POWL - Earnings call transcript Q4 2021

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Operator

Welcome to the Powell Industries Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ryan Coleman, Investor Relations. ahead. go Please,

Ryan Coleman

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

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

Brett Cope

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

quarter challenges financial industry fourth pressures. finish a reflected cost and year Our results strong marked a to inflationary fiscal by

improvement growth we third direction. very business considered, of encouraging new sequential saw upon step an we we closed with and fiscal key our in was the fiscal momentum quarter, drivers XXXX the which out way with in are the I the Importantly, into we right year. pleased fiscal am built carrying the and things All

XX% markets activity customer begin following start from seeing In and we we COVID-XX our the broad to are $XXX million, industrial core optimistic addition, of of sequential of reflects revenue are that our forward. reduced end which activity period totaled fourth year-over-year but remain, going a prospects recover In pandemic. slowly the quarter, our given uncertainties about remain within disciplined We growth of the the significantly growth XX%. cautiously

was new revenue and from and million in gas was quarter, $XXX markets, than the petrochemical industrial up up XX%. the while sequentially $XX of by higher XX% our by orders Within XX% of million XX% by oil year. higher was the orders prior gross our New sector revenue in

last XX%, growth by in Our over these to XX% fourth well, as years, quarter sectors traction fiscal respectively, and they particularly strong have markets grew to few utility of Canada. continue of perform XXXX. the compared the and Each experienced

delivered to strong the contribute solid fiscal to team fourth services quarter. a aftermarket helping our Additionally, performance,

XXX continued down achieve project strong a improved quarter combined margin fourth allow but result improvement steel closeouts in for factory higher to decline raw XX.X% copper. help coupled and to gross achieve That with represents of us execution, of us sequential quarter. rates, year-over-year favorable a of when Our volumes mainly from utilization higher efficiencies, basis materials, prior XX.X% the costs is specifically the points, year. and in The the which,

fiscal for also costs are execute of higher projects We cognizant in coming booked we the on quarters prospect the project as during XXXX.

On through fiscal similar recent pressure engaged will around is to continue on the inflationary the we While our many monitoring in costs of a wide have and economy. and XXXX, are labor with we focused and margins diligent overhead possible, remain being availability, encouraged across costs. by cost remain further stabilization wage protecting to note, extent which on upward price our structure where our we possible. Throughout key suppliers commodities, we sectors the passing causing

accordingly. While it the not in as pressure cause labor inflation a currently is headcount future, our problem for increase project significant margin us, some volumes increase we may and our

million last for comparable as the our working line. $X.X $XXX have the strong roughly net compares a the in is inorganic backlog of feel backlog with recover We strong quarter X% to lower the bottom the liquidity needs cash well of liquidity million, and a million third quarter evaluate the ended quarter. We our we and of a position. markets to capital a which net no sufficient the to slightly reported our than short-term in $X opportunities Powell. the and in totaling quarter of as at million fund year. quarter prior $XXX year $XXX period million as prior the We profit end investments essentially the to and from million prior debt, quarter, Moving We of loss higher $X retaining with improvement than compared ended

while pricing markets. had additional gas along by We markets. our within been see our positive several placed core projects show to projects, financial a of been view month-by-month momentum signs previously that this end results on longer-term an petrochemical oil, basis. the seeing continue for the on with levels, we recovery hold are encouraged pre-pandemic Overall, update than to begin industrial request as and to remain of step We life, lower we mostly have toward our

continue Our while across activity, I markets to our of and and see solid company, have as operations very focus, the to execution core markets higher remained overall levels utility pleased incrementally remain attention of our success am the with strong. traction Across our end the we committed customers.

process economics gas future. we forward, the the LNG, to Looking for to believe in foreseeable industries continue the offer favorable and will natural opportunities of chemical pipeline gas gas

world renewable of and energy markets engineered positioned more biofuels Powell solutions. sporadic uniquely products of is smaller addition, are opportunities we to sources, development participating the biodiesel. markets cleaner custom electrical nature These are in offer in in new the a provider as of In projects planning renewable the and energy and but transitions as in where and

more expect source, in as participate are although hydrogen also these we of longer-term a carbon markets We view around capture initiatives and to production as opportunities. fuel the that as sequestration as nascent well

