##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 001-12488
 Powell Industries, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware(State or other jurisdiction of 
incorporation or organization)
    
    88-0106100(I.R.S. Employer
Identification No.)8550 Mosley Drive, 
Houston, Texas(Address of principal executive offices)
    
    77075-1180(Zip Code)
 Registrants telephone number, including area code:
 (713) 944-6900
 þ o
 o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



POWELL INDUSTRIES, INC. AND SUBSIDIARIES
 TABLE OF CONTENTS
 PagePart I  Financial Information
    
    
    3Item 1. Condensed Consolidated Financial Statements (unaudited)
    
    
    3Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Operations
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    24Part II  Other Information
    
    
    25Item 1. Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    25Item 5. Other Information
    
    
    25Item 6. Exhibits
    
    
    26Signatures
    
    
    27EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Condensed Consolidated Financial Statements
 
 POWELL INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
 March 31,
    
    
    September 30,2011
    
    
    2010(Unaudited)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    122,056
    
    
    $
    115,353Accounts receivable, less allowance for doubtful accounts of $1,508 and
$907, respectively
    
    
    102,539
    
    
    
    91,766Costs and estimated earnings in excess of billings on uncompleted contracts
    
    
    36,399
    
    
    
    38,064Inventories, net
    
    
    39,365
    
    
    
    38,244Income taxes receivable
    
    
    4,555
    
    
    
    6,726Deferred income taxes
    
    
    4,164
    
    
    
    3,087Prepaid expenses and other current assets
    
    
    8,114
    
    
    
    8,951Total Current Assets
    
    
    317,192
    
    
    
    302,191Property, plant and equipment, net
    
    
    61,440
    
    
    
    63,676Goodwill
    
    
    1,003
    
    
    
    1,003Intangible assets, net
    
    
    25,744
    
    
    
    26,132Other assets
    
    
    7,808
    
    
    
    7,710Total Assets
    
    $
    413,187
    
    
    $
    400,712LIABILITIES AND EQUITYCurrent Liabilities:Current maturities of long-term debt and capital lease obligations
    
    $
    1,446
    
    
    $
    1,683Income taxes payable
    
    
    1,316
    
    
    
    1,500Accounts payable
    
    
    43,094
    
    
    
    41,850Accrued salaries, bonuses and commissions
    
    
    14,329
    
    
    
    25,064Billings in excess of costs and estimated earnings on uncompleted contracts
    
    
    46,941
    
    
    
    31,009Accrued product warranty
    
    
    5,763
    
    
    
    5,929Other accrued expenses
    
    
    5,886
    
    
    
    7,711Total Current Liabilities
    
    
    118,775
    
    
    
    114,746Long-term debt and capital lease obligations, net of current maturities
    
    
    4,543
    
    
    
    5,202Deferred compensation
    
    
    3,191
    
    
    
    2,730Other liabilities
    
    
    884
    
    
    
    731Total Liabilities
    
    
    127,393
    
    
    
    123,409Commitments and Contingencies (Note J)Equity:Stockholders Equity:Preferred stock, par value $.01; 5,000,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock, par value $.01; 30,000,000 shares authorized; 11,724,243
and 11,676,955 shares issued and outstanding, respectively
    
    
    117
    
    
    
    117Additional paid-in capital
    
    
    35,060
    
    
    
    33,569Retained earnings
    
    
    249,900
    
    
    
    244,969Accumulated other comprehensive income (loss)
    
    
    717
    
    
    
    (1,352
    )Total Stockholders Equity
    
    
    285,794
    
    
    
    277,303Total Liabilities and Equity
    
    $
    413,187
    
    
    $
    400,712
  3




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##### Table of Contents



POWELL INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)
 Three Months Ended
    
    
    Six Months EndedMarch 31, 2011
    
    
    March 31, 2010
    
    
    March 31, 2011
    
    
    March 31, 2010Revenues
    
    $
    125,598
    
    
    $
    142,135
    
    
    $
    250,272
    
    
    $
    278,051Cost of goods sold
    
    
    99,955
    
    
    
