Pioneer Power Solutions - Earnings Call - Q2 2025

Executive Summary

• Q2 revenue rose 147% year over year to $8.37M, with gross margin expanding sequentially to 15.7% as e-Boost deliveries ramped and productivity improved.
• Bold beats versus S&P Global consensus: Revenue $8.37M vs $6.89M estimate; EPS -$0.11 vs -$0.14 estimate; both better than expected as volumes and unit economics improved on major school district and partner orders.
• Management reaffirmed FY25 revenue guidance of $27–$29M and reiterated that guidance excludes the upcoming HOMe-Boost product; backlog stood at ~$18M at quarter-end, down as larger orders were fulfilled.
• Strategic catalyst: multi‑year e-Boost award valued at ~$10M with the largest U.S. Charging‑as‑a‑Service provider; initial deliveries begin in 2025 with the ramp through 2026–2027.
• Operating discipline improving: Non‑GAAP operating income turned positive ($0.218M) vs losses in Q1 and prior year; cash of $18.0M and no bank debt provide flexibility to support pipeline and leasing initiatives.

What Went Well and What Went Wrong

What Went Well

• Record Q2 growth: revenue +147% YoY to $8.37M, driven by completion of several high‑value e‑Boost orders and rentals; CEO: “The second quarter was an excellent quarter for Pioneer”.
• Non‑GAAP operating income positive ($0.218M) vs a non‑GAAP loss last year and in Q1, reflecting scaling and cost optimization on the 25‑unit school district program.
• Strategic award: ~$10M multi‑year e‑Boost award with a leading CaaS provider; management sees strong demand in school buses, fleets, and emerging robotaxi markets.

What Went Wrong

• Gross margin compressed year over year (15.7% vs 18.9%) due to mix and pricing from ramp of complex programs, even as margins improved sharply vs Q1’s 2.2%.
• Backlog declined to ~$18M (‑23% QoQ) as large orders shipped; sequential second‑half revenue implied to be lower given Q2 pull‑forwards and project lumpiness.
• Continued GAAP operating loss (‑$1.71M) and net loss from continuing operations (‑$1.23M) highlight the path to profitability remains dependent on execution, mix, and scale.

Transcript

Speaker 5

Meetings and welcome to the Pioneer Power Solutions Second Quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator's assistance, please press star and then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brett Maas of Hayden Investor Relations. Please come ahead.

Speaker 2

Thank you, operator. The call today will be hosted by Nathan Mazurek, Chairman and Chief Executive Officer; Walter Michalec, Chief Financial Officer; and Geo Murickan, President of Pioneer E-Mobility. Following this discussion, there will be a Q&A session open to participants on the call. We appreciate the opportunity to review the second quarter financial results and recent business highlights. Before we get started, let me remind you this call is being recorded and webcast. 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 earlier today, Thursday, August 14, which applies to the content of the call. I would now like to turn the call over to Nathan Mazurek, Chairman and CEO.

Nathan, please go ahead.

Speaker 3

Thank you, Brett. Good afternoon, and thank you all for joining us today. I am pleased to report that we delivered strong financial results for the second quarter of 2025, continuing a trend that really began mid-year last year, 2024. Specifically, revenue increased 150% year over year to $8.4 million, and our non-GAAP operating income from continuing operations was a positive $218,000. A significant driver of the second quarter revenue growth and profitability improvement was continued execution on the 25-unit e-Boost order for one of the largest public school districts in the United States. This landmark project, to date, is the largest RFP ever awarded for a mobile charging system, which directly supports charging the school district's initial fleet of 200 electric school buses. After delivering the initial 10 units in the first quarter, we delivered the majority of the balance during the second quarter.

