POWER SOLUTIONS INTERNATIONAL, INC.
For the period ended Jun 30, 2025. Filed Aug 8, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 8, 2025
PSIX$39.16+9.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001137091-25-000010
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-08.
0001137091-25-000016
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 58 previous paragraphs and 67 current paragraphs.
31 unchanged; 23 reworded; 12 added; 4 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
*Non-GAAP measurement, see reconciliation below
Current report
Net sales increased $121.5 million, or 59%, during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, as a result ofhigher sales of $128.6 million in the power systems end market, partially offset by a decrease of $6.9 million and $0.2 million within the industrial and transportation end markets, respectively. This shift in market mix reflects our deliberate strategic focus on higher-growth sectors such as data centers and oil and gas. In particular, we are prioritizing the rapidly expanding data center sector by enhancing our manufacturing capacity and capabilities to meet evolving customer demand. The decline in industrial sales is largely attributable to softer demand in the material handling market.
Current report
Gross profit increased during the three months ended June 30, 2025 by $18.9 million, or 54%, compared to the three months ended June 30, 2024. Gross margin was 28.2% and 31.8% during the three months ended June 30, 2025 and 2024, respectively. The decrease in gross margin is primarily due to strong sales growth in comparatively lower-margin products and temporary inefficiencies related to our accelerated production ramp-up.
Current report
Gross profit increased during the six months ended June 30, 2025 by $33.4 million, or 55%, compared to the six months ended June 30, 2024. Gross margin was 28.8% and 29.6% during the six months ended June 30, 2025 and 2024, respectively. The decrease in gross margin is primarily due to strong sales growth in comparatively lower-margin products and temporary inefficiencies related to our accelerated production ramp-up.
Current report
Research and Development Expenses
Current report
Research and develo pment expenses during the three months ended June 30, 2025 and 2024 were $4.6 million and $5.0 million, respectively.
Current report
Research and development expenses during the six months ended June 30, 2025 and 2024 were $8.9 million and $10.2 million, respectively. The decrease of $1.3 million was primarily driven by the timing of R&D program expenditures and the recovery of R&D costs from certain customers.
Current report
SG&A expenses were $27.8 million during the six months ended June 30, 2025, anincrease of$13.7 million, or 98%, compared to the six months ended June 30, 2024. The increase is primarily due to a favorable non-recurring legal reserve reduction in 2024, and higher costs associated with employee incentive programs, increased sales and administrative expenses to support ongoing business growth in 2025.
Current report
Income Tax (Benefit) Expense
Current report
The Company recorded income tax benefit of $20.1 million for the three months ended June 30, 2025, as compared to income taxexpense of $0.9 million for the same period in 2024. The change was primarily driven by the release of a valuation allowance on deferred tax assets with tax benefit of$29.2 million in the second quarter of 2025. Pretax income was $31.1 million for the three months ended June 30, 2025, compared to $22.4 million for the same period in 2024.
Current report
The Company recorded income tax benefit of $16.3 million for the six months ended June 30, 2025, as compared to income tax expense of $1.1 million for the same period in 2024. The year to date benefit reflects the valuation allowance release. Excluding the effect of the valuation allowance release, there would be no income tax expense for the six months ended June 30, 2025. Pretax income was $53.9 million for the six months ended June 30, 2025, compared to $29.8 million for the same period in 2024.
Current report
Amounts include severance expense for the three and six months ended June 30, 2025.
Removed paragraphs (4)
Previous report
See reconciliation of non-GAAP financial measures to GAAP results below
Previous report
Gross profit increased by $14.5 million, or 56%, during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. Gross margin was 29.7% during the three months ended March 31, 2025, an increase of 2.7% compared to 27.0% for the three months ended March 31, 2024, primarily due to improved mix, pricing actions, and lower warranty costs attributable to the Company's strategic sales shift away from some of our transportation customers. For the three months ended March 31, 2025, warranty costs were $0.6 million compared to warranty costs of $1.5 million in the same period last year.