    105,602
    
    
    
    198,764
    
    
    
    203,701Gross profit
    
    
    25,643
    
    
    
    36,533
    
    
    
    51,508
    
    
    
    74,350Selling, general and administrative expenses
    
    
    21,538
    
    
    
    19,958
    
    
    
    42,466
    
    
    
    41,737Amortization of intangible assets
    
    
    1,254
    
    
    
    1,199
    
    
    
    2,421
    
    
    
    2,061Operating income
    
    
    2,851
    
    
    
    15,376
    
    
    
    6,621
    
    
    
    30,552Other income
    
    
    (1,229
    )
    
    
    
    
    
    
    (1,229
    )
    
    
    Interest expense
    
    
    94
    
    
    
    228
    
    
    
    208
    
    
    
    410Interest income
    
    
    (62
    )
    
    
    (115
    )
    
    
    (107
    )
    
    
    (157
    )Income before income taxes
    
    
    4,048
    
    
    
    15,263
    
    
    
    7,749
    
    
    
    30,299Income tax provision
    
    
    1,549
    
    
    
    5,378
    
    
    
    2,818
    
    
    
    10,669Net income
    
    
    2,499
    
    
    
    9,885
    
    
    
    4,931
    
    
    
    19,630Net income attributable to noncontrolling interest
    
    
    
    
    
    
    (25
    )
    
    
    
    
    
    
    (126
    )Net income attributable to Powell Industries, Inc.
    
    $
    2,499
    
    
    $
    9,860
    
    
    $
    4,931
    
    
    $
    19,504Earnings per share attributable to Powell Industries, Inc.:Basic
    
    $
    0.21
    
    
    $
    0.86
    
    
    $
    0.42
    
    
    $
    1.70Diluted
    
    $
    0.21
    
    
    $
    0.85
    
    
    $
    0.42
    
    
    $
    1.68Weighted average shares:Basic
    
    
    11,666
    
    
    
    11,523
    
    
    
    11,653
    
    
    
    11,498Diluted
    
    
    11,799
    
    
    
    11,659
    
    
    
    11,787
    
    
    
    11,639
  4




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POWELL INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 Six Months EndedMarch 31, 2011
    
    
    March 31, 2010Operating Activities:Net income
    
    $
    4,931
    
    
    $
    19,630Adjustments to reconcile net income to net cash used in operating activities:Depreciation
    
    
    5,037
    
    
    
    4,274Amortization
    
    
    2,456
    
    
    
    2,095Stock-based compensation
    
    
    1,088
    
    
    
    1,163Bad debt expense
    
    
    606
    
    
    
    692Deferred income taxes
    
    
    (782
    )
    
    
    (1,256
    )Gain on sale of investment in joint venture in Kazakhstan
    
    
    (1,229
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (10,324
    )
    
    
    28,280Costs and estimated earnings in excess of billings on uncompleted contracts
    
    
    1,684
    
    
    
    5,948Inventories
    
    
    (739
    )
    
    
    12,151Prepaid expenses and other current assets
    
    
    3,176
    
    
    
    7,156Accounts payable and income taxes payable
    
    
    656
    
    
    
    (19,392
    )Accrued liabilities
    
    
    (12,927
    )
    
    
    (7,283
    )Billings in excess of costs and estimated earnings on uncompleted contracts
    
    
    15,884
    
    
    
    (6,140
    )Other
    
    
    (1,027
    )
    
    
    (1,291
    )Net cash provided by operating activities
    
    
    8,490
    
    
    
    46,027Investing Activities:Proceeds from sale of fixed assets
    
    
    60
    
    
    
    14Purchases of property, plant and equipment
    
    
    (2,667
    )
    
