PSIX 10-K & 10-Q changes, risk factors and insider trading
Power Solutions International, Inc. · Nasdaq · Engines & Turbines · CIK 1137091 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our liquidity could be adversely affected by volatility in demand, supply‑chain constraints, and significant capital investment requirements inherent in our engine manufacturing operations.”
New heading “Artificial Intelligence Risk Factors”
New heading “The increasing use of artificial intelligence technologies by our competitors, customers, and suppliers could impact our competitive position.”
Removed heading “The Company’s management has concluded as of the filing of this 2024 Annual Report that, due to uncertainty surrounding the Company’s ability to extend or refinance its current debt agreements, substantial doubt exists as to its ability to continue as a going concern. The Company’s plans to alleviate the substantial doubt about its ability to continue as a going concern may not be successful, and it may be forced to limit its business activities or be unable to continue as a going concern, which would have a material adverse effect on its results of operations and financial condition.”
Removed heading “The Company’s inability to generate sufficient taxable income in the future may limit the Company’s ability to use net operating loss (“NOL”) carryforwards to reduce future tax payments.”
Largest changes
“The consolidated financial statements included herein have been prepared assuming that the Company will continue as a going concern and contemplating the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. …”see in full comparison
“The Company’s management has concluded as of the filing of this 2024 Annual Report that, due to uncertainty surrounding the Company’s ability to extend or refinance its current debt agreements, substantial doubt exists as to its ability to continue as a going concern. The Company’s plans to alleviate the substantial doubt about its ability to continue as a going concern may not be successful, and it may be forced to limit its business activities or be unable to continue as a going concern, which would have a material adverse effect on its results of operations and financial condition.”see in full comparison
“The Company’s new Revolving Credit Agreement places limitations on its ability to make acquisitions and restricts its ability to incur additional indebtedness, while the SLA places limitations or restrictions on the Company’s usage of borrowed funds. Any future failure by the Company to comply with the financial covenants set forth under the Company’s debt agreements, if not cured or waived, could result in the acceleration of debt maturities or prevent the Company from accessing availability of funds under the SLA. …”see in full comparison
“Several of the Company’s products are sourced internationally, including from China, where the U.S. has imposed tariffs on specified products imported from China. These tariffs have an impact on the Company’s material costs and have the potential to have an even greater impact, depending on the outcome of future trade negotiations and policies. The Company is evaluating U.S. …”see in full comparison
“Our liquidity could be adversely affected by volatility in demand, supply‑chain constraints, and significant capital investment requirements inherent in our engine manufacturing operations.”see in full comparison
“The increasing use of artificial intelligence technologies by our competitors, customers, and suppliers could impact our competitive position.”see in full comparison
Full comparison: every changed paragraph (47)
Tariffs and changes in trade policy could materially increase our costs, disrupt our supply chain, and adversely affect our competitive position and results of operations.
Several of the Company’s products are sourced internationally, including from China. The U.S. government has imposed, and may continue to impose, tariffs on products imported from China and other countries. Since early 2025, President Donald Trump signed executive orders imposing various tariffs on certain imports from Mexico, Canada, and China, and stated his intent to impose tariffs on any country that imposes tariffs on U.S. products. Certain products that we buy from our suppliers are, and may in the future be, subject to these tariffs, which could increase our manufacturing costs.
We may not be able to pass these increased costs on to our customers without adversely affecting demand for our products. The scope, duration, and impact of current and future tariffs remain highly uncertain. Further, the imposition of tariffs on imports from China and other countries have the potential to materially and adversely impact the Company’s sales, profitability and future product launches.
Additionally, the tariffs imposed by the U.S. have resulted, and may in the future result, in retaliatory tariffs by other countries against U.S. exports. The Company also sells its products on a global basis; and, therefore, if such retaliatory tariffs are imposed on exports of the Company’s products, this could make our exported products less competitive than products of our competitors who are not subject to such retaliatory tariffs.
The U.S. government has indicated its intent to adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. The Company is evaluating U.S. government policy, which is subject to change in the current negotiating environment, pricing, its supply chain and its operational strategies to mitigate the impact of these tariffs; however, there can be no assurances that any mitigation strategies employed will remain available under government policy or that the Company will be able to offset tariff-related costs or maintain competitive pricing of its products. Any material reduction in sales or increase in costs resulting from tariffs or trade restrictions could have a material adverse effect on our business, financial condition, and results of operations.
On February 20, 2026, subsequent to year end, the U.S. Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). The President immediately imposed replacement tariffs under Section 122 of the Trade Act of 1974, which are temporary (150-day maximum duration), and has indicated intent to impose tariffs under other authorities going forward. The Company may be entitled to refunds of IEEPA tariffs paid during 2025, but to the extent PSI passed tariff costs through to customers, the Company may be required to reimburse customers for such amounts, which could reduce or eliminate any net benefit from refunds. The tariff environment remains highly uncertain.
Furthermore, escalating geopolitical tensions, including the ongoing conflict in Ukraine and instability in the Middle East, and developments in Venezuela could disrupt global supply chains, increase commodity prices, and create broader economic uncertainty that adversely affects our business.
Several of the Company’s products are sourced internationally, including from China, where the U.S. has imposed tariffs on specified products imported from China. These tariffs have an impact on the Company’s material costs and have the potential to have an even greater impact, depending on the outcome of future trade negotiations and policies. The Company is evaluating U.S. government policy, which is subject to change in the current negotiating environment, pricing, its supply chain and its operational strategies to mitigate the impact of these tariffs; however, there can be no assurances that any mitigation strategies employed will remain available under government policy or that the Company will be able to offset tariff-related costs or maintain competitive pricing of its products. Further, the imposition of tariffs on imports from China and other countries have the potential to materially and adversely impact the Company’s sales, profitability and future product launches. U.S. government has indicated its intent to adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. For example, in early 2025, President Donald Trump signed executive orders imposing various tariffs on certain imports from Mexico, Canada, and China, and stated his intent to impose tariffs on any country that imposes tariffs on U.S. products. Certain products that we buy from our suppliers are, and may in the future be, subject to these tariffs, which could increase our manufacturing costs. Additionally, the tariffs imposed by the U.S. have resulted, and may in the future result, in threatened and actual retaliatory tariffs by other countries against U.S. exports. The Company also sells its products on a global basis; and, therefore, if such retaliatory tariffs are imposed on exports of the Company’s products, this could make our exported products less competitive than products of our competitors who are not subject to such retaliatory tariffs. Any material reduction in sales may have a material adverse effect on the Company’s results of operations.
Our liquidity could be adversely affected by volatility in demand, supply‑chain constraints, and significant capital investment requirements inherent in our engine manufacturing operations.
Our business requires substantial liquidity to fund working capital, capital expenditures, research and development, inventory purchases, and long‑term strategic initiatives. We rely on cash generated from operations, supplemented by available credit facilities, to meet these needs. Our ability to maintain adequate liquidity depends on several factors outside our control. For example, fluctuations in customer demand—particularly in the heavy‑equipment, transportation, industrial, and power‑generation markets—can lead to uneven order patterns that impact cash inflows. A sudden or prolonged decline in sales volumes could reduce operating cash flows and negatively affect our liquidity position.
