POWER SOLUTIONS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies and Other Information

Nature of Business Operations

Power Solutions International, Inc. (“Power Solutions,” “PSI” or the “Company”), a Delaware corporation, is a global producer and distributor of a broad range of high-performance, certified, low-emission power systems, including alternative-fueled power systems for original equipment manufacturers (“OEMs”) of off-highway industrial equipment and large custom-engineered integrated electrical power generation systems.

The Company’s customers include large, industry-leading and multinational organizations. The Company’s products and services are sold predominantly to customers throughout North America as well as to customers located throughout the Pacific Rim and Europe. The Company’s power systems are highly engineered, comprehensive systems which, through the Company’s technologically sophisticated development and manufacturing processes, including its in-house design, prototyping, testing and engineering capabilities and its analysis and determination of the specific components to be integrated into a given power system (driven in large part by emission standards and cost considerations), allow the Company to provide its customers with power systems customized to meet specific OEM application requirements, other customers’ technical specifications and requirements imposed by environmental regulatory bodies.

The Company’s power system configurations range from a basic engine integrated with appropriate fuel system components to completely packaged power systems that include any combination of cooling systems, electronic systems, air intake systems, fuel systems, housings, power takeoff systems, exhaust systems, hydraulic systems, enclosures, brackets, hoses, tubes and other assembled componentry. The Company also designs and manufactures large, custom-engineered integrated electrical power generation systems for both standby and prime power applications. The Company purchases engines from third-party suppliers and produces internally designed engines, all of which are then integrated into its power systems.

Of the other components that the Company integrates into its power systems, a substantial portion consist of internally designed components and components for which it coordinates significant design efforts with third-party suppliers, with the remainder consisting largely of parts that are sourced off-the-shelf from third-party suppliers. Some of the key components (including purchased engines) embody proprietary intellectual property of the Company’s suppliers. As a result of its design and manufacturing capabilities, the Company is able to provide its customers with a power system that can be incorporated into a customer’s specified application. In addition to the certified products described above, the Company sells diesel, gasoline and non-certified power systems and after-market components.

During the first quarter of 2026, the Company acquired MTL Manufacturing & Equipment, Inc. (“MTL”), which engages in the welding, fabrication, painting, and assembly of steel components. The acquisition expands the Company’s manufacturing capabilities and vertical integration.

Stock Ownership and Control

Weichai America Corp., a wholly-owned subsidiary of Weichai Power Co., Ltd. (HK2338, SZ000338) (herein collectively referred to as “Weichai”), owns approximately 46.0% of the outstanding shares of the Company’s Common Stock as of September 30, 2026. Weichai has entered into an Investor Rights Agreement (the “Rights Agreement”) with the Company. The Rights Agreement provides Weichai with representation on the Company’s Board of Directors (the “Board”) and management representation rights. Weichai currently hasfour representatives on the Board, which constitutes the majority of the directors serving on the Board. In addition, the Company and Weichai have entered into a Shareholders Agreement with the Company’s founders (the “Founders”), pursuant to which the Founders have agreed to vote in favor of Weichai’s designees to the Board and for certain other matters. Based solely on the most recent Schedule 13D amendment filed with the SEC by Gary Winemaster, one of the Founders, on September 18, 2025, the Company believes the Founders hold between 5% and 10% of the Company’s outstanding Common Stock as of September 30, 2026. As a result, of its ownership, Board representation and the voting arrangements under the Shareholders Agreement, Weichai is able to exercise control over matters requiring stockholders’ approval, including the election of directors, amendment of the Company’s Certificate of Incorporation (the “Charter”) and approval of significant corporate transactions. This control could have the effect of delaying or preventing a change of control of the Company or changes in management and will make the approval of certain transactions impractical without the support of Weichai.

According to the Rights Agreement, during any period when the Company is a “controlled company” within the meaning of the Nasdaq Listing Rules, it will take such measures as to avail itself of the “controlled company” exemptions available under Rule 5615 of the Nasdaq Listing Rules from Rules 5605(b), (d) and (e) to the extent applicable.

Basis of Presentation and Consolidation

The Company is filing this Form 10-Q for the quarterly period ended September 30, 2026, which contains unaudited condensed consolidated financial statements as of September 30, 2026 and for the three and nine months ended September 30, 2026 and 2025.

The consolidated financial statements include the accounts of Power Solutions International, Inc. and its wholly-owned subsidiaries and majority-owned subsidiaries over which the Company exercises control. The consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and rules and regulations of the SEC for interim financial reporting. All intercompany balances and transactions have been eliminated in consolidation.

Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by U.S GAAP for interim financial reporting. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements of the Company and related footnotes for the year ended December 31, 2025, included in the 2025 Annual Report on Form 10-K, filed with the SEC on March 2, 2026 (the “2025 Annual Report”). There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s 2025 Annual Report. The accompanying interim financial information is unaudited; however, the Company believes the financial information reflects all adjustments (consisting of items of a normal recurring nature) necessary for a fair presentation of its financial position, results of operations and cash flows in conformity with U.S. GAAP. Operating results for interim periods are not necessarily indicative of annual operating results.

Segments

The Company operates asone business and geographic operating segment. Operating segments are defined as components of a business that can earn revenues and incur expenses for which discrete financial information is available that is evaluated on a regular basis by the chief operating decision maker (“CODM”). The Company’s CODM is its principal executive officer, who decides how to allocate resources and assess performance. A single management team reports to the CODM, who manages the entire business. The Company’s CODM reviews consolidated statements of income to make decisions, allocate resources and assess performance, and the CODM does not evaluate the profit or loss from any separate geography or product line.

Concentrations

The following table presents customers individually accounting for more than 10% of the Company’s net sales:

The following table presents customers individually accounting for more than 10% of the Company’s trade accounts receivable:

The following table presents suppliers individually accounting for more than 10% of the Company’s purchases:

**Less than 10% of the total

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions include the valuation of allowances for uncollectible receivables, inventory reserves, warranty reserves, stock-based compensation, evaluation of goodwill, other intangibles, property, plant and equipment for impairment, income tax valuation allowances and determination of useful lives of long-lived assets. Actual results could materially differ from those estimates.

