POWELL INDUSTRIES INC - FORM 8-K - EX-99.1 - December 8, 2010

Attached files

file filename
8-K - FORM 8-K - POWELL INDUSTRIES INCh78261e8vk.htm
EXHIBIT 99.1
(POWELL PRESS RELEASE)
POWELL INDUSTRIES ANNOUNCES FISCAL 2010
FOURTH QUARTER AND YEAR-END RESULTS
Excluding non-cash charges, Company reports fiscal 2010 diluted EPS of $2.93
HOUSTON — DECEMBER 8, 2010 — Powell Industries, Inc. (NASDAQ: POWL), a leading manufacturer of equipment and systems for the management and control of electrical energy and other critical processes, today announced results for the fiscal 2010 fourth quarter and year ended September 30, 2010.
     Revenues for the fourth quarter of fiscal 2010 were $133.8 million compared to revenues of $165.3 million for the fourth quarter of fiscal 2009. The Company recorded a net loss for the fourth quarter of $(4.8) million, or $(0.41) per share, compared to net income of $9.9 million, or $0.85 per diluted share, in the fourth quarter of fiscal 2009. Excluding certain non-cash charges, net income for the fourth quarter was $4.5 million, or $0.38 per diluted share, as set forth in the Non-GAAP Earnings Reconciliation table included below.
     Patrick L. McDonald, President and Chief Executive Officer, stated, “Our fourth quarter results excluding certain non-cash charges were slightly below our expectations. Importantly, our fourth quarter order rate has continued at the pace of recent quarters, and we believe this indicates a stabilization of the market and expect modest improvement in orders in upcoming quarters.
     “The Canadian business should demonstrate the growth we expected based on a tenfold increase in the backlog of equipment orders since we acquired the business nine months ago. This trend continues as the businesses are integrated and as we gain exposure of each of our product lines in the Canadian markets.

 

 

     “Late in the fourth quarter, we made a strategic decision to exit the Kazakhstan joint-venture associated with the Canadian acquisition. Contributing to our conclusion was the decision of the joint-venture’s single largest customer to exit the Kazakhstan market, and we do not believe the potential long-term results of this business warrant the financial and management commitment that would be required. We determined it is in the best interest of the Company to exit the joint-venture and have begun reviewing our alternatives.
     “We acquired PowerComm for the strategic purpose of entering the Canadian market and growing our service business. We intend to be a long-term participant as a Canadian company in that market and remain confident in the future prospects,” concluded McDonald.
FISCAL FOURTH QUARTER 2010 RESULTS
     Fourth quarter revenues decreased to $133.8 million from $165.3 million in the fourth quarter of fiscal 2009 as a result of lower demand and reduced service related activities. Net loss for the fourth quarter was $(4.8) million, or $(0.41) per share. Excluding certain non-cash charges, net income for the fourth quarter was $4.5 million, or $0.38 per diluted share, compared to $9.9 million, or $0.85 per diluted share, a year ago.
     The primary drivers of this year’s fourth quarter decrease in net income were reduced business volumes, which are more closely aligned with current orders and backlog. Other contributing factors were transition costs related to the Canadian acquisition and an operating loss in Canada. The Company recorded a goodwill impairment charge of $7.5 million, or $0.46 per share, primarily related to the Company’s decision to exit the joint-venture in Kazakhstan. Additionally, the Company recorded a foreign deferred tax asset valuation allowance of $3.9 million, or $0.33 per share, related to the goodwill impairment charge and a first year operating loss at Powell Canada. This valuation allowance will be adjusted to offset income tax provisions on future foreign profits.
     New orders placed during the fourth quarter of fiscal 2010 totaled $106 million compared to $136 million in the third quarter of fiscal 2010 and to $100 million in the fourth quarter of fiscal 2009. The Company’s backlog as of September 30, 2010 was $282 million compared to $310 million at June 30, 2010 and to $366 million at September 30, 2009.
FISCAL 2010 RESULTS
     Revenues for fiscal 2010 were $550.7 million compared to $665.9 million in fiscal 2009. Net income was $25.0 million, or $2.14 per diluted share, compared to $39.7 million, or $3.43 per diluted share, in fiscal 2009. Excluding the previously mentioned non-cash items, fiscal 2010 net income was $34.3 million, or $2.93 per diluted share, compared to $39.7 million, or $3.43 per diluted share in fiscal 2009.