Additionally, our manufacturing processes depend on the availability of raw materials and key components such as castings, electronics, and specialized metals. Supply‑chain disruptions, including shortages, delivery delays, or sudden cost increases, may require us to hold higher levels of inventory or pay premium prices to secure materials. These conditions could increase our working capital requirements, compress margins, and reduce available cash.
We also operate in a capital‑intensive industry that requires ongoing investment in production equipment, testing facilities, tooling, and emissions‑compliance technology. If we are unable to generate sufficient cash from operations or secure financing on favorable terms, we may need to delay or scale back critical investments, which could impair our competitiveness and innovation pipeline.
Our access to credit markets may be affected by factors such as rising interest rates, tightening lending standards, deterioration in our credit metrics, or adverse changes in macroeconomic conditions. If we are unable to refinance existing indebtedness or obtain additional funding when needed, we may face increased borrowing costs or constraints on our operational and strategic flexibility.
If any of these risks materialize, our liquidity, financial condition, and ability to execute our business strategy could be materially and adversely affected.
The Company’s management has concluded as of the filing of this 2024 Annual Report that, due to uncertainty surrounding the Company’s ability to extend or refinance its current debt agreements, substantial doubt exists as to its ability to continue as a going concern. The Company’s plans to alleviate the substantial doubt about its ability to continue as a going concern may not be successful, and it may be forced to limit its business activities or be unable to continue as a going concern, which would have a material adverse effect on its results of operations and financial condition.
The consolidated financial statements included herein have been prepared assuming the Company will continue as a going concern. In August 2024, the Company refinanced its debt through a new Uncommitted Revolving Credit Agreement (the “Revolving Credit Agreement”), with Standard Chartered Bank (“Standard Chartered”) and two other lenders. Additionally, also in August 2024, the Company entered into a new Shareholder’s Loan Agreement (the “SLA”) with Weichai. The new Revolving Credit Agreement and the new SLA will mature on August 30, 2025 and August 31, 2025, respectively, and have borrowing capacity of $120.0 million and $105.0 million, respectively. As of December 31, 2024, the Company had $120.0 million of total borrowings outstanding under its debt agreements.
Without additional financing, the Company anticipates that it will not have sufficient cash and cash equivalents to repay amounts owed under its existing debt arrangements as they become due. To provide the Company with a more permanent source of liquidity, management plans to seek an extension and amendment and/or replacement of its existing debt agreements or seek additional liquidity from its current or other lenders before the maturity dates in 2025. There can be no assurance that the Company’s management will be able to successfully complete an extension and amendment of its existing debt agreements or obtain new financing on acceptable terms, when required or if at all. These consolidated financial statements do not include any adjustments that might result from the outcome of the Company’s efforts to address these issues.
Furthermore, if the Company cannot raise capital on acceptable terms, it may not, among other things, be able to do the following:
•continue to expand the Company’s research and product investments and sales and marketing organization;
•expand operations both organically and through acquisitions; and
•respond to competitive pressures or unanticipated working capital requirements.
The Company’s management has concluded that, due to uncertainties surrounding the Company’s future ability to refinance, extend and amend, or repay its outstanding indebtedness under its existing debt arrangements and other requirements under the Revolving Credit Agreement and other outstanding debt, in the future, substantial doubt exists as to its ability to continue as a going concern within one year after the date that these financial statements are issued. The Company’s plans to alleviate the substantial doubt about its ability to continue as a going concern may not be successful, and it may be forced to limit its business activities or be unable to continue as a going concern, which would have a material adverse effect on its results of operations and financial condition.
The consolidated financial statements included herein have been prepared assuming that the Company will continue as a going concern and contemplating the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company’s ability to continue as a going concern is dependent on generating profitable operating results, having sufficient liquidity, maintaining compliance with the covenants and other requirements under the new Revolving Credit Agreement and the new SLA, in the future, and extending and amending, refinancing or repaying the indebtedness outstanding under the Company’s existing debt arrangements.
The Company has a significant amount of indebtedness and is highly leveraged. ItsCompany’s existing debt or any potential new debt could adversely affect its business and growth prospects.
As of December 31, 2024,2025, the Company’s total debt obligations, including indebtedness under the Revolving Credit Agreement andwere SLA was $120.2$96.6 million. The Company’s debt arrangements contain and may contain in the future certain requirements, including specific financial and other covenants or restrictions. The failure or the inability to meet such obligations under existing debt or any new debt could materially and adversely affect the Company’s business and financial condition. In addition, the Company’s debt obligations could make it more vulnerable to adverse economic and industry conditions and could limit its flexibility in planning for or reacting to changes in its business and the industries in which it operates. The Company’s indebtedness and the cash flow needed to satisfy its debt obligations and the covenants contained in current and potential future debt agreements could have important consequences, including the following:
The Company’s new Revolving Credit Agreement places limitations on its ability to make acquisitions and restricts its ability to incur additional indebtedness.
The Company’s new Revolving Credit Agreement places limitations on its ability to make acquisitions and restricts its ability to incur additional indebtedness, while the SLA places limitations or restrictions on the Company’s usage of borrowed funds. Any future failure by the Company to comply with the financial covenants set forth under the Company’s debt agreements, if not cured or waived, could result in the acceleration of debt maturities or prevent the Company from accessing availability of funds under the SLA. If the maturity of the indebtedness is accelerated, the Company may not have sufficient cash resources, or have the ability to obtain financing through alternative resources, to satisfy its debt and other obligations, and the Company may not be able to continue as a going concern.
The continued market acceptance and growth of the market for efficient alternative-fueled, spark-ignited power systems, including natural gas, propane and gasoline, is a key tenet of the Company’s growth strategy. The impact of diesel emission regulations is expected to increase the cost and complexity of diesel power systems, but this may not materialize to the expected extent or at all. Also, customers, or potential customers, may not substitute natural gas, propane and gasoline-powered power systems for diesel power systems in response to these regulations. In addition, to the extent that diesel power system manufacturers develop the ability to design and produce emission-compliant diesel power systems that are more competitive than the Company’s alternative-fueled power systems, customers and potential customers may be less likely to substitute alternative-fueled power systems for diesel power systems. Furthermore, if alternative-fueled power systems are substituted for diesel power systems, there can be no assurance that the Company’s power systems would capture any portion of the potential market increase. If the industrial OEM market generally, or more specifically any of the OEM categories that represent a significant portion of the Company’s business or in which it anticipates significant growth opportunities for its power systems, fails to develop or develops more slowly than the Company anticipates, its business could be materially adversely affected. Lastly, the Company also faces competition from other forms of power systems, including electrification and fuel cells, which could limit its ability to grow in the future.
Lastly, the Company also faces competition from other forms of power systems, including electrification and fuel cells, which could limit its ability to grow in the future.
Ownership of the Company’s stock is concentrated with Weichai and the founder of the Company, and therefore other stockholders’ ability to influence corporate matters is limited.
