1
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 January 31, 1996
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
January 31, 1996.
2
POWELL INDUSTRIES, INC.
PART I - Financial Information
Item 1. Financial Statements ................................................... 3 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Quarterly
Results of Operations ............................................... 8 - 9
PART II - Other Information and Signatures ............................................... 10 - 12
3
Powell Industries, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Share Data)
January 31, October 31,
1996 1995
Assets (unaudited)
----------- -----------
Current Assets:
Cash and cash equivalents............................................................... $1,131 $3,035
Accounts receivable, less allowance for doubtful accounts
of $729 and $724, respectively........................................................ 42,754 32,181
Costs and estimated earnings in excess of billings...................................... 13,038 14,725
Inventories............................................................................. 19,084 20,114
Deferred income taxes................................................................... 968 1,039
Income taxes receivable................................................................. 0 718
Prepaid expenses and other current assets............................................... 1,373 1,889
----------- -----------
Total Current Assets.................................................................. 78,348 73,701
Property, plant and equipment, net........................................................ 16,087 16,271
Deferred income taxes..................................................................... 1,337 1,286
Other assets.............................................................................. 5,560 5,624
----------- -----------
Total Assets.......................................................................... $101,332 $96,882
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts and income taxes payable....................................................... $13,518 $10,843
Accrued salaries, bonuses and commissions............................................... 4,257 5,387
Accrued product warranty................................................................ 3,155 3,015
Other accrued expenses.................................................................. 2,792 3,706
Billings in excess of costs and estimated earnings ..................................... 7,416 5,563
Current maturities of long-term debt.................................................... 2,813 2,813
----------- -----------
Total Current Liabilities............................................................. 33,951 31,327
Long-term debt............................................................................ 3,750 3,750
Deferred compensation expense............................................................. 2,175 2,006
Postretirement benefits liability......................................................... 2,075 2,142
Stockholders' Equity:
Preferred stock, par value $.01; 5,000,000 shares authorized; none issued
Common stock, par value $.01 a share; 15,000,000 shares authorized; 10,542,704
shares issued and outstanding ........................................................ 105 105
Additional paid-in capital.............................................................. 5,062 5,062
Retained earnings....................................................................... 57,867 56,183
Deferred compensation-ESOP.............................................................. (3,653) (3,693)
----------- -----------
Total Stockholders' Equity............................................................ 59,381 57,657
----------- -----------
Total Liabilities and Stockholders' Equity............................................ $101,332 $96,882
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
4
Powell Industries, Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
(In Thousands, Except Per Share Data)
Three Months Ended January 31,
---------------------------------
1996 1995
----------- -----------
Revenues.................................................................................. $49,568 $36,589
Cost of goods sold........................................................................ 39,254 28,998
----------- -----------
Gross profit.............................................................................. 10,314 7,591
Selling, general and administrative expenses.............................................. 7,655 6,337
----------- -----------
Earnings from operations.................................................................. 2,659 1,254
Interest, net............................................................................. 43 122
----------- -----------
Net earnings before income taxes.......................................................... 2,616 1,132
Income tax provision...................................................................... 932 329
----------- -----------
Net earnings ............................................................................. $1,684 $803
=========== ===========
Net earnings per common and common equivalent share....................................... $0.16 $0.08
----------- -----------
Weighted average number of shares outstanding............................................. 10,695,776 10,517,704
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
5
Powell Industries, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (unaudited)
(In Thousands)
Three Months Ended January 31,
------------------------------
1996 1995
----------- -----------
Operating Activities:
Net earnings............................................................................ $1,684 $803
Adjustments to reconcile net earnings to net cash used in
operating activities:
Depreciation and amortization......................................................... 967 851
Postretirement benefit liability...................................................... (67) (24)
Changes in operating assets and liabilities:
Accounts receivable................................................................. (10,573) (2,733)
Costs and estimated earnings in excess of billings.................................. 1,687 (1,635)
Inventories......................................................................... 1,030 (2,579)
Prepaid expenses and other current assets........................................... 516 (518)
Other assets........................................................................ (45) (31)
Accounts and income taxes payable or receivable..................................... 3,393 1,296
Accrued liabilities................................................................. (1,904) (2,626)
Billings in excess of costs and estimated earnings.................................. 1,853 2,962
Other long-term liabilities......................................................... 208 ---
----------- -----------
Net cash used in operating activities..................................................... (1,251) (4,234)
----------- -----------
Investing Activities:
Purchases of property, plant, and equipment............................................. (653) (632)
----------- -----------
Net cash used in investing activities..................................................... (653) (632)
----------- -----------
Net decrease in cash and cash equivalents................................................. (1,904) (4,866)
Cash and cash equivalents at beginning of period.......................................... 3,035 7,598
----------- -----------
Cash and cash equivalents at end of period................................................ $1,131 $2,732
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
6
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 position, results of operations,
and statements of cash flows.
B. INVENTORY
January 31, October 31,
1996 1995
(unaudited)
-------------- -----------
The components of inventory are summarized below (in thousands):
Raw materials and subassemblies........................................................... $13,328 $12,469
Work-in-process........................................................................... 5,756 7,645
-------------- -----------
Total inventories......................................................................... $19,084 $20,114
============= ===========
C. PROPERTY, PLANT AND EQUIPMENT January 31, October 31,
1996 1995
(unaudited)
-------------- -----------
Property, plant and equipment is summarized below (in thousands):
Land...................................................................................... $2,514 $2,514
Buildings and improvements................................................................ 14,865 14,777
Machinery and equipment................................................................... 24,222 23,889
Furniture & fixtures...................................................................... 3,981 3,910
Construction in process................................................................... 518 417
-------------- -----------
46,100 45,507
Less-accumulated depreciation............................................................. 30,013 29,236
-------------- -----------
Total property, plant and equipment, net.................................................. $16,087 $16,271
============== ===========
7
Part I
Item 1
D. OTHER FINANCIAL INFORMATION
Quarter Ended
January 31,
(unaudited)
----------------------------
1996 1995
----------- -----------
Supplemental disclosure of cash flow information (in thousands):
Cash paid during the quarter for:
Interest............................................................................. $367 $488
=========== ===========
Income taxes......................................................................... --- $275
=========== ===========
E. PRODUCTION CONTRACTS
Contracts for which the percentage-of-completion accounting 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.
