GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Powell Industries Inc. Reports Operating Results (10-K)

December 08, 2010 | About:
10qk

10qk

18 followers
Powell Industries Inc. (POWL) filed Annual Report for the period ended 2010-09-30.

Powell Industries Inc. has a market cap of $425.9 million; its shares were traded at around $36.49 with a P/E ratio of 10.7 and P/S ratio of 0.6. Powell Industries Inc. had an annual average earning growth of 8.9% over the past 10 years.POWL is in the portfolios of Chuck Royce of Royce& Associates, Arnold Van Den Berg of Century Management, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

We could be adversely impacted by a significant reduction in business volume from a particular industry which we currently serve. As a result of the supply agreement that we entered into on August 7, 2006, with GE, our revenues from GE were approximately $58 million, $86 million and $82 million in fiscal 2010, fiscal 2009 and fiscal 2008, respectively, or approximately 11%, 14% and 13% of our consolidated revenues for these periods. Aside from GE, with whom we have a long-term supply agreement, we do not believe that the loss of any specific customer would have a material adverse effect on our business. GE has become a significant customer and has accounted for, and could continue to account for, more than 10% of the annual revenues of this business segment as a result of the supply agreement that we entered into on August 7, 2006.

Backlog represents the dollar amount of revenue that we expect to realize from work to be performed on uncompleted contracts, including new contractual agreements on which work has not begun. Our methodology for determining backlog may not be comparable to the methodology used by other companies. Orders included in our backlog are represented by customer purchase orders and contracts, which we believe to be firm. Orders in the Electrical Power Products business segment backlog at September 30, 2010, totaled $245.4 million compared to $329.6 million at September 30, 2009. Our backlog has declined due to the ongoing economic downturn which has lead our customers to reduce and delay spending on new capital projects. We anticipate that approximately $242.6 million of our ending fiscal 2010 backlog will be fulfilled during our fiscal year 2011. Conditions outside of our control have caused us to experience some customer delays and cancellations of certain projects in the past; accordingly, backlog may not be indicative of future operating results as orders in our backlog may be cancelled or modified by our customers.

This business segments research and development activities are directed toward the development of new products and processes as well as improvements in existing products and processes. Research and development expenditures were $6.0 million, $5.8 million and $6.3 million in fiscal years 2010, 2009 and 2008, respectively, and are reported in selling, general and administrative expenses in the consolidated statement of operations.

This business segments products and services are principally sold directly to end-users in the transportation, environmental and energy sectors. From time to time, a significant percentage of revenues may result from one specific contract or customer due to the nature of large projects common to this business segment. In each of the past three fiscal years, revenues with one or more customers individually accounted for more than 10% of our segment revenues. Revenues from these customers totaled $3.2 million, $7.4 million and $5.4 million in fiscal 2010, 2009 and 2008, respectively. Contracts often represent large-scale, single-need projects with an individual customer. By their nature, these projects are typically nonrecurring for a given customer. Thus, multiple and/or continuous projects of similar magnitude with the same customer are rare. As such, gaps in large project awards may cause material fluctuations in segment revenues.

Backlog represents the dollar amount of revenue that we expect to realize from work to be performed on uncompleted contracts, including new contractual agreements on which work has not begun. Our methodology for determining backlog may not be comparable to the methodology used by other companies. Orders included in our backlog are represented by customer purchase orders and contracts, which we believe to be firm. Orders in the Process Control Systems business segment backlog at September 30, 2010, totaled $36.9 million compared to $36.2 million at September 30, 2009. We anticipate that approximately $16.3 million of our ending fiscal 2010 backlog will be fulfilled during our 2011 fiscal year. Conditions outside of our control have caused us to experience some customer delays and cancellations of certain projects in the past; accordingly, backlog may not be indicative of future operating results as orders in our backlog may be cancelled or modified by our customers.

The majority of research and development activities of this business segment are directed toward the development of our software suites for the management and control of the critical processes and facilities of our customers. Non-project research and development expenditures were $0.4 million, $0.3 million and $0.3 million in fiscal years 2010, 2009 and 2008, respectively, and are reported in selling, general and administrative expenses in the Consolidated Statements of Operations.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 2.5/5 (4 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK