POWL - Earnings call transcript Q2 2021

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Operator

Good day, and welcome to the Powell Industries Second Quarter Fiscal 2021 Results Earnings Conference Call [Operator Instructions]. Please note, this event is being recorded as requested by management [Operator Instructions]. Ryan Coleman, please go ahead.

Ryan Coleman

Thank you, operator, and good morning, everyone. Thank you for joining us for Powell Industries conference call to review fiscal year 2021 second quarter results. call Metcalf, Cope, Powell's the CEO; Chairman on Mike and CFO. me are Powell's Brett and With There will onto be be it Powellind.com will a a available replay of available or webcast today's until via May by replay going telephonic the XX. website, be company's will call and provided information The was how release. earnings access to yesterday's on replay the in time no therefore Please today, May of be note only you advised the replay speaks are as time that may information reading. listening call reported sensitive at at accurate or any XXXX, longer on and information this of X, transcript This including results, Reform XXXX. company's that the includes the within conference operating considered Act expectations of be of call Litigation statements forward-looking certain statements related Securities may future the statements, of its meeting to Private risks that and those projected cautioned such uncertainties, results differ involve statements. forward-looking statements forward-looking materially and may are in from actual that Investors these not sensitivity conditions, competition and raw uncertainties risks to, and price strategies. execution and but materials industry and limited economic of and pressures, are of competitive international risks, general availability business These include, economic and political to

refer please information, call that, to with the company's now the Exchange Commission. more For With the Securities I'll Brett. over turn filings and to

Brett Cope

take Thank you to Mike review for Thank you, and results. questions. turn call over joining a then your the we good morning, fiscal few us more today make Ryan, commentary to XXXX will for everyone. Powell's I quarter second comments before and financial

that compared majority severe as during our increase was industrial revenues quarter Houston a teams across the fiscal driven municipal consecutive experience Oil first prior from XX% in that quarter This our Compared nearly traction, sector, impact second lower the year, this approved Our sequentially mixed revenue were year-over-year to petrochemical these of for week. were an based in the the Texas note the challenging continue we year-over-year, of markets, second effects the to of compared and storm XX% growth by year. down another the adverse achieved segments, by XX% our idled mainly well of industrial February, I Revenues a marks down markets, the to of winter as month X% respectively quarter that results which to environment softness of and to utility down second growth XX%, would operating spite quarter. quarter was expectations. relative last quarter was gas XXXX. $XXX partially sectors. while million, in grew the and our across for include which offsetting over X% of

Second headwinds quarter of the industrial gross fiscal XXXX. mainly These margin, well as revenue, lower ago. revenue, a and overhead as year-over-year higher pressure, is The on were copper prices result to was restructuring resulting XX.X%, one raw year other compares underutilized in the decline from percentage as taken of third which partially XX.X% the metals. offset activities by cost material quarter of the

cost that manage prudently to aligned with current environment. we and discretionary also the are to structure our continue monitoring closely We ensure are expenses

it capabilities and markets. major retain expertise maintaining is to know-how, imperative and and business the We cycle our our end that the are for a long of recovery serve we eventual readiness domain

continued net we market prior ended position earnings, operating adverse income of this manage bottom gross new liquidity lower as cycle. orders retained zero below year. net million as an to were result the lower We line, optionality quarter of breakeven and driven profits short-term and $XXX strong through and conditions. down million the we with essentially $XXX,XXX the cash decrease the of have as revenues admits by we and of the a the and to was investments environment we The Moving to in our debt compared decline slightly reported of quarter, $X.X in loss in

markets as fiscal compete New ended $XXX the limited of customer of XXXX. a was of project million $XX to quarter of delays. million million first X% visibility second end and during be the and continued industrial of the of orders of the well The characterized comparable orders new of million in compared attributable as prior totaling the capital decline $XXX XXXX. compared which quarter, period second in backlog The last quarter quarter second with award year. reported million, as $XXX orders to the of quarter to the to booked million sequential the XXXX represents where fiscal We industrial second we new by in $XX and new spending, the $XXX quarter totaled and large orders in year in

one than level and they of the conditions evaluate since across the began industrial more future execution the end pleased while markets. impacting to hit as improve, pandemic company. customers our now are our investment. market We year am started have the remain end I with Notwithstanding this, And cautious capital

adapt they capital focus identifying efficiencies on requested project strong the work execution backlog, any plans. environment, a with to work while have creative continue while the current the our changes to ongoing both driving providing by require we our to as to quickly opportunities customers growth for We closely and also needed spending future currently to support in responding

will process LNG globe believe the natural chemical economics transitions future, continue we to gas forward opportunities pipeline favorable the Looking industries. gas to the energy a in and complex as offer gas of across cleaner the

as developing markets sequestration. well markets are and hydrogen, We but of also as in renewable opportunities bio-diesel, are more nascent, see biofuels, These carbon capture the growing.

additional that possess leading that differentiates of operating We service history and possibility closely reputation We a Powell customer tightened are a from technological and infrastructure. perspective. regulations also require monitoring existing environmental investment in may the

us challenging our to maintain while we financial position enables these through Our cycles. navigate strengths economic

to and choice attributes electrical budget. our for foundation we customers, solid with to remain elements have core infrastructure, aspire and be delivered the of and partner these of time as We that continued and critical, on relationships long believe valued and build, our important we on

over key I'd reiterate our Mike, the to like I areas call to Before fiscal for focus XXXX. turn

suppliers. is and foremost safety the customers, of our First health employees, and and

Mike Also turn before broadening detail the I'll human and balance sheet provide markets structure, our strength, the planning to around evaluation call lastly, our that allow of supply across maintaining current be geographies also capital, technological to With resource cost solid We foundation the our over current for and financial environment. in Powell, more your we it are we us And to continue our serve. for future the that, and expertise take focused lay is questions. also we optimize operations to opportunities. results critical to the chain that markets on growth proactive

Mike Metcalf

morning, the that environment across throughout across to experienced and flat past order Thank remains relatively good The end few everyone. out as the our you, industrial macro challenging the last play intake new continues Brett, core markets, we've particularly year, quarters.

was million orders of New fiscal sequentially versus lower and by This fiscal XXXX. quarter $X for million. XX% the the $XX lower quarter total second second

booked to orders the and XXXX. second the versus the XX%, oil impact year prior backlog and quarter the for As adversely trailing comparison XX were continues fiscal of revenue. affect prior million, the that XXX end and higher XXXX includes in petrochemical came the XX lower but order fiscal by industrial our Revenues we across large sequentially associated year markets million gas on months by as

million. that lower XX prior the Our million just comparison XXX by million lower year sequentially second versus the and quarter historical XX noted. ending This a by the million. quarter or times. X.X to book challenging to But backlog million, XX%, on ago, to perspective. is domestic second bill I decreased was from one for $XXX The healthy $XX was ratio year overall Compared revenue

XXXX, year quarter our flat a versus versus same year of and administrative XX% $X.XX XXXX down compares X% were current the XXX were by markets. $X of markets, underutilized in the ago, the which In sequentially. well the experienced a gas primarily From across petrochemical markets year second year by $XX we of margins percentage our a by same was second our offset, facilities the points, SG&A fiscal across operating net lower million sequentially million Providing across and ago, a the was Selling, $XX and revenues XX% volume a while higher a XXXX. utility commodity million, second of prior to revenues prior or while the diluted fiscal $X.X second pressure quarter XX%, of loss on decreased year. Gross by by quarter versus overall expenses period revenue decline, versus quarter and XXXX. loss prior XXX per uncertainty oil, gas, million the points. period and basis percentage at particularly fiscal of market reflects per oil and sector end end million. compared were prices. XX%. on reported one quarter, in sectors down profit the the gas as traction Alternatively was or $XXX,XXX lower was oil in of increasing basis a basis This general as share sequentially. or was lower revenue X% of $XX the international sector fiscal and XX%, While modest petrochemical net domestic leverage share the a a higher year-over-year income diluted the as lower increase unfavorable in value and in quarter The in industrial driven perspective, $X.X versus ongoing as and X% XX% of second petrochemical

continue higher fiscal projects million, ago, $XXX,XXX. including $X XXXX, property, on as cash end than During operating than we in generated year current for $XXX,XXX. from was maturities net million of was year-end the of increased currently the to equipment XX Long-term million debt, had of by lower backlog. was At XX million our for second second the position. activities and fiscal quarter we and short-term XXXX Investments and execute investments plan working quarter, in a cash and our $XXX focus plant, capital, the fiscal driven quarter

Considering expect we and throughout continue fiscal industrial our our manage very XXXX, environment we position will forward, our across that liquidity Looking this, to diligent. costs landmark. remain operating particularly operating challenged

strong, during $X sheet second the cash fiscal an additional flow generating balance Our million free quarter. of remains extremely

As into anticipate Considering of our slightly or create schedules, accommodate working favorable will their some key Powell, choppiness versus may and that which we turn across tenant we closely Brett half mentioned, second and this, trajectory are in similar have project navigate a landscape sound. managing many downturn happy equation. of At to customers XXXX. fiscal the commercial our liquidity quarterly our our a with closely of this healthy, answer this uncertainty through half, our are and persisting our backlog the industrial is fundamentals end solid, markets, through ample your cash first be across is maintaining questions. we'll while the and closing, cost as we point, our strategy to In

Operator

Franzreb of and John from [Operator comes Our Sidoti Company. Instructions] first question

John Franzreb

start I guess itself. to and of quarter I want in with the

entirely? for or either you deferred shut missed lost Was week. a those shut any a of what was into You result were that down impact out downs quarter. quarter on there Kind of for or revenue pushed the that quantify in the as

Mike Metcalf

revenue between of was carry We million essentially four $X estimated and $X.X for margin. that million million those roughly -- $X which to be days, it of about

impact. definitely it So have did an

it revenue, Some for push example, service of shop work but it of may a wasn't necessarily and of and out field recognized be will that a that been pushed a lost, out lot revenue, have was later. some