While the early units carried higher costs due to the complexity of ramping up a project of this scale, our operations team achieved meaningful gains in productivity and cost optimization as the build-out progressed. As a result, gross profit on these units more than doubled in the second quarter. Additionally, this particular school district is scheduled to receive another 600 electric school buses over the next two years, and we expect to provide additional e-Boost units to support this ongoing program. In the second quarter, we also delivered initial units under our agreement with our channel partner, SparkCharge. The SparkCharge deal, potentially worth up to $10 million, is a direct result of Pioneer's collaborative relationship with this customer and, more importantly, reflects the increasing demand for mobile, clean, and rapidly deployable EV charging solutions. Strategically, we continue to be highly encouraged by the breadth and quality of the opportunities ahead.

We are actively quoting and designing solutions for a host of government-type agencies, transit authorities, robotaxi enterprises, shipping ports, and several major national package delivery providers as they all advance their commitment to electrifying their own fleet operations. The electric school bus market, in particular, continues to show strong momentum and remains a key focus area for us. These end customers are fully committed to a zero-emission future and typically have already ordered and received a significant number of either buses, vans, and other fleet vehicles, making a return to traditional vehicles highly unlikely. We also see immediate and long-term growth potential in autonomous mobility, particularly the burgeoning robotaxi segment, which is essentially an all-electric market. As the adoption of robotaxis accelerates, the demand for flexible, scalable charging infrastructure is growing in parallel.

We believe Pioneer's mobile charging platform is uniquely suited to meet the needs of this market, offering an ideal solution for decentralized, on-demand EV charging. Simply put, the growth of robotaxis aligns directly with Pioneer's growth. At the end of the second quarter, our total backlog was approximately $18 million, representing a decline of 23% compared to the prior quarter, primarily due to the fulfillment of several larger orders that contributed to our strong revenue growth year to date. Beyond the current backlog, we are seeing continued momentum in our growing sales pipeline. We are actively engaged in discussions with dozens of municipalities, transit authorities, shipping ports, autonomous driving enterprises, and several major national package delivery providers. In addition to our core e-Boost platform, we are preparing to launch our residential and light commercial power system, HomeBoost, in the second half of 2025.

HomeBoost integrates a prime-rated natural gas engine with optional DC fast charging, giving homeowners and small facility owners the ability to generate 100% of their energy and charging needs 24/7 if desired or needed. HomeBoost essentially functions as a private power plant, operating independently or alongside the grid, and is ideally suited for both residential and critical commercial loads such as medical facilities and small-scale manufacturers. Early feedback from prospective customers and partners has been overwhelmingly positive, and we believe this innovative product will be a key growth driver for 2026 and beyond. The introduction of HomeBoost is a significant expansion of our addressable market and product scope. In contrast to e-Boost, where e-Boost's charging features lead the value proposition to the customer, HomeBoost's delivery of pure, resilient power leads HomeBoost's value proposition. Fast DC charging is an additional feature of the unit.

In summary, the second quarter marked another meaningful step forward in our growth trajectory and path to profitability. Our performance reflects not only strong execution and increasing operational efficiency, but also the accelerating demand for innovative off-grid power solutions across multiple sectors. Looking ahead, we remain focused on scaling our core business, delivering on our backlog, and planning the launch of HomeBoost. Our strong performance in the first half of the year, combined with increasing visibility into the second half, reinforces our confidence in both the strength of our business and the demand environment. With that, I will turn the call over to Walter.

Speaker 2

Thank you, Nathan, and good afternoon, everyone. Please be advised that we have included a non-GAAP financial measure of operating income from continuing operations, which excludes corporate overhead expenses, research and development costs, depreciation and amortization expense, and non-recurring professional fees. Please refer to our press release issued earlier today, August 14, 2025, 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 should not be used as a substitute or alternative to any measure of financial performance calculated and presented in accordance with U.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.

Second quarter revenue was $8.4 million compared to $3.4 million in the year-ago quarter, an increase of approximately 150%. The increase was primarily due to a significant increase in sales and rentals of our mobile EV charging platform, e-Boost. Second quarter gross profit was $1.3 million, or a gross margin of approximately 16%, compared to a gross profit of $641,000, or a gross margin of approximately 19% in the second quarter of last year. The increase in gross profit was primarily due to the significant increase in sales and rentals of the company's e-Boost equipment, along with improved profitability from the delivery of most of the remaining units in the 25-unit e-Boost order for one of the largest public school districts in the United States. These gains were supported by enhanced productivity and cost optimizations achieved by our operations team as the build-out advanced.