 

 

OUTLOOK
     The following statements are based on the current expectations of the Company. These statements are forward-looking, and actual results may differ materially as further elaborated in the last paragraph below.
     Based on its backlog and current business conditions, Powell Industries expects full year fiscal 2011 revenues to range between $475 million and $525 million and full year fiscal 2011 earnings to range between $1.25 and $1.75 per diluted share.
CONFERENCE CALL
     Powell Industries has scheduled a conference call for Wednesday, December 8, 2010 at 11:00 a.m. eastern time. To participate in the conference call, dial 480-629-9643 at least 10 minutes before the call begins and ask for the Powell Industries conference call. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until December 15, 2010. To access the replay, dial 303-590-3030 using a passcode of 4386408#.
     Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by visiting http://www.powellind.com. To listen to the live call on the web, please visit the website at least fifteen minutes before the call begins to register, download and install any necessary audio software. For those who cannot listen to the live webcast, an archive will be available shortly after the call and will remain available for approximately 90 days at http://www.powellind.com.
     Powell Industries, Inc., headquartered in Houston, designs, manufactures and packages systems and equipment for the control, distribution and management of electrical energy and other dynamic processes. Powell provides products and services to large industrial customers such as utilities, oil and gas producers, refineries, petrochemical plants, pulp and paper producers, mining operations, commuter railways and other vehicular transportation facilities. For more information, please visit www.powellind.com.
Any forward-looking statements in the preceding paragraphs of this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties in that actual results may differ materially from those projected in the forward-looking statements. In the course of operations, we are subject to certain risk factors, competition and competitive pressures, sensitivity to general economic and industrial conditions, international political and economic risks, availability and price of raw materials and execution of business strategy. For further information, please refer to the Company’s filings with the Securities and Exchange Commission, copies of which are available from the Company without charge.

 

 

     POWELL INDUSTRIES, INC. & SUBSIDIARIES
 
     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 
    Three Months Ended     Years Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
(In thousands, except per share data)   (Unaudited)     (Unaudited)  
Revenues
   $ 133,761     $ 165,321     $ 550,692     $ 665,851  
 
                                
Cost of goods sold
     104,298       129,725       408,635       520,802  
 
                        
 
                                
Gross profit
     29,463       35,596       142,057       145,049  
 
                                
Selling, general and administrative expenses
     21,635       20,291       84,457       79,954  
Amortization expense
     1,285       861       4,477       3,460  
Loss on impairment of goodwill
     7,452       —       7,452       —  
 
                        
 
                                
Operating income (loss)
     (909 )     14,444       45,671       61,635  
 
                                
Interest expense
     232       177       870       1,107  
 
                                
Interest income
     (54 )     (38 )     (260 )     (131 )
 
                        
 
                                
Income (loss) before income taxes
     (1,087 )     14,305       45,061       60,659  
 
                                
Income tax provision
     3,695       4,463       19,894       20,734  
 
                        
 
                                
Net income (loss)
     (4,782 )     9,842       25,167       39,925  
 
                                
Net (income) loss attributable to noncontrolling interest.
     —       32       (159 )     (208 )
 
                        
 
                                
Net income (loss) attributable to Powell Industries, Inc.
   $ (4,782 )   $ 9,874     $ 25,008     $ 39,717  
 
                        
 
                                
Earnings per share attributable to Powell Industries, Inc.
                                
 
                                
Basic
   $ (0.41 )   $ 0.86     $ 2.17     $ 3.48  
 
                        
Diluted
   $ (0.41 )   $ 0.85     $ 2.14     $ 3.43  
 
                        
 
                                
Weighted average shares:
                                
 
                                
Basic
     11,626       11,448       11,545       11,424  
 
                        
Diluted
     11,728       11,625       11,693       11,591  
 
                        
 
                                
SELECTED FINANCIAL DATA:
                                
 
                                
Depreciation and amortization
   $ 3,706     $ 2,758     $ 13,703     $ 10,962  
 
                        
 
                                
Capital expenditures
   $ 959     $ 1,669     $ 4,420     $ 8,081  
 
                        

 

 

