Aug 7, 2013
Executives
Karen Roan – IR Mike Lucas – President and CEO Don Madison – Chief Administrative Officer and CFO
Analysts
John Franzreb – Sidoti & Company Jon Tanwanteng – CJS Securities Brent Thielman – DA Davidson Noelle Dilts – Stifel Nicolaus Jon Braatz – Kansas City Capital Shawn Boyd – Next Mark Capital Richard Leader – First Houston Capital
Operator
Good day, ladies and gentlemen. Thank you for standing by.
Welcome to the Powell Industries Third Quarter Earnings Conference Call. During today’s presentation, all parties will be in a listen-only mode.
Following the presentation, the conference will be opened for questions. This conference is being recorded today, August 7, 2013.
I would now like to turn the conference over to Ms. Karen Roan.
Please go ahead ma’am.
Karen Roan
Thank you, Camel, and good morning, everyone. We appreciate you are joining us today for Powell Industries’ conference call to review fiscal 2013 third quarter results.
We would also like to welcome our Internet participants listening to the call simulcast live over the Internet. Before I turn over the call to management, I have the normal details to cover.
If you did not receive an e-mail of the news release issued yesterday afternoon and would like one, please call our offices at 713-529-6600 and we will get one to you. Also if you want to be on the permanent e-mail distribution list for Powell releases, please relay that information to us.
There will be a replay of today’s call and it will be available by webcast by going to the company’s website at powellind.com or a recorded replay will be available until August 14, 2013, 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, August 7, 2013, and therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay you listening.
As you know, this conference call includes certain statements, including statements relating to the company’s expectation 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 strategies. 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.
Mike Lucas
Thank you, Karen. Good morning everyone.
We really appreciate you are joining us this morning to review our fiscal 2013 third quarter result. I’ll make a few opening comments, and then I’ll turn the call over to Don to discuss the financial details.
And then we’ll take your questions. Our third quarter proved challenging as we continued to see projects schedules move out, but especially on large projects.
Revenues were impacted by these schedule changes, but we were able to maintain solid earnings this quarter. As mentioned in the last call, we continue to see a soft market for our IEC products and as a result we took some action this past quarter to resize our workforce in the United Kingdom.
With that now behind us we are refocused on aggressively pursuing active projects. Orders picked up this quarter showing sequential and year-over-year improvement but timing for both project awards and schedules of current projects remained difficult to forecast.
Schedule changes on a few select large projects in our backlog have shifted revenues out of this year and into fiscal 2014. We’re continuously working to mitigate these schedule impacts.
Favorable project mix along with a solid project execution and productivity improvements and focused cost management helps support these solid earnings this quarter. Extended timelines continue for inquiry activity, new order award and project schedules on large projects.
We believe this uncertainty and timing will continue in the fiscal 2014. Activity for small and mid-size projects however has remained consistent over the past few months.
Overall we remain optimistic about the underlying strength in our core markets oil and gas is expected to remain strong and there are several large projects both in petrochemical and LNG that are moving into the early engineering stages. We also see solid growth prospects in Canada and this past we’ve seen some up-tick in our inquiry activity in the utility market.
Our two new facilities in Edmonton, Canada and Houston, Texas remain on schedule, we just began some early production work in our Edmonton facility and expect to have the move completed by the end of September. Our move into the Houston facility will begin later this month.
These investments are well timed and will give us capacity in manufacturing footprint needed to capture the long-term growth we expect. With that, I’ll now turn the call over to Don to review the financial details.
Don?
Don Madison
Thank you, Mike. Revenues were $139.5 million in the third quarter of fiscal 2013, compared to $194.1 million for the third quarter of fiscal 2012.
Project timing continues to impact current year revenues. Gross profit as a percentage of revenue was 21.4% in the third quarter, compared to 22.6% in the third quarter of fiscal 2012.
This decrease in gross profit is primarily a result of margins associated with the mix of projects. Selling, general and administrative expenses were $24 million compared to $25 million a year ago.
This decrease primarily related to a decrease in the depreciation expenses with our existing business systems become fully depreciated in December of 2012. Amortization expense was $415,000, a decrease of $289,000 compared to the third quarter of fiscal 2012.
During the quarter we’ve recorded restructuring and relocation charges of $1.7 million. Our operations in the United Kingdom has been negatively impacted by market conditions and competitive pressures.