As of MarchFebruary 1726, 2025,2026, Weichai beneficially owned 51.1%46.0% of the Company’s outstanding shares of Common Stock. Additionally, Gary S. Winemaster, the Company’s founder, former Chairman of the Board of Directors (the “Board”), former Chief Executive Officer, President and nonexecutive Chief Strategy Officer, beneficially owned approximately 14.4% of the Company’s outstanding shares of Common Stock. Each of these stockholders, by virtue of theirWeichai’s significant equity ownership in the Company, may be able to significantly influence, and, in the case of Weichai,and control the outcome of all matters requiring stockholder approval, including the election and removal of directors and any merger or other significant corporate transactions. The interests of these stockholders may not coincide with the interests of other stockholders. The concentration of ownership might also have the effect of delaying or preventing a change of control of the Company that other stockholders may view as beneficial. Weichai alone owns a majority of the outstanding shares of Common Stock and, therefore, it possesses voting control over the Company sufficient to prevent any change of control from occurring.
Our relationship with Weichai, a Chinese state-owned entity, and heightened U.S.-China geopolitical tensions could subject us to increased regulatory scrutiny, reputational harm, and operational restrictions.
The relationship between the United States and China has become increasingly strained in recent years, with ongoing tensions related to trade, technology, national security, and other matters. The U.S. government has taken, and may continue to take, actions that could affect companies with significant Chinese ownership or business relationships, including:
•Enhanced scrutiny by the Committee on Foreign Investment in the United States (CFIUS) of transactions involving Chinese-affiliated entities;
•Export control restrictions that could limit our ability to share technology or conduct business with Weichai or other Chinese entities;
•Sanctions or other restrictions targeting Chinese state-owned enterprises or their affiliates;
•Legislative or regulatory actions that could restrict or prohibit business relationships with Chinese state-owned entities; and
•Increased disclosure requirements or other regulatory burdens applicable to companies with significant foreign government ownership.
Any such actions could disrupt our strategic collaboration with Weichai, limit our access to certain markets or technologies, increase our compliance costs, or subject us to reputational harm. Additionally, negative public perception of companies with Chinese state ownership could adversely affect our relationships with customers, suppliers, and other business partners, particularly those in the defense, government contracting, or critical infrastructure sectors.
We cannot predict the nature, timing, or impact of future geopolitical developments or government actions. Any material adverse developments in U.S.-China relations or actions targeting companies with Chinese state ownership could have a material adverse effect on our business, financial condition, results of operations, and stock price.
In March 2017, Weichai entered into an Investor Rights Agreement (the “Rights Agreement”) with the Company upon execution of the SPA.Company. The Rights Agreement provides Weichai with majority representation on the Company’s Board and management representation rights. Weichai currently has four representatives on the Board which constitutes the majority of the directors serving on the Board. According to the Rights Agreement, during any period when the Company is a “controlled company” within the meaning of the Nasdaq Listing Rules, it will take such measures as to avail itself of the “controlled company” exemptions available under Rule 5615 of the Nasdaq Listing Rules of Rules 5605(b), (d) and (e). With Weichai being the majority owner of the Company’s outstanding shares of its Common Stock, Weichai is able to exercise control over matters requiring stockholders’ approval, including, among other matters, the election of the Directors, amendment of the Company’s Certificate of Incorporation and approval of significant corporate transactions. This control could have the effect of delaying or preventing a change of control of the Company or changes in management and will make the approval of certain transactions impractical without the support of Weichai.
Artificial Intelligence Risk Factors
The increasing use of artificial intelligence technologies by our competitors, customers, and suppliers could impact our competitive position.
Artificial intelligence (“AI”) and machine learning technologies are rapidly evolving and are increasingly being adopted across industries, including in manufacturing. Our competitors, customers, and suppliers may adopt AI technologies that could affect our competitive position. If we fail to effectively adopt and integrate AI technologies, or if our competitors do so more successfully, we could experience a decline in our competitive position.
We may also face risks from AI technologies used by third parties, including vendors, customers, and service providers, over which we have limited control. Any material disruption to our supply chain or competitive disadvantage resulting from third-party AI adoption could adversely affect our business, financial condition, and results of operations.
The Company’s inability to generate sufficient taxable income in the future may limit the Company’s ability to use net operating loss (“NOL”) carryforwards to reduce future tax payments.
The Company has NOL carryforwards with which to offset its future taxable income for U.S. federal income tax reporting purposes. If the Company should fail to generate a sufficient level of taxable income prior to the expiration of the NOL carryforward periods, then it will lose the ability to apply the NOLs as offsets to future taxable income. Similar limitations also apply to certain U.S. federal tax credits.
Management's Discussion & Analysis (MD&A)
Largest changes
“The Company continues to experience inflationary cost pressures for certain raw materials and other goods, which the Company continues to try to mitigate through price increases and other cost reduction measures. Additionally, the Company continues to experience ongoing tariff costs for its supply chain products and is trying to mitigate these impacts through price increases and other measures, such as seeking certain tariff exclusions, where available. …”see in full comparison
“The Company’s ability to continue as a going concern is dependent on extending and amending, refinancing or repaying the indebtedness outstanding under the Company’s existing debt arrangements. Without additional financing, the Company anticipates that it will not have sufficient cash and cash equivalents to repay amounts owed under its existing debt arrangements as they become due, which raises substantial doubt about the Company’s ability to continue as a going concern within one year from the date of filing. …”see in full comparison
“The Company anticipates an increase in sales for 2025 compared to 2024, driven by expected growth in the power systems end market including products supporting data centers, while sales in the industrial and transportation end markets are projected to remain about flat. …”see in full comparison
“The Company has experienced tariff costs associated with its supply chain products. The Supreme Court's decision to strike down tariffs and the administration's response have created significant uncertainty regarding the scope, rate, duration, and legal authority for future tariffs. We are actively assessing the evolving tariff environment and are committed to proactively mitigating any associated risks through strategic sourcing, pricing actions, and supply chain agility.”see in full comparison
We have not made any changes insee in full comparison20242025 to our reporting unit or the accounting methodology we use to assess impairment loss on goodwill and indefinite-lived intangible assets. In2024,2025, management performed an assessment of the impairment of goodwill for our reporting unit and indefinite-lived intangible assets using aquantitativequalitativeapproach,approach.whichBasedindicatedon the totality of information considered, and after weighing both positive and negative qualitative factors, management concluded that it was not more likely than not that the fairvaluesvaluetheof any reporting unitandwasindefinite-livedbelowintangible assets were substantially in excess of theirits carryingvalues.amount.Therefore,As a result, the Company determined that a quantitative goodwill impairment test was not required, and noindications ofimpairmentwerechargeidentified.was recognized for the period ended December 31, 2025.
PSI’s business is impacted by the current macroeconomic and geopoliticalsee in full comparisonenvironment, which has contributed to differing levels of recovery in the global economy.environment. For example, although the oil and gas market, in which the Company has historically operated, has experienced year over year growth from its historic lows, sales levels may not reach previous higher levels because ofrising crude oil prices andlower rig counts. The Companycontinues to experience inflationary cost pressures for certain raw materials and other goods which the Company continues to try to mitigate through price increases and other cost reduction measures. Additionally, the Company continues to experience ongoingexperiences tariff costsforassociated with products in its supplychainchain.productsWe are actively assessing the evolving tariff environment andisaretryingcommitted tomitigateproactivelythesemitigatingimpactsany associated risks throughpricestrategicincreasessourcing, pricing actions, andothersupplymeasures,chainsuch as seeking certain tariff exclusions, where possible.agility. The potential for continued economic uncertainty and unfavorable oil and gas market dynamics may have a material adverse impact on the levels of future customer orders and the Company’s future business operations, financial condition and liquidity.
