Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Powell Industries Fourth Quarter Earnings Conference Call. [Operator Instructions] This conference is being recorded today, December 5, 2012. I would now like to turn the conference over to Ms. Karen Roan of DRG&L. Please go ahead ma’am.

Thank you, Camilla. Good morning, everyone. We appreciate your joining us for Powell Industries conference call today to review fiscal 2012 fourth quarter and full year results. We would also like to welcome our internet participants listening to the call simulcast live over the internet. Before I turn the call over to management, I have the normal details to cover. If you did not receive an email of the news release issued yesterday afternoon and would like one, please call our offices at DRG&L and we will get one to you. That number is 713-529-6600. Also, if you want to be on the permanent email distribution list for Powell news releases, please relay that information to us. There will be a replay of today’s call and it will be available via webcast by going to the company’s website at www.powellind.com or a recorded replay will be available until December 12, 2012 and information on how to access the replay was provided in yesterday’s earnings release. Please note that information reported on this call speaks only as of today, December 5, 2012 and therefore you are advised that time sensitive information may no longer be accurate as of the time of any replay listening. As you know, this conference call includes certain statements including statements relating to the company’s expectations of its future operating results that may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties and that actual results may differ materially from those projected in the forward-looking statements. These risks and uncertainties include but are not limited to competition and competitive pressures, sensitivity to general economic and industry conditions, international, political and economic risks, availability and price of raw materials and execution of business strategy. For further information, please refer to the company’s filings with the Securities and Exchange Commission. Now with me this morning are Mike Lucas, President and Chief Executive Officer and Don Madison, Executive Vice President and Chief Financial and Administrative Officer. I will now turn over the call to Mike.

Thank you, Karen. Good morning everyone. Thank you for joining us today to review our fiscal 2012 fourth quarter results. It’s my pleasure to join you this morning for my first Powell earnings call. I’m very excited to be part of the Powell team. During my first 100 days on the job I have been meeting and talking to our teams and our customers, visiting our facilities and gaining a better understanding of the various successes and challenges of our business. I also look forward to meeting those of you in the investment community at some point. Let me make a few opening comments and then I'll turn the call over to Don to discuss the financial details. It’s certainly a pleasure to report to you this morning solid financial performance from Q4. It was an excellent quarter and a positive way to end the fiscal year and to begin fiscal ’13. Strength in the oil and gas market has been a significant contributor to our record revenue and solid earnings performance this year, and we continue to see the majority of our activity in this sector. Orders for this past year were $711 million, the second best year in the history the company and only $14 million short of the all-time record of $725 million in bookings from fiscal ’11. I’d like to thank Tom Powell for his leadership this past year as he returned to the role of CEO in 2012. And I’d also like to thank all of our teams around the world and in all of our businesses for their dedication in delivering these results. It’s very much appreciated. Order rates for the first two months of fiscal ‘13 have continued at a pace consistent with the past two years. But customer engineering resource constraints across the oil and gas sector make the timing of the work very difficult to predict. We’re also watchful as to the impact of global economic pressures could have on the business. It’s clear that economies here and around the world are being affected by financial issues, which are also likely to impact our customers’ investments and project timing. Our challenge here at Powell is to stay focused on operational execution, stay focused on financial execution during this environment. One final note before I turn it over to Don, we’re also supporting our customers in the Northeast as they continue to restore normal operations and repair electrical systems following the devastation of Hurricane Sandy. To date we have provided approximately $2 million of repair parts and services to customers in the region. We are continuing a number of discussions with utility and transit authorities in the region in particular. It's likely we'll see additional work as mid-term remediation plans are enacted. I will now turn the call over to Don to discuss the financial details. Don?

Thank you. Mike. Revenues were $184 million in the fourth quarter compared to $171 million in the fourth quarter of last year. Gross profit as a percentage of revenues was 22.5% in the fourth quarter, compared to 16% in the fourth quarter of fiscal ’11. This increase in gross profit is primarily from higher production volumes and reduced costs on projects due to operational efficiency. Operational improvements in Canada were a large contributor to these results. Selling, general and administrative expenses as a percentage of revenues decreased to 12% in the fourth quarter compared to 14% in the fourth quarter a year ago primarily due to higher revenues. SG&A expenses were $23 million, unchanged from last year's fourth quarter. Amortization expense was $488,000, a decrease of $606,000 compared to the fourth quarter of fiscal ’11. This decrease is a result of the lower balance intangible assets following the impairment charge recorded last year. Our provision for income taxes in the fourth quarter of fiscal ‘12 reflects an effective tax rate of 34.5%. Net income for the fourth quarter of fiscal ‘12 was $12 million or $0.99 per share. This compares to the fourth quarter of fiscal ’11 adjusted net income of $1.9 million or $0.16 per share which excludes charges incurred in the fourth quarter of fiscal ’11. A non-GAAP earnings reconciliation was included in our earnings release. For the 12 months ended September 30, 2012 revenues increased by nearly 28% or $155 million to a record $717 million compared to revenues of $562 million in fiscal ’11. Domestic revenues increased by 9% to $413 million while international revenues increased by $121 million or 66% primarily due to the size and the number of international projects in the oil and gas sector. Gross profit increased by 40% or $40 million…

Thank you, Don. As a leading company in the custom design, manufacturing service of electrical solutions, with a long history of innovation, I am very excited about our future opportunities. We have the ability to respond to short-term customer demands and we are also focused on the longer-term making strategic investments to prepare and position ourselves to support growth in our markets. In support of the long-term, we have two significant facility expansion projects underway. One in Houston, Texas and one in Edmonton, Canada that will further strengthen our capabilities to support the needs of our customers. Both of these projects are on track with operational dates scheduled for late summer of 2013. With only about 100 days in this role, it’s a bit too early for me to have any significant comments on the future initiatives of the company. I can tell you, however, that any initiatives will be oriented toward building on the solid Powell foundation and successes rather than any dramatic changes in direction. At this point we will be happy to answer any of your questions.

[Operator Instructions] Our first question is from the line of John Franzreb with Sidoti & Company.

I guess the first question is regarding the fourth quarter. Two consecutive quarters now of impressive gross margins, certainly seems higher than your pointing to Don when we talked a quarter or so ago. What's going on in the gross margin profile in the fourth quarter that has it at this 22% and change level?

Fourth quarter we saw a lot of benefit from our operational costs on the handful of projects that’s at near completion. We had two or three projects, large-scale projects that went through our facilities with -- very smoothly, very efficiently. We clearly always from the planning standpoint say that once we go through our ring out testing that there will be some things that we’ll have to go back and rectify. Those costs were very nominal on these jobs and as a result we were able to report a very favorable margins in the quarter.

Okay. Then I guess as the natural follow-up with your improved manufacturing efficiency with the backlog that's essentially flat year-over-year and sequentially and a sequentially better incoming order book of 186 versus 183, why the generally tepid guidance number for the year ahead?

Two issues there. One is the -- when we’re looking at the margin realization and projects in our backlog, we have to do it from a perspective that they won't be the extreme favorable anomalies to when it comes [ph] to the end of a job. The second issue that we have and I think we talked about this a little bit at the last call is that with the orders in the third quarter we are looking at some challenging months in the first half of the year as far as consistent flow of product through our facilities based on the delivery requirements of certain projects. So between concerns in the December-January time period plus just looking at our projects in the backlog from a prudent perspective on estimating the cost to perform these jobs is the way that we derive the guidance that we have in the press release.

Our next question is from the line of Jon Tanwanteng with CJS Securities.

Regarding the margin improvement just a little more detail, if you can. Could you tell us what portion of that was due to timing of the projects that were being completed, as well as what was the execution, and were there any recoveries in Canada during the quarter?

First off, there were no recoveries from the projects that we've talked about in the past in Canada. Those efforts are still ongoing and nothing in our outlook related to those -- that recovery. Regarding the -- I am sorry, the first question again, was the timing of --

Timing versus execution.

Timing was, I would say revenues in the quarter were not materially different than what we expected. The key projects that were planned for the quarter were the ones that we executed too. I think we did make some good progress of not having a few projects carryover because of the efficiencies of getting them through the organization. The vast majority of it though was related to a lower cost than expected on the final execution of these projects.

Got it. And then on the guidance, even though your revenue line seems to be a little bit flat to down, it seems you're expecting some of this margin improvement to continue. What part of that is recurring or non-recurring, I guess?

Well again, when you're looking at a project, it's not like operational efficiencies that you would have in repetitive manufacturing. Clearly when we're looking at the margins in our backlog and the margins of projects, we’ve seen improvement year-over-year and we expect to see year-over-year improvements again in ’13.

Our next question is from the line of Brent Thielman with D.A. Davidson.

Don or Mike on the backlog, how much is scheduled to be delivered in fiscal ‘13 and then how much is into sort of ‘14 and beyond?

