0000890566-95-000564.txt : 19950915 0000890566-95-000564.hdr.sgml : 19950915 ACCESSION NUMBER: 0000890566-95-000564 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950731 FILED AS OF DATE: 19950913 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: POWELL INDUSTRIES INC CENTRAL INDEX KEY: 0000080420 STANDARD INDUSTRIAL CLASSIFICATION: SWITCHGEAR & SWITCHBOARD APPARATUS [3613] IRS NUMBER: 880106100 STATE OF INCORPORATION: NV FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06050 FILM NUMBER: 95573571 BUSINESS ADDRESS: STREET 1: 8550 MOSLEY DR STREET 2: POST OFFICE BOX 12818 CITY: HOUSTON STATE: TX ZIP: 77075 BUSINESS PHONE: 7139446900 MAIL ADDRESS: STREET 2: 8550 MOSLEY DRIVE P O BOX 12818 CITY: HOUSTON STATE: TX ZIP: 77075 FORMER COMPANY: FORMER CONFORMED NAME: PROCESS SYSTEMS INC DATE OF NAME CHANGE: 19780926 10-Q 1 QUARTERLY REPORT FOR THE PERIOD ENDED 07/31/95 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q (Mark one) [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended July 31, 1995 or [ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ___________________ to ________________________ COMMISSION FILE NUMBER 0-6050 POWELL INDUSTRIES, INC. (Exact name of registrant as specified in its charter) NEVADA 88-0106100 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 8550 MOSLEY DRIVE, HOUSTON, TEXAS 77075-1180 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (713) 944-6900 Indicate by "X" whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Common Stock, par value $.01 per share; 10,542,704 shares outstanding on July 31, 1995. POWELL INDUSTRIES, INC. PART I - Financial Information Item 1. Financial Statements .......................... 3-8 Item 2. Management's Discussion and Analysis of Financial Condition and Quarterly Results of Operations....................... 9-10 PART II - Other Information and Signatures ...................... 11-12 Powell Industries, Inc. and Subsidiaries Consolidated Balance Sheets (In Thousands, Except Share Data) July 31, October 31, Assets 1995 1994 (unaudited) --------- ---------- Current Assets: Cash and cash equivalents ............................ $ 3,578 $ 7,598 Accounts receivable, less allowance for doubtful accounts of $801 and $1,061, respectively ...................................... 34,659 33,976 Costs and estimated earnings in excess of billings ....................................... 11,610 7,338 Inventories .......................................... 19,997 14,899 Deferred income taxes ................................ 2,313 2,134 Prepaid expenses and other current assets ............ 1,738 1,327 -------- -------- Total Current Assets ............................... 73,895 67,272 Property, plant and equipment, net ..................... 16,120 15,659 Deferred income taxes, noncurrent ...................... 955 1,390 Other assets ........................................... 4,470 6,423 -------- -------- Total Assets ....................................... $ 95,440 $ 90,744 ======== ======== Liabilities and Stockholders' Equity Current Liabilities: Accounts and income taxes payable .................... $ 11,450 $ 9,217 Accrued salaries, bonuses and commissions ............ 4,013 4,612 Accrued product warranty ............................. 2,735 3,679 Other accrued expenses ............................... 3,789 5,372 Billings in excess of costs and estimated earnings ................................ 4,820 2,350 Current maturities of long-term debt ................. 2,813 2,813 -------- -------- Total Current Liabilities .......................... 29,620 28,043 Long-term debt ......................................... 5,350 6,563 Deferred compensation expense .......................... 2,009 1,887 Postretirement benefits liability ...................... 2,524 2,595 Stockholders' Equity: Preferred stock, $.01 par value; 5,000,000 shares authorized; none issued Common stock, $.01 par value; 15,000,000 shares authorized; 10,542,704 and 10,517,704, respectively, shares issued and outstanding ...................................... 105 105 Additional paid-in capital ........................... 5,062 4,906 Retained earnings .................................... 54,184 50,485 Deferred compensation-ESOP ........................... (3,414) (3,840) -------- -------- Total Stockholders' Equity ......................... 55,937 51,656 -------- -------- Total Liabilities and Stockholders' Equity ......... $ 95,440 $ 90,744 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. Powell Industries, Inc. and Subsidiaries Consolidated Statements of Operations (unaudited) (In Thousands, Except Per Share Data) Three Months Ended July 31, --------------------------- 1995 1994 ------------ ----------- Revenues ......................................... $ 40,341 $ 36,255 Cost of goods sold ............................... 31,608 28,224 ----------- ----------- Gross profit ..................................... 8,733 8,031 Selling, general and administrative expenses ..... 6,824 6,340 ----------- ----------- Earnings from operations ......................... 1,909 1,691 Interest, net .................................... 179 168 ----------- ----------- Earnings before income taxes ..................... 1,730 1,523 Income tax provision ............................. 292 281 ----------- ----------- Net earnings ..................................... $ 1,438 $ 1,242 =========== =========== Net earnings per common share .................... $ 0.14 $ 0.12 =========== =========== Weighted average number of common shares outstanding ........................... 10,542,704 10,517,704 =========== =========== The accompanying notes are an integral part of these consolidated financial statements. Powell Industries, Inc. and Subsidiaries Consolidated Statements of Operations (unaudited) (In Thousands, Except Per Share Data) Nine Months Ended July 31, -------------------------- 1995 1994 ------------ ----------- Revenues ........................................... $ 118,328 $ 109,975 Cost of goods sold ................................. 93,065 85,788 ----------- ----------- Gross profit ....................................... 25,263 24,187 Selling, general and administrative expenses ....... 19,776 19,298 ----------- ----------- Earnings from operations ........................... 5,487 4,889 Interest, net ...................................... 447 550 ----------- ----------- Earnings before income taxes ....................... 5,040 4,339 Income tax provision ............................... 1,341 1,175 ----------- ----------- Net earnings ....................................... $ 3,699 $ 3,164 =========== =========== Net earnings per common share ...................... $ 0.35 $ 0.30 =========== =========== Weighted average number of common shares outstanding 10,531,593 10,506,593 =========== =========== The accompanying notes are an integral part of these consolidated financial statements. Powell Industries, Inc. and Subsidiaries Consolidated Statements of Cash Flows (unaudited) (In Thousands) Nine Months Ended July 31, --------------------- 1995 1994 -------- --------- Operating Activities: Net earnings ......................................... $ 3,699 $ 3,164 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization ...................... 2,579 2,499 Deferred income taxes .............................. 256 (852) Postretirement benefit liability ................... 71 489 Changes in operating assets and liabilities: Accounts receivable .............................. (683) 619 Costs and estimated earnings in excess of billings ........................................ (4,272) 786 Inventories ...................................... (5,098) (3,405) Prepaid expenses and other current assets ........ (411) (984) Other assets ..................................... 997 470 Accounts payable and income taxes payable ........ 2,233 (2,713) Accrued liabilities .............................. (3,127) 845 Billings in excess of costs and estimated earnings ........................................ 2,470 (1,733) Other long-term liabilities ...................... 563 167 -------- -------- Net cash provided by (used in) operating activities ............................................ (723) (648) -------- -------- Investing Activities: Purchases of property, plant, and equipment .......... (2,084) (1,510) Acquisition of Transdyn Controls, Inc. ............... -- (1,539) -------- -------- Net cash used in investing activities .................. (2,084) (3,049) -------- -------- Financing Activities: Net proceeds from revolving line of credit ........... 1,600 -- Repayments of matured indebtedness ................... (2,813) (3,331) Exercise of stock grants ............................. -- 178 -------- -------- Net cash used in financing activities .................. (1,213) (3,153) -------- -------- Net increase (decrease) in cash and cash equivalents ........................................... (4,020) (6,850) Cash and cash equivalents at beginning of period ....... 7,598 13,118 -------- -------- Cash and cash equivalents at end of period ............. $ 3,578 $ 6,268 ======== ======== The accompanying notes are an integral part of these consolidated financial statements. Part I Item 1 POWELL INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of management, reflect all adjustments which are of a normal recurring nature necessary for a fair presentation of financial positions, results of operations, and statements of cash flows. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the company's latest annual report. Certain reclassifications of prior year amounts were made to conform to the current financial statement presentation. B. INVENTORY July 31, October 31, 1995 1994 (unaudited) ------- ------- The components of inventory are summarized below (in thousands): Raw materials and subassemblies ................ $14,332 $ 9,392 Work-in-process ................................ 5,665 5,507 ------- ------- Total inventories .............................. $19,997 $14,899 ======= ======= C. PROPERTY, PLANT AND EQUIPMENT July 31, October 31, 1995 1994 (unaudited) -------- --------- Property, plant and equipment is summarized below (in thousands): Land ............................................... $ 2,514 $ 2,514 Buildings and improvements ......................... 14,610 14,282 Machinery and equipment ............................ 22,885 21,863 Furniture & fixtures ............................... 3,981 3,076 Construction in process ............................ 733 247 -------- -------- 44,723 41,982 Less-accumulated depreciation ...................... (28,603) (26,323) -------- -------- Total property, plant and equipment, net ........... $ 16,120 $ 15,659 ======== ======== D. Other Financial Information (unaudited) Nine Months Ended July 31, ----------------- 1995 1994 ------ ------ Supplemental disclosure of cash flow information (in thousands): Cash paid during the period for: Interest ............................................ $1,012 $1,300 ====== ====== Income taxes ........................................ $1,655 $1,610 ====== ====== E. Production Contracts For contracts in which the percentage-of-completion method is used, costs and estimated earnings in excess of billings are shown as a current asset and billings in excess of costs and estimated earnings are shown as a current liability. The components of these contracts are as follows (in thousands): July 31, October 31, 1995 1994 (unaudited) -------- ----------- Costs and estimated earnings ................... $ 48,895 $ 33,258 Progress billings .............................. (37,285) (25,920) -------- -------- Total costs and estimated earnings in excess of billings ............................ $ 11,610 $ 7,338 ======== ======== Progress billings .............................. $ 29,020 $ 12,556 Costs and estimated earnings ................... (24,200) (10,206) -------- -------- Total billings in excess of costs and estimated earnings ............................ $ 4,820 $ 2,350 ======== ======== Part I Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND QUARTERLY RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES During 1990, the Company concluded a private placement of $15,000,000 in term notes, of which $6,563,000 was outstanding as of July 31, 1995. These notes are unsecured with a fixed interest rate of 10.4 percent. The notes mature through June 1997, with the next payment of $2,813,000 due in June 1996. The Company also has a revolving line of credit, with a major domestic bank, of $10,000,000, which was amended in April 1995, to extend the maturity date to May 1, 1997. As of July 31, 1995 a total of $1,600,000 of this line was borrowed leaving an available balance of $8,400,000. The Company's ability to satisfy its cash requirements is evaluated by analyzing key measures of liquidity applicable to the Company. The following table is a summary of the measures which are significant to management: July October 31, July 31, 1995 1994 1994 ----------- ----------- ----------- Working Capital ............. $44,275,000 $39,229,000 $38,173,000 Current Ratio ............... 2.49 to 1 2.40 to 1 2.41 to 1 Debt to Capitalization ...... .13 to 1 .15 to 1 .16 to 1 The consolidated statements of cash flows show that approximately $4,020,000 of cash was used during the nine months ended July 31, 1995. The increases in costs and estimated earnings in excess of billings and inventories requiring the use of cash were due to the increased volume of business, product shipment delays and advance purchase of inventory. Another major use of cash was the reduction of accrued liabilities for incentive compensation, legal expenses and insurance. Billings in excess of costs and estimated earnings increased and had a positive effect on the Company's cash flow during the quarter. The increase in this account reflects the increase in the amount of progress billings in advance of costs incurred during the period. The use of cash for capital expenditures during the nine months of 1995 was $2,084,000 which was mainly invested in machinery and equipment. The Company's fiscal 1995 asset management program will continue to focus on the collection of receivables and reduction in inventories. The Company plans to satisfy its fiscal 1995 capital requirements and operating needs primarily with funds available in cash and cash equivalents of $3,578,000, funds generated from operating activities and funds available under its existing revolving credit line. RESULTS OF OPERATIONS The following table sets forth, as a percentage of revenues, certain items from the Consolidated Statements of Operations. JULY 31, --------------------------------- 1995 1994 -------------- --------------- three nine three nine months months months months ended ended ended ended ----- ----- ----- ----- Revenues ................................... 100.0% 100.0% 100.0% 100.0% Gross Profit ............................... 21.7 21.4 22.2 22.0 Selling, general and administrative expenses ................................. 16.9 16.7 17.5 17.6 Interest, net .............................. .4 .4 .5 .5 Net earnings before income tax ............. 4.3 4.3 4.2 4.0 Income tax provision ....................... .7 1.1 .8 1.1 Net earnings ............................... 3.6 3.1 3.4 2.9 REVENUES for the quarter ended July 31, 1995 were up 11% to $40,341,000 from $36,255,000 for the third quarter of last year. This increase in volume was due to higher electrical distribution equipment product line revenues. Revenues for the nine months ended July 31, 1995 were up eight percent to $118,328,000 from $109,975,000 in the first nine months of last year. This increase in volume was due to higher electrical distribution equipment product line revenues which were partially offset by lower revenues from process control product lines. GROSS PROFIT, as a percentage of revenues, was 21.7% and 22.2% for the quarters ended July 31, 1995 and 1994. The gross profit percentage for the nine months ended July 31, 1995 and 1994 was 21.4% and 22.0%, respectively. The lower percentages in 1995 were due to changes in product mix shipped during 1995. SELLING, GENERAL AND ADMINISTRATIVE EXPENSE as a percentage of revenues was 16.9% and 17.5% for the quarters ended July 31, 1995 and 1994. The comparable percentages of revenues for the nine months ending July 31, 1995 and 1994 are 16.7% and 17.6%, respectively. The lower percentages in 1995 were due to the effect of increased revenue volume without corresponding increases in expense. INTEREST, NET is lower in 1995 than in 1994 due to the reduction in outstanding debt. INCOME TAX PROVISION had effective tax rates of 16.9% and 18.4% for the quarters ended July 31, 1995 and 1994. For the nine months ended July 31, 1995 and 1994 the effective tax rate was 26.6% and 27.1% respectively. The lower than statutory rates are due to foreign sales corporation credits. NET EARNINGS were $1,438,000 or $.14 per share for the third quarter of fiscal 1995, an increase of 16% from $1,242,000 or $.12 per share for the same period last year. The net earnings for the nine months ended July 31, 1995 were $3,699,000, or $.35 per share, compared with $3,164,000, or $.30 per share for the first nine months of fiscal 1994, an increase of eight percent. The increase in both 1995 periods reported were mainly due to the higher revenue volume and lower interest expense. The order backlog at July 31, 1995 was $115,500,000 compared to $106,700,000 at October 31, 1994. The October 31, 1994, backlog has been adjusted for a large turbine package order canceled in January 1995, as previously reported, when a customer terminated a cogeneration project. Part II OTHER INFORMATION ITEM 1. Legal Proceedings No material developments in litigation previously reported. ITEM 2. Changes in Securities None ITEM 3. Defaults Upon Senior Securities Not applicable ITEM 4. Submission of Matters to a Vote of Security Holders None ITEM 5. Other Information None ITEM 6. Exhibits and Reports on Form 8-K a. Exhibits 27.0 Financial Data Schedule (electronic format only) b. Reports on Form 8-K No reports on Form 8-K were filed during period ended July 31, 1995 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. POWELL INDUSTRIES, INC. Registrant September 11, 1995 THOMAS W. POWELL ------------------ Thomas W. Powell Date President and Chief Executive Officer (Principal Executive Officer) September 11, 1995 J.F. AHART ------------------ J.F. Ahart Date Vice President, Secretary-Treasurer Chief Financial Officer (Principal Financial and Accounting Officer) EX-27 2 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER ENDED JULY 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS OCT-31-1995 JUL-31-1995 3,578 0 35,460 801 19,997 73,895 44,723 28,603 95,440 29,620 0 105 0 0 55,937 95,440 40,341 40,341 31,608 31,608 6,824 0 179 1,730 292 0 0 0 0 1,438 .14 0