Power Solutions International Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $1.05b | Revenue (TTM) = $676.19m
Market Cap = $1.05b | Estimated Revenue = $686.77m
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $1.06b | Revenue (TTM) = $676.19m
Enterprise Value = $1.06b | Forward Revenue = $686.77m
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net Margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Power Solutions International Stock Analysis
Analyst Opinions
9 Analysts have issued a Power Solutions International forecast:
Analyst Opinions
9 Analysts have issued a Power Solutions International forecast:
Power Solutions International Events
Past Events
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AUG
6
Q2 2026 Earnings Call
about 2 months ago
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MAY
11
Q1 2026 Earnings Call
5 months ago
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StocksGuide Free
Power Solutions International — Q2 2026 Earnings Call
1. Management Discussion
Good afternoon and welcome to Power Solutions International Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.
I would now like to hand the conference over to Ken Jenke, VP, Corporate Controller, PSI. Sir, please go ahead.
Good afternoon, and welcome to Power Solutions International's second quarter 2026 earnings conference call. I'm Ken Jenke, Vice President and Corporate Controller. And joining me today is Ken Li, our Interim Chief Executive Officer and Chief Financial Officer.
Before we begin, I would like to remind everyone that today's prepared remarks and responses to questions may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and assumptions, speak only as of today and are subject to risks and uncertainties that could cause actual results to differ materially.
Important factors include the timing and ultimate conversion of power systems orders into revenue, including data center-related orders, quarterly variability in product mix and the corresponding effect on gross profit and gross margin. The cost, pace, throughput and operational outcomes of capacity ramp-up activities at our Wisconsin operations' ability to execute operational improvement initiatives, the level and persistence of customer demand, including demand conditions in the oil and gas end market, supply chain and component availability, integration of recent acquisitions, including MTL Manufacturing & Equipment, macroeconomic, regulatory and trade conditions, including U.S. tariffs and trade restrictions, changes in management or other personnel and the outcome of pending or threatened litigation and other legal or regulatory matters.
Additional information concerning factors that could cause actual results to differ materially is contained in the cautionary language in today's earnings release and in the factors and other cautionary disclosures in our most recent Form 10-K, subsequent 10-Qs and other SEC filings. Those disclosures are incorporated by reference for purposes of today's call and are available in the Investor Relations section of our website and at sec.gov. We undertake no obligation to update any forward-looking statements except as required by law.
We will also reference certain non-GAAP financial measures in today's call. EBITDA margin represents EBITDA as a percentage of net sales. A definition of EBITDA and a reconciliation to net income appear in today's earnings release, which is available in the Investor Relations section of our website.
With that, I will turn the call over to Ken.
Thank you, Ken, and good afternoon, everyone. Thank you for joining us. Before we review the second quarter results, I would like to briefly address the leadership transition we announced on July 27. Richard Hu will become PSI's Chief Executive Officer on August 17. Richard brings more than 25 years of global industrial leadership experience, including 6 years at BorgWarner, most recently as Vice President and General Manager of the Americas region for its Turbo & Thermal Technologies business units, where he led a multi-billion dollar operation and a global team of approximately 3,900 employees across the United States, Mexico and Brazil. We look forward to welcoming him and working with him as PSI continues to execute its strategy. I will continue to serve as Interim Chief Executive Officer until Richard begins and will continue as Chief Financial Officer following the transition.
Now, let me turn to our second quarter results. 2Q financials. Before I walk through the detailed financials, I want to briefly run the quarter. On a sequential basis, the second quarter showed a meaningful improvement in several key metrics. Sales of $152.5 million increased 18.6% from the first quarter, and the gross margin improved approximately 420 basis points to 27.1% from 22.9%. The gross margin improvements reflect in part the early benefits of ongoing operational improvement efforts in Wisconsin and was partially offset by unfavorable product mix. The strong operating cash flow also enabled us to reduce total debt by approximately $30.8 million during the quarter.
Compared to the second quarter of 2025, net sales reflects the timing of certain power systems shipments and the softened demand in our oil and gas business. Gross margin reflects a lower mix of oil and gas products, together with elevated production costs associated with capacity ramp-up activities at our Wisconsin operations. Year-over-year comparisons in net income were also significantly affected by a nonrecurring $29.2 million, or $1.27 per diluted share, tax benefit in the prior year period, related to the release of a valuation allowance.