Restricted Cash

Restricted cash consists of funds that are contractually restricted as to usage or withdrawal due to required minimum levels of cash collateral for letters of credits and contractual agreements with customers. As of September 30, 2026 and December 31, 2025, the Company had restricted cash of$4.5 million and$3.7 million, respectively, which includes $1.4 million restricted cash held in escrow which could be required to be refunded to the customer if conditions occur as defined in the agreement with the customer. The Company has not recognized revenue associated with the restricted cash. The liability is included within Noncurrent Contract Liabilities on the Consolidated Balance Sheet.

Inventories

The Company’s inventories consist primarily of engines and parts. Engines are valued at the lower of cost, including estimated freight-in or net realizable value. Parts are valued at the lower of cost or net realizable value, except for integral parts provided by customers for installation on custom ordered engines. Such parts are accounted for as noncash consideration which is valued at fair value. Net realizable value approximates replacement cost. Cost is principally determined using the first-in, first-out or average-cost method and includes material, labor and manufacturing overhead. It is the Company’s policy to review inventories on a continuing basis for obsolete, excess and slow-moving items and to record valuation adjustments for such items in order to eliminate non-recoverable costs from inventory. Valuation adjustments are recorded in an inventory reserve account and reduce the cost basis of the inventory in the period in which the reduced valuation is determined. Inventory reserves are established based on quantities on hand, usage and sales history, customer orders, projected demand and utilization within a current or future power system. Specific analysis of individual items or groups of items is performed based on these same criteria, as well as on changes in market conditions or any other identified conditions.

Inventories consist of the following:

Activity in the Company’s inventory allowance was as follows:

As of September 30, 2026 and December 31, 2025, the Company’s inventory included$1.7 million and$0.2 million, respectively, of raw materials provided by its customers for installation in the fulfillment of its performance obligations to these customers and recorded an associated contract liability. See Note 3. Revenue for further information regarding contract assets and contract liabilities.

Other Accrued Liabilities

Other accrued liabilities consisted of the following:

1 As of September 30, 2026 and December 31, 2025 accrued litigation includes accruals related to various ongoing legal matters including associated legal fees. See Note 11. Commitments and Contingencies for further information regarding the various ongoing legal matters.

2 The Company has an incentive compensation plan, which authorizes the granting of a variety of different types of awards including, but not limited to, non-qualified stock options, incentive stock options, Stock Appreciation Rights (“SARs”), Restricted Stock Awards (“RSAs”), deferred stock and performance units to its executive officers, employees, consultants and Directors. The liability classified SAR awards were exercised and paid during the quarter ended June 30, 2026. See Note 14. Stock-Based Compensation in the Company’s 2025 Annual Report for additional information on the SARs and RSAs.

Warranty Costs

The Company offers a standard limited warranty on the workmanship of its products that in most cases covers defects for a defined period. Warranties for certified emission products are mandated by the U.S. Environmental Protection Agency (the “EPA”) and/or the California Air Resources Board (the “CARB”) and are longer than the Company’s standard warranty on certain emission-related products. The Company’s products also carry limited warranties from suppliers. The Company’s warranties generally apply to engines fully manufactured by the Company and to the modifications the Company makes to supplier base products. Costs related to supplier warranty claims are generally borne by the supplier and passed through to the end customer.

Warranty estimates are based on historical experience and represent the projected cost associated with the product. A liability and related expense are recognized at the time products are sold. The Company adjusts estimates when it is determined that actual costs may differ from initial or previous estimates. The Company’s warranty liability is generally affected by failure rates, repair costs and the timing of failures. Future events and circumstances related to these factors could materially change the estimates and require adjustments to the warranty liability. In addition, new product launches require a greater use of judgment in developing estimates until historical experience becomes available.

Accrued product warranty activities included in Other noncurrent liabilities on the Consolidated Balance Sheet are presented below:

*Warranty costs, net of supplier recoveries and other adjustments, were $2.9 million and$5.3 million for the nine months ended September 30, 2026 and 2025, respectively. Supplier recoveries were none and $0.1 million for nine months ended September 30, 2026 and 2025.

**Changes in estimates for preexisting warranties reflect changes in the Company’s estimate of warranty costs for products sold in prior periods. Such adjustments typically occur when claims experience deviates from historical and expected trends. During thenine months ended September 30, 2026, the Company recorded a cost for changes in estimates of preexisting warranties of $0.6 million, or $0.03 per diluted share. During thenine months ended September 30, 2025, the Company recorded a cost for changes in estimates of preexisting warranties $0.7 million, or $0.03 per diluted share.

Tariff Refunds

During the second quarter of 2026, the Company received tariff refunds totaling $22.7 million related to the International Emergency Economic Powers Act (“IEEPA”) ruling. The Company accounts for IEEPA tariff refunds under ASC 450-30, Gain Contingencies, and recognizes tariff refunds when the refund is realized or realizable. Under the American Institute of Certified Public Accountants (“AICPA”) IEEPA tariff refund guidance, recognized tariff refunds generally should be recorded in the same manner as the related tariff costs were originally recorded, and material amounts and line items should be disclosed.

During the third quarter of 2026, the Company completed its evaluation of the tariff refunds received. The Company determined that $3.8 million of the refunds related to tariff costs were not passed through to customers. Accordingly, the Company recognized $3.8 million as a reduction of Cost of Sales in the Company’s Condensed Consolidated Statements of Income during the three months ended September 30, 2026.

The remaining $18.9 million of tariff refunds was determined to be refundable to customers. This amount consisted of $17.5 million to be settled through credit notes as of September 30, 2026 and recorded within Accounts Receivable, net of allowances on the Condensed Consolidated Balance Sheets. The remaining $1.4 million is recorded within Tariff Refund Liability on the Condensed Consolidated Balance Sheet since the final amounts to be refunded to customers or retained by the Company is unknown as of the issuance of these consolidated financial statements.

