PIONEER POWER SOLUTIONS, INC. Revenue Disclosure

3. REVENUES

 

Nature of the Company’s products and services

 

The Company’s principal products and services include electric power systems and equipment, distributed energy resources, power generation equipment and mobile electric vehicle charging solutions. The Company’s principal products and services are primarily sold in the United States. See Note 13 – Business Segment, Geographic and Customer Information, for additional information.

 

Products

 

The Company’s Electrical Infrastructure business (included in discontinued operations; see Note 11 – Discontinued Operations for details) provided electric power systems and equipment and distributed energy resources that helped customers effectively and efficiently protect, control, transfer, monitor and manage their electric energy needs.

 

The Company’s Critical Power business provides customers with power generation equipment and the Company’s suite of mobile e-Boost electric vehicle charging solutions.

 

Services

 

Power generation systems represent considerable investments that require proper maintenance and service in order to operate reliably during a time of emergency. The Company’s power maintenance programs provide preventative maintenance, repair and support service for the Company’s customers’ power generation systems.

 

The timing of revenue recognition, customer billings and cash collections results in accounts receivable, contract assets and deferred revenue at the end of each reporting period. Contract assets include unbilled amounts typically resulting from revenue recognized exceeding amounts billed to customers for contracts utilizing an input method based on the proportion of labor hours incurred as compared to the total estimated labor hours for the fixed-fee contract performance obligations. The Company bills customers as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, upon achievement of contractual milestones or upon deliveries.

 

 

Revenue Recognition

 

During the years ended December 31, 2024, and 2023, the Company recognized $558 and $343 of equipment revenue over time, respectively, from its Critical Power segment. Additionally, the Company recognized $11,704 and $3,070 of revenue at a point in time from the sale of its products, which is typically recognized upon delivery, from its Critical Power segment during the years ended December 31, 2024, and 2023, respectively.

 

Service revenues include maintenance contracts that are recognized over time based on the contract term and repair services which are recognized as services are delivered. The Company recognized $8,690 and $7,703 of service revenue during the years ended December 31, 2024, and 2023, respectively. Under its continuing operations, the Company recognizes revenue as services are provided. Amounts billed and due from customers, as well as the value of unbilled account receivables, are generally classified within current assets in the consolidated balance sheets. The customer payments are generally due in 30 days.

 

Under certain contracts, the Company may be entitled to invoice the customer and receive payments in advance of performing the related contract work. In those instances, the Company recognizes a liability for advance billings in excess of revenue recognized, which is referred to as deferred revenue. Payments received from customers in advance of revenue recognition are not considered a significant financing component because they are utilized to pay for contract costs within a one-year period or are requested by the Company to ensure the customers meet their payment obligations.

 

The change in deferred revenue as of December 31, 2024, was driven primarily by ordinary course contract activity. As of January 1, 2023, the Company had a deferred revenue balance of $808. For the years ended December 31, 2024, and 2023, the Company recognized revenue of $162 and $670 respectively, related to amounts that were included in deferred revenue as of December 31, 2023, and 2022, respectively, resulting primarily from the progress made on the various active contracts during the respective reporting periods. As of December 31, 2024, the Company had $991 related to contract liabilities where performance obligations have not yet been satisfied, which has been included within deferred revenue on the consolidated balance sheet.

 

Unbilled receivables include amounts for work performed for which the Company has an unconditional right to receive payment and that are not subject to the completion of any other specific task, other than the billing itself.

 

Concentration of Risk

 

For the year ended December 31, 2024, the Company derived 22% and 13% of its revenue from two customers. For the year ended December 31, 2023, the Company derived 14% of its revenue from one customer. As of December 31, 2024, one customer’s outstanding receivable balance equaled 72% of the total outstanding receivable balance. As of December 31, 2023, two customers’ outstanding receivable balance equaled 22% and 12% of the total outstanding receivable balance.

 

Return of a product requires that the buyer obtain permission in writing from the Company. When the buyer requests authorization to return material for reasons of their own, the buyer will be charged for placing the returned goods in saleable condition, restocking charges and for any outgoing and incoming transportation paid by the Company. The Company warrants title to the products, and also warrants the products on date of shipment to the buyer, to be of the kind and quality described in the contract, merchantable, and free of defects in workmanship and material. Returns and warranties during the year ended December 31, 2024 were $295. Returns and warranties during the year ended December 31, 2023, were insignificant.

 

Disaggregated Revenue

 

The following table presents the Company’s revenues disaggregated by revenue discipline:

 SCHEDULE OF REVENUE DISAGGREGATED

 

		2024				2023
		For the Years Ended
		December 31,
		2024				2023
Revenues - ASC 606
Products		$	12,262			$	3,413
Services			8,690				7,703
Total revenues - ASC 606			20,952				11,116
Revenues - ASC 842
Fixed lease revenue			1,927				-
Total revenues - ASC 842			1,927				-
Total revenue		$	22,879			$	11,116

 

Lease Revenues

 

There were no leasing revenues arising from variable lease payments during the years ended December 31, 2024, and 2023.

 

The following table presents future operating lease payments to be received as of December 31, 2024:

 SCHEDULE OF FUTURE OPERATING LEASE PAYMENTS TO BE RECEIVED

For the Years Ended December 31,		Total
2025		$	2,059
2026			743
2027			200
2028			200
2029			142
Total		$	3,344