Previous report
Income Tax Expense
Previous report
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 is seeking the replacement of its existing debt agreements with committed long-term financing 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 restructuring of its existing debt agreements or obtain new financing on acceptable terms, when required or if at all.
Reworded paragraphs (23)
Previous wording
The following discussion and analysis includes forward-looking statements about the Company’s business and consolidated results of operations for the three months ended March 31, 2025 and 2024, 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.
Current wording
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 June 30, 2025 and 2024, 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.
Previous wording
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, research and development (“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 U.S. Environment Protection Agency (“EPA”), the California Air Resource Board (“CARB”) and the People’s Republic of China’s Ministry of Ecology and Environment (“MEE”).
Current wording
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 U.S. Environment Protection Agency (“EPA”), the California Air Resource Board (“CARB”) and the People’s Republic of China’s Ministry of Ecology and Environment (“MEE”).
Previous wording
The Company’s products are primarily used by global original equipment manufacturers (“OEM”) and end-user customers across a wide range of applications and equipment that includes standby and prime power generation, demand response, microgrid, combined heat and power, arbor care, material handling (including forklifts), agricultural and turf, construction, pumps and irrigation, compressors, utility vehicles, light- and medium-duty vocational trucks, school and transit buses, and utility power. The Company manages the business as a single reporting segment.
Current wording
The Company’s products are primarily used by global original equipment manufacturers (“OEM”) and end-user customers across a wide range of applications and equipment that includes standby and prime power generation, demand response, microgrid, combined heat and power, arbor care, material handling (including forklifts), agricultural and turf, construction, pumps and irrigation, compressors, utility vehicles, light- and medium-duty vocational trucks, school and transit buses, and utility power. The Company manages the business as a single reportable segment.
Previous wording
Net sales by geographic area and by end market for thethree months ended March 31, 2025 and 2024 are presented below:
Current wording
Net sales by geographic area and by end market for the three and six months ended June 30, 2025 and 2024 are presented below:
Previous wording
PSI’s growth in net revenue for the three months in 2025 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 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.
Current wording
PSI’s growth in net revenue for the six months in 2025 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 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.
Previous wording
The Company experiences recent tariff costs associated with its supply chain products. We are actively assessing the evolving tariff environment and are committed to proactively mitigate 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.
Current wording
The Company experiences recent tariff costs associated with its supply chain products. We are actively assessing the evolving tariff environment and are committed to proactively mitigate 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 Second Amended Revolving Credit Agreement allows the Company to borrow up to $135.0 million and extends the maturity date to July 30, 2027.
Previous wording
Results of operations for the three months ended March 31, 2025 compared with the three months ended March 31, 2024:
Current wording
Condensed consolidated results of operations for the three and six months ended June 30, 2025, compared with the three and six months ended June 30, 2024(UNAUDITED):
Previous wording
Net sales increased $40.2 million, or 42%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024, as a result of sales increases of $44.7 million and $0.8 million in the power systems and transportation end markets, respectively, partly offset by a decrease of $5.2 million in the industrial end market. Higher power systems end market sales were primarily due to increased demand for products across various applications, with the largest increases attributable to products used within the packaging market such as enclosures serving the fast-growing data center market, and oil and gas products. The Company is strategically prioritizing the rapidly expanding data center sector, improving and increasing our manufacturing capacity and capabilities to meet our customers’ evolving demands for our products. The lower industrial end market sales is primarily driven by reduced demand in the material handling market. The Company is actively pursuing new industrial customers for sales growth.
Current wording
Net sales increased $81.3 million, or 74%, during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, as a result of higher sales of $83.8 million in the power systems end market, partially offset by a decrease of $1.6 million and $0.9 million within the industrial and transportation end markets, respectively. This shift in market mix reflects our deliberate strategic focus on higher-growth sectors such as data centers and oil and gas. In particular, we are prioritizing the rapidly expanding data center sector by enhancing our manufacturing capacity and capabilities to meet evolving customer demand. The decline in industrial sales is largely attributable to softer demand in the material handling market.
