Power Solutions International (NASDAQ: PSIX) Q1 2026 earnings fall as margins compress
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Power Solutions International, Inc. reported a weaker first quarter of 2026 compared with 2025. Net sales were $128.6 million, down 5% year over year, as lower power systems revenue, especially in oil and gas and uneven data center orders, outweighed growth in industrial and transportation markets.
Net income fell to $7.3 million from $19.1 million, with diluted EPS dropping to $0.32 from $0.83. Gross margin declined to 22.9% from 29.7% due to mix and elevated production costs from capacity ramp-up in Wisconsin, although margins improved sequentially from the fourth quarter of 2025.
Adjusted EBITDA decreased to $13.9 million from $26.1 million. Cash and cash equivalents rose to $45.1 million, and total debt increased to $103.4 million as of March 31, 2026. The company expects second-quarter 2026 revenue to be generally consistent with the first quarter and anticipates stronger sales in the second half, roughly in line with the second half of 2025, driven by larger Power Systems orders, while noting continued softness in oil and gas and ongoing ramp-up costs.
Positive
- Liquidity and cash generation strengthened: Cash and cash equivalents increased to $45.1 million as of March 31, 2026 from $41.3 million at December 31, 2025, supported by net cash provided by operating activities of $19.1 million in the first quarter.
- Sequential gross margin improvement: While year-over-year gross margin declined, management noted gross margin improved by approximately 100 basis points versus the fourth quarter of 2025, reflecting early benefits from efficiency efforts in Wisconsin.
- Data center demand remains solid: The company continues to see strong demand for data center power solutions and anticipates stronger sales in the second half of 2026, approximately in line with the second half of 2025 as larger Power Systems orders move into production.
Negative
- Significant profit decline: Net income fell 62% year over year to $7.3 million, with diluted EPS down from $0.83 to $0.32, reflecting weaker margins and higher operating expenses.
- Margin compression from mix and ramp-up costs: Gross margin declined from 29.7% to 22.9%, driven by a lower mix of oil and gas products and elevated production costs associated with capacity ramp-up activities in Wisconsin.
- Ongoing end-market and cost headwinds: Management expects continued softness in the oil and gas end market and persistent capacity ramp-up costs, with no formal full-year 2026 guidance provided and second-half strength subject to order timing and operational factors.
Insights
Q1 2026 shows sharp profit compression, with management leaning on second-half recovery.
Power Solutions International delivered Q1 2026 revenue of $128.6 million, down 5%, but profits fell more sharply. Net income dropped 62% to $7.3 million as gross margin compressed from 29.7% to 22.9%, reflecting a weaker power systems mix and higher Wisconsin ramp-up costs.
Operating expenses rose 15%, driven by higher selling, general and administrative costs and increased R&D to support new programs. As a result, operating income was nearly halved to $11.4 million. Adjusted EBITDA of $13.9 million was down 47%, indicating broad profitability pressure despite stable interest expense.
Management expects Q2 2026 revenue to be generally consistent with Q1 and anticipates stronger sales in the second half of 2026, approximately in line with the second half of 2025, as larger Power Systems orders convert. However, they highlight continued softness in oil and gas, dependency on customer schedules and manufacturing throughput, and ongoing Wisconsin ramp-up costs as key variables.
8-K Event Classification
3 items: 2.02, 7.01, 9.01
3 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 7.01
Regulation FD Disclosure
Disclosure
Material non-public information disclosed under Regulation Fair Disclosure, often investor presentations or guidance.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Net sales: $128.6 million
Net income: $7.3 million
Diluted EPS: $0.32
+5 more
8 metrics
Net sales
$128.6 million
Q1 2026, down 5% from $135.4 million in Q1 2025
Net income
$7.3 million
Q1 2026, down 62% from $19.1 million in Q1 2025
Diluted EPS
$0.32
Q1 2026, down from $0.83 in Q1 2025
Gross margin
22.9%
Q1 2026, versus 29.7% in Q1 2025
Adjusted EBITDA
$13.9 million
Q1 2026, versus $26.1 million in Q1 2025
Cash and cash equivalents
$45.1 million
As of March 31, 2026, versus $41.3 million at December 31, 2025
Total debt
$103.4 million
As of March 31, 2026, including $95.0 million under revolving credit agreement
Net cash from operations
$19.1 million
Cash provided by operating activities in Q1 2026
Key Terms
Gross margin, Adjusted EBITDA, Revolving Credit Agreement, Non-GAAP financial measures, +2 more
6 terms
Gross margin financial
"Gross margin in the first quarter of 2026 was 22.9%, compared to 29.7% in the same period last year."
