Powell Industries (POWL) Q4 2003 earnings summary

Executive summary

• FY03 demand and pricing weakened, reducing revenue and earnings; Process Control Systems grew while Electrical Power Products contracted.

• Operating cash flow reached a record $36.5 million, and cash, cash equivalents and marketable securities ended the year at $42.3 million.

Financial highlights

• FY03 revenue was $253.4 million, down from $306.4 million in FY02; gross profit was $49.0 million versus $67.7 million.

• Net income was $7.1 million, or $0.67 diluted EPS, versus $17.9 million, or $1.67, in FY02; continuing-operations diluted EPS was $0.71.

• Q4 FY03 revenue was $57.2 million, gross profit $12.0 million, net income $1.2 million and diluted EPS $0.12.

• Reported earnings included a $0.5 million after-tax goodwill impairment, a $0.2 million after-tax machinery impairment and $0.9 million of prior-year state tax exposure estimates, net of federal tax benefit.

Outlook and guidance

• FY04 revenue was expected at $220 million to $235 million, a 7% to 13% decline; continuing-operations diluted EPS guidance was $0.48 to $0.63.

• Weakness and depressed pricing in Electrical Power Products markets and reduced infrastructure investment were expected to persist into FY04.

• FY04 capital expenditures were expected to be $5 million to $8 million; cash was expected to grow through the first three quarters before higher Q4 working-capital needs.