Cover Page
Cover Page - shares | 3 Months Ended | |
Dec. 31, 2021 | Feb. 07, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-12488 | |
Entity Registrant Name | Powell Industries, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 88-0106100 | |
Entity Address, Address Line One | 8550 Mosley Road | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77075-1180 | |
City Area Code | 713 | |
Local Phone Number | 944-6900 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | POWL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,763,843 | |
Entity Central Index Key | 0000080420 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --09-30 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 77,905 | $ 114,314 |
Short-term investments | 23,622 | 19,667 |
Accounts receivable, less allowance for credit losses of $411 and $333 | 79,478 | 78,304 |
Contract assets | 67,904 | 54,199 |
Inventories | 36,157 | 29,835 |
Income taxes receivable | 217 | 161 |
Prepaid expenses | 4,033 | 4,382 |
Other current assets | 1,092 | 1,599 |
Total Current Assets | 290,408 | 302,461 |
Property, plant and equipment, net | 107,509 | 109,457 |
Operating lease assets, net | 3,526 | 3,453 |
Goodwill and intangible assets, net | 1,003 | 1,003 |
Deferred income taxes | 5,554 | 4,639 |
Other assets | 15,800 | 15,179 |
Total Assets | 423,800 | 436,192 |
Current Liabilities: | ||
Current maturities of long-term debt | 0 | 400 |
Accounts payable | 42,348 | 45,247 |
Contract liabilities | 49,396 | 42,433 |
Accrued compensation and benefits | 8,152 | 20,395 |
Accrued product warranty | 2,443 | 2,531 |
Current operating lease liabilities | 1,966 | 1,415 |
Income taxes payable | 554 | 1,076 |
Other current liabilities | 8,809 | 7,659 |
Total Current Liabilities | 113,668 | 121,156 |
Long-term debt, net of current maturities | 0 | 0 |
Deferred compensation | 9,749 | 8,613 |
Long-term operating lease liabilities | 1,866 | 2,413 |
Other long-term liabilities | 2,938 | 2,787 |
Total Liabilities | 128,221 | 134,969 |
Commitments and Contingencies (Note F) | ||
Stockholders' Equity: | ||
Preferred stock, par value $0.01; 5,000,000 shares authorized; none issued | 0 | 0 |
Common stock, par value $0.01; 30,000,000 shares authorized; 12,569,861 and 12,497,691 shares issued, respectively | 126 | 125 |
Additional paid-in capital | 64,364 | 63,948 |
Retained earnings | 276,390 | 282,505 |
Treasury stock, 806,018 shares at cost | (24,999) | (24,999) |
Accumulated other comprehensive loss | (20,302) | (20,356) |
Total Stockholders' Equity | 295,579 | 301,223 |
Total Liabilities and Stockholders' Equity | $ 423,800 | $ 436,192 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 411 | $ 333 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, shares issued (in shares) | 12,569,861 | 12,497,691 |
Treasury stock, shares (in shares) | 806,018 | 806,018 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | ||
Revenues | $ 106,569 | $ 106,575 |
Cost of goods sold | 93,133 | 88,304 |
Gross profit | 13,436 | 18,271 |
Selling, general and administrative expenses | 15,902 | 16,874 |
Research and development expenses | 1,824 | 1,673 |
Amortization of intangible assets | 0 | 44 |
Operating loss | (4,290) | (320) |
Interest expense | 47 | 50 |
Interest income | (50) | (111) |
Loss before income taxes | (4,287) | (259) |
Income tax provision (benefit) | (1,441) | 105 |
Net loss | $ (2,846) | $ (364) |
Loss per share: | ||
Basic (in dollars per share) | $ (0.24) | $ (0.03) |
Diluted (in dollars per share) | $ (0.24) | $ (0.03) |
Weighted average shares: | ||
Basic (in shares) | 11,765 | 11,674 |
Diluted (in shares) | 11,765 | 11,674 |
Dividends per share (in dollars per share) | $ 0.26 | $ 0.26 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (2,846) | $ (364) |
Foreign currency translation adjustments | 54 | 4,349 |
Comprehensive income (loss) | $ (2,792) | $ 3,985 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income/(Loss) |
Balance (in shares) at Sep. 30, 2020 | 12,422 | (806) | ||||
Balance at Sep. 30, 2020 | $ 306,626 | $ 124 | $ 61,998 | $ 294,016 | $ (24,999) | $ (24,513) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (364) | (364) | ||||
Foreign currency translation adjustments | 4,349 | 4,349 | ||||
Stock-based compensation (in shares) | 59 | |||||
Stock-based compensation | 894 | $ 1 | 893 | |||
Shares withheld in lieu of employee tax withholding | (632) | (632) | ||||
Dividends | (3,028) | (3,028) | ||||
Balance (in shares) at Dec. 31, 2020 | 12,481 | (806) | ||||
Balance at Dec. 31, 2020 | 307,845 | $ 125 | 62,259 | 290,624 | $ (24,999) | (20,164) |
Balance (in shares) at Sep. 30, 2021 | 12,498 | (806) | ||||
Balance at Sep. 30, 2021 | 301,223 | $ 125 | 63,948 | 282,505 | $ (24,999) | (20,356) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (2,846) | (2,846) | ||||
Foreign currency translation adjustments | 54 | 54 | ||||
Stock-based compensation (in shares) | 72 | |||||
Stock-based compensation | 1,008 | $ 1 | 1,007 | |||
Shares withheld in lieu of employee tax withholding | (660) | (660) | ||||
Dividends | (3,200) | 69 | (3,269) | |||
Balance (in shares) at Dec. 31, 2021 | 12,570 | (806) | ||||
Balance at Dec. 31, 2021 | $ 295,579 | $ 126 | $ 64,364 | $ 276,390 | $ (24,999) | $ (20,302) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Activities: | ||
Net loss | $ (2,846) | $ (364) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,414 | 2,630 |
Stock-based compensation | 1,008 | 894 |
Bad debt expense (recovery), net | 91 | (19) |
Deferred income taxes | (915) | (82) |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (1,189) | (6,249) |
Contract assets and liabilities, net | (6,730) | (4,955) |
Inventories | (6,312) | 244 |
Income taxes | (578) | 267 |
Prepaid expenses and other current assets | 857 | 166 |
Accounts payable | (2,918) | (7,387) |
Accrued liabilities | (11,035) | (10,087) |
Other, net | 320 | (234) |
Net cash used in operating activities | (27,833) | (25,176) |
Investing Activities: | ||
Purchases of short-term investments | (3,937) | (3,924) |
Maturities of short-term investments | 0 | 7,847 |
Purchases of property, plant and equipment, net | (436) | (961) |
Net cash provided by (used in) investing activities | (4,373) | 2,962 |
Financing Activities: | ||
Payments on industrial development revenue bonds | (400) | (400) |
Shares withheld in lieu of employee tax withholding | (660) | (632) |
Dividends paid | (3,048) | (3,028) |
Net cash used in financing activities | (4,108) | (4,060) |
Net decrease in cash and cash equivalents | (36,314) | (26,274) |
Effect of exchange rate changes on cash and cash equivalents | (95) | 74 |
Cash and cash equivalents at beginning of period | 114,314 | 160,216 |
Cash and cash equivalents at end of period | $ 77,905 | $ 134,016 |
Overview and Summary of Signifi
Overview and Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Overview and Summary of Significant Accounting Policies | Overview and Summary of Significant Accounting Policies Overview Powell Industries, Inc. (we, us, our, Powell or the Company) is incorporated in the state of Delaware. Powell's predecessor companies were founded 75 years ago by William E. Powell in 1947. Our major subsidiaries, all of which are wholly owned, include: Powell Electrical Systems, Inc.; Powell (UK) Limited; Powell Canada Inc.; and Powell Industries International, B.V. We develop, design, manufacture and service custom-engineered equipment and systems which (1) distribute, control and monitor the flow of electrical energy and (2) provide protection to motors, transformers and other electrically powered equipment. We are headquartered in Houston, Texas and serve the oil and gas and petrochemical markets, which include onshore and offshore production, liquefied natural gas (LNG) facilities and terminals, pipelines, refineries and petrochemical plants. Additional markets include electric utility and light rail traction power as well as mining and metals, pulp and paper and other municipal, commercial and industrial markets. Impact of the COVID-19 Pandemic and Oil and Gas Commodity Market Volatility on Powell The COVID-19 pandemic continues to impact global energy markets. T his pandemic has negatively impacted demand, which in turn has resulted in considerable volatility across global oil and gas commodity markets. As a result, some of our industrial customers are deferring or suspending their planned capital expen ditures. C ertain of our customers have asked that we delay or cancel our manufacturing on their projects as their operations have been