got to do the work.

Speaker 5

Great, thank you, and I appreciate you taking my question, thanks.

Speaker 2

Of course.

Operator

This concludes the question and answer session. I'd like to turn the floor back to management for any closing comments.

Speaker 2

Thank you all for joining. Thank you all for your support. And we look forward to updating you all on our next earnings call. Thank you.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.

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Key Takeaways

  • Q1 revenue doubled to $6.7 million, driven by the initial completion of 10 eBoost mobile EV charging units for a major U.S. public school district and an 18% increase in backlog to $23.2 million.
  • Gross margin fell to 2% (from 16% a year ago) due to higher costs on the first-of-25 large eBoost units, but management expects margin recovery in Q2 as production efficiencies improve.
  • Non-GAAP operating loss widened to $989 000 versus $319 000 in Q1 2024; the company reaffirmed full-year revenue guidance of $27 million to $29 million after a $16.7 million special dividend.
  • Strong eBoost pipeline: Pioneer is in active discussions with dozens of municipalities, transit authorities, ports and national delivery providers, with many opportunities likely to convert into 2026 bookings.
  • HomeBoost launch set for H2 2025 (deliveries in 2026), offering a natural gas prime engine with optional DC fast charging for 24/7 residential and light-commercial power resilience as a major future growth driver.
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Earnings Conference Call
Pioneer Power Solutions Q1 2025
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