Equipment and systems manufacturer to the power industry, Powell Industries (Nasdaq: POWL) reported lower revenues for the second quarter of fiscal 2010 but higher net income as it boosted operational efficiency.
The Houston based company chalked up US$142 million in revenues in the second quarter, down from US$164 million in the same period in fiscal 2009, but net income climbed to $9.9 million, or 85 cents per share, up from $8.9 million, or 77 cents per share in Q2 2009.
"Our exceptional performance yielded strong results in the second quarter. We are pleased with our initiatives to strengthen project management and continue to see improvements in operational efficiency,” Patrick McDonald, President and CEO, stated.
McDonald added that the company was excited by its recent acquisition PowerComm, which provides electrical and instrumentation construction and maintenance services, as well as a manufacturer of switchgear and related products, primarily serving the oil and gas industry in western Canada. Powell Industries paid US$24.2 million in cash for PowerComm, and could pay a further $7.6 million if certain earnings targets are met.
Despite the positive headline numbers, the company’s outlook, clouded by the recent oil spill in the Gulf of Mexico, and the company’s order backlog, did little to appease investors.
As of March 31, 2010, the group’s backlog stood at $313 million, down from $342 million as of December 31 2009 and $486 million 12 months ago. New orders placed did rise to $113 million in the second quarter from $108 million in the first quarter, but were lower than the $154 million booked in Q2 2009.
In additional the lower order book, McDonald also aired some concern over the impact BP’s (LSE:BP, NYSE:BP) oil spill in the Gulf.
"Our marketplace remains one of uncertainty, and we believe the events of the past week in the Gulf of Mexico may make the decisions of our oil and gas customers even more difficult in the near term. Currently, we are unable to predict when the economic issues and regulatory environment will stabilize and confidence to bring about new U.S. capital infrastructure investments will return. Our focus continues to be on our customer relationships and our ability to maintain the capabilities and resources to support our customers on projects not only in the U.S. but around the world."
Powell Industries is forecasting full year fiscal 2010 revenues to range between $550 million and $575 million and full year fiscal 2010 earnings to range between $2.10 and $2.35 per diluted share.
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