ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 88-0106100 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
8550 Mosley Road Houston, Texas | 77075-1180 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Common Stock, par value $0.01 per share | POWL | NASDAQ Global Market |
Large accelerated filer ¨ | Accelerated filer x | Non-accelerated filer ¨ | Smaller reporting company ¨ | Emerging growth company ¨ |
Page | |
December 31, 2019 | September 30, 2019 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 120,966 | $ | 118,639 | |||
Short-term investments | — | 6,042 | |||||
Accounts receivable, less allowance for doubtful accounts of $346 and $301 | 100,890 | 112,093 | |||||
Contract assets | 60,296 | 55,374 | |||||
Inventories | 32,448 | 29,202 | |||||
Income taxes receivable | 149 | 233 | |||||
Prepaid expenses | 4,646 | 4,335 | |||||
Other current assets | 1,906 | 2,650 | |||||
Total Current Assets | 321,301 | 328,568 | |||||
Property, plant and equipment, net | 120,795 | 120,812 | |||||
Operating lease assets, net | 6,213 | — | |||||
Goodwill and intangible assets, net | 1,293 | 1,337 | |||||
Deferred income taxes | 5,243 | 5,117 | |||||
Other assets | 11,606 | 11,577 | |||||
Total Assets | $ | 466,451 | $ | 467,411 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Current maturities of long-term debt | $ | 400 | $ | 400 | |||
Accounts payable | 45,166 | 51,180 | |||||
Contract liabilities | 77,556 | 71,464 | |||||
Accrued compensation and benefits | 9,763 | 20,182 | |||||
Accrued product warranty | 3,162 | 2,946 | |||||
Current operating lease liabilities | 2,247 | — | |||||
Income taxes payable | 1,034 | 913 | |||||
Other current liabilities | 10,215 | 10,811 | |||||
Total Current Liabilities | 149,543 | 157,896 | |||||
Long-term debt, net of current maturities | 400 | 800 | |||||
Deferred compensation | 7,052 | 6,447 | |||||
Long-term operating lease liabilities | 4,792 | — | |||||
Other long-term liabilities | 2,991 | 3,115 | |||||
Total Liabilities | 164,778 | 168,258 | |||||
Commitments and Contingencies (Note F) | |||||||
Stockholders' Equity: | |||||||
Preferred stock, par value $.01; 5,000,000 shares authorized; none issued | — | — | |||||
Common stock, par value $.01; 30,000,000 shares authorized; 12,403,231 and 12,372,766 shares issued, respectively | 124 | 124 | |||||
Additional paid-in capital | 59,524 | 59,153 | |||||
Retained earnings | 289,184 | 289,422 | |||||
Treasury stock, 806,018 shares at cost | (24,999 | ) | (24,999 | ) | |||
Accumulated other comprehensive loss | (22,160 | ) | (24,547 | ) | |||
Total Stockholders' Equity | 301,673 | 299,153 | |||||
Total Liabilities and Stockholders' Equity | $ | 466,451 | $ | 467,411 |
Three months ended December 31, | |||||||
2019 | 2018 | ||||||
Revenues | $ | 134,150 | $ | 109,351 | |||
Cost of goods sold | 112,324 | 94,720 | |||||
Gross profit | 21,826 | 14,631 | |||||
Selling, general and administrative expenses | 17,289 | 15,928 | |||||
Research and development expenses | 1,474 | 1,694 | |||||
Amortization of intangible assets | 44 | 44 | |||||
Operating income (loss) | 3,019 | (3,035 | ) | ||||
Interest expense | 67 | 56 | |||||
Interest income | (381 | ) | (157 | ) | |||
Income (loss) before income taxes | 3,333 | (2,934 | ) | ||||
Income tax provision (benefit) | 558 | (239 | ) | ||||
Net income (loss) | $ | 2,775 | $ | (2,695 | ) | ||
Earnings (loss) per share: | |||||||
Basic | $ | 0.24 | $ | (0.23 | ) | ||
Diluted | $ | 0.24 | $ | (0.23 | ) | ||
Weighted average shares: | |||||||
Basic | 11,614 | 11,551 | |||||
Diluted | 11,665 | 11,551 | |||||
Dividends per share | $ | 0.26 | $ | 0.26 |
Three months ended December 31, | |||||||
2019 | 2018 | ||||||
Net income (loss) | $ | 2,775 | $ | (2,695 | ) | ||
Foreign currency translation adjustments | 2,387 | (4,088 | ) | ||||
Comprehensive income (loss) | $ | 5,162 | $ | (6,783 | ) |
Accumulated | |||||||||||||||||||||||||||||
Additional | Other | ||||||||||||||||||||||||||||
Common Stock | Paid-in | Retained | Treasury Stock | Comprehensive | |||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Shares | Amount | Income/(Loss) | Totals | ||||||||||||||||||||||
Balance, September 30, 2019 | 12,373 | $ | 124 | $ | 59,153 | $ | 289,422 | (806 | ) | $ | (24,999 | ) | $ | (24,547 | ) | $ | 299,153 | ||||||||||||
Net income | — | — | — | 2,775 | — | — | — | 2,775 | |||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | 2,387 | 2,387 | |||||||||||||||||||||
Stock-based compensation | 30 | — | 982 | — | — | — | — | 982 | |||||||||||||||||||||
Shares withheld in lieu of employee tax withholding | — | — | (611 | ) | — | — | — | — | (611 | ) | |||||||||||||||||||
Dividends paid | — | — | — | (3,013 | ) | — | — | — | (3,013 | ) | |||||||||||||||||||
Balance, December 31, 2019 | 12,403 | $ | 124 | $ | 59,524 | $ | 289,184 | (806 | ) | $ | (24,999 | ) | $ | (22,160 | ) | $ | 301,673 |
Accumulated | |||||||||||||||||||||||||||||
Additional | Other | ||||||||||||||||||||||||||||
Common Stock | Paid-in | Retained | Treasury Stock | Comprehensive | |||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Shares | Amount | Income/(Loss) | Totals | ||||||||||||||||||||||
Balance, September 30, 2018 | 12,281 | $ | 123 | $ | 56,769 | $ | 291,530 | (806 | ) | $ | (24,999 | ) | $ | (21,779 | ) | $ | 301,644 | ||||||||||||
Net loss | — | — | — | (2,695 | ) | — | — | — | (2,695 | ) | |||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | (4,088 | ) | (4,088 | ) | |||||||||||||||||||
Stock-based compensation | 41 | — | 1,220 | — | — | — | — | 1,220 | |||||||||||||||||||||
Shares withheld in lieu of employee tax withholding | — | — | (731 | ) | — | — | — | — | (731 | ) | |||||||||||||||||||
Dividends paid | — | — | — | (2,992 | ) | — | — | — | (2,992 | ) | |||||||||||||||||||
Balance, December 31, 2018 | 12,322 | $ | 123 | $ | 57,258 | $ | 285,843 | (806 | ) | $ | (24,999 | ) | $ | (25,867 | ) | $ | 292,358 |
Three months ended December 31, | |||||||
2019 | 2018 | ||||||
Operating Activities: | |||||||
Net income (loss) | $ | 2,775 | $ | (2,695 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 2,597 | 3,221 | |||||