Full comparison: every changed paragraph (39)
The Company designs, engineers, manufactures, markets and sells a broad range of advanced, emission-certified engines and power systems that run on a wide variety of clean, alternative fuels, including natural gas, propane, and biofuels, as well as gasoline and diesel options, within the power systems, industrial and transportation end markets with primary manufacturing, assembly, engineering, R&D, sales and distribution facilities located in suburban Chicago, Illinois and Darien and Beloit, Wisconsin. The Company provides highly engineered, comprehensive solutions designed to meet specific customer application requirements and technical specifications, including those imposed by environmental regulatory bodies, such as the EPAEPA, CARB, MEE, and the CARB.EU.
During 2025, the Company sold approximately 19,800 engines of which 74% utilized propane or natural gas as their fuel source and 18% utilized gasoline. The remaining 8% of engines were dual fuel gasoline/propane, diesel and service engines. During 2024, the Company sold over 22,200 engines of which approximately 76% utilized propane or natural gas as their fuel source and 13% utilized gasoline. The remaining 11% of engines were dual fuel gasoline/propane, diesel and service engines. During 2023, the Company sold over 33,500 engines of which approximately 76% utilized propane or natural gas as their fuel source and 17% utilized gasoline. The remaining 7% of engines were dual fuel gasoline/propane, diesel and service/base engines.
The Company and Weichai executed the Collaboration Agreement in order to achieve their respective objectives, enhance the cooperation alliance and share experiences, expertise and resources. Among other things, the Collaboration Arrangement established a joint steering committee, permitted Weichai to employ a limited number of technical, marketing, sales, procurement and finance personnel to work at the Company and established several collaborations related to stationary natural-gas applications and Weichai diesel engines. The Collaboration Agreement also provides for the steering committee to create various subcommittees with operating roles and otherwise governs the treatment of intellectual property of the parties prior to the collaboration and the intellectual property developed during the collaboration. On March 22, 2023, the Collaboration Agreement was extended for an additional term of three years.years, expiring in March 2026. The Company received a renewal notice from Weichai and is in the process of negotiating the renewal of the Collaboration Agreement; however, no formal extension has been executed as of the date of this filing. The Company’s sales to Weichai were $1.8$1.3 million and $1.7$1.8 million during 20242025 and 2023,2024, respectively. The Company purchased $21.5$39.8 million and $6.2$21.5 million of inventory from Weichai during 20242025 and 2023,2024, respectively.
PSI is party to the SLA with Weichai. See Note 6. Debt, included in Item 8. Financial Statements and Supplementary Data, for additional information.
Legal settlementssettlement includedexpenses inwere immaterial for the 2024year operatingended results,December were31, 2025. The Company recognized a benefit of $4.7 million in the 2024 operating results (see Note 11. Commitments and Contingencies, included in Part II. Item 8. Financial Statements and Supplementary Data, for additional information).
PSI’s growth in net revenue in 20242025 was driven by power systems markets, including data center and oil and gas products, partially offset by lower sales from more mature, lower-margin markets such as transportation.industrial. This shift in markets reflects the Company’s conscious strategic prioritization toward higher growth, higher-margin markets with less emphasis on more mature markets.
PSI’s business is impacted by the current macroeconomic and geopolitical environment, which has contributed to differing levels of recovery in the global economy.environment. For example, although the oil and gas market, in which the Company has historically operated, has experienced year over year growth from its historic lows, sales levels may not reach their previous higher levels because of rising crude oil prices and lower rig counts. The Company has been actively navigating these challenges by balancing its investments, expenses, pricing and sales efforts in this market as well as others.
The Company has experienced tariff costs associated with its supply chain products. The Supreme Court's decision to strike down tariffs and the administration's response have created significant uncertainty regarding the scope, rate, duration, and legal authority for future tariffs. We are actively assessing the evolving tariff environment and are committed to proactively mitigating any associated risks through strategic sourcing, pricing actions, and supply chain agility.
The potential for continued economic uncertainty and unfavorable oil and gas market dynamics may have a material adverse impact on the levels of future customer orders and the Company’s future business operations, financial condition and liquidity. On July 30, 2025, the Company amended its Revolving Credit Agreement with Standard Chartered Bank and three other lenders. The amended Revolving Credit Agreement allows the Company to borrow up to $135.0 million and extends the maturity date to July 30, 2027.
The Company continues to experience inflationary cost pressures for certain raw materials and other goods, which the Company continues to try to mitigate through price increases and other cost reduction measures. Additionally, the Company continues to experience ongoing tariff costs for its supply chain products and is trying to mitigate these impacts through price increases and other measures, such as seeking certain tariff exclusions, where available. The potential for continued economic uncertainty and unfavorable oil and gas market dynamics may have a material adverse impact on the levels of future customer orders and the Company’s future business operations, financial condition and liquidity.
The company remains confident in the Company’s long-term strategy and market positioning. Given broader market conditions, ongoing operational initiatives, and variability in customer order timing, the Company has determined it is appropriate to take a disciplined approach and not provide business outlook for 2026 at this time. Management will continue to evaluate its ability to provide outlook as execution progresses and visibility improves.
The Company anticipates an increase in sales for 2025 compared to 2024, driven by expected growth in the power systems end market including products supporting data centers, while sales in the industrial and transportation end markets are projected to remain about flat. Notwithstanding this outlook, which is being driven in part by expectations for stable supply chain dynamics 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, ongoing geopolitical and macroeconomic uncertainties, especially with the latest tariff announcements and the possible impact on trade between the USA and the rest of the world, among other factors.
Hyster-Yale Supply Arrangement: In 2023, Hyster-Yale began using alternative suppliers for several high-volume engines that the Company provides, including the 2.0L and 2.4L engines, due in part to supply chain issues related to UFLPA enforcement. As a result, the Company experienced a decline in sales volumes to Hyster-Yale in 2024.
* Non-GAAP measurement, see reconciliation below
* See reconciliation of non-GAAP financial measures to GAAP results below
Net sales increased $17.0$246.4 million, or 4%,52%, compared to 2023,2024, as a result of sales increases of $100.6$260.6 million in the power systems end market, partly offset by decreases of $37.1$8.5 million and $46.6$5.7 million within the industrial and transportation end markets, respectively. HigherThis powershift systems endin market salesmix werereflects primarilyour duedeliberate tostrategic increasedfocus demandon forhigher-growth products across various applications, with the largest increases attributable to products used within the packaging marketsectors such as enclosures serving the fast-growing data center market,centers and oil and gasgas. products.In Theparticular, Companywe is strategicallyare prioritizing the rapidly expanding data center sector,sector improvingby and increasingenhancing our manufacturing capacity and capabilities to meet our customers’ evolving demandscustomer fordemand. ourThe products.decline Decreasedin industrial end market sales areis primarilylargely dueattributable to decreases insofter demand for products used withinin the material handling and arbor care markets, as well as the direct effects of enforcement of the UFLPA, which limited the Company’s ability to import certain raw materials. The decreased sales within the transportation end market were primarily attributable to lower sales in the truck and school bus market from ceasing sales of emission-certified engines into this market, and new compliance and regulatory requirements that changed engine product offerings in this market.
