Greetings and welcome to the Pioneer’s 2023 Third Quarter Financial Results. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Brett Maas from Hayden IR. Thank you Mr. Moss. You may begin.

Thank you and welcome. The call today is being hosted by Nathan Mazurek, Chairman and Chief Executive Officer, and Walter Michalec, Chief Financial Officer. Following this discussion, there will be a formal Q&A session over the participants on the call. We appreciate the opportunity to review the third quarter financial results and discuss recent business highlights. Before we get started, let me remind you this call is being recorded and webcast. During the call, management may make forward-looking statements. These statements will be based on the 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, which applies to the content of the call. I would like to now turn the call over to Nathan Mazurek, Chairman and CEO. Nathan, please go ahead.

Thank you, Brett. Good morning and thank you all for joining us today. We also have Geo Murickan, President of Pioneer's eMobility business, essentially our eBoost business, on the call as well. The quarter's financial results included a doubling of revenue and strong profitability, demonstrating the value of Pioneer's products and services, as well as a reflection of the underlying strength of our target markets. Revenue of $12.4 million for the third quarter is a record, since divesting our Transformer business in 2019. Higher sales, lower input costs, and a favorable product mix drove net earnings to $0.10 a share, up from a loss of $0.13 a share a year ago in the third quarter of 2022. We expect to achieve our full-year revenue guidance as well as positive net income for the full year 2023. We also expect to enter 2024 with accelerating momentum and a record backlog and plan to announce more formal guidance for 2024 early in the New Year. Our outdoor compact E-Bloc power solution for the distributed generation market and our e-Boost high-speed mobile electric charging suite of products continue to penetrate new markets and gain additional traction in currently served markets. First, E-Bloc continues to benefit from the rapid growth of the distributed generation market. Raw demand for electricity continues to grow and the grid's ability to satisfy this growth continues to decline. The result is accelerating power usage, higher power costs, and reduced reliability and supply of power. The E-Bloc product platform at its core integrates an automatic transfer switch, circuit protection scheme, and programmable controls into a compact outdoor unit. This allows the user to protect and control two or more sources of power concurrently, potentially even in parallel, located in one unitized piece of equipment. This limits the user's installation cost,…

Thank you, Nathan, and good morning, everyone. Pioneer's revenue during the third quarter was a record since divesting its transformer business in August of 2019. Third quarter revenues were $12.4 million, up $6.2 million or 99% when compared to the same period of last year. Revenue from the T&D solution segment, which manufactures our E-Bloc power systems and related equipment, increased 156% to $9.7 million. And revenue from the critical power segment, which manufactures our mobile high-speed electric charging solution e-Boost, was up nearly 13% to $2.8 million in the comparable period. Gross profit for the third quarter was $3.7 million or nearly 30% of revenues compared to a gross profit of $861,000 or approximately 14% of revenues during the third quarter of last year. This significant improvement to gross profit was primarily due to the increase in sales of our E-Bloc power systems and related equipment, lower input costs, and improved productivity. Total operating expenses or SG&A overhead was $2.7 million or 22% of revenues during the third quarter of this year, an increase of 20% when compared to $2.3 million in the year-ago quarter. It's important to note that SG&A expense includes approximately $600,000 in incremental investments in sales, marketing, product development, and personnel expense for our e-Boost solution, a drag of about $0.06 per share on EPS. This is intentional and targeted spending designed to drive demand for this new solution. We expect these investments to continue through the remainder of the year as we build and scale this new business line. Finally, higher wage costs including salaries, benefits, and stock-based compensation caused SG&A expense to increase during the third quarter of this year when compared to the same period of last year. Operating income for the third quarter of this year was $953,000, a positive swing…

Thank you, Walter. Our addressable markets are massive and almost every day new use cases from current and potential customers emerge. The energy transition era is real and Pioneer is at the forefront of it, offering proven and competitive solutions. With that, I will now turn the call over to the operator for any questions from investors.

Thank you. [Operator Instructions] The first question comes from the line of Amit Dayal with H.C. Wainwright. Please go ahead.