We are confident with equipment emerging as that innovation our markets to unique seek and solutions. us of that pivot long to these provides a we require history advantage new electrical

by core control the around changing remain plan the evolve for We committed market to priorities. commands needs such, As initiatives R&D that activities X electrical to focusing of energy. landscape and with our distribution as strategic our we

growing electrical automation is first Our priority platform. our

their we solutions, an build our upon fiscal of to have the of automation help move to XXXX. digital play will continue through analytics made unveiled through larger to strategy. like maintenance achieve carbon customers to of progress future while our goals. investments, believe capital of digital customers have Building our of predictive of in continue We our technology performance life maintenance, steady a reduction a We achieve to technologies from their asset electrical and sensors operating suite out role this help we electrical preventive throughout reputable history extending management which leveraging helping all ours distribution, suite also that equipment sensors event-based higher

market an base our energy historically second to where as area to existing installed focus focus organically leading of priorities is position people, carry compelling may product help either the there to spend through feel play models. the underserved. And density, has that should we subscription-like operate, or that here building of a seek catalog countered cyclical new opportunities the existing out well Similarly, a both cycles. plan focused be of are electrical business all business the priority third that identifying geographies of also product we aim we our to expanding scope side would move role where services market efforts our expertise. OpEx complement Ultimately, where that provide expanding have on our we both but our around is services applications opportunities R&D, our sector our our a all These or finally, technologies. digital tangential existing Powell. targeting that seek our to portfolio by The as offerings be product strategic where our to we as customer the differentiated grow around to through traditional accretive Rather penetrating market diversification currently than Powell in offerings, Inorganic well inorganic select things this to opportunities as markets with our on can a franchise. as opportunity into seeks is global we into through to services efforts strategic bolster de-risk

priorities our XXXX, fiscal enter we As are unchanged.

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

our solid maintaining performance, project as factory cost we execution an protect environment. closeouts we efficiencies inflationary our focused strong Second, on in look margins remain and to

I'll priorities. cost horizon, look resource services strategic franchise markets we executing serve. over innovation; around strategic on such of financial to optimize focusing call and continuous questions. new we by we in on Mike progresses. geographic more electrical the each of of centered your forward through leverage thoughtfully evaluation strategic is Next our turn the rich over a committed our products results where across finally, of and we our as portfolio as countercyclical are operations are automation, chain before three these our planning diversification markets around detail supply initiatives we our We expanding updates presence longer-term that, to providing to provide the history geographies can look and take that markets. as product opportunities; the year and initiatives growing a our to And With to around structure, and/or current These

Mike Metcalf

in associated attributable entities. commercial our by per On XX.X% in fourth the revenues basis, markets. was fiscal experienced Reported $XX all large versus More end fourth markets. $X discipline. were expenses sector many of free and by volume. backlog fourth diluted core oil the ago. volume versus the as the XX% was We traction a led in morning, living fiscal fourth The industrial spending million by period increase million the This general from at versus the generated fourth $XXX,XXX strengthening by on ago broad and across year-over-year XXXX was year, backlog XX% in in profit a traction to $XX is of increased million activity higher $X.XX increased specifically, increased as orders on markets year. in well $XXX,XXX compared fiscal reported increase for period higher core XX% to year or the ongoing million times. increased we of fiscal of volume, backlog fiscal higher XX%. a uptick manufacturing quarter fiscal sector were X% Net versus X% quarter revenue by $XXX reported and versus industrial X% utility last of reduction net year-over-year our quarter million, million year the international a XX.X% in was million, year. same million by industrial spending year quarter Compared and increase year's year, Revenues which was quarter higher fourth the reflect that $XXX,XXX. period or petrochemical driven quarter cash fiscal versus the you, well net $XXX the higher Gross during and gas $XX for the the quarter gross same ratio by Selling, the million, Thank good of or profit the XXXX, $XXX sequentially increased XX% as our and prior of was throughout performance by stronger ago, in same orders the as increased end end strong to driven project of year prior of higher revenues across we of service a $XXX the by the experienced by the industrial percentage while a continued as a XX.X% or fourth million XXXX. quarter of period lower lower revenues year to and $XX our fourth administrative to currently core pressures project strong Brett, rate across XXXX expenses an end quarter These revenues million recognized prior and or $X.X million utility year-over-year part one fiscal fourth as the our SG&A was fiscal capital volume a We of points of by by compared fourth cadence one in basis by was reduction the across ago by flow quarter decreased revenues year-over-year fiscal everyone. to while prior we our mix. and commodity revenues the the as XXXX, one recovery This year execution of XX%, prior by offset the were in domestic gains the same million income of primarily the share. XX% $XX pricing in quarter, net well sector expenses. as $XX in our large than variables CapEx to $XX working book-to-bill of experienced revenue partially continued compared XXX fourth productivity X.X travel period. on our as margin results These by versus while across unfavorable were ago. the attributable quarter reported

