POWER SOLUTIONS INTERNATIONAL, INC.
For the period ended Jun 30, 2026. Filed Aug 6, 2026.
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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, 2026 · Filed Aug 6, 2026
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 2026-03-31; filed 2026-05-11.
0001628280-26-033451
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001628280-26-054328
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 64 previous paragraphs and 65 current paragraphs.
38 unchanged; 21 reworded; 6 added; 5 removed; 0 previous and 0 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 (6)
Current report
*Non-GAAP measurement, see reconciliation below
Current report
Selling, general and administrative(“SG&A”)expenses were$12.1 million during the three months ended June 30, 2026, adecrease of $4.6 million, or 27%, compared to the three months ended June 30, 2025. SG&A expenses were $25.1 million during the six months ended June 30, 2026, andecrease of$2.7 million, or 10%, compared to the six months ended June 30, 2025. During both three and six months ended June 30, 2026, the decrease was primarily attributable to lower compensation expense related to the revaluation of previously awarded SARs, lower costs associated with employee incentive programs, partially offset by incremental selling and administrative expenses associated with MTL Manufacturing and Equipment in the first quarter.
Current report
Interest expense was $1.6 million for the three months ended June 30, 2026, as compared to $1.7 million for the three months ended June 30, 2025. Interest expense was $3.3 million for the six months ended June 30, 2026, as compared to $3.5 million for the six months ended June 30, 2025. During both three and six months ended June 30, 2026, interest expense decreased largely due to overall lower effective interest rates. See Note 7. Debt, included in Part 1, Item 1. Financial Statements, for additional information.
Current report
Income Tax (Benefit) Expense
Current report
The Company recorded income tax expense of $5.6 million for the three months ended June 30, 2026, as compared to income taxbenefit of $20.1 million for the same period in 2025. Pretax income was $22.5 million for the three months ended June 30, 2026, compared to $31.1 million for the same period in 2025. The Company recorded income tax expense of $8.0 million for the six months ended June 30, 2026, as compared to income taxbenefit of $16.3 million for the same period in 2025. Pretax income was $32.2 million for the six months ended June 30, 2026, compared to $53.9 million for the same period in 2025. During both the three and six months ended June 30, 2026, the change from an income tax benefit in 2025 to an income tax expense in 2026 was primarily attributable to the release of the majority of the Company's valuation allowance during the second quarter of 2025, which did not recur in 2026.
Current report
Amounts include severance expense of less than $0.1 million and $0.1 millionfor the three and six months ended June 30, 2026 and 2025, respectively, as well as executive recruiting expense of$0.4 million for each period presented.
Removed paragraphs (5)
Previous report
See reconciliation of non-GAAP financial measures to GAAP results below
Previous report
Selling, general and administrative (“SG&A”) expenses were $13.0 million during the first quarter of 2026, anincrease of$1.9 million, or 17%, compared to the same period in the prior year. The variance primarily reflects higher compensation expense related to the revaluation of previously awarded SARs, incremental selling and administrative expenses associated with MTL Manufacturing and Equipment, and other administrative and management expenses supporting the business in 2026.
Previous report
Interest expense was $1.7 million in the first quarter of 2026, compared to $1.8 million in the same period in the prior year, primarily due to lower overall effective interest rates. See Note 7. Debt, included in Part I, Item 1. Financial Statements, for additional information.
Previous report
Income Tax Expense
Previous report
Amounts include severance expense for thethree months ended March 31, 2026.
Reworded paragraphs (21)
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, 2026 and 2025, including discussions about management’s expectations for the Company’s business. These statements represent projections, beliefs and expectations based on current circumstances and conditions and are made in light of recent events and trends. These statements should not be construed either as assurances of performance or as promises of a given course of action. Instead, various known and unknown factors are likely to cause the Company’s actual performance and management’s actions to vary, and the results of these variances may be both material and adverse. See “Forward-Looking Statements” in this Quarterly Report. The following discussion should also be read in conjunction with the Company’s unaudited consolidated financial statements and the related Notes included in this Quarterly Report.
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, 2026 and 2025, including discussions about management’s expectations for the Company’s business. These statements represent projections, beliefs and expectations based on current circumstances and conditions and are made in light of recent events and trends. These statements should not be construed either as assurances of performance or as promises of a given course of action. Instead, various known and unknown factors are likely to cause the Company’s actual performance and management’s actions to vary, and the results of these variances may be both material and adverse. See “Forward-Looking Statements” in this Quarterly Report. The following discussion should also be read in conjunction with the Company’s unaudited consolidated financial statements and the related Notes included in this Quarterly Report.