Gross profit increased by $44.4 million, or 32%, to $184.9 million in 2025, compared to $140.5 million in 2024. Gross margin was 25.6% and 29.5% in 2025 and 2024, respectively. The decrease in gross margin is primarily due to inefficiencies related to our accelerated production ramp-up for data center product lines.
Gross profit increased by $34.7 million, or 33%, to $140.5 million in 2024, compared to $105.9 million in 2023. Gross margin was 29.5% and 23.1% in 2024 and 2023, respectively. The increase in gross margin is primarily due to improved sales mix, pricing actions, higher operating efficiencies, and lower warranty costs primarily attributable to the Company’s sales shift away from certain transportation customers. For the year ended December 31, 2024, warranty costs were $6.5 million, a decrease of $6.5 million compared to warranty costs of $13.0 million in the same period last year, mainly attributable to changes in estimates for preexisting warranties. A majority of the warranty activity is attributable to products sold within the transportation end market in prior years.
R&D expenses in 20242025 and 20232024 were $20.1$18.2 million and $19.5$20.1 million, respectively. The increasedecrease of $0.6$1.9 million, or 3%,9%, was primarily relateddriven toby the testingtiming of newR&D products.program expenditures and the recovery of R&D costs from certain customers.
Selling, general and administrative (“SG&A”) decreasedincreased in 20242025 by $3.0$18.4 million, or 7%,49%, compared to 2023.2024. The decreaseincrease is primarily due to a decrease$4.3 million favorable non-recurring legal reserve reduction in accrued2024, legal$4.4 settlementsmillion ofhigher $4.7 million, lower professional fees and the decrease in selling expensescosts associated with decreasedemployee incentive programs, $3.9 million expense related to customer relationship improvement efforts, and $5.8 million mainly from increased sales and administrative expenses to support ongoing business growth in the transportation market.2025.
Income Tax (Benefit) Expense
The Company recorded income tax benefit of $10.6 million in 2025 and income tax expense of $0.9 million in both 2024 and 2023.2024. The Company’s pretax income was $70.2$103.4 million in 2024,2025, compared to pretax income of $27.2$70.2 million in 2023.2024. The Company2025 continuestax benefit primarily reflects the $38.3 million valuation allowance, which resulted in a one-time increase of approximately $1.66 to utilizeearnings NOLsper along with other tax credits to lower its effective tax rate. The Company continues to record a full valuation allowance against deferred tax assets.share.
1.Amounts reflect non-cash stock-based compensation expense and have no material impact on the Adjusted net income per share – diluted for the year ended December 31, 20242025 and 2023.2024.
2.Amounts include legalseverance settlementsexpense for the year ended December 31, 20242025 and 2023.2024.
3.Amounts include insurancelegal recoveries related to a prior year incident and have no material impact on the Adjusted net income per share – dilutedsettlements for the year ended December 31, 20242025 and 2023.2024.
Net cash provided by operations was $62.4$24.1 million in 20242025 compared to net cash provided by operations of $70.5$62.4 million in 2023,2024, a decrease of $8.1$38.3 million in cash provided by operating activities year-over-year. The decrease in cash provided by operating activities primarily resulted from a $44.5$69.6 million decrease of cash provided by working capital accounts, partially offset by an increase in earnings of $43.0$44.7 million. The decrease in cash generated from working capital was primarily related to,to the purchases of inventoryinventory, decrease in accounts payables, and lowerthe timing of collections on accounts receivablereceivables, forreflecting higher sales volume and operational growth during the year ended December 31, 20242025 compared to December 31, 2023.2024.
The Company used $25.9$27.7 million in cash from financing activities during the year ended December 31, 20242025 compared to $66.8$25.9 million in cash used by financing activities during the year ended December 31, 2023.2024. The cash used by financing activities for the year ended December 31, 20242025 was due to proceeds from the newfull Revolvingrepayment Credit Agreement and payments made onof the SLA and other debt. Cash used in 2023 was primarily attributable to repayment of existing debt duringyear theto year.date. See additional discussion below and in Note 6. Debt in Item 8. Financial Statements and Supplementary Data related to the amendments of the Company’s debt arrangements.
The Company’s sources of funds are cash flows from operations, borrowings made pursuant to its credit facilities and shareholder’s loan agreements, and cash and cash equivalents on hand. Uses of funds include payments of principal on our debt facilities and shareholder’s loan agreements,facilities, capital expenditures, and working capital needs. We currently anticipate that cash flows from operations, available funds and access to financing sources, including under our Revolving Credit Agreement, will continue to be sufficient to meet our cash needs for the next twelve months and beyond.
WhileOur thematerial cash requirements from known contractual and other obligations primarily relate to our debt and lease obligations. The Company has achieved profitability and generated positive cash flows from operating activities in 2024, uncertainties exist about the Company’s ability to refinance, extend, or repay its outstanding indebtedness.2025. As of December 31, 2024,2025, the Company’s total outstanding debt obligations under the Revolving Credit Agreement,Agreement theand SLA,for finance leases and other debt, all of which are short-term requirements, were $120.2$96.6 million in the aggregate, and its cash and cash equivalents were $55.3$41.3 million. See Item 8.1. Financial Statements and Supplementary Data,Statements, Note 6. Debt, for additional information. On July 30, 2025, the Company amended its Revolving Credit Agreement with Standard Chartered Bank and three other lenders. The second amended Revolving Credit Agreement allows the Company to borrow up to $135.0 million and extends the maturity date to July 30, 2027.
The Company’s ability to continue as a going concern is dependent on extending and amending, refinancing or repaying the indebtedness outstanding under the Company’s existing debt arrangements. Without additional financing, the Company anticipates that it will not have sufficient cash and cash equivalents to repay amounts owed under its existing debt arrangements as they become due, which raises substantial doubt about the Company’s ability to continue as a going concern within one year from the date of filing. In order to provide the Company with a more permanent source of liquidity, management plans to seek an extension and amendment and/or replacement of its existing debt agreements or seek additional liquidity from its current or other lenders before the maturity dates in 2025. There can be no assurance that the Company’s management will be able to successfully complete an extension and amendment of its existing debt agreements or obtain new financing on acceptable terms, when required or if at all.