We reorganized certain non-core operations and limit a certain positions to realign our workforce and recorded a restructuring charge of $1.1 million for severance cost. Additionally, we recorded $600,000 related to the relocation and startup effort in connection with the construction of our two new facilities of which approximately $300,000 with the reclassification from SG&A expenses a cost incurred earlier in the year.
We reported net income of $9.3 million or $0.77 per diluted share for the third quarter of fiscal 2013, this compares to $12.1 million or $1.02 per share in the third quarter of fiscal 2012. For the nine months ended June 30, 2013, revenues were $487 million, compared to $533 million in the same period a year ago.
Domestic revenues decreased by 3.4% and international revenues decreased by 15.6%, these decreases are primarily due to the completion of several complex oil and gas construction projects that were in process during fiscal 2012. Additionally, this year we’ve encountered a number of customer-driven schedule changes which have deferred revenues to fiscal 2014.
Gross profit as a percentage of revenues increased to 21.3%, compared to 18.5% for the first nine-month of fiscal 2012. The year-over-year operating improvements from our Canadian operations, as well as margins associated with the mix of projects and our focus on cost management contribute to the increased in gross profit.
Selling, general and administrative expenses increased $4.1 million to $70.2 million, compared to the same period a year ago. This increase is primarily related to increased personnel costs and commissions, sales commissions, as well as an increased in long-term incentive compensation.
Also included our increased legal expenses primarily relates to our efforts to pursue our client project claims in Canada. These increases are partially offset by decrease in depreciation expense.
For the nine months, first nine months of fiscal 2013, amortization expense was $1.2 million compared to $2.1 million a year ago. And as we discussed earlier, we recorded restructuring and relocation charges of $1.7 million in the third quarter.
In the second quarter of fiscal we received a settlement from the previous owners of our Canadian business in the amount of $1.7 million which was recorded as other income. Our provision for income taxes reflects an effective tax rate of 25.6% for the first nine months of fiscal 2013, compared to 27.4% a year ago.
These rates are below statutory rate, primarily due to the differences and the availability of federal research and development tax credits and the utilization of loss carry-forwards on Canadian income. For the nine months ended June 30, 2013, net income was $23.5 million or $1.96 per diluted share, compared to $17.8 million or $1.50 per diluted share a year ago.
Before with charges for restructuring and relocation costs, net income for the first nine months of fiscal 2013 was $24.9 million or $2.08 per diluted share. Our order backlog as of June 30, 2013 was $496 million, compared to $522 million last quarter and $433 million a year ago.
New orders were $155 million in the third quarter, compared to a $124 million in the second quarter and $133 million in the third quarter of fiscal 2012. For the nine months ended June 30, 2013, cash provided by operating activates totaled $89 million.
Investments in property, plant and equipment totaled $54 million, which includes approximately $42 million investment in our new facilities. At June 30, 2013, we had cash of $125 million, compared to $90 million at September 30, 2012.
Long-term debt in capital lease obligations, including current maturities, totaled $3.6 million. Looking ahead.
Based on our backlog, and revised project schedules, we have reduced our expected full year fiscal 2013 revenues by $25 million to range between $650 million and $675 million. Full year fiscal 2013 earnings guidance remains unchanged.
We expect full-year earnings to range between $2.30 and $2.55 per diluted share. Included at our earnings outlook is an estimate of $0.25 per diluted share for one-time cost related to the startup of the two new manufacturing facilities most of which will be incurred in our fourth quarter.
At this point Mike and I will be happy to answer your questions.
Operator
Thank you, sir. Ladies and gentlemen we’ll now begin the question-and-answer session (Operator Instructions) Our first question is from the line of John Franzreb with Sidoti & Company.
Please go ahead.
John Franzreb – Sidoti & Company
Good morning guys.
Don Madison
Good morning John.
Mike Lucas
Good morning John.
John Franzreb – Sidoti & Company
I guess I want to start with the last item, the guidance. Can you just tell me if it includes the UK restructuring costs is it included or excluded in your guidance and is about $600,000 so far of incurred REIT cost of the facility cost just kind of clear that up for me Don?