Previous wording
Selling, general and administrative (“SG&A”) expenses increased during the three months ended March 31, 2025 by $1.6 million, or 17%, compared to the three months ended March 31, 2024. The increase is primarily due to higher legal expenses, professional fees and administrative expenses to support business growth.
Current wording
Selling, general and administrative(“SG&A”)expenses were$16.7 million during the three months ended June 30, 2025 anincrease of $12.2 million, or 269%, compared to the three months ended June 30, 2024. The increase is primarily due to a favorable non-recurring legal reserve reduction in 2024, and higher costs associated with employee incentive programs, increased sales and administrative expenses to support ongoing business growth in 2025.
Previous wording
Interest expense decreased $1.6 million to $1.8 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, largely due to reduced outstanding debt and lower overall effective interest rates. See Note 6. Debt, included in Part I, Item 1. Financial Statements, for additional information.
Current wording
Interest expense was $1.7 million for the three months ended June 30, 2025, as compared to $2.9 million for the three months ended June 30, 2024, largely due to reduced outstanding debt and lower overall effective interest rates. See Note 6. Debt, included in Part 1, Item 1. Financial Statements, for additional information.
Previous wording
The Company recorded income tax expense of $3.8 million and$0.2 millionfor the three months ended March 31, 2025 and 2024, respectively. The Company’s pretax income was$22.9 million for the three months ended March 31, 2025, compared to a pretax income of $7.3 million for the three months ended March 31, 2024. The Company continues to record a full valuation allowance against deferred tax assets. See Note 11. Income Taxes, included in Part 1, Item 1. Financial Statements, for additional information related to the Company’s income tax provision.
Current wording
See Note 11. Income Taxes, included in Part I, Item 1. Financial Statements, for additional information related to the Company’s income tax provision.
Previous wording
The following table presents a reconciliation from Net income to Adjusted net income for the three months ended March 31, 2025 and 2024:
Current wording
The following table presents a reconciliation from Net income to Adjusted net income for the three and six months ended June 30, 2025 and 2024:
Previous wording
The following table presents a reconciliation from Net income per share – diluted to Adjusted net income per share – diluted for the three months ended March 31, 2025 and 2024:
Current wording
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 June 30, 2025 and 2024:
Previous wording
The following table presents a reconciliation from Net income to EBITDA and Adjusted EBITDA for the three months ended March 31, 2025 and 2024:
Current wording
The following table presents a reconciliation from Net income to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024:
Previous wording
Amounts reflect non-cash stock-based compensation expense and have no material impact on the Adjusted earnings per share for the three months ended March 31, 2024.
Current wording
Amounts reflect non-cash stock-based compensation expense and have no material impact on the Adjusted net income per share – diluted for the three and six months ended June 30, 2025 and 2024.
Previous wording
Amounts include legal settlements and have no material impact on the Adjusted earnings per share for the three months ended March 31, 2025 and 2024.
Current wording
Amounts include legal settlements for the three and six months ended June 30, 2025 and 2024.
Previous wording
Cash Flows for the Three Months Ended March 31, 2025
Current wording
Cash Flows for the Six Months Ended June 30, 2025
Previous wording
Net cash provided by operating activities was $8.8 million for the three months ended March 31, 2025, compared to net cash provided by operating activities of $15.6 million for the three months ended March 31, 2024, resulting in a decrease of $6.8 million in cash provided by operating activities year-over-year. The decrease in cash provided by operating activities primarily resulted from a $18.5 million decrease of cash provided by working capital accounts, partially offset by an increase in earnings of $12.0 million. The decrease in cash generated from working capital was primarily related to the purchases of inventory and fewer collections on accounts receivables, offset by decreased payments on accounts payable for the three months ended March 31, 2025 compared to March 31, 2024.