PSI’s business is impacted by the current macroeconomic and geopolitical environment, which has contributed to differing levels of recovery in the global economy.environment. For example, although the oil and gas market, in which the Company has historically operated, has experienced year over year growth from its historic lows, sales levels may not reach previous higher levels because of rising crude oil prices and lower rig counts. The Company continues to experience inflationary cost pressures for certain raw materials and other goods which the Company continues to try to mitigate through price increases and other cost reduction measures. Additionally, the Company continues to experience ongoingexperiences tariff costs forassociated with products in its supply chainchain. productsWe are actively assessing the evolving tariff environment and isare tryingcommitted to mitigateproactively thesemitigating impactsany associated risks through pricestrategic increasessourcing, pricing actions, and othersupply measures,chain such as seeking certain tariff exclusions, where possible.agility. The potential for continued economic uncertainty and unfavorable oil and gas market dynamics may have a material adverse impact on the levels of future customer orders and the Company’s future business operations, financial condition and liquidity.
We have not made any changes in 20242025 to our reporting unit or the accounting methodology we use to assess impairment loss on goodwill and indefinite-lived intangible assets. In 2024,2025, management performed an assessment of the impairment of goodwill for our reporting unit and indefinite-lived intangible assets using a quantitativequalitative approach,approach. whichBased indicatedon the totality of information considered, and after weighing both positive and negative qualitative factors, management concluded that it was not more likely than not that the fair valuesvalue theof any reporting unit andwas indefinite-livedbelow intangible assets were substantially in excess of theirits carrying values.amount. Therefore,As a result, the Company determined that a quantitative goodwill impairment test was not required, and no indications of impairment werecharge identified.was recognized for the period ended December 31, 2025.
The Company performs its annual impairment test using the discounted cash flow method which involves the Company’s management making estimates with respect to a variety of factors that will significantly impact the future performance of the business, including the following:
•future volume projections;
•estimated margins on sales;
•estimated growth rate for SG&A costs;
•future effective tax rate; and
•weighted-average cost of capital (“WACC”) used to discount future performance of the Company.
When the Company identifies cost effective opportunities to address issues in products sold or corrective actions for safety issues, it initiates product recalls or field campaigns. As a result of the uncertainty surrounding the nature and frequency of product recalls and field campaigns, the liability for such actions is generally recorded when the Company commits to a product recall or field campaign. When collection is reasonably assured, the Company also estimates the amount of warranty claim recoveries to be received from its suppliers. Warranty costs and recoveries are included in Cost of sales in the Consolidated Statements of Income. Warranty costs and recoveries are included in Cost of sales in the Consolidated Statements of Income. See Note 1. Summary of Significant Accounting Policies and Other Information, included in Item 8. Financial Statements and Supplementary Data for further discussion.
What changed in the latest 10-Q
Risk Factors
In addition to the other information set forth in this report, you should carefully consider the risk factors described in Item 1A. Risk Factors, in Part II of the Company’s Quarterly Report on Form 10‑Q for the period ended June 30, 2025, as well as those described in Item 1A. Risk Factors, in Part I of the Company’s 2025 Annual Report on Form 10-K, filed with the SEC on March 2, 2026. These risk factors could materially affect the Company’s business, financial condition, results of operations, liquidity, or future results. The risks described in these filings are not the only risks the Company faces. Additional risks and uncertainties not currently known to the Company or that the Company currently deems immaterial may also materially adversely affect its business, financial condition, results of operations, or liquidity. There have been no material changes to the risk factors previously disclosed in the filings referenced above.
Full comparison: every changed paragraph (1)
In addition to the other information set forth in this report, you should carefully consider the risk factors described in Item 1A. Risk Factors, in Part II of the Company’s Quarterly Report on Form 10‑Q for the period ended MarchJune 31,30, 2025, as well as those described in Item 1A. Risk Factors, in Part I of the Company’s 2025 Annual Report on Form 10-K, filed with the SEC on March 2, 2026. These risk factors could materially affect the Company’s business, financial condition, results of operations, liquidity, or future results. The risks described in these filings are not the only risks the Company faces. Additional risks and uncertainties not currently known to the Company or that the Company currently deems immaterial may also materially adversely affect its business, financial condition, results of operations, or liquidity. There have been no material changes to the risk factors previously disclosed in the filings referenced above.
Management's Discussion & Analysis (MD&A)
Largest changes
see in full comparisonResultsCondensed consolidated results of operations for the three and six months endedMarchJune31,30,20262026, compared with the three and six months endedMarchJune31,30, 2025 (UNAUDITED):
Net salessee in full comparisonfordecreasedthe first quarter of 2026 were $128.6 million, a decrease of $6.9$39.4 million, or5%,21%, during the three months ended June 30, 2026, compared to thefirstthreequartermonths ended June 30, 2025, as a result of2025. The decrease reflectedlower sales of $34.6 million, $3.0 million and $1.7 million in the power systems, industrial and transportation end markets, respectively. Net sales decreased $46.2 million, or 14%, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, as a result of lower sales of $44.8 million and $1.5 million in the power systems end marketof $10.2 million, partially offset by increases of $3.0 million and $0.3 million in the industrialand transportation end markets, respectively.SalesDuring both three and six months ended June 30, 2026, sales in the power systems end market declined primarily due tosoftness in oil and gas markets, together withuneven order patterns and shipment timing for data center-relatedproducts.products, together with softness in oil and gas markets. The Company continues to see strong demand for data center power solutions. However, the timing and ultimate volume ofrelatedrevenueshipmentsrecognized from that demand remain subject to customer scheduling, manufacturing throughput,supply-chainsupplyfactors,chain factors and other variables, and the Company is not predicting any specific level of data center revenue in any future period. Based on the current production schedule, the Company expects second-half 2026 sales to exceed first-half 2026 sales as larger Power Systems orders move into production, although shipment timing and quarterly results may continue to vary.
“The Company recorded income tax expense of $5.6 million for the three months ended June 30, 2026, as compared to income tax benefit of $20.1 million for the same period in 2025. Pretax income was $22.5 million for the three months ended June 30, 2026, compared to $31.1 million for the same period in 2025. The Company recorded income tax expense of $8.0 million for the six months ended June 30, 2026, as compared to income tax benefit of $16.3 million for the same period in 2025. …”see in full comparison
Gross profitsee in full comparisonfordecreased during thefirstthreequartermonthsofended June 30, 2026wasby$29.4 million, a decrease of $10.9$12.7 million, or27%,24%, compared to thefirstthreequartermonthsofended June 30, 2025. Gross margininwas 27.1% and 28.2% during thefirstthreequartermonthsofended June 30, 2026wasand22.9%,2025, respectively. Gross profit decreased during the six months ended June 30, 2026 by $23.6 million, or 25%, compared to29.7%theinsix months ended June 30, 2025. Gross margin was 25.2% and 28.8% during thesamesixperiodmonthslastendedyear.JuneGross30, 2026 and 2025. During both the three and six months ended June 30, 2026, gross margin reflected a lower mix of oil and gas products, together with elevated production costs associated with capacity ramp-up activities supporting data center-related applications at the Company’s Wisconsin operations. On a sequential basis, gross margin improved by approximately100420 basis points comparedtowith thefourthfirst quarter of2025,2026.owingThe improvement reflected in parttothe early benefits of the Company’sefforts to improveongoing operationalefficiencyimprovement efforts inWisconsin,Wisconsinbutand was partially offset byanunfavorable product mix in thefirstsecond quarter. The Company’s capacity ramp-up activities at its Wisconsin operations are continuing, and the Company expects related production costs to persist; the trajectory of any further sequential improvement remains subject to product mix, throughput and other operational factors.