Demand for our data center power solutions remains strong. Based on our current production schedule, we expect the second half 2026 sales to exceed the first half 2026 sales as larger power systems orders move into production. Although shipment timing and quarterly results may vary. The remainder of our remarks will cover results by end markets, gross margin drivers, operating expenses, cash flow and balance sheet and updates on MTL and our outlook.
Net sales for the second quarter of 2026 were $152.5 million, a decrease of $39.4 million, or 21%, compared to the second quarter of 2025. Sequentially, sales increased 18.6% from the first quarter of 2026, exceeding our prior expectation that the second quarter revenue would be generally consistent with the first quarter.
The year-over-year decrease was primarily driven by lower sales of $34.6 million in the power systems end markets, $3.0 million in the industrial end markets and $1.7 million in the transportation end markets. Within our power systems end markets, the year-over-year decline primarily reflects the uneven order patterns and the shipment timing for data center-related products, together with continued softness in our oil and gas business.
We continue to see strong demand for our data center power solutions, and based on our current production schedule, we expect the second half of 2026 sales to exceed the first half of 2026 sales as larger power systems orders move into production and are recognized as revenue. At the same time, the timing and ultimate volume of revenue recognized from that demand remains subject to customer scheduling, manufacturing flow paths, supply chain factors and other variables, and we are not predicting any specific level of data center revenue in any future period.
Gross profit for the second quarter of 2026 was $41.4 million, compared to $54.1 million in the second quarter of 2025. Gross margin was 27.1% in the quarter, compared to 28.2% in the prior year period. On a sequential basis, gross margin improved approximately 420 basis points from 22.9% in the first quarter to 27.1% in the second quarter. The improvements reflect in part the early benefits of our ongoing operational improvement efforts in Wisconsin and was partially offset by unfavorable product mix in the quarter. We are encouraged by that progress. For the first half of 2026, gross margin was 25.2%.
I want to be clear about the outlook on gross margin. Our capacity ramp-up activities in Wisconsin are continuing, and we expect elevated production costs to persist. The trajectory of any future sequential improvements will depend on product mix, flow paths and other operational factors. We are not providing a specific gross margin outlook for 2026 at this time. Over the longer term, our goal is to focus on business opportunities that can support gross margin at or around the 25% level.
Research and development expenses were $5.1 million in the second quarter, compared to $4.6 million in the prior year period. The increase 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 expenses were $12.1 million in the second quarter, a decrease of $4.6 million, or 27%, compared to the second quarter of 2025. The decrease was primarily attributable to lower compensation expense related to the revaluation of previously awarded stock appreciation rights, as well as lower costs associated with employee incentive programs, partially offset by incremental selling and administrative expenses associated with MTL Manufacturing & Equipment.
Total operating expenses were $17.4 million in the quarter. Operating income was $23.9 million compared to $32.5 million in the second quarter of 2025. Interest expense was $1.6 million in the second quarter, compared to $1.7 million in the prior year period, reflecting lower overall effective interest rates. Income tax expense was $5.6 million in the second quarter of 2026, compared to an income tax benefit of $20.1 million in the prior year period.
As noted at the outset, the prior year second quarter included a $29.2 million, or $1.27 per diluted share, nonrecurring tax benefit, related to the release of a valuation allowance on deferred tax assets. That one-time benefit is the primary driver of the significant year-over-year difference in net income, and investors should keep that context in mind when reading the year-over-year comparison.
Net income was $16.9 million, or $0.73 per diluted share, in the second quarter of 2026, compared to net income of $51.2 million, or $2.22 per diluted share in the second quarter of 2025. On a sequential basis, net income increased $9.6 million and diluted earnings per share more than doubled from the first quarter.
EBITDA for the second quarter was $25.7 million, compared to $34.1 million in the prior year period. EBITDA margin was 16.9% compared to 17.8% in the prior year period. On a sequential basis, EBITDA nearly doubled from $13.2 million in the first quarter, while EBITDA margin improved 670 basis points from 10.2% to 16.9%. The sequential increase reflects the higher sales and gross profit in the second quarter, together with lower operating expenses.
