EX-99.1 2 d189859dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

   PRESS RELEASE

 

FOR IMMEDIATE RELEASE   

Contacts: Don R. Madison, CFO

Powell Industries, Inc.

713-947-4422

POWELL INDUSTRIES ANNOUNCES FISCAL 2016

SECOND QUARTER RESULTS

Company reports adjusted diluted EPS of $0.69

HOUSTON — MAY 3, 2016 — Powell Industries, Inc. (NASDAQ: POWL), a leading supplier of custom engineered solutions for the management, control and distribution of electrical energy, today announced results for the fiscal 2016 second quarter ended March 31, 2016.

Revenues for the second quarter of fiscal 2016 were $152.3 million compared to revenues of $170.2 million for the second quarter of fiscal 2015. The Company reported net income for the second quarter of $5.6 million, or $0.49 per diluted share, compared to a net loss of $3.7 million, or $0.31 per diluted share, for the second quarter of fiscal 2015. Excluding restructuring and separation costs, net income for the second quarter of fiscal 2016 was $7.9 million, or $0.69 per diluted share. A reconciliation of this non-GAAP financial measure to net income is included in the financial tables below.

Thomas W. Powell, President and Chief Executive Officer, stated, “Across the company, we are realizing positive results from our focus on solid project execution and cost reduction initiatives. We are particularly pleased with the improved operational performance of our Canadian operation.

“During the second quarter, the impact of reduced capital spending in our primary oil and gas markets reduced available project opportunities and, as a result, we anticipate these lower order rates to persist through the remainder of the year and into 2017. Operationally, our strong project execution capabilities enable us to support our customers with their ongoing capital projects. Most notably, with $57 million in cash and virtually no debt, we are well positioned to manage our businesses through the current market cycle.”

New orders placed during the second quarter of fiscal 2016 totaled $117 million compared to $102 million in the first quarter of fiscal 2016 and $167 million in the second quarter of fiscal 2015. The Company’s backlog as of March 31, 2016 was $357 million compared to $391 million as of December 31, 2015 and compared to $499 million at the end of last year’s second quarter.

OUTLOOK

The following statements are based on the current expectations of the Company. These statements are forward-looking, and actual results may differ materially as further elaborated in the last paragraph below.

Reflecting current backlog and business conditions, Powell expects full year fiscal 2016 revenues to range between $520 million and $560 million, unchanged from previous guidance, and fiscal year 2016 earnings to range between $0.80 and $1.10 per diluted share, compared to previous earnings guidance of a range between $0.65 and $1.05 per diluted share. The Company’s earnings guidance excludes restructuring and separations costs. Powell recorded $4.8 million in restructuring and separation costs, net of tax, in the first six months of fiscal 2016 and will continue to evaluate additional restructuring that may be required to align operating costs with anticipated market conditions.

CONFERENCE CALL

Powell Industries has scheduled a conference call for Wednesday, May 4, 2016 at 11:00 a.m. eastern time. To participate in the conference call, dial 412-902-0030 at least 10 minutes before the call begins and ask for the Powell Industries conference call. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until May 11, 2016. To access the replay, dial 201-612-7415 using a passcode of 13635395#.

Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by visiting powellind.com. To listen to the live call on the web, please visit the website at least fifteen minutes before the call begins to register, download and install any necessary audio software. For those who cannot listen to the live webcast, an archive will be available shortly after the call and will remain available for approximately 90 days at powellind.com.

 

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Powell Industries, Inc., headquartered in Houston, engineers packaged solutions and systems for the management, control and distribution of electrical energy. Powell markets include large industrial customers such as utilities, oil and gas producers, refineries, petrochemical plants, pulp and paper producers, mining operations and commuter railways. For more information, please visit powellind.com.

Any forward-looking statements in the preceding paragraphs of this release 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 uncertainties in that actual results may differ materially from those projected in the forward-looking statements. In the course of operations, we are subject to certain risk factors, competition and competitive pressures, sensitivity to general economic and industrial conditions, international political and economic risks, availability and price of raw materials and execution of business strategy. For further information, please refer to the Company’s filings with the Securities and Exchange Commission, copies of which are available from the Company without charge.

This press release contains references to certain non-GAAP financial measures discussed above. Please see the financial table below for more details on these non-GAAP financial measures, including a reconciliation of these non-GAAP financial measures to net income and the reasons management believes these measures are useful to investors.

