PSI sees 1Q sales drop amid soft markets

WOOD DALE - Power Solutions International reported net sales for the first quarter of 2016 declined as a result of a weaker oil and gas end market.

Net sales for the first quarter of 2016 were $61.8 million, compared to $86.1 million in the first quarter of 2015. The sales decline in the quarter compared to the first quarter of 2015 was primarily driven by a reduction of approximately $25.6 million from the oil and gas end market partially offset by increased sales in the quarter of approximately $5.4 million in the Company's on-road end market.

Operating loss of $8.7 million in the quarter compares to operating income of $4.1 million in the first quarter of 2015 and operating loss of $738,000 in the fourth quarter of 2015. In 2015, operating expenses included transaction costs of approximately $200,000 ($120,000 after tax or $0.01 per diluted common share) and $393,000 ($236,000 after tax or $0.02 per diluted common share) for the first and fourth quarters, respectively. Operating expense in the first quarter of 2016 did not include any such transaction costs.

"Our first quarter revenues were in line with our expectations and reflected the continued softness in the oil and gas end market," said CEO Gary Winemaster. "We expect improvements throughout 2016, particularly in the second half where we anticipate an increased ramp up of on-road volume and a greater contribution from power generation.

"We've made meaningful progress with our balance sheet and gained financial flexibility with an amendment to our debt," Winemaster added. "Since the fourth quarter of 2015, we've lowered our operating expenses, while at the same time increasing R&D to support the success of our on-road initiatives. We remain enthusiastic in our ability to achieve growth in this valuable end market in 2016 and well into the future. Further, we reiterate our prior revenue guidance which includes profitability for the full year."