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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark one)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended July 31, 1995
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from
___________________ to ________________________
COMMISSION FILE NUMBER 0-6050
POWELL INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 88-0106100
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8550 MOSLEY DRIVE, HOUSTON, TEXAS 77075-1180
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 944-6900
Indicate by "X" whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Common Stock, par value $.01 per share; 10,542,704 shares outstanding on
July 31, 1995.
POWELL INDUSTRIES, INC.
PART I - Financial Information
Item 1. Financial Statements .......................... 3-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Quarterly
Results of Operations....................... 9-10
PART II - Other Information and Signatures ...................... 11-12
Powell Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Share Data)
July 31, October 31,
Assets 1995 1994
(unaudited)
--------- ----------
Current Assets:
Cash and cash equivalents ............................ $ 3,578 $ 7,598
Accounts receivable, less allowance for
doubtful accounts of $801 and $1,061,
respectively ...................................... 34,659 33,976
Costs and estimated earnings in excess
of billings ....................................... 11,610 7,338
Inventories .......................................... 19,997 14,899
Deferred income taxes ................................ 2,313 2,134
Prepaid expenses and other current assets ............ 1,738 1,327
-------- --------
Total Current Assets ............................... 73,895 67,272
Property, plant and equipment, net ..................... 16,120 15,659
Deferred income taxes, noncurrent ...................... 955 1,390
Other assets ........................................... 4,470 6,423
-------- --------
Total Assets ....................................... $ 95,440 $ 90,744
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts and income taxes payable .................... $ 11,450 $ 9,217
Accrued salaries, bonuses and commissions ............ 4,013 4,612
Accrued product warranty ............................. 2,735 3,679
Other accrued expenses ............................... 3,789 5,372
Billings in excess of costs and
estimated earnings ................................ 4,820 2,350
Current maturities of long-term debt ................. 2,813 2,813
-------- --------
Total Current Liabilities .......................... 29,620 28,043
Long-term debt ......................................... 5,350 6,563
Deferred compensation expense .......................... 2,009 1,887
Postretirement benefits liability ...................... 2,524 2,595
Stockholders' Equity:
Preferred stock, $.01 par value; 5,000,000 shares
authorized; none issued Common stock, $.01 par
value; 15,000,000 shares authorized; 10,542,704
and 10,517,704, respectively, shares issued
and outstanding ...................................... 105 105
Additional paid-in capital ........................... 5,062 4,906
Retained earnings .................................... 54,184 50,485
Deferred compensation-ESOP ........................... (3,414) (3,840)
-------- --------
Total Stockholders' Equity ......................... 55,937 51,656
-------- --------
Total Liabilities and Stockholders' Equity ......... $ 95,440 $ 90,744
======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
Powell Industries, Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
(In Thousands, Except Per Share Data)
Three Months Ended July 31,
---------------------------
1995 1994
------------ -----------
Revenues ......................................... $ 40,341 $ 36,255
Cost of goods sold ............................... 31,608 28,224
----------- -----------
Gross profit ..................................... 8,733 8,031
Selling, general and administrative expenses ..... 6,824 6,340
----------- -----------
Earnings from operations ......................... 1,909 1,691
Interest, net .................................... 179 168
----------- -----------
Earnings before income taxes ..................... 1,730 1,523
Income tax provision ............................. 292 281
----------- -----------
Net earnings ..................................... $ 1,438 $ 1,242
=========== ===========
Net earnings per common share .................... $ 0.14 $ 0.12
=========== ===========
Weighted average number of common
shares outstanding ........................... 10,542,704 10,517,704
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
Powell Industries, Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
(In Thousands, Except Per Share Data)
Nine Months Ended July 31,
--------------------------
1995 1994
------------ -----------
Revenues ........................................... $ 118,328 $ 109,975
Cost of goods sold ................................. 93,065 85,788
----------- -----------
Gross profit ....................................... 25,263 24,187
Selling, general and administrative expenses ....... 19,776 19,298
----------- -----------
Earnings from operations ........................... 5,487 4,889
Interest, net ...................................... 447 550
----------- -----------
Earnings before income taxes ....................... 5,040 4,339
Income tax provision ............................... 1,341 1,175
----------- -----------
Net earnings ....................................... $ 3,699 $ 3,164
=========== ===========
Net earnings per common share ...................... $ 0.35 $ 0.30
=========== ===========
Weighted average number of common shares outstanding 10,531,593 10,506,593
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