Gross margin is the difference between how much money a company makes from selling its products and how much it costs to produce them, expressed as a percentage of sales. It shows how efficiently a company is turning sales into profit before other expenses like marketing or salaries. Higher gross margin means the company keeps more money from each sale, which is a good sign of financial health.
Adjusted EBITDA financial
"Adjusted EBITDA * | | $ | 13,875 | | | $ | 26,069 | | | $ | (12,194) | | | (47) | %"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Revolving Credit Agreement financial
"Total debt as of March 31, 2026 included borrowings of $95.0 million under the Company’s Revolving Credit Agreement."
A revolving credit agreement is a flexible loan arrangement where a borrower can borrow, repay, and borrow again up to a set limit, similar to a credit card. It matters because it gives businesses or individuals quick access to funds whenever needed, helping manage cash flow and cover expenses without applying for a new loan each time.
Non-GAAP financial measures financial
"In addition to the results provided in accordance with U.S. GAAP above, this report also includes non-GAAP (adjusted) financial measures."
Non-GAAP financial measures are numbers companies use to show their financial performance that exclude certain expenses or income. They help investors see how the company might perform without one-time costs or other unusual items, giving a different perspective from official reports. However, since they can be adjusted, they don’t always tell the full story and should be looked at alongside standard financial figures.
Stock-based compensation financial
"Amounts reflect non-cash stock-based compensation expense for the three months ended March 31, 2026 and 2025."
Stock-based compensation is when a company pays employees, directors or consultants with shares or the right to buy shares instead of or in addition to cash. It matters to investors because issuing stock or options spreads ownership thinner (like cutting a pie into more slices), which can reduce each existing share’s claim on profits and can also change reported earnings; investors watch it to assess true cost of running the business and how management is incentivized.
Capacity ramp-up activities financial
"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."
Earnings Snapshot
Net sales: $128.6 million · Guidance included
Q1 2026
Net sales
$128.6 million
-5% year over year
Net income
$7.3 million
-62% year over year
Diluted EPS
$0.32
down from $0.83 in Q1 2025
Gross margin
22.9%
down from 29.7% in Q1 2025
Adjusted EBITDA
$13.9 million
down from $26.1 million in Q1 2025
Guidance
The company expects Q2 2026 revenue to be generally consistent with Q1 2026 and anticipates stronger sales in the second half of 2026, approximately in line with the second half of 2025, driven by larger Power Systems orders.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 8-K
___________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): May 11, 2026
___________________________________
(Exact name of registrant as specified in its charter)
___________________________________
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
(Address of principal executive offices and zip code) | ||||||||
Registrant's telephone number, including area code: ( | ||||||||
___________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 - Regulation FD Disclosure
On May 11, 2026, Power Solutions International, Inc. (the “Company”) issued a press release announcing first quarter 2026 financial results and containing its outlook for 2026.
In accordance with General Instruction B.2. of Form 8-K, the information contained under Item 2.02 in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and will not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 9.01 - Financial Statements and Exhibits.
(d): The following exhibits are being filed herewith:
Exhibit No. | Description | |||||||
99.1 | Press Release of Power Solutions International, Inc., dated May 11, 2026 | |||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on this 11th day of May, 2026.
POWER SOLUTIONS INTERNATIONAL, INC. | |||||
By: | /s/ Xun Li | ||||
Xun Li | |||||
Chief Financial Officer | |||||
Exhibit 99.1Power Solutions International Announces First Quarter 2026 Financial Results
First Quarter Net Sales of $128.6 million
First Quarter Net Income of $7.3 million
Diluted EPS of $0.32 for the Quarter
WOOD DALE, Ill., May 11, 2026 – Power Solutions International, Inc. (the “Company” or “PSI”) (Nasdaq: PSIX), a leader in the design, engineering and manufacture of emission-certified engines and power systems, today announced its financial results for the first quarter of 2026.
Financial Highlights
| ($ in millions, except per share amounts) | March 31, 2026 | March 31, 2025 | Change | ||||||||
| Net Sales | $128.6 | $135.4 | (5)% | ||||||||
| Gross Profit | $29.4 | $40.3 | (27)% | ||||||||
| Net Income | $7.3 | $19.1 | (62)% | ||||||||
| Diluted Earnings per Share | $0.32 | $0.83 | $(0.51) | ||||||||
Dino Xykis, Chief Executive Officer, said: “Our first quarter results were below the strong prior-year period, which had benefited from significant growth in our Power Systems business. The year-over-year declines in sales and profitability primarily reflected softer oil and gas demand, the timing of certain Power Systems shipments, and elevated production costs associated with the capacity ramp-up in our Wisconsin operations.
At the same time, demand related to data center applications remains solid. Gross margin improved sequentially from the fourth quarter of 2025, partially offset by unfavorable product mix.”
First Quarter 2026 Results
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 million in 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. The Company continues to see strong demand for data center power solutions, and expects sales to increase in the second half of 2026. 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.
Gross profit for the first quarter of 2026 was $29.4 million, a decrease 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.
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.
Selling, general and administrative expenses were $13.0 million during the first quarter of 2026, an increase 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.
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.
Income tax expense was $2.4 million in the first quarter of 2026, compared to $3.8 million in the same period of the prior year. The decrease was primarily driven by lower pre-tax income in 2026, partially offset by a higher effective tax rate.
Balance Sheet Update
The Company’s cash and cash equivalents were approximately $45.1 million, and total debt was approximately $103.4 million, as of March 31, 2026. This compares to cash and cash equivalents of approximately $41.3 million and total debt of approximately $96.8 million as of December 31, 2025. Total debt as of March 31, 2026 included borrowings of $95.0 million under the Company’s Revolving Credit Agreement.
Outlook for 2026
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.
About Power Solutions International, Inc.
Power Solutions International, Inc. (PSI) is a leader in the design, engineering and manufacture of a broad range of advanced, emission-certified engines and power systems. PSI provides integrated turnkey solutions to leading global original equipment manufacturers and end-user customers within the power systems, industrial and transportation end markets. The Company’s in-house design, prototyping, engineering and testing capabilities allow PSI to customize high-performance engines using a fuel-agnostic strategy to run on a wide variety of fuels, including natural gas, propane, gasoline, diesel and biofuels.
PSI develops and delivers complete power systems that are used worldwide in stationary and mobile power generation applications supporting standby, prime, demand response, and microgrid solutions, as well as products and packages supporting the growing data center markets. PSI’s industrial end market provides engine and battery powertrain solutions to serve applications such as forklifts, agricultural and turf, arbor care, industrial sweepers, aerial lifts, irrigation pumps, ground support, and construction
equipment. PSI’s transportation end market provides engine powertrain solutions to specialized applications such as terminal tractors, port equipment, military vehicles, and other non-road vocational vehicles. For more information on PSI, visit www.psiengines.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect the Company’s current expectations and assumptions regarding future events. Words such as “anticipate,” “believe,” “budget,” “contemplate,” “continue,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “outlook,” “plan,” “position,” “project,” “prospect,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in or implied by such statements.
Important factors that could cause actual results to differ materially include, without limitation: the timing and ultimate conversion of Power Systems orders into revenue, including data-center-related orders, and the volume and timing of related shipments; quarterly variability in product mix and the corresponding effect on gross profit and gross margin; the cost, pace, throughput and operational outcomes of capacity ramp-up activities at the Company’s Wisconsin operations, including the duration and magnitude of related production costs; the level and persistence of customer demand in the power systems, industrial and transportation end markets; volatility in oil and gas prices and corresponding demand for related products; supply-chain disruptions, component availability and supplier performance; macroeconomic, regulatory and trade conditions, including U.S. tariffs and trade restrictions; integration of recent and future acquisitions, including the acquisition of MTL Manufacturing and Equipment; the outcome of pending or threatened litigation and regulatory inquiries, including the previously disclosed putative federal securities class action; changes in management or other personnel, including the timing of any related disclosures; the ability to recruit and retain key employees; the impact of changes in our effective tax rate or applicable tax legislation; and the other risks and uncertainties described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and in the Company’s subsequent filings with the U.S. Securities and Exchange Commission, all of which are incorporated by reference into this press release.
The Company’s forward-looking statements speak only as of the date of this filing. Except as required by law, the Company expressly disclaims any intention or obligation to revise or update any forward-looking statement, whether as a result of new information, future events or otherwise. Investors are cautioned not to place undue reliance on any forward-looking statements.
Contact
Power Solutions International, Inc.
Kenneth Li
Chief Financial Officer
630-284-9719
kli@psiengines.com
Results of operations for the three months ended March 31, 2026 compared with the three months ended March 31, 2025 (UNAUDITED):
| (in thousands, except per share amounts) | For the Three Months Ended March 31, | |||||||||||||||||||||||||
| 2026 | 2025 | Change | % Change | |||||||||||||||||||||||
Net sales (to related parties $9 and $464 for the three months ended March 31, 2026 and 2025, respectively) | $ | 128,592 | $ | 135,446 | $ | (6,854) | (5) | % | ||||||||||||||||||
Cost of sales (derived from related party net sales $5 and $316 for the three months ended March 31, 2026 and 2025, respectively) | 99,168 | 95,152 | 4,016 | 4 | % | |||||||||||||||||||||
| Gross profit | 29,424 | 40,294 | (10,870) | (27) | % | |||||||||||||||||||||
| Gross margin % | 22.9 | % | 29.7 | % | (6.8) | % | ||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Research and development expenses | 4,805 | 4,244 | 561 | 13 | % | |||||||||||||||||||||
| Research and development expenses as a % of sales | 3.7 | % | 3.1 | % | 0.6 | % | ||||||||||||||||||||
| Selling, general and administrative expenses | 12,977 | 11,109 | 1,868 | 17 | % | |||||||||||||||||||||
| Selling, general and administrative expenses as a % of sales | 10.1 | % | 8.2 | % | 1.9 | % | ||||||||||||||||||||
| Amortization of intangible assets | 249 | 307 | (58) | (19) | % | |||||||||||||||||||||
| Total operating expenses | 18,031 | 15,660 | 2,371 | 15 | % | |||||||||||||||||||||
| Operating income | 11,393 | 24,634 | (13,241) | (54) | % | |||||||||||||||||||||
| Other expense (income), net: | ||||||||||||||||||||||||||
Interest expense (from related parties $0 and $415 for the three months ended March 31, 2026 and 2025, respectively) | 1,745 | 1,766 | (21) | (1) | % | |||||||||||||||||||||
| Other expense (income) | (85) | — | (85) | NM | ||||||||||||||||||||||
| Total other expense, net | 1,660 | 1,766 | (106) | (6) | % | |||||||||||||||||||||
| Income before income taxes | 9,733 | 22,868 | (13,135) | (57) | % | |||||||||||||||||||||
| Income tax expense | 2,433 | 3,786 | (1,353) | (36) | % | |||||||||||||||||||||
| Net income | $ | 7,300 | $ | 19,082 | $ | (11,782) | (62) | % | ||||||||||||||||||
| Earnings per common share: | ||||||||||||||||||||||||||
| Basic | $ | 0.32 | $ | 0.83 | $ | (0.51) | (61) | % | ||||||||||||||||||
| Diluted | $ | 0.32 | $ | 0.83 | $ | (0.51) | (61) | % | ||||||||||||||||||
| Non-GAAP Financial Measures: | ||||||||||||||||||||||||||
| Adjusted net income * | $ | 8,005 | $ | 19,235 | $ | (11,230) | (58) | % | ||||||||||||||||||
| Adjusted net income per share – diluted* | $ | 0.36 | $ | 0.83 | (0.47) | (57) | % | |||||||||||||||||||
| EBITDA * | $ | 13,170 | $ | 25,916 | $ | (12,746) | (49) | % | ||||||||||||||||||
| Adjusted EBITDA * | $ | 13,875 | $ | 26,069 | $ | (12,194) | (47) | % | ||||||||||||||||||
NM Not meaningful
* See reconciliation of non-GAAP financial measures to GAAP results below
POWER SOLUTIONS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| (in thousands, except par values) | As of March 31, 2026 (unaudited) | As of December 31, 2025 | ||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 45,089 | $ | 41,250 | ||||||||||
| Restricted cash | 4,448 | 3,698 | ||||||||||||
Accounts receivable, net of allowances of $1,399 and $967 as of March 31, 2026 and December 31, 2025, respectively; (from related parties $200 and $415 as of March 31, 2026 and December 31, 2025, respectively) | 73,690 | 90,446 | ||||||||||||
| Income tax receivable | 5,348 | 6,442 | ||||||||||||
| Inventories, net | 129,243 | 127,363 | ||||||||||||
| Prepaid expenses | 4,293 | 4,500 | ||||||||||||
| Contract assets | 11,567 | 15,965 | ||||||||||||
| Other current assets | 1,152 | 1,256 | ||||||||||||
| Total current assets | 274,830 | 290,920 | ||||||||||||
| Property, plant and equipment, net | 32,281 | 23,014 | ||||||||||||
| Operating lease right-of-use assets, net | 61,164 | 52,911 | ||||||||||||
| Intangible assets, net | 1,607 | 1,236 | ||||||||||||
| Goodwill | 34,921 | 29,835 | ||||||||||||
| Deferred tax assets | 12,188 | 13,322 | ||||||||||||
| Customs-related deposits | 13,148 | 12,893 | ||||||||||||
| Other noncurrent assets | 543 | 614 | ||||||||||||
| TOTAL ASSETS | $ | 430,682 | $ | 424,745 | ||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
Accounts payable (to related parties $3,300 and $4,126 as of March 31, 2026 and December 31, 2025, respectively) | $ | 42,544 | $ | 48,196 | ||||||||||
| Current maturities of long-term debt | 1,804 | 28 | ||||||||||||
| Finance lease liability, current | 364 | 355 | ||||||||||||
| Operating lease liability, current | 7,351 | 6,346 | ||||||||||||
Other accrued liabilities (to related parties $88 and $60 as of March 31, 2026 and December 31, 2025, respectively) | 28,310 | 37,353 | ||||||||||||
| Total current liabilities | 80,373 | 92,278 | ||||||||||||
| Long-term debt, net of current maturities | 5,050 | 10 | ||||||||||||
| Revolving line of credit, long-term | 95,000 | 95,000 | ||||||||||||
| Finance lease liability, long-term | 1,223 | 1,224 | ||||||||||||
| Operating lease liability, long-term | 55,628 | 49,397 | ||||||||||||
| Noncurrent contract liabilities | 1,666 | 1,699 | ||||||||||||
| Other noncurrent liabilities | 5,965 | 6,528 | ||||||||||||
| TOTAL LIABILITIES | $ | 244,905 | $ | 246,136 | ||||||||||
| STOCKHOLDERS’ EQUITY | ||||||||||||||
Common stock – $0.001 par value; 50,000 shares authorized; 23,117 shares issued; 23,051 and 23,041 shares outstanding at March 31, 2026 and December 31, 2025, respectively | 23 | 23 | ||||||||||||
| Additional paid-in capital | 157,878 | 157,602 | ||||||||||||
| Retained earnings | 29,776 | 22,476 | ||||||||||||
Treasury stock, at cost, 66 and 76 shares at March 31, 2026 and December 31, 2025, respectively | (1,900) | (1,492) | ||||||||||||
| TOTAL STOCKHOLDERS’ EQUITY | 185,777 | 178,609 | ||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 430,682 | $ | 424,745 | ||||||||||
POWER SOLUTIONS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| (in thousands) | For the Three Months Ended March 31, | |||||||||||||
| 2026 | 2025 | |||||||||||||
| Cash flows from operating activities | ||||||||||||||
| Net income | $ | 7,300 | $ | 19,082 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Amortization of intangible assets | 249 | 307 | ||||||||||||
| Depreciation | 1,443 | 975 | ||||||||||||
| Noncash lease expense | 1,439 | 1,684 | ||||||||||||
| Stock-based compensation expense | 424 | 153 | ||||||||||||
| Amortization of financing fees | 151 | 165 | ||||||||||||
| Deferred income taxes | 1,134 | — | ||||||||||||
| Provision (credit) for losses in accounts receivable | 432 | (37) | ||||||||||||
| Increase in allowance for inventory obsolescence, net | 405 | 206 | ||||||||||||
| Other adjustments, net | 111 | 33 | ||||||||||||
| Changes in operating assets and liabilities, net of effects of business combinations: | ||||||||||||||
| Accounts receivable | 17,137 | (12,619) | ||||||||||||
| Inventories | 339 | (19,294) | ||||||||||||
| Prepaid expenses | 207 | 33 | ||||||||||||
| Contract assets | 4,398 | 4,077 | ||||||||||||
| Other assets | (133) | 1,571 | ||||||||||||
| Accounts payable | (4,316) | 7,014 | ||||||||||||
| Income taxes receivable | 1,094 | 986 | ||||||||||||
| Accrued expenses | (10,434) | 9,272 | ||||||||||||
| Other noncurrent liabilities | (2,250) | (4,797) | ||||||||||||
