Pioneer Power Solutions, Inc. reported a decline in financial performance for the three and nine months ended September 30, 2024, compared to the same periods in 2023. Revenues for the third quarter were $10.9 million, down 4.7% from $11.5 million in Q3 2023. For the nine months, revenues decreased by 22.4% to $25.8 million from $33.3 million in the prior year. The decline was primarily attributed to a significant drop in the Electrical Infrastructure segment, which saw revenues fall by 48.1% in Q3 and 48.8% for the nine months, while the Critical Power Solutions segment experienced a substantial revenue increase of 129.8% in Q3 and 55.4% for the nine months.

Gross profit also decreased sharply, with Q3 gross profit at $2.1 million, down 44.1% from $3.7 million in 2023. For the nine months, gross profit fell to $4.4 million, a 57.3% decline from $10.4 million. The gross margin for Q3 decreased to 18.9% from 32.3% in the previous year, reflecting challenges in the Electrical Infrastructure segment, which reported a gross margin drop to 12.1%.

Operating losses were reported at $(1.1) million for Q3 2024, compared to an operating income of $940,000 in Q3 2023. For the nine months, the operating loss was $(4.5) million, down from an operating income of $2.4 million in the same period last year. The increase in total operating expenses, which rose to $3.2 million in Q3 from $2.8 million in 2023, contributed to the losses.

Net losses for the three months ended September 30, 2024, were $(1.1) million, compared to net income of $1.0 million in Q3 2023. For the nine months, net losses totaled $(4.4) million, a stark contrast to net income of $2.6 million in the same period of 2023. Basic net loss per share for Q3 2024 was $(0.10), compared to earnings of $0.10 per share in Q3 2023.

As of September 30, 2024, total current assets increased to $31.5 million from $27.7 million at the end of 2023, while total liabilities rose to $22.4 million from $18.3 million. The company reported a backlog of $66.2 million, significantly up from $33.4 million a year earlier, indicating potential future revenue growth.

In a strategic development, Pioneer Power Solutions sold its subsidiary, Pioneer Custom Electrical Products, LLC, for $50 million in cash and equity on October 29, 2024. The company plans to utilize the proceeds to support its operations and capital improvements. Additionally, the company is addressing material weaknesses in its internal controls, particularly in revenue recognition and inventory accounting, by engaging external assistance and planning to hire more qualified personnel.