Turning to cash flow, we generated $56.6 million of operating cash flow in the second quarter, compared to $20.2 million in the prior year period. For the first half of 2026, operating cash flow was $75.7 million, compared to $25.5 million in the first half of 2025, with favorable working capital movements and operational improvements contributing to the year-over-year increase.
Capital expenditures were $0.8 million in the second quarter and $2.7 million for the first half of the year. Strong cash flow enabled us to reduce total debt by approximately $30.8 million during the quarter. We ended the second quarter with $70.1 million in cash and cash equivalents, and the total debt of approximately $72.6 million, including a $65 million drawn on our revolving credit facility. Total debt was approximately $103.4 million as of March 31, 2026.
As of December 31, 2025, cash and cash equivalents were $41.3 million, and total debt was approximately $96.6 million. Our balance sheet is solid, and we believe our current liquidity position is sufficient to meet our anticipated cash needs.
MTL updates. On January 9, 2026, we acquired MTL Manufacturing & Equipment Inc. MTL's operations contributed positively to our consolidated net income in the second quarter. The acquisition expanded PSI's vertical integration by adding in-house manufacturing capabilities for components used in power generation products, including fuel tanks and enclosure assemblies. We believe these capabilities will enhance supply chain control and manufacturing flexibility and support our future growth.
2026 outlook. Given ongoing variability in order timing and market conditions, we are not providing formal full-year guidance at this time. Based on our current production schedule and information available as of today, we expect the second half 2026 sales to exceed the first half 2026 sales and to be approximately in line with sales in the second half of 2025 as larger power systems orders move into production and are recognized as revenue. The timing and ultimate volume of these shipments remain subject to customer scheduling, manufacturing flow paths, supply chain factors and other variables, and there can be no assurance that those orders will translate to a uniformly strong second half.
Continued softness in oil and gas end markets is expected to weigh on quarterly revenue trends. Capacity ramp-up activities at our Wisconsin operations, and the related cost effects on gross margin are expected to continue.
Key takeaways. Let me close our prepared remarks with 3 key takeaways from the second quarter. First, we delivered a meaningful sequential improvement in revenue and gross margin with sales up 18.6% from the first quarter and gross margin improved approximately 420 basis points. The gross margin improvements reflect in part the early benefits of our ongoing operational improvement efforts in Wisconsin, although capacity ramp-up activities and related costs continue.
Second, our financial position is stronger. Operating cash flow of $56.6 million in the quarter enabled us to reduce total debt by approximately $30.8 million. We ended the quarter with roughly balanced cash and debt and increased financial flexibility to support our growth.
Third, demand for our data center power solutions remains strong. Based on our current production schedule, we expect the second half of 2026 sales to exceed the first half of 2026 sales as larger power system orders move into production. Although shipment timing and quarterly results may vary, we remain focused on operational execution and converting that demand into revenue.
With that, operator, we are ready to open the line for questions.
[Operator Instructions] Our first question comes from the line of Eric Stine with Craig-Hallum Capital Group.
2. Question Answer
So maybe we could just talk a little bit more in depth about Q2. I mean, clearly it came in ahead of your internal projections. So maybe some clarity, because you still got softness in oil and gas, how far you are through the ramp in the enclosure business? And I would guess that goes hand in hand with the gross margin improvement, which -- this is a level that we haven't seen in several quarters and is a level that you achieved back when oil and gas was strong, and it's your highest margin business. So I'm just trying to get my arms around how that improvement came about in Q2, both revenues and margins.
Yes. Eric, thanks for the question. So if you compare the Q2 sales, $152 million versus Q1, $128 million, the total increase is about $24 million. And I would say most of the increase is from the power systems. And definitely the Wisconsin operation increased the production and the sales.
And if you look back at the past performance, we started to have some challenge headwind on Wisconsin operations second half last year. And our gross margin in 3Q last year was like 23.9% and 4Q last year, 21.9%. And the 1Q, we made improvement, 22.9%. So since then, we implemented various operation improvement initiatives in Wisconsin, and we see improvements in productivity, efficiency, flow paths and also material availability, which enable us to increase the production and also sales for enclosures.
