Power Solutions International, Inc. · NASDAQ:PSIX
Power Solutions International — Investor Presentation (May 2020)
47 slides from Power Solutions International's investor presentation, May 4, 2020
Slide 1: Corporate Overview
CORPORATE OVERVIEW May 4, 2020 Exhibit 99.2
Slide 2: Safe Harbor & Other Cautionary Notes
SAFE HARBOR & OTHER CAUTIONARY NOTES This presentation has been prepared by Power Solutions International, Inc. (PSI) for investors, solely for informational purposes. The information contained in this presentation does not purport to be all-inclusive or to contain all of the information a prospecti
Slide 3: About PSI
ABOUT PSI Jo
Slide 4: PSI's Mission
“ PSI’s MISSION: Solving Power Challenges of Global Equipment Manufacturers Through High-Quality, Innovative Products
Slide 5: Powering Leading Equipment Manufacturers Globally
POWERING LEADING EQUIPMENT MANUFACTURERS GLOBALLY
Slide 6: Overview
OVERVIEW Approximately 900 Employees Leading Worldwide Manufacturer of Engines Produced 1,000,000 engines historically Wide range of engines: 27 different displacements ranging from 1L to 53L Approximately 1,000,000 sq. ft. manufacturing footprint, with headquarters in Wood Dale, IL OTC Pink: PSIX F
Slide 7: Advanced Facilities
ADVANCED FACILITIES PSI Corp. HQ & Engine Dress Facility 201 Mittel Dr. Wood Dale, IL 261,000 sq. ft. Dedicated R&D & Engineering Facility Automotive Grade High-Volume Production Lines State-of-the-Art Machining Center Advanced Testing Laboratory Approximately 1,000,000 sq. ft. PSI Machining & Engin
Slide 8: Engine Development Center
ENGINE DEVELOPMENT CENTER Acquired in 2018 Located near Illinois headquarters Increase speed to market response Industry leading engine testing In-house EPA & CARB certified test cell operation
Slide 9: Technologies & Talent
TECHNOLOGIES & TALENT Leading Talent Advanced Engineering Disciplines Industry-Leading Application Knowledge Strategic Partnerships Approximately 900 Employees Innovative Technologies PSI Proprietary Controls Certified, Low-Emission Solutions (EPA, CARB Certifications) Fuel-Flexible Systems: Natural
Slide 10: Manufacturing & Engine Capabilities
MANUFACTURING & ENGINE CAPABILITIES Complete Range APPLICATION ENGINEERING & INTEGRATION TESTING & VALIDATION CALIBRATION & EMISSIONS ENGINE DESIGN & ENGINEERING MATERIAL OPTIMIZATION & SIMULATION SPECIALIZED MACHINING ADVANCED MANUFACTURING POWERTRAIN ASSEMBLY & KITTING COMPLETE ENGINE SIMULATION C
Slide 11: Expansive Product Line
TRANSPORTATION EXPANSIVE PRODUCT LINE Powering Global Transportation, Energy & Industrial OEMs Engine Displacements 6.0L, 8.8L Fuel Types Propane, Natural Gas, Gasoline Integration Transmissions & Tanks Horsepower Range 293 hp – 345 hp Torque Range 317 lb-ft – 565 lb-ft INDUSTRIAL Engine Displacemen
Slide 12: Weichai Collaboration
WEICHAI COLLABORATION A Global Partner
Slide 13: PSI & Weichai History & Milestones
PSI & WEICHAI HISTORY & MILESTONES Formation of Power Great Lakes, Inc. Power Solutions Inc. (PSI) established as global distributor of GM industrial engines – Gas Product scope Acquisition of 3PI Acquisition of Buck’s Engines, PowerTrain Integration and Bi-Phase PSI goes public. PSIX launched as an
Slide 14: Expanded Global Business Footprint
Major Facility Snapshot: Shanghai – Engine Machining and R&D Weifang – High-Speed Engine & Vehicle Machining and R&D Chongqing – Medium/ High-Speed Engine & MVP R&D Xi’an – HD Truck & HD Transmission Box R&D Wiesbaden, Germany – Forklift & Hydraulics R&D Forli, Italy – Luxury Yachts R&D Marseilles,
Slide 15: Product Synergies
PRODUCT SYNERGIES Our collective product portfolio offers the most competitive and complete engine and power range available across all applications 32L 40L 53L 65L Transportation Weichai has a large market share in Asia, for which it develops and manufactures thousands of commercial vehicle engines
Slide 16: Energy: Powering the Future
ENERGY Powering the Future
Slide 17: Energy Markets & Customers