Previous wording
Net sales by geographic area and by end market for thethree months ended March 31, 2026 and 2025 are presented below:
Current wording
Net sales by geographic area and by end market for the three and six months ended June 30, 2026 and 2025 are presented below:
Previous wording
Sales declined in the first quarter of 2026, primarily within the power systems end market, reflecting uneven customer ordering patterns and some softness in the oil and gas market. Looking ahead, we expect sales to improve in the second half of the year, driven by demand in data center-related markets, partially offset by ongoing softness in the oil and gas market.
Current wording
Sales declined in the second quarter of 2026, primarily within the power systems end market, reflecting uneven customer ordering patterns and some softness in the oil and gas market. Looking ahead, we expect sales to improve in the second half of the year, driven by demand in data center-related markets, partially offset by ongoing softness in the oil and gas market.
Previous wording
The Company is focused on leading the business through a growth phase with a stronger balance sheet while strategically prioritizing products that demonstrate strong demand and higher gross margins. Consistent with those goals, the Company is actively pursuing several initiatives to enhance and expand manufacturing capacity to meet the increasing demand from data center markets. Pivoting the focus to these markets will drive net sales growth and profitability. Through expanded capacity and strategic partnerships, management expects this positive trend to continue.
Current wording
The Company is focused on leading the business through a growth phase with a stronger balance sheet while strategically prioritizing products that demonstrate strong demand and higher gross margins. Consistent with those goals, the Company is actively pursuing several initiatives to enhance and expand manufacturing capacity to meet the increasing demand from data center markets. The Company expects that pivoting the focus to these markets will drive net sales growth and profitability. Through expanded capacity and strategic partnerships, management expects this positive trend to continue.
Previous wording
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 stronger sales growth in the second half of 2026, approximately in line with sales in the second half of 2025, as larger Power Systems orders move into production and are recognized as revenue. However, the timing and ultimate volume of those shipments remain subject to customer scheduling, manufacturing throughput, supply chain factors and other variables. There can be no assurance that those orders will translate to a uniformly stronger second half. Continued softness in the oil and gas end market is expected to weigh on quarterly revenue trends, and capacity ramp-up activities at the Company’s Wisconsin operations and their related cost effects on gross margin are expected to continue.
Current wording
Given ongoing variability in order timing and market conditions, the Company is not providing formal full-year guidance at this time. Based on the current production schedule and information available as of the date of this release, the Company expects second-half 2026 sales to exceed 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. However, the timing and ultimate volume of those shipments remain subject to customer scheduling, manufacturing throughput, supply chain factors and other variables. There can be no assurance that those orders will translate to a uniformly stronger second half. Continued softness in the oil and gas end market is expected to weigh on quarterly revenue trends, and capacity ramp-up activities at the Company’s Wisconsin operations and their related cost effects on gross margin are expected to continue.
Previous wording
Results of operations for the three months ended March 31, 2026 compared with the three months ended March 31, 2025(UNAUDITED):
Current wording
Condensed consolidated results of operations for the three and six months ended June 30, 2026, compared with the three and six months ended June 30, 2025(UNAUDITED):
Previous wording
Net sales for the first quarter of 2026 were $128.6 million, a decrease of $6.9 million, or 5%, compared to the first quarter of 2025. The decrease reflected lower sales in the power systems end market of$10.2 million, partially offset by increases of $3.0 million and $0.3 millionin the industrial and transportation end markets, respectively. Sales in the power systems end market declined primarily due to softness in oil and gas markets, together with uneven order patterns and shipment timing for data center-related products. However, the timing and ultimate volume of related shipments remain subject to customer scheduling, manufacturing throughput, supply-chain factors, and other variables, and the Company is not predicting any specific level of data center revenue in any future period.
Current wording
Net sales decreased $39.4 million, or 21%, during the three months ended June 30, 2026, compared to the three months ended June 30, 2025, as a result of lower sales of $34.6 million, $3.0 million and $1.7 million in the power systems, industrial and transportation end markets, respectively. Net sales decreased $46.2 million, or 14%, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, as a result oflower sales of $44.8 million and $1.5 million in the power systems end market and transportation end markets, respectively. During both three and six months ended June 30, 2026, sales in the power systems end market declined primarily due to uneven order patterns and shipment timing for data center-related products, together with softness in oil and gas markets. The Company continues to see strong demand for data center power solutions. However, the timing and ultimate volume of revenue recognized from that demand remain subject to customer scheduling, manufacturing throughput, supply chain factors and other variables, and the Company is not predicting any specific level of data center revenue in any future period. Based on the current production schedule, the Company expects second-half 2026 sales to exceed first-half 2026 sales as larger Power Systems orders move into production, although shipment timing and quarterly results may continue to vary.