    
    (1,460
    )Proceeds from sale of investment in joint venture in Kazakhstan
    
    
    1,229
    
    
    
    Acquisition of Powell Canada
    
    
    
    
    
    
    (21,828
    )Net cash used in investing activities
    
    
    (1,378
    )
    
    
    (23,274
    )Financing Activities:Borrowings on Canadian revolving line of credit
    
    
    2,619
    
    
    
    891Payments on Canadian revolving line of credit
    
    
    (2,627
    )
    
    
    (1,215
    )Payments on Canadian term loan
    
    
    
    
    
    
    (123
    )Payments on industrial development revenue bonds
    
    
    (400
    )
    
    
    (400
    )Payments on deferred acquisition payable
    
    
    
    
    
    
    (4,292
    )Other
    
    
    (189
    )
    
    
    354Net cash used in financing activities
    
    
    (597
    )
    
    
    (4,785
    )Net increase in cash and cash equivalents
    
    
    6,515
    
    
    
    17,968Effect of exchange rate changes on cash and cash equivalents
    
    
    188
    
    
    
    (1,767
    )Cash and cash equivalents at beginning of period
    
    
    115,353
    
    
    
    97,403Cash and cash equivalents at end of period
    
    $
    122,056
    
    
    $
    113,604
  5




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POWELL INDUSTRIES, INC. AND SUBSIDIARIES
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
  Overview
    Basis of Presentation
    Reclassifications
  Use of Estimates
  6




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New Accounting Standards
     Subsequent Events
    7




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Fair Value Measurements at March 31, 2011Quoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    Fair Value at(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    March 31, 2011AssetsCash equivalents
    
    $
    65,494
    
    
    $
    
    
    
    $
    
    
    
    $
    65,494Total
    
    $
    65,494
    
    
    $
    
    
    
    $
    
    
    
    $
    65,494LiabilitiesForeign currency forward contracts
    
    $
    
    
    
    $
    18
    
    
    $
    
    
    
    $
    18Total
    
    $
    
    
    
    $
    18
    
    
    $
    
    
    
    $
    18
  Fair Value Measurements at September 30, 2010Quoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    Inputs
    
    
    Fair Value at(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    September 30, 2010AssetsCash equivalents
    
    $
    64,014
    
    
    $
    
    
    
    $
    
    
    
    $
    64,014Total
    
    $
    64,014
    
    
    $
    
    
    
    $
    
    
    
    $
    64,014LiabilitiesForeign currency forward contracts
    
    $
    
    
    
    $
    47
    
    
    $
    
    
    
    $
    47Total
    
    $
    
    
    
    $
    47
    
    
    $
    
    
    
    $
    47
   8




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Accounts receivable
    
    $
    16,643Inventories
    
    
    4,180Prepaid expenses and other current assets
    
    
    3,401Property, plant and equipment
    
    
    7,863Goodwill
    
    
    7,180Intangible assets
    
    
    9,043Accounts payable and other current liabilities
    
    
    (7,649
    )Capital lease obligations
    
    
    (2,667
    )Bank debt assumed
    
    
    (15,072
    )Total purchase price
    
    $
    22,922
    9




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Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2011
    
    
    2010
    
    
    2011
    
    
    2010Numerator:Net income attributable to Powell Industries, Inc.
    
    $
    2,499
    
    
    $
    9,860
    
    
    $
    4,931
    
    
    $
    19,504Denominator:Weighted average basic shares
    
    
    11,666
    
    
    
    11,523
    
    
    
    11,653
    
    
    
    11,498Dilutive effect of stock options, restricted stock and
restricted stock units
    
    
    133
    
    
    
    136
    
    
    
    134
    
    
    
    141Weighted average diluted shares with assumed conversions
    
    
    11,799
    
    
    
    11,659
    
    
    
    11,787
    
    
    