Don Madison
The one-time cost incurred in the workforce resizing in the UK is included in our guidance and the one-time cost associated with startup of the two new facilities is included in the $0.25 of which about $600,000 has to be incurred year-to-date and we expect approximately another $2 million to $2.5 million to be incurred in the balance of the project, most of which will be in the fourth quarter but some of that small amount of that could roll over into our October time period.
John Franzreb – Sidoti & Company
Okay. And last quarter if I remember correctly you had implied that the orders in the second half would be similar to the orders in the first half given the third quarter intake number if you’re going to have a bang out on fourth quarter or you’re going to fall short of that to close to the delays can you just discuss the dynamic of what’s going on there?
Mike Lucas
Yes, that John this is Mike that, as you expect the fourth quarter bookings to probably be more in line with what we just saw in the third quarter the new awards are also just seem to be dragging out as well. We’re not seeing the projects go away, activity is still good it’s mainly on those large projects which has taken lot longer to make decision in the new final awards John.
John Franzreb – Sidoti & Company
Is there any particular reason why Mike?
Mike Lucas
I think it’s been still related to some of the resource constraints we talked about previously as in the call. And these large projects just seem to be going under a little extra scrutiny, a little bit more robust testing, a little bit more justification to get them through the hurdles just taken longer than anticipated.
John Franzreb – Sidoti & Company
Okay. I’ll get back into queue.
Thank you.
Operator
Our next question is from the line of Jon Tanwanteng with CJS Securities. Please go ahead.
Jon Tanwanteng – CJS Securities
Hi guys. Very nice to having the margin, thanks for taking my questions.
Good morning. We’re a bit more than a year to this paradigm of engineering constraints that delaying projects, what are the engineering fronts your clients doing to mitigate the shortage and when can we expect it to be resolved?
Don Madison
Jon, it’s a tough question. We see a lot more these larger projects involving international engineering firms so you see some of it being spread around the world to lightening the load.
People are still scrambling for engineering resources and we’re even seeing some signs of maybe scope of supply that would have been done at in EPC firm as there we rebalance that and move it back to the suppliers. So in some cases we’re starting to see scope of work being as (inaudible) can it be moved or redistributed between suppliers and EPC firm so it’s not a quick fix.
Jon Tanwanteng – CJS Securities
Okay. And then obviously gross margins fairly quite good for you guys, what level do you expect to be sustainable there and what will that look like once your fiscal year transitions are complete and may be if there some big petrochemical come online as well?
Don Madison
Jon, when you’re looking at gross margins clearly we’re working to see from a cost containment and productivity standpoint continue positive movement in that area. When you’re looking the impact near term lets don’t forget that in the fourth quarter while we are breaking it out on the separate line on the T&L and the restructuring and relocation the hard cost associated with the physical transfer of product and production from facility they’re actually expected to be some soft cost that will hit the cost to goods sold and therefore gross profits and margins.
So in the fourth quarter I would expect there to be some softening in our growth margins but I think you’ll see improvement next year as we start operating in the new facilities as and get the new processes that we’ve got in place have moved out. Relative to the, where that’s going to end up when you need facilities with this many balls are in the air right now it’s a little bit hard to say I think that as we saw before you’ll see earlier improvements as a result of moving into the Canadian facility given the amount of work that’s in front of this the capacity strength and the cost that we’re incurring producing product in Houston and shipping it to Canada and I think it will take us a little more time to realize those benefits in expansion here in Houston.
Jon Tanwanteng – CJS Securities
Great, thank you very much.
Operator
Our next question is from the line of Brent Thielman with DA Davidson. Please go ahead.
Brent Thielman – DA Davidson
Hey good morning.
Don Madison
Good morning.
Mike Lucas
Good morning.
Brent Thielman – DA Davidson
Yeah Mike I thought your comments around the utility side of things, was a little more positive that may be we’ve heard in some time. Could you kind of elaborate a little bit more on what you’re seeing there?
Mike Lucas
Yeah and it’s simply one quarter data point I wouldn’t read that yet into the trend but we did this last quarter see an up-tick in inquiry activity, our quotation level is up a little bit, it’s mostly it’s still significantly just slanting towards environmental projects as oppose to generation capacity expansion or anything like that, but it’s a one quarter data point hard to call it a trend but it was pretty good in third quarter.
Brent Thielman – DA Davidson
Sure, understood. And then at this point are you done with the restructuring process in the UK?
