Powell Industries, Inc. (POWL)
F4Q09 Earnings Call
December 16, 2009 11:00 am ET
Karen Roan – Investor Relations DRG&E
Patrick L. McDonald – President, Chief Executive Officer
Don R. Madison – Executive Vice President, Chief Financial Office, Chief Administrative Officer
John Franzreb – Sidoti & Co.
Brent Thielman – D. A. Davison & Co.
Fred Buonocore – CJS Securities
Ned Borland – Next Generation Equity Research
Craig Bell – Madison Williams
Jonathan Bratz – Kansas City Capital
[Brian Raffin – Morgan Keegan Capital Management]
[William Breemer – Maxim Group]
Previous Statements by POWL
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Good morning everyone. We appreciate your joining us for Powell Industries conference call today to review fiscal 2009 fourth quarter and year end results. We would also like to welcome our internet participants listening to the call as it is simulcast live over the internet.
Before I turn the call over to management, I have the normal details to cover. If you did not receive an email of the news release issued this morning and the earnings release issued on December 9, please call our offices at DRG&E and we will get those to you. That number is 713-529-6600. Also, if you want to be on the permanent email distribution list for Powell news releases, please relay that information to us as well.
There will be a replay of today’s call and it will be available by going to the company’s website at www.powellind.com or a recorded replay will be available until December 23, 2009 and information on how to access the replay was provided in today’s news release and the earnings release.
Please note that information reported on this call speaks only as of today, December 16, 2009 and therefore you are advised that time sensitive information may no longer be accurate as of the time of the replay. As you know, this conference call includes certain statements including statements relating to the company’s expectations of its future operating results that may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and uncertainties and that actual results may differ materially from those projected in the forward-looking statements. These risks and uncertainties include but are not limited to competition and competitive pressures, sensitivity to general economic and industry 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.
Now with me this morning are Pat McDonald, President and Chief Executive Officer and Don R. Madison, Executive Vice President and Chief Financial and Administrative Officer. I will now turn over the call to Pat.
Patrick L. McDonald
Good morning everyone. Thank you for joining us today to review our fiscal 2009 fourth quarter and year end results. Following my initial comments on this quarter, year and current market environment, Don will cover the financial details of the quarter. Then, I will return with some final remarks which will include a discussion on our acquisition of PowerComm which closed yesterday.
We are pleased with our operating performance in the fourth quarter. While revenues were relatively the same as the fourth quarter a year ago, we generated solid double digit earnings growth of 18%. We are clearly coming off of a great year; a record year in terms of revenues, earnings and cash flow and this was achieved as a result of our strong backlog of projects at the beginning of the year. The dedication and hard work of all of our employees working on these projects resulted in improvements in our processes and our productivity.
2010 will be a more challenging year as the economic conditions of 2009 greatly impacted our incoming order rates, especially in the second half of 2009. In the oil and gas markets, a number of opportunities exist and the projects are ready to begin.
However, the current regulatory and tax uncertainties in conjunction with weaker demand are preventing these projects from converting to orders. The price of oil is relatively stable and these projects are certainly viable at $60 to $80 per barrel oil, but there is definitely a hesitancy to commit capital to these large projects.
Other heavy industries that require large amounts of energy and power to operate are also being affected by these same economic uncertainties. The utility business is largely demand driven, and we believe that the world will need more not less, electricity over the long term. We were really behind the curve regarding adequate generation capacity a couple of years ago, but with this current drop in demand, we’ve been given some time. Nonetheless, the tax, regulatory and carbon emission issues apply to utilities as well.
In summary, there are many dynamic variables impacting our markets which make predicting results almost impossible. However, we are not simply waiting for signals that the markets are improving, as we are moving forward to be able to capitalize on whatever opportunities appear whether it is an acquisition like PowerComm providing new markets and customers or, increasing our efforts to refine our internal processes or to effectively increase the value of our offerings to our customers.
Also, we are continually investing in our employees, identifying training needs and making organizational changes that will help us reach our long term potential.