Stock-based compensation | 982 | 1,220 | |||||
Bad debt expense | 42 | 27 | |||||
Deferred income taxes | (126 | ) | (517 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | 11,844 | 4,385 | |||||
Contract assets and liabilities, net | 1,474 | 21,036 | |||||
Inventories | (3,054 | ) | (3,853 | ) | |||
Income taxes | 216 | 6,620 | |||||
Prepaid expenses and other current assets | 498 | (565 | ) | ||||
Accounts payable | (5,457 | ) | (8,622 | ) | |||
Accrued liabilities | (10,128 | ) | (10,385 | ) | |||
Other, net | 445 | (763 | ) | ||||
Net cash provided by operating activities | 2,108 | 9,109 | |||||
Investing Activities: | |||||||
Purchases of short-term investments | — | (5,869 | ) | ||||
Maturities of short-term investments | 6,146 | 11,621 | |||||
Purchases of property, plant and equipment, net | (2,402 | ) | (755 | ) | |||
Net cash provided by investing activities | 3,744 | 4,997 | |||||
Financing Activities: | |||||||
Payments on industrial development revenue bonds | (400 | ) | (400 | ) | |||
Shares withheld in lieu of employee tax withholding | (611 | ) | (731 | ) | |||
Dividends paid | (3,013 | ) | (2,992 | ) | |||
Net cash used in financing activities | (4,024 | ) | (4,123 | ) | |||
Net increase in cash, cash equivalents and restricted cash | 1,828 | 9,983 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 499 | (813 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 118,639 | 61,725 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 120,966 | $ | 70,895 |
Three months ended December 31, | |||||||
2019 | 2018 | ||||||
Numerator: | |||||||
Net income (loss) | $ | 2,775 | $ | (2,695 | ) | ||
Denominator: | |||||||
Weighted average basic shares | 11,614 | 11,551 | |||||
Dilutive effect of restricted stock units | 51 | — | |||||
Weighted average diluted shares | 11,665 | 11,551 | |||||
Income (loss) per share: | |||||||
Basic | $ | 0.24 | $ | (0.23 | ) | ||
Diluted | $ | 0.24 | $ | (0.23 | ) |
Three months ended December 31, | |||||||
2019 | 2018 | ||||||
Balance at beginning of period | $ | 301 | $ | 157 | |||
Bad debt expense | 42 | 27 | |||||
Uncollectible accounts written off, net of recoveries | (10 | ) | (42 | ) | |||
Change due to foreign currency translation | 13 | (3 | ) | ||||
Balance at end of period | $ | 346 | $ | 139 |
December 31, 2019 | September 30, 2019 | ||||||
Raw materials, parts and sub-assemblies, net | $ | 31,526 | $ | 28,102 | |||
Work-in-progress | 922 | 1,100 | |||||
Total inventories | $ | 32,448 | $ | 29,202 |
Three months ended December 31, | |||||||
2019 | 2018 | ||||||
Balance at beginning of period | $ | 2,946 | $ | 2,604 | |||
Increase in warranty expense | 843 | 746 | |||||
Deduction for warranty charges | (645 | ) | (604 | ) | |||
Change due to foreign currency translation | 18 | (14 | ) | ||||
Balance at end of period | $ | 3,162 | $ | 2,732 |
December 31, 2019 | September 30, 2019 | ||||||
Contract assets | $ | 60,296 | $ | 55,374 | |||
Contract liabilities | (77,556 | ) | (71,464 | ) | |||
Net contract asset (liability) | $ | (17,260 | ) | $ | (16,090 | ) |
Three months ended December 31, 2019 | Three months ended December 31, 2018 | ||||||
United States | $ | 107,078 | $ | 89,898 | |||
Canada | 14,454 | 9,715 | |||||
Europe, Middle East and Africa | 10,166 | 5,441 | |||||
Asia/Pacific | 1,686 | 3,744 | |||||
Mexico, Central and South America | 766 | 553 | |||||
Total revenues by geographic destination | $ | 134,150 | $ | 109,351 |
Three months ended December 31, 2019 | Three months ended December 31, 2018 | ||||||
Oil and gas | $ | 59,994 | $ | 49,576 | |||
Petrochemical | 30,426 | 19,778 | |||||
Electric utility | 23,015 | 19,258 | |||||
Traction power | 8,351 | 5,009 | |||||
All others | 12,364 | 15,730 | |||||
Total revenues by market sector | $ | 134,150 | $ | 109,351 |
December 31, 2019 | September 30, 2019 | ||||||
Industrial development revenue bonds | $ | 800 | $ | 1,200 | |||
Less: current portion | (400 | ) | (400 | ) | |||
Total long-term debt | $ | 400 | $ | 800 |
Number of Restricted Stock Units | Weighted Average Fair Value Per Share | |||||
Outstanding at September 30, 2019 | 131,850 | $ | 33.76 | |||
Granted | 70,000 | 38.57 | ||||
Vested | (46,900 | ) | 35.65 | |||
Forfeited/canceled | (750 | ) | 33.16 | |||
Outstanding at December 31, 2019 | 154,200 | 35.37 |
Fair Value Measurements at December 31, 2019 | |||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value at December 31, 2019 | ||||||||||||
Assets: | |||||||||||||||
Cash and cash equivalents | $ | 120,966 | $ | — | $ | — | $ | 120,966 | |||||||
Other assets | — | 7,205 | — | 7,205 | |||||||||||
Liabilities: | |||||||||||||||
Deferred compensation | — | 6,869 | — | 6,869 |
Fair Value Measurements at September 30, 2019 | |||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value at September 30, 2019 | ||||||||||||
Assets: | |||||||||||||||
Cash and cash equivalents | $ | 118,639 | $ | — | $ | — | $ | 118,639 | |||||||
Short-term investments | 6,042 | — | — | 6,042 | |||||||||||
Other assets | — | 6,825 | — | 6,825 | |||||||||||
Liabilities: | |||||||||||||||
Deferred compensation | — | 6,249 | — | 6,249 |
Lease Cost | Three months ended December 31, 2019 | |||
Operating lease cost | $ | 628 | ||
Less: sublease income | (79 | ) | ||
Variable lease cost(1) | 94 | |||
Short-term lease cost(2) | 190 | |||
Total lease cost | $ | 833 |
Operating Leases | December 31, 2019 | |||
Assets: | ||||
Operating lease assets, net | $ | 6,213 | ||
Liabilities: | ||||
Current operating lease liabilities | 2,247 | |||
Long-term operating lease liabilities | 4,792 | |||
Total lease liabilities | $ | 7,039 |
Operating Leases | ||||
Remainder of 2020 | $ | 1,811 | ||
2021 | 2,392 | |||
2022 | 2,131 | |||
2023 | 1,103 | |||
2024 | 85 | |||
Thereafter | — | |||
Total future minimum lease payments | 7,522 | |||
Less: present value discount (imputed interest) | (483 | ) | ||
Present value of lease liabilities | $ | 7,039 |
Three months ended December 31, | |||||||
2019 | 2018 | ||||||
Income (loss) before income taxes | $ | 3,333 | $ | (2,934 | ) | ||
Income tax provision (benefit) | 558 | (239 | ) | ||||
Net income (loss) | $ | 2,775 | $ | (2,695 | ) | ||
Effective tax rate | 17 | % | 8 | % |
• | Our business is subject to the cyclical nature of the end markets that we serve. This has had, and may continue to have, an adverse effect on our future operating results. |
• | Our industry is highly competitive. |
• | Technological innovations by competitors may make existing products and production methods obsolete. |
• | Unforeseen difficulties with expansions, relocations or consolidations of existing facilities could adversely affect our operations. |
• | Quality problems with our products could harm our reputation and erode our competitive position. |
• | Growth and product diversification through strategic acquisitions involves a number of risks. |
• | The departure of key personnel could disrupt our business. |
• | Our business requires skilled and unskilled labor, and we may be unable to attract and retain qualified employees. |
• | We are exposed to risks relating to the use of subcontractors on some of our projects. |
• | Misconduct by our employees or subcontractors, or a failure to comply with laws or regulations, could harm our reputation, damage our relationships with customers and subject us to criminal and civil enforcement actions. |
• | Unsatisfactory safety performance may subject us to penalties, negatively impact customer relationships, result in higher operating costs, and negatively impact employee morale and turnover. |
• | Catastrophic events could disrupt our business. |
• | Economic uncertainty and financial market conditions may impact our customer base, suppliers and backlog. |
• | Our backlog is subject to unexpected adjustments and cancellations and, therefore, may not be a reliable indicator of our future earnings. |
• | Revenues recognized over time from our fixed-price contracts could result in volatility in our results of operations. |
• | Many of our contracts contain performance obligations that may subject us to penalties or additional liabilities. |
• | Fluctuations in the price and supply of materials used to manufacture our products may reduce our profits and could adversely impact our ability to meet commitments to our customers. |
• | Obtaining surety bonds, letters of credit, bank guarantees, or other financial assurances, may be necessary for us to successfully bid on and obtain certain contracts. |
• | Failure to remain in compliance with covenants or obtain waivers or amendments under our credit agreement could adversely impact our business. |
• | We extend credit to customers in conjunction with our performance under fixed price contracts which subjects us to potential credit risks. |
• | We carry insurance against many potential liabilities, but our management of risk may leave us exposed to unidentified or unanticipated risks. |
• | Our international operations expose us to risks that are different from, or possibly greater than, the risks we are exposed to domestically and may adversely affect our operations. |
• | Failures or weaknesses in our internal controls over financial reporting could adversely affect our ability to report on our financial condition and results of operations accurately and/or on a timely basis. |
• | A failure in our business systems or cyber security attacks on any of our facilities, or those of third parties, could adversely affect our business and our internal controls. |
• | Our stock price could decline or fluctuate significantly due to unforeseen circumstances. These fluctuations may cause our stockholders to incur losses. |
• | There can be no assurance that we will declare or pay future dividends on our common stock. |
• | Our operations could be adversely impacted by the effects of government regulations. |
• | Changes in tax laws and regulations may change our effective tax rate and could have a material effect on our financial results. |
• | Actual and potential claims, lawsuits and proceedings could ultimately reduce our profitability and liquidity and weaken our financial condition. |
• | Changes in and compliance with environmental laws could adversely impact our financial results. |
• | Provisions of our charter documents or Delaware law could delay or prevent an acquisition of our company, even if the acquisition would be beneficial to our stockholders, and could make it more difficult to change management. |
• | Significant developments arising from recent U.S. Government proposals concerning tariffs and other economic proposals could adversely impact our business. |
Number | Description of Exhibits | ||
3.1 | — | ||
3.2 | — | ||
*31.1 | — | ||
*31.2 | — | ||
**32.1 | — | ||
**32.2 | — | ||
*101.INS | — | XBRL Instance Document | |
*101.SCH | — | XBRL Taxonomy Extension Schema Document | |
*101.CAL | — | XBRL Taxonomy Extension Calculation Linkbase Document | |
*101.DEF | — | XBRL Taxonomy Extension Definition Linkbase Document | |
*101.LAB | — | XBRL Taxonomy Extension Label Linkbase Document | |
*101.PRE | — | XBRL Taxonomy Extension Presentation Linkbase Document | |
* Filed herewith | |||
** Furnished herewith |
POWELL INDUSTRIES, INC. | ||
(Registrant) | ||
Date: February 5, 2020 | By: | /s/ Brett A. Cope |
Brett A. Cope | ||
President and Chief Executive Officer | ||
(Principal Executive Officer) | ||
Date: February 5, 2020 | By: | /s/ Michael W. Metcalf |
Michael W. Metcalf | ||
Executive Vice President | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Powell Industries, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Brett A. Cope Brett A. Cope President and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Powell Industries, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Michael W. Metcalf Michael W. Metcalf Executive Vice President Chief Financial Officer (Principal Financial Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Brett A. Cope Brett A. Cope President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Michael W. Metcalf Michael W. Metcalf Executive Vice President Chief Financial Officer |
Detail of Selected Balance Sheet Accounts (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Activity in Allowance for Doubtful Accounts Receivable | Activity in our allowance for doubtful accounts consisted of the following (in thousands):
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Components of Inventories | The components of inventories are summarized below (in thousands):
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Activity in Product Warranty Accrual | Activity in our product warranty accrual consisted of the following (in thousands):
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Assets and Liabilities Measured on Recurring Basis | The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2019 (in thousands):
The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2019 (in thousands):
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Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
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Dec. 31, 2019 |
Dec. 31, 2018 |
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Numerator: | ||
Net income (loss) | $ 2,775 | $ (2,695) |
Denominator: | ||
Weighted average basic shares (in shares) | 11,614 | 11,551 |
Dilutive effect of restricted stock units (in shares) | 51 | 0 |
Weighted average diluted shares (in shares) | 11,665 | 11,551 |
Income (loss) per share: | ||
Basic (in dollars per share) | $ 0.24 | $ (0.23) |
Diluted (in dollars per share) | $ 0.24 | $ (0.23) |
Income Taxes - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Dec. 31, 2019 |
Dec. 31, 2018 |
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Income Tax Disclosure [Abstract] | ||
Effective tax rate | 17.00% | 8.00% |
Unrecognized tax benefits, decrease due to expiration of certain federal statutes of limitations and volunatary filings | $ 0.9 |
Leases - Narrative (Details) $ in Millions |
Dec. 31, 2019
USD ($)
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Leases [Abstract] | |
Lease accrual | $ 0.8 |
Weighted average discount rate, percent | 4.25% |
Weighted average remaining lease term | 3 years 2 months 12 days |
Commitments and Contingencies |
3 Months Ended |
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Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Letters of Credit, Surety Bonds and Bank Guarantees Certain customers require us to post letters of credit, bank guarantees or surety bonds. These security instruments assure that we will perform under the terms of our contract. In the event of default, the counterparty may demand payment from the bank under a letter of credit or bank guarantee, or performance by the surety under a bond. To date, there have been no significant draws or claims related to security instruments for the periods reported. We were contingently liable for letters of credit of $13.4 million as of December 31, 2019. We also had surety bonds totaling $180.0 million that were outstanding, with additional bonding capacity of $570.0 million available, at December 31, 2019. We have an $11.9 million facility agreement (Facility Agreement) between Powell (UK) Limited and a large international bank that provides Powell (UK) Limited the ability to enter into bank guarantees as well as forward exchange contracts and currency options. At December 31, 2019, we had outstanding guarantees totaling $5.2 million and amounts available under this Facility Agreement were $6.7 million. The Facility Agreement expires in May 2020 and provides for financial covenants and customary events of default, and carries cross-default provisions with our U.S. Revolver. If an event of default (as defined in the Facility Agreement) occurs and is continuing, per the terms and subject to the conditions set forth therein, obligations outstanding under the Facility Agreement may be accelerated and declared immediately due and payable. As of December 31, 2019, we were in compliance with all of the financial covenants of the Facility Agreement. Litigation We are involved in various legal proceedings, claims and other disputes arising from our commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. Although we can give no assurances about the resolution of pending claims, litigation or other disputes and the effect such outcomes may have on us, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on our consolidated financial position or results of operations or liquidity. |
Income Taxes |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The calculation of the effective tax rate is as follows (in thousands):
Our income tax provision (benefit) reflects an effective tax rate on pre-tax results of 17% for the first quarter of Fiscal 2020 compared to 8% in the first quarter of Fiscal 2019. The effective tax rate for the three months ended December 31, 2019 was favorably impacted by the Research and Development Tax Credit (R&D Tax Credit) as well as the utilization of net operating loss carryforwards in Canada that were fully reserved with a valuation allowance. Conversely, losses recognized in Canada reserved with a valuation allowance negatively impacted the effective tax rate in the three months ended December 31, 2018. There were no material discrete items recognized in the first quarter of Fiscal 2020 or 2019. Due to the expiration of certain federal statutes of limitations and voluntary filings, management believes that, within the next twelve months, it is reasonably possible that the unrecognized tax benefits will decrease by approximately $0.9 million and would positively impact our effective tax rate. We are unable to make reasonably reliable estimates regarding the timing of future cash outflows, if any, associated with the remaining unrecognized tax benefits. |
Revenue - Performance Obligations (Details) $ in Millions |
Dec. 31, 2019
USD ($)
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Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation, amount | $ 425.9 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation, amount | $ 367.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, expected timing of satisfaction, period | 12 months |