Mike Lucas
We are, yes we are.
Brent Thielman – DA Davidson
Okay, great. I’ll get back in queue.
Thanks.
Operator
(Operator Instructions) Our next question is from the line of Noelle Dilts with Stifel Nicolaus. Please go ahead.
Noelle Dilts – Stifel Nicolaus
Hi, thanks good morning.
Don Madison
Good morning Noelle.
Noelle Dilts – Stifel Nicolaus
My first question is kind of a housekeeping question. Could you tell us the tax rate that you have embedded in that you’re looking out for the fourth quarter and kind of directionally where you’re expecting the tax rate to go into in 2014?
Mike Lucas
Well, there are a lot of moving parts in our tax rate right now. But when you’re looking at the near-term I think part of the desirable will be is the ultimate profitability of our Canadians and what we can use from a loss carry-forward protection there coverage, a lot of the one-time cost will be incurred in Canada.
So that’s a little bit of a bearable but at this point in time I would say that we’re going to see a modest increase in the fourth quarter probably something more in the neighborhood of 28% to 28.5% effective tax rate for the full year – that of speaking to the full year impact as of the end of the fourth quarter. When you’re looking at next year again a lot of it is again going to depend on the well let me back up again.
Part of this quarter’s benefit and this year’s benefit is a catch-up in R&D tax credits that we’ve been able to record. Two issues there one is the R&D tax credit expired at the first quarter of last year and we’re rapid actively replaced this year.
Second part of that puzzle is that we went through a new formal R&D tax credit review but with working with a third-party and we’re able to evaluate that and get some benefit this year including amending our tax returns for the prior year that’s helped drive our effective tax rate there. Next year I think you’re going to be back to where we had talked in the previous quarter something in the north of 30% probably in a 31%, 32% but again a lot of that’s going to depend on the benefit that we get on the NOLs in Canada.
Noelle Dilts – Stifel Nicolaus
Okay, great.
Mike Lucas
Does that help?
Noelle Dilts – Stifel Nicolaus
It does, thank you. My second question is on the international markets where you’re seeing softness.
Would you say that’s more kind of market-driven or are you seeing a change in the competitive dynamics in that market?
Mike Lucas
No, I don’t think it has changed much its mainly in our IEC product line it’s been fundamentally soft for a while and we just took this opportunity to adjust some fixed cost because frankly we don’t see a return in that quickly. But it’s mainly on our IEC product line.
Noelle Dilts – Stifel Nicolaus
Okay. And then finally I think last quarter you talked about the opportunity in the petrochemical market that you were saying over 10 projects that had, where you saw opportunities that greater than $30 million each, is that kind of facility you’re looking at or has that changed at all?
Mike Lucas
No, the number of projects are still there, the size of the projects are still there we’re starting to see a little early inquiry activity I think we’ve been saying in the past inquiry activity this year, order activity next year. But we got to overlay a little caution on that, these are all very large projects and just like we’ve seen in other places we’re anticipating that those larger projects could have these longer decision-making processes.
So the pipeline still looks the same, the timing is difficult to judge.
Noelle Dilts – Stifel Nicolaus
Okay, great. Thank you very much.
Operator
Our next question is a follow-up from the line the of Jon Tanwanteng (CJS Securities)
Jon Tanwanteng – CJS Securities
Hi, guys. You mentioned a little bit of an increase in petrochem and LNG inquiry activity, I’m just wondering what’s your historical penetration or market share, it looks like in that sector is it somewhere to you’re pushing out in oil and gas?
Mike Lucas
Certainly for the U.S. the Gulf Coast based petrochem yeah it’s been very high and similar to what we have in oil and gas very well established good installed base there.
Jon Tanwanteng – CJS Securities
Okay, great. That’s it.
Operator
The next question is another follow-up from the line of John Franzreb (Sidoti & Company). Please go ahead.
John Franzreb – Sidoti & Company
Yeah. I am just wondering, how is it been staffing the Edmonton facility, can you talk little bit about that?
Don Madison
John, we still are successful staffing up. We have – we will see – we’re working hard to staff up here in the – between now and in the end of December.