And also, when we produce more, it has positive impacts on the fixed cost absorption. So definitely, Wisconsin gross margin is also improving. So all of these together helped us to deliver a quite improvement in the second quarter. But going forward, we continue to see, I would say, softness in the oil and gas. We're not seeing any sign for significant improvement. But we do have some larger custom orders for the AI data center product. And the team is working on transforming the order into production and sales. So we expect the second half sales will exceed the first half.
And our internal expectation is the second half will be consistent with the second half last year. But our sales team is working closely with our customer to generate more sales initiatives, and operation team is working with supply chain to make sure on-time delivery and material availability. So we are doing our best to increase or improve sales in the second half, and we try to exceed our expectation.
And then maybe, I guess, for my follow-up, just more on the competitive front in that data center enclosure business. And frankly, this is a question that I've been getting increasingly from investors, shareholders and not. And that is -- so I know that you got Generac, and they're using the Baudouin engines, and clearly that's a Weichai engine, but you got PSI also uses a Weichai engine. So I'm just kind of curious if you can speak to the differences between what is being used by you and your competitors in terms of size, price and performance. And I am also curious what that means for your future product roadmap.
Yes, we serve different customers, right? Weichai engine, the Baudouin, they sell the engine gensets to Generac, and we sell to a different customer. And I -- frankly, I'm not so clear which type of engine gensets they sell to Generac, but I think there's some difference. And we deal with different customers. We work with our customers very closely. As you might know, there's some trend change on the AI data center power system. Historically, the data center used the utility grid plus the diesel genset as standby. And right now, the trend is more towards using gas gensets for prime and use the diesel for standby and the battery for instantaneous response. So we focus on our product development and serve our customer needs.
Okay. So -- I mean, so these are different engines or different sizes or I mean, just maybe -- if there's a way to just kind of get my arms around that a little bit, but...
Yes. I think with the diesel gensets, maybe it's similar, and -- but we are also working on potentially gas gensets. And we have different customers. They sell to Generac. We sell to a different customer. So I don't think we're in the direct competition. And based on our meeting with our customer, we see a strong demand for our products for this year and also for next year.
Okay. I guess, I'll just take the rest of this offline.
[Operator Instructions] Our next question comes from the line of Alan Lau with Jefferies.
Congratulations on the great results in the second quarter. I would like to follow up on the previous question. I wonder if there's any guidance into 2027, especially given that we are in the second half of 2026, and there seems to be progress in gas engines as well. So I wonder if there's any color into 2027. Yes.
Thank you, Alan, for the question. So, Alan, we are not providing formal guidance for the sales outlook for '26 or '27. But as you know, our part is serving the mission-critical AI data center, and the capacity for the power system for the data center is constrained. So there's a high demand for the system -- power system, which is reliable, emission-certified, and also scalable power system. So what I can see is we have high demand of our products for 2026. And our sales team is working closely with our customer to secure more orders for 2027. And the demand for our product, remember, is strong. And after we get more visibility for the 2027 sales information, and we will share with all investors, maybe in 4Q.
So my follow-up question would be -- so the margins of the second quarter have significantly improved. So we'd like to know, how would you comment on the drag from oil and gas? Because the -- in your previous remarks, it seems that the growth in data center-related products are partially offset by oil and gas. And I wonder if you would call this bottoming, or how would you describe the trends in oil and gas segment?
Yes. The oil and gas market still remains soft. In our current forecast, we assume that the softness will continue at least for this year, right? And the oil and gas products usually carry a relatively high gross margin for our products. And definitely, we grow our sales for the data center business and offsets the sales drop from oil and gas. So for this quarter, we still see quarter-by-quarter sales growth. And I will say, we are still -- we are not providing a very detailed quantitative outlook, but we still think the second half sales definitely will exceed the first half sales. And our internal expectation is the second half will be consistent with the second half we had last year.
We'll take this offline.
[Operator Instructions] Our next question will come from the line of Dilyara Sailaubayeva with Freedom Finance Global.
I just would like to know some updates on Wisconsin. Like, do you currently have enough capacity in Wisconsin to support the expected data center ramp? Or would additional capacity expansion be needed if demand continues to grow into 2027?