    11,639Net earnings per share:Basic
    
    $
    0.21
    
    
    $
    0.86
    
    
    $
    0.42
    
    
    $
    1.70Diluted
    
    $
    0.21
    
    
    $
    0.85
    
    
    $
    0.42
    
    
    $
    1.68
   Allowance for Doubtful Accounts
  Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2011
    
    
    2010
    
    
    2011
    
    
    2010Balance at beginning of period
    
    $
    1,188
    
    
    $
    2,580
    
    
    $
    907
    
    
    $
    1,607Increase (decrease) to bad debt expense
    
    
    318
    
    
    
    (609
    )
    
    
    606
    
    
    
    692Deductions for uncollectible accounts written off, net of recoveries
    
    
    (4
    )
    
    
    (27
    )
    
    
    (3
    )
    
    
    (397
    )Increase (decrease) due to foreign currency translation
    
    
    6
    
    
    
    (14
    )
    
    
    (2
    )
    
    
    28Balance at end of period
    
    $
    1,508
    
    
    $
    1,930
    
    
    $
    1,508
    
    
    $
    1,930
 Warranty Accrual
  Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2011
    
    
    2010
    
    
    2011
    
    
    2010Balance at beginning of period
    
    $
    5,845
    
    
    $
    7,437
    
    
    $
    5,929
    
    
    $
    7,558Warranty expense
    
    
    452
    
    
    
    559
    
    
    
    863
    
    
    
    1,350Deductions for warranty charges
    
    
    (628
    )
    
    
    (835
    )
    
    
    (1,209
    )
    
    
    (1,747
    )Increase (decrease) due to foreign currency translation
    
    
    94
    
    
    
    (107
    )
    
    
    180
    
    
    
    (107
    )Balance at end of period
    
    $
    5,763
    
    
    $
    7,054
    
    
    $
    5,763
    
    
    $
    7,054
 Inventories
  March 31,
    
    
    September 30,2011
    
    
    2010Raw materials, parts and subassemblies
    
    $
    39,372
    
    
    $
    40,325Work-in-progress
    
    
    7,014
    
    
    
    4,646Provision for excess and obsolete inventory
    
    
    (7,021
    )
    
    
    (6,727
    )Total inventories
    
    $
    39,365
    
    
    $
    38,244
 10




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Cost and Estimated Earnings on Uncompleted Contracts
  March 31,
    
    
    September 30,2011
    
    
    2010Costs incurred on uncompleted contracts
    
    $
    485,730
    
    
    $
    482,149Estimated earnings
    
    
    143,249
    
    
    
    138,836628,979
    
    
    
    620,985Less: Billings to date
    
    
    639,521
    
    
    
    613,930Net (overbilled) underbilled position
    
    $
    (10,542
    )
    
    $
    7,055Included in the accompanying balance sheets under the following captions:Costs and estimated earnings in excess of billings on uncompleted contracts  underbilled
    
    $
    36,399
    
    
    $
    38,064Billings in excess of costs and estimated earnings on uncompleted contracts  overbilled
    
    
    (46,941
    )
    
    
    (31,009
    )Net (overbilled) underbilled position
    
    $
    (10,542
    )
    
    $
    7,055
   Goodwill
    
    
    Intangible AssetsBalance at September 30, 2010
    
    $
    1,003
    
    
    $
    26,132Purchase of patent-pending technology
    
    
    
    
    
    
    1,513Amortization
    
    
    
    
    
    
    (2,421
    )Foreign currency translation adjustment
    
    
    
    
    
    
    520Other
    
    
    
    
    
    
    Balance at March 31, 2011
    
    $
    1,003
    
    
    $
    25,744
     Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2011
    
    
    2010
    
    
    2011
    
    
    2010Net income attributable to Powell Industries, Inc.
    
    $
    2,499
    
    
    $
    9,860
    
    
    $
    4,931
    
    
    $
    19,504Unrealized gain (loss) on foreign currency translation, net of tax
    
    
    1,712
    
    
    
    (685
    )
    
    
    2,072
    
    
    
    81Unrealized gain (loss) on derivative contracts, net of tax
    
    
    (10
    )
    
    
    44
    
    
    
    (3
    )
    
    
    (197
    )Comprehensive income
    
    $
    4,201
    
    
    $
    9,219
    
    
    $
    7,000
    
    
    $
    19,388
   March 31,
    
    
    September 30,2011
    
    
    2010Industrial development revenue bonds
    
    $
    4,400
    
    
    $
    4,800Capital lease obligations
    
    
    1,589
    
    
    
    2,085Subtotal long-term debt and capital lease obligations
    
    
    5,989
    
    
    
    6,885Less current portion
    
    
    (1,446
    )
    
    
    (1,683
    )Total long-term debt and capital lease obligations
    
    $
    4,543
    
    
    $
    5,202
 11




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US and UK Revolvers
     Canadian Revolver
      12




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##### Table of Contents



Industrial Development Revenue Bonds
      Asset Derivatives
    
    
    Liability DerivativesFair
    
    
    
    
    
    
    FairBalance Sheet Location
    
    
    Value
    
    
    Balance Sheet Location
    
    
    Value(in thousands)Derivatives designated as hedging instruments:Foreign exchange forwards
    
    Prepaid expenses and other current assets
    
    $
    
    
    
    Other accrued expenses
    
    $
    18Total derivatives
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    18
  Asset Derivatives
    
    
    Liability DerivativesFair
    
    
    
    
    
    
    FairBalance Sheet Location
    
    
    Value
    
    
    Balance Sheet Location
    
    
    Value(in thousands)Derivatives designated as hedging instruments:Foreign exchange forwards
    
    Prepaid expenses and other current assets
    
    $
    
    
    
    Other accrued expenses
    
    $
    47Total derivatives
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    47
 13




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Amount of Gain (Loss)Amount of Gain (Loss)
    
    
    
    
    
    
    Reclassified fromRecognized in Other
    
    
    
    
    
    
    Accumulated OtherComprehensive Income on
    
    
    
    
    
    
    Comprehensive IncomeDerivatives
    
    
    
    
    
    
    into IncomeThree Months
    
    
    Six Months
    
    
    Location of Gain (Loss)
    
    
    Three Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Reclassified from Accumulated
    
    
    Ended
    
    
    EndedMarch 31,
    
    
    March 31,
    
    
    Other comprehensive Income
    
    
    March 31,
    
    
    March 31,Derivatives designated:
    
    2011
    
    
    2011
    
    
    into Income
    
    
    2011
    
    
    2011(in thousands)
    
    
    
    
    
    
    
    
    
    
    (in thousands)Derivatives designated as cash flow hedges:Foreign exchange forwards
    
    $
    (16
    )
    
    $
    (5
    )
    
    Revenues
    
    $
    22
    
    
    $
    42Total designated cash flow hedges
    
    $
    (16
    )
    
    $
    (5
    )
    
    
    
    
    
    $
    22
    
    
    $
    42
  Amount of Gain (Loss)Amount of Gain (Loss)
    
    
    
    
    
    
    Reclassified fromRecognized in Other
    
    
    
    
    
    
    Accumulated OtherComprehensive Income on
    
    
    
    
    
    
    Comprehensive IncomeDerivatives 1
    
    
    
    
    
    
    into Income 1Three Months
    
    
    Six Months
    
    
    Location of Gain (Loss)
    
    
    Three Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Reclassified from Accumulated
    
    
    Ended
    
    
    EndedMarch 31,
    
    
    March 31,
    
    
    Other comprehensive Income
    
    
    March 31,
    
    
    March 31,Derivatives designated:
    
    2010
    
    
    2010
    
    
    into Income
    
    
    2010
    
    
    2010(in thousands)
    
    
    
    
    
    
    (in thousands)Derivatives designated as cash flow hedges:Foreign exchange forwards
    
    $
    71
    
    
    $
    771
    
    
    Revenues
    
    $
    (328
    )
    
    $
    (186
    )Total designated cash flow hedges
    
    $
    71
    
    
    $
    771
    
    
    
    
    
    
    $
    (328
    )
    
    $
    (186
    )
 
 1
    
    For the three and six month periods ended March 31, 2010, we recorded in revenues an
immaterial amount of ineffectiveness from cash flow hedges.  Cash Flow Hedges
    14




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Credit Risk
   Letters of Credit and Bonds
    Litigation
    Restricted Stock Units
   15




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##### Table of Contents



Restricted Stock
     Stock Options
  RemainingWeighted
    
    WeightedAverage
    
    Average
    
    AggregateStock
    
    Exercise
    
    Contractual
    
    IntrinsicOptions
    
    Price
    
    Term (Years)
    
    Value(in thousands)Outstanding at September 30, 2010
    
    
    128,600
    
    
    $
    18.41Granted
    
    
    
    
    
    
    Exercised
    
    
    (16,400
    )
    
    
    18.44Forfeited / Cancelled
    
    
    
    
    
    
    Outstanding at March 31, 2011
    
    
    112,200
    
    
    $
    18.41
    
    
    
    1.46
    
    
    $
    2,065Exercisable at March 31, 2011
    
    
    112,200
    
    
    $
    18.41
    
    
    
    1.46
    
    
    $
    2,065
    16




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedMarch 31,
    
    
    March 31,2011
    
    
    2010
    
    
    2011
    
    
    2010Revenues:Electrical Power Products
    
    $
    119,063
    
    
    $
    133,401
    
    
    $
    236,206
    
    
    $
    261,530Process Control Systems
    
    
    6,535
    
    
    
    8,734
    
    
    
    14,066
    
    
    
    16,521Total
    
    $
    125,598
    
    
    $
    142,135
    
    
    $
    250,272
    
    
    $
    278,051Gross profit:Electrical Power Products
    
    $
    23,923
    
    
    $
    33,661
    
    
    $
    48,215
    
    
    $
    68,027Process Control Systems
    
    
    1,720
    
    
    
    2,872
    
    
    
    3,293
    
    
    
    6,323Total
    
    $
    25,643
    
    
    $
    36,533
    
    
    $
    51,508
    
    
    $
    74,350Income before income taxes:Electrical Power Products
    
    $
    4,194
    
    
    $
    14,320
    
    
    $
    8,279
    
    
    $
    28,168Process Control Systems
    
    
    (146
    )
    
    
    943
    
    
    
    (530
    )
    
    
    2,131Total
    
    $
    4,048
    
    
    $
    15,263
    
    
    $
    7,749
    
    
    $
    30,299
 17




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis of our financial condition and results of operations should
be read in conjunction with the accompanying condensed consolidated financial statements and
related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report
on Form 10-K for the year ended September 30, 2010, which was filed with the Securities and
Exchange Commission on December 8, 2010 and is available on the SECs website at www.sec.gov.
 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
    
    
    The current economic uncertainty and financial market conditions have negatively impacted
and may continue to impact our customer base, suppliers and backlogs.
    
    Our operations could be adversely impacted by the Macondo well incident, the continuing
effects from the U.S. government moratorium on offshore deepwater drilling projects and
related new regulations.
    
    Our industry is highly competitive.
    
    International and political events may adversely affect our operations.
    
    Fluctuations in the price and supply of raw materials used to manufacture our products
may reduce our profits.
    
    Our volume of fixed-price contracts and the use of percentage-of-completion accounting
could result in volatility in our results of operations.
    
    Our acquisition strategy involves a number of risks.
    
    Our backlog is subject to unexpected adjustments and cancellations and, therefore, may
not be a reliable indicator of our future earnings.
    
    Our operating results may vary significantly from quarter to quarter.
    
    We may be unsuccessful at generating profitable internal growth.
    