I think you’ll be seeing – we will be seeing fairly sizeable increase in the workforce. The – our ability to recruit we’ve been –we’ve had good success today there are few isolated issues like project management that they’re more difficult than others but by and large I think we are pleased with their success that we’ve had today and don’t believe we will have a major challenge giving the workforce to where we needed to be early next year.
John Franzreb – Sidoti & Company
Okay. And with large projects been pushed out, as there been any change in the pricing environment for those jobs?
Mike Lucas
Not really that we’ve seen the pricing has been maintained relatively consistently. We are – we do work for opportunity if we couldn’t push some of the inflationary increases through where we can but I don’t think there is any change in the pricing outlook.
John Franzreb – Sidoti & Company
Okay. Thank you, very much guys.
Operator
Our next question is from the line of Jon Braatz with Kansas City Capital. Please go ahead.
Jon Braatz – Kansas City Capital
Good morning, gentlemen.
Mike Lucas
Good morning.
Don Madison
Good morning.
Jon Braatz – Kansas City Capital
Don, let me get it straight. There will be a separate line item for the relocation expenses in the fourth quarter?
Don Madison
Yes. If you look at the – in the press release you’ll see that we broke out the…
Jon Braatz – Kansas City Capital
Right.
Don Madison
The $1.7 million.
Jon Braatz – Kansas City Capital
Yeah.
Don Madison
We will add to that number in the fourth quarter for cost early in the fourth quarter. And like I said early, I think a small amount of this – and we’ll probably be over into October.
That’s majority that it will be the fourth quarter.
Jon Braatz – Kansas City Capital
Were there no relocation costs on the second quarter?
Don Madison
Basically, that was the $300,000 reclassification. In the first half of the year, we – that just rolled up into other expenses and then we got to debating here internally and target made more sense to break that out and make it visible.
Jon Braatz – Kansas City Capital
Okay.
Don Madison
That where we did as we’d reclass the $300,000 down to the included with the $1.7. So, if you really look at it a $1.4 million was incurred in the third quarter and about $300,000 was incurred in the first half, most of it in the second.
Jon Braatz – Kansas City Capital
Okay, all right. Secondly, when we look at these big large projects being pushed out to ride a little bit, is there any in terms of the timeline any similarity between these projects, or are they all been delayed three months, six months or is it all across the Board.
Any constancy in terms of that delay?
Don Madison
Not any real visible pattern and even on the projects like we said we have in backlog we’re seeing dates move out even on existing projects, they’re committed and underway. So but not any pattern you can see where you could reach that whole timeline x number of months, now it just seems to be slow creep.
Jon Braatz – Kansas City Capital
Okay. Is there one particular project that been extended further than other I mean does it got years or 18 months or something like that?
Don Madison
No.
Jon Braatz – Kansas City Capital
Any of the delays go that far out?
Don Madison
Nothing that we’ve got on our radar list it’s been delayed. Well there was a couple of offshore projects you read about probably could have seen in the papers were the big oil companies postpone those definitely.
Jon Braatz – Kansas City Capital
Sure.
Don Madison
I’d say other projects, nothing out sliding 18 months, it’s usually four weeks here, six weeks there, it’s little creep.
Jon Braatz – Kansas City Capital
Okay. Thank you very much.
Operator
Shawn Boyd – Next Mark Capital
Good morning. And thanks for taking the question.
Don Madison
Good morning Shawn.
Shawn Boyd – Next Mark Capital
Just a quick question here on CapEx, it came in a little later in the quarter I think is $20.5 million. Could we just sort of push that over into the fourth quarter or are we expecting maybe a lower CapEx budget for the year now?
Mike Lucas
No, basically as you’re sliding to the later part of the year, the overall construction cost of these two facilities are still pretty much inline where we’ve been thinking they’ve been now for the last six months. I think what you’re going to see is that as we ramp up some of the final payments we’re actually going to probably slide into the first quarter of next year.
But overall we’re still going to be around $80 million about $26 million yet to be spent. Most of that will be – should be incurred in the fourth quarter but some of that will over into probably the October, November time period.
Shawn Boyd – Next Mark Capital
Okay. And is that still bringing down on a total – for the year fiscal 2014 to expect a more regular I don’t know $10 million to $15 million kind of level?