Selling, general and administrative (“SG&A”) expenses weresee in full comparison$13.0$12.1 million during thefirstthreequartermonths ended June 30, 2026, a decrease of2026, an increase of $1.9$4.6 million, or17%,27%, compared to thesamethreeperiodmonthsinended June 30, 2025. SG&A expenses were $25.1 million during thepriorsixyear.monthsTheendedvarianceJune 30, 2026, an decrease of $2.7 million, or 10%, compared to the six months ended June 30, 2025. During both three and six months ended June 30, 2026, the decrease was primarilyreflectsattributablehigherto lower compensation expense related to the revaluation of previously awarded SARs, lower costs associated with employee incentive programs, partially offset by incremental selling and administrative expenses associated with MTL Manufacturing andEquipment,Equipmentand other administrative and management expenses supportingin thebusinessfirstin 2026.quarter.
“The Company recorded income tax expense of $2.4 million and $3.8 million for the three months ended March 31, 2026 and 2025, respectively. The Company’s pretax income was $9.7 million for the three months ended March 31, 2026, compared to a pretax income of $22.9 million for the three months ended March 31, 2025. The decrease was primarily driven by lower pre-tax income in 2026, partially offset by a higher effective tax rate. See Note 12. Income Taxes, included in Part 1, Item 1. Financial Statements, for additional information related to the Company’s income tax provision.”see in full comparison
Full comparison: every changed paragraph (31)
The following discussion and analysis includes forward-looking statements about the Company’s business and consolidated results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025, including discussions about management’s expectations for the Company’s business. These statements represent projections, beliefs and expectations based on current circumstances and conditions and are made in light of recent events and trends. These statements should not be construed either as assurances of performance or as promises of a given course of action. Instead, various known and unknown factors are likely to cause the Company’s actual performance and management’s actions to vary, and the results of these variances may be both material and adverse. See “Forward-Looking Statements” in this Quarterly Report. The following discussion should also be read in conjunction with the Company’s unaudited consolidated financial statements and the related Notes included in this Quarterly Report.
Net sales by geographic area and by end market for the three and six months ended MarchJune 31,30, 2026 and 2025 are presented below:
Sales declined in the firstsecond quarter of 2026, primarily within the power systems end market, reflecting uneven customer ordering patterns and some softness in the oil and gas market. Looking ahead, we expect sales to improve in the second half of the year, driven by demand in data center-related markets, partially offset by ongoing softness in the oil and gas market.
The Company is focused on leading the business through a growth phase with a stronger balance sheet while strategically prioritizing products that demonstrate strong demand and higher gross margins. Consistent with those goals, the Company is actively pursuing several initiatives to enhance and expand manufacturing capacity to meet the increasing demand from data center markets. PivotingThe Company expects that pivoting the focus to these markets will drive net sales growth and profitability. Through expanded capacity and strategic partnerships, management expects this positive trend to continue.
Given ongoing variability in order timing and market conditions, the Company is not providing formal full-year guidance at this time. Based on the current visibility,production schedule and information available as of the date of this release, the Company currently expects second-quartersecond-half 2026 revenuesales to exceed first-half 2026 sales and to be generally consistent with the first quarter on a sequential basis. The Company anticipates stronger sales growth in the second half of 2026, approximately in line with sales in the second half of 2025, as larger Power Systems orders move into production and are recognized as revenue. However, the timing and ultimate volume of those shipments remain subject to customer scheduling, manufacturing throughput, supply chain factors and other variables. There can be no assurance that those orders will translate to a uniformly stronger second half. Continued softness in the oil and gas end market is expected to weigh on quarterly revenue trends, and capacity ramp-up activities at the Company’s Wisconsin operations and their related cost effects on gross margin are expected to continue.
ResultsCondensed consolidated results of operations for the three and six months ended MarchJune 31,30, 20262026, compared with the three and six months ended MarchJune 31,30, 2025 (UNAUDITED):
*Non-GAAP measurement, see reconciliation below
* See reconciliation of non-GAAP financial measures to GAAP results below
Net sales fordecreased the first quarter of 2026 were $128.6 million, a decrease of $6.9$39.4 million, or 5%,21%, during the three months ended June 30, 2026, compared to the firstthree quartermonths ended June 30, 2025, as a result of 2025. The decrease reflected lower sales of $34.6 million, $3.0 million and $1.7 million in the power systems, industrial and transportation end markets, respectively. Net sales decreased $46.2 million, or 14%, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, as a result of lower sales of $44.8 million and $1.5 million in the power systems end market of $10.2 million, partially offset by increases of $3.0 million and $0.3 million in the industrial and transportation end markets, respectively. SalesDuring both three and six months ended June 30, 2026, sales in the power systems end market declined primarily due to softness in oil and gas markets, together with uneven order patterns and shipment timing for data center-related products.products, together with softness in oil and gas markets. The Company continues to see strong demand for data center power solutions. However, the timing and ultimate volume of relatedrevenue shipmentsrecognized from that demand remain subject to customer scheduling, manufacturing throughput, supply-chainsupply factors,chain factors and other variables, and the Company is not predicting any specific level of data center revenue in any future period. Based on the current production schedule, the Company expects second-half 2026 sales to exceed first-half 2026 sales as larger Power Systems orders move into production, although shipment timing and quarterly results may continue to vary.
Gross profit fordecreased during the firstthree quartermonths ofended June 30, 2026 wasby $29.4 million, a decrease of $10.9$12.7 million, or 27%,24%, compared to the firstthree quartermonths ofended June 30, 2025. Gross margin inwas 27.1% and 28.2% during the firstthree quartermonths ofended June 30, 2026 wasand 22.9%,2025, respectively. Gross profit decreased during the six months ended June 30, 2026 by $23.6 million, or 25%, compared to 29.7%the insix months ended June 30, 2025. Gross margin was 25.2% and 28.8% during the samesix periodmonths lastended year.June Gross30, 2026 and 2025. During both the three and six months ended June 30, 2026, gross margin reflected a lower mix of oil and gas products, together with elevated production costs associated with capacity ramp-up activities supporting data center-related applications at the Company’s Wisconsin operations. On a sequential basis, gross margin improved by approximately 100420 basis points compared towith the fourthfirst quarter of 2025,2026. owingThe improvement reflected in part tothe early benefits of the Company’s efforts to improveongoing operational efficiencyimprovement efforts in Wisconsin,Wisconsin butand was partially offset by an unfavorable product mix in the firstsecond quarter. The Company’s capacity ramp-up activities at its Wisconsin operations are continuing, and the Company expects related production costs to persist; the trajectory of any further sequential improvement remains subject to product mix, throughput and other operational factors.
Research and development expenses during the three months ended MarchJune 31,30, 2026 and 2025 were $4.8$5.1 million and $4.2$4.6 million, respectively. TheResearch and development expenses during the six months ended June 30, 2026 and 2025 were $9.9 million and $8.9 million, respectively. During the three and six months ended June 30, 2026, the increase of $0.4 million and $1.0 million, respectively, was primarily driven by higher R&D program expenditures to support new programs in 2026 and the recovery of R&D costs from certain customers in 2025.