profit net result $XXX Now the large share that cash to diluted share $XX.X the percentage a flow as was Long-term in expenses Total volume were basis fiscal fiscal of in Overall, net year decreased to were At fiscal XXXX higher $XXX,XXX of the booked $XX a was of the year. versus a and administrative $XXX,XXX. XX.X% revenues, $X.XX We usage revenues. decreased variance the XX.X% XX% income XXXX, of $XX $X.XX investments XXXX million revenues million of our year. versus of of or cash XXXX a prior lower fiscal $XXX,XXX revenues generation current costs, or SG&A general mix percentage product order versus end of fiscal fiscal were in to fiscal XXX prior on million expenses $XX versus a diluted million, in XXXX. XXXX. of maturities, per million driven year-end $XXX fiscal recapping million, industrial debt, commodity the than free reported the our $XX per compared year XXXX, XXXX. had fiscal lower a million short-term by XXXX lower position. of total the prior quarter we in XX% with the and including in cash year as lower $XXX Gross of by by and million across second year. points shifting the compared prior was business revenues as leverage Orders Selling, lower

during as will fiscal quarter, usual well core cost of the offerings inorganic to to variables liquidity fiscal enter XXXX, volumes gradual sheet than that exceptional. explore industrial in finally, is half we your these fiscal the XXXX. second escalation of both that we continue and markets we and market At half. stronger well XXXX will in point, will line XXXX. Considering environment, as organic continue their and to our recovery be initiatives optimistic chain as business we we'll answer anticipate we first delivering outlined. the experienced as diversify current continue current do opportunities that manage market first pressures grow our service Based supply Brett upon and the solid happy the As to our the through as we headwinds that balance enable the in with we end strength will seasonality terms remains core position order later anticipate and questions. these product the strategic versus this pricing improvements Furthermore, subside fiscal that our constraints remain in this and And environment, of fiscal that the be

Operator

session now Franzreb Sidoti & Company. Instructions] with begin [Operator from first question-and-answer question John will the The We comes

You may go ahead.

John Franzreb

taking Thanks Good the questions. morning, guys. for

Brett Cope

Good morning, John.

John Franzreb

that with case? seeing Actually, opportunity I'd like progresses. to out as pipeline start the you're you're the an It seems that improving like Why there. booking encouraged is XXXX about profile more fiscal

Brett Cope

activity. funding. that's there more John, to is The one more year, compared last RFQ work certainly, done actual of Well, being is cautious, part this on time to timing still the jobs There's plan.

user ultimate the their there's this at hesitation So, side understand financial still to timing.

of talked get A last that rescoping, couple redos the of about We've try still return. to they look So, a taking at of projects, cost as lot the lots it out. quarters. on

there more So there. is activity

has buoyed that our seem in things headed that direction. So confidence be to the right

timing. still question is big Our

John Franzreb

Okay. out XX And the projects of are be there six there that any next you might think within materialized months? note to that large