Okay, thank you. So, for Wisconsin, definitely I say we're making measurable improvements, right? So that's the reason we see the sales growth and also gross margin improvements. And the team put up lots of resources, adding people and also implemented some process improvement initiatives, and we added capacity. In Wisconsin, previously, we had about 150,000 square feet, right? Now, it's about 800,000 square feet. And what I can see now is, at the current capacity, we can support the current demand, and for next year, as needed, definitely, we can spend the capital to increase more capacity to serve our customers. And what I see is, over the past several months, the team did a great job, improved lots of different areas, the labor efficiency, the cost structure and also the material availability. And going forward, I will continue to expect the team to deliver more process improvements in Wisconsin, right?
Okay. So just to follow up on that. So given the sequential improvement in gross margins, how should investors think about the normalized gross margin potential of the business once your Wisconsin operations stabilize?
Yes, we saw pretty significant gross margin improvements in 2Q. And as you know, there are many things that could impact the quarterly gross margin. It could be impacted by mix, pricing and variable efficiency, fixed cost absorption, all these kinds of things. And if you see our year-to-date, the gross margin is 25.2%. And we will continue to make process improvements in Wisconsin. And also, hopefully, we can have favorable mix for the remainder of the year. I will not give you a specific number for the outlook, but I will say, in the longer term, our business goal is to have a gross margin at a 25% range.
Thank you, and I would now like to hand the conference back over to Kenneth Li for closing remarks.
Okay. I just want to thank everyone who joined the call today, and I appreciate your continued interest in PSI. And we look forward to giving you another update for the next quarter's meeting. Thank you.
This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone have a great day.
Power Solutions International — Q1 2026 Earnings Call
1. Management Discussion
Good afternoon, and welcome to Power Solutions International First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.
I would now like to hand the conference over to Ken Janke, VP Corporate Controller, PSI. You may begin.
Good afternoon, and welcome to Power Solutions International's First Quarter 2026 Earnings Conference Call. Joining me on today's call are Dino Xykis, Chief Executive Officer; Ken Li, Chief Financial Officer; and Dorothy Du, General Counsel.
Statements made in today's discussion as well as information provided from time to time by Power Solutions International, Inc. will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied.
Among the factors that could cause actual results to differ materially are the timing and ultimate conversion of Power Systems orders, including data center-related orders, quarterly variability in our product mix and corresponding gross margins, the cost, pace and outcome of capacity ramp-up activities at our Wisconsin operations, demand in the oil and gas end market, supply chain and component availability, macroeconomic, regulatory and trade conditions, pending litigation and regulatory inquiries and the other risks and uncertainties described in our most recent annual report on Form 10-K, our quarterly reports on Form 10-Q and other filings with the SEC, all of which are incorporated by reference for purposes of today's call. The company undertakes no obligation to update any forward-looking statements, except as required by law.
We will also reference certain non-GAAP financial measures on today's call. Reconciliations to the most directly comparable GAAP measures are available in our earnings release and SEC filings.
With that, I will turn the call over to Dino.
Good afternoon, everyone, and thank you for joining us. We appreciate your time today and your continued interest in PSI.
For many of you, this is the first earnings conference call you have heard from PSI since our December 2024 uplisting to the NASDAQ stock market. I will start with a brief overview of our company and will then turn the call over to Ken to walk through our financial performance and our outlook.
Company overview. Power Solutions International founded in 1985 and headquartered in Wood Dale, Illinois designs and manufactures emission-certified engines and integrated Power Systems across natural gas, propane, diesel, gasoline and biofuels. The company has produced more than 1.5 million engines over its history and operates manufacturing and engineering facilities across Illinois, Wisconsin, Texas and Michigan. PSI serves OEM customers across Power Systems, industrial and transportation end markets, including data centers, standby power, oil and gas, material handling and specialized vehicles.
Over the past several years, PSI has improved profitability, reduced its debt, strengthened its balance sheet, refinanced its credit facility and uplisted to NASDAQ in December of 2024. In 2025, the company was added to the Russell 3000, Russell 2000, Russell Microcap and MSCI USA Small Cap Indices.
The first quarter. Turning to the quarter. As Ken will describe in more detail, our first quarter results were below the strong prior year period, which had benefited from significant growth in our Power Systems business. The year-over-year declines in sales and profitability primarily reflected softer oil and gas demand, the timing of certain power system shipments and elevated production costs associated with the capacity ramp-up in our Wisconsin operation.
