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Powell Industries Announces Fiscal 2010 Fourth Quarter and Year-End Results

December 8, 2010

HOUSTON, Dec. 8, 2010 /PRNewswire-FirstCall/ — Powell Industries, Inc. (Nasdaq: POWL), a leading manufacturer of equipment and systems for the management and control of electrical energy and other critical processes, today announced results for the fiscal 2010 fourth quarter and year ended September 30, 2010.

Revenues for the fourth quarter of fiscal 2010 were $133.8 million compared to revenues of $165.3 million for the fourth quarter of fiscal 2009. The Company recorded a net loss for the fourth quarter of $(4.8) million, or $(0.41) per share, compared to net income of $9.9 million, or $0.85 per diluted share, in the fourth quarter of fiscal 2009. Excluding certain non-cash charges, net income for the fourth quarter was $4.5 million, or $0.38 per diluted share, as set forth in the Non-GAAP Earnings Reconciliation table included below.

Patrick L. McDonald, President and Chief Executive Officer, stated, “Our fourth quarter results excluding certain non-cash charges were slightly below our expectations. Importantly, our fourth quarter order rate has continued at the pace of recent quarters, and we believe this indicates a stabilization of the market and expect modest improvement in orders in upcoming quarters.

“The Canadian business should demonstrate the growth we expected based on a tenfold increase in the backlog of equipment orders since we acquired the business nine months ago. This trend continues as the businesses are integrated and as we gain exposure of each of our product lines in the Canadian markets.

“Late in the fourth quarter, we made a strategic decision to exit the Kazakhstan joint-venture associated with the Canadian acquisition. Contributing to our conclusion was the decision of the joint-venture’s single largest customer to exit the Kazakhstan market, and we do not believe the potential long-term results of this business warrant the financial and management commitment that would be required. We determined it is in the best interest of the Company to exit the joint-venture and have begun reviewing our alternatives.

“We acquired PowerComm for the strategic purpose of entering the Canadian market and growing our service business. We intend to be a long-term participant as a Canadian company in that market and remain confident in the future prospects,” concluded McDonald.

FISCAL FOURTH QUARTER 2010 RESULTS

Fourth quarter revenues decreased to $133.8 million from $165.3 million in the fourth quarter of fiscal 2009 as a result of lower demand and reduced service related activities. Net loss for the fourth quarter was $(4.8) million, or $(0.41) per share. Excluding certain non-cash charges, net income for the fourth quarter was $4.5 million, or $0.38 per diluted share, compared to $9.9 million, or $0.85 per diluted share, a year ago.

The primary drivers of this year’s fourth quarter decrease in net income were reduced business volumes, which are more closely aligned with current orders and backlog. Other contributing factors were transition costs related to the Canadian acquisition and an operating loss in Canada. The Company recorded a goodwill impairment charge of $7.5 million, or $0.46 per share, primarily related to the Company’s decision to exit the joint-venture in Kazakhstan. Additionally, the Company recorded a foreign deferred tax asset valuation allowance of $3.9 million, or $0.33 per share, related to the goodwill impairment charge and a first year operating loss at Powell Canada. This valuation allowance will be adjusted to offset income tax provisions on future foreign profits.

New orders placed during the fourth quarter of fiscal 2010 totaled $106 million compared to $136 million in the third quarter of fiscal 2010 and to $100 million in the fourth quarter of fiscal 2009. The Company’s backlog as of September 30, 2010 was $282 million compared to $310 million at June 30, 2010 and to $366 million at September 30, 2009.

FISCAL 2010 RESULTS

Revenues for fiscal 2010 were $550.7 million compared to $665.9 million in fiscal 2009. Net income was $25.0 million, or $2.14 per diluted share, compared to $39.7 million, or $3.43 per diluted share, in fiscal 2009. Excluding the previously mentioned non-cash items, fiscal 2010 net income was $34.3 million, or $2.93 per diluted share, compared to $39.7 million, or $3.43 per diluted share in fiscal 2009.

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.

Based on its backlog and current business conditions, Powell Industries expects full year fiscal 2011 revenues to range between $475 million and $525 million and full year fiscal 2011 earnings to range between $1.25 and $1.75 per diluted share.