Detail of Selected Balance Sheet Accounts - Activity in Allowance for Doubtful Accounts Receivable (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Dec. 31, 2019 |
Dec. 31, 2018 |
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Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at beginning of period | $ 301 | $ 157 |
Bad debt expense | 42 | 27 |
Uncollectible accounts written off, net of recoveries | (10) | (42) |
Change due to foreign currency translation | 13 | (3) |
Balance at end of period | $ 346 | $ 139 |
Long-Term Debt |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following (in thousands):
U.S. Revolver On September 27, 2019, we entered into an Amended and Restated Credit Agreement with Bank of America, N.A. (the " "U.S. Revolver"), which replaced our prior credit agreement. The U.S. Revolver is a $75.0 million revolving credit facility, that is available for both borrowings and letters of credit and expires September 2024. As of December 31, 2019, there were no amounts borrowed under this facility and letters of credit outstanding were $13.4 million. There was $61.6 million available for the issuance of letters of credit and borrowings under the U.S. Revolver as of December 31, 2019. We are required to maintain certain financial covenants, the most significant of which are a consolidated leverage ratio less than 3.0 to 1.0 and a consolidated interest coverage ratio of greater than 3.0 to 1.0. Additionally, we must maintain a consolidated cash balance of $30 million at all times. The U.S. Revolver also contains a "material adverse effect" clause which is a material change in our operations, business, properties, liabilities or condition (financial or otherwise) or a material impairment of our ability to perform our obligations under our credit agreements. As of December 31, 2019, we were in compliance with all of the financial covenants of the U.S. Revolver. The U.S. Revolver allows the Company to elect that any borrowing under the facility bear an interest rate based on either the base rate or the eurocurrency rate, in each case, plus the applicable rate. The base rate is generally the highest of (a) the federal funds rate plus 0.50%, (b) the Bank of America prime rate or (c) the London Interbank Offered Rate ("LIBOR") plus 1.00%. The applicable rate is generally a range from (0.25)% to 1.75% depending on the type of loan and the Company's consolidated leverage ratio. The U.S. Revolver is collateralized by a pledge of 100% of the voting capital stock of each of our domestic subsidiaries and 65% of the voting capital stock of each non-domestic subsidiary. The U.S. Revolver provides for customary events of default and carries cross-default provisions with other existing debt agreements. If an event of default (as defined in the U.S. Revolver) occurs and is continuing, on the terms and subject to the conditions set forth in the U.S. Revolver, amounts and letters of credit outstanding under the U.S. Revolver may be accelerated and may become immediately due and payable. Industrial Development Revenue Bonds We borrowed $8.0 million in October 2001 through a loan agreement funded with proceeds from tax-exempt industrial development revenue bonds (Bonds). These Bonds were issued by the Illinois Development Finance Authority and were used for the completion of our Northlake, Illinois facility. Pursuant to the Bond issuance, a reimbursement agreement between us and a major domestic bank required an issuance by the bank of an irrevocable direct-pay letter of credit (Bond LC), as collateral, to the Bonds’ trustee to guarantee payment of the Bonds’ principal and interest when due. The Bond LC is subject to both early termination and extension provisions customary to such agreements, as well as various covenants, for which we were in compliance at December 31, 2019. While the Bonds mature in 2021, the reimbursement agreement requires annual redemptions of $0.4 million that commenced on October 25, 2002. A sinking fund is used for the annual principal payment. The Bonds bear interest at a floating rate determined weekly by the Bonds’ remarketing agent, which was the underwriter for the Bonds and is an affiliate of the bank. This interest rate was 1.79% as of December 31, 2019. |
Leases |
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Dec. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases Our leases consist primarily of office and manufacturing space, construction equipment and office equipment. All of our future lease obligations are related to non-cancelable operating leases. The most significant portion of our lease portfolio relates to leases of office and manufacturing facilities in Canada which we no longer occupy. We currently sublease the majority of these Canadian facilities. The following table provides a summary of lease cost components for the three months ended December 31, 2019 (in thousands):
(1) Variable lease cost represents common area maintenance charges related to our Canadian office space leases. (2) Short-term lease cost includes leases and rentals with initial terms of one year or less. We recognize operating lease assets and operating lease liabilities representing the present value of the remaining lease payments for leases with initial terms greater than twelve months. Leases with initial terms of twelve months or less are not recorded in our Condensed Consolidated Balance Sheets. Our operating lease assets have been reduced by a lease accrual of $0.8 million related to certain unused facility leases in Canada. The following table provides a summary of the operating lease assets and operating lease liabilities included in our Condensed Consolidated Balance Sheets as of December 31, 2019 (in thousands):
The following table provides the maturities of our operating lease liabilities as of December 31, 2019 (in thousands):
The weighted average discount rate as of December 31, 2019 was 4.25%. The weighted average remaining lease term was 3.2 years at December 31, 2019. |
Revenue - Contract Balances (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2019 |
Sep. 30, 2019 |
|
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 60,296 | $ 55,374 |
Contract liabilities | (77,556) | (71,464) |
Net contract asset (liability) | (17,260) | (16,090) |
Revenue recognized related to contract liabilities | 45,600 | |
Retention amounts included in accounts receivable | 5,900 | $ 5,600 |
Retained amount expected to be collected in the next twelve months | 5,600 | |
Retained amount expected to be collected in 2021 | $ 300 |
Detail of Selected Balance Sheet Accounts - Components of Inventories (Details) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Sep. 30, 2019 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials, parts and sub-assemblies, net | $ 31,526 | $ 28,102 |
Work-in-progress | 922 | 1,100 |
Total inventories | $ 32,448 | $ 29,202 |
Commitments and Contingencies (Details) |
Dec. 31, 2019
USD ($)
|
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Guarantee Obligations [Line Items] | |
Additional bonding capacity | $ 570,000,000 |
Facility Agreement | Powell (UK) Limited | |
Guarantee Obligations [Line Items] | |
Guarantee liability | 5,200,000 |
Revolving credit facility | 11,866,500 |
Amount of credit facility remaining borrowing capacity | 6,700,000 |
Surety Bonds | |
Guarantee Obligations [Line Items] | |
Guarantee liability | $ 180,000,000 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Sep. 30, 2019 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 346 | $ 301 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, shares issued (in shares) | 12,403,231 | 12,372,766 |
Treasury stock, shares (in shares) | 806,018 | 806,018 |
Overview and Summary of Significant Accounting Policies - New Accounting Standard (Details) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Oct. 01, 2019 |
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease assets, net | $ 6,213 | |
Operating lease liabilities | $ 7,039 | |
ASU 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease assets, net | $ 7,000 | |
Operating lease liabilities | $ 7,000 |
Earnings Per Share (Tables) |
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Basic and Diluted Weighted Average Shares used in Computation of Earnings Per Share | The following table reconciles basic and diluted weighted average shares used in the computation of earnings per share (in thousands, except per share data):
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Stock-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Units Activity | Total RSU activity (number of shares) for the three months ended December 31, 2019 is summarized below:
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Leases - Summary of Operating Lease Assets and Liabilities (Details) $ in Thousands |
Dec. 31, 2019
USD ($)
|
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Assets: | |
Operating lease assets, net | $ 6,213 |
Liabilities: | |
Current operating lease liabilities | 2,247 |
Long-term operating lease liabilities | 4,792 |
Total lease liabilities | $ 7,039 |
Stock-Based Compensation - Schedule of Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) |
3 Months Ended |
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Dec. 31, 2019
$ / shares
shares
| |
Number of Restricted Stock Units | |
Outstanding at beginning of period (in shares) | shares | 131,850 |
Granted (in shares) | shares | 70,000 |
Vested (in shares) | shares | (46,900) |
Forfeited/canceled (in shares) | shares | (750) |
Outstanding at end of period (in shares) | shares | 154,200 |
Weighted Average Fair Value Per Share | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 33.76 |
Granted (in dollars per share) | $ / shares | 38.57 |
Vested (in dollars per share) | $ / shares | 35.65 |
Forfeited/canceled (in dollars per share) | $ / shares | 33.16 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 35.37 |
Subsequent Events (Details) - $ / shares |
3 Months Ended | ||
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Feb. 04, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
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Subsequent Event [Line Items] | |||
Quarterly cash dividend (in dollars per share) | $ 0.26 | $ 0.26 | |
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Quarterly cash dividend (in dollars per share) | $ 0.26 |
Long-Term Debt - Components of Long-Term Debt (Details) - USD ($) $ in Thousands |
Dec. 31, 2019 |
Sep. 30, 2019 |
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Debt Disclosure [Abstract] | ||
Industrial development revenue bonds | $ 800 | $ 1,200 |
Less: current portion | (400) | (400) |
Total long-term debt | $ 400 | $ 800 |
Revenue - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Dec. 31, 2019 |
Dec. 31, 2018 |
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Revenue from External Customer [Line Items] | ||
Changes in contract estimates related to projects in progress | $ 4.3 | $ 3.1 |
Transferred over Time | Product Concentration Risk | Revenue from Contract with Customer Benchmark | ||
Revenue from External Customer [Line Items] | ||
Concentration risk, percentage | 95.00% | 93.00% |
Transferred at Point in Time | Product Concentration Risk | Revenue from Contract with Customer Benchmark | ||
Revenue from External Customer [Line Items] | ||
Concentration risk, percentage | 5.00% | 7.00% |
Detail of Selected Balance Sheet Accounts |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Detail of Selected Balance Sheet Accounts | Detail of Selected Balance Sheet Accounts Allowance for Doubtful Accounts Activity in our allowance for doubtful accounts consisted of the following (in thousands):
Inventories The components of inventories are summarized below (in thousands):
Accrued Product Warranty Activity in our product warranty accrual consisted of the following (in thousands):
