Powell Industries (POWL) Q4 2009 earnings summary

Executive summary

• Fiscal 2009 delivered record revenue, earnings and operating cash flow despite a weakening global economy and slowing orders in the second half.

• Results benefited from higher production volume, pricing and efficiency gains; incoming orders and backlog fell as customers postponed capital projects.

• Investments in process improvements, engineering, employee training and customer services were aimed at improving readiness for the next growth cycle.

Financial highlights

• Revenue was $665.9M, up $27.2M YoY; gross profit rose to $145.0M from $126.4M.

• Net income was $39.7M versus $25.8M; diluted EPS was $3.43 versus $2.26.

• Income before interest, income taxes and minority interest increased to $61.6M from $42.4M; SG&A was $83.4M versus $84.0M.

• Operating cash flow was $127.0M; cash and cash equivalents reached $97.4M, compared with $10.1M at FY08 close.

• New orders were $511.2M versus $705.4M; year-end backlog declined to $365.8M from $518.6M.

Outlook and guidance

• FY10 began with backlog of $365.8M, down $152.8M from the prior-year starting backlog; project delays increased in H2 FY09.

• Delays were attributed to lower near-term oil demand, global economic and financial-market uncertainty, and uncertainty over potential regulatory changes.

• Long-term energy and infrastructure demand is expected to support future opportunities, including petroleum, power generation and distribution, and transit projects; timing remains difficult to predict.

• Available cash and borrowing capacity were expected to cover operating needs, capital improvements and debt repayments; costs were to be aligned with market conditions.