Thank you. Good morning, everyone. Thank you for taking my questions.

Good morning, Amit.

The available capacity -- congrats on the strong quarter, by the way. We did $12.1 million last quarter, $12.4 million this quarter. Is this indicative of you guys potentially, at these revenue levels?

You know what the guidance we gave for the balance of the year. It's going to be, I think, somewhere in the $9 to $12 million range. It really depends. We're not deep enough in the quarter yet. Depends who's taking, who's not, some stuff that we move up that we constantly are in flux with certain customers, especially electrical utilities. But that's a decent range. We haven't come out with guidance for 2024 yet. And that, I think, will give it more, our fourth quarter will be done by then, and we'll also be looking early in 2024 out for the whole year. So we'll get a little bit of a better look. We're still a small company. So, one or two jobs at $2 million plus each, slipping or accelerating, make a difference. I wouldn't -- short answer is I wouldn't read that much into it. We kind of try to do our best job on an annual basis, and the quarters are going to be a little bit uneven still.

Understood. I appreciate that. And on the e-Boost side, Nathan, you said you potentially could quadruple revenues for this segment. Will that potentially come on the sacrifice of any E-Bloc capacity or revenues? Or is this basically on a standalone basis you could quadruple from these levels on the e-Boost side?

Yes. Good question. I mean, they're made in two different facilities. So the e-Boost is done in our facility in Minneapolis, and that can be done without any additional space or without any additional capital investment. That would probably take us to the max there for calendar 2024. And during the course of 2024, even now, we're trying to figure out, what happens afterwards. But that doesn't do it -- that doesn't affect the E-Bloc business. The E-Bloc business this year, or its related product, out of the facility in Los Angeles, let's say by the end of the year, will have shipped in product, I don't know, $35-ish million, give or take. That's pushing the capacity to almost statistical 100%. And we get asked all the time, what are we going to do for 2024? So we're already in the process of really subcontracting the lowest value processes that we do, basic sheet metal or standardized sheet metal, even busbar, without making a large capital investment so that we can use the facility and the personnel in its highest and best use, which is really to engineer, wire, and assemble and test E-Bloc-type product.

Understood. Okay. Thank you. And there's this last one, again, on maybe the e-Boost side. These customers and folks who are coming back to you for repeat orders, is there a larger runway within these existing customers before you even need to maybe find new buyers for these products?

Yes. I mean, again, we're going to do more formal guidance at the beginning of 2024. But on the e-Boost side, it's really from three big buckets. It's customers that are repeating. And those are typically truck and electric bus manufacturers. They have a long way to go. Their runways are very large. You're talking about with most of the ones that we deal with, they'll have anywhere upwards 100 to 250 dealers around the United States and Canada. So there's a long way to go with units just with them. It's coming from new use cases that we really don't anticipate. That's the other bucket, whether it be an electrical utility that's got the rural remote issues and they're being tasked with charging or in the case that we've announced earlier, VinFast that's bringing in thousands and thousands of vehicles from Vietnam and need mobile charging at the various ports that they bring them in. We started with them in the port of San Francisco. It's moved to the port of Los Angeles. They expect to be bringing in material into the port of Jacksonville and other ports as well and continue to love and need the solution. And then it really comes from fleets, fleet management companies to a large extent. And they made orders of initial sizes and so forth of what they thought. And that's getting traction among the fleets that they are managing or hoping to manage. So that's also a long runway for follow on orders.

Thank you, Nathan. That's all I have. I'll get back in queue.

Okay. Pleasure, Amit.

Thank you. Next question comes from the line of Manish [Indiscernible]. Please go ahead.

Hey, I'm sorry I jumped on a little late. Maybe you already addressed it, but back to the guidance for the rest of the year. I think you touched on the revenue side, but I believe the way the guidance is given, EPS could still be a loss for Q4. Is that what you're expecting or do we expect to be positive on the EPS side?

Right. So the short answer is we expect it to be positive. How positive? I really don't know until the revenue and the mix plays itself out. And of course you are technically correct. We guided towards positive EPS for the year. So theoretically at this point we could lose $0.07 and still be positive for the year, which is a great position to be in. But thank you for bringing this up and teasing this out. We don't have any intention of being negative in the fourth quarter.

Okay. All right. Thank you. And with your 2024 guidance that you talked about, will you be giving EPS guidance when you guys give out?

That's the plan, yes.

Okay. All right. Thank you very much.

You're very welcome.

Thank you. [Operator Instructions] Next question comes from the line of Scott Louis with Semple [Ph] Capital. Please go ahead.

Thanks for taking the call. Great quarter.

Sure Scott. Thank you Scott.

I have a question on the gross margins. 29% was terrific. And I think it's the best you've ever done. Is that number sustainable going forward?

That's a great question, Scott. It's definitely something, once we've, it's like tasting forbidden waters. Once we've tasted it, we don't want to move backwards. We shoot for 25. That's, that's how we base a lot of the analysis and guidance going forward for 2025. But we definitely see that we have the ability to stretch in certain cases. It's really going to depend on the continued spend, on the e-Boost and when e-Boost stops being a drag on earnings and break even and then hopefully, be a contributor. So that's the long winded answer to your question.

Okay. Well, that's a good Segway into my next question. At what point do you expect e-Boost to stop being a drag and start to contribute? Can you give us some color on the timeline?

Yes. So I think it should stop being a drag is what's a drag. But I think it should mitigate a lot of the loss and the spend somewhere in the second quarter of 2024 and start contributing in the second half of the year. I think the first quarter will be some advance in that area, not enough to say that it's close to breakeven until a little bit later.

And then my last question is, after the Q2 call, you called out water utilities and data center as highlights of your end markets. And can you comment on your end market growth that you saw in the Q3 and how those two end markets specifically did, and then any surprises to the upside or the negative side?

Yes, I mean, it's only to the positive side. They continue to, I probably didn't do a good job in the comments I made earlier, but at this point, we're across so many verticals. When we call them out, then everybody's thinking, okay, what about this one, that one, and so forth. It's everywhere. Data continues to be strong. EV charging stations are super strong. Water utility that is the heart. The water utility and the large automotive project that we did were the heart of the third quarter. And we fully expect it, especially on the water side, we expect that to continue. That's a large, large untapped market with a customer that is ready to spend and is not sort of bound by, they have different spend considerations than a more commercial customer.

Great. Thank you very much.

You're very welcome, Scott. Can't wait to see you again soon.

Thank you. Next question comes from the line of Albert Jones with Jones Capital Management. Please go ahead.

Thanks. Very nice quarter. Quickly on the gross profit of 29.8% of revenue, I imagine that was a lot of it was going by sales mix. Can you tell me if the sales mix for the fourth quarter is trending different than the third quarter?

It's trending sort of the same. Part of it, as far as the type of product, every day we live in a dynamic human world. So how well did we execute? Did we hit the hours? Did we make a mistake on some components from a material point of view? So I don't have all that data. The product mix is still a beneficial, is a good product mix, something I would hope overall continues through 2024 as far as product mix. But I don't have a more drilled down view on the profitability of the jobs yet. And the fourth quarter is not over.

Yes. Okay. Thanks. One more quick one as far as the revenues were quite good. Did all orders get shipped out or did any possibly move into a slight delay to being shipped fourth quarter or first quarter that you could talk about?

Yes. I mean, that's every quarter for us. So if you ask me every quarter, did things get shipped out? Did things get pushed out? Some things get accepted and pulled in. Happens all the time. So I'm not sure where you want to go with it. That's the nature of the business. The quarter customers, especially the larger one, not interested, that September 30th is the end of our quarter or whatever that means. So I'm not sure what you're trying to uncover.

Just, well, the talk on the macro side of some of the U.S. car companies are making delays to their orders on the EV side because of the slow uptake supposedly. You hear this every day on the business news. So my question was kind of related to that, as far as a macro thing, on that side.