Recently Issued Accounting Pronouncements– Adopted

In July 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025‑05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The ASU provides a practical expedient that permits entities to assume that current economic conditions as of the balance sheet date will remain unchanged for the remaining life of current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers when estimating expected credit losses. The Company adopted ASU 2025‑05 effective January 1, 2026 and elected the practical expedient for its current accounts receivable and current contract assets. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or related disclosures.

Recently Issued Accounting Pronouncements – Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income: Expense Disaggregation Disclosures (Subtopic 220-40). This update requires entities to provide more detailed disclosures about the components of significant expense categories, enhancing the transparency and decision usefulness of financial statements. The amendments in this update are intended to provide investors with additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods. In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective date of ASU 2024-03. ASU 2024-03 is effective for public business entities for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. While we anticipate that the adoption of this standard will require additional disclosures, the Company is currently assessing the impact of the amendment to this standard on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The ASU clarifies and reorganizes certain interim reporting requirements, including guidance on interim disclosure principles and the form and content of interim financial statements. The guidance is effective for public business entities for annual reporting periods beginning after December 15, 2027, and interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of this standard on its interim consolidated financial statements and related disclosures.

Note 2. Business Combination

On January 9, 2026, the Company acquired 100% of the issued and outstanding equity interest of MTL, for a total purchase price of$11.1 million subject to customary working capital and other post-closing adjustments (the “Acquisition”). MTL is engaged in the welding, fabrication, painting, and assembly of steel components. The acquisition expands the Company’s manufacturing capabilities and vertical integration, and it is expected to support future growth and operational efficiencies. The transaction was accounted for as a business combination under ASC 805, Business Combinations (“ASC 805”), using the acquisition method of accounting. Accordingly, the Company recognized the assets acquired and liabilities assumed at their estimated fair values as of the acquisition date.

Preliminary Purchase Price Consideration

The aggregate purchase price consisted of $10.0 million in cash and a $1.1 million promissory note issued to the seller which bears interest at 8.0% per annum, and matures on January 9, 2031, with annual principal payments beginning in 2027. The note is secured by the acquired shares of MTL. Cash consideration paid at closing was subject to adjustment for estimated closing working capital and other items pursuant to the stock purchase agreement for the Acquisition. Any changes resulting from the final determination of these adjustments will be reflected as measurement period adjustments. The preliminary purchase price of MTL consists of the following:

Preliminary Purchase Price Allocation

In accordance with ASC 805, the identifiable assets acquired and liabilities assumed were recorded at their estimated fair values as of January 9, 2026. The components of the preliminary allocation of the purchase price are summarized below:

Goodwill is calculated as the excess of the purchase price over the net assets acquired and primarily represents the future economic benefits expected from anticipated synergies, assembled workforce, and expansion into new markets, and is not deductible for U.S. federal income tax purposes. Identifiable intangible assets acquired in the transaction include trade names.

For indefinite lived intangible assets, the Company applied the income approach through a relief from royalty method to fair value the trade name using Level 3 inputs. The Company amortizes trade names over 10 years.

The fair values of assets acquired and liabilities assumed are based on the information that was available to management at the time of the unaudited financial statements were prepared. The Company may record measurement period adjustments in the period they are identified, with such adjustments reflected as if they had been recognized as of the acquisition date. The measurement period may extend up to 12 months after the acquisition date. The finalization of the Company’s purchase accounting assessment could result in change in the valuation of assets acquired and liabilities assumed.

Consolidated Results of Operations

MTL’s results of operations have been included in the Company’s consolidated financial statements from the acquisition date of January 9, 2026 through the end of the reporting period. Revenue and net income attributable to MTL for the periods presented were not material to the Company’s consolidated results. Pro forma financial information has not been presented because the impact of this acquisition was immaterial to our consolidated financial statements.

Transaction Costs

The Company incurred $0.3 million of acquisition‑related costs during the nine months ended September 30, 2026 and $0.2 million in 2025, primarily consisting of legal, advisory, valuation, and integration expenses. These expenses are included in selling, general and administrative expenses in the Consolidated Statements of Income.

Note 3. Revenue

Disaggregation of Revenue

The following table summarizes net sales by end market:

The following table summarizes net sales by geographic area:

Contract Balances

Most of the Company’s contracts are for a period of less than one year; however, extended warranty contracts extend beyond one year. The timing of revenue recognition may differ from the time of invoicing to customers and these timing differences result in contract assets, or contract liabilities on the Company’s Consolidated Balance Sheets. Contract assets include amounts related to the contractual right to consideration for completed performance when the right to consideration is conditional. The Company records contract liabilities when cash payments are received or due in advance of performance. The fair value of noncash consideration of parts provided by customers is recorded in contract liabilities. Contract assets and contract liabilities are recognized at the contract level.

During the nine months ended September 30, 2026 and 2025, the Company recognized $1.8 million and $10.6 million, respectively, of revenue upon satisfaction of performance obligations related to amounts that were included in the net contract liabilities balance as of December 31, 2025 and 2024, respectively. During thethree months ended September 30, 2026 and 2025, the Company recognized $0.2 million and $1.7 million, respectively, of revenue upon satisfaction of performance obligations related to amounts that were included in the net contract liabilities balance as of June 30, 2026 and 2025, respectively.

Remaining Performance Obligations

The Company has elected the practical expedient to not disclose remaining performance obligations that have expected original durations of one year or less. For performance obligations that extend beyond one year, the Company had$1.8 million of remaining performance obligations as of September 30, 2026, primarily related to extended warranties. The Company expects to recognize revenue related to these remaining performance obligations of $1.6 million in 2027, and $0.2 million in 2028.