During the second quarter of 2025, Pioneer incurred an operating loss from continuing operations of $1.7 million, unchanged from the $1.7 million operating loss from continuing operations recorded during the second quarter of last year. During the second quarter of 2025, Pioneer Power Solutions generated non-GAAP operating income from continuing operations of $218,000, which again excludes corporate overhead expenses, R&D expense, depreciation and amortization, and non-recurring professional fees, as compared to a non-GAAP operating loss from continuing operations of $137,000 for the same quarter in 2024, a year-over-year improvement of $355,000. Net loss from continuing operations for the second quarter of 2025 was $1.2 million, compared to a net loss from continuing operations of $1.7 million during the second quarter of 2024, an improvement of approximately $500,000.

Taking a look at our balance sheet, as of June 30, 2025, we had cash on hand of $18 million, zero bank debt, and working capital of approximately $24 million, compared to $41.6 million of cash on hand, zero bank debt, and working capital of $26.7 million as of December 31, 2024. The cash on hand as of June 30, 2025 represents cash per share of approximately $1.62. The decrease in our cash on hand during the first half of the year is primarily due to the payment of a one-time special cash dividend of an aggregate of $16.7 million in January and the payment of federal and state income taxes totaling approximately $4 million during the second quarter. Today, we are reaffirming our guidance for revenue of $27 million to $29 million for the full year of 2025. This concludes my remarks.

I will now turn the call back over to Nathan.

Speaker 3

Thank you, Walter. Operator, you can open the lines for questions.

Speaker 5

Thank you. Ladies and gentlemen, we will now be conducting the question and answer session. If you'd like to ask a question, please key in star and then one on your telephone keypad. A confirmation tone will indicate that a line is in the question queue. You may key in star and then two to leave the question queue. For participants making use of speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Rob Brown of Lake Street Capital Markets. Please go ahead.

Speaker 0

Good afternoon and congratulations on all the progress.

Speaker 3

Yeah, thank you, Rob.

Speaker 0

First question's on the e-Boost order with the charging services company. I think you said it could be up to $10 million. Just a little color on kind of how that rolls out and what are the variables on the sizing there?

Speaker 3

The real variables are, you know, what sizes they want, when they want them. It covers, there's a certain opening that they have. There's a window where we've fixed pricing for buying, we've fixed pricing for leasing, and we're holding certain inventory for them. Without disclosing too much, that's kind of how that works. We try to get a, together, we try to get a fix on what they think they'll be using over, call it a 24-month period, and locking everybody into certain parameters.

Speaker 0

Okay, perfect. Thank you. On the pipeline, I think there were several markets that were quite active, and you said dozens of potential municipalities. Just a sense of how that pipeline matures, the timing on it, and how does that sort of build for orders that give you visibility into next year?

Speaker 3

Yeah, I mean, we'll be making announcements as things happen of significance. That will help guide, let's say, in the next couple of months. Government agencies or government themselves, whether it be state or local, work at different paces. Everybody's different. They're almost like people. That's kind of a slower pace. Usually, the good is that they've made a commitment or they're halfway through a deep-seated commitment to going all electric and are trying now to come up with the best solutions or mixture of solutions to support their charging. That's a wide market, a very slow-moving market. Private business, however they're traded, whether they're privately held or they're publicly traded businesses, are motivated differently. Some of that helps us, some of it doesn't. The speed of those markets is much quicker. It's like what we're doing every day. It's a blend.

The large school district is obviously part of a large metro city on the West Coast of the United States. SparkCharge is a privately held business that is mostly serving private businesses, non-government type businesses. The robotaxi market, which if you would have asked me three months ago, I would have said it's all talk, talk, talk, talk, and we don't see anything. They're way down the road in spending money and providing solutions and rolling out in a competitive way with each other, which makes it a much more significant market for us going forward. Frankly, probably the fastest as far as response time now to POs, it will be the fastest market for us.