Brett Cope

projects to and next in big look earlier, direction there a in more of they shortages today, economically big are There be I'll everything of the in projects in in There months. some the can world foreseeable probably would course, come pile and but all that there, possibility are great. is in labor going that get challenges and, the future. else if moving like out logistics-wise in some and they're here positive going if say keeps the that And XX

John Franzreb

something way or especially the of any I out surprised items, quarter the it the there in such other strong kind the gross fourth close that as headwinds, other? in margin the needle Great. that was. like project one how benefits just moved significant Was considering on quarter, was And the commodity

Mike Metcalf

about terrific recognized headwind commodity we But and outs project XXX Commodity inflation offset across points. system, the Yes. the actually the productivity. productivity close inflation Hi, was basis John. And really, of really the a impact.

Brett Cope

for And team. echo the Yes. that Powell I

solid all operationally, very of the was our I across quarter think groups.

And was a really firing so nice the all that they everybody company. job in we cylinders did really -- really on and

John Franzreb

of services three you targets Got it. that the to two And And of sales kind for The business, just all for the side the Brett, fiscal business XXXX? part in represent much do of one question. what say, of last how it of years? coming, have did

Brett Cope

Yes.

speaking, when First of from the is service know, historically short get John, the majority market. business, all, out really of you to our as we

install it's last been what's eight longer on working to or our commissioning. lot -- moving really So, is a and And life know-how. long years, we've leveraging equipment of term, five extension into

goal become Our use to of the by to happening is at demographic that and technology to the into and both improve more the the side people equation. the moving client margin capability relevant site with the side, OpEx and countercyclical changes our

So, business profile a tied. tied cyclical, pretty has it largely, volume and The that from but bulk revenue, our to of service commissioning it and because from of to standpoint, that life again, it's can total XX of it short it's install points because very XX run can to our still vary highly short window and anywhere commissioning. install

Mike Metcalf

that market and is service, nature. we not it's also selling it's parts after -- things of And It's wrench-turning. not that talk -- when John purely

to XX% above. So that the entire basket XX% or is the

John Franzreb

I’ll queue. Okay. back get into Thanks guys.

Brett Cope

Sure.

Operator

question next Kansas Jon comes Braatz City Our Capital. from with

may go You ahead.

Jon Braatz

Good Brett, morning, Mike.

Brett Cope

Jon. Hey,

Mike Metcalf

Jon. morning, Good

Jon Braatz

traction you going increase forward? Do little -- being bill And a a how about help you talk traction bit markets? you sustained? that And talk see market? nice Brett, see the bit that was Can Obviously, the this could it but a you year. the will about little that? infrastructure do

Brett Cope

Yes.

out the contracting of entity unlike local And lot the a on know, years of So comments a I as This there's some a some or market that, the a then by of is about Powell, have money business. market so traction of of funds. the made a industrial call you being disciplined. flows of couple federal matching government lot layers our ago, couple for approach market

words, more Powell contracting bit to project So layers in little time -- we're the gets in piece. down my a several there risk is because the by the

know-how the last this going US are more the maintained, domestic Canada. at good isn't fundamentally business, it's of The couple But at do. we've hasn't taking and to and Whereas to applied changing. we been we're discipline if of we been but of solid that growth that has then over market, what approach years look the discipline Canada. into how sort into and penetration I the So

So position to being put a that of those how little especially move needle, at some last solidly we years that's for projects projects going the I growth forward? contractors the we just in that to jobs. funds, for I'm well the some forward agency these confident where but there of Powell we've again, a closely, and sense And that that move agencies. will capitalize work what -- some guess, those still to the with are Powell seen going absolutely move to bill, Will we with more? on versus start remedial where projects capitalize start There's revenue it's different they are to selected of on infrastructure align across it matching the can hopeful couple still line. watching do to those going make will

Jon Braatz

the earlier? off, rate orders Okay. that new seen same you've Canadian is is that Brett, you work at or are sort the of -- running seeing

