Power Solutions International, Inc.

Second-quarter 2026 net sales were $152.5 million, down $39.4 million, or 21%, from $191.9 million in Q2 2025, and up 18.6% from Q1 2026. Gross profit was $41.4 million versus $54.1 million a year ago, and gross margin was 27.1% versus 28.2% in Q2 2025 and 22.9% in Q1 2026. Operating income was $23.9 million, EBITDA was $25.7 million, and EBITDA margin was 16.9%. Net income was $16.9 million, or $0.73 per diluted share, versus $51.2 million, or $2.22 per diluted share, in Q2 2025; last year’s quarter included a $29.2 million, or $1.27 per diluted share, tax benefit. Operating cash flow was $56.6 million in the quarter, capex was $0.8 million, cash and cash equivalents ended at $70.1 million, and total debt was about $72.6 million, including $65 million drawn on the revolver. For the first half of 2026, gross margin was 25.2% and operating cash flow was $75.7 million. Management did not provide formal full-year guidance, but said second-half 2026 sales are expected to exceed first-half 2026 sales and be approximately in line with second-half 2025 sales, while continued softness in oil and gas and Wisconsin ramp-up costs are expected to weigh on quarterly trends.

Xun Li said the quarter reflected meaningful operational progress, especially in Wisconsin, where productivity, efficiency, flow paths and material availability improved. He emphasized that demand for data center power solutions remains strong and that larger orders are moving into production, but he repeatedly stressed that shipment timing and quarterly results can vary. His tone was constructive but cautious: optimistic about growth opportunities, yet careful not to overstate visibility into 2027 or precise revenue timing.

Li highlighted the hard numbers behind the improvement: sales of $152.5 million, gross margin of 27.1%, operating income of $23.9 million, EBITDA of $25.7 million, and operating cash flow of $56.6 million. He said the gross margin gain versus Q1 was helped by early operational improvement benefits in Wisconsin and fixed-cost absorption, but that elevated production costs from capacity ramp-up are expected to persist and he gave no specific 2026 gross margin outlook. He also noted debt reduction of about $30.8 million in the quarter, ending cash of $70.1 million and total debt of about $72.6 million, and said liquidity is sufficient for anticipated cash needs. On capital allocation, the company’s focus appeared to be on cash generation, debt reduction, and supporting future growth rather than any shareholder return discussion.

Analysts pressed management on how much of the Q2 improvement came from the enclosure/data center ramp versus oil and gas, and Li said most of the sequential sales increase came from power systems and Wisconsin operations. On competition, questions focused on engine and platform differences versus Generac; Li said PSI serves different customers, is not directly competing, and is also working on potential gas gensets. Analysts also asked about 2027 visibility and whether Wisconsin has enough capacity; management declined to give formal 2027 guidance, saying visibility should improve later in the year, and said current Wisconsin capacity can support current demand with additional capital available if needed.