January 31, October 31,
1996 1995
(unaudited)
-------------- ---------------
The components of these contracts are as follows (in thousands):
Costs and estimated earnings......................................................... $41,685 $50,282
Progress billings.................................................................... (28,647) (35,557)
---------- ----------
Total costs and estimated earnings in excess of billings............................. $13,038 $14,725
========== ==========
Progress billings.................................................................... $53,234 $29,682
Costs and estimated earnings......................................................... (45,818) (24,119)
---------- ----------
Total billings in excess of costs and estimated earnings............................. $7,416 $5,563
========== ==========
8
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 January 31, 1996. 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.
In October 1995, the Company entered into a $15,000,000 revolving line of
credit agreement with a major domestic bank. As of January 31, 1996, the
Company did not have borrowings outstanding under this line.
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:
January 31, October 31, January 31,
1996 1995 1995
Working Capital $44,397,000 $42,374,000 $40,282,000
Current Ratio 2.31 to 1 2.35 to 1 2.37 to 1
Debt to Capitalization .10 to 1 .10 to 1 .15 to 1
Management believes that the Company continues to maintain a strong liquidity
position. The increase in working capital at January 31, 1996, as compared to
October 31, 1995 is due mainly to increased accounts receivable that were
partially offset by increases in billings in excess of costs and estimated
earnings and accounts payable. The primary reason for these changes was the
increased business level.
The consolidated statements of cash flows show that approximately $1,900,000 of
cash was used during the three months ended January 31, 1996. The increase in
accounts receivables requiring the use of cash was due to the increased volume
of business with extended progress and prebilling terms. The other major use
of cash was the reduction of accrued liabilities. Costs and estimated earnings
and inventories decreased and accounts payable increased, having a positive
effect on the Company's cash flow during the quarter. The use of cash for
capital expenditures during the three months of 1996 was $653,000 which was
primarily invested in machinery and equipment.
The Company's fiscal 1996 asset management program will continue to focus on
the collection of receivables and reduction in inventories. The Company plans
to satisfy its fiscal 1996 capital requirements and operating needs primarily
with funds available in cash and cash equivalents of $1,131,000, funds
generated from operating activities and funds available under its existing
revolving credit line.
9
RESULTS OF OPERATIONS
The following table sets forth, as a percentage of revenues, certain items from
the Consolidated Statements of Operations.
Quarters Ended January 31 1996 1995
- -------------------------------------------------------------------------
Revenues 100.0% 100.0%
Gross Profit 20.8 20.7
Selling, general and administration
expenses 15.4 17.3
Interest, net .1 .3
Net earnings before income tax 5.3 3.1
Income tax provision 1.9 .9
Net earnings 3.4 2.2
Revenues for the quarter ended January 31, 1996 were up 35 percent to
$49,568,000 from $36,589,000 in the first quarter of last year. This increase
in volume was due primarily to higher electrical distribution equipment
product line revenues. However, all products had increases in the record first
quarter results.
Gross profit, as a percentage of revenues, was 20.8 percent and 20.7 percent
for the quarters ended January 31, 1996 and 1995.
Selling, general and administration expense as a percentage of revenues was
15.4% and 17.3% for the quarters ended January 31, 1996 and 1995. The decrease
reflects the effect of higher revenue volume without corresponding increases in
expense.
Interest, net is lower in 1996 than in 1995 due to the reduction in outstanding
debt.
Income tax provision The effective tax rates were 35.6% and 29.1% for the
quarters ended January 31, 1996 and 1995 respectively. The lower than
statutory rate is due to larger foreign sales corporation credits in 1995 which
are not projected for 1996.
Net earnings were $1,684,000 or $.16 per share for the first quarter of fiscal
1996, an increase of 109% from $803,000 or $.08 per share for the same period
last year. This increase was mainly due to the higher revenue volume for the
1996 quarter.
The order backlog at January 31, 1996 was $125,329,000 compared to $112,569,000
at October 31, 1995. The increase is the result of record bookings in
electrical distribution and control equipment. The total bookings of
$62,328,000 during the quarter was the largest total for a quarter in the
Company's history.
10
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
b. Reports on Form 8K
None
11
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
March 13, 1996 /s/ THOMAS W. POWELL
- -------------- ----------------------------------------------
Date Thomas W. Powell
President and Chief Executive Officer
(Principal Executive Officer)
March 13, 1996 /s/ J.F. AHART
- -------------- ----------------------------------------------
Date J.F. Ahart
Vice President,
Secretary-Treasurer
Chief Financial Officer
(Principal Financial and Accounting
Officer)
12
EXHIBIT INDEX
27 -- Financial Data Schedule
5
1,000
3-MOS
OCT-31-1995
JAN-31-1996
1,131
0
43,483
729
19,084
78,348
43,586
30,013
101,332
33,951
0
105
0
0
57,867
101,332
49,568
49,568
39,254
39,254
7,655
0
43
2,616
932
0
0
0
0
1,684
0.16
0
