PIONEER POWER SOLUTIONS, INC. Q2 FY2024 earnings call

• Sold the PCEP business unit to Mill Point Capital, enabling focus on Critical Power and eMobility.
• E-BOOST has various product lines with growth opportunities, including HOMe-Boost launching in early 2025, E-BOOST Pure Power units expected to increase from 5-6 in 2024 to over 50 in 2025, and the ZEB unit for zero-emission mobile power.
• Critical Power division backlog increased by about 45% from December 31, 2023, to September 30, 2024.

The company sold its PCEP business unit for $50 million in cash and assumption of certain liabilities. The Critical Power division, including the E-BOOST business, is expected to generate over $20 million in revenue in 2024. As of September 30, 2024, the total backlog for the critical power division alone was $24 million, an increase of about 45% from December 31, 2023. The E-BOOST business has various product lines such as e-Boost Mini, e-Boost Mobile, e-Boost GOAT, e-Boost POD, HOMe-Boost, E-BOOST Pure Power, and ZEB unit.

• Expect to discuss E-BOOST financial performance and 2025 revenue and profit guidance in the upcoming third quarter call.
• HOMe-Boost to be initially marketed through targeted regional distributors and dealers in early 2025 with no guidance baked in for 2025 yet.
• Expect to deliver over 50 E-BOOST Pure Power units in 2025.

• Potential lumpy sales due to the small size of the business.
• Competition in the market for E-BOOST products.
• Customer delays in order takings as mentioned in the Q&A regarding utilities and other customers delaying orders.

Q: Get a sense of M&A strategy and how it can improve E-BOOST segment A: Financially allows to get bigger faster, needs to be sizable ($25M+ revenue), not bleeding, and related to existing business Q: Demand drivers for 45% backlog increase in Critical Power division A: Growth in transit bus fleet electrification, ports/airports electrification, municipalities electrifying fleets, and clean energy markets like hydrogen dispensing and battery energy storage Q: Target margins for E-BOOST business and overheads A: Will detail in upcoming third quarter call Q: Capacity to ramp E-BOOST targets for 2025 A: Working with outsourced partners, keeping capacity fixed in Minneapolis and using subcontractors to handle capacity Q: Sales team portioning for E-BOOST vs E-Bloc products A: Previously one company with some cross-selling, but solutions different, so separation not an issue Q: E-Bloc sale reasons A: Matured faster, more salable, avoided dilution, and will continue to grow under new ownership Q: HOMe-Boost applicability for large enterprises like Chick-fil-A A: Suited for smaller footprints like Chick-fil-A, not large box retailers due to different electrical needs Q: E-BOOST market growth potential and competition A: Demand is high, competition validates market, but Pioneer has R&D edge, customized solutions, and data integration capabilities Q: Corporate expense and backlog lumpy sales A: Small business will have lumpiness, corporate overhead details to be addressed in upcoming guidance, and $50M cash generates yield Q: Competition and barriers in E-BOOST market A: Mix of first to market and execution, and proprietary technology like R&D, data integration, and customized solutions provide edge Q: Execution and customer order delays A: Some customer order delays, but will detail in upcoming third quarter call Q: Distributed energy production prospects A: Distributed generation has come of age, currently natural gas-based for resilience and cost, will shift to battery and hydrogen but not yet at scale