| Net cash provided by operating activities | 19,130 | 8,811 | ||||||||||||
| Cash flows from investing activities | ||||||||||||||
| Capital expenditures | (1,890) | (3,403) | ||||||||||||
| Business acquisition | (11,911) | — | ||||||||||||
| Net cash used in investing activities | (13,801) | (3,403) | ||||||||||||
| Cash from financing activities | ||||||||||||||
| Repayment of long-term debt and lease liabilities | (180) | (98) | ||||||||||||
| Repayment of short-term financings | — | (10,000) | ||||||||||||
| Repurchases to settle tax withholding obligations for stock-based compensation awards | (556) | (142) | ||||||||||||
| Other financing activities, net | (4) | — | ||||||||||||
| Net cash used in financing activities | (740) | (10,240) | ||||||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 4,589 | (4,832) | ||||||||||||
| Cash, cash equivalents, and restricted cash at beginning of the period | 44,948 | 58,491 | ||||||||||||
| Cash, cash equivalents, and restricted cash at end of the period | $ | 49,537 | $ | 53,659 | ||||||||||
Non-GAAP Financial Measures
In addition to the results provided in accordance with U.S. GAAP above, this report also includes non-GAAP (adjusted) financial measures. Non-GAAP financial measures provide insight into selected financial information and should be evaluated in the context in which they are presented. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP, and non-GAAP financial measures as reported by the Company may not be comparable to similarly titled amounts reported by other companies. The non-GAAP financial measures should be considered in conjunction with the consolidated financial statements, including the related notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this report. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated below.
| Non-GAAP Financial Measure | Comparable GAAP Financial Measure | ||||
| Adjusted net income | Net income | ||||
| Adjusted net income per share – diluted | Net income per share – diluted | ||||
| EBITDA | Net income | ||||
| Adjusted EBITDA | Net income | ||||
The Company believes that Adjusted net income, Adjusted net income per share – diluted, EBITDA, and Adjusted EBITDA provide relevant and useful information, which is widely used by analysts, investors and competitors in its industry as well as by the Company’s management in assessing the performance of the Company. Adjusted net income is defined as net income as adjusted for certain items that the Company believes are not indicative of its ongoing operating performance. Adjusted net income per share – diluted is a measure of the Company’s diluted earnings per common share adjusted for the impact of special items. EBITDA provides the Company with an understanding of earnings before the impact of investing and financing charges and income taxes. Adjusted EBITDA further excludes the effects of other non-cash charges and certain other items that do not reflect the ordinary earnings of the Company’s operations.
Adjusted net income, Adjusted net income per share – diluted, EBITDA, and Adjusted EBITDA are used by management for various purposes, including as a measure of performance of the Company’s operations and as a basis for strategic planning and forecasting. Adjusted net income, Adjusted net income per share – diluted, and Adjusted EBITDA may be useful to an investor because these measures are widely used to evaluate companies’ operating performance without regard to items excluded from the calculation of such measures, which can vary substantially from company to company depending on the accounting methods, the book value of assets, the capital structure and the method by which the assets were acquired, among other factors. They are not, however, intended as alternative measures of operating results or cash flow from operations as determined in accordance with U.S. GAAP.