Brett Cope

did -- -- a markets jump XXXX XXXX so and oil that we and after of have and nice back to not kind pivoted of some big wins. some looking pivoted strategies as up big, It's that at in go and up there. started gas the we We explore east downturn in the to to

as east So as steady. penetration, west. to quick across Yes. refilling but we it steady initial It's is aren't

Jon Braatz

Okay.

so they be in the than at? where currently on they are begin ease and level. the assuming And comfortable margins at gross where cost you fact, little stay -- of Are the the on, they're bit a be to orders the order with at we least And orders, Okay. or pricing and looking new inflation, new on higher would new materials wins? would

Brett Cope

definitely pushing pressure a in some half, in throughout half. think at through, cases. the in not And up there having the question quarter pricing is pricing the two We're I but Well, competitive be I the or continues in XXXX. know the to is success last all fiscal I year short-term tough. level last think came in definitely, second first the

in in we pricing, everybody the spring where think kind we And I increases the throughout and to pushing continued the of through, step-up the just started commodity that in started sharing a we see some right, are side. year.

as I for to commodities a the we think buy finished challenge the not as well go piece that is into the logistics, us wage but through that goods, of just the manage that things substation. we convert into of might course,

of a geographic that don't our make, there's So organically also markets where brick-and-mortar from world, might more to are. parts come all of and with to lot of whereas kind third-party we're we that centric our that have the buyout work facilities we

jobs are lot those come to scrutinize those we understand -- challenges. the in have it's something stage RFQ So, a to closer they at when

the in first pretty hard. think continues I that half so And

Jon Braatz

Okay.

on question as one have new biofuels, of that areas? on energy, Are the work you work, stuff. actually and those renewable Okay. such all or bidding last currently renewable that And the won discussed, secondly, some in you some opportunities any you fuels,

Brett Cope

executing couple We have. right on got biodiesel jobs of that now. We've a we're

projects. trying the figure mean are in part trying exercises lot out by We to there to on of out the and about play as stuff, the of the that biofuels being the how UK. Canada, I US, figure execute the and and a Northern bidding are lot quite going market. can There's piece, jobs, talked aren't carbon at pricing Those people to a are we -- we're well there's how mean, -- of moving Middle capture, kind East, even the competitors those our hydrogen sequestration some, in I of the

solution out We of conversions. bodes some have but a than little still well, the very that a are biofuel those further

Jon Braatz

you Okay. very Thank much. That’s all.

Brett Cope

Okay Jon.

Operator

question Deysher Our with Pinnacle. John next from comes

ahead. may You go

John Deysher

to nice up the Good congratulations quarter. morning solid a and on wrap way year. was That a

Brett Cope

you Strong teams. Thank our by John. performance

John Deysher

was correct do. wrong, call trying that of actually number available this suite in electrical have out? And the -- me but initiatives, you've to you're is now? in Good what that that that. the it I'm is of one, One the of sensors, couple product initiatives. terms suite predictive first all I strategic granular Brett, analytics, the if on initiative Has I Is guess terms laid two of is questions platform. a been hear. automation to rolled where of out

Brett Cope

first as John, working first, full the of and Powell as would years on we the I focus -- last been three towards disciplined. to process as our priorities yes, we've with and is process Board stress working well we kind really develop this So and rollout within our work the for are refining -- of of that team that the a the work here couple stay

out this here, learning year, largely are out. We another On one of rolled past the sensors the one out progress automation, go. we're and been one electrical We've rolled making the as couple last sensors we there. years, rolling

add, their from those and the tying actionable information comes for And are how itself of sectors, the into that sensor next into we're value So, clients. learning then intel improve to making the multiple step product, market the that which is the out geographies. across sensors our way sensors multiple the

So, process from of our our help back do clients feedback what and to feeding to there is quicker. change or work really information something coming that this out good into our do put us else we to help clients there organically now, step need would both

