POWER SOLUTIONS INTERNATIONAL, INC. (Exact Name of Registrant as Specified in its Charter) FORM 10-K
Power Solutions International, Inc. (PSIX) filed its annual report (Form 10-K) for the fiscal year ended December 31, 2024. The company reported net sales of $145.8 million, a 10% increase from the prior year. Gross profit increased 12% to $34.5 million, while operating income rose 15% to $10.3 million. Net income was $6.4 million, a 20% increase from the prior year. The company’s cash and cash equivalents decreased to $14.1 million, while total debt increased to $43.5 million. PSIX’s market capitalization was approximately $145.8 million as of June 30, 2024. The company has 23,007,894 outstanding shares of common stock as of March 17, 2025.
Financial Performance Overview
Power Solutions International (PSI), a leading manufacturer of engines and power systems, has reported its financial results for the year ended December 31, 2024. The company experienced a solid year, with net sales increasing by 4% to $476 million compared to the prior year. This growth was driven by strong demand in the power systems end market, which offset declines in the industrial and transportation segments.
Gross profit increased by 33% to $140.5 million, with the gross margin expanding to 29.5% from 23.1% in the prior year. The improvement in profitability was attributed to favorable product mix, pricing actions, higher operating efficiencies, and lower warranty costs. Operating expenses decreased by 4%, reflecting lower selling, general and administrative (SG&A) expenses.
As a result of these positive trends, net income more than doubled to $69.3 million, or $3.01 per diluted share, compared to $26.3 million, or $1.15 per diluted share, in the previous year. The company also reported strong non-GAAP metrics, with adjusted net income increasing by 144% to $64.7 million and adjusted EBITDA growing by 64% to $82.2 million.
Segment Performance
The company’s performance was driven by the power systems end market, which saw a 46% increase in sales to $325.7 million. This was primarily due to growing demand for products used in data centers and the oil and gas industry. In contrast, sales in the industrial and transportation end markets declined by 23% and 63%, respectively, due to lower demand in certain applications and the impact of supply chain challenges.
The shift in the company’s sales mix towards the higher-margin power systems market was a strategic priority, as PSI focused on prioritizing products with stronger demand and profitability. This transition contributed to the significant improvement in gross margin during the year.
Operational Initiatives and Outlook
To support the growth in the power systems market, PSI has been actively investing in expanding its manufacturing capacity and capabilities. The company is also leveraging its strategic partnership with Weichai, a Chinese engine manufacturer, to enhance its product offerings and expand its presence in the Pacific Rim region.
Looking ahead, the company anticipates continued sales growth in 2025, driven by the power systems end market, including products supporting data centers. However, the company cautioned that significant uncertainty remains due to ongoing supply chain challenges, inflationary pressures, commodity volatility, and broader macroeconomic and geopolitical factors.
Financial Position and Liquidity
As of December 31, 2024, PSI had $55.3 million in cash and cash equivalents and $120.2 million in total outstanding debt, primarily under its Revolving Credit Agreement and the Shareholder Loan Agreement (SLA). The company generated $62.4 million in cash from operating activities during the year, but used $25.9 million in cash for financing activities, primarily for debt repayments.
The company’s ability to continue as a going concern is dependent on its ability to extend, amend, refinance, or repay its existing debt arrangements before they become due in 2025. Management is actively pursuing options to secure additional financing or renegotiate the terms of its existing debt agreements to provide a more permanent source of liquidity for the company.
Key Risks and Challenges
PSI’s financial performance and future outlook are subject to several risks and challenges, including:
Macroeconomic and Geopolitical Uncertainties: The company’s business is impacted by the current macroeconomic and geopolitical environment, which has contributed to uneven recovery in the global economy. This has affected certain end markets, such as oil and gas, where sales may not reach previous higher levels due to factors like rising crude oil prices and lower rig counts.
Supply Chain and Inflationary Pressures: The company continues to experience inflationary cost pressures for raw materials and other goods, as well as ongoing tariff costs for its supply chain products. While the company is trying to mitigate these impacts through price increases and other measures, these challenges may have a material adverse impact on future customer orders and the company’s financial condition and liquidity.
Legal Contingencies: PSI is party to several legal contingencies, which could result in additional expenses or liabilities if the outcomes are unfavorable.
Debt Refinancing: The company’s ability to continue as a going concern is dependent on its successful refinancing, extension, or repayment of its existing debt arrangements before they become due in 2025. Failure to secure additional financing or renegotiate the terms of its debt could have a significant adverse impact on the company’s operations and financial position.
Conclusion
Overall, Power Solutions International delivered a strong financial performance in 2024, driven by its strategic focus on the higher-growth and higher-margin power systems market. The company’s improved profitability and cash flow generation are positive signs, but it faces ongoing challenges related to macroeconomic conditions, supply chain disruptions, and the need to refinance its debt obligations. Navigating these issues will be crucial for the company to maintain its momentum and deliver sustained value to shareholders.