Previous wording
Gross profit for the first quarter of 2026 was $29.4 million, adecrease of $10.9 million, or 27%, compared to the first quarter of 2025. Gross margin in the first quarter of 2026 was 22.9%, compared to 29.7% in the same period last year. Gross margin reflected a lower mix of oil and gas products, together with elevated production costs associated with capacity ramp-up activities supporting data center-related applications at the Company’s Wisconsin operations. On a sequential basis, gross margin improved by approximately 100 basis points compared to the fourth quarter of 2025, owing in part to the Company’s efforts to improve operational efficiency in Wisconsin, but was partially offset by an unfavorable product mix in the first quarter. The Company’s capacity ramp-up activities at its Wisconsin operations are continuing, and the Company expects related production costs to persist; the trajectory of any further sequential improvement remains subject to product mix, throughput and other operational factors.
Current wording
Gross profit decreased during the three months ended June 30, 2026 by $12.7 million, or 24%, compared to the three months ended June 30, 2025. Gross margin was 27.1% and 28.2% during the three months ended June 30, 2026 and 2025, respectively. Gross profit decreased during the six months ended June 30, 2026 by $23.6 million, or 25%, compared to the six months ended June 30, 2025. Gross margin was 25.2% and 28.8% during the six months ended June 30, 2026 and 2025. During both the three and six months ended June 30, 2026, gross margin reflected a lower mix of oil and gas products, together with elevated production costs associated with capacity ramp-up activities supporting data center-related applications at the Company’s Wisconsin operations. On a sequential basis, gross margin improved by approximately 420 basis points compared with the first quarter of 2026. The improvement reflected in part the early benefits of the Company’s ongoing operational improvement efforts in Wisconsin and was partially offset by unfavorable product mix in the second quarter. The Company’s capacity ramp-up activities at its Wisconsin operations are continuing, and the Company expects related production costs to persist; the trajectory of any further sequential improvement remains subject to product mix, throughput and other operational factors.
Previous wording
Research and development expenses during the three months ended March 31, 2026 and 2025 were $4.8 million and $4.2 million, respectively. 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.
Current wording
Research and develo pment expenses during the three months ended June 30, 2026 and 2025 were $5.1 million and $4.6 million, respectively. Research and development expenses during the six months ended June 30, 2026 and 2025 were $9.9 million and $8.9 million, respectively. During the three and six months ended June 30, 2026, the increase of $0.4 million and$1.0 million, respectively, was primarily driven by higher R&D program expenditures to support new programs in 2026 and the recovery of R&D costs from certain customers in 2025.
Previous wording
The Company recorded income tax expense of $2.4 million and$3.8 millionfor the three months ended March 31, 2026 and 2025, respectively. The Company’s pretax income was $9.7 million for the three months ended March 31, 2026, compared to a pretax income of $22.9 million for the three months ended March 31, 2025. The decrease was primarily driven by lower pre-tax income in 2026, partially offset by a higher effective tax rate. See Note 12. Income Taxes, included in Part 1, Item 1. Financial Statements, for additional information related to the Company’s income tax provision.
Current wording
See Note 12. 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, 2026 and 2025:
Current wording
The following table presents a reconciliation from Net income to Adjusted net income for the three and six months ended June 30, 2026 and 2025:
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, 2026 and 2025:
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, 2026 and 2025:
Previous wording
The following table presents a reconciliation from Net income to EBITDA and Adjusted EBITDA for the three months ended March 31, 2026 and 2025:
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, 2026 and 2025:
Previous wording
Amounts reflect non-cash stock-based compensation expense for the three months ended March 31, 2026 and 2025.
Current wording
Amounts reflect non-cash stock-based compensation expense for the three and six months ended June 30, 2026 and 2025.
Previous wording
Amounts include legal settlements for the three months ended March 31, 2026.
Current wording
Amounts include legal settlements for the three and six months ended June 30, 2026.
