Pioneer Power Solutions, Inc.

Good day, and welcome to the Pioneer Power Solutions, Inc. fourth quarter and year-end 2021 earnings results call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Brett Moss from Hayden IR. Please go ahead.

Thank you, and welcome. The call today will be hosted by Nathan Masaryk, Chairman and Chief Executive Officer, Walter Michalik, Chief Financial Officer, and also on the call today is Gio Rickens. President, this company has recently launched Pioneer Power Mobility Business Unit. Following this discussion, there will be a Q&A session over the participants on the call. We appreciate the opportunity to review the fourth quarter and full year financial results, as well as discuss recent business highlights. Before we get started, let me remind you that this call is being recorded in webcast. During this call, management will 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 in different materially. Please refer to the cautionary text regarding forward-looking statements containing the earnings release issued earlier today and in the posted version of these prepared remarks, both of which apply to the content of the call. I now like to turn the call over to Nathan Masaryk, Chairman and CEO. Nathan, please go ahead.

Thank you, Brett. Good afternoon, and thank you all for joining us today for our conference call. This was a watershed quarter for the company. We have successfully repositioned Pioneer as a valued provider of equipment and services to the rapidly growing technology distributed generation, and electric vehicle markets. The shift in strategic direction that has taken place in the last 18 months is in direct response to specific customer demand and is predicated on two durable secular catalysts. The first reality is the intense focus of many larger power users to utilize multiple power sources in order to reduce electric power costs. provide resiliency, and decrease their carbon footprint. Sole reliance on the grid is no longer acceptable from a reliability or sustainability point of view. The episode in Texas in the winter of 2021 demonstrated this challenge, as has the multiple brownouts and rolling blackouts in California and other locations during the summer months. For data centers, call centers, refineries, industrial facilities, and retailers with perishable inventory, even a brief power interruption is a business challenge that cannot be tolerated. For others, it is the never-ending increase on their power bill relating to demand charges. Backup generation, peak shaving, peak skimming, battery storage, and the use of renewable energy sources is a matter of business continuity and profitability. Achieving these objectives, however, can be challenging. The second secular tailwind is the growing popularity of electric vehicles. The charging infrastructure for electric vehicles has not kept up with their demand, and there is a growing need for high-capacity off-grid charging solutions. Retailers, restaurants, hotels and casinos, concerts, trade shows, and sport venues and workplaces are moving quickly to add charging solutions. These additions are not simple. requiring city, county-type permits, civil and electrical and architectural engineering, and third-party approvals like utilities and facility owners. All of this takes time, usually more than a year, and occurs additional cost that is slowing down the necessary EV charging infrastructure build-out, impacting the EV vehicle adoption. The biggest hurdle in this process is often the grid capacity itself, and the necessary power infrastructure to add the large demand from EV charging in locations like older apartments and condo complexes, rendering these locations with no solution for EV charging and those building residents with no option to adopt electric vehicles. This has been driving the demand for a decarbonizing off-grid mobile solution for EV charging. Our E-block solution provides a critical system for expanded distributed energy generation. Our grid-on-a-skid e-block is a rapidly deployable, customized product that enables easy connection of on-site solar, wind, peak shaving, energy storage, or backup generation. It is skid-mounted, outdoor rated, can be deployed almost anywhere, and can manage almost any type of energy resource. With this, customers can utilize solar, wind, or any other renewable energy source while maintaining their traditional connection to the grid. More specifically, during the fourth quarter, we were awarded our largest e-block order to date, valued at approximately $12 million. The order comprises 62 e-block units destined to be installed at 62 different store locations of one of the nation's largest mass retailers. These units will improve the electrical resiliency, redundancy, and power capacity at these locations and are expected to begin shipping in the second quarter this year. In addition, these units represent only the initial phase of this retailer's target of approximately 500 additional store locations over the next few years. I'd note this retailer has several thousand locations overall, and this is just one of many large retailers that we are targeting. In addition, during the fourth quarter, we also received a $500,000 order for eBlock to be deployed as part of a Southern California Utilities hydrogen fuel cell residential demonstration project. Our eBlock solution will provide a packaged electrical solution tasked with integrating and controlling the various distributed energy resources, including a hydrogen fuel cell, photovoltaic solar, and energy storage to form an islanded microgrid that can support the power needs of the prototype two-story