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, 1997
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; 10,613,683 shares outstanding on March
5, 1997.
2
Powell Industries, Inc. and Subsidiaries
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,
1997 October 31,
Assets (unaudited) 1996
----------- -----------
Current Assets:
Cash and cash equivalents ............................................... $ 10,098 $ 8,935
Accounts receivable, less allowance for doubtful accounts
of $707 and $777, respectively ........................................ 32,239 37,013
Costs and estimated earnings in excess of billings ...................... 16,877 13,934
Inventories ............................................................. 11,181 14,114
Deferred income taxes ................................................... 2,181 2,572
Income taxes receivable ................................................. -- 876
Prepaid expenses and other current assets ............................... 2,343 1,700
-------- --------
Total Current Assets .................................................. 74,919 79,144
Property, plant and equipment, net ........................................ 17,464 14,602
Deferred income taxes ..................................................... 1,267 1,164
Other assets .............................................................. 4,595 4,613
-------- --------
Total Assets .......................................................... $ 98,245 $ 99,523
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts and income taxes payable ....................................... $ 8,401 $ 8,543
Accrued salaries, bonuses and commissions ............................... 4,845 5,687
Accrued product warranty ................................................ 1,681 1,614
Accrued legal expenses .................................................. 3,719 3,903
Other accrued expenses .................................................. 2,375 3,717
Billings in excess of costs and estimated earnings ...................... 4,991 5,425
Current maturities of debt .............................................. 3,750 3,750
-------- --------
Total Current Liabilities ............................................. 29,762 32,639
Deferred compensation expense ............................................. 1,354 2,157
Postretirement benefits liability ......................................... 1,458 1,502
Commitments and contingencies
Stockholders' Equity:
Preferred stock, par value $.01; 5,000,000 shares authorized; none issued
Common stock, par value $.01; 15,000,000 shares authorized,
10,609,504 and 10,604,644 shares issued and outstanding ................ 106 106
Additional paid-in capital .............................................. 5,603 5,601
Retained earnings ....................................................... 63,312 60,943
Deferred compensation-ESOP .............................................. (3,350) (3,425)
-------- --------
Total Stockholders' Equity ............................................ 65,671 63,225
-------- --------
Total Liabilities and Stockholders' Equity ............................ $ 98,245 $ 99,523
======== ========
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,
--------------------------------
1997 1996
------------ ------------
Revenues ................................................................. $ 43,128 $ 39,861
Cost of goods sold ....................................................... 32,840 31,001
------------ ------------
Gross profit ............................................................. 10,288 8,860
Selling, general and administrative expenses ............................. 6,888 5,924
------------ ------------
Earnings from continuing operations before interest and income taxes ..... 3,400 2,936
Interest expense (income), net ........................................... (138) 43
------------ ------------
Earnings from continuing operations before income taxes .................. 3,538 2,893
Income tax provision ..................................................... 1,169 1,031
------------ ------------
Earnings from continuing operations ...................................... 2,369 1,862
Loss from discontinued operations, net of income tax ..................... -- (178)
------------ ------------
Net earnings ............................................................. $ 2,369 $ 1,684
============ ============
Net earnings (loss) per common and common equivalent share:
Continuing operations .................................................. $ 0.22 $ 0.18
Discontinued operations ................................................ -- (0.02)
------------ ------------
Net earnings per common and common equivalent share ...................... $ 0.22 $ 0.16
============ ============
Weighted average number of common and common equivalent shares outstanding 10,771,622 10,695,776
============ ============
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,
------------------------------
1997 1996
-------- --------
Operating Activities:
Net earnings .......................................................... $ 2,369 $ 1,684
Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities:
Depreciation and amortization ....................................... 830 798
Deferred income taxes (benefit) ..................................... 288 (681)
