Power Solutions slides on weak industrial, transportation demand forecast

Shares of Power Solutions (PSIX) are under pressure on Friday after the maker of alternative-fuel power systems reported strong quarterly results as the market reacted to the outlook for the industrial and transportation sectors, which are expected to remain flat.

RESULTS: Power Solutions reported third quarter results, with sales and profit coming in higher than expected. The company announced profit of $27.6M, or $1.20 per diluted share, in its Q3 and said Q3 2025 sales rose 62% to $203.8M, boosted by an $85.3M increase in the power systems market. This was, however, partly offset by declines of $4.7M in industrial and $2.6M in transportation markets. According to the company, the shift in market mix reflects its “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. The decline in industrial sales is largely attributable to softer demand in the materials handling market.”

Gross margin stood at 23.9%, a decrease of 5% versus 28.9% in the same period in the prior year. This was due to strong sales growth in comparatively lower-margin products and temporary inefficiencies related to the company’s “accelerated production ramp-up.”

Dino Xykis, Chief Executive Officer, said, “We achieved the highest sales in our company’s history this quarter, delivering strong financial performance with sales increasing 62% and net income rising 59%. These results underscore the robust demand for our power systems solutions, particularly within the data center market. During the quarter, we expanded our manufacturing capacity and increased production across key data center product lines. We are continuing to ramp up production to ensure on-time delivery while implementing targeted operational improvements to enhance efficiency, execution and future growth going forward.”

OUTLOOK: Power Solutions said it anticipates strong sales growth of 45% 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 flat.

PRICE ACTION: In afternoon trading, shares of Power Solutions have dropped almost 27% to $59.57.