Pioneer Reports 2018

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FORT LEE, N.J., Aug. 9, 2018 /PRNewswire/ -- Pioneer Power Solutions, Inc. (Nasdaq: PPSI) ("Pioneer" or the "Company"), a company engaged in the manufacture, sale and service of electrical transmission, distribution and on-site power generation equipment, today announced its financial results for the second quarter and year-to-date periods ended June 30, 2018.
On May 2, 2018, Pioneer signed a definitive agreement to sell its switchgear business, and as a result this business segment has been reclassified as discontinued operations. Accordingly, the results presented in this press release reflect continuing operations.
Second Quarter 2018 Results and Recent Business Highlights from Continuing Operations:
Second quarter revenue of $24.6 million, down 9.9% compared to $27.3 million in Q2 2017 and up 4.7% sequentially compared to $23.5 million in Q1 2018 Second quarter gross margin of 21.2% down one basis point compared to 21.3% in Q2 2017 and up 230 basis points compared to 18.9% in Q1 2018 Net loss from continuing operations in the second quarter of $78,000, down $1.8 million compared to net income from continuing operations of $1.7 million in Q2 2017 and a narrowing of $503,000 (86.6%) compared to a net loss from continuing operations of $581,000 in Q1 2018 Second quarter adjusted EBITDA* of $1.8 million, down 40% compared to $3.0 million in Q2 2017 and up 38.5% compared to $1.3 million in Q1 2018 Backlog from continuing operations as of June 30, 2018 was approximately $36.3 million, the highest in company history, up 20.6% compared to $30.1 million at March 31, 2018 and up 16.7% compared to $31.1 million at June 30, 2017
Nathan Mazurek, Pioneer's Chairman and Chief Executive Officer, said, "The second quarter represented a significant improvement on a sequential basis, with notable improvements in revenue, gross margin and EBITDA and a narrowing of our net loss by more than half a million dollars, from $581,000 in the first quarter to just $78,000 in the second quarter. We ended the quarter with the highest backlog in our history, up 20% in just three months, and while we do not intend to regularly provide mid-quarter backlog figures, our backlog at July 31 was over $39 million, up an additional 7% from the end of June. Demand for our solutions, especially from data centers and cryptocurrency mining operations, is strong and growing, and our service business is up 6.5% year-to-date compared to the first half of last year. Today, we have a stable, efficient, cost-controlled platform for profitable growth."
"In addition, the second quarter was also impacted by unfavorable foreign currency exchange rates, which represented an approximate $544,000 drag on our earnings, when compared to Q2 2017," added Mr. Mazurek. "Finally, the second quarter last year was unusually strong with higher revenues and an ideal mix, especially for our liquid filled operation, creating a challenging comparison. Our liquid filled business is at full capacity for the balance of the year, giving us clear visibility into the second half of the year, and our dry type business is building on its strong position in the general construction and data center markets. In particular, our backlog for medium voltage dry type power units is at an all-time high and growing. Combined with accelerating service related sales, we are confident that revenue in both the third and fourth quarter should exceed that of the second quarter, driving further sequential improvements in our profitability."
Second Quarter Financial Results
Revenue from Continuing Operations
Total revenue from continuing operations for the three-month period ended June 30, 2018 was $24.6 million, down 9.9% compared to $27.3 million for the second quarter of 2017. The decrease was driven by lower sales of the Company's liquid filled transformer products and lower equipment sales resulting from a reduced focus on the Company's unprofitable Critical Power segment, which were partially offset by increased service revenues. On a sequential basis, revenues increased 4.7% compared to $23.5 million in the first quarter of 2018. For the six months ended June 30, 2018, total revenue from continuing operations was $48.1 million compared to $52.3 million for the six months ended June 30, 2017, a decrease of 8.2%. For the three months ended June 30, 2018, service revenue increased by $326,000, or 14.4%, as compared to the same period in the prior year due to an increase in service revenue. For the six months ended June 30, 2018, service revenue increased by $292,000, or 6.5%, compared to the same period in 2017.
Gross Margin from continuing operations
For the three months ended June 30, 2018, Pioneer's gross profit was $5.2 million, or 21.2% of revenues, compared to $5.8 million, or 21.3% of revenues, for the year-ago period. The decrease in gross profit was driven primarily by lower sales and an unfavorable product mix in the Company's 'dry type' transformers. On a sequential basis, gross profi...