Note 4. Weichai Transactions

Weichai Collaboration Arrangement and Related Party Transactions

The Company and Weichai executed a strategic collaboration agreement (the “Collaboration Agreement”) on March 20, 2017, in order to achieve their respective strategic objectives and enhance the strategic cooperation alliance to share experience, expertise and resources. On March 22, 2023, the Collaboration Agreement was extended for an additional term ofthree years, through March 20, 2026. The Collaboration Agreement expired in accordance with its terms on March 20, 2026. The Company has received a renewal notice from Weichai and is in the process of negotiating the renewal of the Collaboration Agreement; however, no formal extension has been executed as of the date of this filing.

The Company evaluates whether an arrangement is a collaborative arrangement at its inception based on the facts and circumstances specific to the arrangement. The Company also reevaluates whether an arrangement qualifies or continues to qualify as a collaborative arrangement whenever there is a change in either the roles of the participants or the participants’ exposure to significant risks and rewards dependent on the ultimate commercial success of the endeavor. For those collaborative arrangements where it is determined that the Company is the principal participant, costs incurred and revenue generated from third parties are recorded on a gross basis in the financial statements. Purchases of inventory from Weichai were$18.0 million and$31.1 million for the three and nine months ended September 30, 2026, respectively. Purchases of inventory from Weichai were$3.1 million and$35.4 million for the three and nine months ended September 30, 2025, respectively.

In January 2022, PSIand Societe Internationale des Moteurs Baudouin (“Baudouin”), a subsidiary of Weichai, entered into an international distribution and sales agreement which enables Baudouin to bring PSI’s power systems line of products into the European, Middle Eastern, and African markets. In addition to sales, Baudouin will manage service, support, warranty claims, and technical requests. Refer to the Consolidated Balance Sheets and Statements of Income for detailed related party information.

During the year ended December 31, 2025, the Company and KION North America Corporation ("KNA"), a subsidiary of Weichai, entered into an agreement to settle development costs incurred by the Company related to a 2.4L dual-fuel engine intended for use by KNA in the production of materials handling equipment.

See Note 16. Related Party Transactionsfor information regarding the purchase agreement with Shandong Weichai Import & Export Corporation (“SWIEC”), an affiliate of Weichai, KNA, and manufacture of record (“MOR”) agreement with Weichai.

Note 5. Property, Plant and Equipment

Property, plant and equipment by type were as follows:

Note 6. Goodwill and Other Intangibles

Goodwill

The carrying amount of goodwill at September 30, 2026 and December 31, 2025 was as follows:

Accumulated impairment losses at both September 30, 2026 and December 31, 2025 were $11.6 million.

Other Intangible Assets

Components of intangible assets are as follows:

Note 7. Debt

The Company’s outstanding debt consisted of the following:

Revolving Credit Agreements

On August 30, 2024, the Company closed on a Revolving Credit Agreement, with Standard Chartered Bank (“Standard Chartered Credit Agreement”) and two other lenders. The Standard Chartered Credit Agreement allowed the Company to borrow up to$120.0 million and had a maturity date of August 30, 2025. The Standard Chartered Credit Agreement was subject to customary events of default and covenants, including minimum consolidated EBITDA and Consolidated Interest Coverage Ratio covenants for the third and fourth quarters of 2024 and the first and second quarters of 2025. Borrowings under the Standard Chartered Credit Agreement incurred interest at the applicable Secured Overnight Financing Rate (“SOFR”) plus 2.00% per annum. The obligations under the Standard Chartered Credit Agreement were unconditionally guaranteed, on a joint and several basis, by certain wholly-owned, existing and subsequently acquired or formed direct and indirect subsidiaries of the Company, subject to customary exceptions. The obligations under the Standard Chartered Credit Agreement were secured by substantially all assets of the Company and the Company’s wholly-owned subsidiaries. In addition, the Company paid fees of $0.6 million related to the Standard Chartered Credit Agreement which were deferred and amortized over the term of the revolving credit agreement.

On July 30, 2025, the Company entered into a second amendment to its then-existing Standard Chartered Credit Agreement, which increased aggregate borrowing capacity to $135.0 million and extended the maturity date to July 30, 2027. Borrowings under the amended facility bore interest at SOFR plus 2.10%, increasing to SOFR plus 2.60% if Weichai held less than 50% of the Company’s common equity. The Company incurred approximately $1.2 million of fees related to the amendment, which were deferred and being amortized over the term of the facility. The amended facility was replaced by a new Revolving Credit Agreement on September 25, 2026.

On September 25, 2026, the Company entered into a new secured Revolving Credit Agreement (the “HSBC Credit Agreement”) with HSBC Bank USA, National Association, as administrative agent, and a syndicate of lenders. The HSBC Credit Agreement provides aggregate revolving commitments of $220.0 million, including letter of credit commitments of up to $70.0 million, and matures on September 25, 2029. Borrowings may bear interest based on Term SOFR plus 1.80% or an alternate base rate plus the applicable margin. The facility is secured by substantially all assets of the Company and specified guarantor subsidiaries, including intellectual property. The agreement contains customary affirmative and negative covenants and requires a minimum consolidated interest coverage ratio of 3.00 to 1.00 and a maximum consolidated leverage ratio of 3.00 to 1.00. At closing, the Company borrowed $35.0 million under the HSBC Credit Agreement. The proceeds were used to repay the outstanding obligation of $15.0 million under the Company’s prior revolving credit facility and for other working capital needs. As of September 30, 2026, the Company had $35.0 million outstanding under the Revolving Credit Agreements.

In connection with the refinancing, the Company terminated the Standard Chartered Credit Agreement. For accounting purposes, the Company evaluated the syndicated refinancing on a lender-by-lender basis. The portions attributable to continuing lenders were accounted for as debt modifications, the portion attributable to the exiting lender was accounted for as an extinguishment, and the portion attributable to a new lender was accounted for as new debt. The Company recognized a loss on extinguishment of approximately $0.2 million related to the exiting lender’s portion of unamortized issuance costs and legal fees. The loss on extinguishment is included within Interest Expense on the Company’s Condensed Consolidated Statements of Income.

