Pioneer Power Solutions, Inc.

Good day, ladies and gentlemen, and welcome to the Pioneer Power Solutions 2022 Fourth Quarter and Full Year 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 a handset before making your selection. I would now like to turn the call over to Brett Moss of Hayden IR. Please go ahead, sir.

Thank you and welcome. The call today will be hosted by Nathan Masaryk, Chairman and Chief Executive Officer, Walter Mihalik, Chief Financial Officer, and Gio Morican, President and CEO of Pioneer Power Mobility. Following this discussion, there will be a Q&A session open to 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 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 releases issued earlier today, which applies to the content of the call. I would 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. Throughout 2022, we have been highlighting our new products and solutions specifically conceived and produced for the rapidly growing distributed generation and electric vehicle markets. We laid out an aggressive growth target for 2022 and talked about strong demand, increased orders, and widespread customer interest. These elements came together in the fourth quarter of 2022 as our revenue in the quarter nearly tripled to $9.5 million. We reported debt income and earnings of 10 cents a share, and backlog increased 33% in the last three months of the year to $37.2 million. The result was, as we expected, a strong end to a solid year of growth, as full-year revenue increased 48% to $27 million. While the fourth quarter did indeed benefit from a favorable product mix and higher than expected operating efficiencies, we are projecting that we expect to extend 2022's fourth quarter performance and generate positive EPS for the full year of 2023 ahead of the timetable we referenced last year and inclusive of continued cash investments in our eBlock and eBoost product platforms. We have essentially reached the point where our projected annual volume enables us to achieve improved operating leverage and sustainable EPS on an annual basis. While we still expect some quarter-to-quarter volatility to influence both our top and bottom lines in 2023, for full year 2023, we are projecting between $42 and $45 million in revenue, representing a growth rate of at least 50%, continued margin expansion, and full-year positive net income. It is also important to note that as of December 31, 2022, we have approximately $14.3 million in net operating loss carry-forwards available to shelter taxable net income in the near future. As I noted earlier, our backlog at December 31st, 2022 was $37.2 million, a record level for us since we divested our transformer business over three years ago. From a production planning perspective, our facility in Los Angeles is essentially a capacity for 2023, and we are actively planning and expanding our manufacturing capacity for 2024 at this point. As we have noted, our eBlock and eBoost solutions directly address two durable secular catalysts. eBlock is an integrated, compact, and outdoor transfer switch scheme circuit protection and power control system specifically designed for users of more than one source of electrical power. eBlock allows facilities to add additional energy sources like solar, battery storage, fuel cells, or natural gas engines without doing any internal upgrades to their existing electrical system. eBlock allows the user to effectively manage, control, and protect all these inputs, facilitating peak shaving, peak skimming, and general resilience. Finally, eBlock presents all these benefits in a compact, outdoor, competitive, skid-mounted package. To date, our primary markets for eBlock have been multi-location businesses with a large physical and power footprint, such as retailers and supermarkets, as well as power-intense and uptime-sensitive facilities like data centers, water utilities, hospitals, senior living facilities, and prisons. The distributed generation initiative is really just getting started for all these verticals. and eBlock squarely addresses their expected demand. In December of 2021, we announced a $12 million order for our eBlock power system from a major big box retailer. Other retailers, as well as data centers and manufacturing facilities, among others, are evaluating the eBlock solution as well. During 2022, we won our first order from the data center market, and we believe this represents a significant market opportunity for us over the next several years, as data center developers and owners continue to push for a more diversified resilience package and a lower carbon footprint. In October of last year, we announced that one of the largest automakers in the world awarded us an $8 million order to integrate eBlock as part of their innovative power delivery infrastructure for a new massive manufacturing campus in the United States, which will focus on their electric vehicle and battery production. Finally, we want an order for a U.S. water utility of more than $5 million during the fourth quarter of 2022. This order is our first for a water utility, significantly expanding our backlog and representing an exciting new use case. We will be providing multiple e-block units to the Water Utility Authority to be deployed as part of a sophisticated distributed energy system enabling the water utility to avoid a water delivery disruption, better manage its power utilization, control costs, and reduce its carbon footprint. We expect to deliver these e-block systems in the second and third