Selling, general and administrative (“SG&A”) expenses were $13.0$12.1 million during the firstthree quartermonths ended June 30, 2026, a decrease of 2026, an increase of $1.9$4.6 million, or 17%,27%, compared to the samethree periodmonths inended June 30, 2025. SG&A expenses were $25.1 million during the priorsix year.months Theended varianceJune 30, 2026, an decrease of $2.7 million, or 10%, compared to the six months ended June 30, 2025. During both three and six months ended June 30, 2026, the decrease was primarily reflectsattributable higherto lower compensation expense related to the revaluation of previously awarded SARs, lower costs associated with employee incentive programs, partially offset by incremental selling and administrative expenses associated with MTL Manufacturing and Equipment,Equipment and other administrative and management expenses supportingin the businessfirst in 2026.quarter.
Interest expense was $1.7$1.6 million infor the firstthree quartermonths ofended June 30, 2026, as compared to $1.8$1.7 million infor the samethree periodmonths inended June 30, 2025. Interest expense was $3.3 million for the priorsix year,months primarilyended June 30, 2026, as compared to $3.5 million for the six months ended June 30, 2025. During both three and six months ended June 30, 2026, interest expense decreased largely due to overall lower overall effective interest rates. See Note 7. Debt, included in Part I,1, Item 1. Financial Statements, for additional information.
Income Tax (Benefit) Expense
The Company recorded income tax expense of $5.6 million for the three months ended June 30, 2026, as compared to income tax benefit of $20.1 million for the same period in 2025. Pretax income was $22.5 million for the three months ended June 30, 2026, compared to $31.1 million for the same period in 2025. The Company recorded income tax expense of $8.0 million for the six months ended June 30, 2026, as compared to income tax benefit of $16.3 million for the same period in 2025. Pretax income was $32.2 million for the six months ended June 30, 2026, compared to $53.9 million for the same period in 2025. During both the three and six months ended June 30, 2026, the change from an income tax benefit in 2025 to an income tax expense in 2026 was primarily attributable to the release of the majority of the Company's valuation allowance during the second quarter of 2025, which did not recur in 2026.
See Note 12. Income Taxes, included in Part I, Item 1. Financial Statements, for additional information related to the Company’s income tax provision.
The Company recorded income tax expense of $2.4 million and $3.8 million for the three months ended March 31, 2026 and 2025, respectively. The Company’s pretax income was $9.7 million for the three months ended March 31, 2026, compared to a pretax income of $22.9 million for the three months ended March 31, 2025. The decrease was primarily driven by lower pre-tax income in 2026, partially offset by a higher effective tax rate. See Note 12. Income Taxes, included in Part 1, Item 1. Financial Statements, for additional information related to the Company’s income tax provision.
The following table presents a reconciliation from Net income to Adjusted net income for the three and six months ended MarchJune 31,30, 2026 and 2025:
The following table presents a reconciliation from Net income per share – diluted to Adjusted net income per share – diluted for the three and six months ended MarchJune 31,30, 2026 and 2025:
The following table presents a reconciliation from Net income to EBITDA and Adjusted EBITDA for the three and six months ended MarchJune 31,30, 2026 and 2025:
1.Amounts reflect non-cash stock-based compensation expense for the three and six months ended MarchJune 31,30, 2026 and 2025.
2.Amounts include severance expense of less than $0.1 million and $0.1 million for the three and six months ended June 30, 2026 and 2025, respectively, as well as executive recruiting expense of $0.4 million for each period presented.
2.Amounts include severance expense for the three months ended March 31, 2026.
3.Amounts include legal settlements for the three and six months ended MarchJune 31,30, 2026.
Cash Flows for the ThreeSix Months Ended MarchJune 31,30, 2026
Net cash provided by operating activities was $19.1$75.7 million for the threesix months ended MarchJune 31,30, 2026, compared to $8.8$25.5 million for the threesix months ended MarchJune 31,30, 2025, representing an increase of $10.3$50.3 million in cash provided by operating activities year-over-year. The increase occurred despite a decrease in net income of $11.8$46.1 million, driven primarily by favorable changes in working capital. These changes included a significant source of cash from accounts receivable, reflecting improved collections in the current period, as well as a lower use of cash for inventory purchases compared to the prior‑year period. These favorable impacts were partially offset by increased uses of cash related to accrued expenses and accounts payable during the threesix months ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025.
Net cash used in investing activities was $13.8$14.6 million for the threesix months ended MarchJune 31,30, 2026, compared to cash used in investing activities of $3.4$5.4 million for the threesix months ended MarchJune 31,30, 2025. For the threesix months ended MarchJune 31,30, 2026 and 2025, cash used in investing activities related to capital expenditures and the acquisition of MTL.
The Company used $0.7$31.5 million in cash from financing activities for the threesix months ended MarchJune 31,30, 2026, compared to $10.2$25.4 million cash used by financing activities for the threesix months ended MarchJune 31,30, 2025. The cash used by financing activities for the threesix months ended MarchJune 31,30, 2026 was primarily due to paydown of $30.0 million on the Revolving Credit Agreement, payoff of the SBA loan, and repayments of lease liabilities and share repurchases to settle tax withholding obligations for stock-based compensation awards. See additional discussion in Note 7. Debt, included in Part I, Item 1. Financial Statements, which further describe the Company’s debt arrangements.
Our material cash requirements from known contractual and other obligations primarily relate to our debt and lease obligations. The Company has achieved profitability and generated positive cash flows from operating activities in 2026. As of MarchJune 31,30, 2026, the Company’s total outstanding debt obligations under the Revolving Credit Agreement and forAgreement, finance leases and other debt, were $103.4$72.6 million in the aggregate, and its cash and cash equivalents were $45.1$70.1 million. See Item 1. Financial Statements, Note 7. Debt, for additional information. On July 30, 2025, the Company amended its Revolving Credit Agreement with Standard Chartered Bank and three other lenders. The second amended Revolving Credit Agreement allows the Company to borrow up to $135.0 million and extends the maturity date to July 30, 2027.
At MarchJune 31,30, 2026, the Company had four outstanding letters of credit totaling $2.5 million. See Item 1. Financial Statements, Note 11. Commitments and Contingencies for additional information related to the Company’s off-balance sheet arrangements and the outstanding letters of credit.
The Company’s significant accounting policies are consistent with those discussed in Note 1. Summary of Significant Accounting Policies and Other Information, to the consolidated financial statements and the MD&A section of the Company’s 2025 Annual Report. During the threesix months ended MarchJune 31,30, 2026, there were no significant changes in the application of critical accounting policies.
PSIX insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding PSIX (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 1,497,155 | $58.2M | 0.09% | Added 27884% |
| Millennium Management (Israel Englander) | 2026-06-30 | 206,942 | $8.0M | 0.01% | Added 111% |
| Two Sigma Investments | 2026-06-30 | 108,961 | $4.2M | 0.0% | Added 135% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 52,017 | $2.0M | 0.0% | Added 86% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 29,658 | $1.2M | 0.0% | Added 5% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 15,072 | $586.1K | 0.0% | Reduced 5% |