CONFERENCE CALL

Powell Industries has scheduled a conference call for Wednesday, December 8, 2010 at 11:00 a.m. eastern time. To participate in the conference call, dial 480-629-9643 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 December 15, 2010. To access the replay, dial 303-590-3030 using a passcode of 4386408#.

Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by visiting http://www.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 http://www.powellind.com.

Powell Industries, Inc., headquartered in Houston, designs, manufactures and packages systems and equipment for the control, distribution and management of electrical energy and other dynamic processes. Powell provides products and services to large industrial customers such as utilities, oil and gas producers, refineries, petrochemical plants, pulp and paper producers, mining operations, commuter railways and other vehicular transportation facilities. For more information, please visit www.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.


    Contacts:   Don R. Madison, CFO
                Powell Industries, Inc.
                713-947-4422

                Ken Dennard  / ksdennard@drg-l.com
                Karen Roan / kcroan@drg-l.com
                DRG&L/ 713-529-6600

    POWELL INDUSTRIES, INC. & SUBSIDIARIES
    --------------------------------------
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                  Three Months Ended
                                                     September 30,
                                                     2010       2009
                                                     ----       ----

       (In thousands, except per share data)          (Unaudited)

     Revenues                                    $133,761   $165,321

     Cost of goods sold                           104,298    129,725
                                                  -------    -------

     Gross profit                                  29,463     35,596

     Selling, general and administrative
      expenses                                     21,635     20,291
     Amortization expense                           1,285        861
     Loss on impairment of goodwill                 7,452          -
                                                    -----        ---

     Operating income (loss)                         (909)    14,444

     Interest expense                                 232        177

     Interest income                                  (54)       (38)
                                                      ---        ---

     Income (loss) before income taxes             (1,087)    14,305

     Income tax provision                           3,695      4,463
                                                    -----      -----

     Net income (loss)                             (4,782)     9,842

     Net (income) loss attributable to
      noncontrolling interest                           -         32
                                                      ---        ---

     Net income (loss) attributable to Powell
      Industries, Inc.                            $(4,782)    $9,874
                                                  =======     ======

     Earnings per share attributable to Powell
      Industries, Inc.

        Basic                                      $(0.41)     $0.86
                                                   ======      =====
        Diluted                                    $(0.41)     $0.85
                                                   ======      =====

     Weighted average shares:

        Basic                                      11,626     11,448
                                                   ======     ======
        Diluted                                    11,728     11,625
                                                   ======     ======

     SELECTED FINANCIAL DATA:

     Depreciation and amortization                 $3,706     $2,758
                                                   ======     ======

     Capital expenditures                            $959     $1,669
                                                     ====     ======


                                                       Years Ended
                                                      September 30,
                                                      2010        2009
                                                      ----        ----

       (In thousands, except per share data)           (Unaudited)

     Revenues                                     $550,692    $665,851

     Cost of goods sold                            408,635     520,802
                                                   -------     -------

     Gross profit                                  142,057     145,049

     Selling, general and administrative
      expenses                                      84,457      79,954
     Amortization expense                            4,477       3,460
     Loss on impairment of goodwill                  7,452           -
                                                     -----         ---

     Operating income (loss)                        45,671      61,635

     Interest expense                                  870       1,107

     Interest income                                  (260)       (131)
                                                      ----        ----

     Income (loss) before income taxes              45,061      60,659

     Income tax provision                           19,894      20,734
                                                    ------      ------

     Net income (loss)                              25,167      39,925

     Net (income) loss attributable to
      noncontrolling interest                         (159)       (208)
                                                      ----        ----

     Net income (loss) attributable to Powell
      Industries, Inc.                             $25,008     $39,717
                                                   =======     =======

     Earnings per share attributable to Powell
      Industries, Inc.

        Basic                                        $2.17       $3.48
                                                     =====       =====
        Diluted                                      $2.14       $3.43
                                                     =====       =====

     Weighted average shares:

        Basic                                       11,545      11,424
                                                    ======      ======
        Diluted                                     11,693      11,591
                                                    ======      ======

     SELECTED FINANCIAL DATA:

     Depreciation and amortization                 $13,703     $10,962
                                                   =======     =======

     Capital expenditures                           $4,420      $8,081
                                                    ======      ======

    POWELL INDUSTRIES, INC. & SUBSIDIARIES
    --------------------------------------
    CONDENSED CONSOLIDATED BALANCE SHEETS
                                                     September
                                                          30,   September 30,
                                                            2010          2009
                                                            ----          ----
                       (In thousands)                (Unaudited)