model home. This system eliminates the need for connectivity to a public utility grid. We expect to ship this system in the second quarter of this year. These two wins for eBlock validate our development of this innovative product. Our focus now is to leverage this initial success to bring eBlock to a much wider group of energy developers and users. eBlock is a compelling solution to a persistent problem. It makes distributed generation easy, affordable, and fast. Customers are seeking energy independence, or at least grid independence. To utilize more than one energy source, including solar and wind and insulate businesses from the issues of an aging energy grid. In addition, many customers are looking to add charging system for EVs to their infrastructure. We make both possible much more rapidly and cost effectively than historical solutions. More importantly, they represent just a tiny portion of a much larger opportunity and an opportunity that is growing quickly. During 2022, We will be delivering e-block to senior living centers, supermarket chains, and warehouse fulfillment centers. These are just some of the orders already committed and in our backlog. Again, our focus is on expanding the addressable market, and we are making steady progress in achieving this goal. The other secular trend I mentioned was EV charging, and we have created a new business unit, Pioneer Power Mobility, and launched a new suite of solutions for this market in November called eBoost. eBoost is a self-contained high-capacity mobile charging solution sustainably powered through a green fuel with low GHG emissions and designed for roadside event and quick charge logistics. The rapid growth of EVs has made on-demand off-grid charging a priority. We are poised to meet this demand. We have created three delivery platforms of eBoost in order to better serve varied user requirements. First is eBoost GOAT, which stands for generator on a truck. This is a truck-mounted EV charging solution, which is fully mobile and can provide high-speed charging anywhere. Second, eBoost Mobile is a trailer-mounted solution that provides multiple options for towing and can be available at specific businesses, large sports and cultural events, and can be relocated with minimal effort and on short notice. Finally, there is eBoost Pod, a primarily stationary pod and skid-based EV charging solution with as-needed mobility that can provide EV charging to multiple vehicles. This is an ideal solution for gas stations, hotels, and other retail locations that utilize EV charging to increase customer traffic and retention or as merely a brand differentiator. All eBoost platforms are designed to provide on-demand power needs, especially in emergency situations such as a power outage, serving as a backup power source with convenient power connections and outlets available onboard. We have already booked and shipped our first sale, a significant order of nearly $800,000 being deployed at a hotel and casino, and will recognize meaningful revenue from eBoost in the first quarter, our current quarter. Just recently, we won a second order from a turnkey EV fleet charging infrastructure solutions provider and a Pioneer-authorized channel partner. The sale is for two of our eBoost skid-mounted pod solutions, to be used for recharging trucks at the customers' dealerships and electrical school buses at the bus depot. The selection of e-boost was made on the basis that it was off-grid, sustainable, portable, and could be delivered to the EV manufacturer in a timely fashion and support their dealerships with subsequent sales of these products. We expect these units to be delivered during the second quarter this year. These two orders were won soon after we launched the suite of e-boost products in November of last year. Market reception is overwhelming. We believe we are the only company offering a high-capacity, fast-charging mobile solution powered by transportable and available liquid propane. This allows a greater... a user greater charging capacity and faster charging than any other solution. In fact, for 2022, we expect eBoost to represent as much as 10% of our annual revenue. Not our pipeline or our backlog, but recognized revenue in 2022. Further, we expect eBoost revenue to double in 2023 from 2022 levels. The progress we've made is reflected in our backlog. During the fourth quarter, our backlog more than doubled from $10.9 million at September 30th to $22.8 million as of December 31st. Again, our backlog is not a pipeline. Our backlog represents firm, non-cancellable orders, most of which are expected to be delivered over the next 12 months. Based on this backlog and the accelerating demand for these solutions, we expect year-over-year revenue to grow by more than 50% this year. The underlying trends are strong, and the market opportunity is significant. We do not see any slowdown in these trends. Our focus is to capitalize on them to the best of our ability, benefiting from our first mover advantage. In addition, we expect significant margin expansion. The growth is exciting and validates our strategy. We have developed differentiated solutions that meet a large and growing demand, but more importantly, these products will enable us to expand our margins as well. You should expect to see steady year-over-year improvements in our margins as we move through this year. Over the coming weeks and months, I am confident you will hear more from us about new deployments of eBoost and eBlock and the positive impacts our solutions are having for our customers. With that, let me turn the call over to Walter, our CFO, to discuss our financial results.