Current wording
Net cash provided by operating activities was $25.5 million for the six months ended June 30, 2025, compared to net cash provided by operating activities of $17.2 million for the six months ended June 30, 2024, resulting in an increase of $8.3 million in cash provided by operating activities year-over-year. The increase in cash provided by operating activities primarily resulted from a $5.9 million increase of cash used by working capital accounts and an increase in earnings of $41.6 million. The decrease in cash generated from working capital was primarily related to the purchases of inventory and the timing of collections on accounts receivables, reflecting higher sales volume and operational growth, partially offset by increase in accounts payable and other current liabilities for the six months ended June 30, 2025 compared to June 30, 2024.
Previous wording
Net cash used in investing activities was $3.4 million for the three months ended March 31, 2025, compared to cash used in investing activities of $0.8 million for the three months ended March 31, 2024. For the three months ended March 31, 2025 and 2024, cash used in investing activities related to capital expenditures.
Current wording
Net cash used in investing activities was $5.4 million for the six months ended June 30, 2025, compared to cash used in investing activities of $1.5 million for the six months ended June 30, 2024. For the six months ended June 30, 2025 and 2024, cash used in investing activities related to capital expenditures.
Previous wording
The Company used $10.2 million in cash from financing activities forthe three months ended March 31, 2025, compared to $5.2 million cash used by financing activities for the three months ended March 31, 2024. The cash used by financing activities for the three months ended March 31, 2025, was due to payments made on the SLA and other existing debt year to date. See additional discussion in Note 6. Debt, included in Part I, Item 1. Financial Statements, which further describe the Company’s debt arrangements.
Current wording
The Company used $25.4 million in cash from financing activities forthe six months ended June 30, 2025, compared to $10.2 million cash used by financing activities for the six months ended June 30, 2024. The cash used by financing activities for the six months ended June 30, 2025, was due to the full repayment of the SLA and other existing debt year to date. See additional discussion in Note 6. Debt, included in Part I, Item 1. Financial Statements, which further describe the Company’s debt arrangements.
Previous wording
While the Company has achieved profitability and generated positive cash flows from operating activities in 2025, uncertainties exist about the Company’s ability to refinance, amend, or extend its outstanding indebtedness. As March 31, 2025, the Company’s total outstanding debt obligations under the Revolving Credit Agreement, the SLA, and for finance leases and other debt, all of which are short-term requirements, were $111.0 million in the aggregate, and its cash and cash equivalents were $50.0 million. See Item 1. Financial Statements, Note 6. Debt, for additional information.
Current wording
The Company has achieved profitability and generated positive cash flows from operating activities in 2025. As June 30, 2025, the Company’s total outstanding debt obligations under the Revolving Credit Agreement and for finance leases and other debt, all of which are short-term requirements, were $96.8 million in the aggregate, and its cash and cash equivalents were $49.5 million. See Item 1. Financial 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.
Previous wording
At March 31, 2025, the Company hadfour outstanding letters of credit totaling$1.8 million. See Item 1. Financial Statements, Note 10. Commitments and Contingencies for additional information related to the Company’s off-balance sheet arrangements and the outstanding letters of credit.
Current wording
At June 30, 2025, the Company had four outstanding letters of credit totaling $1.8 million. See Item 1. Financial Statements, Note 10. Commitments and Contingencies for additional information related to the Company’s off-balance sheet arrangements and the outstanding letters of credit.
Previous wording
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 2024 Annual Report. During the three months ended March 31, 2025, there were no significant changes in the application of critical accounting policies.
Current wording
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 2024 Annual Report. During the six months ended June 30, 2025, there were no significant changes in the application of critical accounting policies.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Interest expense was $3.5 million for the six months ended June 30, 2025, as compared to $6.3 million for the six months ended June 30, 2024, largely due to reduced outstanding debt and lower overall effective interest rates. See Note 6. Debt, included in Part 1, Item 1. Financial Statements, for additional information.