John Deysher

competitive landscape the the different core Is business? from

Brett Cope

medium for portfolio automation think substation, the It's that understanding don't these voltage done that isn't can't have you we together feed We've in hard multinationals kind the pull work there's Microsoft, that an Googles we've ranges wide competition. mean, on platforms when and the can -- you the and wide have years, -- web, the Big distribution -- it. really people and we that of tremendous a given the in. using on low I running play but of Data you last tons to the data that that's and And of really gamut. our truly area the you of really preventative XX voltage of about lot history piece. monitor automation, to to When that asset big focused about particular the a a the got it -- automation I speaking our the core just for have a maintenance, events from all look know get There electrical covers into strategy to get you management items to we these maintenance specifically move well into time-based

challenge do that's think years doing now, but next is area exactly differentiated. a challenged is our So the the actionable we're feedback what to we We it more we the think not last of data, not be maybe ways we've competitors bring technology now But like very historically customers. And, with step space that we're -- the it way for reliable are how there getting would good that we've take repeatable that out we the do approached said, and think to into an there, been some being other in we've us things used for intended. other to is against. we competing couple -- -- we will I are doing that more got we're

And so, we're thinking through that as well.

John Deysher

year? fiscal contribute -- meaningful past that revenues that Okay. in did business the Was

Brett Cope

lower, lot of higher say lot the these revenues order. the to substation I are individual come sensors -- I they No, do with compared a wouldn't calories, -- is a but mean, right, a

So the calories are higher.

or Of to them progress the course, either channels. market, other continue to through goal into directly our is

next of just to into and future. our in So clearly the in goals. help kind our of direct the get again, market ways for the we're the developing but haven't the us sales, to But develop need been versus them to certainly taking market approach to things step that other past, also distribution would promise that, get

John Deysher

the third on that offerings, countercyclical to were I What are guess, enter? And specific electric strategic about about technology sense. revenue to, talking examples like base. product think there? initiative, you'd of us that new makes you some existing products give your your talked That you I diversifying you Can Okay. areas

Brett Cope

John. to here, a listening competition Trying Sure. lot -- in of

medium deck, know the Powell, are I core primary you mean, So, us investor the look focused products very our in at voltage switchgear space. you as

but integrate envelope motor that, most spend as the voltage have lot as we the the and we but of low-voltage switchgear voltage Over on low we the the couple of make with well last how medium -- know control. breaker, and years, don't a folks time into

look and the and grid future. both distribution needs EV will device And that's the that going primary secondary the into led not in the us so, in that grid. if of tomorrow. to to We're the And and utility partners but the you organically the for to switchgear develop coming potentially do bidirectional and is able our R&D into with what the grid, the our -- renewables need footprint, side traction at on in we also car, what what products we're of the go even of to on to of sustained move to charging out, solutions larger working terms round the think side and grid do but that the do we're of side

the think markets some grid there's the whether that is think where opportunity facility grid, are or we in in we based utility of needle. that we move we a So grid can the industrial a

John Deysher

Okay. mentioned budget the And go a you've of forward? this. up going R&D drives I R&D Is going to lot guess

Brett Cope

there but but third if to was we've eye is be developing something, spending Last so resources learning. technologies, R&D it of right couple one some -- of now pivoted And recently design money R&D something to forward to these now. have shifted some that is organic the the an years that organically heavily would the we ideas some development, and keeping the -- is out three shift -- priorities priority to we think this have spent trying also so more new that internal and budget right inorganic we push innovative,

John Deysher

there already these I in units? of are a people, been terms has to people there who initiatives And the been the underlying the has perhaps reports these you to dedicated assigned or running and to person finally, assigned strategic Board, guess tasks Okay. that directly are

Brett Cope

of helping council. it's Powell. ideas. But So dedicated we've and the committees some between together today, talked the a put some mix we doing don't within they XXX we and are coming person generation position definitely us a job development. of and about team have kind the Board's strategic a great a management It with that up And is

had the the but to-date, that's definitely that future in centralizing so process considering. And something we've we're is

John Deysher

good you luck. continued Okay. That's We wish promising. sounds

Brett Cope

Thank John. you,

Operator

John [Operator Instructions] Our comes Company. & next question from Franzreb Sidoti with