Powell Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(In Thousands)
Nine Months
Ended July 31,
---------------------
1995 1994
-------- ---------
Operating Activities:
Net earnings ......................................... $ 3,699 $ 3,164
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization ...................... 2,579 2,499
Deferred income taxes .............................. 256 (852)
Postretirement benefit liability ................... 71 489
Changes in operating assets and liabilities:
Accounts receivable .............................. (683) 619
Costs and estimated earnings in excess of
billings ........................................ (4,272) 786
Inventories ...................................... (5,098) (3,405)
Prepaid expenses and other current assets ........ (411) (984)
Other assets ..................................... 997 470
Accounts payable and income taxes payable ........ 2,233 (2,713)
Accrued liabilities .............................. (3,127) 845
Billings in excess of costs and estimated
earnings ........................................ 2,470 (1,733)
Other long-term liabilities ...................... 563 167
-------- --------
Net cash provided by (used in) operating
activities ............................................ (723) (648)
-------- --------
Investing Activities:
Purchases of property, plant, and equipment .......... (2,084) (1,510)
Acquisition of Transdyn Controls, Inc. ............... -- (1,539)
-------- --------
Net cash used in investing activities .................. (2,084) (3,049)
-------- --------
Financing Activities:
Net proceeds from revolving line of credit ........... 1,600 --
Repayments of matured indebtedness ................... (2,813) (3,331)
Exercise of stock grants ............................. -- 178
-------- --------
Net cash used in financing activities .................. (1,213) (3,153)
-------- --------
Net increase (decrease) in cash and cash
equivalents ........................................... (4,020) (6,850)
Cash and cash equivalents at beginning of period ....... 7,598 13,118
-------- --------
Cash and cash equivalents at end of period ............. $ 3,578 $ 6,268
======== ========
The accompanying notes are an integral part of these
consolidated financial statements.
Part I
Item 1
POWELL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, in the opinion of
management, reflect all adjustments which are of a normal recurring nature
necessary for a fair presentation of financial positions, results of operations,
and statements of cash flows. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the company's latest annual report. Certain reclassifications of prior year
amounts were made to conform to the current financial statement presentation.
B. INVENTORY
July 31, October 31,
1995 1994
(unaudited)
------- -------
The components of inventory are summarized
below (in thousands):
Raw materials and subassemblies ................ $14,332 $ 9,392
Work-in-process ................................ 5,665 5,507
------- -------
Total inventories .............................. $19,997 $14,899
======= =======
C. PROPERTY, PLANT AND EQUIPMENT
July 31, October 31,
1995 1994
(unaudited)
-------- ---------
Property, plant and equipment is summarized
below (in thousands):
Land ............................................... $ 2,514 $ 2,514
Buildings and improvements ......................... 14,610 14,282
Machinery and equipment ............................ 22,885 21,863
Furniture & fixtures ............................... 3,981 3,076
Construction in process ............................ 733 247
-------- --------
44,723 41,982
Less-accumulated depreciation ...................... (28,603) (26,323)
-------- --------
Total property, plant and equipment, net ........... $ 16,120 $ 15,659
======== ========
D. Other Financial Information (unaudited)
Nine Months Ended
July 31,
-----------------
1995 1994
------ ------
Supplemental disclosure of cash flow information
(in thousands): Cash paid during the period for:
Interest ............................................ $1,012 $1,300
====== ======
Income taxes ........................................ $1,655 $1,610
====== ======
E. Production Contracts
For contracts in which the percentage-of-completion method is used, costs
and estimated earnings in excess of billings are shown as a current asset
and billings in excess of costs and estimated earnings are shown as a
current liability.
The components of these contracts are as follows (in thousands):
July 31, October 31,
1995 1994
(unaudited)
-------- -----------
Costs and estimated earnings ................... $ 48,895 $ 33,258
Progress billings .............................. (37,285) (25,920)
-------- --------
Total costs and estimated earnings in
excess of billings ............................ $ 11,610 $ 7,338
======== ========
Progress billings .............................. $ 29,020 $ 12,556
Costs and estimated earnings ................... (24,200) (10,206)
-------- --------
Total billings in excess of costs and
estimated earnings ............................ $ 4,820 $ 2,350
======== ========
Part I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND QUARTERLY RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
During 1990, the Company concluded a private placement of $15,000,000 in term
notes, of which $6,563,000 was outstanding as of July 31, 1995. These notes are
unsecured with a fixed interest rate of 10.4 percent. The notes mature through
June 1997, with the next payment of $2,813,000 due in June 1996.
The Company also has a revolving line of credit, with a major domestic bank, of
$10,000,000, which was amended in April 1995, to extend the maturity date to May
1, 1997. As of July 31, 1995 a total of $1,600,000 of this line was borrowed
leaving an available balance of $8,400,000.