When you're looking at the rollover into ’14, I don’t have it here in front of me, it is probably about $50 million to $75 million that will roll over into fiscal ’14. A big part of that is going to be the backlog related to our public work sector and typically there you're going to have a two to three-year cycle as far as completing the work. So it is that normal subset that does extend out that I am speaking to that is slightly higher than where we were this time last year. I would say it’s probably up $25 million to $35 million.

And then in terms of orders in the oil and gas sector, any new areas within that market you’re beginning to benefit from that maybe you hadn’t experienced before?

Again that’s a mature industry, mature sector and we have long-term relationships. So I don't think there's anything that I would consider out of ordinary, out of line with what we talked about in the past.

[Operator Instructions] We have a question from the line of John Franzreb with Sidoti & Company.

Backlog picked up in the process control business in the quarter rather substantially sequentially. Two parts, one is the new business going to be profitable? I know that’s been essentially running a breakeven for quite some time. And two, where is it coming from, little color will be great?

Basically the profitability clearly in that segment has to do with the volume to a great extent making sure that we can cover the overhead in that segment. That segment has struggled the last year or two because of the funding available. We have a couple of projects that have come into the backlog this year. That’s part of the growth in the backlog year-over-year that we spoke about a minute ago. And actually what it is that’s coming from P3 is the public financing of toll roads and so we’re actually getting private money going into traffic management. And we've been successful in catching some of that business so that while the municipalities the public-sector can't necessarily fund it upfront we will be paying for it through our tolls over the coming years.

So is it like revenue rate on or above $9 million, Don that gets you significant contribution from that business? Is that the way to think about it on a quarterly basis?

The contribution will improve in ‘13 relative to the prior years, yes.

You said that, that was some of the utility municipal spending that you referenced in your prepared remarks was PCS, so is it all PCS or was there other spending on the E&I that’s going to utility and municipal spending?

John, I'm sorry, you lost me. Can you ask the question again?

Yes, in your prepared remarks you mentioned that there has been improved utility and municipal spending, some of it related to Sandy, some of it’s from other sources.

Basically, no, let me just answer that question first. At this point in time, I’ll have to go back to the prepared comments, but there has been not any significant improvement in non-oil and gas spending in recent -- in the recent period. For the fourth quarter the utility spend, the public-sector spend with the exception of this P3 type project I spoke about which is technically not a public -- it’s a public-sector project but not financed by municipal funds, there it has been very flat. We did pickup a couple million dollars of work so far related to the Northeast helping restore operations on the electrical infrastructure. We are still in the conversations and there is clearly salt water damaged equipment in the area, at that we are working with several of the agencies in the area that we expect that will convert to projects for us over the next 12 months. But they’re still going through the short-term remediation efforts at this point in time.

You actually answered both questions I was looking for there, Don, that was great. And one last question, it sounded like, Mike, that you said that both facilities will be completed at the end of next summer. Is that a change in initial timeline? I thought one was going to be done mid-summer and the other one was going to be done closer to the end of September, early October.

They are not materially changed, they’re both I would say running 2 to 4 weeks behind where we would have liked to see them. But they are both still scheduled to be in our fourth fiscal quarter.

Our next question is from the line of Jon Braatz with Kansas City Capital.

Don, could you talk a little bit more specifically about the Canadian operations and the relative profitability there and where it might stand in relationship to where it was last year and where you think it could go?

Well, I will talk to some of that. First off, the Canadian operations was profitable for the second half of the year, but we did -- we were not able to completely overcome the hold that we positioned ourselves for with this one large project in the first quarter so that we have recovered from an operational perspective some of the costs that we incurred in the first half of the year. But when you're looking at the full year it still ended up in a loss position for fiscal ’12. The improvement that we've seen in the second half of the year, we fully expect to continue to grow upon that in fiscal ’13. Fiscal ‘13 will -- we are projecting and expecting it to perform better than it did in the second half of ’12. Keep in mind that part of the one-time costs that we are looking at in our outlook is going to be incurred in Canada disproportionate to that in the U.S. The costs expected to move into the new facility up there are expected to be somewhat higher than here a little over the 50% mark. I am not including that but even including that in my thinking Canada next year will be profitable.

How much in your two capacity facility expansions, how much capacity are you adding, is there a way to quantify that?

When you’re looking at square-footage in Canada it is probably in the neighborhood of -- somewhere in the neighborhood of three times what we currently have. Keep in mind that from an operational perspective though we’re backstopping a lot of the efforts and needs to supply product with operations in the U.S. particularly here out of Houston. So that we could not be delivering today what we are delivering in Canada if we weren’t paying for the premiums of shipping it from the U.S. both parts and in some finished products. So from a revenue perspective, Canadian operations will grow year-over-year in ’14 but a lot of it will also come to improve profitability because of the incremental costs we’re having to incur to support that area from a revenue standpoint. When you’re looking at the U.S. expansion what we have done is that we are in the process of exiting some of the leases we have here in the U.S. The facility that we have is intended to allow us to grow over the next 3 to 5 years, but initially what we'll do is some of that will be for short-term growth but it will also reduce our lease costs that we have here in the greater Houston area.

Don, any thoughts on how significant those incremental costs are that you spoke over in the Canadian operations, the product produced in the U.S., is it a meaningful amount that would move the needle let’s say in 2014?

Well, it would make a meaningful number from a Canadian perspective. When you're looking at the weighted average of the entire company, it would probably be nominal particularly in ’13 because well, I am thinking even ‘14 because keep in mind this facility will be in true operations for a very short period during our fiscal ‘13 which ends in September.

Our next question is from the line of John Reilly with ACK Asset Partners.

Wow, you just cut the former questioner off quickly.

I’d say you must have a lot of [indiscernible] John.

I must have pressed the right button. Just a follow up to what he was asking then. Just -- so we know Canada is three times the size, you’re shipping out of Houston. We’re going to reduce some lease expenses. Is there an incremental revenue contribution in ’14 from these two facilities we can think about?

The incremental revenue will come from the market, not the facilities. At this point in time we are seeing a strong investment in the oil and gas. We fully expect that will continue into ‘14 but to sit here and say that the facilities are going to create revenues, we’ve got to keep things in perspective, the market will create the revenue.

So talk about then on the oil and gas, I was surprised to see book to bill of 1 which was pretty darn good. And I know oil and gas is carrying you, just talk about what you're seeing, what you're bidding on right now in the offshore platforms and what you’re kind of seeing in that end market?

When you're looking at the inquiry rates, request for quotation, the dialogue that’s going on and the planning stage, it is consistent with what we’ve seen over the last couple of years in the oil and gas sector. It continues to be strong and robust and there is a lot of bullish attitude regarding investments that are going to be made in the future. The challenge that we have is the fact that we're still seeing delays in information coming to us on particular details to finalize quotes to make awards and again, we’re -- our interpretation of it from the information that we do have it's the engineering constraints that we've seen in the marketplace in the industry sector that we talked about in the last couple of calls. That -- so the timing of these awards is still very difficult. And so I expect that we will still see lumpy orders as we go into fiscal ’13. But when you’re looking at the overall strength of the activity I would say we’re not seeing any softening in the oil and gas sector.

And then just -- when I look at the petrochem spend there is a talk about in the Houston area and I know there is a number of large projects. When do you think that the quotation activity and award activity for that -- for those facilities would potentially come for switchgear?

Keep in mind that when you’re looking at the electrical infrastructure it’s going to be one of the last major packages bid. So based on what we think will happen, we don't think that we'll be bidding those projects until the second half of ‘13 and most likely would not significantly impact revenues before fiscal ’14.

Our next question is a follow-up from the line of Jon Tanwanteng with CJS Securities.

Actually most of my questions were answered, thank you.

[Operator Instructions] Our next question is a follow-up question from the line of Brent Thielman with D.A. Davidson.

Don, for modeling purposes when should we expect to sort of think about the bulk of the start-up costs to show up in fiscal ’13?

There will be a little bit of that will be incurred in the first half but -- 75%, 80% of it will be in the second half of the year, our third and fourth fiscal quarter.

And then just the tax rate you’re assuming for fiscal '13 then?

Well that one is more difficult one. When you're looking at the non-Canadian earnings it’s going to be more in the 34.5% to 35%. Given the fact that there is no tax effect on earnings in Canada that can skew that number relatively dramatically. So it’s even hard for us to estimate the timing and the impact on a quarterly basis from an earnings perspective there.

There are no further questions at this time. I would now like to turn the call back over to management for closing remarks.

Well, thank you everyone for joining us today. We look forward to talking to you next quarter and as always we very much appreciate your interest in Powell. Have a happy and safe holiday season everyone. Bye, bye.

Ladies and gentlemen, this concludes Powell Industries’ fourth quarter earnings conference call. If you’d like to listen to a replay of today's conference, please dial 1-303-590-3030 with the access code of 4578177. ACT would like to thank you for your participation. You may now disconnect.