Ryan Coleman

Yeah.

ahead. You may go

John Franzreb

expand types growth sense upon much maybe are you're the inorganic I them? wonder Brett, for scale, willing you or opportunities. revenue you helpful. be What if businesses I pay Yeah. of how in could that targeting either to would think

Brett Cope

electrical franchise kind automation probably we're as as and might priorities solutions electrical of building area into the at, looking the looking we building outlined, and especially the shared teams, the in products services here. automation John, in the well be because the side the three all earlier of automation stepped opportunity products on I and So kind we of diversified call the that year an feedback we're last side, funnel the the as at platform,

customers some Powell. We in-house are from at -- demand some getting that requirements the just aren't

a getting we bit a the attention in if those want to step it's little and So time solve to more right market. take problems, now

the fits there, building is -- there future. is time funnel spending last months of the been or over probably and XX lot that's we've something an and on out foreseeable that the not out getting and a for So, area seeing and what's that

the in He's of a talked make capital Mike -- let terms comments. of couple application So I'll about framework. size,

You want to?

Mike Metcalf

out a the there's John, Brett that scenarios out. could framework laid worked number that Board. we Yeah, potentially strategic the with play have initiatives capital the of And through given

it small accretive our small on be. appetite kind this of couple would again, really on a side and what right larger -- -- the Powell portfolio. magnitude. opportunity would the depends on But could sized really, from of the to range we something a that in we've the what fits So side maybe But

Brett Cope

couple we of right -- the -- even about to of are do and going are And comments being they we've quite we some this expensive now. are Powell. of frankly, fit the made kind Yes, -- space disciplined, about a things automation in

months and we developed refine word as we the on moving a with it the continue So we're while to to process will use Board think to as discipline last has and needle going -- XX over the the the continue be forward the process. still management be I team,

it. smart we can expeditious, be about So but be

John Franzreb

revenues. than profile Got results. some margin What the in business. embedded good look your seasonality we how it's and expect year, coming at We your sequential to a or results staring or first? a two, of about the kind quarter But we allowing back being play fourth of written of be in sort And the Are like in that more second which does as eyes? off for is half we decremental it. out red the for to get the drop know in profitable ink quarter

Mike Metcalf

on Yes, that John, few we variables as think screen. there's I we're look into the a keeping radar XXXX, forward

the First, mentioned, quarter the first typically as you business that seasonality traditional encounters.

we about very, as little It fiscal think clearly if half the you and very this cadence know, a XXXX, XQ started order Second, first of in that XXXX, pick the in million soft. up bit quarter. to experienced $XXX was you

we have exit talked business, inflationary abate we've we the the pricing the And in as That, fact -- of bleed second backlog to towards that in will the really the the commodity Number year. softer anticipate long -- and the the nature calls, models. cycle orders -- utilization business. about on in this start lot navigating increases in we've -- pressure of a half prior bit coupled the half. system, through those these think we given -- But puts our So will incorporated the that pressures. commodity with the three through of second little the a the or of that that is

second So -- little holistically, at when be you project we will a look the half XXXX softer than the half. first

John Franzreb

lot, my follow-ups. Thanks taking Thanks guys. a Okay. for

Mike Metcalf

Okay. Thanks.

Operator

closing turn remarks. over Cope, our CEO, concludes Brett to would I question-and-answer back This session. like conference to the for any

Brett Cope

Thank you, operator.

I fiscal results. in With And of focused incrementally levels both end structure continued future. quarters interest participation industrial enhance an comfortable with up of consecutive two encouraging Powell, today's recovering morning, for closely look maintaining remain the growing utilization and execution XXXX improved across high we that, and you from are project core We watching that We our call. with this financial on are next Mike and year. your heard us you've on quarter. over thank our are and financial markets the As we entering to more efficiency protect forward for all gains to you your past speaking and business, appreciate our strong cost setting

Operator

has concluded. conference The now

disconnect. You may now

Powell Industries (POWL) 8 Dec 212021 Q4 Earnings call transcript