The Company's ability to satisfy its cash requirements is evaluated by analyzing
key measures of liquidity applicable to the Company. The following table is a
summary of the measures which are significant to management:
July October 31, July 31,
1995 1994 1994
----------- ----------- -----------
Working Capital ............. $44,275,000 $39,229,000 $38,173,000
Current Ratio ............... 2.49 to 1 2.40 to 1 2.41 to 1
Debt to Capitalization ...... .13 to 1 .15 to 1 .16 to 1
The consolidated statements of cash flows show that approximately $4,020,000 of
cash was used during the nine months ended July 31, 1995. The increases in costs
and estimated earnings in excess of billings and inventories requiring the use
of cash were due to the increased volume of business, product shipment delays
and advance purchase of inventory. Another major use of cash was the reduction
of accrued liabilities for incentive compensation, legal expenses and insurance.
Billings in excess of costs and estimated earnings increased and had a positive
effect on the Company's cash flow during the quarter. The increase in this
account reflects the increase in the amount of progress billings in advance of
costs incurred during the period. The use of cash for capital expenditures
during the nine months of 1995 was $2,084,000 which was mainly invested in
machinery and equipment.
The Company's fiscal 1995 asset management program will continue to focus on the
collection of receivables and reduction in inventories. The Company plans to
satisfy its fiscal 1995 capital requirements and operating needs primarily with
funds available in cash and cash equivalents of $3,578,000, funds generated from
operating activities and funds available under its existing revolving credit
line.
RESULTS OF OPERATIONS
The following table sets forth, as a percentage of revenues, certain items from
the Consolidated Statements of Operations.
JULY 31,
---------------------------------
1995 1994
-------------- ---------------
three nine three nine
months months months months
ended ended ended ended
----- ----- ----- -----
Revenues ................................... 100.0% 100.0% 100.0% 100.0%
Gross Profit ............................... 21.7 21.4 22.2 22.0
Selling, general and administrative
expenses ................................. 16.9 16.7 17.5 17.6
Interest, net .............................. .4 .4 .5 .5
Net earnings before income tax ............. 4.3 4.3 4.2 4.0
Income tax provision ....................... .7 1.1 .8 1.1
Net earnings ............................... 3.6 3.1 3.4 2.9
REVENUES for the quarter ended July 31, 1995 were up 11% to $40,341,000 from
$36,255,000 for the third quarter of last year. This increase in volume was due
to higher electrical distribution equipment product line revenues. Revenues for
the nine months ended July 31, 1995 were up eight percent to $118,328,000 from
$109,975,000 in the first nine months of last year. This increase in volume was
due to higher electrical distribution equipment product line revenues which were
partially offset by lower revenues from process control product lines.
GROSS PROFIT, as a percentage of revenues, was 21.7% and 22.2% for the quarters
ended July 31, 1995 and 1994. The gross profit percentage for the nine months
ended July 31, 1995 and 1994 was 21.4% and 22.0%, respectively. The lower
percentages in 1995 were due to changes in product mix shipped during 1995.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE as a percentage of revenues was
16.9% and 17.5% for the quarters ended July 31, 1995 and 1994. The comparable
percentages of revenues for the nine months ending July 31, 1995 and 1994 are
16.7% and 17.6%, respectively. The lower percentages in 1995 were due to the
effect of increased revenue volume without corresponding increases in expense.
INTEREST, NET is lower in 1995 than in 1994 due to the reduction in outstanding
debt.
INCOME TAX PROVISION had effective tax rates of 16.9% and 18.4% for the quarters
ended July 31, 1995 and 1994. For the nine months ended July 31, 1995 and 1994
the effective tax rate was 26.6% and 27.1% respectively. The lower than
statutory rates are due to foreign sales corporation credits.
NET EARNINGS were $1,438,000 or $.14 per share for the third quarter of fiscal
1995, an increase of 16% from $1,242,000 or $.12 per share for the same period
last year. The net earnings for the nine months ended July 31, 1995 were
$3,699,000, or $.35 per share, compared with $3,164,000, or $.30 per share for
the first nine months of fiscal 1994, an increase of eight percent. The increase
in both 1995 periods reported were mainly due to the higher revenue volume and
lower interest expense.
The order backlog at July 31, 1995 was $115,500,000 compared to $106,700,000 at
October 31, 1994. The October 31, 1994, backlog has been adjusted for a large
turbine package order canceled in January 1995, as previously reported, when a
customer terminated a cogeneration project.
Part II
OTHER INFORMATION
ITEM 1. Legal Proceedings
No material developments in litigation previously reported.
ITEM 2. Changes in Securities
None
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
27.0 Financial Data Schedule (electronic format only)
b. Reports on Form 8-K
No reports on Form 8-K were filed during period ended July 31, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
POWELL INDUSTRIES, INC.
Registrant
September 11, 1995 THOMAS W. POWELL
------------------ Thomas W. Powell
Date President and Chief Executive Officer
(Principal Executive Officer)
September 11, 1995 J.F. AHART
------------------ J.F. Ahart
Date Vice President,
Secretary-Treasurer
Chief Financial Officer
(Principal Financial and Accounting Officer)