At the same time, demand related to data center application remains solid and gross margin improved sequentially from the fourth quarter of 2025, owing it in part to the company's efforts to improve operational efficiency in Wisconsin, but partially offset by unfavorable product mix.
With that, I will turn the call over to Ken.
Thank you, Dino, and good afternoon, everyone. I will walk through our financial performance for the first quarter, then provide some operational context and update on liquidity and our outlook framework for the balance of the year.
Net sales for the first quarter were $128.6 million, representing a decline of approximately 5% year-over-year. This decrease was primarily driven by lower sales in our Power Systems end market, reflecting uneven customer ordering patterns and continued softness in the oil and gas market. These declines were partially offset by growth in our industrial and transportation end markets.
Gross profit for the quarter was $29.4 million compared to $40.3 million in the prior year, and the gross margin was 22.9% compared to 29.7% in the prior year period. The year-over-year decline in gross margin reflects a less favorable product mix in the period, including lower contributions from oil and gas products, together with elevated production costs associated with capacity ramp-up activities supporting data center-related applications.
On a sequential basis, gross margin was approximately 100 basis points higher than the fourth quarter of 2025, which we believe shows early progress in reducing operational inefficiencies. So the gain was partially offset by an unfavorable product mix in the first quarter.
We caution that the capacity ramp-up activities at our Wisconsin operations are continuing, and we expect elevated product costs raised to that ramp-up to persist with the trajectory of any further sequential improvement subject to product mix, slow cost and other operational factors.
Operating expense were $18 million, up approximately 15% year-over-year, reflecting continued investments in research and development to support new product initiatives as well as increased selling and administrative expense to support growth.
Operating income for the quarter was $11.4 million compared to $20.6 million in the prior year period. Net income was $7.3 million or $0.32 per diluted share compared to $19.1 million or $0.83 per diluted share in the prior year. Adjusted EBITDA was $13.9 million, reflecting the same underlying operational dynamics impacting profitability.
Turning to cash flow. We generated $18.7 million of operating cash flow in the quarter, more than doubling compared to the prior year period and driven primarily by favorable working capital dynamics.
From a balance sheet perspective, we ended the quarter with $45.1 million of cash and cash equivalents and approximately $103.4 million of total debt. Our balance sheet remains solid, and we continue to generate positive cash flow.
From a liquidity standpoint, we are well positioned. Our cash generation, combined with access to our $135 million revolving credit facility provides flexibility to support our operations and ongoing investments. We believe our current liquidity position is sufficient to meet our anticipated cash needs for at least the next 12 months.
Turning to our priorities for 2026. Our team is focused on operational execution, ongoing margin recovery, reliable delivery against the customer commitments and consistent communication with our investors. Given ongoing variability in order timing and market conditions, the company is not providing formal full year guidance at this time.
Based on current visibility, the company currently expects second quarter 2026 revenue to be generally consistent with the first quarter on a sequential basis. The company anticipates strong sales growth in the second half of 2026, approximately in line with sales in the second half of 2025 as larger power system orders move into production and are recognized as revenue.
However, the timing and ultimate volume of those shipments remains subject to customer scheduling, manufacturing slow parts, supply chain factors and other variables. There can be no assurance that those orders will translate to a uniformly strong second half.
Continued softness in the oil and gas end market is expected to weigh on quarterly revenue trends, and the capacity ramp-up activities at the company's Wisconsin operations and their related cost effects on gross margin are expected to continue.
We continue to see ongoing demand for power infrastructure, particularly in data center and distributed power applications and to invest in our manufacturing footprint and product platforms in support of that demand. Converting that demand into revenue depends on the operational and the market factors I have described, and we will continue to update investors as the year progresses.
With that, operator, please open the line for questions.
[Operator Instructions] Our first question comes from the line of Eric Stine with Craig-Hallum Capital Group.
2. Question Answer
I'm wondering, so on Q1, if you're able to, could you just give a little detail on specifically Power Systems and maybe not exact, but talk about kind of the contribution from oil and gas. Clearly, that is something that you've talked about since late last year, have seen it not really a surprise. But curious how do we view that and then also view that you are ramping up the enclosure business.