quarters of 2023 to three different locations in Central California. Turning to our e-boost mobile charging platform, we continue to see increasing interest in our Anytime Anywhere mobile EV charging solution. This solution is now nearly a year and a half old, having been introduced formally in November of 2021. As a reminder, the eBoost portfolio is comprised of several platforms. eBoost Mini is a skid mounted version that provides high capacity EV charging in our smallest footprint. It brings on-demand charging of electric vehicles to any location within a facility with just a forklift and anywhere else on board a trailer. This gives an easy and convenient way for dealerships and depots to charge their first EVs. eBoost GOAT, G-O-A-T, generator on a truck, is a truck mounted option that brings ultimate mobility with high capacity EV charging. It enables on demand charging of EV vehicles at any convenient location, providing EV truck and car owners the convenience of dispatchable charging services and thereby helping eliminate range anxiety. eBoost Mobile is a trailer mounted solution that balances the need for mobility and higher capacity of EV charging such as that the solution can be relocated with minimal effort and on short notice. eBoost Mobile provides multiple options for towing, and can be available at specific businesses, large sports and cultural events, or other gatherings to fulfill the elevated demand for high-speed charging. eBoost Pod is a mostly stationary EV charging solution, customizable, higher capacity, and can be moved if necessary. The pod can provide high-speed DC fast charging to four or more vehicles simultaneously. Like all e-boost solutions, it can also service other power needs, especially in emergency situations such as a power outage, serving as a backup power source with convenient power connectors and outlets available on board. To date, target customers for e-boost have included electric trucks, truck and bus manufacturers, their associated dealers, fleet management companies, package delivery providers, school bus operators, and the like. Other active e-boost markets include electric vertical takeoff and landing aircraft or EFTO, primarily the future of air taxis, e-sports and off-road vehicles, e-boats, e-jet skis, snowmobiles, even off-highway agricultural and mining equipment like e-tractors and sprayers. Beyond the obvious environmental and economic tailwinds, state and federal policies are accelerating demand and ultimate adoption. The National Electric Vehicle Infrastructure, or NEVI, program is the latest example, providing incentives and federal grant funding to U.S. companies that provide charging stations domestically in order to unfold a national charging network along our interstate highways. We expect the NEVI program to be a serious catalyst for us in 2024 as we work with businesses and business associations that are bidding to provide this charging infrastructure. Our e-boost solution is an especially appealing solution in rural and underserved parts of our nation's highways where permanent infrastructure solutions are just uneconomical. Demand and excitement regarding the eBoost platform has continued to grow in 2023. In January, we announced that Merchants Fleet, the nation's fastest-growing fleet management company, ordered two trailer-mounted eBoost solutions to serve as benchmark products for Merchants Fleet's larger EV charging offering. Merchants Fleet selected eBoost because it delivers an off-grid, mobile, direct, current fast charger with built-in resiliency. Our e-boost system is sustainably powered using a propane fuel generator and a solar-powered battery storage system. This order is yet more evidence that those on the leading edge of the EV adoption movement represent ideal customers for us as they have unique and regular EV charging needs and the existing infrastructure simply is not sufficient. We fill that void. In February, we also announced additional purchases by a leading electric school bus manufacturer. These units are skid mounted and join units we have already built and sold to this particular bus manufacturer in 2022. The need is clear. Sales of EVs have significantly outpaced the charging infrastructure. This is particularly true in the industrial and commercial sectors. where electrification has reached warehouses and delivery options as a way to reduce the environmental impact as well as fuel costs. Many organizations are moving quickly to add charging solutions for customers, employees, and company fleets. As we move through 2022, we continue to add new use cases, including the ability to recharge EVs as they are disembarked from overseas shipments, as well as airport authorities that invested in EV passenger shuttles and buses but are waiting for permanent EV infrastructure to arrive. To wit, we delivered two large e-boost units to the Port of San Francisco in January of this year on behalf of a Vietnamese electric vehicle manufacturer so that they may fast charge their passenger vehicles as they are unloaded in the shipping terminal. Their continued reliance on our e-boost product is further affirmation of the market need and our ability to fulfill it. As fleets are electrified, mobile and on-demand charging will become increasingly important, and e-boost fills this unique niche. As a result, we expect e-boost to continue to drive significant growth and profit generation for us in 2023. With that, let me turn the call over to Walter Mihalik, our CFO, to discuss our financial results.