Speaker 0

Okay, thank you. In the HomeBoost product, you're talking about a launch here in the second half. Could you give us a sense of some of the milestones you expect with the rollout and how you see that launch at this point?

Speaker 3

Yeah, the launch has been a little bit delayed. I really, we wanted to kind of roll out in July. All the delay is on me. We've been experimenting, or me primarily experimenting with it mechanically and electrically to both make sure its fit and form is super functional, attractive, and not too big and easily transportable, and made some electrical changes to make things a little bit easier and more cost-effective for everybody. We're not factoring in any revenue for 2025. That would be a big bonus. I really don't expect that at all to happen. We do expect orders to happen in 2025, accelerating in the first quarter of 2026, and then hope it's a meaningful part of our revenue for 2026.

Speaker 0

Great, thank you. I'll turn it over.

Speaker 3

Thank you, Rob.

Speaker 5

Our next question comes from Ahmed Dale of H.C. Wainwright. Please go ahead.

Speaker 1

Thank you. Good afternoon, everyone. Nathan, congrats on another strong quarter. Good to see the margins bounce back. On that front, should we expect margins to stay at these levels and maybe move higher given that initial build-up costs are now out of the way?

Speaker 3

I think that we're always trying to improve the margins. I think that the margin, the margin, the gross margins themselves should do no less than where they are and hopefully improve in the third quarter, of which we're halfway through, call it, and continue to improve in the fourth quarter. How much is really on us, but there should be no more margin erosion.

Speaker 1

Okay, understood. Thank you for that. It looks like your pipeline is really solid, Nathan. I mean, lots of opportunities from new avenues that you probably were not anticipating earlier, like you said, the robotaxi stuff. On the other side of it, how are we going to manage this level of interest with the capacity we have? I'm just trying to get a sense of, with the setup now or today, how much revenues can the company support with the available capacity, etc., and how are you thinking of managing that part of the business going forward?

Speaker 3

Yeah, that's a discussion that we're having all the time in response to what we believe we can do, and then, of course, we have to respond in real time. For the large order out west, the 25-unit order, for 22 out of 25 units, we used a contract manufacturer right there in Los Angeles. We would not have been able to deliver, definitely not on time or that amount in our current facility in Minneapolis. For the balance of the year, we believe that we can deliver the balance of the orders in the year. There again, the mix helps. It's larger units with higher ticket prices, and we're able to do that in a balanced and deliberate fashion. We will not be manufacturing this. We decided a while ago we won't be manufacturing the HomeBoost unit ourselves. We're dealing 100% with one contract manufacturer in Minnesota.

I think that would be the majority of the growth in 2026, hopefully is going to come from the HomeBoost product. We kind of have that covered. What you're addressing is kind of the middle. We get another 25-unit type order. Is it all the same, not all the same, and how we handle that? We'll probably do the same. We'll handle it with a mix of doing it internally and/or using contract manufacturers. There's no plan to expand the capacity in Minneapolis, and there's no reason to fix from a regional point of view on somebody yet.

Speaker 1

That's understandable. From a revenue concentration perspective, is the majority of the revenues right now coming from states like California? How do you expect this to evolve as HomeBoost comes to the market and maybe other solutions you bring to the market?

Speaker 3

Thank you. That's a great... Right now, it's definitely the, you know, California definitely is number one, and I don't see that really changing. The market is just too big, too strong, and there's too much incentive for the users to go electric and therefore helps with our solutions. Listen, the success of HomeBoost would be the greatest avenue for us. It diversifies the market. It's really, as I said in the prepared remarks, it's leading with the power solution. Charging is important, but a feature. It's not necessary for the user to actually need the charging.

You really touched on something because, again, we don't trumpet it yet because we haven't done enough, but we're doing more and more or guiding to expanding the business to address more pure power type applications, bespoke distributed generation where we can help with our expertise in the generator part of the business so that we're less, I guess, less relying on incentives to fuel the business. No pun intended.