ENERGY MARKETS & CUSTOMERS Our Customers/End Users Markets Oil & Gas Telecommunications Data Centers Medical Office & Commercial Utility & Water Treatment Growth opportunities across various markets driven by several factors (e.g., aged electric grid, power outage activity, growth of intermittent so
Slide 18: Application/Market Growth Opportunities
APPLICATION/MARKET GROWTH OPPORTUNITIES The growth of intermittent sources of energy, such as wind and solar, is driving increased demand for generators, microgrids and demand response equipment Sources: Global Market Insights, Navigant Research, imarc, technavio Diesel Generator Market Size The glo
Slide 19: Natural Gas Energy Growth
NATURAL GAS ENERGY GROWTH Sources: Diesel Progress September 2019; Forbes – December 6, 2019; Research Nester; GE Reports (12/5/18); EIA.gov (4/5/2019) Natural Gas Energy Market Dynamics Cleaner than diesel; Not subject to the transportation limitations that diesel has during times of extreme weathe
Slide 20: Energy Engine Portfolio – Gas
2.4L 3.0L 4.3L 5.7L 8.1L 8.8L 11.1L 14.6L 18.3L 21.9L PLANNED 65L NEW 53L NEW 40L NEW 32L NEW 6.7L NEW 4.5L ENERGY ENGINE PORTFOLIO – GAS NEW 10L NEW 13L NEW 17L NEW 20L
Slide 21: Energy Engine Portfolio – Diesel
ENERGY ENGINE PORTFOLIO – DIESEL PLANNED 65L DIESEL NEW 53L DIESEL NEW 40L DIESEL PLANNED 10L DIESEL NEW 20L DIESEL PLANNED 17L DIESEL PLANNED 13L DIESEL
Slide 22: Gas Product Expansion <150kWe
GAS PRODUCT EXPANSION <150kWe 8.8L
Slide 23: Gas Product Expansion >500kWe
GAS PRODUCT EXPANSION >500kWe
Slide 24: Diesel Products Addition
DIESEL PRODUCTS ADDITION Displacement ° 500 kWe 1000 kWe 1500 kWe 2000 kWe
Slide 25: Power Generation Opportunity Today & Future
POWER GENERATION OPPORTUNITY TODAY & FUTURE Weichai Gas & Diesel Engine Platforms Open Power Generation Market Significantly * Power generation market opportunity projections are based on internal estimates and data from Power Systems Research 2018 PSI POWER GEN ADDRESSABLE MARKET NG Engines 2.4L-22
Slide 26: Transportation: Powering the Road Ahead
TRANSPORTATION Powering the Road Ahead
Slide 27: PSI Transportation Markets & Customers
PSI TRANSPORTATION MARKETS & CUSTOMERS Propane & Gasoline EUROVAN & TRANSIT CHASSIS & OEM UTILITY RV RECENT EXPERIENCE FUTURE OPPORTUNITIES
Slide 28: Transportation Market
TRANSPORTATION MARKET China Market U.S./North America Market Source: School Bus Fleet (School Bus Sales Report - 2019), CAAM/PiperJaffray (9/24/19), KeyBank Research, (2/23/20), carsalesbase.com, trailer-bodybuilders.com; Internal estimates SCHOOL BUS CLASS 5-7 TRUCK CLASS 2-4 TRUCK/VAN (Class 3-4:
Slide 29: School Bus Market
SCHOOL BUS MARKET Strong Gasoline & Propane Growth, Industry-Leading Customers, Significant Engine Market Opportunity Sources: School Bus Fleet (School Bus Sales Report - 2019); Blue Bird investor presentation January 2019; School Bus Fleet (7/25/16), Icbus.com; Blue Bird press release on 12/11/19;
Slide 30: Major Automotive OEMs including General Motors, Ford, Mitsubishi and others are moving into electrification
Major Automotive OEMs including General Motors, Ford, Mitsubishi and others are moving into electrification and hybridization, which eliminates completely, or utilizes, smaller combustion engines Emission regulations like the current standard, the Corporate Average Fuel (CAFÉ) standard, for passenge
Slide 31: Industrial: Powering Productivity
INDUSTRIAL Powering Productivity
Slide 32: Industrial Markets & Customers
INDUSTRIAL MARKETS & CUSTOMERS OIL & GAS COMPRESSION/ OIL LIFTS FORKLIFT AERIAL WORK PLATFORM ARBOR CARE UTILITY VEHICLE SWEEPERS /SCRUBBER ICE RESURFACING OTHER INDUSTRIAL
Slide 33: Industrial Engine Portfolio
2.0L/2.4L 3.0L 4.3L 5.7L 8.1L 8.8L 11.1L 14.6L 18.3L 21.9L PLANNED 65L NEW 53L NEW 40L NEW 32L NEW 6.7L NEW 4.5L INDUSTRIAL ENGINE PORTFOLIO NEW 10L NEW 13L NEW 17L NEW 20L 0.998L
Slide 34: Financial Update, Next Steps, Business Objectives
FINANCIAL UPDATE NEXT STEPS BUSINESS OBJECTIVES
Slide 35: Capital Structure Overview