The Company incurred approximately $0.9 million of new debt issuance costs in connection with the HSBC Credit Agreement. Qualifying costs associated with the new and modified revolving commitments, together with approximately $0.4 million of continuing unamortized costs and termination legal fees allocated to continuing lenders, resulted in approximately $1.3 million of deferred debt issuance costs. These costs are amortized over the applicable term of the HSBC Credit Agreement.

On January 9, 2026, the Company acquired the equity interests of MTL for $11.1 million dollars which included a $1.1 million promissory note issued to the seller (the “Promissory Note”). The Promissory Note bears interest at 8% per annum and matures on January 9, 2031. The Promissory Note is secured by the acquired shares of MTL. As of September 30, 2026, the Company had $1.1 million outstanding on the Promissory Note. As part of the acquisition, the Company also assumed the outstanding debt of MTL as described below.

MTL entered into a financing arrangement underthe Master Loan Agreement (“First Master Loan Agreement”) dated August 14, 2025 with U.S. Bank Equipment Finance, a division of U.S. Bank National Association. The First Master Loan Agreement provides for an original principal balance of $3.5 million, bearing interest at a fixed annual rate of 6.25% and matures in August 2031. The loan is secured by substantially all equipment financed under the arrangement. The First Master Loan Agreement permits prepayment subject to a prepayment fee stated as a percentage of the prepaid balance or a make-whole amount. Such prepayment provisions apply to both voluntary prepayments and amounts accelerated following events of default. The loan bears interest at a stated fixed rate. The Company is required to comply with customary representations, warranties, and covenants associated with the financing arrangement. As of September 30, 2026, the Company hadno amounts outstanding under this loan.

MTL entered into a financing arrangement underthe Master Loan Agreement (“Second Master Loan Agreement”) dated October 23, 2025 with U.S. Bank Equipment Finance, a division of U.S. Bank National Association. The Second Master Loan Agreement provides for an original principal balance of $2.0 million, bearing interest at a fixed annual rate of 6.20% and matures in October 2031. The loan is secured by substantially all equipment financed under the arrangement. The Second Master Loan Agreement permits prepayment subject to a prepayment fee stated as a percentage of the prepaid balance or a make-whole amount. Such prepayment provisions apply to both voluntary prepayments and amounts accelerated following events of default. The loan bears interest at a stated fixed rate. The Company is required to comply with customary representations, warranties, and covenants associated with the financing arrangement. As of September 30, 2026, the Company hadno amounts outstanding under this loan.

On July 27, 2022, MTL entered into a loan agreement with JPMorgan Chase Bank, N.A. underthe U.S. Small Business Administration 7(a) loan program (“SBA Loan”). The SBA Loan provides for an original principal balance of $0.9 million, bearing interest at a fixed annual rate of 5.03% and matures on July 27, 2032. The loan is secured by substantially all equipment financed under the arrangement. The loan may be prepaid without penalty for amounts up to 20% of the outstanding principal balance. The Company may prepay outstanding balances exceeding the 20% with proper notices and pay specified additional interest amounts. The Company is required to comply with customary representations, warranties, covenants associated with the financing arrangement, and certain new indebtedness restrictions. As of September 30, 2026, the Company hadno amounts outstanding under the SBA Loan.

As of September 30, 2026, the Company’s total outstanding debt obligations under the Revolving Credit Agreementand for finance leases and other debt were $37.7 million in the aggregate. The Company's total accrued interest for the Revolving Credit Agreement was $0.1 million and $0.3 million as of September 30, 2026 and December 31, 2025, respectively. Accrued interest is included within Other Accrued Liabilities on the Consolidated Balance Sheet.

Note 8. Other Non-Current Liabilities

On June 14, 2024, the Company executed a non-interest bearing note payable of $4.5 million upon settlement of a legal matter (the “Note Payable”). The Note Payable is due May 2028 and is discounted based on an imputed interest rate of 6.66%. The Note Payable includes an option for the Company to extend maturity of the note to September 2029 upon written notice before the thirty-seventh payment and, if such option is exercised, the maximum payment amount of the Note Payable increases to $4.8 million.

As of September 30, 2026 and December 31, 2025 the current portion of the Note Payable of $1.1 million and $0.7 million, respectively, is included in Other accrued liabilities in the Company’s Consolidated Balance Sheet.

The following table presents remaining maturities for the note payable as of September 30, 2026:

The Company recorded less than$0.1 million discount amortization as interest expense for both the three months ended September 30, 2026 and 2025, respectively. The Company recorded $0.1 million and $0.2 million discount amortization as interest expense for the nine months ended September 30, 2026 and 2025, respectively.

Note 9. Leases

Leases

The Company has obligations under lease arrangements primarily for facilities, equipment and vehicles. These leases have original lease periods expiring between July 2027 and August 2036. The following table summarizes the lease expense by category in the Consolidated Statements of Income:

The following table summarizes the components of lease expense:

The following table presents supplemental cash flow information related to leases:

As of September 30, 2026 and December 31, 2025, the weighted-average remaining lease term was 7.7 years and 8.0 years for operating leases, respectively, and 3.5 years and 4.2 years for finance leases, respectively. As of both September 30, 2026 and December 31, 2025, the weighted-average discount rate was 7.1% for operating leases, and 6.9% for finance leases.

The following table presents supplemental balance sheet information related to leases:

1. Included in Property, plant and equipment, net for finance leases on the Consolidated Balance Sheets.

The following table presents maturity analysis of lease liabilities as of September 30, 2026:

Note 10. Fair Value of Financial Instruments

For assets and liabilities measured at fair value on a recurring and nonrecurring basis, a three-level hierarchy of measurements based upon observable and unobservable inputs is used to arrive at fair value. Observable inputs are developed based on market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions about valuation based on the best information available in the circumstances. Depending on the inputs, the Company classifies each fair-value measurement as follows:

•Level 1 – based on quoted prices in active markets for identical assets or liabilities;

•Level 2 – based on other significant observable inputs for the assets or liabilities through corroborations with market data at the measurement date; and

•Level 3 – based on significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.