    The departure of key personnel could disrupt our business.
    
    Our business requires skilled labor, and we may be unable to attract and retain qualified
employees.
 18




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##### Table of Contents




    
    Actual and potential claims, lawsuits and proceedings could ultimately reduce our
profitability and liquidity and weaken our financial condition.
    
    We carry insurance against many potential liabilities, however our management of risk may
leave us exposed to unidentified, uninsured or unanticipated risks.
    
    We may incur additional healthcare costs arising from federal healthcare reform
legislation.
    
    Technological innovations by competitors may make existing products and production
methods obsolete.
    
    Catastrophic events could disrupt our business.
  Overview
    Results of Operations
 Revenue and Gross Profit
  19




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##### Table of Contents



Electrical Power Products
     Process Control Systems
    20




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##### Table of Contents



Consolidated Selling, General and Administrative Expenses
   Other Income
  Interest Expense and Income
   Provision for Income Taxes
  Net Income Attributable to Powell Industries, Inc.
  Backlog
  21




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##### Table of Contents



Liquidity and Capital Resources
    Operating Activities
  Investing Activities
  Financing Activities
  New Accounting Standards
  Critical Accounting Policies
  22




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##### Table of Contents



Outlook
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Risk
  Foreign Currency Transaction Risk
  23




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##### Table of Contents



Commodity Price Risk
  Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Internal Control over Financial Reporting
  Design and Operation of Control Systems
  24




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 5. Other Information
  Votes CastNominee
    
    Votes Cast For
    
    Against
    
    Votes Withheld
    
    Abstentions
    
    Non-VotesEugene L. Butler
    
    
    8,513,266
    
    
    
    
    
    
    
    1,061,828
    
    
    
    
    
    
    
    Christopher E. Cragg
    
    
    9,184,252
    
    
    
    
    
    
    
    390,842
    
    
    
    
    
    
    
    Bonnie V. Hancock
    
    
    9,325,901
    
    
    
    
    
    
    
    249,193
    
    
    
    
    
    
    
    
 25




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##### Table of Contents



Item 6. Exhibits
 Number
    
    
    
    Description of Exhibits3.1
    
    
    
    Certificate of Incorporation of Powell Industries, Inc. filed with the Secretary of State of
the State of Delaware on February 11, 2004 (filed as Exhibit 3.1 to our Form 8-A/A filed
November 1, 2004, and incorporated herein by reference).3.2
    
    
    
    By-laws of Powell Industries, Inc. (filed as Exhibit 3.2 to our Form 8-A/A filed November 1,
2004, and incorporated herein by reference).*31.1
    
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).*31.2
    
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).*32.1
    
    
    
    Certification of Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32.2
    
    
    
    Certification of Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith 26




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##### Table of Contents



SIGNATURES
  POWELL INDUSTRIES, INC.
(Registrant)May 4, 2011
    By:
    /s/ Patrick L. McDonaldDate
    
    Patrick L. McDonaldPresident and Chief Executive Officer
(Principal Executive Officer)May 4, 2011
    By:
    /s/ Don R. MadisonDate
    
    Don R. MadisonExecutive Vice President
Chief Financial and Administrative Officer
(Principal Financial and Accounting Officer) 27




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##### Table of Contents



EXHIBIT INDEX
 Number
    
    
    
    Exhibit Title3.1
    
    
    
    Certificate of Incorporation of Powell Industries, Inc. filed with the Secretary of State
of the State of Delaware on February 11, 2004 (filed as Exhibit 3.1 to our Form 8-A/A
filed November 1, 2004, and incorporated herein by reference).3.2
    
    
    
    By-laws of Powell Industries, Inc. (filed as Exhibit 3.2 to our Form 8-A/A filed November
1, 2004, and incorporated herein by reference).*31.1
    
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).*31.2
    
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).*32.1
    
    
    
    Certification of Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*32.2
    
    
    
    Certification of Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith 28