Net Income increased by 91%, EPS were $0.31, an increase of $0.15 for the Quarter, Gross Margin 27.0%, an increase of 6.9% for the Quarter, Operating Cash Flows were $15.6 million, an increase of $10.6 million for the Quarter, Debt decreased $5.0 million for the Quarter, Shareholder Equity restored positive $3.2 million for the Quarter. WOOD DALE, Ill., May 07, 2024 (GLOBE NEWSWIRE) -- Power Solutions International, Inc. (the "Company" or "PSI") (OTC:PSIX), a leader in the design, engineering and manufacture of emission-certified engines and power systems, announces first quarter 2024 financial results. First Quarter 2024 Results Today, Power Solutions International, Inc., reported results for the three months ended March 31, 2024, with first quarter of 2024 net income of $7.1 million and diluted earnings per share of $0.31, compared to net income of $3.7 million and diluted earnings per share of $0.16 for the first quarter of 2023. Sales for the first quarter of 2024 were $95.2 million, a decrease of $21.2 million, or 18%, compared to the first quarter of 2023, as a result of lower sales of $14.1 million and $24.4 million within the industrial and transportation end markets, respectively, partially offset by an increase of $17.3 million in the power systems end market. Higher power systems end market sales are primarily due to increased demand for products across various applications, with the largest increases attributable to products used within the packaging market such as enclosures serving the fast-growing data center market as well as oil and gas products and demand response products. The decreased sales within the transportation end market were primarily attributable to lower sales in the truck and school bus market as customer products have evolved and new compliance and regulatory requirements have changed engine product offerings. Decreased industrial end market sales are primarily due to decreases in demand for products used within the material handling and arbor care markets, as well as the direct effects of enforcement of the Uyghur Forced Labor Prevention Act ("UFLPA"), which limited the Company's ability to import certain raw materials in early 2024. Gross profit increased by $2.3 million, or 10%, during the first quarter of 2024 as compared to the same period in the prior year. Gross margin in the first quarter of 2024 was 27.0%, an increase of 6.8 percentage points compared to 20.2% in the same period last year, primarily due to improved mix, pricing actions, higher operating efficiencies, and lower warranty costs. For the three months ended March 31, 2024, warranty costs were $1.5 million net of supplier recoveries, and other adjustments, including $0.1 million of charges for adjustments to preexisting warranties, an improvement of $3.5 million compared to warranty costs of $5.1 million last year, largely due to lower adjustments to preexisting warranties during the first quarter of 2024. A majority of the preexisting warranty activity is attributable to products sold within the transportation end market. Selling, general and administrative expenses decreased during the first quarter of 2024 by $0.4 million, or 4%, compared to the prior year. The decrease is primarily due to lower selling expenses associated with decreased sales in the transportation segment and lower professional fees, partially offset by an increase in incentive compensation expenses. Interest expense was $3.3 million in the first quarter of 2024 as compared to $4.7 million in the same period in the prior year, largely due to higher overall effective interest rates on the Company's debt, partially offset by lower average outstanding debt. Adjusted net income was $7.0 million, or Adjusted income per share of $0.31 in the first quarter of 2024, compared to Adjusted net income of $3.8 million, or Adjusted income per share of $0.16 for the first quarter of 2023. Adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") was $11.9 million compared to Adjusted EBITDA of $10.1 million in the first quarter last year. See "Non-GAAP Financial Measures" below for the Company's definition of total Adjusted net income (loss), Adjusted earnings (loss) per share, EBITDA and Adjusted EBITDA and the financial tables that accompany this release for reconciliations of these measures to their closest comparable GAAP measures. Debt Update The Company's total debt was approximately $140.2 million at March 31, 2024, while cash and cash equivalents were approximately $33.1 million. This compares to total debt of approximately $145.2 million and cash and cash equivalents of approximately $22.8 million at December 31, 2023. Included in the Company's total debt at March 31, 2024, were borrowings of $45.0 million under the Uncommitted Revolving Credit Agreement ("Credit Agreement") with Standard Chartered Bank, borrowings of $25.0 million, $50.0 million, and $19.8 million respectively, under the various Shareholder Loan Agreements, with Weichai America Corp., its majority stockholder, as described in more detail in the Company's Form 10-Q for the first quarter of 2024. The Company made payments totaling $5.0 million related to the Credit Agreement, during the first quarter of 2024 and an additional $5.0 million in April 2024. Management Comments Dino Xykis, Chief Executive Officer and Chief Technical Officer, commented, "Despite headwinds we experienced in the first quarter 2024, such as supply chain challenges from UFLPA and demand weakness on some products, the company managed to achieve profitability by prioritizing margin enhancement and efficient management of working capital. We expect sales will improve for the remaining year, driven by strong demand for our power systems products. We are also extremely pleased that we restored positive shareholder equity in the quarter, for the first time since 2020. We also paid down debt $5.0 million in the first quarter of 2024, and an additional $5.0 million in April 2024." Xykis continued, "While there will be challenges and uncertainties ahead of us in 2024, we are committed to profitable growth and expect growth from the power systems end market to help drive our outlook for the upcoming year." Outlook for 2024 The Company expects its sales in 2024 to increase by approximately 3% versus 2023 levels, a result of expectations for strong growth in the power systems end market paired with flat sales in the industrial end market and a forecasted reduction in the transportation end markets. Notwithstanding this outlook, which is being driven in part by expectations for continuous 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 and Israel, among other factors. 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 www.psiengines.com. 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 macro-economic environment in both the U.S. and internationally on our business and expectations regarding growth of the industry; uncertainties arising from global events (including the Russia-Ukraine and Israel-Hamas conflicts), natural disasters or pandemics, and their impact on material prices; the effects of strategic investments on our operations, including our efforts to expand our global market share and actions taken to increase sales growth; the ability to develop and successfully launch new products; labor costs and other employment-related costs; loss of suppliers and disruptions in the supply of raw materials; 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 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, the impact of supply chain interruptions and raw material shortages, including compliance disruptions such as the UFLPA delaying goods from China; 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, 2023 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 ended March 31, 2024 compared with the three months ended March 31, 2023 (UNAUDITED): (in thousands, except per share amounts) For the Three Months Ended March 31,           2024   2023   Change   % Change Net sales (from related parties $197 and $1,097 for the three months ended March 31, 2024 and 2023, respectively) $ 95,240     $ 116,469     $ (21,229 )   (18 )% Cost of sales (from related parties $153 and $825 for the three months ended March 31, 2024 and 2023, respectively)   69,484       93,000       (23,516 )   (25 )% Gross profit   25,756       23,469       2,287     10 % Gross margin %           27.0 %             20.2 %             6.9 %     Operating expenses:               Research and development expenses   5,197       4,604       593     13 % Research and development expenses as a % of sales           5.5 %             4.0 %             1.5 %     Selling, general and administrative expenses   9,532       9,905       (373 )   (4 )% Selling, general and administrative expenses as a % of sales           10.0 %             8.5 %             1.5 %     Amortization of intangible assets   365       436       (71 )   (16 )% Total operating expenses   15,094       14,945       149     1 % Operating income   10,662       8,524       2,138     25 % Interest expense (from related parties $2,222 and $1,816 for the three months ended March 31, 2024 and 2023, respectively)   3,346       4,665       (1,319 )   (28 )% Income before income taxes   7,316       3,859       3,457     90 % Income tax expense   201       135       66     49 % Net income $ 7,115     $ 3,724     $ 3,391     91 %                 Earnings per common share: