PSIX question and a recent article

Hi Saul,

I have started trying to get a handle on PSIX. From what I have read, which of course includes your posts, PSIX is a multi-bagger opportunity even after rising some 200% last year. PSIX is still a small cap and it appears to be growing revenues and non-GAAP earnings at a rapid clip. This one could be the next RB pick. You never know …

I need to look at it a bit more to understand its business segments, insider/institution holdings, debt levels, etc… Do you have any notes from recent earnings call(s) that you could share here?

BTW, I found the following bullish article from Seeking Alpha:…

It appears some folks are thinking of this problem of disposing off the so called “waste gas”. There was an article on this on the Fool’s free site as well.

What got me interested in PSIX was that they provide a solution to a huge and growing problem. Northern North Dakota recently made the headlines because the flaring of gas from fracking was so extensive that it could be seen from outer space. Because the infrastructure doesn’t exist to collect this “waste gas,” the frackers simply burn it. To make this seemingly ridiculous situation even worse, drillers truck in diesel fuel to power the generators and engines needed for fracking.

The common sense and obvious solution is to stop flaring the gas, and use the “waste gas” to power the generators and engines that are currently using diesel. That is where PSIX comes in, they have a product that does just that.



Hi Anirban, I just added some myself.

Here are my recent notes.

Sept 2013
PSIX announced today that its wholly-owned subsidiary, Power Great Lakes, Inc. (“PGL”), has been appointed a “4000 Series Gas Center of Excellence” by Perkins Engines. This appointment provides PGL the rights to sell, customize, install, and support the Perkins 4000 Series high-horsepower gas engines in North America.

Perkins has named six qualified companies worldwide, including PGL, as 4000 Series Gas Centers of Excellence. These companies will consolidate wide-ranging application demands and product support in their respective global regions.

The Perkins 4000 Series systems will range from 23-liters to 61-liters of displacement and is fuel-flexible, capable of running on natural gas and a wide range of alternative fuels.

“We’re delighted to have won this opportunity to expand our proven gas technologies from 300-kilowatts to 1-megawatt range and we look forward to continuing to build on our relationship with Perkins.”

The new agreement broadens a nearly 30-year partnership with Perkins, with Power Great Lakes currently serving as a North American Perkins Master Distributor, representing a 12-state territory.

In addition to their longstanding relationship, Perkins chose PGL as its exclusive North American 4000 Series Gas Center of Excellence based on the company’s significant natural gas engine experience and its ability to customize power systems. The ability to customize is key to growth in the gas engine business, because the segment is primarily comprised of customers with very specific end-use requirements.

PGL will serve as Perkins’ authorized channel to market the 4000 Series gas engines in North America. Perkins 4000 Series gas engines can serve a wide range of end-use applications, including oil and gas, mining, and off-pipeline operations, as well as municipal power generation.

“We believe the high-horsepower market represents a sizable opportunity to continue growth and increase market share. Our technical knowledge, specialized manufacturing facilities and existing customer base make us an ideal fit to meet the individualized demands of the high-power engine market.”

Nov 2013 – Announced Sept quarter results.

Net sales were $64.6 million, up 25% from $51.7 million and up 9% sequentially from $59.1 million.

Contributing to the sales increase was strong growth in heavy-duty power generation systems and in aftermarket sales.

Gross Margins were 19.1%, up from 16.3% a year ago, also due to more heavy duty engines and more aftermarket sales.

Operating income was $4.1 million an increase of 43% from $2.9 million, and up 7% sequentially from $3.8 million.

Operating margin of 6.4% in the current quarter was up from 5.6% a year ago and compares to 6.5% sequentially.

Adjusted net up both sequentially and year over year.

Our strong performance continued in the third quarter with sales increasing 25% from last year and 9% from the second quarter. Gross margins also expanded to 19.1% this quarter. We continue to benefit from strong momentum in oil and gas applications, where our heavy-duty power systems can use wellhead gas. This results in a rapid payback for the customer, using a cleaner-burning fuel. Sales of these systems almost doubled in the third quarter from last year. We are in the early stages of an exciting new market opportunity."

As the leader in alternative power solutions for the industrial market, we believe we are uniquely qualified to capitalize on the new energy environment. With the addition of new markets like China and our on-road opportunities, believe we are well positioned for strong growth in the years ahead.

PS – The figure for stock based compensation they give is for the whole nine months which makes it hard to calculate quarterly adjusted earnings, but their adjusted earnings are 74 cents for three quarters and 95 cents trailing.

Conference Call:
For 2014, I can assure that our operating expenses will not be growing as quickly as our top line. So there’s going to be somewhat of a natural expansion of operating margins due to that. But in addition, I know Eric and his team are aggressively working on costing down for our components which is key to what we do. That will improve gross margins.

Engines sold: In 2012 we sold roughly 40,000 engines. For 2013, I think we’ll sell about 50,000 engines. And then for 2014 I think that number will approach 65,000 engines.

Raised estimates for sales for 2013 from $230 million midpoint to $236 million midpoint. I suspect they’ll beat it by $7 million.

Important Clarification: When they get engines like from GM and Perkins (a part of Caterpillar), what they get is the engine block and the right to develop an alternative fuel engine based on the engine block. The engine block is made up of the cylinder(s) of a reciprocating engine and often some or all of their associated surrounding structures (coolant passages, intake and exhaust passages and ports, and crankcase).

Dec 2013 – Insider buy
Chairman of the Board buys 3300 shares at market ($69). ($200,000 plus


Thanks, Saul, for the update on PSIX. And for sharing that you have recently added to your position.

It is gratifying to see the chairman of the board purchase $200,000 worth of shares in December.


Thanks, Saul, for the update on PSIX. And for sharing that you have recently added to your position.

It is gratifying to see the chairman of the board purchase $200,000 worth of shares in December.

While Saul may be the chairman of this board, I don’t think he meant that he purchased $200K worth of the shares. :wink:

Touche, GauchoChris!

When Chairman Saul speaks I listen!