    Assets:

       Current assets                                   $302,191      $315,003

       Property, plant and equipment (net)                63,676        61,036

       Other assets                                       34,845        28,801
                                                          ------        ------

          Total assets                                  $400,712      $404,840
                                                        ========      ========

    Liabilities & stockholders' equity:

       Current liabilities                              $114,746      $149,142

       Long-term debt and capital lease
        obligations, net of current maturities             5,202         4,800

       Deferred and other long-term liabilities            3,461         3,681

       Stockholders' equity and noncontrolling
        interest                                         277,303       247,217
                                                         -------       -------

          Total liabilities and stockholders' equity    $400,712      $404,840
                                                        ========      ========

    POWELL INDUSTRIES, INC. & SUBSIDIARIES
    --------------------------------------
    BUSINESS SEGMENTS
                                     Three Months Ended         Years Ended
                                        September 30,          September 30,
                                        2010        2009     2010        2009
                                        ----        ----     ----        ----
                     (In thousands)      (Unaudited)            (Unaudited)

     Revenues:
           Electrical Power
            Products                $127,402    $159,567 $524,236    $637,845
           Process Control
            Systems                    6,359       5,754   26,456      28,006
                                       -----       -----   ------      ------

           Total revenues           $133,761    $165,321 $550,692    $665,851
                                    ========    ======== ========    ========

     Income before income
      taxes and minority
      interest:

           Electrical Power
            Products                 $(1,331)    $13,707  $44,557     $56,700
           Process Control
            Systems                      244         598      504       3,959
                                         ---         ---      ---       -----

           Total income before
            income taxes and
            minority interest        $(1,087)    $14,305  $45,061     $60,659
                                     =======     =======  =======     =======


                                          September 30,        September 30,
                                                    2010                 2009
                                                    ----                 ----
                       (In thousands)                  (Unaudited)
    Identifiable tangible assets:

       Electrical Power Products                $230,111             $258,012
       Process Control Systems                     9,617                6,863
       Corporate                                 133,635              117,398
                                                 -------              -------

       Total identifiable tangible assets       $373,363             $382,273
                                                ========             ========

    Backlog:

       Electrical Power Products                $245,433             $329,558
       Process Control Systems                    36,870               36,198
                                                  ------               ------

       Total backlog                            $282,303             $365,756
                                                ========             ========

    POWELL INDUSTRIES, INC. & SUBSIDIARIES
    --------------------------------------
    NON-GAAP EARNINGS RECONCILIATION
                                                        Three Months Ended
                                                           September 30,
                                                           2010        2009
                                                           ----        ----
                     (In thousands)                         (Unaudited)

     Net Income:

           Net income (loss) attributable to Powell
            Industries, Inc.                            $(4,782)     $9,874
           Goodwill impairment, net of taxes              5,365           0
           Deferred tax asset valuation allowance         3,892           0
                                                          -----         ---

           Non-GAAP net income                           $4,475      $9,874
                                                         ======      ======

     Diluted shares outstanding                          11,728      11,625

     Diluted Earnings Per Share:

           Earnings per share                            $(0.41)      $0.85
           Non-GAAP earnings per share                    $0.38       $0.85


                                                            Years Ended
                                                           September 30,
                                                           2010        2009
                                                           ----        ----
                     (In thousands)                         (Unaudited)

     Net Income:

           Net income (loss) attributable to Powell
            Industries, Inc.                            $25,008     $39,717
           Goodwill impairment, net of taxes              5,365           0
           Deferred tax asset valuation allowance         3,892           0
                                                          -----         ---

           Non-GAAP net income                          $34,265     $39,717
                                                        =======     =======

     Diluted shares outstanding                          11,693      11,591

     Diluted Earnings Per Share:

           Earnings per share                             $2.14       $3.43
           Non-GAAP earnings per share                    $2.93       $3.43

The Company defines Non-GAAP net income as net income (loss) before goodwill impairment and deferred tax valuation allowance. Non-GAAP net income is presented to exclude the impact of the goodwill impairment and valuation allowance related to the tax benefit from net operating loss. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company believes this non-GAAP financial measure is helpful, however, 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.

SOURCE Powell Industries, Inc.


Source: newswire