And then curious what that enclosure business, are you expecting more of a ramp-up in Q2? What kind of goes into your Q2 view as well?
So Eric, for the Power Systems, the 1Q sales is about $96 million and versus last year, like $107 million. And as we mentioned, we start to notice the softness in the oil and gas later last year, right? And this softness extended to 1Q this year. So most of the sales decrease this quarter versus last year 1Q is driven by the Power Systems, the oil and gas, the softness and also the uneven customer demand for other data center-related products.
So we -- right now, in the near term, we still assume that oil and gas will remain soft throughout the year. And if there's some pickup, definitely, it will be favorable for the sales and also margin perspective, right?
Now for the Wisconsin operation, the company adding resource to support the Wisconsin operation, and we are doing a lot of process improvements, time study. We see some notable improvements in the cost structure, labor overhead in the manufacturing cost if we compare this quarter versus 4Q last year. And the improvement is also reflected in our margin -- gross margin improvement, 100 basis points this quarter versus last quarter, right?
Now for the orders regarding to the data center products, as we indicated in the press release, we anticipate strong activity in the second half and this is based on some order we already received. So now we expect the second half sales will be the same level as we had last year for the second half. But again, the actual shipment timing and volume is subject to the customer schedule, our slow cost and also the supply chain, right?
Yes. No, of course. So then if I think about second quarter, I mean, are you -- because obviously, you're coming out of this period where you're now starting to ramp up the enclosure business after doing -- you've got a number of ongoing improvements, so I get that. But if you're looking for a flat sequential quarter, looking for Enclosure growth, I mean, that would imply that you are expecting further weakening of oil and gas in Q2. Curious if that is your intention or -- because I mean, it sounds like you haven't really seen an improvement there and don't expect to even if oil is certainly has appreciated given what's going on in the Middle East, but it sounds like you don't necessarily think that, that has a positive impact anytime soon.
You're right, Eric. Even though the oil price is very high, and we are not seeing a significant ordering for oil and gas products. So for the second quarter, we expect it will be the same level as Q1.
Okay. I may have missed it, but just on gross margins, can you talk about -- I don't know if you said it, but I think you might have said that you expect that you're starting to see a little bit of improvement given all the steps that you took in Q4 and early in Q1 and then expect continued improvement throughout the year. And I'm not sure if you gave any indications of the magnitude.
So the 1Q gross margin, 22.9% and the 4Q was 21.9%. So it's about 100 basis point improvement, right? But we -- as I said, we did see some notable improvements for our Wisconsin operation. And going forward, we expect the gross margin will be flat or slightly better than 1Q.
Again, this is also subject to the product mix and also our cost structure improvement. And the 1Q, the gross margin was kind of negatively impacted by product mix. Usually, our oil and gas products carry a high gross margin. So this is impacted by the oil and gas also for the 1Q.
Okay. Last one for me. Just curious, I mean, I know you're about a quarter in or a little bit over, but just would love some thoughts on the MTL acquisition, some of the benefits you're seeing, why you did it? I mean, it's pretty straightforward, but I would just love you to kind of give your thoughts on that acquisition in its early days.
Sure. So we completed the MTL acquisition on January 9 this year. And MTL specialized in fabrication, welding, painting and assembly of metal components, and it also make the data center parts. And MTL has been PSI supplier for a long time, more than 10 years. They have been supplying us the fuel tank, right? And this acquisition definitely help us to vertically integrate our supply chain, help us to reduce the lead time and also PSI can have access to its UL certification.
So since the acquisition, the integration is underway, and we are exploring different opportunities to leverage the MTL asset base. to help us to do other fabrication for the data center with the components. So the revenue contribution from MTL is expected to be pretty modest in 2026. And in the near term, the team focus will be on the operational execution, slow part coloration and production consistency.
Our next question comes from the line of Alan Lau with Jefferies,
So I would like to understand more on the growth outlook, especially from the Enclosure business as the company ramps up the production. So I would like to know if you might share what's the capacity in dollar terms for the Enclosure business? And are you getting orders from major clients?
Thank you, Alan. So Alan, we serve our customer mainly in 3 kind of industry end markets, basically industrial power system and also transportation. And for the power system, we provide the products, microgrid, standby power, prime power and also data center-related products like Enclosure. So in our financial statements, we do not break down the sales related to the Enclosure business. So it's within our power system in the power system, the end user market.
