Pioneer Power Solutions, Inc.

Good day, ladies and gentlemen, and welcome to the Pioneer Power Solutions 2022 First Quarter Financial Results Conference Call. At this time, all participants are in listen-only mode. Following this discussion, the call will be open for questions. If you have a question, please press the star followed by the one. And if you're using a speaker equipment, please lift the handset before making your selection. I would now like to turn the conference over to Mr. Brett Moss of Hayden ILR. 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 Morican, President of the company's recently launched Pioneer Power Mobility, I'm sorry, Mobility Business Unit. Following this discussion, there will be a Q&A session open to the participants on the call. We appreciate the opportunity to review the first quarter of 2022 financial results, as well as discuss recent business highlights. Before we get started, let me remind you 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 to differ materially. Please refer to the cautionary text regarding forward-looking statements contained in the earnings release issued earlier today and the posted version of these prepared remarks, both of which apply to the content of the call. I would now like to turn the call over to Nathan Mazurick, Chairman and CEO. Nathan, please go ahead.

Thank you, Brett. Good afternoon, and thank you all for joining us today for our conference call. 2022 is off to an excellent start. Following the sale of our transformer business in August of 2019, we shifted our strategy to focus on two significant durable secular tailwinds, distributed generation and electric vehicle charging infrastructure. This shift was deliberate and calculated, designed to leverage our engineering, technical, and marketing capabilities most profitably, within the electrical equipment landscape. This business shift has indeed unfolded as we had anticipated. The opportunities related to distributed generation and electric vehicle charging are both significantly manifesting themselves as reflected by our vastly improved financial results for the first quarter of 2022. Our revenue for the quarter was up more than 70% year over year, and sequentially as well. In addition, our backlog increased sequentially and year over year to the highest level in more than 30 months, even as we grew our top line by over 70%. This growth reflects only the initial phase for our new solutions. We believe that as demand continues to grow and combine with our current backlog, we are confident that we will increase our revenue by at least 50%. in 2022, with e-boost and e-block becoming increasingly relevant to our consolidated results as the year progresses. In addition, in the first quarter, the increased volume combined with improved manufacturing productivity resulted in gross margins expanding to over 14% from 4.5% last year. Finally, the increases in revenue and margin were achieved despite continued supply chain challenges in both pricing and availability. These headwinds compressed our ability to achieve even higher sales and margins in the first quarter. As I mentioned earlier, our strategic shift was predicated on two durable secular catalysts. The first trend is the exponential growth in the last 10 years of distributed generation resources. Our customers want to add secondary power sources like natural gas engines and fuel cells, utilize green energy resources like wind and solar, all combined with continued access to the utility grid, battery backup, all in order to create better control over their energy infrastructure, control costs, and reduce their carbon footprint. Our e-block power system makes this possible. enabling customers to efficiently engage in power peak shaving and peak skimming, improve resilience through battery storage, and afford the optionality to use renewable energy sources to address ESG goals. Our e-block can be deployed quickly, often with little or no permitting or interconnect requirements, and usually with no interruption to the current operations. And we can and indeed have done easily add EV charging infrastructure to this solution. Sales of EVs continue to increase, but there has been a serious lag in building out the necessary charging infrastructure, creating opportunity for us. Retailers, restaurants, hotels, casinos, concerts, trade shows, sports venues, workplaces all want to move quickly to add charging solution. The biggest hurdle in this process is often the grid capacity and or the necessary power infrastructure to handle new large electrical loads generated by the EV charging. Our e-block solution addresses these two opportunities. During the fourth quarter of last year, we were awarded our largest e-block order to date, valued at approximately $12 million for 62 e-block units to be installed at 62 separate store locations of one of the nation's largest mass retailers. This retailer has approximately 5,000 total locations in the United States. These units will improve the electrical resiliency, redundancy, and power capacity at these locations and also potentially provide EV charging capabilities for employees and customers. We expect to begin shipping the first of these 62 units towards the end of the current quarter, the second quarter. Please note that this is just one single retailer and just the first phase of deployment, so we see this as an area of significant growth potential for us at Pioneer. Our focus now is to leverage this initial success to bring eBlock to a much wider group of energy developers and users, such as senior living centers, supermarket chains, warehouse fulfillment centers, and many others. The other secular trend I mentioned earlier is EV charging and specifically anytime, anywhere EV type charging. To address the need for EV charging on a temporary basis, like at concerts or festivals or any off-grid mobile type requirement, we created a new business unit, Pioneer Power Mobility, last November 2021. and launched a new suite of solutions for this market called eBoost. eBoost is a self-contained, high-capacity, sustainably powered mobile charging solution. We have created three delivery platforms for eBoost. First, eBoost GOAT, G-O-A-T, which stands for generator on a truck. This is a truck-mounted EV charging solution, which is fully mobile. indeed provides the highest form of mobility and can provide high speed charging anywhere. Second, eBoost Mobile is a trailer mounted or skid mounted portable solution that provides multiple options for towing or forklift relocation and can be available at specific businesses, large sports and cultural events, and can be relocated with minimal effort and on short notice. Third, eBoost Pod is primarily a stationary EV charging solution with as-needed mobility that can provide EV charging to multiple vehicles. This is the ideal solution for gas stations, hotels, and other retail locations that utilize or are thinking about installing EV charging to increase customer traffic and retention or as a brand differentiator. Or for any customer hesitant to to invest and commit long-term capital and pure physical space to a more permanent EV solution. All three eBoost platforms are designed to provide on-demand power needs in addition to its primary task of high-speed charging. So in emergency situations like a power outage and the like, eBoost can serve as a backup power source with convenient power connectors and outlets available on board. We have already booked and shipped our first sale, a significant order of nearly $800,000 being deployed at hotel and casino. In addition, we received and delivered this order in the first quarter. We also won a second order for two units from Navistar, a leading manufacturer and solutions provider of trucks and buses. These two e-buskid-mounted solutions are to be used for recharging Navistar's electric trucks and buses and have already been delivered in the current second quarter. In fact, these units were displayed by Navistar only last week at the 2022 Advanced Clean Transportation Expo, the largest advanced transportation technology and clean fleet event in North America. Market reception for eBoost is strong and growing rapidly. We enjoyed significant interest and attention at the ACT expos, and many attendees, like electric truck and bus manufacturers and others, found the eBoost suite of solutions quite compelling. We believe we are the only company offering a high-capacity, fast-charging mobile solution powered by transportable and available propane. allowing greater charging capacity and faster charging than any other mobile solution. We expect eBoost to represent as much as 10% of our annual revenue in 2022, and we expect eBoost revenue to double in 2023 from 2022 levels. We are reiterating our outlook for full-year revenue growth of at least 50% in 2022 compared to 2021 levels, We are indeed ahead of that pace through Q1. We expect the second quarter results to be similar to the first quarter, including significant year-over-year revenue growth and improved margins, and expect the second half of the year to result in even stronger results as we benefit from our continued investments to support e-boost and the revenue from our new solutions. With that, let me turn the call over to Walter Mihalik, Chief Financial Officer to discuss our financial results.