The following table presents a reconciliation from Net income to Adjusted net income for the three months ended March 31, 2026 and 2025:
| (in thousands) | For the Three Months Ended March 31, | |||||||||||||
| 2026 | 2025 | |||||||||||||
| Net income | $ | 7,300 | $ | 19,082 | ||||||||||
Stock-based compensation 1 | 424 | 153 | ||||||||||||
Severance 2 | 134 | — | ||||||||||||
Other legal matters 3 | 147 | — | ||||||||||||
| Adjusted net income | $ | 8,005 | $ | 19,235 | ||||||||||
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:
| For the Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net income per share – diluted | $ | 0.32 | $ | 0.83 | ||||||||||
Stock-based compensation 1 | 0.02 | — | ||||||||||||
Severance 2 | 0.01 | — | ||||||||||||
Other legal matters 3 | 0.01 | — | ||||||||||||
| Adjusted net income per share – diluted | $ | 0.36 | $ | 0.83 | ||||||||||
| Diluted shares (in thousands) | 23,063 | 23,061 | ||||||||||||
The following table presents a reconciliation from Net income to EBITDA and Adjusted EBITDA for the three months ended March 31, 2026 and 2025:
| (in thousands) | For the Three Months Ended March 31, | |||||||||||||
| 2026 | 2025 | |||||||||||||
| Net income | $ | 7,300 | $ | 19,082 | ||||||||||
| Interest expense | 1,745 | 1,766 | ||||||||||||
| Income tax expense | 2,433 | 3,786 | ||||||||||||
| Depreciation | 1,443 | 975 | ||||||||||||
| Amortization of intangible assets | 249 | 307 | ||||||||||||
| EBITDA | 13,170 | 25,916 | ||||||||||||
Stock-based compensation 1 | 424 | 153 | ||||||||||||
Severance 2 | 134 | — | ||||||||||||
Other legal matters 3 | 147 | — | ||||||||||||
| Adjusted EBITDA | $ | 13,875 | $ | 26,069 | ||||||||||
1.Amounts reflect non-cash stock-based compensation expense for the three months ended March 31, 2026 and 2025.
2.Amounts include severance expense for the three months ended March 31, 2026.
3.Amounts include legal settlements for the three months ended March 31, 2026.
FAQ
How did Power Solutions International (PSIX) perform financially in Q1 2026?
Power Solutions International reported weaker results in Q1 2026 versus 2025. Net sales were $128.6 million, down 5%, while net income dropped 62% to $7.3 million. Diluted EPS declined from $0.83 to $0.32 as margins compressed and operating expenses increased.
What drove the revenue and margin changes for PSIX in the first quarter of 2026?
Lower power systems revenue and higher production costs drove the change. Sales fell mainly from softer oil and gas demand and uneven data center orders. Gross margin declined from 29.7% to 22.9% due to product mix and elevated Wisconsin capacity ramp-up costs.
What guidance or outlook did Power Solutions International (PSIX) provide for 2026?
The company is not issuing formal full-year 2026 guidance. Management expects second-quarter 2026 revenue to be generally consistent with the first quarter and anticipates stronger sales in the second half, approximately in line with the second half of 2025, depending on order timing and operations.
How did PSIX’s non-GAAP metrics like Adjusted EBITDA change in Q1 2026?
Non-GAAP profitability metrics declined significantly. Adjusted EBITDA fell to $13.9 million from $26.1 million, while adjusted net income decreased to $8.0 million from $19.2 million. These measures exclude stock-based compensation, severance and certain legal costs.
What is Power Solutions International’s (PSIX) liquidity and debt position as of March 31, 2026?
Liquidity improved modestly while debt increased. Cash and cash equivalents were $45.1 million and total debt was $103.4 million, including $95.0 million under the revolving credit agreement. Operating cash flow of $19.1 million supported the higher cash balance.
Which end markets are most affecting PSIX’s performance in 2026?
Power systems and oil and gas are key swing factors. Lower power systems sales, especially tied to oil and gas and uneven data center orders, hurt Q1 2026 results. Industrial and transportation end markets saw modest growth, partially offsetting the decline.