Good day, ladies and gentlemen and welcome to the Pioneer Power Solutions 2022 First Quarter Financial Results Conference Call. I would now like to turn the conference over to Mr. Brett Maas of Hayden IR. Please go ahead.

Thank you and welcome. The call today will be hosted by Nathan Mazurek, Chairman and Chief Executive Officer; Walter Michalec, Chief Financial Officer; and also on the call today is Geo Murickan, President of the company's recently launched Pioneer Power Mobility business Unit. Following this discussion, there will be a Q&A session open to the participants on the call. We appreciate the opportunity to review the first quarter of 2022 financial results as well as discuss recent business highlights. Before we get started, let me remind you this call is being recorded and webcast. During this call, management will make forward-looking statements. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the cautionary text regarding forward-looking statements contained in the earnings release issued earlier today and in the posted version of these prepared remarks, both of which apply to the content of the call. I would now like to turn the call over to Nathan Mazurek, Chairman and CEO. Nathan, please go ahead.

Thank you, Brett. Good afternoon and thank you all for joining us today for our conference call. 2022 is off to an excellent start. Following the sale of our transformer business in August of 2019, we shifted our strategy to focus on 2 significant, durable, secular tailwinds: Distributed generation and electric vehicle charging infrastructure. This shift was deliberate and calculated, designed to leverage our engineering, technical and marketing capabilities most profitably within the electrical equipment landscape. This business shift has indeed unfolded as we had anticipated. The opportunities related to distributed generation and electric vehicle charging are both significantly manifesting themselves, as reflected by our vastly improved financial results for the first quarter of 2022. Our revenue for the quarter was up more than 70% year-over-year and sequentially as well. In addition, our backlog increased sequentially and year-over-year to the highest level in more than 30 months, even as we grew our top line by over 70%. This growth reflects only the initial phase for our new solutions. We believe that as demand continues to grow and combined with our current backlog, we are confident that we will increase our revenue by at least 50% in 2022, with E-Boost and e-Bloc becoming increasingly relevant to our consolidated results as the year progresses. In addition, in the first quarter, the increased volume, combined with improved manufacturing productivity, resulted in gross margins expanding to over 14% from 4.5% last year. Finally, the increases in revenue and margin were achieved despite continued supply chain challenges in both pricing and availability. These headwinds compressed our ability to achieve even higher sales and margins in the first quarter. As I mentioned earlier, our strategic shift was predicated on 2 durable secular catalyst. The first trend is the exponential growth in the last 10 years of…

Thank you, Nathan and good afternoon, everyone. Revenues were $6 million in the first quarter of 2022, up 72.4% year-over-year and up approximately 72% sequentially compared to the fourth quarter of 2021. As Nathan indicated, the first quarter results benefited from the significant contribution of e-Bloc sales as well as our first E-Boost sale. Continued supply chain disruptions are having an impact on our results but we were successful in mitigating the impact during the first quarter. Gross profit for the first quarter of 2022 was $875,000 or a 14.5% gross margin compared to $159,000 or a 4.5% gross margin for the year ago period. The increase in gross profit and improvement in gross margin was primarily due to higher volume, enabling greater capacity utilization, overall improvements in productivity and the delivery of our first E-Boost unit. This was partially offset by higher input costs as a result of global supply chain challenges, a tighter labor market and inflationary pressures. Selling, general and administrative expenses of $1.7 million were 29% of revenues for the first quarter of 2022, an increase of $481,000 when compared to $1.3 million in the year ago quarter. Operating loss during the first quarter of 2022 narrowed by $235,000 to $871,000 as compared to an operating loss of $1.1 million during the same period in 2021, even as the company increased selling, general and administrative expenses to support its expected continued growth. Net loss for the first quarter of 2022 was $788,000 or negative $0.08 per share compared to net income of $351,000 or 4% -- $0.04 per share during the first quarter of 2021. Please note, during the first quarter of last year, we recognized a $1.4 million gain in other income on the forgiveness of our PPP loan. Adjusting for this onetime gain and…

Our first question comes from Amit Dayal of H.C. Wainwright.

Nathan, so with respect to the 62 e-Blocs, what's the deployment time line? Can you remind us, please? And has there been any change to this? I know you started in maybe this quarter. Are you looking to complete this by the end of the year? Or will that go into maybe early 2023?

So our plan is to -- I don't want to say 100% but pretty much 100% completed this year. The user, the ultimate destination is a little slower receiving or being ready to receive the product than they originally anticipated. Probably the bulk of them will go in the third quarter. There may be some hangover into the fourth quarter but I would be very surprised if there was anything for 2023.

Understood. And then sort of with this time line, how should we think about quarterly revenue performance? I guess from a sequential perspective, it looks like 3Q could be stronger for you compared to maybe 2Q or even 4Q. Any...

Yes. Go ahead. I'm sorry.

Yes, I was just trying to get sort of a sense of the cadence for the rest of the year.

Yes. I think the cadence is going to be that, as best as I can tell, second quarter would be similar, up somewhat over the first quarter but at similar performance to the first quarter and with the third and the fourth quarter with more outsized type performance.

Okay. And then just from a preparedness perspective, given all the supply chain issues, are you comfortable with how you have your sort of inventory, et cetera, to deliver these 62 units?

Yes. I mean we secured all the prime materials in advance, especially for the large contracts that we have and the users there were extremely helpful in advancing funds, so that we were able to, whether by deposit or by outright purchase, have almost everything. But like everybody is complaining about, it's a $300 current transformer or some sort of push button that delays the larger jobs. But we've been managing through it. And I think it compressed us a little bit in the first quarter and will compress us a little bit in the second quarter. But I don't see any other big changes for the rest of 2022.

And then just last one, Nathan. As some of your deliveries into the end of the year, should we expect gross margin improvements to also start coming through?

That's -- you should expect it because we expect it. So yes.

And this time, it appears that we have no further questions. I'll now turn it back over to Mr. Mazurek for any closing remarks.

All right. Thank you, Ian. Thank you all for your time and support. This was an exciting start to the year and we believe we have significant opportunities to further grow in 2022. We look forward to updating you again on our next call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.