Previous wording
Cash Flows for the Three Months Ended March 31, 2026
Current wording
Cash Flows for the Six Months Ended June 30, 2026
Previous wording
Net cash provided by operating activities was $19.1 million for the three months ended March 31, 2026, compared to $8.8 million for the three months ended March 31, 2025, representing an increase of $10.3 million in cash provided by operating activities year-over-year. Theincrease occurred despite a decrease in net income of $11.8 million, driven primarily by favorable changes in working capital. These changes included a significant source of cash from accounts receivable, reflecting improved collections in the current period, as well as a lower use of cash for inventory purchases compared to the prior‑year period. These favorable impacts were partially offset by increased uses of cash related to accrued expenses and accounts payable during the three months ended March 31, 2026 compared to March 31, 2025.
Current wording
Net cash provided by operating activities was $75.7 million for the six months ended June 30, 2026, compared to $25.5 million for the six months ended June 30, 2025, representing an increase of $50.3 million in cash provided by operating activities year-over-year. The increase occurred despite a decrease in net income of $46.1 million, driven primarily by favorable changes in working capital. These changes included a significant source of cash from accounts receivable, reflecting improved collections in the current period, as well as a lower use of cash for inventory purchases compared to the prior‑year period. These favorable impacts were partially offset by increased uses of cash related to accrued expenses and accounts payable during the six months ended June 30, 2026 compared to June 30, 2025.
Previous wording
Net cash used in investing activities was $13.8 million for the three months ended March 31, 2026, compared to cash used in investing activities of $3.4 million for the three months ended March 31, 2025. For the three months ended March 31, 2026 and 2025, cash used in investing activities related to capital expenditures and the acquisition of MTL.
Current wording
Net cash used in investing activities was $14.6 million for the six months ended June 30, 2026, compared to cash used in investing activities of $5.4 million for the six months ended June 30, 2025. For the six months ended June 30, 2026 and 2025, cash used in investing activities related to capital expenditures and the acquisition of MTL.
Previous wording
The Company used $0.7 million in cash from financing activities forthe three months ended March 31, 2026, compared to $10.2 million cash used by financing activities for the three months ended March 31, 2025. The cash used by financing activities for the three months ended March 31, 2026 was primarily due to repayments of lease liabilities and share repurchases to settle tax withholding obligations for stock-based compensation awards. See additional discussion in Note 7. Debt, included in Part I, Item 1. Financial Statements, which further describe the Company’s debt arrangements.
Current wording
The Company used $31.5 million in cash from financing activities forthe six months ended June 30, 2026, compared to $25.4 million cash used by financing activities for the six months ended June 30, 2025. The cash used by financing activities for the six months ended June 30, 2026 was primarily due to paydown of $30.0 million on the Revolving Credit Agreement, payoff of the SBA loan, and repayments of lease liabilities and share repurchases to settle tax withholding obligations for stock-based compensation awards. See additional discussion in Note 7. Debt, included in Part I, Item 1. Financial Statements, which further describe the Company’s debt arrangements.
Previous wording
Our material cash requirements from known contractual and other obligations primarily relate to our debt and lease obligations. The Company has achieved profitability and generated positive cash flows from operating activities in 2026. As of March 31, 2026, the Company’s total outstanding debt obligations under the Revolving Credit Agreement and for finance leases and other debt, were $103.4 million in the aggregate, and its cash and cash equivalents were $45.1 million. See Item 1. Financial Statements, Note 7. Debt, for additional information. On July 30, 2025, the Company amended its Revolving Credit Agreement with Standard Chartered Bank and three other lenders. The second amended Revolving Credit Agreement allows the Company to borrow up to $135.0 million and extends the maturity date to July 30, 2027.
Current wording
Our material cash requirements from known contractual and other obligations primarily relate to our debt and lease obligations. The Company has achieved profitability and generated positive cash flows from operating activities in 2026. As of June 30, 2026, the Company’s total outstanding debt obligations under the Revolving Credit Agreement, finance leases and other debt, were $72.6 million in the aggregate, and its cash and cash equivalents were $70.1 million. See Item 1. Financial Statements, Note 7. Debt, for additional information. On July 30, 2025, the Company amended its Revolving Credit Agreement with Standard Chartered Bank and three other lenders. The second amended Revolving Credit Agreement allows the Company to borrow up to $135.0 million and extends the maturity date to July 30, 2027.
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 2025 Annual Report. During the three months ended March 31, 2026, 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 2025 Annual Report. During the six months ended June 30, 2026, there were no significant changes in the application of critical accounting policies.