negatively impacted by this pandemic and the reduced oil and gas demand, which has resulted in recognition of cancellation fees based on contract terms and the extent of our progress on the projects. We continue to work with and review the contracts with our key suppliers who have been impacted by this pandemic to ensure that we are able to meet our customer commitments. The consequences of a prolonged global economic decline could include, but are not limited to, a continued reduction in commercial and industrial activity. The Company cannot reasonably estimate the duration or severity of this pandemic, or the extent to which the resulting disruptions may materially impact our business, results of operations or cash flows. We will take prudent measures to maintain our strong liquidity and cash position, which may include reducing our capital expenditures and research and development costs, as well as reducing or eliminating future dividend payments. Basis of Presentation These unaudited condensed consolidated financial statements include the accounts of Powell and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP), have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with respect to the interim condensed consolidated financial statements have been included. The results of operations for the interim periods are not necessarily indicative of the results for the entire fiscal year. We believe that these financial statements contain all adjustments necessary so that they are not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Powell and its subsidiaries included in Powell’s Annual Report on Form 10-K for the year ended September 30, 2021, which was filed with the Securities and Exchange Commission (SEC) on December 8, 2021. References to Fiscal 2022 and Fiscal 2021 used throughout this report shall mean our fiscal years ended September 30, 2022 and 2021, respectively. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share We compute basic earnings per share by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per common and potential common share includes the weighted average of additional shares associated with the incremental effect of dilutive restricted stock and restricted stock units, as prescribed by the FASB guidance on earnings per share. The following table reconciles basic and diluted weighted average shares used in the computation of earnings per share (in thousands, except per share data): Three months ended December 31, 2021 2020 Numerator: Net loss $ (2,846) $ (364) Denominator: Weighted average basic shares 11,765 11,674 Dilutive effect of restricted stock units — — Weighted average diluted shares 11,765 11,674 Loss per share: Basic $ (0.24) $ (0.03) Diluted $ (0.24) $ (0.03) For each of the three months ended December 31, 2021 and 2020, we incurred net losses and therefore all potential common shares were deemed to be anti-dilutive. |
Detail of Selected Balance Shee
Detail of Selected Balance Sheet Accounts | 3 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Detail of Selected Balance Sheet Accounts | Detail of Selected Balance Sheet Accounts Allowance for Credit Losses Activity in our allowance for credit losses consisted of the following (in thousands): Three months ended December 31, 2021 2020 Balance at beginning of period $ 333 $ 510 Bad debt expense (recovery), net 91 (19) Uncollectible accounts written off, net of recoveries (14) (10) Change due to foreign currency translation 1 12 Balance at end of period $ 411 $ 493 Inventories The components of inventories are summarized below (in thousands): December 31, 2021 September 30, 2021 Raw materials, parts and sub-assemblies, net $ 35,295 $ 28,688 Work-in-progress 862 1,147 Total inventories $ 36,157 $ 29,835 Accrued Product Warranty Activity in our product warranty accrual consisted of the following (in thousands): Three months ended December 31, 2021 2020 Balance at beginning of period $ 2,531 $ 2,771 Increase to warranty expense 293 658 Deduction for warranty charges (382) (779) Change due to foreign currency translation 1 25 Balance at end of period $ 2,443 $ 2,675 |
Revenue
Revenue | 3 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Revenue Recognition Our revenues are primarily generated from the manufacturing of custom-engineered products and systems under long-term fixed-price contracts under which we agree to manufacture various products such as traditional and arc-resistant distribution switchgear and control gear, medium-voltage circuit breakers, monitoring and control communications systems, motor control centers, switches and bus duct systems. These products may be sold separately as an engineered solution but are typically integrated into custom-built enclosures which we also build. These enclosures are referred to as power control room substations (PCRs®), custom-engineered modules or electrical houses (E-Houses). Some contracts may also include the installation and the commissioning of these enclosures. Revenue from these contracts is generally recognized over time utilizing the cost-to-cost method. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. We believe that this method is the most accurate representation of our performance, because it directly measures the value of the services transferred to the customer over time as we incur costs on our contracts. Contract costs include all direct materials, labor and indirect costs related to contract performance, which may include indirect labor, supplies, tools, repairs and depreciation costs. We also have contracts to provide value-added services such as field service inspection, installation, commissioning, modification and repair, as well as retrofit and retrofill components for existing systems. If the service contract terms give us the right to invoice the customer for an amount that corresponds directly with the value of our performance completed to date (i.e., a service contract in which we bill a fixed amount for each hour of service provided), then we recognize revenue over time in each reporting period corresponding to the amount with which we have the right to invoice. Our performance obligations are satisfied as the work progresses. Revenues from our custom-engineered products and value-added services transferred to customers over time accounted for approximately 94% of total revenues for the three months ended December 31, 2021 and 92% of total revenues for the three months ended December 31, 2020. Additionally, we have sales orders for spare parts and replacement circuit breakers for switchgear that are obsolete or that are no longer produced by the original manufacturer. Revenues from these sales orders are recognized at the time we fulfill our performance obligation to the customer, which is typically upon shipment and represented approximately 6% of total revenues for the three months ended December 31, 2021 and 8% of total revenues for the three months ended December 31, 2020. Some contracts may contain a cancellation clause that could limit the amount of revenue we are able to recognize over time. In these instances, revenue and costs associated with these contracts are deferred and recognized at a point in time when the performance obligation is fulfilled. Selling and administrative costs incurred in relation to obtaining a contract are typically expensed as incurred. We periodically utilize a third-party sales agent to obtain a contract and will pay a commission to that agent. We record the full commission liability to the third-party sales agents at the order date, with a corresponding deferred asset. As the project progresses, we record commission expense based on percentage of completion rates that correlate to the project and reduce the deferred asset. Once we have been paid by the customer, we pay the commission and the deferred liability is reduced. Performance Obligations A performance obligation is a promise in a contract or with a customer to transfer a distinct good or service. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue as the performance obligations are satisfied. To determine the proper revenue recognition for contracts, we evaluate whether a contract should be accounted for as more than one performance obligation or, less commonly, whether two or more contracts should be combined and accounted for as one performance obligation. This evaluation of performance obligations requires significant judgment. The majority of our contracts have a single performance obligation where multiple engineered products and services are combined into a single custom-engineered solution. Our contracts include a standard one-year assurance warranty. Occasionally, we provide service-type warranties that will extend the warranty period. These extended warranties qualify as a separate performance obligation, and revenue is deferred and recognized over the warranty period. If we determine during the evaluation of the contract that there are multiple performance obligations, we allocate the transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Remaining unsatisfied performance obligations, which we refer to as backlog, represent the estimated transaction price for goods and services for which we have a material right, but work has not been performed. As of December 31, 2021, we had backlog of $416.0 million, of which approximately $301.7 million is expected to be recognized as revenue within the next twelve months. Backlog may not be indicative of future operating results as orders may be cancelled or modified by our customers. Our backlog does not include service and maintenance-type contracts for which we have the right to invoice as services are performed. Contract Estimates Actual revenues and project costs may vary from previous estimates due to changes in a variety of factors. The cost estimation process is based upon the professional knowledge and experience of our engineers, project managers and financial professionals. Factors that are considered in estimating the work to be completed and ultimate contract recovery include the availability and productivity of labor, the nature and complexity of the work to be performed, the availability of materials, and the effect of any delays on our project performance. We periodically review our job performance, job conditions, estimated profitability and final contract settlements, including our estimate of total costs and make revisions to costs and income in the period in which the revisions are probable and reasonably estimable. We bear the risk of cost overruns in most of our contracts, which may result in reduced profits. Whenever revisions of estimated contract costs and contract values indicate that the contract costs will exceed estimated revenues, thus creating a loss, a provision for the total estimated loss is recorded in that period. For the three months ended December 31, 2021 and 2020, our operating results were positively impacted by $2.8 million and $5.5 million, respectively, as a result of changes in contract estimates related to projects in progress at the beginning of the respective period. These changes in estimates resulted primarily from favorable project execution and negotiations of variable consideration, discussed below, as well as revenue and reduced costs recognized from project cancellations and other changes in facts and circumstances during these periods. The decrease from the prior year is primarily due to the increase in raw material commodity costs. Variable Consideration It is common for our long-term contracts to contain variable consideration that can either increase or decrease the transaction price. Due to the nature of our contracts, estimating total cost and revenue can be complex and subject to variability due to change orders, back charges, spare parts, early completion bonuses, customer allowances and liquidated damages. We estimate the amount of variable consideration based on the expected value method, which is the sum of the probability-weighted amounts, or the most likely amount method which uses various factors including experience with similar transactions and assessment of our anticipated performance. Variable consideration is included in the transaction price if legally enforceable and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur once the uncertainty associated with the variable consideration is resolved. Contract Modifications Contracts may be modified for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the enforceable rights and obligations under the contract. Most of our contract modifications are for goods and services that are not distinct from the existing performance obligation. Contract modifications result in a cumulative catch-up adjustment to revenue based on our measure of progress for the performance obligation. Contract Balances The timing of revenue recognition, billings and cash collections affects accounts receivable, contract assets and contract liabilities in our Condensed Consolidated Balance Sheets. Contract assets are recorded when revenues are recognized in excess of amounts billed for fixed-price contracts as determined by the billing milestone schedule. Contract assets are transferred to accounts receivable when billing milestones have been met, or we have an unconditional right to payment. Contract liabilities typically represent advance payments from contractual billing milestones and billings in excess of revenue recognized. It is unusual to have advanced milestone payments with a term greater than one year, which could represent a financing component on the contract. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period and are generally classified as current. Contract assets and liabilities as of December 31, 2021 and September 30, 2021 are summarized below (in thousands): December 31, 2021 September 30, 2021 Contract assets $ 67,904 $ 54,199 Contract liabilities (49,396) (42,433) Net contract asset $ 18,508 $ 11,766 The increase in net contract asset at December 31, 2021 from September 30, 2021 was primarily due to the timing of contract billing milestones and new orders as well as cash used on our large industrial project awarded in Fiscal 2020. To determine the amount of revenue recognized during the period from contract liabilities, we first allocate revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that balance. During the three months ended December 31, 2021, we recognized revenue of approximately $23.3 million that was related to contract liabilities outstanding at September 30, 2021. The timing of our invoice process is typically dependent on the completion of certain milestones and contract terms and subject to agreement by our customer. Payment is typically expected within 30 days of invoice. Any uncollected invoiced amounts for our performance obligations recognized over time, including contract retentions, are recorded as accounts receivable in the Condensed Consolidated Balance Sheets. Certain contracts allow customers to withhold a small percentage of billings pursuant to retainage provisions, and such amounts are generally due upon completion of the contract and acceptance of the project by the customer. Based on our experience in recent years, the majority of these retainage balances are expected to be collected within approximately twelve months. As of December 31, 2021 and September 30, 2021, accounts receivable included retention amounts of $9.3 million and $9.6 million, respectively. Of the retained amount at December 31, 2021, $6.8 million is expected to be collected in the next twelve months and is recorded in accounts receivable. The remaining $2.5 million is recorded in other assets. Disaggregation of Revenue The following tables present our disaggregated revenue by geographic destination and market sector for the three months ended December 31, 2021 and 2020 (in thousands): Three months ended December 31, 2021 2020 United States $ 82,145 $ 80,586 Canada 15,125 14,091 Europe, Middle East and Africa 7,830 8,256 Asia/Pacific 944 2,716 Mexico, Central and South America 525 926 Total revenues by geographic destination $ 106,569 $ 106,575 Three months ended December 31, 2021 2020 Oil and gas (excludes petrochemical) $ 43,021 $ 40,028 Petrochemical 17,228 9,165 Electric utility 21,533 28,171 Traction power 11,372 13,361 All others 13,415 15,850 Total revenues by market sector $ 106,569 $ 106,575 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following (in thousands): December 31, 2021 September 30, 2021 Industrial development revenue bonds $ — $ 400 Less: current portion — (400) Total long-term debt $ — $ — U.S. Revolver We have a credit agreement with Bank of America, N.A. (as amended, the "U.S. Revolver"), which is a $75.0 million revolving credit facility that is available for both borrowings and letters of credit and expires September 27, 2024. The U.S. Revolver states that up to $30 million may be deducted from the amount of letters of credit outstanding (not to be less than zero) when calculating the consolidated funded indebtedness which is a component of the consolidated net leverage ratio. Additionally, we have the option to cash collateralize all or a portion of the letters of credit outstanding, which would favorably impact the consolidated funded indebtedness calculation and the consolidated net leverage ratio. As of December 31, 2021, there were no amounts borrowed under the U.S. Revolver and letters of credit outstanding were $31.2 million. There was $43.8 million available for the issuance of letters of credit and borrowings under the U.S. Revolver as of December 31, 2021. We are required to maintain certain financial covenants, the most significant of which are a consolidated net leverage ratio less than 3.0 to 1.0 and a consolidated interest coverage ratio of greater than 3.0 to 1.0. Our most restrictive covenant, the consolidated net leverage ratio, is the ratio of earnings before interest, taxes, depreciation, amortization and stock-based compensation (EBITDAS) to funded indebtedness. An increase in indebtedness, which includes letters of credit, or a decrease in EBITDAS could restrict our ability to issue letters of credit or borrow under the U.S. Revolver. Additionally, we must maintain a consolidated cash balance of $30 million at all times, which can be deducted from the letters of credit outstanding as noted above. The U.S. Revolver also contains a "material adverse effect" clause which is a material change in our operations, business, properties, liabilities or condition (financial or otherwise) or a material impairment of our ability to perform our obligations under our credit agreements. As of December 31, 2021, we were in compliance with all of the financial covenants of the U.S. Revolver. The U.S. Revolver allows the Company to elect that any borrowing under the facility bears an interest rate based on either the base rate or the eurocurrency rate, in each case, plus the applicable rate. The base rate is generally the highest of (a) the federal funds rate plus 0.50%, (b) the Bank of America prime rate or (c) the London Interbank Offered Rate (LIBOR) successor rate plus 1.00%. The applicable rate is generally a range from (0.25)% to 1.75% depending on the type of loan and the Company's consolidated net leverage ratio. On December 31, 2021, the Company entered into a LIBOR Transition Amendment with Bank of America that states that LIBOR will be replaced with a successor rate in accordance with the U.S. Revolver. The U.S. Revolver is collateralized by a pledge of 100% of the voting capital stock of each of our domestic subsidiaries and 65% of the voting capital stock of each non-domestic subsidiary. The U.S. Revolver provides for customary events of default and carries cross-default provisions with other existing debt agreements. If an event of default (as defined in the U.S. Revolver) occurs and is continuing, on the terms and subject to the conditions set forth in the U.S. Revolver, amounts and letters of credit outstanding under the U.S. Revolver may be accelerated and may become immediately due and payable. Industrial Development Revenue Bonds We borrowed $8.0 million in October 2001 through a loan agreement funded with proceeds from tax-exempt industrial development revenue bonds (Bonds) for the completion of our Northlake, Illinois facility. The Bonds matured on October 1, 2021 and our final payment of $0.4 million was made. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Letters of Credit, Bank Guarantees and Bonds Certain customers require us to post letters of credit, bank guarantees or surety bonds. These security instruments assure that we will perform under the terms of our contract. In the event of default, the counterparty may demand payment from the bank under a letter of credit or bank guarantee, or performance by the surety under a bond. To date, there have been no significant draws or claims related to security instruments for the periods reported. We were contingently liable for letters of credit of $31.2 million as of December 31, 2021. We also had surety bonds totaling $144.4 million that were outstanding, with additional bonding capacity of $455.6 million available, at December 31, 2021. At present, we have strong surety relationships; however, a change in market conditions or the sureties' assessment of our financial position could cause the sureties to require cash collateralization for undischarged liabilities under the bonds. We have a $9.5 million facility agreement (Facility Agreement) between Powell (UK) Limited and a large international bank that provides Powell (UK) Limited the ability to enter into bank guarantees as well as forward exchange contracts and currency options. At December 31, 2021, we had outstanding guarantees totaling $3.3 million and amounts available under this Facility Agreement were $6.2 million. The Facility Agreement provides for customary events of default, and carries cross-default provisions with our U.S. Revolver. If an event of default (as defined in the Facility Agreement) occurs and is continuing, per the terms and subject to the conditions set forth therein, obligations outstanding under the Facility Agreement may be accelerated and declared immediately due and payable. Additionally, we are required to maintain cash collateral for guarantees greater than two years. As of December 31, 2021, we were in compliance with all of the financial covenants of the Facility Agreement. In accordance with the terms of the Facility Agreement, the total amount available was reduced from $9.5 million to $6.8 million in January 2022. Litigation We are involved in various legal proceedings, claims and other disputes arising from our commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. Although we can give no assurances about the resolution of pending claims, litigation or other disputes and the effect such outcomes may have on us, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on our consolidated financial position or results of operations or liquidity. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Refer to our Annual Report on Form 10-K for the fiscal year ended September 30, 2021 for a full description of our existing stock-based compensation plans. Restricted Stock Units We issue restricted stock units (RSUs) to certain officers and key employees of the Company. The fair value of the RSUs is based on the price of our common stock as reported on the NASDAQ Global Market on the grant dates. Typically, these grants vest over a three three three Total RSU activity (number of shares) for the three months ended December 31, 2021 is summarized below: Number of Weighted Outstanding at September 30, 2021 199,919 $ 30.34 Granted 107,350 24.79 Vested (71,767) 32.66 Forfeited/canceled — — Outstanding at December 31, 2021 235,502 $ 26.94 During the three months ended December 31, 2021 and 2020, we recorded compensation expense of $0.9 million and $0.8 million, respectively, related to the RSUs. Restricted Stock |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements We measure certain financial assets and liabilities at fair value. Fair value is defined as an “exit price,” which represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in valuing an asset or liability. The accounting guidance requires the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. As a basis for considering such assumptions and inputs, a fair value hierarchy has been established which identifies and prioritizes three levels of inputs to be used in measuring fair value. The three levels of the fair value hierarchy are as follows: Level 1 — Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 — Inputs other than the quoted prices in active markets that are observable either directly or indirectly, including: quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data. Level 3 — Unobservable inputs that are supported by little or no market data and require the reporting entity to develop its own assumptions. The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2021 (in thousands): Fair Value Measurements at December 31, 2021 Quoted Prices in Significant Other Significant Fair Value at Assets: Cash and cash equivalents $ 77,905 $ — $ — $ 77,905 Short-term investments 23,622 — — 23,622 Other assets — 9,452 — 9,452 Liabilities: Deferred compensation — 9,675 — 9,675 The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2021 (in thousands): Fair Value Measurements at September 30, 2021 Quoted Prices in Significant Other Significant Fair Value at Assets: Cash and cash equivalents $ 114,314 $ — $ — $ 114,314 Short-term investments 