Yes. So I understand your question better now. Sorry. Yes. We're not seeing in our space and the markets that we're after, for the most part, we're not seeing any slowdown whatsoever. Doesn't mean it won't happen and doesn't mean that we're immune from anything that's happening. But even, I mean, even orders that we took from the autonomous vehicle division of a certain automaker and so forth, and despite, what we read that some of those businesses are incurring bumps in the road, the opposite. They all call to make sure that we're full steam ahead and that they have -- they've invested a lot of money into these businesses and they have every intention of giving it -- giving it their all for the next several years.

Hey thanks for clearing that up for me, I appreciate it. One quick one in prepared remarks you mentioned some larger solutions I know you had a huge install in Las Vegas that you've talked about in the past as far as that goes. Are we talking even larger or something on that size scale? What are the newer customers talking about as far as larger solutions from you?

Yes. Again, I'm not sure specifically. I don't remember anything in Las Vegas. We have shipped a couple of jobs there if I try to rack my brain, but I'm not sure specifically what you're referring to. The order mix has been going, especially on the E-Bloc side. It's -- the ticket sizes get bigger and bigger, the projects get bigger and bigger. We announced earlier when we received the order from the large automotive business of $9 million. I mean that's the largest that we've ever taken post the selling of the transformer business probably even before that. So the year -- this year has been anchored by some large orders like that. And then a lot of orders more in the, I guess, $200, 000 range and everything in between. So I don't know if that helps at all or if there's something more specific. And we expect the same in 2024. It's going to be anchored by some very large projects and then a lot of the smaller ones or repeat of certain units if you're a retailer or somebody else with multi-locations.

All right. That’s all I got. Thanks guys.

Thank you. [Operator Instructions] Next question comes from the line of Bruce Callaway [Ph] with Callaway Capital. Please go ahead.

Hey congratulations on a good quarter. I'm just trying to delve into the numbers a little more. It looks like e-Boost is probably going to do about $8-ish million this year, $8 million to $10 million, and you said a quadrupling next year. So does that imply about $30 million to $40 million. And also on your capacity issues for E-Bloc. Looks like maybe $35 million to $40 million is full capacity. And how much more can you squeeze out from that plant? And I guess the demand is way more than that for next year, what do you think you could increase those sales by like 30%, 40%? And also my second question is the share count went by like 400,000, 500,000. Is that mostly compensation for the executives?

Okay. I mean, we'll -- I'll answer the first two, and then I'll let Walter go through the third. The options, but I think that you are correct on stock-based compensation and some other awards that we gave to employees. But from a -- I'll go backwards then, from a capacity point of view, I think we talked about it a little earlier on e-Boost. Yes, we'll do about $35 million more or less this year out of the Los Angeles facility. And that's what I call statistical 100%. We've said several times but we'll say it more formally now. We're in the process of subcontracting out certain, I guess, lower value-added processes that we perform there, like some of the metal bending, some of the copper bending that we do, we traditionally grew up just doing everything. We expect that to probably increase the capacity there more than 50%. I don't know exactly how much. If it works out amazingly well, it'd be closer to 100%. If it doesn't work out so well, maybe it'll be a little bit below 50%. We'll see as 2024 unfold, even though we're sort of at the beginning of that right now. Yes. And e-Boost, yes, the little trick there with e-Boost, so the e-Boost sales, I'm doing it by units. A lot of what you see in Critical Power is some of it's not related to e-Boost. A lot of it is not a lot of it is pure service work that we still do. So let's use -- I'm glad you raised it because we should have actually had it in the remarks and been more formal and maybe next call and next release will be more formal. But e-Boost sales this year will be somewhere over $1 million. Now that includes rental income as well. So there's more expensive unit behind a longer-term lease. When we say quadruple. Quadruple is easy, frankly, that would be $4 million. Again, we haven't done the formal guidance, but we're kind of using rental income and product sales of about $10 million additional sales next year related to e-Boost. So maybe that helps a little, at least be more clear to you.

All right. That’s good.

Okay, thank you Bruce.

Thank you. There are no further questions at this time. I would now like to turn the floor over to Nathan Mazurek, for closing comments.

All right. Thank you all for your time and support. We look forward to updating you as we win additional projects and more formally update you on our next earnings call.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.