Mike Lucas
Yes, basically I would say that next year we’re still early into our thinking is where plan for next year but my expectations are that next year going to be plus or minus $10 million plus whatever we have carryover on the buildings. And there may be some carry around machinery equipments well but basically carrier one of the two large projects plus probably another $10 million plus or minus of new projects.
Shawn Boyd – Next Mark Capital
Got it, okay. Thanks for the color.
And on the large projects getting pushed, the only question that is have you actually – of the remaining that used that is so shifted out to the point where you’re putting a much lower probability those projects even coming back into the order book.
Don Madison
No, not really the number of projects in the pipeline that helped the pipeline the probability we think we’ve got on some of those job fundamentally not shifting, it’s timing.
Shawn Boyd – Next Mark Capital
Okay. So, it sounds that order growth we would expect that to – I understand what you said about old target of that in the second half equals the first half that and you’re very clear about fourth quarter orders being somewhere to Q3.
But as we move into fiscal 2014 it sounds like we should be able to expect that resumption order growth fairly early in the year first half of the year, is that correct or not?
Don Madison
I would be cautious as to put the timing on that and the reason that I’m saying that is because of the difficult that we’re having is to when some of these projects are going forward. As Mike mentioned few minutes ago I mean it’s at the engineering resources plus I think particularly when you’re looking at the petrochem what I’m hearing is that there is just a lot of analysis going on when they’re going to be engineering analysis stage is to how big they wanted, what the production is going to be and there is a lot of iterations that are going on in the process in addition to just the limitation of resources.
I don’t know that that’s going to materially change in the near term. We’re optimistic that we’ll see that list during the year but to tell you it’s going to lift in the first half of the year I think is we don’t have enough clarity to make that comment at this point.
Shawn Boyd – Next Mark Capital
Got it. Okay, Don.
Last question from me is, your comment on the tax rate just want to clarify something you talked about 28% to 28.5%, is that a fourth quarter tax rate or what you expect the full year to-date?
Don Madison
Full year.
Shawn Boyd – Next Mark Capital
Got it. Thanks gentlemen.
Good luck.
Don Madison
Yep.
Operator
Richard Leader – First Houston Capital
Hey, good morning Mike and Don.
Don Madison
Good Morning.
Mike Lucas
Good morning.
Richard Leader – First Houston Capital
Hey, let me ask you about the cash that’s a nice problem to have. Some companies other companies have a lot of cash sitting on their balance sheets and they stay a lot of it is overseas and would be subject to a tax penalty if it was brought home, that cash is not situated at Powell in that sort of fashion is it?
Don Madison
Clearly, we do have some cash that is par to offshore as a result of cash generated by our international operations but that’s a relatively small percentage of our total cash. The vast majority of our cash is being held with here within the U.S.
Richard Leader – First Houston Capital
And our share buybacks or cash dividends part of the plans for that cash at the present time?
Don Madison
At this point in time, they are not part of the plan. They are always part of the discussion that takes place in our Board meetings as to what’s the appropriate earmarking utilization of our cash.
But at this point in time that’s not in our plans.
Richard Leader – First Houston Capital
So, acquisitions might be in your plans can you just comment as to the equity issue in the pipeline as to whether it’s full empty or any comments at all?
Don Madison
At this point in time that we’ve continued to focus on where we want to grow next but most of our internal efforts have been making sure that we get these facilities up and running and transferred into smoothly. I think, you’ll see, we’ll be putting more of our internal resources are looking at the next area of growth in the coming year.
But I don’t think there is anything in the pipeline that would be immediate as far as impacting our cash of any significant amount.
Richard Leader – First Houston Capital
Okay, thanks.
Operator
There are no further questions at this time. I would now like to turn the call back over to management for closing remarks.
Mike Lucas
Well just in closing, I would like to say our markets are very healthy still. Our attention is fourth quarter is going to be focused on operational execution with delivering the backlog we have, managing through the schedule changes and getting our factories move.
We’re in excellent shape regarding these infrastructure investments we’re making. We think we’re very well setup for next year.
We want to just thank you again for dialing in for your – and your interest in Powell and we’ll talk to you next quarter. Good bye everyone.
Operator
Ladies and gentlemen, this concludes the Powell Industries’ third quarter earnings conference call. If you’d like to listen to a replay of today’s conference, please dial 1303-590-3030, with the access code of 4627818.
ACT would like to thank you for your participation. You may now disconnect.