Speaker 1

Understood. You know, also along those lines, Nathan, you're not going to be sort of constrained by these federal budget cuts, et cetera, because most of your customers are local, municipal, state level from, you know, for folks in that segment, and the rest of them are, you know, private or public companies. Is that how we should look at it?

Speaker 3

I would look at it with, yes, with the caveat that, you know, federal budget cuts or whatever you want to call it, abandoning certain incentives, that doesn't help. You know, even states as rich as, you know, or as strong as California and other states, you know, everybody likes when the federal government helps them out. Now that they've got to do all these incentives on their own and they are committed, yes, that's true. In any market, you take your foot off the pedal a little bit, it's not a positive for that particular market. That's the caveat to what you're saying. Yeah, California's committed. Washington's committed. Oregon's committed. You know, Arizona's committed in deep-seated ways. It's them on their own.

Speaker 1

Okay. That's all I have, Nathan. I'll take my other questions offline. Thank you.

Speaker 3

You're very welcome.

Speaker 5

Ladies and gentlemen, just a reminder, if you'd like to ask a question, please key in star and then one on your telephone keypad. Our next question comes from Howard Root, who's a private investor. Please go ahead.

Speaker 0

Good afternoon. Thanks for taking my question, and congratulations on the great growth in the quarter. That's very impressive.

Speaker 3

Thank you. Thank you, Howard.

Speaker 0

Great. A couple of little questions first for me on the gross margin. Impressive going from 2% to 16% in one quarter. As you look forward, I see that you answered the prior question that should tick up, hopefully. When you bring HomeBoost on, will that be a temporary drag on gross margins, or is that going to improve it longer term? How do you see the two products matching?

Speaker 3

Yeah, HomeBoost, you know, because we're not, I mean, we have obviously, you know, engineering and design and, you know, one-time sunken costs and very little maintenance costs, but we're not going to be manufacturing the product. We're pretty, other than the SG&A associated with it, we have a very fixed idea of what it's going to cost us. We're going to be pricing at a level that is going to be a consistent, should move, especially with more volume, should move the gross margins up.

Speaker 0

Okay, great. Is there a target gross margin you see with your overall business? Are you shooting for 20 or 25%, or is that 25% too much to ask in your product line?

Speaker 3

Yeah, so if you take the full mix of the business, it really would depend on the success of HomeBoost. 25% is not too much. You know, internally, longer term, we're asking for more. We're asking for 30% plus because as e-Boost continues to grow, for the most part, when we want to, we're taking on service for those units as well, and the service business is right there, and it's becoming a more significant piece of what we're doing. 30% plus is really the more medium-term goals for us.

Speaker 0

Great, great. I noticed a $1.4 million cash usage kind of listed as a sales type lease origination. Could you explain what that was? Is that a one-time item or is that ongoing?

Speaker 3

That was with the customer. We did a capital lease with them. That's the use for it. That's how we booked it.

Speaker 0

Okay. Is that a customer thing going forward, or is that just a one-off?

Speaker 3

We're taking leasing opportunities kind of on a step-by-step basis. Now that you mention it, I mean, you know, we have X, and I don't even remember off the top of my head what we're expecting to do in lease or rental revenue for this year. It is something that we would like to grow with the right customers, under the right circumstances. If you have a good counterparty, leasing is a much more profitable business for us. It's a much higher return on assets for us.

Speaker 0

Okay. In terms of guidance, now in the first half, you've done a little over $15 million and you're guiding to $27 million to $29 million for the year, which would mean a little bit less in the second half. I can kind of guess at that based on that large order and lumpiness as you're ramping up. Could you just give a little bit more color on how you get to the second half guidance being down from the first half?

Speaker 3

Yeah, the real flip was that there were some units that we were able to get out in June that I didn't expect that we'd be able to. You know, the one thing we don't do, there are many things that we don't do, but one of those is, you know, we don't sandbag it. If we could invoice it, we did it. Did it make the revenue a little higher this quarter? It would be nice if it was a perfect form up through 2025. Yeah, but I mean, if we can do it, then we're applying the labor and material to it and the customer's ready to take it, we invoice it. We're so small that $2 million makes a big difference.

Speaker 0

Okay, that's what I thought. In terms of the backlog at $18 million, is all of that $10 million order in your backlog?

Speaker 3

No.

Speaker 0

How do you define it? No one defines backlog differently.

Speaker 3

Yeah, we define it the same way for at least 10 years. It's actually non-cancelable purchase orders that we expect to deliver in less than 12 months. It's still the same.

Speaker 0

Okay, all right. Finally, on the competitive side, could you, just in general terms, is there anything new in the competition on either the e-Boost or the HomeBoost product lines that you see out there? How do you see you're stacking up against the competition now?

Speaker 3

Yeah, e-Boost, if anything, there's less. Charging has been tough. Some of the people who've started or tried to imitate, whether it's us or somebody else, or use a battery solution or even diesel type solution, whatever it was, it doesn't really make a difference. There's not enough air in the tank for everybody to keep going. That's been actually unfortunate for those people, the employees and investors in some of those businesses, but that's been a benefit to us. On the HomeBoost, we don't see anything yet. We're trying to be a little bit stealthy with it and not come out full force until we are actually ready to be full on it because we want to get the advantage of a first-mover, but not really.

Any competition to e-Boost is, I don't want to say all the time, but 99% of the time is around the battery type product, which we don't really compete with that. We're not, that's low power, low power density, much more expensive. I don't want to say in a dismissive way, we can do that too and are contemplating even offering those solutions for those customers who really, really want that as part of their solution just to keep people out of this business.

Speaker 0

Great, great. Congrats on the excellent quarter and great work.

Speaker 3

Thank you, Howard.

Speaker 0

Thanks.

Speaker 3

Thank you, Howard.

Speaker 5

Thank you. Our next question comes from Bruce Giller of Giller Ventures. Please go ahead.

Speaker 4

Hi, good afternoon.

Speaker 3

Hey, good afternoon, Bruce.

Speaker 4

Hi. Do you see any potential application for your products to provide backup power to the data center market?

Speaker 3

Yeah, that's a big question. I don't want to launch into a soliloquy on data centers today and power and so forth. Right now, pure backup power for a data center, these units are too small. Even the largest unit that we do, that would be data centers in 1992. That's the level you're talking about, seriously. Through our old, through the Volterra business, the switchgear business that we sold, we're intimately involved in that business. We were and continue to monitor that business because we have an equity stake in it. The amount of power that they're sucking and the amount per node of what backup is, the bottom is one megawatt already. It's 99% of the time still diesel sets, monster diesel reciprocating engines.

Speaker 4

Gotcha. Up to the point you just made, what's the company's remaining equity stake in that business?

Speaker 3

It's about 6% in that platform. The business is doing extremely well, and we hope to benefit one day from a value there.

Speaker 4

Great, thank you.

Speaker 3

You're welcome.

Speaker 5

Our next question comes from Chris Vachowski, who's a private investor. Please go ahead.

Speaker 1

Hello, congratulations on the great results from me as well. My question was already asked and answered. I also had the data center question, thank you for addressing that. I would just like to say good luck to us all.

Speaker 3

Thank you, Chris. Thank you for calling in.

Speaker 1

No problem.

Speaker 5

Thank you. Ladies and gentlemen, there's no further questions in the question queue. I will now hand over for closing remarks.

Speaker 3

Thank you, operator. With the robust sales pipeline, expanding market opportunities, and a clear path towards profitability, we believe Pioneer is exceptionally well positioned to lead in the rapidly evolving power and electric mobility landscape. Thank you all for joining. Thank you all for your continued support. We look forward to updating you all on our next earnings call.

Speaker 5

Thank you. Ladies and gentlemen, that concludes this event. Thank you for attending, and you may now disconnect your line.