John Franzreb

sniffing and still order people a around where numbers? an what change or more as activity. than as been it risking little just were environment months the in bit far seeing about quotation three curious book everybody's there a the or is ago tempo Has I'm are they you're

Brett Cope

a still right, popped of a There looking most of bit conversation most Kevin looking The recent this about is quarters, down. liked I'd quarter. talked uncertainty we was the recent kind we've in I popped the I expect So other you we see there your of to of overhang? to comment out couple more out up, quarter, continue the the next little that is and kind say to think move had, I couple sniffing. was of this calls about kind it what activity,

what I of was, in, I crept about of out short-term it we a on, was think quarter. I talked sort looks winter inquiry the fundamental the urgency the with see that last even say, another level, So quarters. to storm, there Horizon uncertain change quarter couple can't still but

start the the my to there, as heading rates that think about I say I and potential still rise direction to but it's is can't sitting a run positive to the say here over time, above going today. pandemic hit sustain in comment

Operator

[Operator Instructions] is Kansas question to Braatz from Capital. The next going City of come Jon

Jon Braatz

of talk you signal the look there indicator a might the be industrial about your turn you markets, markets, in end something question. of there the across is are a that leading When landscape to Brett, weakness and out trends? a you? in that is that the would bottom be that there we're for we're there at something and better out up to there And days that Is signal you something turn might beginning the ahead?

Brett Cope

Jon, year be and will the planned, what's a think raw lot a one Reading world knowing half, as and that I the of the the the it's across and really continue projects out think the still be. I economic to eventually making talked I've of and driving read as fundamentals are gas that and as our the year, last look teams to we I there indicators market, materialize. continue need what's of to the engaged space, of material over cost that, being sure potential

there's is triggers teams that getting pinpoint I say activity we are hesitant pushing to just quarter can person And I'd person, to call, I we going that, think what but receive little again, consumption say today but more to is see traveling. are as the was a unclear. today's than being are macro Customers our ago. on bit that still able I still a don't world of anybody to, that back all

encouraging, the give And fundamental, than the other consumption to can the pull are that CapEx. I that's have you large when they trigger to but say of trigger on going that the economics I solid. I confidence it's look think the just mass So can't

think going going were watching to That's the for space, We interesting as things a chemicals. well gas of prices. LNG still on. I core kind of go, as that lot don't pretty a fundamentals just but they're in land are and see market You that still all look projects building. good

should these go. of Some

Jon Braatz

business, energy out let's any Have any alternative some awards of of projects, with, say, hydrogen, to bio-diesel, secure you being been able those anything there contract awarded?

Brett Cope

recent We and in a there's diesel the most in And now. quarter, more we not awards. some in had non-conventional that some successful in of others, fact, in and were some successful few right going conversion

And so to as up have and Those been a been, as sustained map. win that's the picked utility the traction. nice relative well that's

Operator

question Company. next John Franzreb Our & comes from Sidoti at

John Franzreb

kind am I a the bit contradicts just utility talk up what of you was commentary, in quarter. said maybe want to I that little -- the hearing. That in

there the that's what of other companies, up they that, utility into of can kind lot bit? and a actually of Some is a out crews were delve moaning little kind your that

Brett Cope

the the Canada, like better states. been a us from has then then, side in utility standpoint, recovered with But market It XX So from math a the it's XX revenue standpoint, and of states. to slowdown, from report an for in drop saw bit an couple up a core years market lower overall revenue. recall, on of petrochem And on revenue you in and the markets the the the kind rises on order John, the the year-over-year. especially a intake of ago we the never and on really little they with distribution

accelerate we our of so so and went into for markets the supported getting utility into Canada. we our have been Canada, of We distribution of actually diversification, by is other last to And in forced kind geographically the east that highlight strategies. Canada's, quarters a were couple were business like speaking, west

John Franzreb

competitive the What landscape, just being bit there? are you how given little maybe aggressive people talk about out more the can Are pricing is disciplined? environment? marketplace, And seeing a the you

Brett Cope

competitiveness the last saw change, a I'd bit February pretty about to I we over a don't notch days. want XX say and I'm in was a it indicated little talked we of think last moved I it's but call up sure step this say increase. in

comment made Mr. minute lose So I it here ago about definitely, win to some a Rochester a some.

getting full team are every took looking past it's We more on a faith at and definitely up step competitive. of job the this this It and work.

Operator

Brett it for our now concludes back This turn remarks. answer to will time. I session at question and any closing this

Brett Cope

resources, That to to as as of such operator. ability as impact cycle markets, our and results. continued well challenge continued end plan our the long nature our our you, in our efficiently core Thank business financial uncertainty

However, backlog and to endure and a a team a employees strong the from we the of robust current that allow will environment. across continue very sheet, strong to us committed company, benefit balance

for we today's during you new past quarter. identifying that As on continued our all appreciate speaking forward XX-year call. your focused to have remain backlog with thank commercial We cycles for and We forward. the your on look our in and our mix that, next solutions better interest product diversify history. in Powell you opportunities With going participation will

Operator

today's Thank presentation. you now coming for concluded. conference to is The

You disconnect. may now

Powell Industries (POWL) 9 May 212021 Q2 Earnings call transcript