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What changed in POWER SOLUTIONS INTERNATIONAL, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of POWER SOLUTIONS INTERNATIONAL, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+150 added−161 removedSource: 10-K (2026-03-02) vs 10-K (2025-03-24)

Top changes in POWER SOLUTIONS INTERNATIONAL, INC.'s 2025 10-K

150 paragraphs added · 161 removed · 105 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

27 edited+10 added−9 removed75 unchanged
Biggest changePrior to this role, Mr. Li was with Caterpillar Inc., a publicly traded company on the NYSE, from 2008 through 2020, where he served in various financial leadership positions, the most recent of which was chief financial officer of the global mining machine product group from 2013 to 2020. Prior to Caterpillar, Mr.
Biggest changeLi held financial leadership positions at Caterpillar Inc., a publicly traded company, including serving as Chief Financial Officer of machine product group from 2013 to 2020. From 2003 to 2008, Mr. Li held finance leadership roles at Ford Motor Company, a publicly traded company. Mr.
The key trends include the following: • the worldwide growth of intermittent sources of energy, such as wind and solar, and an aged electric grid in the United States, coupled with power outage activity due to weather or power shutdowns, are driving increased demand for generators, microgrids and demand response equipment; • increasingly stringent regulations and growing efforts to reduce emissions are driving demand for clean energy and alternatives to diesel power engines in several markets such as the power generation market for microgrids, oil and gas applications, and arbor care markets, among others; • growth in data centers and their increasing demand for electricity, which is driving growth for backup power (commercial generators/microgrids); • growth in e-commerce activity around the world, which is driving demand for last-mile delivery vehicles; and • the availability of automotive engines that are suited for industrial application.
The key trends include the following: • the worldwide growth of intermittent sources of energy, such as wind and solar, and an aged electric grid in the United States, coupled with power outage activity due to weather or power shutdowns, are driving increased demand for generators, microgrids and demand response equipment; • stringent regulations and growing efforts to reduce emissions are driving demand for clean energy and alternatives to diesel power engines in several markets such as the power generation market for microgrids, oil and gas applications, and arbor care markets, among others; • growth in data centers and their increasing demand for electricity, which is driving growth for backup power (commercial generators/microgrids); • growth in e-commerce activity around the world, which is driving demand for last-mile delivery vehicles; and • the availability of automotive engines that are suited for industrial application.
In addition, there are field audit requirements, which require the removal of power systems from service at specified stages of their useful lives to perform confirmatory exhaust emissions testing and/or on-board diagnostic (“OBD”) system audits and testing. All of the Company’s emission-certified power systems meet existing exhaust emission standards of the EPA and CARB.
In addition, there are field audit requirements, which require the removal of power 11 systems from service at specified stages of their useful lives to perform confirmatory exhaust emissions testing and/or on-board diagnostic (“OBD”) system audits and testing. All of the Company’s emission-certified power systems meet existing exhaust emission standards of the EPA and CARB.
Similarly, the EU has adopted more restrictive standards under its Stage V regulations. Tier 4 and Stage V regulations call for reductions in levels of particulate matter and oxides of nitrogen. 11 The initial and ongoing certification requirements vary by power system application and market segment.
Similarly, the EU has adopted more restrictive standards under its Stage V regulations. Tier 4 and Stage V regulations call for reductions in levels of particulate matter and oxides of nitrogen. The initial and ongoing certification requirements vary by power system application and market segment.
From time to time, the Company enters into agreements with its customers to fund a portion of the research, development and engineering costs of a particular project. These reimbursements are accounted for as a reduction of the related research, 9 development and engineering expenditure.
From time to time, the Company enters into agreements with its customers to fund a portion of the research, development and engineering costs of a particular project. These reimbursements are accounted for as a reduction of the related research, development and engineering expenditure.
(“SAME”), whose ability to supply product was suspended because of the intensified enforcement and expansion of the UFLPA near the end of 2023. Beginning December 2024, the supply agreement automatically extends for additional one-year terms unless a notice of termination is provided by either party six months prior to scheduled expiration.
(“SAME”), whose ability t o supply product was suspended because of the intensified enforcement and expansion of the UFLPA near the end of 2023. Beginning December 2024, the supply agreement automatically extends for additional one-year terms unless a notice of termination is provided by either party six months prior to scheduled expiration.
In January 2022, PSI and Société Internationale des Moteurs Baudouin (“Baudouin”), a subsidiary of Weichai, entered into an international distribution and sales agreement which enables Baudouin to bring PSI’s power systems line of products into the European, Middle Eastern, and African markets, which resulted in $1.1 million of sales during the year ended December 31, 2024 .
In January 2022, PSI and Société Internationale des Moteurs Baudouin (“Baudouin”), a subsidiary of Weichai, entered into an international distribution and sales agreement which enables Baudouin to bring PSI’s power systems line of products into the European, Middle Eastern, and African markets, which resulted in $1.2 million of sales during the year ended December 31, 2025.
The Company has also been investing heavily in the expansion of its heavy-duty engine product line, which has historically provided better margins, particularly through its collaboration with Weichai America Corp., a wholly-owned subsidiary of Weichai Power Co., Ltd. (HK2338, 000338.SZ) (herein collectively referred to as “Weichai”). Weichai is the beneficial owner of 51.1% of the outstanding Common Stock.
The Company has also been investing heavily in the expansion of its heavy-duty engine product line, which has historically provided better margins, particularly through its collaboration with Weichai America Corp., a wholly-owned subsidiary of Weichai Power Co., Ltd. (HK2338, 000338.SZ) (herein collectively referred to as “Weichai”). Weichai is the beneficial owner of 46.0% of the outstanding Common Stock.
The Company is committed to producing high quality products that provide reduced emissions and to operating its facilities in a manner that mitigates their impact on the environment. For the full year ended 2024, approximate ly 76% of the engines sold run on either propane or natural gas.
The Company is committed to producing high quality products that provide reduced emissions and to operating its facilities in a manner that mitigates their impact on the environment. For the full year ended 2025, approximate ly 74% of the engines sold run on either propane or natural gas.
This ensures sustainability of the organization. The Company’s short-term and long-term incentive plans are designed to provide a variable pay opportunity to reward the attainment of key financial and operational goals as well as shareholder value creation. In addition to the base and variable pay plans, the Company offers employees other benefits including medical, paid-time off, and retirement savings plans.
The Company’s short-term and long-term incentive plans are designed to provide a variable pay opportunity to reward the attainment of key financial and operational goals as well as shareholder value creation. 10 In addition to the base and variable pay plans, the Company offers employees other benefits including medical, paid-time off, and retirement savings plans.
The Company also leverages its technical resources to provide service and support functions for its power systems sold to OEM customers. Backlog Backlog generally is not considered a significant factor in the Company’s business. Employees and Human Capital As of December 31, 2024, the Company’s workforce consisted of approximately 700 full-time employees.
The Company also leverages its technical resources to provide service and support functions for its power systems sold to OEM customers. Backlog Backlog generally is not considered a significant factor in the Company’s business. Employees and Human Capital As of December 31, 2025, the Company’s workforce consisted of approximately 1,000 full-time employees.
Within several applications for which the Company provides solutions, it maintains supplier relationships with customers, which are often among the largest in that category. The Company’s largest customer represented 11% of consolidated net sales in 2024.
Within several applications for which the Company provides solutions, it maintains supplier relationships with customers, which are often among the largest in that category. The Company’s largest customer represented 20% of consolidated net sales in 2025.
Failure to comply with these standards could result in materially adverse effects on the Company’s future financial results. Information about the Company’s Executive Officers The following selected information for each of the Company’s current executive officers was prepared as of March 17 2025 . Name Age Executive Officer Since Present Position with the Company C.
Failure to comply with these standards could result in materially adverse effects on the Company’s future financial results. Information about the Company’s Executive Officers The following selected information for each of the Company’s current executive officers was prepared as of February 26, 2026 . Name Age Executive Officer Since Present Position with the Company C.
Turnover for salaried employees in 2024 was approximately 9.5%.The Company’s talent management and succession planning process includes the identification of key 10 positions based on current and future business strategies, the identification of potential successors, and a plan for talent development. The Company focuses on attracting and retaining the best employees by providing market competitive pay and benefits.
Turnover for salaried employees in 2025 was approximately 18.0% .The Company’s talent management and succession planning process includes the identification of key positions based on current and future business strategies, the identification of potential successors, and a plan for talent development. The Company focuses on attracting and retaining the best employees by providing market competitive pay and benefits.
The largest customer changes from time to time as a result of various factors, including prevailing market conditions, customers’ strategies and inventory of the Company’s power systems. 8 Competition Each of the Company’s end markets have a variety of competitors, including engine manufacturers, independent suppliers and distributors of engines, fuel systems and component providers, manufacturers of power generation equipment, engine packagers and integrators, and the in-house operations of certain OEMs, some of which have longer operating histories, strong brand recognition and significantly greater financial and marketing resources.
Competition Each of the Company’s end markets have a variety of competitors, including engine manufacturers, independent suppliers and distributors of engines, fuel systems and component providers, manufacturers of power generation equipment, engine packagers 8 and integrators, and the in-house operations of certain OEMs, some of which have longer operating histories, strong brand recognition and significantly greater financial and marketing resources.
Supplier Relationships In addition to producing its own engines, the Company has established relationships with its suppliers for certain engines that are integrated into the Company’s comprehensive power systems, the most significant of which are HD Hyundai Infracore Co., LTD (“HD Hyundai”), a subsidiary of HD Hyundai, Shenyang Packson Technology Co., LTD.
The Company’s net research, development and engineering expenditures for 2025 and 2024 were $18.2 million and $20.1 million, respectively. 9 Supplier Relationships In addition to producing its own engines, the Company has established relationships with its suppliers for certain engines that are integrated into the Company’s comprehensive power systems, the most significant of which are HD Hyundai Infracore Co., LTD (“HD Hyundai”), a subsidiary of HD Hyundai, Shenyang Packson Technology Co., LTD.
The Company sets annual targets for its Total Recordable Incident Rate (“TRIR”) and Days Away, Restricted or Transferred (“DART”) and regularly reviews these metri cs. For 2024, the Company achieved an overall TRIR of 4.418, meaning that for every 100 employees, 0.40 employees incurred an injury that resulted in recordable medical treatment.
The Company sets annual targets for its Total Recordable Incident Rate (“TRIR”) and Days Away, Restri cted or Transferred (“DART”) and regularly reviews these metrics. For 2025, the Company achieved an overall TRIR of 7.42, meaning that for every 100 full-time employees, 7.42 employees incurred an injury that resulted in recordable medical treatment.
Environmental Protection Agency (“EPA”), the California Air Resources Board (“CARB”) and regulatory bodies within the European Union (“EU”). The Company’s products include both sourced and internally designed and manufactured engines that are engineered and integrated with associated components. These comprehensive power systems are tested and validated to meet quality, safety, durability and environmental standards and regulations.
The Company’s products include both sourced and internally designed and manufactured engines that are engineered and integrated with associated components. These comprehensive power systems are tested and validated to meet quality, safety, durability and environmental standards and regulations.
Li served as Chief Financial Officer for ND Paper, a leading pulp, packaging and paper company, from 2020 to August 2022, where he was a member of the executive leadership management team with primary responsibility for finance, accounting, tax, auditing, treasury, risk management, internal audit, and strategic planning, among other areas, and served as a strategic advisor to the Chief Executive Officer.
From 2020 to August 2022, Mr. Li served as Chief Financial Officer of ND Paper, a pulp, packaging, and paper company. He was a member of the executive leadership team with responsibility for finance and accounting functions and strategic planning. From 2008 to 2020, Mr.
(Dino) Xykis 65 2020 Chief Executive Officer Xun (Kenneth) Li 55 2022 Chief Financial Officer Randall D. Lehner 53 2024 General Counsel C. (Dino) Xykis was appointed as the Chief Executive Officer on April 24, 2023, after serving as Interim CEO since June 2, 2022. Mr.
(Dino) Xykis 67 2020 Chief Executive Officer Xun (Kenneth) Li 56 2022 Chief Financial Officer Zhaoying (Dorothy) Du 48 2025 General Counsel and Corporate Secretary C. (Dino) Xykis was appointed as the Chief Executive Officer on April 24, 2023, after serving as Interim CEO since June 2, 2022. Mr.
The Company and Weichai also entered into a strategic collaboration agreement (the “Collaboration Agreement”) under which they have been working together to accelerate market opportunities for each company’s respective product lines across various geographic and end-user markets. On March 22, 2023, the Collaboration Agreement was extended for an additional term of three years.
Leverage the Company’s relationship with Weichai In March 2017, the Company and Weichai executed a strategic collaboration agreement (the “Collaboration Agreement”) under which they have been working together to accelerate market opportunities for each company’s respective product lines across various geographic and end-user markets.
Also, through the Company’s relationship with Weichai, it has access to Weichai’s ‘New Energy’ product portfolio and is exploring product diversification opportunities in the areas of battery storage and electrification. Expand global business Through the expansion of its product lineup and the entry into new markets, the Company has a history of growing its product offerings internationally beyond North America.
Also, through the Company’s relationship with Weichai, it has access to Weichai’s ‘New Energy’ product portfolio and is exploring product diversification opportunities in the areas of battery storage and electrification.
The Company sees long-term opportunity in continuing to grow its business worldwide with further R&D investment including new-product development and offerings.
Expand global business Through the expansion of its product lineup and the entry into new markets, the Compa ny has a history of growing its product offerings internationally beyond North America. The Company sees long-term opportunity in continuing to grow its business worldwide with further R&D investment including new-product development and offerings.
As of January 1, 2024, the Company no longer sells emissions-certified engines into the on-road market. The Company provides highly engineered, comprehensive solutions designed to meet specific customer application requirements and technical specifications, including those imposed by environmental regulatory bodies, including the U.S.
The Company provides highly engineered, comprehensive solutions designed to meet specific customer application requirements and technical specifications, including those imposed by environmental regulatory bodies, including the U.S. Environmental Protection Agency (“EPA”), the California Air Resources Board (“CARB”), the People’s Republic of China’s Ministry of Ecology and Environment (“MEE”) and regulatory bodies within the European Union (“EU”).
The DART was 3.96 in 2024, meaning that for every 100 employees, 0.039 individuals experienced an incident that resulted in days away from work or restricted work tasks.
The DART Rate was 4.22 in 2025, meaning that for every 100 full-time employees, 4.22 individuals experienced an incident that resulted in lost time or modified duty.
Xun (Kenneth) Li was appointed as the Chief Financial Officer on August 26, 2022. Mr. Li is an accomplished executive who has more than 20 years of professional experience in the areas of finance, accounting, financial planning & analysis, internal controls and strategy, among others. Most recently, Mr.
Xun (Kenneth) Li was appointed Chief Financial Officer of Power Solutions International, Inc. on August 26, 2022. As Chief Financial Officer, Mr. Li has responsibility for the Company’s finance, accounting, financial planning and analysis, treasury, tax, risk management, internal audit, and related functions, and supports the Chief Executive Officer and Board of Directors on financial and strategic matters.
He also holds a Bachelor of Arts degree in political science from the University of Michigan with high honors.
Li holds a Master of Business Administration with high distinction and a Master of Science in Accounting from the University of Michigan, a Master of Science in Mechanical Engineering from the University of Oklahoma, and a Bachelor of Science in Mechanical Engineering from Shanghai Jiao Tong University.
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Leverage the Company’s relationship with Weichai In March 2017, the Company executed a share purchase agreement (the “SPA”) with Weichai America Corp.
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On March 22, 2023, the Collaboration Agreement was extended for an additional term of three years, expiring in March 2026. The Company received a renewal notice from Weichai and is in the process of negotiating the renewal of the Collaboration Agreement; however, no formal extension has been executed as of the date of this filing.
Removed
Under the terms of the SPA, Weichai invested $60.0 million in the Company (the “Weichai Transactions”) by purchasing a combination of newly issued Common Stock and preferred stock, par value $0.001 (the “Preferred Stock”), as well as a stock purchase warrant, which significantly strengthened the Company’s financial condition and contributed to the extinguishment of its $60.0 million term loan in 2017.
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The largest customer changes from time to time as a result of various factors, including prevailing market conditions, customers’ strategies and inventory of the Company’s power systems.
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Weichai has also provided support for PSI’s business and operations through various shareholder loan agreements as described in Part II, Item 7. Liquidity and Capital Resources .
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He is a Certified Public Accountant in the state of Illinois. 12 Zhaoying (Dorothy) Du was appointed General Counsel and Corporate Secretary of Power Solutions International, Inc. on September 15, 2025. As General Counsel and Corporate Secretary, Ms.
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The Company’s net research, development and engineering expenditures for 2024 and 2023 were $20.1 million and $19.5 million, respectively.
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Du has responsibility for the Company's legal affairs, corporate governance, compliance, risk management, securities, and related functions, and supports the Chief Executive Officer and Board of Directors on legal and strategic matters. Ms.
Removed
Li was with Ford Motor Company, a publicly traded company on the NYSE, where he held finance leadership roles of increasing responsibility, from 2003 to 2008. Mr. Li earned the Masters in Business Administration degree with high distinction and a Master of Science (M.S.) degree in Accounting, both from the University of Michigan.
Added
Du has 20 years of experience providing strategic legal counsel to U.S. and multinational companies, leading initiatives to address complex commercial and regulatory matters, helping businesses manage risks, drive innovation, and implement pragmatic legal solutions that support business success. From March 2025 to September 2025, Ms. Du led the global supply chain legal team of Lenovo, a publicly traded company.
Removed
He also holds an M.S. in Mechanical Engineering from the University of Oklahoma and a Bachelors of Science degree in Mechanical Engineering from Shanghai JiaoTong University. Mr. Li is also a certified public accountant in the state of Illinois. 12 Randall D. Lehner was appointed as the General Counsel on March 4, 2024. Mr.
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She was a member of the Lenovo global supply chain executive leadership team, advising on procurement, factory setup, trade compliance, regulatory risks, and contract negotiations across global operations. From February 2016 to March 2025, Ms.
Removed
Lehner is an accomplished legal advisor who has more than 25 years of legal experience in the areas of corporate and board governance, dispute resolution, regulatory compliance, internal controls and strategy, among others. Most recently, from May 2020 to February 2024, Mr.
Added
Du served as Global Head of Legal of Motorola Mobility, a Lenovo company, where she was a member of the executive leadership team, overseeing matters including artificial intelligence, R&D, commercial contracts, intellectual property, compliance, data privacy and information security, corporate governance, corporate secretary, litigation, and other legal functions.
Removed
Lehner served as associate general counsel and deputy general counsel for Guaranteed Rate, LLC, a leading mortgage company, where he was a member of the legal leadership team with primary responsibility for litigation and risk management. Prior to this role, from 2015 through 2020, Mr.
Added
From 2013 to 2016, she served as General Counsel of the China operations and Senior Counsel for compliance and risk management at The Warranty Group (now part of Assurant, Inc.). From 2005 to 2012, Ms.
Removed
Lehner was a partner with Kelley Drye & Warren LLP, where his practice focused on commercial litigation, regulatory and internal investigations and government enforcement actions. Prior to Kelley Drye & Warren LLP, from 1997 to 2014, Mr. Lehner worked at several other prestigious law firms. Mr. Lehner holds a Juris Doctor degree from Duke University with high honors.
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Du served as Co-Chair of the APAC Practice Group at Freeborn & Peters (now part of Smith, Gambrell & Russell, LLP) and as an attorney at Sonnenschein Nath & Rosenthal, LLP (now Dentons LLP), advising on cross-border transactions, securities, corporate governance, mergers and acquisitions, financing, compliance, and other complex matters. Ms.
Added
Du holds a Juris Doctor degree from the University of Missouri - Kansas City School of Law, a Master of Arts degree in Political Science from the University of Georgia, and a Bachelor of Law degree from Sun Yat-Sen University Law School. She is licensed to practice law in Illinois and is admitted to practice law in China.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

29 edited+22 added−22 removed111 unchanged
Biggest changeThe Company generally must obtain product certification from both the EPA and the CARB to sell its products in the United States. The Company may attempt to expand sales of its certified power systems to OEMs that sell their products in other countries, which may also have stringent emissions requirements.
Biggest changeExamples of such regulations include those that (i) restrict the sale of power systems that do not meet emission standards and (ii) impose penalties on sellers of noncompliant power systems. 15 The Company generally must obtain product certification from both the EPA and the CARB to sell its products in the United States.
Accordingly, the Company is subject to the political, economic and other risks that are inherent in operating a multinational company, including risks related to the following: • general economic conditions; • the imposition of tariffs and other import or export barriers, which could potentially disrupt the Company’s existing supply chains and impose additional costs on the Company’s business; • trade and technology protection measures; • compliance with regulations governing import and export activities; 19 • import and export duties and restrictions; • currency fluctuations and exchange restrictions; • transportation delays and interruptions; • political and economic instability; • terrorist activities; • acts of war, including the events currently underway in Ukraine and Israel, which could lead to volatility in commodity availability and pricing, access to current or new markets, and general overall market volatility and weakness, among other factors; • labor unrest; • natural disasters; and • public health concerns including the potential negative impacts to suppliers, customers or the Company’s business.
Accordingly, the Company is subject to the political, economic and other risks that are inherent in operating a multinational company, including risks related to the following: • general economic conditions; • the imposition of tariffs and other import or export barriers, which could potentially disrupt the Company’s existing supply chains and impose additional costs on the Company’s business; • trade and technology protection measures; • compliance with regulations governing import and export activities; • import and export duties and restrictions; • currency fluctuations and exchange restrictions; • transportation delays and interruptions; • political and economic instability; • terrorist activities; • acts of war, including the events currently underway in Ukraine and Israel, which could lead to volatility in commodity availability and pricing, access to current or new markets, and general overall market volatility and weakness, among other factors; • labor unrest; • natural disasters; and • public health concerns including the potential negative impacts to suppliers, customers or the Company’s business.
Expenses that may occur in the future and/or liabilities not covered by the Company’s directors and officers liability insurance policy, that may be imposed in connection with actions against certain of the Company’s past and present directors and officers and certain current and former employees who are entitled to indemnification would be funded by the Company with its existing cash resources.
Expenses that may occur in the future and/or liabilities not covered by the Company’s directors and officers liability insurance policy, that may be imposed in connection with actions against certain of the Company’s past and present directors and officers and certain current and former employees who are entitled to indemnification would be funded by 22 the Company with its existing cash resources.
In connection with complying with such environmental laws and regulations as well as with industry environmental initiatives, the standards of business conduct required by some of its customers and its commitment to sound corporate citizenship in all aspects of its business, the Company could incur substantial compliance and operating costs and be subject to disruptions to its operations and logistics.
In connection with complying with such environmental laws and regulations as well as with industry environmental initiatives, the 20 standards of business conduct required by some of its customers and its commitment to sound corporate citizenship in all aspects of its business, the Company could incur substantial compliance and operating costs and be subject to disruptions to its operations and logistics.
Such price increases occur from time to 14 time due to increases in overall inflation, spot shortages of commodities, increases in labor costs or longer-term shortages due to market forces. In particular, the prices of certain precious metals, such as palladium and rhodium, used in emissions-control systems fluctuate frequently and often significantly.
Such price increases occur from time to time due to increases in overall inflation, spot shortages of commodities, increases in labor costs or longer-term shortages due to market forces. In particular, the prices of certain precious metals, such as palladium and rhodium, used in emissions-control systems fluctuate frequently and often significantly.
In addition, to the extent that diesel power system manufacturers develop the ability to design and produce emission-compliant diesel power systems that are more competitive than the Company’s alternative-fueled power systems, customers and potential customers may be less likely to substitute alternative-fueled power systems for diesel power systems.
In addition, to the extent that diesel power system manufacturers develop the ability to design and produce emission-compliant diesel power systems that are more competitive than the Company’s alternative-fueled power systems, customers and potential customers may be less likely to substitute 16 alternative-fueled power systems for diesel power systems.
The Company does not own any material patents and relies on a combination of trademark and trade 21 secret laws, along with confidentiality agreements, contractual provisions and licensing arrangements, to establish and protect its intellectual property rights.
The Company does not own any material patents and relies on a combination of trademark and trade secret laws, along with confidentiality agreements, contractual provisions and licensing arrangements, to establish and protect its intellectual property rights.
While the Company incurs significant research and development costs to ensure that its products 15 comply with emission standards and meet certification requirements in the regions in which its products are sold, the Company cannot provide assurance that its products will continue to meet those standards.
While the Company incurs significant research and development costs to ensure that its products comply with emission standards and meet certification requirements in the regions in which its products are sold, the Company cannot provide assurance that its products will continue to meet those standards.
There is no assurance that material weaknesses or significant deficiencies in internal controls will not be identified in the future or that we 20 will be successful in adequately remediating any such material weaknesses or significant deficiencies. We may in the future discover areas of our internal controls that need improvement.
There is no assurance that material weaknesses or significant deficiencies in internal controls will not be identified in the future or that we will be successful in adequately remediating any such material weaknesses or significant deficiencies. We may in the future discover areas of our internal controls that need improvement.
Significant adverse changes to the Com pany’s business environment and future cash flows could cause the recognition of material impairment charges in future periods. The Company currently faces, and will continue to face, significant competition.
Significant 21 adverse changes to the Com pany’s business environment and future cash flows could cause the recognition of material impairment charges in future periods. The Company currently faces, and will continue to face, significant competition.
This control could have the effect of delaying or preventing 18 a change of control of the Company or changes in management and will make the approval of certain transactions impractical without the support of Weichai.
This control could have the effect of delaying or preventing a change of control of the Company or changes in management and will make the approval of certain transactions impractical without the support of Weichai.
The Company estimates that as much as approximately $105.5 million and $72.1 million of its 2024 and 2023 net sales, respectively, were attributable to the sale of products used within the oil and gas industry.
The Company estimates that as much as approximately $193.9 million and $105.5 million of its 2025 and 2024 net sales, respectively, were attributable to the sale of products used within the oil and gas industry.
The Company has international operations with sales outside the U.S. representing 13% of the Company’s total net sales. Further, the Company’s global supply chain is large and complex, and a majority of the Company’s supplier facilities, are located outside the U.S. As a result, the Company’s operations and performance depend significantly on global and regional economic conditions.
Further, the Company’s global supply chain is large and complex, and a majority of the Company’s supplier facilities, are located outside the U.S. As a result, the Company’s operations and performance depend significantly on global and regional economic conditions.
E ach of these stockholders, by virtue of their significant equity ownership in the Company, may be able to significantly influence, and, in the case of Weichai, control the outcome of all matters requiring stockholder approval, including the election and removal of directors and any merger or other significant corporate transactions.
Weichai’s significant equity ownership in the Company, may be able to significantly influence, and control the outcome of all matters requiring stockholder approval, including the election and removal of directors and any merger or other significant corporate transactions. The interests of these stockholders may not coincide with the interests of other stockholders.
If the industrial OEM market generally, or more specifically any of the OEM categories that represent a significant portion of the Company’s business or in which it anticipates significant growth opportunities for its power systems, fails to develop or develops more slowly than the Company anticipates, its business could be materially adversely affected. 16 Lastly, the Company also faces competition from other forms of power systems, including electrification and fuel cells, which could limit its ability to grow in the future.
If the industrial OEM market generally, or more specifically any of the OEM categories that represent a significant portion of the Company’s business or in which it anticipates significant growth opportunities for its power systems, fails to develop or develops more slowly than the Company anticipates, its business could be materially adversely affected.
For example, in early 2025, President Donald Trump signed executive orders imposing various tariffs on certain imports from Mexico, Canada, and China, and stated his intent to impose tariffs on any country that imposes tariffs on U.S. products.
The U.S. government has imposed, and may continue to impose, tariffs on products imported from China and other countries. Since early 2025, President Donald Trump signed executive orders imposing various tariffs on certain imports from Mexico, Canada, and China, and stated his intent to impose tariffs on any country that imposes tariffs on U.S. products.
Financial Condition, Results of Operations, and Cash Flows The Company is subject to price increases in some of the key components in its power systems. The prices of some of the key components of the Company’s power systems are subject to fluctuation due to market forces, including changes in the costs of raw materials incorporated into these components.
The prices of some of the key components of the Company’s power systems are subject to fluctuation due to market forces, including changes in the costs of raw materials incorporated into these components.
The Company’s debt arrangements contain and may contain in the future certain requirements, including specific financial and other covenants or restrictions. The failure or the inability to meet such obligations under existing debt or any new debt could materially and adversely affect the Company’s business and financial condition.
The failure or the inability to meet such obligations under existing debt or any new debt could materially and adversely affect the Company’s business and financial condition.
Ownership of the Company’s stock is concentrated with Weichai and the founder of the Company, and therefore other stockholders’ ability to influence corporate matters is limited. As of March 17 2025, Weichai beneficially owned 51.1% of the Company’s outstanding shares of Common Stock. Additionally, Gary S.
Ownership of the Company’s stock is concentrated with Weichai and therefore other stockholders’ ability to influence corporate matters is limited. As of February 26, 2026, Weichai owned 46.0% of the Company’s outstanding shares of Common Stock.
Further, the imposition of tariffs on imports from China and other countries have the potential to materially and adversely impact the Company’s sales, profitability and future product launches. U.S. government has indicated its intent to adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements.
The U.S. government has indicated its intent to adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements.
Accordingly, future sales of the Company’s products will depend upon its products being certified to meet the existing and future air quality and energy standards imposed by the relevant regulatory agencies.
The Company may attempt to expand sales of its certified power systems to OEMs that sell their products in other countries, which may also have stringent emissions requirements. Accordingly, future sales of the Company’s products will depend upon its products being certified to meet the existing and future air quality and energy standards imposed by the relevant regulatory agencies.
Similar limitations also apply to certain U.S. federal tax credits. Unanticipated changes in our effective tax rate, the adoption of new tax legislation or exposure to additional income tax liabilities could adversely affect our profitability. We are subject to income taxes in the United States jurisdictions.
T he Company directors’ and officers’ liability insurance policy renews annually and expires in July 2026 . Unanticipated changes in our effective tax rate, the adoption of new tax legislation or exposure to additional income tax liabilities could adversely affect our profitability. We are subject to income taxes in the United States jurisdictions.
The Company’s business is affected by government environmental policies, mandates and regulations around the world, most significantly with respect to emission standards in the United States. Examples of such regulations include those that (i) restrict the sale of power systems that do not meet emission standards and (ii) impose penalties on sellers of noncompliant power systems.
The Company’s business is affected by government environmental policies, mandates and regulations around the world, most significantly with respect to emission standards in the United States.
The Company continuously seeks to maintain a robust program of information security and controls, but the impact of a material information technology event could have a material adverse effect on its reputation and results of operations. General Risk Factors Adverse global and regional economic conditions may materially and adversely affect the Company’s business, results of operations and financial condition.
The Company continuously seeks to maintain a robust program of information security and controls, but the impact of a material information technology event could have a material adverse effect on its reputation and results of operations. Artificial Intelligence Risk Factors The increasing use of artificial intelligence technologies by our competitors, customers, and suppliers could impact our competitive position.
The Company also sells its products on a global basis, and therefore its export sales could be impacted by tariffs. Several of the Company’s products are sourced internationally, including from China, where the U.S. has imposed tariffs on specified products imported from China.
The Company also sells its products on a global basis, and therefore its export sales could be impacted by tariffs. Tariffs and changes in trade policy could materially increase our costs, disrupt our supply chain, and adversely affect our competitive position and results of operations. Several of the Company’s products are sourced internationally, including from China.
The interests of these stockholders may not coincide with the interests of other stockholders. The concentration of ownership might also have the effect of delaying or preventing a change of control of the Company that other stockholders may view as beneficial.
The concentration of ownership might also have the effect of delaying or preventing a change of control of the Company that other stockholders may view as beneficial. Weichai alone owns a majority of the outstanding shares of Common Stock and, therefore, it possesses voting control over the Company sufficient to prevent any change of control from occurring.
The Company’s new Revolving Credit Agreement places limitations on its ability to make acquisitions and restricts its ability to incur additional indebtedness, while the SLA places limitations or restrictions on the Company’s usage of borrowed funds.
The Company’s new Revolving Credit Agreement places limitations on its ability to make acquisitions and restricts its ability to incur additional indebtedness. 14 Financial Condition, Results of Operations, and Cash Flows The Company is subject to price increases in some of the key components in its power systems.
The Company may be impacted by volatility of oil and gas prices and/or fuel price differentials.
Lastly, the Company also faces competition from other forms of power systems, including electrification and fuel cells, which could limit its ability to grow in the future. The Company may be impacted by volatility of oil and gas prices and/or fuel price differentials.
Certain products that we buy from our suppliers are, and may in the future be, subject to these tariffs, which could increase our manufacturing costs. Additionally, the tariffs imposed by the U.S. have resulted, and may in the future result, in threatened and actual retaliatory tariffs by other countries against U.S. exports.
Certain products that we buy from our suppliers are, and may in the future be, subject to these tariffs, which could increase our manufacturing costs. We may not be able to pass these increased costs on to our customers without adversely affecting demand for our products. The scope, duration, and impact of current and future tariffs remain highly uncertain.
Removed
These tariffs have an impact on the Company’s material costs and have the potential to have an even greater impact, depending on the outcome of future trade negotiations and policies.
Added
Further, the imposition of tariffs on imports from China and other countries have the potential to materially and adversely impact the Company’s sales, profitability and future product launches. Additionally, the tariffs imposed by the U.S. have resulted, and may in the future result, in retaliatory tariffs by other countries against U.S. exports.
Removed
Any material reduction in sales may have a material adverse effect on the Company’s results of operations.
Added
Any material reduction in sales or increase in costs resulting from tariffs or trade restrictions could have a material adverse effect on our business, financial condition, and results of operations. On February 20, 2026, subsequent to year end, the U.S. Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”).
Removed
Liquidity and Indebtedness The Company’s management has concluded as of the filing of this 2024 Annual Report that, due to uncertainty surrounding the Company’s ability to extend or refinance its current debt agreements, substantial doubt exists as to its ability to continue as a going concern.
Added
The President immediately imposed replacement tariffs under Section 122 of the 13 Trade Act of 1974, which are temporary (150-day maximum duration), and has indicated intent to impose tariffs under other authorities going forward .
Removed
The Company’s plans to alleviate the substantial doubt about its ability to continue as a going concern may not be successful, and it may be forced to limit its business activities or be unable to continue as a going concern, which would have a material adverse effect on its results of operations and financial condition.
Added
The Company may be entitled to refunds of IEEPA tariffs paid during 2025, but to the extent PSI passed tariff costs through to customers, the Company may be required to reimburse customers for such amounts, which could reduce or eliminate any net benefit from refunds. The tariff environment remains highly uncertain.
Removed
The consolidated financial statements included herein have been prepared assuming the Company will continue as a going concern. In August 2024, the Company refinanced its debt through a new Uncommitted Revolving Credit Agreement (the “Revolving Credit Agreement”), with Standard Chartered Bank (“ Standard Chartered ”) and two other lenders.
Added
Furthermore, escalating geopolitical tensions, including the ongoing conflict in Ukraine and instability in the Middle East, and developments in Venezuela could disrupt global supply chains, increase commodity prices, and create broader economic uncertainty that adversely affects our business.
Removed
Additionally, also in August 2024, the Company entered into a new Shareholder’s Loan Agreement (the “SLA”) with Weichai. The new Revolving Credit Agreement and the new SLA will mature on August 30, 2025 and August 31, 2025 , respectively, and have borrowing capacity of $120.0 million and $105.0 million, respectively.
Added
Liquidity and Indebtedness Our liquidity could be adversely affected by volatility in demand, supply‑chain constraints, and significant capital investment requirements inherent in our engine manufacturing operations. Our business requires substantial liquidity to fund working capital, capital expenditures, research and development, inventory purchases, and long‑term strategic initiatives.
Removed
As of December 31, 2024, the Company had $120.0 million of total borrowings outstanding under its debt agreements. Without additional financing, the Company anticipates that it will not have sufficient cash and cash equivalents to repay amounts owed under its existing debt arrangements as they become due.
Added
We rely on cash generated from operations, supplemented by available credit facilities, to meet these needs. Our ability to maintain adequate liquidity depends on several factors outside our control. For example, fluctuations in customer demand—particularly in the heavy‑equipment, transportation, industrial, and power‑generation markets—can lead to uneven order patterns that impact cash inflows.
Removed
To provide the Company with a more permanent source of liquidity, management plans to seek an extension and amendment and/or replacement of its existing debt agreements or seek additional liquidity from its current or other lenders before the maturity dates in 2025.
Added
A sudden or prolonged decline in sales volumes could reduce operating cash flows and negatively affect our liquidity position. Additionally, our manufacturing processes depend on the availability of raw materials and key components such as castings, electronics, and specialized metals.
Removed
There can be no assurance that 13 the Company’s management will be able to successfully complete an extension and amendment of its existing debt agreements or obtain new financing on acceptable terms, when required or if at all.
Added
Supply‑chain disruptions, including shortages, delivery delays, or sudden cost increases, may require us to hold higher levels of inventory or pay premium prices to secure materials. These conditions could increase our working capital requirements, compress margins, and reduce available cash. We also operate in a capital‑intensive industry that requires ongoing investment in production equipment, testing facilities, tooling, and emissions‑compliance technology.
Removed
These consolidated financial statements do not include any adjustments that might result from the outcome of the Company’s efforts to address these issues.
Added
If we are unable to generate sufficient cash from operations or secure financing on favorable terms, we may need to delay or scale back critical investments, which could impair our competitiveness and innovation pipeline.
Removed
Furthermore, if the Company cannot raise capital on acceptable terms, it may not, among other things, be able to do the following: • continue to expand the Company’s research and product investments and sales and marketing organization; • expand operations both organically and through acquisitions; and • respond to competitive pressures or unanticipated working capital requirements.
Added
Our access to credit markets may be affected by factors such as rising interest rates, tightening lending standards, deterioration in our credit metrics, or adverse changes in macroeconomic conditions. If we are unable to refinance existing indebtedness or obtain additional funding when needed, we may face increased borrowing costs or constraints on our operational and strategic flexibility.
Removed
The Company’s management has concluded that, due to uncertainties surrounding the Company’s future ability to refinance, extend and amend, or repay its outstanding indebtedness under its existing debt arrangements and other requirements under the Revolving Credit Agreement and other outstanding debt, in the future, substantial doubt exists as to its ability to continue as a going concern within one year after the date that these financial statements are issued.
Added
If any of these risks materialize, our liquidity, financial condition, and ability to execute our business strategy could be materially and adversely affected. The Company’s existing debt or any potential new debt could adversely affect its business and growth prospects.
Removed
The Company’s plans to alleviate the substantial doubt about its ability to continue as a going concern may not be successful, and it may be forced to limit its business activities or be unable to continue as a going concern, which would have a material adverse effect on its results of operations and financial condition.
Added
As of December 31, 2025, the Company’s total debt obligations, including indebtedness under the Revolving Credit Agreement were $96.6 million . The Company’s debt arrangements contain and may contain in the future certain requirements, including specific financial and other covenants or restrictions.
Removed
The consolidated financial statements included herein have been prepared assuming that the Company will continue as a going concern and contemplating the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.
Added
Our relationship with Weichai, a Chinese state-owned entity, and heightened U.S.-China geopolitical tensions could subject us to increased regulatory scrutiny, reputational harm, and operational restrictions. The relationship between the United States and China has become increasingly strained in recent years, with ongoing tensions related to trade, technology, national security, and other matters.
Removed
The Company’s ability to continue as a going concern is dependent on generating profitable operating results, having sufficient liquidity, maintaining compliance with the covenants and other requirements under the new Revolving Credit Agreement and the new SLA, in the future, and extending and amending, refinancing or repaying the indebtedness outstanding under the Company’s existing debt arrangements.
Added
The U.S. government has taken, and may continue to take, actions that could affect companies with significant Chinese ownership or business relationships, including: • Enhanced scrutiny by the Committee on Foreign Investment in the United States (CFIUS) of transactions involving Chinese-affiliated entities; • Export control restrictions that could limit our ability to share technology or conduct business with Weichai or other Chinese entities; • Sanctions or other restrictions targeting Chinese state-owned enterprises or their affiliates; • Legislative or regulatory actions that could restrict or prohibit business relationships with Chinese state-owned entities; and 18 • Increased disclosure requirements or other regulatory burdens applicable to companies with significant foreign government ownership.
Removed
The Company has a significant amount of indebtedness and is highly leveraged. Its existing debt or any potential new debt could adversely affect its business and growth prospects. As of December 31, 2024, the Company’s total debt obligations, including indebtedness under the Revolving Credit Agreement and SLA was $120.2 million .
Added
Any such actions could disrupt our strategic collaboration with Weichai, limit our access to certain markets or technologies, increase our compliance costs, or subject us to reputational harm.
Removed
Any future failure by the Company to comply with the financial covenants set forth under the Company’s debt agreements, if not cured or waived, could result in the acceleration of debt maturities or prevent the Company from accessing availability of funds under the SLA.
Added
Additionally, negative public perception of companies with Chinese state ownership could adversely affect our relationships with customers, suppliers, and other business partners, particularly those in the defense, government contracting, or critical infrastructure sectors. We cannot predict the nature, timing, or impact of future geopolitical developments or government actions.
Removed
If the maturity of the indebtedness is accelerated, the Company may not have sufficient cash resources, or have the ability to obtain financing through alternative resources, to satisfy its debt and other obligations, and the Company may not be able to continue as a going concern.
Added
Any material adverse developments in U.S.-China relations or actions targeting companies with Chinese state ownership could have a material adverse effect on our business, financial condition, results of operations, and stock price. Weichai maintains certain rights through its Investor Rights Agreement with the Company. In March 2017, Weichai entered into an Investor Rights Agreement (the “Rights Agreement”) with the Company.
Removed
Winemaster, the Company’s founder, former Chairman of the Board of Directors (the “Board”), former Chief Executive Officer, President and nonexecutive Chief Strategy Officer, beneficially owned approximately 14.4% of the Company’s outstanding shares of Common Stock.
Added
Artificial intelligence (“AI”) and machine learning technologies are rapidly evolving and are increasingly being adopted across industries, including in manufacturing. Our competitors, customers, and suppliers may adopt AI technologies that could affect our competitive position.
Removed
Weichai alone owns a majority of the outstanding shares of Common Stock and, therefore, it possesses voting control over the Company sufficient to prevent any change of control from occurring. Weichai maintains certain rights through its Investor Rights Agreement with the Company. Weichai entered into an Investor Rights Agreement (the “Rights Agreement”) with the Company upon execution of the SPA.
Added
If we fail to effectively adopt and integrate AI technologies, or if our competitors do so more successfully, we could experience a decline in our competitive position. We may also face risks from AI technologies used by third parties, including vendors, customers, and service providers, over which we have limited control.
Removed
T he Company directors’ and officers’ liability insurance policy renews annually and expires in July 2025 . The Company’s inability to generate sufficient taxable income in the future may limit the Company’s ability to use net operating loss (“NOL”) carryforwards to reduce future tax payments.
Added
Any material disruption to our supply chain or competitive disadvantage resulting from third-party AI adoption could adversely affect our business, financial condition, and results of operations.
Removed
The Company has NOL carryforwards with which to offset its future taxable income for U.S. federal income tax reporting purposes. If the Company should fail to generate a sufficient level of taxable income prior to the expiration of the NOL carryforward periods, then it will lose the ability to apply the NOLs as offsets to future taxable income.
Added
General Risk Factors Adverse global and regional economic conditions may materially and adversely affect the Company’s business, results of operations and financial condition. 19 The Company has international operations with sales outside the U.S. representing 7% of the Company’s total net sales.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed17 unchanged
Biggest changeThe following summarizes the role and frequency in which the Audit Committee oversees and monitors cybersecurity risks: • At least annually the Vice President of Information Technology presents compliance activities related to cybersecurity to the Audit Committee which includes those activities related to compliance with the cybersecurity disclosure regulations; • Material breaches, if any are, disclosed to the Audit Committee either in regularly scheduled meetings or, if urgent in calls with the Chair of the Audit Committee; • Periodically, the Vice President of Information Technology provides updates to the Audit Committee on internal controls surrounding information technology (including cybersecurity); • The Chair of the Audit Committee provides regular updates during Audit Committee meetings which includes cybersecurity; and 23 • The Vice President of Information Technology presents updates on the cybersecurity program to the Company’s Board annually.
Biggest changeThe following summarizes the role and frequency in which the Audit Committee oversees and monitors cybersecurity risks: • At least annually the Vice President of Information Technology presents compliance activities related to cybersecurity to the Audit Committee which includes those activities related to compliance with the cybersecurity disclosure regulations; • Material breaches, if any are, disclosed to the Audit Committee either in regularly scheduled meetings or, if urgent in calls with the Chair of the Audit Committee; • Periodically, the Vice President of Information Technology provides updates to the Audit Committee on internal controls surrounding information technology (including cybersecurity); • The Chair of the Audit Committee provides regular updates during Audit Committee meetings which includes cybersecurity; and • The Vice President of Information Technology presents updates on the cybersecurity program to the Company’s Board annually.
The Company engaged a third party to conduct phishing and penetration tests in 2024. The Company continues to evolve its processes, procedures, and tools as a result of the observations from these tests. The Vice President of Information Technology oversees the population of third-party service providers connected to any of the Company’s networks.
The Company engaged a third party to conduct phishing and penetration tests in 2024. The Company continues to evolve its processes, procedures, and tools as a result of the observations from these tests. 23 The Vice President of Information Technology oversees the population of third-party service providers connected to any of the Company’s networks.
The Company utilizes the National Institute of Standards and Technology guidance in all cybersecurity policies and procedures. Annual training for 22 employees is required as well as ad hoc trainings for specific topics or events as deemed appropriate throughout the year.
The Company utilizes the National Institute of Standards and Technology guidance in all cybersecurity policies and procedures. Annual training for employees is required as well as ad hoc trainings for specific topics or events as deemed appropriate throughout the year.
In 2024, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats or provide assurances that we have not experienced undetected cybersecurity incidents.
In 2025, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats or provide assurances that we have not experienced undetected cybersecurity incidents.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed0 unchanged
Biggest changeThe Company’s primary manufacturing, assembly, engineering, research and development, sales and distribution facilities are located in suburban Chicago, Illinois, as well as in Darien and Beloit, Wisconsin. The Company believes that all of its facilities have been adequately maintained, are in good operating condition and are suitable for its current needs.
Biggest changeThe Company’s corporate headquarters is located in Wood Dale, Illinois, a suburb of Chicago. 24 The Company’s primary manufacturing, assembly, engineering, research and development, sales and distribution facilities are located in suburban Chicago, Illinois, as well as in Darien and Beloit, Wisconsin.
Item 2. Properties. The Company’s operations are located in 7 leased facilities in the United States, totaling approximately 1.0 million square feet of floor space. The Company is in the process of expanding the Wisconsin facility, which will results in an additional 0.1 million square feet. The Company’s corporate headquarters is located in Wood Dale, Illinois, a suburb of Chicago.
Item 2. Properties. The Company’s operations are located i n 8 leased facilities in the United States, totaling approximately 1.2 million square feet of floor space.
These facilities are expected to meet the Company’s needs in the foreseeable future.
The Company believes that all of its facilities have been adequately maintained, are in good operating condition and are suitable for its current needs. These facilities are expected to meet the Company’s needs in the foreseeable future.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−2 removed0 unchanged
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The Common Stock traded on Nasdaq under the symbol “PSIX” from May 28, 2013 through April 18, 2017. The Common Stock was suspended from trading and was subsequently delisted from Nasdaq effective at the open of business on April 19, 2017.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The Company’s Common Stock is traded on the Nasdaq under the symbol “PSIX”. As of February 26, 2026, the sale price for the Company’s Common Stock, as reported by the Nasdaq , was $92.07 per share.
The Company intends to retain its future earnings to support operations, to finance expansion and reduce debt. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities During 2024 and 2023, the Company did not repurchase any equity securities. Item 6. Reserved
The Company intends to retain its future earnings to support operations, to finance expansion and reduce debt. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities During 2025 and 2024, the Company did not repurchase any equity securities. Item 6. Reserved
Holders As of March 17 2025, there were approximately 43 holders of record of the Company’s Common Stock. Dividend Policy The Company has not paid any cash dividends on the Common Stock to date. The payment of dividends is currently restricted by the Credit Agreement.
Holders As of February 26, 2026, there were approximately 36 holders of record of the Company’s Common Stock. Dividend Policy The Company has not paid any cash dividends on the Common Stock to date. The payment of dividends is currently restricted by the Credit Agreement.
Removed
It then traded on the OTC Pink marketplace (“OTCPink”), operated by OTC Markets Group, Inc. (“OTC Market”), under “PSIX” until December 26, 2024. The OTCPink is a quotation system and not a national securities exchange, and many companies have experienced limited liquidity when traded through this quotation system.
Removed
The quotations represent inter-dealer prices without adjustment for retail markups, markdowns or commissions, and may not necessarily represent actual transactions. The Company’s Common Stock uplisted on the Nasdaq under the symbol “PSIX” on December 26, 2024. As of March 17 2025, the sale price for the Company’s Common Stock, as reported by the Nasdaq , was $33.09 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

39 edited+13 added−23 removed29 unchanged
Biggest changeWith the recent introduction of numerous natural gas and diesel engines, coupled with its existing strong product lineup, the Company believes that it has a solid foundation to achieve long-term growth, particularly within the power systems market. 27 Results of Operations Results of operations for the year ended December 31, 2024 compared with the year ended December 31, 2023 : (in thousands, except per share amounts) For the Year Ended December 31, 2024 2023 Change % Change Net sales (from related parties $1,766 and $2,449 for the year ended December 31, 2024 and 2023, respectively) $ 475,967 $ 458,973 $ 16,994 4 % Cost of sales (from related parties $1,304 and $1,790 for the year ended December 31, 2024 and 2023, respectively) 335,430 353,109 (17,679) (5) % Gross profit 140,537 105,864 34,673 33 % Gross margin % 29.5 % 23.1 % 6.4 % Operating expenses: Research and development expenses 20,056 19,457 599 3 % Research and development expenses as a % of sales 4.2 % 4.2 % — % Selling, general and administrative expenses 37,378 40,386 (3,008) (7) % Selling, general and administrative expenses as a % of sales 7.9 % 8.8 % (0.9) % Amortization of intangible assets 1,459 1,746 (287) (16) % Total operating expenses 58,893 61,589 (2,696) (4) % Operating income 81,644 44,275 37,369 84 % Interest expense (from related parties $6,998 and $7,729 for the year ended December 31, 2024 and 2023, respectively) 11,443 17,069 (5,626) (33) % Income before income taxes 70,201 27,206 42,995 158 % Income tax expense 922 900 22 NM Net income $ 69,279 $ 26,306 $ 42,973 163 % Earnings per common share: Basic $ 3.01 $ 1.15 $ 1.86 162 % Diluted $ 3.01 $ 1.15 $ 1.86 162 % Non-GAAP Financial Measures: Adjusted net income * $ 64,675 $ 26,552 $ 38,123 144 % Adjusted income per share * $ 2.81 $ 1.17 $ 1.64 140 % EBITDA * $ 86,843 $ 49,875 $ 36,968 74 % Adjusted EBITDA * $ 82,239 $ 50,121 $ 32,118 64 % NM Not meaningful * See reconciliation of non-GAAP financial measures to GAAP results below Net Sales Net sales increased $17.0 million, or 4%, compared to 2023, as a result of sales increases of $100.6 million in the power systems end market, partly offset by decreases of $37.1 million and $46.6 million within the industrial and transportation end markets, respectively.
Biggest changeWith the recent introduction of numerous natural gas and diesel engines, coupled with its existing strong product lineup, the Company believes that it has a solid foundation to achieve long-term growth, particularly within the power systems market. 28 Results of Operations Results of operations for the year ended December 31, 2025 compared with the year ended December 31, 2024 : (in thousands, except per share amounts) For the Year Ended December 31, 2025 2024 Change % Change Net sales (to related parties $1,266 and $1,766 for the year ended December 31, 2025 and 2024, respectively) $ 722,405 $ 475,967 $ 246,438 52 % Cost of sales (derived from related party net sales $863 and $1,304 for the year ended December 31, 2025 and 2024, respectively) 537,506 335,430 202,076 60 % Gross profit 184,899 140,537 44,362 32 % Gross margin % 25.6 % 29.5 % (3.9) % Operating expenses: Research and development expenses 18,164 20,056 (1,892) (9) % Research and development expenses as a % of sales 2.5 % 4.2 % (1.7) % Selling, general and administrative expenses 55,803 37,378 18,425 49 % Selling, general and administrative expenses as a % of sales 7.7 % 7.9 % (0.2) % Amortization of intangible assets 1,218 1,459 (241) (17) % Total operating expenses 75,185 58,893 16,292 28 % Operating income 109,714 81,644 28,070 34 % Other expense (income), net Interest expense (from related parties $634 and $6,998 for the year ended December 31, 2025 and 2024, respectively) 6,702 11,443 (4,741) (41) % Other expense (income) (352) — (352) NM Income before income taxes 103,364 70,201 33,163 47 % Income tax (benefit) expense (10,623) 922 (11,545) NM Net income $ 113,987 $ 69,279 $ 44,708 65 % Earnings per common share: Basic $ 4.95 $ 3.01 $ 1.94 64 % Diluted $ 4.94 $ 3.01 $ 1.93 64 % Non-GAAP Financial Measures: Adjusted net income * $ 114,849 $ 64,675 $ 50,174 78 % Adjusted income per share * $ 4.98 $ 2.81 $ 2.17 77 % EBITDA * $ 115,454 $ 86,843 $ 28,611 33 % Adjusted EBITDA * $ 116,316 $ 82,239 $ 34,077 41 % NM Not meaningful * Non-GAAP measurement, see reconciliation below Net Sales Net sales increased $246.4 million, or 52%, compared to 2024, as a result of sales increases of $260.6 million in the power systems end market, partly offset by decreases of $8.5 million and $5.7 million within the industrial and transportation end markets, respectively.
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.
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 30 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.
This shift in markets reflects the 26 Company’s conscious strategic prioritization toward higher growth, higher-margin markets with less emphasis on more mature markets. The Company is focused on leading the business through a growth phase with a stronger balance sheet while strategically prioritizing products that demonstrate strong demand and higher gross margins.
This shift in markets reflects the 27 Company’s conscious strategic prioritization toward higher growth, higher-margin markets with less emphasis on more mature markets. The Company is focused on leading the business through a growth phase with a stronger balance sheet while strategically prioritizing products that demonstrate strong demand and higher gross margins.
The credit environment in which our customers operate has been relatively stable over the past few years and the Company collections are bolstered by a robust collections department. Total bad debt expense was less than $0.1 million in both 2024 and 2023.
The credit environment in which our customers operate has been relatively stable over the past few years and the Company collections are bolstered by a robust collections department. Total bad debt expense was less than $0.1 million in both 2025 and 2024.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis includes forward-looking statements about the Company’s business and consolidated results of operations for the fiscal years ended December 31, 2024 and 2023, including discussions about management’s expectations for the Company’s business.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis includes forward-looking statements about the Company’s business and consolidated results of operations for the fiscal years ended December 31, 2025 and 2024, including discussions about management’s expectations for the Company’s business.
The Company provides highly engineered, comprehensive solutions designed to meet specific customer application requirements and technical specifications, including those imposed by environmental regulatory bodies, such as the EPA and the CARB.
The Company provides highly engineered, comprehensive solutions designed to meet specific customer application requirements and technical specifications, including those imposed by environmental regulatory bodies, such as the EPA, CARB, MEE, and EU.
The Collaboration Agreement also provides for the steering committee to create various subcommittees with operating roles and otherwise governs the treatment of intellectual property of the parties prior to the collaboration and the intellectual property developed during the collaboration. On March 22, 2023, the Collaboration Agreement was extended for an additional term of three years.
The Collaboration Agreement also provides for the steering committee to create various subcommittees with operating roles and otherwise governs the treatment of intellectual property of the parties prior to the collaboration and the intellectual property developed during the collaboration. On March 22, 2023, the Collaboration Agreement was extended for an additional term of three years, expiring in March 2026.
The potential for continued economic uncertainty and unfavorable oil and gas market dynamics may have a material adverse impact on the levels of future customer orders and the Company’s future business operations, financial condition and liquidity. At December 31, 2024, the Company had four outstanding letters of credit totaling $1.4 million. See Item 8.
The potential for continued 32 economic uncertainty and unfavorable oil and gas market dynamics may have a material adverse impact on the levels of future customer orders and the Company’s future business operations, financial condition and liquidity. At December 31, 2025, the Company had four outstanding letters of credit totaling $1.8 million. See Item 8.
Cash Flow from Investing Activities Net cash used in investing activities was $4.6 million for the year ended December 31, 2024 compared to cash used in investing activities of $5.0 million for year ended December 31, 2023, respectively . For the years ended December 31, 2024 and 2023, cash used in investing activities related to capital expenditures.
Cash Flow from Investing Activities Net cash used in investing activities was $10.0 million for the year ended December 31, 2025 compared to cash used in investing activities of $4.6 million for year ended December 31, 2024, respectively . For the years ended December 31, 2025 and 2024, cash used in investing activities related to capital expenditures.
Interest Expense Interest expense decreased $5.6 million to $11.4 million in 2024 from $17.1 million in 2023, largely due to reduced outstanding debt and lower overall effective interest rates. See Note 6. Debt , included in Item 8. Financial Statements and Supplementary Data for additional information.
Interest Expense Interest expense decreased $4.7 million to $6.7 million in 2025 from $11.4 million in 2024, largely due to reduced outstanding debt and lower overall effective interest rates. See Note 6. Debt , included in Item 8. Financial Statements and Supplementary Data for additional information.
Warranty costs and recoveries are included in Cost of sales in the Consolidated Statements of Income. Warranty costs and recoveries are included in Cost of sales in the Consolidated Statements of Income. S ee Note 1. Summary of Significant Accounting Policies and Other Information , included in Item 8. Financial Statements and Supplementary Data for further discussion.
Warranty costs and recoveries are included in Cost of sales in the Consolidated Statements of Income. S ee Note 1. Summary of Significant Accounting Policies and Other Information , included in Item 8. Financial Statements and Supplementary Data for further discussion. Impact of New Accounting Standards For information about recently issued accounting pronouncements, see Note 1.
The decrease in cash provided by operating activities primarily resulted from a $44.5 million decrease of cash provided by working capital accounts, partially offset by an increase in earnings of $43.0 million.
The decrease in cash provided by operating activities primarily resulted from a $69.6 million decrease of cash provided by working capital accounts, partially offset by an increase in earnings of $44.7 million.
Cash Flow from Financing Activities The Company used $25.9 million in cash from financing activities during the year ended December 31, 2024 compared to $66.8 million in cash used by financing activities during the year ended December 31, 2023.
Cash Flow from Financing Activities The Company used $27.7 million in cash from financing activities during the year ended December 31, 2025 compared to $25.9 million in cash used by financing activities during the year ended December 31, 2024.
Recent Trends and Business Outlook PSI’s growth in net revenue in 2024 was driven by power systems markets, including data center and oil and gas products, partially offset by lower sales from more mature, lower-margin markets such as transportation.
Financial Statements and Supplementary Data , for additional information). Recent Trends and Business Outlook PSI’s growth in net revenue in 2025 was driven by power systems markets, including data center and oil and gas products, partially offset by lower sales from more mature, lower-margin markets such as industrial.
These assessments may be performed quantitatively or qualitatively. We have not made any changes in 2024 to our reporting unit or the accounting methodology we use to assess impairment loss on goodwill and indefinite-lived intangible assets.
These assessments may be performed quantitatively or qualitatively. We have not made any changes in 2025 to our reporting unit or the accounting methodology we use to assess impairment loss on goodwill and indefinite-lived intangible assets. In 2025, management performed an assessment of the impairment of goodwill for our reporting unit and indefinite-lived intangible assets using a qualitative approach.
For example, although the oil and gas market, in which the Company has historically operated, has experienced year over year growth from its historic lows, sales levels may not reach their previous higher levels because of rising crude oil prices and lower rig counts.
PSI’s business is impacted by the current macroeconomic and geopolitical environment. For example, although the oil and gas market, in which the Company has historically operated, has experienced year over year growth from its historic lows, sales levels may not reach their previous higher levels because of lower rig counts.
The remaining 11% of engines were dual fuel gasoline/propane, diesel and service engines. During 2023 , the Company sold over 33,500 engines of which approximately 76% utilized propane or natural gas as their fuel source and 17% utilized gasoline. The remaining 7% of engines were dual fuel gasoline/propane, diesel and service/base engines.
The remaining 8% of engines were dual fuel gasoline/propane, diesel and service engines. During 2024, the Company sold over 22,200 engines of which approximately 76% utilized propane or natural gas as their fuel source and 13% utilized gasoline. The remaining 11% of engines were dual fuel gasoline/propane, diesel and service/base engines.
For example, although the oil and gas market, in which the Company has historically operated, has experienced year over year growth from its historic lows, sales levels may not reach previous higher levels 31 because of rising crude oil prices and lower rig counts.
PSI’s business is impacted by the current macroeconomic and geopolitical environment. For example, although the oil and gas market, in which the Company has historically operated, has experienced year over year growth from its historic lows, sales levels may not reach previous higher levels because of lower rig counts.
Warranty The Company offers a standard limited warranty on the workmanship of its products that in most cases covers defects for a defined period, warranties mandated by governments and warranties for products that carry limited warranties from suppliers.
Summary of Significant Accounting Policies and Other Information , included in Item 8. Financial Statements and Supplementary Data for further discussion. Warranty The Company offers a standard limited warranty on the workmanship of its products that in most cases covers defects for a defined period, warranties mandated by governments and warranties for products that carry limited warranties from suppliers.
The Company manages the business as a single reporting segment. 25 Net sales by geographic area and by end market for 2024 and 2023 are presented below: (in thousands) For the year ended December 31, 2024 For the Year Ended December 31, 2023 Geographic Area % of Total % of Total United States $ 419,706 88 % $ 378,886 83 % North America (outside of United States) 24,466 5 % 21,265 5 % Pacific Rim 24,652 5 % 39,822 8 % Europe 7,090 2 % 13,815 3 % Others 53 — % 5,185 1 % Total $ 475,967 100 % $ 458,973 100 % (in thousands) For the year ended December 31, 2024 For the Year Ended December 31, 2023 End Market % of Total % of Total Power Systems $ 325,749 68 % $ 225,106 49 % Industrial 123,268 26 % 160,334 35 % Transportation 26,950 6 % 73,533 16 % Total $ 475,967 100 % $ 458,973 100 % During 2024, the Company sold over 22,200 engines of which approximately 76% utilized propane or natural gas as their fuel source and 13% utilized gasoline.
The Company manages the business as a single reporting segment. 26 Net sales by geographic area and by end market for 2025 and 2024 are presented below: (in thousands) For the year ended December 31, 2025 For the Year Ended December 31, 2024 Geographic Area % of Total % of Total United States $ 675,194 93 % $ 419,706 88 % North America (outside of United States) 21,270 3 % 24,466 5 % Pacific Rim 22,309 3 % 24,652 5 % Europe 3,373 1 % 7,090 2 % Others 259 — % 53 — % Total $ 722,405 100 % $ 475,967 100 % (in thousands) For the year ended December 31, 2025 For the Year Ended December 31, 2024 End Market % of Total % of Total Power Systems $ 586,347 81 % $ 325,749 68 % Industrial 114,768 16 % 123,268 26 % Transportation 21,290 3 % 26,950 6 % Total $ 722,405 100 % $ 475,967 100 % During 2025, the Company sold approximately 19,800 engines of which 74% utilized propane or natural gas as their fuel source and 18% utilized gasoline.
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. 29 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, 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.
The decrease in cash generated from working capital was primarily related to, purchases of inventory and lower collections on accounts receivable for the year ended December 31, 2024 compared to December 31, 2023 .
The decrease in cash generated from working capital was primarily related to the purchases of inventory, decrease in accounts payables, and the timing of collections on accounts receivables, reflecting higher sales volume and operational growth during the year ended December 31, 2025 compared to December 31, 2024 .
Impact of New Accounting Standards For information about recently issued accounting pronouncements, see Note 1. Summary of Significant Accounting Policies and Other Information , included in Item 8. Financial Statements and Supplementary Data .
Summary of Significant Accounting Policies and Other Information , included in Item 8. Financial Statements and Supplementary Data .
Financial Statements and Supplementary Data related to the amendments of the Company’s debt arrangements . Liquidity and Capital Resources The Company’s sources of funds are cash flows from operations, borrowings made pursuant to its credit facilities and shareholder’s loan agreements, and cash and cash equivalents on hand.
Liquidity and Capital Resources The Company’s sources of funds are cash flows from operations, borrowings made pursuant to its credit facilities and cash and cash equivalents on hand. Uses of funds include payments of principal on our debt facilities, capital expenditures, and working capital needs.
The following table presents a reconciliation from Net income to Adjusted net income: (in thousands) For the Year Ended December 31, 2024 2023 Net income $ 69,279 $ 26,306 Stock-based compensation 1 89 151 Legal Settlements 2 (4,693) 195 Insurance proceeds 3 — (100) Adjusted net income $ 64,675 $ 26,552 The following table presents a reconciliation from Net income per share – diluted to Adjusted net income per share – diluted: For the Year Ended December 31, 2024 2023 Net income per share – diluted $ 3.01 $ 1.15 Stock-based compensation 1 — 0.01 Legal Settlements 2 (0.20) 0.01 Adjusted net income per share – diluted $ 2.81 $ 1.17 Diluted shares (in thousands) 23,018 22,973 The following table presents a reconciliation from Net income to EBITDA and Adjusted EBITDA: (in thousands) For the Year Ended December 31, 2024 2023 Net income $ 69,279 $ 26,306 Interest expense 11,443 17,069 Income tax expense 922 900 Depreciation 3,740 3,854 Amortization of intangible assets 1,459 1,746 EBITDA 86,843 49,875 Stock-based compensation 1 89 151 Legal Settlements 2 (4,693) 195 Insurance proceeds 3 — (100) Adjusted EBITDA $ 82,239 $ 50,121 1.
The following table presents a reconciliation from Net income to Adjusted net income: (in thousands) For the Year Ended December 31, 2025 2024 Net income $ 113,987 $ 69,279 Stock-based compensation 1 427 89 Severance 2 435 — Other legal matters 3 — (4,693) Adjusted net income $ 114,849 $ 64,675 The following table presents a reconciliation from Net income per share – diluted to Adjusted net income per share – diluted: For the Year Ended December 31, 2025 2024 Net income per share – diluted $ 4.94 $ 3.01 Stock-based compensation 1 0.02 — Severance 2 0.02 — Other legal matters 3 — (0.20) Adjusted net income per share – diluted $ 4.98 $ 2.81 Diluted shares (in thousands) 23,066 23,018 The following table presents a reconciliation from Net income to EBITDA and Adjusted EBITDA: (in thousands) For the Year Ended December 31, 2025 2024 Net income $ 113,987 $ 69,279 Interest expense 6,702 11,443 Income tax (benefit) expense (10,623) 922 Depreciation 4,170 3,740 Amortization of intangible assets 1,218 1,459 EBITDA 115,454 86,843 Stock-based compensation 1 427 89 Severance 2 435 — Other legal matters 3 — (4,693) Adjusted EBITDA $ 116,316 $ 82,239 1.
GAAP, and non-GAAP financial amounts as reported by the Company may not be comparable to similarly titled measures 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.
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.
The cash used by financing activities for the year ended December 31, 2024 was due to proceeds from the new Revolving Credit Agreement and payments made on the SLA and other debt. Cash used in 2023 was primarily attributable to repayment of existing debt during the year. Se e additional discussion below and in Note 6. Debt in Item 8.
The cash used by financing activities for the year ended December 31, 2025 was due to the full repayment of the SLA and other existing debt year to date. Se e additional discussion below and in Note 6. Debt in Item 8. Financial Statements and Supplementary Data related to the amendments of the Company’s debt arrangements .
Legal Settlement Expenses Legal settlements included in the 2024 operating results, were a benefit of $4.7 million (see Note 11. Commitments and Contingencies , included in Part II. Item 8. Financial Statements and Supplementary Data , for additional information).
The Company purchased $39.8 million and $21.5 million of inventory from Weichai during 2025 and 2024, respectively. Legal Settlement Expenses Legal settlement expenses were immaterial for the year ended December 31, 2025. The Company recognized a benefit of $4.7 million in the 2024 operating results (see Note 11. Commitments and Contingencies , included in Part II. Item 8.
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.
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 amounts as reported by the Company may not be comparable to similarly titled measures reported by other companies.
EBITDA provides the Company with an understanding of earnings before the impact of investing and financing charges and income taxes.
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.
Amounts reflect non-cash stock-based compensation expense and have no material impact on the Adjusted net income per share – diluted for the year ended December 31, 2024 and 2023 . 2. Amounts include legal settlements f or the year ended December 31, 2024 and 2023 . 3.
Amounts reflect non-cash stock-based compensation expense for the year ended December 31, 2025 and 2024 . 2. Amounts include severance expense for the year ended December 31, 2025 and 2024 . 3.
Amounts include insurance recoveries related to a prior year incident and have no material impact on the Adjusted net income per share – diluted f or the year ended December 31, 2024 and 2023 . 30 Cash Flows Cash was impacted as follows: (in thousands) For the Year Ended December 31, 2024 2023 Change % Change Net cash provided by operating activities $ 62,390 $ 70,512 $ (8,122) (12) % Net cash used in investing activities (4,559) (5,020) 461 (9) % Net cash used in financing activities (25,934) (66,798) 40,864 (61) % Net increase (decrease) in cash, cash equivalents, and restricted cash $ 31,897 $ (1,306) $ 33,203 NM Capital expenditures $ (4,559) $ (5,036) $ 477 (9) % NM Not meaningful Cash Flow from Operating Activities Net cash provided by operations was $62.4 million in 2024 compared to net cash provided by operations of $70.5 million in 2023, a decrease of $8.1 million in cash provided by operating activities year-over-year .
Amounts include legal settlements f or the year ended December 31, 2025 and 2024 . 31 Cash Flows Cash was impacted as follows: (in thousands) For the Year Ended December 31, 2025 2024 Change % Change Net cash provided by operating activities $ 24,113 $ 62,390 $ (38,277) (61) % Net cash used in investing activities (9,962) (4,559) (5,403) 119 % Net cash used in financing activities (27,694) (25,934) (1,760) 7 % Net (decrease) increase in cash, cash equivalents, and restricted cash $ (13,543) $ 31,897 $ (45,440) (142) % Capital expenditures $ (9,973) $ (4,559) $ (5,414) 119 % NM Not meaningful Cash Flow from Operating Activities Net cash provided by operations was $24.1 million in 2025 compared to net cash provided by operations of $62.4 million in 2024, a decrease of $38.3 million in cash provided by operating activities year-over-year .
The potential for continued economic uncertainty and unfavorable oil and gas market dynamics may have a material adverse impact on the levels of future customer orders and the Company’s future business operations, financial condition and liquidity. The Company is party to several legal contingencies. Se e Note 11. Commitments and Contingencies for further discussion of the Company’s indemnification obligations.
The potential for continued economic uncertainty and unfavorable oil and gas market dynamics may have a material adverse impact on the levels of future customer orders and the Company’s future business operations, financial condition and liquidity. On July 30, 2025, the Company amended its Revolving Credit Agreement with Standard Chartered Bank and three other lenders.
Income Tax Expense The Company recorded income tax expense of $0.9 million in both 2024 and 2023. The Company’s pretax income was $70.2 million in 2024, compared to pretax income of $27.2 million in 2023. The Company continues to utilize NOLs along with other tax credits to lower its effective tax rate.
Income Tax (Benefit) Expense The Company recorded income tax benefit of $10.6 million in 2025 and income tax expense of $0.9 million in 2024. The Company’s pretax income was $103.4 million in 2025, compared to pretax income of $70.2 million in 2024.
The Company is committed to focusing on growth opportunities and investment while also optimizing its cost structure to enhance growth and profitability, ultimately delivering sustained value to our shareholders. The Company continues to experience inflationary cost pressures for certain raw materials and other goods, which the Company continues to try to mitigate through price increases and other cost reduction measures.
The Company is committed to focusing on growth opportunities and investment while also optimizing its cost structure to enhance growth and profitability, ultimately delivering sustained value to our shareholders. The Company has experienced tariff costs associated with its supply chain products.
As of December 31, 2024 , the Company’s total outstanding debt obligations under the Revolving Credit Agreement , the SLA, finance leases and other debt, all of which are short-term requirements, were $120.2 million in the aggregate, and its cash and cash equivalents were $55.3 million. See Item 8. Financial Statements and Supplementary Data , Note 6.
The Company has achieved profitability and generated positive cash flows from operating activities in 2025. As of December 31, 2025 , the Company’s total outstanding debt obligations under the Revolving Credit Agreement and for finance leases and other debt, were $96.6 million in the aggregate, and its cash and cash equivalents were $41.3 million. See Item 1.
Because these estimates form a basis for the determination of whether the impairment charge should be recorded, these estimates are considered to be critical accounting estimates. S ee Note 1. Summary of Significant Accounting Policies and Other Information , included in Item 8. Financial Statements and Supplementary Data for further discussion.
As a result, the Company determined that a quantitative goodwill impairment test was not required, and no impairment charge was recognized for the period ended December 31, 2025. 33 Because these estimates form a basis for the determination of whether the impairment charge should be recorded, these estimates are considered to be critical accounting estimates. S ee Note 1.
The Company continues to record a full valuation allowance against deferred tax assets. See Note 12. Income Taxes , included in Item 8. Financial Statements and Supplementary Data , for additional information related to the Company’s income tax provision. Non-GAAP Financial Measures In addition to the results provided in accordance with accounting principles generally accepted in the United States (“U.S.
The 2025 tax benefit primarily reflects the $38.3 million valuation allowance, which resulted in a one-time increase of approximately $1.66 to earnings per share. See Note 12. Income Taxes , included in Item 8. Financial Statements and Supplementary Data , for additional information related to the Company’s income tax provision.
Research and Development Expenses R&D expenses in 2024 and 2023 were $20.1 million and $19.5 million, respectively. The increase of $0.6 million, or 3%, was primarily related to the testing of new products. Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) decreased in 2024 by $3.0 million , or 7%, compared to 2023.
The decrease of $1.9 million, or 9%, was primarily driven by the timing of R&D program expenditures and the recovery of R&D costs from certain customers. Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) increased in 2025 by $18.4 million , or 49%, compared to 2024.
Removed
The Company’s sales to Weichai were $1.8 million and $1.7 million during 2024 and 2023, respectively. The Company purchased $21.5 million and $6.2 million of inventory from Weichai during 2024 and 2023, respectively. PSI is party to the SLA with Weichai. See Note 6. Debt , included in Item 8. Financial Statements and Supplementary Data , for additional information.
Added
The Company received a renewal notice from Weichai and is in the process of negotiating the renewal of the Collaboration Agreement; however, no formal extension has been executed as of the date of this filing. The Company’s sales to Weichai were $1.3 million and $1.8 million during 2025 and 2024, respectively.
Removed
PSI’s business is impacted by the current macroeconomic and geopolitical environment, which has contributed to differing levels of recovery in the global economy.
Added
The Supreme Court's decision to strike down tariffs and the administration's response have created significant uncertainty regarding the scope, rate, duration, and legal authority for future tariffs. We are actively assessing the evolving tariff environment and are committed to proactively mitigating any associated risks through strategic sourcing, pricing actions, and supply chain agility.
Removed
Additionally, the Company continues to experience ongoing tariff costs for its supply chain products and is trying to mitigate these impacts through price increases and other measures, such as seeking certain tariff exclusions, where available.
Added
The amended Revolving Credit Agreement allows the Company to borrow up to $135.0 million and extends the maturity date to July 30, 2027. The Company is party to several legal contingencies. Se e Note 11. Commitments and Contingencies for further discussion of the Company’s indemnification obligations. The company remains confident in the Company’s long-term strategy and market positioning.
Removed
The Company anticipates an increase in sales for 2025 compared to 2024, driven by expected growth in the power systems end market including products supporting data centers , while sales in the industrial and transportation end markets are projected to remain about flat.
Added
Given broader market conditions, ongoing operational initiatives, and variability in customer order timing, the Company has determined it is appropriate to take a disciplined approach and not provide business outlook for 2026 at this time. Management will continue to evaluate its ability to provide outlook as execution progresses and visibility improves.
Removed
N otwithstanding this outlook, which is being driven in part by expectations for stable supply chain dynamics and a continuation of favorable economic conditions within the United States and across the Company’s various markets, the Company cautions that significant uncertainty remains as a result of supply chain challenges, inflationary costs, commodity volatility, ongoing geopolitical and macroeconomic uncertainties, especially with the latest tariff announcements and the possible impact on trade between the USA and the rest of the world, among other factors.
Added
This shift in market mix reflects our deliberate strategic focus on higher-growth sectors such as data centers and oil and gas. In particular, we are prioritizing the rapidly expanding data center sector by enhancing our manufacturing capacity and capabilities to meet evolving customer demand.
Removed
Hyster-Yale Supply Arrangemen t : In 2023 , Hyster-Yale began using alternative suppliers for several high-volume engines that the Company provides, including the 2.0L and 2.4L engines, due in part to supply chain issues related to UFLPA enforcement. As a result, the Company experienced a decline in sales volumes to Hyster-Yale in 2024.
Added
The decline in industrial sales is largely attributable to softer demand in the material handling market. 29 Gross Profit Gross profit increased by $44.4 million, or 32%, to $184.9 million in 2025, compared to $140.5 million in 2024. Gross margin was 25.6% and 29.5% in 2025 and 2024, respe ctively.
Removed
Higher power systems end market sales were primarily due to increased demand for products across various applications, with the largest increases attributable to products used within the packaging market such as enclosures serving the fast-growing data center market, and oil and gas products.
Added
The decrease in gross margin is primarily due to inefficiencies related to our accelerated production ramp-up for data center product lines. Research and Development Expenses R&D expenses in 2025 and 2024 were $18.2 million and $20.1 million, respectively.
Removed
The Company is strategically prioritizing the rapidly expanding data center sector, improving and increasing our manufacturing capacity and capabilities to meet our customers’ evolving demands for our products.
Added
The increase is primarily due to a $4.3 million favorable non-recurring legal reserve reduction in 2024, $4.4 million higher costs associated with employee incentive programs, $3.9 million expense related to customer relationship improvement efforts, and $5.8 million mainly from increased sales and administrative expenses to support ongoing business growth in 2025.
Removed
Decreased industrial end market sales are primarily due to decreases in demand for products used within the material handling and arbor care markets, as well as the direct effects of enforcement of the UFLPA, which limited the Company’s ability to import certain raw materials.
Added
Non-GAAP Financial Measures In addition to the results provided in accordance with accounting principles generally accepted in the United States (“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.
Removed
The decreased sales within the transportation end market were primarily attributable to lower sales in the truck and school bus market from ceasing sales of emission-certified engines into this market, and new compliance and regulatory requirements that changed engine product offerings in this market. 28 Gross Profit Gross profit increased by $34.7 million, or 33%, to $140.5 million in 2024, compared to $105.9 million in 2023.
Added
We currently anticipate that cash flows from operations, available funds and access to financing sources, including under our Revolving Credit Agreement, will continue to be sufficient to meet our cash needs for the next twelve months and beyond. Our material cash requirements from known contractual and other obligations primarily relate to our debt and lease obligations.
Removed
Gross margin was 29.5% and 23.1% in 2024 and 2023, respe ctively. The increase in gross margin is primarily due to improved sales mix, pricing actions, higher operating efficiencies, and lower warranty costs primarily attributable to the Company’s sales shift away from certain transportation customers.
Added
Financial Statements , Note 6. Debt , for additional information. On July 30, 2025 , the Company amended its Revolving Credit Agreement with Standard Chartered Bank and three other lenders. The second amended Revolving Credit Agreement allows the Company to borrow up to $135.0 million and extends the maturity date to July 30, 2027 .
Removed
For the year ended December 31, 2024, warranty costs were $6.5 million, a decrease of $6.5 million compared to warranty costs of $13.0 million in the same period last year, mainly attributable to changes in estimates for preexisting warranties. A majority of the warranty activity is attributable to products sold within the transportation end market in prior years.
Added
The Company experiences tariff costs associated with products in its supply chain. We are actively assessing the evolving tariff environment and are committed to proactively mitigating any associated risks through strategic sourcing, pricing actions, and supply chain agility.
Removed
The decrease is primarily due to a decrease in accrued legal settlements of $4.7 million, lower professional fees and the decrease in selling expenses associated with decreased sales in the transportation market.
Added
Based on the totality of information considered, and after weighing both positive and negative qualitative factors, management concluded that it was not more likely than not that the fair value of any reporting unit was below its carrying amount.
Removed
Management does not use these non-GAAP financial measures for any purpose other than the reasons stated below.
Removed
Uses of funds include payments of principal on our debt facilities and shareholder’s loan agreements, capital expenditures, and working capital needs. While the Company has achieved profitability and generated positive cash flows from operating activities in 2024, uncertainties exist about the Company’s ability to refinance, extend, or repay its outstanding indebtedness.
Removed
Debt, for additional information. The Company’s ability to continue as a going concern is dependent on extending and amending, refinancing or repaying the indebtedness outstanding under the Company’s existing debt arrangements.
Removed
Without additional financing, the Company anticipates that it will not have sufficient cash and cash equivalents to repay amounts owed under its existing debt arrangements as they become due, which raises substantial doubt about the Company’s ability to continue as a going concern within one year from the date of filing.
Removed
In order to provide the Company with a more permanent source of liquidity, management plans to seek an extension and amendment and/or replacement of its existing debt agreements or seek additional liquidity from its current or other lenders before the maturity dates in 2025.
Removed
There can be no assurance that the Company’s management will be able to successfully complete an extension and amendment of its existing debt agreements or obtain new financing on acceptable terms, when required or if at all. PSI’s business is impacted by the current macroeconomic and geopolitical environment, which has contributed to differing levels of recovery in the global economy.
Removed
The Company continues to experience inflationary cost pressures for certain raw materials and other goods which the Company continues to try to mitigate through price increases and other cost reduction measures.
Removed
Additionally, the Company continues to experience ongoing tariff costs for its supply chain products and is trying to mitigate these impacts through price increases and other measures, such as seeking certain tariff exclusions, where possible.
Removed
In 2024, management performed an assessment of the impairment of 32 goodwill for our reporting unit and indefinite-lived intangible assets using a quantitative approach, which indicated that the fair values the reporting unit and indefinite-lived intangible assets were substantially in excess of their carrying values. Therefore, no indications of impairment were identified.
Removed
The Company performs its annual impairment test using the discounted cash flow method which involves the Company’s management making estimates with respect to a variety of factors that will significantly impact the future performance of the business, including the following: • future volume projections; • estimated margins on sales; • estimated growth rate for SG&A costs; • future effective tax rate; and • weighted-average cost of capital (“WACC”) used to discount future performance of the Company.

Other PSIX 10-K year-over-year comparisons