     POWELL INDUSTRIES, INC. & SUBSIDIARIES
 
     CONDENSED CONSOLIDATED BALANCE SHEETS
                 
    September 30,     September 30,  
    2010     2009  
(In thousands)   (Unaudited)          
Assets:
                
 
                
Current assets
   $ 302,191     $ 315,003  
 
                
Property, plant and equipment (net)
     63,676       61,036  
 
                
Other assets
     34,845       28,801  
 
            
 
                
Total assets
   $ 400,712     $ 404,840  
 
            
 
                
Liabilities & stockholders’ equity:
                
 
                
Current liabilities
   $ 114,746     $ 149,142  
 
                
Long-term debt and capital lease obligations,
     5,202       4,800  
net of current maturities
                
 
                
Deferred and other long-term liabilities
     3,461       3,681  
 
                
Stockholders’ equity and noncontrolling interest
     277,303       247,217  
 
            
 
                
Total liabilities and stockholders’ equity
   $ 400,712     $ 404,840  
 
            

 

 

     POWELL INDUSTRIES, INC. & SUBSIDIARIES
 
     BUSINESS SEGMENTS
                                 
    Three Months Ended     Years Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
(In thousands)   (Unaudited)     (Unaudited)  
Revenues:
                                
Electrical Power Products
   $ 127,402     $ 159,567     $ 524,236     $ 637,845  
Process Control Systems
     6,359       5,754       26,456       28,006  
 
                        
 
                                
Total revenues
   $ 133,761     $ 165,321     $ 550,692     $ 665,851  
 
                        
 
                                
Income before income taxes and minority interest:
                                
 
                                
Electrical Power Products
   $ (1,331 )   $ 13,707     $ 44,557     $ 56,700  
Process Control Systems
     244       598       504       3,959  
 
                        
 
                                
Total income before income taxes and minority interest
   $ (1,087 )   $ 14,305     $ 45,061     $ 60,659  
 
                        
                 
    September 30,     September 30,  
    2010     2009  
(In thousands)   (Unaudited)  
Identifiable tangible assets:
                
 
                
Electrical Power Products
   $ 230,111     $ 258,012  
Process Control Systems
     9,617       6,863  
Corporate
     133,635       117,398  
 
            
 
                
Total identifiable tangible assets
   $ 373,363     $ 382,273  
 
            
 
                
Backlog:
                
 
                
Electrical Power Products
   $ 245,433     $ 329,558  
Process Control Systems
     36,870       36,198  
 
            
 
                
Total backlog
   $ 282,303     $ 365,756  
 
            

 

 

     POWELL INDUSTRIES, INC. & SUBSIDIARIES
 
     NON-GAAP EARNINGS RECONCILIATION
                                 
    Three Months Ended     Years Ended  
    September 30,     September 30,  
    2010     2009     2010     2009  
(In thousands)   (Unaudited)     (Unaudited)  
 
                                
Net Income:
                                
 
                                
Net income (loss) attributable to
   $ (4,782 )   $ 9,874     $ 25,008     $ 39,717  
Powell Industries, Inc.
                                
Goodwill impairment, net of taxes
     5,365       -0-       5,365       -0-  
Deferred tax asset valuation allowance
     3,892       -0-       3,892       -0-  
 
                        
 
                                
Non-GAAP net income
   $ 4,475     $ 9,874     $ 34,265     $ 39,717  
 
                        
 
                                
Diluted shares outstanding
     11,728       11,625       11,693       11,591  
 
                                
Diluted Earnings Per Share:
                                
 
                                
Earnings per share
   $ (0.41 )   $ 0.85     $ 2.14     $ 3.43  
Non-GAAP earnings per share
   $ 0.38     $ 0.85     $ 2.93     $ 3.43  
The Company defines Non-GAAP net income as net income (loss) before goodwill impairment and deferred tax valuation allowance. Non-GAAP net income is presented to exclude the impact of the goodwill impairment and valuation allowance related to the tax benefit from net operating loss. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company believes this non-GAAP financial measure is helpful, however, in comparing the historical results to current results and measuring operating earnings trends. The Company also believes the disclosure of Non-GAAP net income will help investors meaningfully evaluate and compare its cash flow generating capacity from quarter to quarter and year to year.
# # #

 

POWELL INDUSTRIES INC Reports