19,667 — — 19,667 Other assets — 9,100 — 9,100 Liabilities: Deferred compensation — 8,527 — 8,527 Fair value guidance requires certain fair value disclosures be presented in both interim and annual reports. The estimated fair value amounts of financial instruments have been determined using available market information and valuation methodologies described below. Cash and cash equivalents – Cash and cash equivalents, primarily funds held in money market savings instruments, are reported at their current carrying value, which approximates fair value due to the short-term nature of these instruments and are included in cash and cash equivalents in our Condensed Consolidated Balance Sheets. Short-term Investments – Short-term investments include time deposits with original maturities of three months or more. Other Assets and Deferred Compensation – We hold investments in an irrevocable Rabbi Trust for our deferred compensation plan. The assets are primarily related to company-owned life insurance policies and are included in other assets in the accompanying Condensed Consolidated Balance Sheets. Because the mutual funds and company-owned life insurance policies are combined in the plan, they are categorized as Level 2 in the fair value measurement hierarchy. The deferred compensation liability represents the investment options that the plan participants have designated to serve as the basis for measurement of the notional value of their accounts. Because the deferred compensation liability is intended to offset the plan assets, it is also categorized as Level 2 in the fair value measurement hierarchy. There were no transfers between levels within the fair value measurement hierarchy during the quarter ended December 31, 2021. |
Leases
Leases | 3 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Leases | Leases Our leases consist primarily of office and manufacturing space and construction equipment. All of our future lease obligations are related to non-cancelable operating leases. The most significant portion of our lease portfolio relates to leases of office and manufacturing facilities in Canada which we no longer occupy. We currently sublease the majority of these Canadian facilities. The following table provides a summary of lease cost components for the three months ended December 31, 2021 and 2020, respectively (in thousands): Three months ended December 31, Lease Cost 2021 2020 Operating lease cost $ 571 $ 608 Less: sublease income (174) (180) Variable lease cost (1) 141 108 Short-term lease cost (2) 273 169 Total lease cost $ 811 $ 705 (1) Variable lease cost represents common area maintenance charges related to our Canadian office space lease. (2) Short-term lease cost includes leases and rentals with initial terms of one year or less. We recognize operating lease assets and operating lease liabilities representing the present value of the remaining lease payments for leases with initial terms greater than twelve months. Leases with initial terms of twelve months or less are not recorded in our Condensed Consolidated Balance Sheets. As of December 31, 2021 and September 30, 2021, our operating lease assets have been reduced by a lease accrual of $0.3 million and $0.4 million, respectively, related to certain unused facility leases in Canada. The following table provides a summary of the operating lease assets and operating lease liabilities included in our Condensed Consolidated Balance Sheets as of December 31, 2021 and September 30, 2021, respectively (in thousands): Operating Leases December 31, 2021 September 30, 2021 Assets: Operating lease assets, net $ 3,526 $ 3,453 Liabilities: Current operating lease liabilities 1,966 1,415 Long-term operating lease liabilities 1,866 2,413 Total lease liabilities $ 3,832 $ 3,828 The following table provides the maturities of our operating lease liabilities as of December 31, 2021 (in thousands): Operating Leases Remainder of 2022 $ 1,822 2023 1,536 2024 361 2025 204 2026 51 Thereafter — Total future minimum lease payments $ 3,974 Less: present value discount (imputed interest) (142) Present value of lease liabilities $ 3,832 The weighted average discount rate as of December 31, 2021 was 3.87%. The weighted average remaining lease term was 2.0 years at December 31, 2021. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The calculation of the effective tax rate is as follows (in thousands): Three months ended December 31, 2021 2020 Loss before income taxes $ (4,287) $ (259) Income tax provision (benefit) (1,441) 105 Net loss $ (2,846) $ (364) Effective tax rate 34 % (41) % Our income tax benefit reflects an effective tax rate on pre-tax loss of 34% for the first quarter of Fiscal 2022 compared to an income tax provision that reflects a negative 41% in the first quarter of Fiscal 2021. For the three months ended December 31, 2021, the estimated Research and Development Tax Credit (R&D Tax Credit) favorably impacted the effective tax rate. The effective tax rate for the first quarter of Fiscal 2022 and Fiscal 2021 were negatively impacted by the losses recognized in various foreign jurisdictions that were reserved with a valuation allowance as well as discrete items in the amount of $0.1 million primarily related to the vesting of restricted stock units. These unfavorable items offset the benefits related to the estimated R&D Tax Credit and the projected utilization of net operating loss carryforwards in Canada that were fully reserved with a valuation allowance for the three months ended December 31, 2020. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Quarterly Dividend Declared On February 1, 2022, our Board of Directors declared a quarterly cash dividend on our common stock in the amount of $0.26 per share. The dividend is payable on March 16, 2022 to shareholders of record at the close of business on February 16, 2022. |
Overview and Summary of Signi_2
Overview and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These unaudited condensed consolidated financial statements include the accounts of Powell and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP), have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with respect to the interim condensed consolidated financial statements have been included. The results of operations for the interim periods are not necessarily indicative of the results for the entire fiscal year. We believe that these financial statements contain all adjustments necessary so that they are not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Powell and its subsidiaries included in Powell’s Annual Report on Form 10-K for the year ended September 30, 2021, which was filed with the Securities and Exchange Commission (SEC) on December 8, 2021. References to Fiscal 2022 and Fiscal 2021 used throughout this report shall mean our fiscal years ended September 30, 2022 and 2021, respectively. |
Use of Estimates | Use of EstimatesThe preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying footnotes. The most significant estimates used in our condensed consolidated financial statements affect revenue recognition and estimated cost recognition on our customer contracts, the allowance for credit losses, provision for excess and obsolete inventory, warranty accruals and income taxes. The amounts recorded for warranties, legal, income taxes, impairment of long-lived assets (when applicable), liquidated damages and other contingent liabilities require judgments regarding the amount of expenses that will ultimately be incurred. We base our estimates on historical experience, forecasts and various other assumptions, as well as the specific circumstances surrounding these contingent liabilities, in evaluating the amount of liability that should be recorded. Additionally, the recognition of deferred tax assets requires estimates related to future income and other assumptions regarding timing and future profitability because the ultimate realization of net deferred tax assets is dependent on the generation of future taxable income during the periods in which temporary differences become deductible. Estimates routinely change as new events occur, additional information becomes available or operating environments change. Actual results may differ from our prior estimates. |
Revenue Recognition | Revenue Recognition Our revenues are primarily generated from the manufacturing of custom-engineered products and systems under long-term fixed-price contracts under which we agree to manufacture various products such as traditional and arc-resistant distribution switchgear and control gear, medium-voltage circuit breakers, monitoring and control communications systems, motor control centers, switches and bus duct systems. These products may be sold separately as an engineered solution but are typically integrated into custom-built enclosures which we also build. These enclosures are referred to as power control room substations (PCRs®), custom-engineered modules or electrical houses (E-Houses). Some contracts may also include the installation and the commissioning of these enclosures. Revenue from these contracts is generally recognized over time utilizing the cost-to-cost method. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. We believe that this method is the most accurate representation of our performance, because it directly measures the value of the services transferred to the customer over time as we incur costs on our contracts. Contract costs include all direct materials, labor and indirect costs related to contract performance, which may include indirect labor, supplies, tools, repairs and depreciation costs. We also have contracts to provide value-added services such as field service inspection, installation, commissioning, modification and repair, as well as retrofit and retrofill components for existing systems. If the service contract terms give us the right to invoice the customer for an amount that corresponds directly with the value of our performance completed to date (i.e., a service contract in which we bill a fixed amount for each hour of service provided), then we recognize revenue over time in each reporting period corresponding to the amount with which we have the right to invoice. Our performance obligations are satisfied as the work progresses. Revenues from our custom-engineered products and value-added services transferred to customers over time accounted for approximately 94% of total revenues for the three months ended December 31, 2021 and 92% of total revenues for the three months ended December 31, 2020. Additionally, we have sales orders for spare parts and replacement circuit breakers for switchgear that are obsolete or that are no longer produced by the original manufacturer. Revenues from these sales orders are recognized at the time we fulfill our performance obligation to the customer, which is typically upon shipment and represented approximately 6% of total revenues for the three months ended December 31, 2021 and 8% of total revenues for the three months ended December 31, 2020. Some contracts may contain a cancellation clause that could limit the amount of revenue we are able to recognize over time. In these instances, revenue and costs associated with these contracts are deferred and recognized at a point in time when the performance obligation is fulfilled. Performance Obligations A performance obligation is a promise in a contract or with a customer to transfer a distinct good or service. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue as the performance obligations are satisfied. To determine the proper revenue recognition for contracts, we evaluate whether a contract should be accounted for as more than one performance obligation or, less commonly, whether two or more contracts should be combined and accounted for as one performance obligation. This evaluation of performance obligations requires significant judgment. The majority of our contracts have a single performance obligation where multiple engineered products and services are combined into a single custom-engineered solution. Our contracts include a standard one-year assurance warranty. Occasionally, we provide service-type warranties that will extend the warranty period. These extended warranties qualify as a separate performance obligation, and revenue is deferred and recognized over the warranty period. If we determine during the evaluation of the contract that there are multiple performance obligations, we allocate the transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Contract Estimates Actual revenues and project costs may vary from previous estimates due to changes in a variety of factors. The cost estimation process is based upon the professional knowledge and experience of our engineers, project managers and financial professionals. Factors that are considered in estimating the work to be completed and ultimate contract recovery include the availability and productivity of labor, the nature and complexity of the work to be performed, the availability of materials, and the effect of any delays on our project performance. We periodically review our job performance, job conditions, estimated profitability and final contract settlements, including our estimate of total costs and make revisions to costs and income in the period in which the revisions are probable and reasonably estimable. We bear the risk of cost overruns in most of our contracts, which may result in reduced profits. Whenever revisions of estimated contract costs and contract values indicate that the contract costs will exceed estimated revenues, thus creating a loss, a provision for the total estimated loss is recorded in that period. Variable Consideration It is common for our long-term contracts to contain variable consideration that can either increase or decrease the transaction price. Due to the nature of our contracts, estimating total cost and revenue can be complex and subject to variability due to change orders, back charges, spare parts, early completion bonuses, customer allowances and liquidated damages. We estimate the amount of variable consideration based on the expected value method, which is the sum of the probability-weighted amounts, or the most likely amount method which uses various factors including experience with similar transactions and assessment of our anticipated performance. Variable consideration is included in the transaction price if legally enforceable and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur once the uncertainty associated with the variable consideration is resolved. Contract Modifications Contracts may be modified for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the enforceable rights and obligations under the contract. Most of our contract modifications are for goods and services that are not distinct from the existing performance obligation. Contract modifications result in a cumulative catch-up adjustment to revenue based on our measure of progress for the performance obligation. Contract Balances The timing of revenue recognition, billings and cash collections affects accounts receivable, contract assets and contract liabilities in our Condensed Consolidated Balance Sheets. Contract assets are recorded when revenues are recognized in excess of amounts billed for fixed-price contracts as determined by the billing milestone schedule. Contract assets are transferred to accounts receivable when billing milestones have been met, or we have an unconditional right to payment. Contract liabilities typically represent advance payments from contractual billing milestones and billings in excess of revenue recognized. It is unusual to have advanced milestone payments with a term greater than one year, which could represent a financing component on the contract. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic and Diluted Weighted Average Shares used in Computation of Earnings Per Share | The following table reconciles basic and diluted weighted average shares used in the computation of earnings per share (in thousands, except per share data): Three months ended December 31, 2021 2020 Numerator: Net loss $ (2,846) $ (364) Denominator: Weighted average basic shares 11,765 11,674 Dilutive effect of restricted stock units — — Weighted average diluted shares 11,765 11,674 Loss per share: Basic $ (0.24) $ (0.03) Diluted $ (0.24) $ (0.03) |
Detail of Selected Balance Sh_2
Detail of Selected Balance Sheet Accounts (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Activity in Allowance for Doubtful Accounts Receivable | Activity in our allowance for credit losses consisted of the following (in thousands): Three months ended December 31, 2021 2020 Balance at beginning of period $ 333 $ 510 Bad debt expense (recovery), net 91 (19) Uncollectible accounts written off, net of recoveries (14) (10) Change due to foreign currency translation 1 12 Balance at end of period $ 411 $ 493 |
Components of Inventories | The components of inventories are summarized below (in thousands): December 31, 2021 September 30, 2021 Raw materials, parts and sub-assemblies, net $ 35,295 $ 28,688 Work-in-progress 862 1,147 Total inventories $ 36,157 $ 29,835 |
Activity in Product Warranty Accrual | Activity in our product warranty accrual consisted of the following (in thousands): Three months ended December 31, 2021 2020 Balance at beginning of period $ 2,531 $ 2,771 Increase to warranty expense 293 658 Deduction for warranty charges (382) (779) Change due to foreign currency translation 1 25 Balance at end of period $ 2,443 $ 2,675 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Contract Asset and Liabilities | Contract assets and liabilities as of December 31, 2021 and September 30, 2021 are summarized below (in thousands): December 31, 2021 September 30, 2021 Contract assets $ 67,904 $ 54,199 Contract liabilities (49,396) (42,433) Net contract asset $ 18,508 $ 11,766 |
Disaggregation of Revenue | The following tables present our disaggregated revenue by geographic destination and market sector for the three months ended December 31, 2021 and 2020 (in thousands): Three months ended December 31, 2021 2020 United States $ 82,145 $ 80,586 Canada 15,125 14,091 Europe, Middle East and Africa 7,830 8,256 Asia/Pacific 944 2,716 Mexico, Central and South America 525 926 Total revenues by geographic destination $ 106,569 $ 106,575 Three months ended December 31, 2021 2020 Oil and gas (excludes petrochemical) $ 43,021 $ 40,028 Petrochemical 17,228 9,165 Electric utility 21,533 28,171 Traction power 11,372 13,361 All others 13,415 15,850 Total revenues by market sector $ 106,569 $ 106,575 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Components of Long-term debt | Long-term debt consisted of the following (in thousands): December 31, 2021 September 30, 2021 Industrial development revenue bonds $ — $ 400 Less: current portion — (400) Total long-term debt $ — $ — |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Restricted Stock Units Activity | Total RSU activity (number of shares) for the three months ended December 31, 2021 is summarized below: Number of Weighted Outstanding at September 30, 2021 199,919 $ 30.34 Granted 107,350 24.79 Vested (71,767) 32.66 Forfeited/canceled — — Outstanding at December 31, 2021 235,502 $ 26.94 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities Measured on Recurring Basis | The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2021 (in thousands): Fair Value Measurements at December 31, 2021 Quoted Prices in Significant Other Significant Fair Value at Assets: Cash and cash equivalents $ 77,905 $ — $ — $ 77,905 Short-term investments 23,622 — — 23,622 Other assets — 9,452 — 9,452 Liabilities: Deferred compensation — 9,675 — 9,675 The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2021 (in thousands): Fair Value Measurements at September 30, 2021 Quoted Prices in Significant Other Significant Fair Value at Assets: Cash and cash equivalents $ 114,314 $ — $ — $ 114,314 Short-term investments 19,667 — — 19,667 Other assets — 9,100 — 9,100 Liabilities: Deferred compensation — 8,527 — 8,527 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Lease Cost | The following table provides a summary of lease cost components for the three months ended December 31, 2021 and 2020, respectively (in thousands): Three months ended December 31, Lease Cost 2021 2020 Operating lease cost $ 571 $ 608 Less: sublease income (174) (180) Variable lease cost (1) 141 108 Short-term lease cost (2) 273 169 Total lease cost $ 811 $ 705 (1) Variable lease cost represents common area maintenance charges related to our Canadian office space lease. (2) Short-term lease cost includes leases and rentals with initial terms of one year or less. |
Operating Lease Assets and Liabilities | The following table provides a summary of the operating lease assets and operating lease liabilities included in our Condensed Consolidated Balance Sheets as of December 31, 2021 and September 30, 2021, respectively (in thousands): Operating Leases December 31, 2021 September 30, 2021 Assets: Operating lease assets, net $ 3,526 $ 3,453 Liabilities: Current operating lease liabilities 1,966 1,415 Long-term operating lease liabilities 1,866 2,413 Total lease liabilities $ 3,832 $ 3,828 |
Maturities of Operating Lease Liabilities | The following table provides the maturities of our operating lease liabilities as of December 31, 2021 (in thousands): Operating Leases Remainder of 2022 $ 1,822 2023 1,536 2024 361 2025 204 2026 51 Thereafter — Total future minimum lease payments $ 3,974 Less: present value discount (imputed interest) (142) Present value of lease liabilities $ 3,832 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Calculation of the Effective Income Tax Rate | The calculation of the effective tax rate is as follows (in thousands): Three months ended December 31, 2021 2020 Loss before income taxes $ (4,287) $ (259) Income tax provision (benefit) (1,441) 105 Net loss $ (2,846) $ (364) Effective tax rate 34 % (41) % |
Overview and Summary of Signi_3
Overview and Summary of Significant Accounting Policies (Details) | 3 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Predecessor companies founded | 75 years |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator: | ||
Net loss | $ (2,846) | $ (364) |
Denominator: | ||
Weighted average basic shares (in shares) | 11,765 | 11,674 |
Dilutive effect of restricted stock units (in shares) | 0 | 0 |
Weighted average diluted shares (in shares) | 11,765 | 11,674 |
Loss per share: | ||
Basic (in dollars per share) | $ (0.24) | $ (0.03) |
Diluted (in dollars per share) | $ (0.24) | $ (0.03) |
Detail of Selected Balance Sh_3
Detail of Selected Balance Sheet Accounts - Activity in Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at beginning of period | $ 333 | $ 510 |
Bad debt expense (recovery), net | 91 | (19) |
Uncollectible accounts written off, net of recoveries | (14) | (10) |
Change due to foreign currency translation | 1 | 12 |
Balance at end of period | $ 411 | $ 493 |
Detail of Selected Balance Sh_4
Detail of Selected Balance Sheet Accounts - Components of Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials, parts and sub-assemblies, net | $ 35,295 | $ 28,688 |
Work-in-progress | 862 | 1,147 |
Total inventories | $ 36,157 | $ 29,835 |
Detail of Selected Balance Sh_5
Detail of Selected Balance Sheet Accounts - Activity in Product Warranty Accrual (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at beginning of period | $ 2,531 | $ 2,771 |
Increase to warranty expense | 293 | 658 |
Deduction for warranty charges | (382) | (779) |
Change due to foreign currency translation | 1 | 25 |
Balance at end of period | $ 2,443 | $ 2,675 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue from External Customer [Line Items] | ||
Changes in contract estimates related to projects in progress | $ 2.8 | $ 5.5 |
Transferred over Time | Product Concentration Risk | Revenue from Contract with Customer Benchmark | ||
Revenue from External Customer [Line Items] | ||
Concentration risk, percentage | 94.00% | 92.00% |
Transferred at Point in Time | Product Concentration Risk | Revenue from Contract with Customer Benchmark | ||
Revenue from External Customer [Line Items] | ||
Concentration risk, percentage | 6.00% | 8.00% |
Revenue - Performance Obligatio
Revenue - Performance Obligations (Details) $ in Millions | Dec. 31, 2021USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation, amount | $ 416 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation, amount | $ 301.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, expected timing of satisfaction, period | 12 months |
Revenue - Contract Balances (De
Revenue - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 67,904 | $ 54,199 |
Contract liabilities | (49,396) | (42,433) |
Net contract asset | 18,508 | 11,766 |
Revenue recognized related to contract liabilities | 23,300 | |
Retention amounts included in accounts receivable | 9,300 | $ 9,600 |
Retained amount expected to be collected in the next twelve months | 6,800 | |
Retained amount expected to be collected | $ 2,500 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 106,569 | $ 106,575 |
Oil and gas (excludes petrochemical) | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 43,021 | 40,028 |
Petrochemical | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 17,228 | 9,165 |
Electric utility | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 21,533 | 28,171 |
Traction power | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 11,372 | 13,361 |