Financial Instruments Measured at Carrying Value

Current Assets

Cash and cash equivalents (Level 1) are measured at carrying value, which approximates fair value because of the short-term maturities of these instruments.

Debt

The Company measured its material debt obligations and notes payable using original carrying value.

•The carrying value of borrowings under the Company’s Revolving Credit Agreements approximated fair value as of September 30, 2026. The Company’s estimate was based on Level 2 inputs, including the recent execution of the HSBC Credit Agreement on September 25, 2026, the short period of time between closing and September 30, 2026, the variable interest rate terms of the agreements, and the absence of significant changes in the Company’s credit profile or applicable market borrowing rates during that period.

•The Company measured its non-interest bearing Note Payable using the rate at which it could have obtained financing of a similar nature from other sources on the transaction date. The unamortized discount is reported in the Consolidated Balance Sheets as a deduction from the face amount of the note payable.

•The Promissory Note was issued for the acquisition of MTL on January 9, 2026. The debt was established at market rate and the fair value approximates carrying value since the period of time between issuance and September 30, 2026 is not significant.

The Company measured its material debt obligations and note payable using Level 2 inputs as follows:

Other Financial Assets and Liabilities

In addition to the methods and assumptions used for the financial instruments discussed above, accounts receivable, net income tax receivable, accounts payable, and certain accrued expenses are measured at carrying value, which approximates fair value because of the short-term maturities of these instruments.

Note 11. Commitments and Contingencies

Legal Contingencies

The legal matters discussed below and others could result in losses, including damages, fines, civil penalties and criminal charges, which could be substantial. The Company records accruals for these contingencies to the extent the Company concludes that a loss is both probable and reasonably estimable. Regarding the matters disclosed below, unless otherwise disclosed, the Company has determined that liabilities associated with these legal matters are reasonably possible; however, unless otherwise stated, the possible loss or range of possible loss cannot be reasonably estimated. Given the nature of the litigation and investigations and the complexities involved, the Company is unable to reasonably estimate a possible loss for all such matters until the Company knows, among other factors the following:

•what claims, if any, will survive dispositive motion practice;

•the extent of the claims, particularly when damages are not specified or are indeterminate;

•how the discovery process will affect the litigation;

•the settlement posture of the other parties to the litigation; and

•any other factors that may have a material effect on the litigation or investigation.

However, the Company could incur judgments, enter into settlements or revise its expectations regarding the outcome of certain matters, and such developments could have a material adverse effect on the Company’s results of operations in the period in which the amounts are accrued and/or liquidity in the period in which the amounts are paid.

Mast Powertrain v. the Company

In February 2020, the Company received a demand for arbitration from Mast Powertrain, LLC (“Mast”) pursuant to a development agreement entered into in November 2011 (the “Development Agreement”). Mast claimed that it was owed more than$9.0 million in past royalties and other damages for products sold by the Company pursuant to the Development Agreement. The Company disputed Mast’s damages, denied that any royalties are owed to Mast, denied any liability, and counterclaimed for overpayment on invoices paid to Mast. Mast subsequently clarified its claim for past royalties owed to be approximately$4.5 million. In July 2021, the Company reached a settlement with Mast to resolve past claims for royalties owed for $1.5 million which the Company had previously recorded within Selling, general and administrative expenses in the Consolidated Statement of Income for the year-ended December 31, 2020. The Company fully paid the settlement and hadno recognized liability as of December 31, 2025. In September 2023, Mast filed a lawsuit against the Company in the Eastern District of Texas Federal Court (“Court”), alleging, among other things, damages of approximately $6.0 million for fraudulent inducement leading to the 2021 arbitration settlement agreement and breach of said settlement agreement. Upon court order, the Company participated in separate mediations in May 2024 and December 2024, and no settlement was reached. The Company has filed a motion to stay the lawsuit and compel it to arbitration, and the Court granted that motion on January 31, 2025. As of both September 30, 2026 and December 31, 2025, the Company had recorded an estimated liability of $0.9 million, recorded within Other accrued liabilities on the Consolidated Balance Sheets related to the potential settlement of this matter.

Gary Winemaster Litigation v. The Company

In August 2021, the Company’s former Chairman of the Board and former Chief Executive Officer and President, Gary Winemaster (“Winemaster”), filed suit in the Court of Chancery of the State of Delaware against the Company and Travelers Casualty and Surety Company of America (“Travelers”) alleging the Company’s breach of its advancement obligations under Winemaster’s indemnification agreement and Travelers’ breach of the side A policy between Traveler’s and the Company of which Winemaster is a beneficiary. In his complaint, Winemaster was seeking reimbursement under his indemnification agreement in excess of $7.2 million of attorney’s fees plus interest incurred by Winemaster in his defense of the Department of Justice (“DOJ”) case, U.S. v. Winemaster et al. Since the filing of the complaint, the Company estimates that Travelers has paid approximately $8.8 million to Winemaster’s attorneys, Latham and Watkins, under the Company’s side A policy to settle existing outstanding attorney’s fees. Travelers is seeking reimbursement from the Company for those advances pursuant to the terms of the side A policy. In October 2021, the Company and Winemaster entered into a Stipulation and Advancement Order to handle all future attorney’s fees relating to his DOJ and SEC cases, to the extent not reimbursed by Travelers under the side A policy. In June 2024, the Company reached a settlement with Travelers for $4.5 million, resulting in a $4.3 million gain that was recorded within Selling, General and Administrative expenses on the Consolidated Statements of Income. As of both September 30, 2026 and December 31, 2025, the Company recorded the aforementioned settlement liability within Other noncurrent liabilities with the current portion within Other accrued liabilitieson the Consolidated Balance Sheets. Refer to Note 8. Other Non-Current Liabilitiesfor additional information related to this settlement.

Securities Class Action

On March 20, 2026, a putative securities class action complaint captioned Dishion v. Power Solutions International, Inc., et al., Case No. 1:26-cv-03149, was filed in the United States District Court for the Northern District of Illinois against Power Solutions International, Inc. and certain of its executive officers. The complaint purports to assert claims on behalf of persons and entities that purchased or otherwise acquired the Company’s common stock between May 8, 2025 and March 2, 2026, inclusive, and alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder based on alleged misstatements and omissions concerning the Company’s business, operations and prospects, including matters relating to demand, manufacturing capacity and operating inefficiencies for data center product lines. The complaint seeks damages and other relief. The Company believes the claims are without merit and intends to defend the action vigorously. The matter is at an early stage, and the Company cannot reasonably estimate a possible loss or range of loss at this time.

Stockholder Derivative Action

On August 20, 2026, a verified stockholder derivative complaint captioned Kim v. Xykis, et al., Case No. 1:26-cv-10079, was filed in the United States District Court for the Northern District of Illinois, purportedly on behalf of the Company, against certain of the Company’s current and former directors and officers. On August 28, 2026, a second verified stockholder derivative complaint captioned Leiden v. Xykis, et al., Case No. 1:26-cv-10452, asserting substantially similar claims against the same defendants, was filed in the same court. The Company is named as a nominal defendant in both actions. The complaints, which are based on allegations substantially similar to those in the Dishion securities class action, assert claims for violations of Section 14(a) of the Exchange Act and Rule 14a-9 thereunder, breach of fiduciary duty, unjust enrichment, waste of corporate assets, and insider selling and misappropriation of information, and seek unspecified damages and other monetary relief on the Company’s behalf, corporate governance reforms, and an award of attorneys’ fees and costs.

On September 28, 2026, the Court consolidated the two actions. By order entered October 8, 2026, the Court stayed the consolidated action pending resolution, in whole or in part, of a motion to dismiss in the Dishion action, subject to certain conditions and earlier termination events. The matter is at an early stage, and the Company cannot reasonably estimate a possible loss or range of loss, if any, at this time. The Company’s certificate of incorporation and indemnification agreements provide for advancement of defense expenses and indemnification of current and former directors and officers, subject to their terms and applicable law.

Indemnification Agreements

The Company has entered into indemnification agreements with each of its directors and executive officers that, subject to the terms and conditions of such agreem ents and applicable law, provide for indemnification and advancement of expenses to the fullest extent permitted by Delaware law. The Company holds a directors’ and officers’ liability insurance policy, which is renewed annually and currently expires in July 2027. The insurance policy includes standard exclusions including for any previously pending litigation.

Other Commitments

At September 30, 2026, the Company hadfour outstanding letters of credit totaling $2.5 million. The letters of credit primarily serve as collateral for the Company for certain facility leases and insurance policies. As discussed in Note 1. Summary of Significant Accounting Policies and Other Information, the Company had restricted cash of $4.5 million as of September 30, 2026, related to these letters of credit and cash held in escrow due to a customer agreement.

Note 12. Income Taxes

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. Income tax expense for interim periods is computed using an estimated annual effective tax rate (“AETR”), applied to year to date ordinary income, adjusted for discrete items recognized in the period incurred. The Company’s operations are located in the United States, therefore, the tax footnote includes only federal and state domestic tax obligations.

Income Tax Expense

For the three and nine months ended September 30, 2026, the Company recorded income tax expense of $10.2 million and $18.2 million, respectively.

Qualitative Explanation of Effective Tax Rate Drivers

The Company’s effective tax rate was 25.3% and 25.2% for the three and nine months ended September 30, 2026, respectively, compared to an effective tax rate for the three and nine months ended September 30, 2025 of (3.3)% and (21.3)%, respectively. The change in the effective tax rate for the three and nine months ended September 30, 2026 compared to the prior-year periods was primarily attributable to the release of substantially all of the Company’s valuation allowance during 2025, including the release recorded in the second quarter of 2025 and an additional benefit recognized in the third quarter of 2025, which reflected the Company’s improved profitability.

Deferred Income Taxes

There were no material changes in the Company’s deferred tax assets or liabilities during the three and nine months ended September 30, 2026, other than those resulting from normal interim period activity. Refer to the Company’s consolidated financial statements as of and for the year ended December 31, 2025 for additional information regarding the components of deferred tax assets and liabilities.

Valuation Allowance

As of September 30, 2026, the Company maintained a valuation allowance of approximately $0.2 million. The valuation allowance relates to a capital loss carryforward.

Unrecognized Tax Benefits

The amount of unrecognized tax benefits, that if recognized, would affect the annual effective tax rate was approximately $0.6 million and $1.3 million as of September 30, 2026 and December 31, 2025, respectively. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. For the three and nine months ended September 30, 2026 and 2025, interest and penalties were not material.

Income Taxes Paid

Income taxes paid, net of refunds, during the three and nine months ended September 30, 2026 were $1.3 million and $2.2 million, respectively, consisting entirely of state income taxes.

Open Tax Years

The Company remains subject to examination by U.S. federal and state taxing authorities generally for tax years 2017 through 2026. Management does not believe the resolution of any open matters will have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Note 13. Stockholders’ Equity

Common and Treasury Stock

The changes in shares of Common and Treasury Stock are as follows:

Note 14. Stock-Based Compensation

On March 6, 2026, the Company’s Board of Directors (the “Board”) approved the Power Solutions International, Inc. 2026 Phantom Unit Plan (the “Plan”). The Plan is designed to incentivize eligible service providers of the Company by granting cash-settled awards (“Phantom Units”) tied to the fair market value of the Company’s common stock. The Plan is administered by the Board or a committee thereof, which has full discretionary authority to grant awards, determine vesting schedules, interpret the Plan, and make all related determinations. Awards are subject to the Company’s clawback and recoupment policies, including any policies adopted to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Each Phantom Unit represents an unfunded and unsecured obligation of the Company to make a cash payment to the participant equal to the average fair market value per share of the Company’s common stock over the thirty (30) trading days immediately preceding the applicable vesting date. The Phantom Units do not represent actual equity interests in the Company, carry no voting rights, and do not entitle participants to dividends. The number of Phantom Units subject to each award is determined by dividing the dollar value of the award on the grant date by the average fair market value per share of the Company’s common stock over the thirty (30) trading days immediately preceding the grant date. Because settlement amounts are determined by reference to the average fair market value per share of the Company’s common stock over the thirty (30) trading days immediately preceding each applicable vesting date, the actual amounts payable under the Plan are not determinable at the time of grant.

Phantom Units vest inthree equal annual installments, with the first installment vesting on the vesting commencement date and the remaining installments vesting on each of the first and second anniversaries of the vesting commencement date, subject to the participant’s continuous service with the Company or its affiliates. Accelerated vesting of all unvested Phantom Units occurs upon (i) termination of service due to death or disability, (ii) a change in control in which the acquirer does not assume or substitute the outstanding awards, or (iii) an involuntary termination or resignation for good reason within twenty-four (24) months following a change in control in which the awards were assumed or substituted. Settlement is made in a lump sum cash payment within sixty (60) days following the applicable vesting date. The Company granted 23,302 units,641 units were forfeited, and the corresponding expense was insignificant for the period March 6, 2026 through September 30, 2026.

Note 15. Earnings Per Share

The Company computes basic earnings per share by dividing net income by the weighted-average common shares outstanding during the period. Diluted earnings per share is calculated to give effect to all potentially dilutive common shares that were outstanding during the period. Weighted-average diluted common shares outstanding primarily reflect the additional shares that would be issued upon the assumed exercise of stock options and the assumed vesting of unvested share awards. The treasury stock method has been used to compute diluted earnings per share for the three and nine months ended September 30, 2026 and 2025.

The Company issued SARs and RSAs, all of which have been evaluated for their potentially dilutive effect under the treasury stock method. See Note 14. Stock-Based Compensation in the Company’s 2025 Annual Report for additional information on the SARs and the RSAs.

The computations of basic and diluted earnings per share are as follows:

The aggregate number of shares excluded from the diluted earnings per share calculations, because they would have been anti-dilutive, were none for both the three months ended September 30, 2026 and 2025 andnone for both thenine months ended September 30, 2026 and 2025, respectively. For the three and nine months ended September 30, 2026 and 2025, SARs and RSAs were not included in the diluted earnings per share calculations as they would have been anti-dilutive because the Company’s average stock price was less than or equal to the exercise price of the SARs or the grant price of the RSAs.

Note 16. Related Party Transactions

Weichai Transactions

See Note 4. Weichai Transactions for information regarding the Collaboration Agreement.

Other Related Party Transactions

See Note 11. Commitments and Contingencies for information regarding the Company’s indemnification obligations related to a former director and officer of the Company.

In January 2025, the Company entered into afive-year purchase agreement with SWIEC, for the exclusive purchase and distribution of certain engine and engine components for the fulfillment of a contract with a customer in North America. The supply agreement includes annual minimum requirements of products ordered during the initial term. If all minimum targets are met within the first three-year periods, the contract may be negotiated to extend beyond thefive-year initial term. The annual minimum requirements are as follows:

In February 2025, the Company entered into a MOR agreement with Weichai. The MOR agreement requires the Company to pay Weichai a fee of 1.75% of gross revenues generated by the sale of certain engines manufactured by Weichai. Fees are due on a quarterly basis. The fee for both the three and nine months ended September 30, 2026 was less than $0.1 million. The MOR agreement expires in December 2029.

Note 17. Segment Reporting

Operating segments are defined as components of a business that can earn revenues and incur expenses for which discrete financial information is available that is reviewed on a regular basis by the chief operating decision maker (“CODM”). The Company operatesasone business and geographic operating and reportable segment.

Chief Operating Decision Maker

The Company’s CODM is its Chief Executive Officer (“CEO”). The CEO oversees the strategic planning and direction of the Company, and the CEO has final approval in assessing the Company’s performance and allocating its resources.

Identification of Reportable Segment

The Company’s single reportable segment derives revenues primarily in North America from customers by designing, engineering, manufacturing, marketing and selling a broad range of advanced, emission-certified engines and power systems that are powered by 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. Revenue is attributed to geographic areas based on the country of sale. The sources of external revenue by end market and geographic area are previously disclosed in Note 3. Revenue.

The Company evaluated the basis for the CODM's decisions about the allocation of Company resources as well as the basis for the CODM's assessments of the evaluation of the Company's (segment) performance. Specifically, the Company evaluated the financial information that is generally provided and / or is available to the CODM. The Company’s CODM reviews consolidated statements of income to make decisions, allocate resources and assess performance.

Measurement

The CODM assesses performance and decides how to allocate resources primarily using consolidated revenue by end market and consolidated net income (loss). The CODM uses consolidated net income (loss) to monitor budget and forecast information to actual results. The CODM reviews cash, accounts receivable, inventory, accounts payable, and total debt; however other long-lived asset information is not reviewed by the CODM.

The accounting policies of the Company’s single reportable segment are the same as those described in the Note 1. Summary of Significant Accounting Policies and Other Information. The measure of segment assets is consolidated total assets presented in the Company’s Consolidated Balance Sheets. Note 1 Concentrations discloses customers individually accounting for more than 10% of the Company’s consolidated net sales.

Significant Expenses

Significant segment expenses are presented in the Consolidated Statements of Income.

Note 18. Subsequent Events

In October 2026, the Company made payments totaling $20.0 million on its HSBC Credit Agreement. As of November 5, 2026, the outstanding balance under the HSBC Credit Agreement was $15.0 million.