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Stock-Based Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Refer to our Annual Report on Form 10-K for the fiscal year ended September 30, 2019 for a full description of our existing stock-based compensation plans. Restricted Stock Units We issue restricted stock units (RSUs) to certain officers and key employees of the Company. The fair value of the RSUs is based on the price of our common stock as reported on the NASDAQ Global Market on the grant dates. The typical annual grant vests over a three-year period from the date of issuance and is a blend of time-based and performance-based shares. The portion of the grant that is time-based typically vests over a three-year period on each anniversary of the grant date, based on continued employment. The performance-based shares vest based on the three-year earnings performance of the Company following the grant date. At December 31, 2019, there were 154,200 RSUs outstanding. The RSUs do not have voting rights but do receive dividend equivalents upon vesting. Additionally, the shares of common stock underlying the RSUs are not considered issued and outstanding until vested and common stock is issued. Total RSU activity (number of shares) for the three months ended December 31, 2019 is summarized below:
During the three months ended December 31, 2019 and 2018, we recorded compensation expense of $0.9 million and $1.2 million, respectively, related to the RSUs. Restricted Stock Each non-employee director receives 2,000 restricted shares of the Company’s common stock annually. Fifty-percent of the restricted stock granted to each of our non-employee directors vests immediately, while the remaining fifty-percent vests on the anniversary of the grant date. Compensation expense is recognized immediately for the first fifty-percent of the restricted stock granted, while compensation expense for the remaining fifty-percent is recognized over the remaining vesting period. During the three months ended December 31, 2019 and 2018, there were no restricted shares granted. During the three months ended December 31, 2019 and 2018, we recorded compensation expense of $0.1 million and less than $0.1 million, respectively related to restricted stock. |
Subsequent Events |
3 Months Ended |
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Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On February 4, 2020, our Board of Directors declared a quarterly cash dividend on our common stock in the amount of $0.26 per share. The dividend is payable on March 18, 2020 to shareholders of record at the close of business on February 19, 2020. |
Revenue (Tables) |
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Contract Asset and Liabilities | Contract assets and liabilities as of December 31, 2019 and September 30, 2019 are summarized below (in thousands):
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Disaggregation of Revenue | The following tables present our disaggregated revenue by geographic destination and market sector for the three months ended December 31, 2019 and 2018 (in thousands):
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Leases (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Cost | The following table provides a summary of lease cost components for the three months ended December 31, 2019 (in thousands):
(1) Variable lease cost represents common area maintenance charges related to our Canadian office space leases. (2) Short-term lease cost includes leases and rentals with initial terms of one year or less. |
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Operating Lease Assets And Liabilities | The following table provides a summary of the operating lease assets and operating lease liabilities included in our Condensed Consolidated Balance Sheets as of December 31, 2019 (in thousands):
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Maturities of Operating Lease Liabilities | The following table provides the maturities of our operating lease liabilities as of December 31, 2019 (in thousands):
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Earnings Per Share |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share We compute basic earnings per share by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per common and potential common share includes the weighted average of additional shares associated with the incremental effect of dilutive restricted stock and restricted stock units, as prescribed by the FASB guidance on earnings per share. The following table reconciles basic and diluted weighted average shares used in the computation of earnings per share (in thousands, except per share data):
For the three months ended December 31, 2018, we incurred a net loss and therefore all potential common shares were deemed to be anti-dilutive. |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
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Dec. 31, 2019 |
Dec. 31, 2018 |
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Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 2,775 | $ (2,695) |
Foreign currency translation adjustments | 2,387 | (4,088) |
Comprehensive income (loss) | $ 5,162 | $ (6,783) |
Document and Entity Information - shares |
3 Months Ended | |
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Dec. 31, 2019 |
Feb. 03, 2020 |
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Document And Entity Information [Abstract] | ||
Entity Registrant Name | POWELL INDUSTRIES INC | |
Entity Central Index Key | 0000080420 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2019 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Common Stock, Shares Outstanding | 11,597,213 |
Income Taxes - Schedule of Calculation of the Effective Tax Rate (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Dec. 31, 2019 |
Dec. 31, 2018 |
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Income Tax Disclosure [Abstract] | ||
Income (loss) before income taxes | $ 3,333 | $ (2,934) |
Income tax provision (benefit) | 558 | (239) |
Net income (loss) | $ 2,775 | $ (2,695) |
Effective tax rate | 17.00% | 8.00% |
Leases - Lease Costs (Details) $ in Thousands |
3 Months Ended |
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Dec. 31, 2019
USD ($)
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Leases [Abstract] | |
Operating lease cost | $ 628 |
Less: sublease income | (79) |
Variable lease cost | 94 |
Short-term lease cost | 190 |