All others | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 13,415 | 15,850 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 82,145 | 80,586 |
Canada | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 15,125 | 14,091 |
Europe, Middle East and Africa | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 7,830 | 8,256 |
Asia/Pacific | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 944 | 2,716 |
Mexico, Central and South America | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 525 | $ 926 |
Long-Term Debt - Components of
Long-Term Debt - Components of Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Debt Disclosure [Abstract] | ||
Industrial development revenue bonds | $ 0 | $ 400 |
Less: current portion | 0 | (400) |
Total long-term debt | $ 0 | $ 0 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) | 3 Months Ended | |||
Dec. 31, 2021USD ($) | Oct. 01, 2021USD ($) | Sep. 30, 2021USD ($) | Oct. 31, 2001USD ($) | |
Line Of Credit Facility [Line Items] | ||||
Revolving credit facility borrowings, outstanding amount | $ 0 | $ 400,000 | ||
U.S. Revolver | ||||
Line Of Credit Facility [Line Items] | ||||
Percentage of voting capital stock pledged as collateral | 100.00% | |||
Non-domestic subsidiaries of voting capital stock | 65.00% | |||
U.S. Revolver | Amended and Restated Credit Agreement | ||||
Line Of Credit Facility [Line Items] | ||||
Revolving credit facility | $ 75,000,000 | |||
Cash collateral pledged balance | 30,000,000 | |||
Letters of credit collateral amount, minimum outstanding | 0 | |||
Revolving credit facility borrowings, outstanding amount | 0 | |||
Amount available under the credit facility | $ 43,800,000 | |||
Debt covenant, consolidated leverage ratio (less than) | 3 | |||
Debt covenant, consolidated interest coverage ratio (greater than) | 3 | |||
U.S. Revolver | Amended and Restated Credit Agreement | Fed Funds Rate | ||||
Line Of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
U.S. Revolver | Amended and Restated Credit Agreement | LIBOR | ||||
Line Of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 1.00% | |||
U.S. Revolver | Amended and Restated Credit Agreement | Base Rate | Minimum | ||||
Line Of Credit Facility [Line Items] | ||||
Basis spread on variable rate | (0.25%) | |||
U.S. Revolver | Amended and Restated Credit Agreement | Base Rate | Maximum | ||||
Line Of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 1.75% | |||
U.S. Revolver | Amended and Restated Credit Agreement | Financial Standby Letter of Credit | ||||
Line Of Credit Facility [Line Items] | ||||
Guarantee liability | $ 31,200,000 | |||
Industrial Development Revenue Bonds | ||||
Line Of Credit Facility [Line Items] | ||||
Borrowings | $ 8,000,000 | |||
Final annual payment | $ 400,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2021 | Jan. 31, 2022 | |
Guarantee Obligations [Line Items] | ||
Additional bonding capacity | $ 455,600,000 | |
Cash collateral required for guarantees, period (greater than) | 2 years | |
Facility Agreement | Powell (UK) Limited | ||
Guarantee Obligations [Line Items] | ||
Guarantee liability | $ 3,300,000 | |
Revolving credit facility | 9,500,000 | |
Amount of credit facility remaining borrowing capacity | 6,200,000 | |
Facility Agreement | Powell (UK) Limited | Subsequent Event | ||
Guarantee Obligations [Line Items] | ||
Revolving credit facility | $ 6,800,000 | |
Surety Bonds | ||
Guarantee Obligations [Line Items] | ||
Guarantee liability | 144,400,000 | |
U.S. Revolver | Amended and Restated Credit Agreement | ||
Guarantee Obligations [Line Items] | ||
Revolving credit facility | 75,000,000 | |
Amount of credit facility remaining borrowing capacity | 43,800,000 | |
U.S. Revolver | Financial Standby Letter of Credit | Amended and Restated Credit Agreement | ||
Guarantee Obligations [Line Items] | ||
Guarantee liability | $ 31,200,000 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2021 | |
Restricted Stock Units (RSUs) | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Unvested restricted stock outstanding (in shares) | 235,502 | 199,919 | |
Compensation expense | $ 0.9 | $ 0.8 | |
Restricted Stock Units (RSUs) | Time Based Restricted Stock Unit | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Restricted Stock Units (RSUs) | Performance Based Restricted Stock Unit | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Restricted Stock | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Compensation expense | $ 0.1 | $ 0.1 | |
Restricted Stock | Non Employee Director Equity Incentive Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Shares issued under the plan (in shares) | 2,400 | ||
Restricted Stock | Non Employee Director Equity Incentive Plan | Immediate Vesting | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting, percentage | 50.00% | ||
Restricted Stock | Non Employee Director Equity Incentive Plan | Anniversary of Grant Date | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting, percentage | 50.00% |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) | 3 Months Ended |
Dec. 31, 2021$ / sharesshares | |
Number of Restricted Stock Units | |
Outstanding at beginning of period (in shares) | shares | 199,919 |
Granted (in shares) | shares | 107,350 |
Vested (in shares) | shares | (71,767) |
Forfeited/canceled (in shares) | shares | 0 |
Outstanding at end of period (in shares) | shares | 235,502 |
Weighted Average Grant Value Per Share | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 30.34 |
Granted (in dollars per share) | $ / shares | 24.79 |
Vested (in dollars per share) | $ / shares | 32.66 |
Forfeited/canceled (in dollars per share) | $ / shares | 0 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 26.94 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Assets: | ||
Cash and cash equivalents | $ 77,905 | $ 114,314 |
Short-term investments | 23,622 | 19,667 |
Other assets | 9,452 | 9,100 |
Liabilities: | ||
Deferred compensation | 9,675 | 8,527 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Cash and cash equivalents | 77,905 | 114,314 |
Short-term investments | 23,622 | 19,667 |
Other assets | 0 | 0 |
Liabilities: | ||
Deferred compensation | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Cash and cash equivalents | 0 | 0 |
Short-term investments | 0 | 0 |
Other assets | 9,452 | 9,100 |
Liabilities: | ||
Deferred compensation | 9,675 | 8,527 |
Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Cash and cash equivalents | 0 | 0 |
Short-term investments | 0 | 0 |
Other assets | 0 | 0 |
Liabilities: | ||
Deferred compensation | $ 0 | $ 0 |
Leases - Lease Costs (Details)
Leases - Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | ||
Operating lease cost | $ 571 | $ 608 |
Less: sublease income | (174) | (180) |
Variable lease cost | 141 | 108 |
Short-term lease cost | 273 | 169 |
Total lease cost | $ 811 | $ 705 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Sep. 30, 2021 |
Leases [Abstract] | ||
Lease accrual | $ 0.3 | $ 0.4 |
Weighted average discount rate, percent | 3.87% | |
Weighted average remaining lease term | 2 years |
Leases - Summary of Operating L
Leases - Summary of Operating Lease Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Assets: | ||
Operating lease assets, net | $ 3,526 | $ 3,453 |
Liabilities: | ||
Current operating lease liabilities | 1,966 | 1,415 |
Long-term operating lease liabilities | 1,866 | 2,413 |
Total lease liabilities | $ 3,832 | $ 3,828 |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Sep. 30, 2021 |
Leases [Abstract] | ||
Remainder of 2022 | $ 1,822 | |
2023 | 1,536 | |
2024 | 361 | |
2025 | 204 | |
2026 | 51 | |
Thereafter | 0 | |
Total future minimum lease payments | 3,974 | |
Less: present value discount (imputed interest) | (142) | |
Present value of lease liabilities | $ 3,832 | $ 3,828 |
Income Taxes - Schedule of Calc
Income Taxes - Schedule of Calculation of the Effective Tax Rate (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Loss before income taxes | $ (4,287) | $ (259) |
Income tax provision (benefit) | (1,441) | 105 |
Net loss | $ (2,846) | $ (364) |
Effective tax rate | 34.00% | (41.00%) |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 34.00% | (41.00%) |
Deferred tax assets, valuation allowance | $ 0.1 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Feb. 01, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Subsequent Event [Line Items] | |||
Quarterly cash dividend (in dollars per share) | $ 0.26 | $ 0.26 | |
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Quarterly cash dividend (in dollars per share) | $ 0.26 |