 

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POWELL INDUSTRIES, INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

 

     Three months ended
March 31,		     Six months ended
March 31,		  
     2016     2015     2016     2015  

(In thousands, except per share data)

        (Unaudited)     

Revenues

    $ 152,266      $ 170,199      $ 302,243      $ 322,800   

Cost of goods sold

      122,172        145,898        248,999        277,430   
  

 

 

    

 

 

    

 

 

    

 

 

  

Gross profit

      30,094        24,301        53,244        45,370   

Selling, general and administrative expenses

      19,024        19,464        38,425        40,279   

Research and development expenses

      1,959        1,626        3,813        3,466   

Restructuring and separation expenses

      3,259        1,332        7,056        1,332   

Amortization of intangible assets

      86        113        174        232   
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating income

      5,766        1,766        3,776        61   

Other income

      (507 )      (879 )      (1,015 )      (1,386 ) 

Interest expense

      50        33        74        69   

Interest income

      (71 )      (84 )      (71 )      (88 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

      6,294        2,696        4,788        1,466   

Income tax provision (benefit)

      727        6,379        (320 )      5,388   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income

    $ 5,567      $ (3,683 )    $ 5,108      $ (3,922 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Earnings per share:

         

Basic

    $ 0.49      $ (0.31 )    $ 0.45      $ (0.33 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Diluted

    $ 0.49      $ (0.31 )    $ 0.45      $ (0.33 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Weighted average shares:

         

Basic

      11,369        12,018        11,382        12,029   

Diluted

      11,422        12,018        11,415        12,029   

SELECTED FINANCIAL DATA:

         

Depreciation and Amortization

    $ 3,408      $ 3,358      $ 6,692      $ 6,794   
  

 

 

    

 

 

    

 

 

    

 

 

  

Capital Expenditures

    $ 497      $ 9,730      $ 1,126      $ 28,692   
  

 

 

    

 

 

    

 

 

    

 

 

  

Dividends Paid

    $ 2,929      $ 3,136      $ 5,921      $ 6,264   
  

 

 

    

 

 

    

 

 

    

 

 

  

 

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POWELL INDUSTRIES, INC. & SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

     March 31,
2016		      September 30,
2015		  
(In thousands)    (Unaudited)  

Assets:

      

Cash

    $ 57,358       $ 43,569   

Other current assets

      235,848         253,530   

Property, plant and equipment (net)

      150,722         154,594   

Long-term assets

      16,831         17,131   
  

 

 

     

 

 

  

Total assets

    $ 460,759       $ 468,824   
  

 

 

     

 

 

  

Liabilities & equity:

      

Current liabilities

    $ 117,749       $ 124,952   

Long-term debt, net of current maturities

      2,000         2,400   

Deferred and other long-term liabilities

      7,976         8,210   

Stockholders’ equity

      333,034         333,262   
  

 

 

     

 

 

  

Total liabilities and stockholders’ equity

    $ 460,759       $ 468,824   
  

 

 

     

 

 

  

SELECTED FINANCIAL DATA:

      

Working capital

    $ 175,457       $ 172,147   
  

 

 

     

 

 

  

 

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POWELL INDUSTRIES, INC. & SUBSIDIARIES

NON-GAAP NET INCOME RECONCILIATION

 

     Three months ended
March 31,		     Six months ended
March 31,		  
(In thousands)    2016      2015     2016      2015  
     (Unaudited)     (Unaudited)  

Net Income:

           

Income (loss) from continuing operations

    $ 5,567       $ (3,683 )    $ 5,108       $ (3,922 ) 

Restructuring and separation costs, net of tax

      2,296         866        4,764         866   

Income tax reserve release (FIN 48)

      —           (4,149 )      —           (4,149 ) 

Canadian tax valuation allowance

      —           8,996        —           8,996   
  

 

 

     

 

 

    

 

 

     

 

 

  

Non-GAAP net income

    $ 7,863       $ 2,030      $ 9,872       $ 1,791   
  

 

 

     

 

 

    

 

 

     

 

 

  

Diluted shares outstanding

      11,422         12,018        11,415         12,029   

Diluted Earnings Per Share:

           

Earnings (loss) per share

    $ 0.49       $ (0.31 )    $ 0.45       $ (0.33 ) 

Non-GAAP earnings per share

    $ 0.69       $ 0.17      $ 0.86       $ 0.15   

For all periods presented, the Company defines non-GAAP net income as net income from continuing operations which excludes: 1) Restructuring and separation costs, net of tax; 2) the Income tax reserve release (FIN 48); and 3) the Canadian tax valuation allowance. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. However, the Company believes by excluding these items, these non-GAAP financial measures are helpful in comparing the historical results to current results and measuring operating earnings trends. The Company also believes the disclosure of non-GAAP net income will help investors meaningfully evaluate and compare its cash flow generating capacity from quarter to quarter and year to year.

The non-GAAP adjustments, and the basis for excluding them from GAAP financial measures, are outlined below:

 

  •   Restructuring and separation costs, net of tax – For the six months ended March 31, 2016, we recorded $4.8 million in restructuring and separation costs due to the restructuring of our senior management team and the alignment of our salaried and hourly workforce with future production requirements. In the second quarter of Fiscal 2015, we incurred approximately $0.9 million in restructuring and separation costs.

 

  •   Income tax reserve release (FIN 48) – In the second quarter of Fiscal 2015, we released an income tax reserve of $4.1 million for R&D tax credits upon the closing of an IRS audit

 

  •   Canadian tax valuation allowance – In the second quarter of Fiscal 2015, we established a $9.0 million valuation allowance against the Canadian deferred tax assets because we anticipated that we may not be able to realize the benefits of the net operating loss carryforwards and other deductible differences.

Due to the nature of these items, the Company does not believe that these items reflect its ongoing operations.

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