Total lease cost | $ 833 |
Long-Term Debt (Tables) |
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Components of Long-term debt | Long-term debt consisted of the following (in thousands):
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Income Taxes (Tables) |
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Calculation of the Effective Income Tax Rate | The calculation of the effective tax rate is as follows (in thousands):
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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
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Dec. 31, 2019 |
Dec. 31, 2018 |
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Income Statement [Abstract] | ||
Revenues | $ 134,150 | $ 109,351 |
Cost of goods sold | 112,324 | 94,720 |
Gross profit | 21,826 | 14,631 |
Selling, general and administrative expenses | 17,289 | 15,928 |
Research and development expenses | 1,474 | 1,694 |
Amortization of intangible assets | 44 | 44 |
Operating income (loss) | 3,019 | (3,035) |
Interest expense | 67 | 56 |
Interest income | (381) | (157) |
Income (loss) before income taxes | 3,333 | (2,934) |
Income tax provision (benefit) | 558 | (239) |
Net income (loss) | $ 2,775 | $ (2,695) |
Earnings (loss) per share: | ||
Basic (in dollars per share) | $ 0.24 | $ (0.23) |
Diluted (in dollars per share) | $ 0.24 | $ (0.23) |
Weighted average shares: | ||
Basic (in shares) | 11,614 | 11,551 |
Diluted (in shares) | 11,665 | 11,551 |
Dividends per share (in dollars per share) | $ 0.26 | $ 0.26 |
Overview and Summary of Significant Accounting Policies |
3 Months Ended |
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Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Overview and Summary of Significant Accounting Policies | Overview and Summary of Significant Accounting Policies Overview Powell Industries, Inc. (we, us, our, Powell or the Company) was incorporated in the state of Delaware in 2004 as a successor to a Nevada company incorporated in 1968. The Nevada company was the successor to a company founded by William E. Powell in 1947, which merged into the Company in 1977. Our major subsidiaries, all of which are wholly owned, include: Powell Electrical Systems, Inc.; Powell (UK) Limited; Powell Canada Inc. and Powell Industries International, B.V. We develop, design, manufacture and service custom-engineered equipment and systems for the distribution, control and monitoring of electrical energy. Headquartered in Houston, Texas, we serve the oil and gas markets, including onshore and offshore oil and gas production, pipeline, refining and liquid natural gas terminals, as well as petrochemical, electric utility, light rail traction power and other heavy industrial markets. Basis of Presentation These unaudited condensed consolidated financial statements include the accounts of Powell and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP), have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with respect to the interim condensed consolidated financial statements have been included. The results of operations for the interim periods are not necessarily indicative of the results for the entire fiscal year. We believe that these financial statements contain all adjustments necessary so that they are not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Powell and its subsidiaries included in Powell’s Annual Report on Form 10-K for the year ended September 30, 2019, which was filed with the Securities and Exchange Commission (SEC) on December 5, 2019. References to Fiscal 2020 and Fiscal 2019 used throughout this report shall mean our fiscal years ended September 30, 2020 and 2019, respectively. Use of Estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (U.S. GAAP) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying footnotes. The most significant estimates used in our condensed consolidated financial statements affect revenue recognition and estimated cost recognition on our customer contracts, the allowance for doubtful accounts, provision for excess and obsolete inventory, warranty accruals and income taxes. The amounts recorded for warranties, legal, income taxes, impairment of long-lived assets (when applicable) and other contingent liabilities require judgments regarding the amount of expenses that will ultimately be incurred. We base our estimates on historical experience and on various other assumptions, as well as the specific circumstances surrounding these contingent liabilities, in evaluating the amount of liability that should be recorded. Additionally, the recognition of deferred tax assets requires estimates related to future income and other assumptions regarding timing and future profitability because the ultimate realization of net deferred tax assets is dependent on the generation of future taxable income during the periods in which temporary differences become deductible. Estimates routinely change as new events occur, additional information becomes available or operating environments change. Actual results may differ from our prior estimates. New Accounting Standards Effective October 1, 2019, we adopted the new lease accounting standard and recorded operating lease assets and operating lease liabilities of approximately $7.0 million and determined that no adjustment to retained earnings was necessary. Financial results for reporting periods after October 1, 2019 are reported under the new standard; however financial results for prior periods were not adjusted and will continue to be presented in accordance with the previous standard. Upon adoption, we elected a package of practical expedients which, among other things, allowed for the historical classification of our existing leases to carryforward. Additionally, we elected to separate non-lease components for our real estate and IT infrastructure asset classes. All other asset classes account for both lease and non-lease components in the operating lease asset and operating lease liability calculations. See Note I for further discussion of leases. |
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