Postretirement benefits liability ................................... (44) 118
Changes in operating assets and liabilities:
Accounts receivable ............................................... 4,774 (8,204)
Costs and estimated earnings in excess of billings ................ (2,943) 876
Inventories ....................................................... 2,933 373
Prepaid expenses and other current assets ......................... (643) 680
Other assets ...................................................... (99) (36)
Accounts payable and income taxes payable or receivable ........... 734 1,757
Accrued liabilities ............................................... (2,301) (2,105)
Billings in excess of costs and estimated earnings ................ (434) 1,423
Deferred compensation expense ..................................... (728) 209
Changes in net assets of discontinued activities .................. -- 2,119
-------- --------
Net cash provided by (used in) operating activities ..................... 4,736 (989)
-------- --------
Investing Activities:
Purchases of property, plant and equipment ............................ (3,575) (676)
-------- --------
Net cash used in investing activities ................................... (3,575) (676)
-------- --------
Financing activities:
Exercise of stock options ............................................. 2 --
-------- --------
Net cash provided by financing activities ............................... 2 --
-------- --------
Net increase (decrease) in cash and cash equivalents .................... 1,163 (1,665)
Cash and cash equivalents at beginning of period ........................ 8,935 2,796
-------- --------
Cash and cash equivalents at end of period .............................. $ 10,098 $ 1,131
Supplemental disclosure of cash flow information (in thousands):
Cash paid during the quarter for:
Interest ........................................................... $ 195 $ 367
======== ========
Income taxes ....................................................... -- --
======== ========
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 cash flows.
B. INVENTORY
January 31,
1997 October 31,
(unaudited) 1996
------------ -----------
The components of inventory are summarized below (in thousands):
Raw materials and subassemblies ................................ $ 7,764 $ 8,118
Work-in-process ................................................ 3,417 5,996
------- -------
Total inventories .............................................. $11,181 $14,114
======= =======
C. PROPERTY, PLANT AND EQUIPMENT
January 31,
1997 October 31,
(unaudited) 1996
------------ -----------
Property, plant and equipment is summarized below (in thousands):
Land ............................................................ $ 2,362 $ 2,362
Buildings and improvements ...................................... 13,361 13,255
Machinery and equipment ......................................... 21,336 21,157
Furniture & fixtures ............................................ 3,010 2,923
Construction in process ......................................... 5,267 1,869
------- -------
45,336 41,566
Less-accumulated depreciation ................................... 27,872 26,964
------- -------
Total property, plant and equipment, net ........................ $17,464 $14,602
======= =======
7
Part I
Item 1
D. PRODUCTION CONTRACTS
For contracts in 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.
1997 October 31,
(unaudited) 1996
------------ -----------
The components of these contracts are as follows (in thousands):
Costs and estimated earnings ................................... $ 53,436 $ 45,559
Progress billings .............................................. (36,559) (31,625)
-------- --------
Total costs and estimated earnings in excess of billings ....... $ 16,877 $ 13,934
======== ========
Progress billings .............................................. $ 44,941 $ 50,667
Costs and estimated earnings ................................... (39,950) (45,242)
-------- --------
Total billings in excess of costs and estimated earnings ....... $ 4,991 $ 5,425
======== ========
8
Part I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND QUARTERLY RESULTS
OF OPERATIONS
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 1997 1996
- ---------------------------------------------------------------
Revenues .......................... 100.0% 100.0%
Gross Profit ...................... 23.9 22.2
Selling, general and administrative
expenses ........................ 16.0 14.9
Earnings from continuing operations
before income taxes ............. 8.2 7.3
Income tax provision .............. 2.7 2.6
Losses from discontinued operations --- (.5)
Net earnings ...................... 5.5 4.2
Revenues for the quarter ended January 31, 1997 were up 8.2 percent to
$43,128,000 from $39,861,000 in the first quarter of last year. This increase
in volume was due primarily to higher electrical distribution equipment
revenues. Export sales were $17,312,000 or 40.1 percent of sales, an increase
of 4.3 percent from $16,600,000 in the first quarter of 1996.
Gross profit, as a percentage of revenues, was 23.9 percent and 22.2 percent
for the quarters ended January 31, 1997 and 1996, respectively. This increase
is due to improved prices and higher volumes in the electrical distribution
operations partially offset by higher overhead expenses.
Selling, general and administrative expenses as a percentage of revenues were
16.0 percent and 14.9 percent for the quarters ended January 31, 1997 and 1996,
respectively. The increase is primarily due to higher sales commissions and
selling expenses.
Income tax provision effective tax rates were 33.0 percent and 35.6 percent for
the quarters ended January 31, 1997 and 1996, respectively. The lower than
statutory rate is due to foreign sales corporation credits.
Earnings from continuing operations increased to $2,369,000 or $.22 per share
for the first quarter of fiscal 1997, an increase of 27.2 percent from
$1,862,000 or $.18 per share for the same period last year. The increase is
primarily due to the factors discussed above.
Net earnings were $2,369,000 or $.22 per share for the first quarter of fiscal
1997, an increase of 40.7 percent from $1,684,000 or $.16 per share for the
same period last year.
Backlog
The order backlog at January 31, 1997 was $119,978,000 compared to $106,457,000
at October 31, 1996. The increase is the result of record bookings in
electrical distribution and control equipment. The total bookings of
$56,649,000 during the quarter was the largest total for a quarter in the
Company's history.
9
LIQUIDITY AND CAPITAL RESOURCES
During 1990, the Company concluded a private placement of $15,000,000 in term
notes, of which $3,750,000 was outstanding as of January 31, 1997. These notes
are unsecured with a fixed interest rate of 10.4 percent. The notes mature with
the final payment of $3,750,000 due in June 1997.
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, 1997, 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,
1997 1996 1996
Working Capital $45,157,000 $46,505,000 $36,643,000
Current Ratio 2.5 to 1 2.4 to 1 2.4 to 1
Debt to Capitalization .1 to 1 .1 to 1 .1 to 1
Management believes that the Company continues to maintain a strong liquidity
position. The decrease in working capital at January 31, 1997, as compared to
October 31, 1996 is due mainly to a decrease in accounts receivable partially
offset by decreases in accrued liabilities.
Cash and cash equivalents increased approximately $1,163,000 during the three
months ended January 31, 1997. The decrease in accounts receivable provided
cash due to collection on extended progress and prebilling term receivables.
The primary use of cash was for capital expenditures related to the plant
expansion at three operating facilities.
The Company's fiscal 1997 asset management program will continue to focus on
the collection of receivables and reduction in inventories. The Company plans
to satisfy its fiscal 1997 capital requirements and operating needs primarily
with funds available in cash and cash equivalents of $10,098,000, funds
generated from operating activities and funds available under its existing
revolving line of credit.
The previous discussion should be read in conjunction with the consolidated
financial statements.
Any forward looking statements in the preceding paragraphs of this Form 10Q 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 uncertainty in that actual results may
differ materially from those projected in the forward looking statements. These
risks and uncertainties include, without limitation, difficulties which could
arise in obtaining materials or components in sufficient quantities as needed
for the Company's manufacturing and assembly operations, unforeseen political
or economic problems in countries to which the Company exports its products in
relation to the Company's principal competitors, any significant decrease in
the Company's backlog of orders, any material employee relation problems, or
any material litigation or claims made against the Company, as well as general
market conditions, competition and pricing.
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 10, 1997
- -------------- ------------------------------------
Date Thomas W. Powell
President and Chief Executive Officer
(Principal Executive Officer)
March 10, 1997
- -------------- ------------------------------------
Date J.F. Ahart
Vice President,
Secretary-Treasurer
Chief Financial Officer
(Principal Financial and Accounting Officer)
12
EXHIBIT INDEX
Exhibit
No. Description
- ------- -----------
27 Financial Data Schedule
5
1,000
3-MOS
JAN-01-1997
JAN-01-1997
10,098
0
32,946
707
11,181
74,919
45,336
27,872
98,245
29,762
0
0
0
106
65,564
98,245
43,128
43,128
32,840
32,840
6,888
0
138
3,538
1,169
0
0
0
0
2,369
0.22
0