So we will say, we received some orders from our customer, and we anticipate strong activity in the second half of the year, and we expect the second half sales will be at the level we had in second half last year, right? And we still have some pretty solid demand from our customers, our products. And certainly, as I said, the actual shipment timing and the volume still subject to the customer schedule and our capability, how successful we can convert the orders to sales.
Understood. So I'd like to follow up on oil and gas because -- so you mentioned that you expect second half of the revenue will be similar to last year. So I would like to know if it's in terms of absolute terms, which means because second half last year, I think the revenue in total is roughly 4 billion. So are you -- do you mean you expect second half revenue is approximately at $4 billion level?
So the second -- right now, our kind of general outlook in the second half sales will be similar last year second half, right, because we anticipate a strong demand for our products and activity in the second half, right? So that's our outlook, based on the orders we have right now from our customer and also our forecast.
So what's the mix of oil and gas in second half last year?
Alan, we do not provide the mix information, particular products in the end market group, yes.
We have never provided that, that split. It's under policies, yes.
So then I would like to know if -- like any major clients that -- I understand maybe a bit sensitive, but like any major orders you get from hyperscalers or key contractors for hyperscalers?
We do not name individual customers. We never have.
Yes. We do not provide information on any specific customers, yes.
Understood. So would you share the update on gas engine because I think this gas engine for prime power is an upcoming trend. So I wonder if you might share updates on that front.
Yes. So the PSI, we provide a very broad portfolio of engines, right, starting from 1-liter all the way to 88-liter and 110-liter, and we are using multiple fuel cells such as gas, propane, gasoline, diesel and biofuel. So we spend R&D to develop the products, right? For the 1Q, we spent about $4.8 million, and we continue to spend R&D to develop new products and emission certification, and also develop a special application for our customers, right?
So what I say is there are definitely activities going on, on the gas side. And we are working to develop the products to meet the industry demand. That's what we are doing. And I will say the current -- we have a lot of current engineering activity includes ongoing work related to the emission compliance, thermal management, packaging optimization and all kind of customer-specific application requirements. And we're also doing R&D to develop a larger diesel engine for the data center market.
So by bigger diesel engines, I wonder if it's above 3 megawatts.
I'm sorry, could you repeat the question again?
I wonder if the bigger diesel engines are above the typical 2 to 3 megawatts.
So I think right now, we have 88-liters. It's above 3 megawatts, yes.
Thank you. This concludes the Q&A session. Thank you all for your participation. This does conclude today's call. You may now disconnect.
Financial data from Power Solutions International
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 676 676 |
13%
13%
100%
|
|
| - Direct Costs | 515 515 |
22%
22%
76%
|
|
| Gross Profit | 161 161 |
7%
7%
24%
|
|
| - Selling and Administrative Expenses | 53 53 |
4%
4%
8%
|
|
| - Research and Development Expense | 19 19 |
2%
2%
3%
|
|
| EBITDA | 89 89 |
14%
14%
13%
|
|
| - Depreciation and Amortization | 1.13 1.13 |
16%
16%
0%
|
|
| EBIT (Operating Income) EBIT | 88 88 |
14%
14%
13%
|
|
| Net Profit | 68 68 |
39%
39%
10%
|
|
In millions USD.
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Power Solutions International Stock News
Company Profile
Power Solutions International, Inc. engages in the design, manufacture, and trade of power systems and electrical power generation equipment. The company is headquartered in Wood Dale, Illinois and currently employs 700 full-time employees. The company went IPO on 2007-07-11. The company develops and delivers complete power systems that are used worldwide in stationary and mobile power generation applications supporting standby, prime, demand response, and microgrid solutions, as well as products and packages supporting the data center markets. The Company’s industrial end market provides engine and battery powertrain solutions to serve applications such as forklifts, agricultural and turf, arbor care, industrial sweepers, aerial lifts, irrigation pumps, ground support, and construction equipment. The Company’s products are primarily used by global original equipment manufacturers (OEMs).
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| Head office | United States |
| CEO | Mr. Xykis |
| Employees | 1,000 |
| Website | psiengines.com |