CAPITAL STRUCTURE OVERVIEW *Based on 22,857,602 shares outstanding as of 4/22/20 and information contained in various SEC filings. Weichai America Investment Investment of $60 million of equity in PSI on 3/31/17 Warrant exercise on 4/23/19 for approximate proceeds of $1.6 million Debt Overview $130
Slide 36: 2019 Financial Results – Sales/Gross Margin
2019 FINANCIAL RESULTS – SALES/GROSS MARGIN GROSS MARGIN 2019 sales reflects growth across energy (+$37.1m) and transportation (+$34.0m) end markets, partly offset by lower industrial end market sales (-$21.1m) Includes approximately $30 million of transportation sales associated with the shipment o
Slide 37: 2019 Financial Results – EPS/Adjusted EPS and Adjusted EBITDA
2019 FINANCIAL RESULTS – EPS/ADJUSTED EPS AND ADJUSTED EBITDA ADJUSTED EBITDA* In addition to sales growth and significant gross margin improvement, 2019 GAAP net income and earnings per common share (EPS) were also favorably impacted by the following items: SG&A expenses decreased by $5.5m, largely
Slide 38: Update - Next Steps/Outlook
UPDATE - NEXT STEPS/OUTLOOK Filed Form 10-K on 5/16/19: Covers restated financials for the full years of 2014 and 2015, and Q1 of 2016, in addition to the audited financial statements for 2016 and 2017; Form 10-K covering full year 2018 financials filed on 12/27/19 Filed Form 10Qs (covering Q1-Q3 20
Slide 39: Update - Next Steps/Outlook
UPDATE - NEXT STEPS/OUTLOOK Projected sales and profitability for 2020 expected to be substantially lower than 2019 levels Impact from COVID-19 pandemic and the related historic decline in oil prices Q4 2019 acceleration of approximately $30 million of transportation end market sales from 2020 Indus
Slide 40: Business Objectives
Streamlining of Business Processes Review and identify cost reductions throughout the organization Enhanced controls and monitors across major spend areas Warranty Expense Mitigation Efforts Developing reimbursement/commercial remedies from key suppliers, where applicable Continued evaluation and im
Slide 41: Business Objectives Continued
Strengthen Business through Optimization of Business Systems and Technology Reimplementation of ERP system Supports efforts to remediate internal controls, improve processes, drive greater operational efficiencies and provide better and timelier decision making across the organization Capitalize on
Slide 42: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Non-GAAP Financial Measures In addition to the results provided in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) above, this presentation also includes non-GAAP (adjusted) financial measures. Non-GAAP financial measures provide in
Slide 43: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION The following table presents a reconciliation from Net income (loss) to Adjusted net income (loss): (in thousands)For the Year Ended December 31,20192018Net income (loss)$8,248$(54,726)Changes in value of warrants 11,35210,400Stock-based compensation 29881,229Asset impairment
Slide 44: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION The following table presents a reconciliation from Earnings (loss) per common share – diluted to Adjusted earnings (loss) per share: For the Year Ended December 31,20192018Earnings (loss) per common share – diluted$0.38$(2.94)Changes in value of warrants 10.060.56Stock-based
Slide 45: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION The following table presents a reconciliation from Net income (loss) to EBITDA and Adjusted EBITDA: (in thousands)For the Year Ended December 31,20192018Net income (loss)$8,248$(54,726)Interest expense7,8717,628Income tax expense409169Depreciation5,1615,196Amortization of int
Slide 46: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Amounts consist of changes in the value, including the impact of the exercise in April 2019, of the Weichai Warrant. Amounts reflect non-cash stock-based compensation expense (2019 and 2018 amounts excludes $0.3 million and $1.4 million, respectively, associated with the rete
Slide 47: Thank You
THANK YOU. 201 Mittel Drive, Wood Dale, IL 60191 630.350.9400 • www.psiengines.com
Power Solutions International — Investor Presentation (May 2020) on 6ix