POWL - Earnings call 4 2023 | Powell Industries, Inc.

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Operator

Welcome to the Powell Industries Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Ryan Coleman, Investor Relations. Thank you.

begin. may You

Ryan Coleman

good for and fiscal Thank for results. you XXXX Thank Industries morning, conference us year full Powell quarter review call joining fourth you, and everyone. today year to

are call Metcalf, today's access webcast Mike There call, the on it CFO. information be company's replay to me by or Brett Powell's be CEO; Powell's will December replay Chairman a powellind.com, be will in Cope, will and the provided and earnings the and replay of via With website, available going on XX. yesterday's The to telephonic a until available how was release.

Please X, information longer be note speaks December XXXX, call and of this accurate at therefore, may no the advised information listening that time-sensitive reading. reported time or you transcript on any today, only as replay of are the that

including includes the of be of results future call operating certain conference XXXX. within This meaning related statements statements, expectations company's Reform to Act its Securities Litigation forward-looking the may the that statements considered Private of

business not and and and industry include, that price general conditions, these cautioned uncertainties economic risks availability forward-looking raw and and projected may risks, actual These and from future statements and competitive of results statements. pressures, risks involve sensitivity are and such differ are in competition forward-looking but strategies. materially of Investors limited economic that to, those uncertainties execution to international, political materials

Exchange please information, the For more Securities filings refer to Commission. the company's with and

over With that, Brett. to call I'll turn the now

Brett Cope

will most Mike before end fiscal more Powell's fiscal close year The over quarter markets our full period strong quarter delivered as recovery you of team turn Powell comments great company's industrial history. us in good Thank the our to fiscal ended another of recorded $X.X your for a year make orders XXXX, we review have billion for sharp that in Ryan, to and few prior of and years of and far questions. We the call then you, Thank a ever out in commentary fourth a the on XX-month to the joining we financial year. led note take morning, results. I the twice everyone. XXXX X to the best and by today

that demands am team front-end team upon The tremendous elevated be trusted years on activity continue earn competition. It budget our effort Powell including and in of we teams sharp and customers ramp we recovery as of from estimating continue leadership partner sales incredibly our the well proud have as our these on placed across our differentiate significant, performance. we teams as a our all on ourselves I entire reliable, groups. like members from project as operating as our to of reputation is the delivering our time project build with that activity to and

our utility to end Revenue our and million, grew well prior sectors within the drove as growth $XXX markets, market the and in year grew to industrial full across commercial revenue particularly LNG the in for fourth Strength million. quarter the to core while XX% compared XX% year. as industrial other substantial $XXX

healthy which $XXX that revenue We in on remain order net a moment. provide previously our the to detail million in our a expectation growth compared trend previous but reflects quarters. fourth quarter activity will market more orders Mike normalized returned will by additional recorded new to sector of communicated

which quarter fourth gross of increase We XXX points also the margin delivered XX.X%, in basis of an year-over-year. is a

are execution all recent well compared these support and as to closeouts While strong years. our our margins productivity from subsequent margins significantly as have certainly volumes, to higher helping project improved benefited initiatives

XXXX fiscal backlog for fiscal that can combined deliver XXs levels above measures, targets set low teens margins the these consistent XXXX. high confident quality XXXX total our with with in gross the fiscal are in We our support and margins

than line, per quarter, roughly share year, On year we higher fourth bottom and higher prior $X.XX Xx per recorded the full the diluted fiscal earnings in for diluted the share $X.XX XXXX. which Xx roughly of was than the

backlog at just incredibly under Our remains $X.X strong billion.

unchanged has roughly ago. was It $XXX more sequentially than X the doubled from year but million

mix deliver current feel We backlog and we core every what and core are nature continue scope mainly both to the the and on budget. backlog competencies speak our of our projects of comprised do to dollar to of time we on confident we that backlog best, are can Powell's that is project and that our confident

in expansion helping rise the business. of remain an We our facility located projects our the the while improvement Coast also previously us In initiated Gulf on both well facilitate support backlog, Houston improved along of our schedules will future to for capacity discussed some several as fiscal efficiency of production we facilities. capital quarter, that third of our incremental as the competitive

on November, largely expansion Work we capacity. using expanded productively the the in are and now concluded

of staffed. was our personnel always staffing This have of as recent far mind developed and they labor, in of availability concerned, to As continue a quarters. levels resources human team as is large manufacturing adequately work in headwind remain our the less ensure front due is today creative quality to of part solutions floors are while hard than it

prioritize certainly The that the a and engineered challenges organization. that a availability identify the certain Though with most across environment, pandemic, of period have execution components followed lower materials inflationary came of immediately remains the costs and challenge. overall, the moderated. activity cost after by of The raw efficiencies required project we environment and inflationary

while enjoying efforts, across a robust enjoyed serve recovery. benefits activity of Quoting we remains largest have those strong are market the markets most sectors. Today, the we

end the well with favorable capture of as continue the We've within related pipeline as opportunities activity see also and such been sustainable sequestration. aviation as fuel biodiesel chemical and markets We gas pleased markets. carbon to within and gas overall renewable to hydrogen, LNG, biofuels,

our forward. to going being We larger these envision markets financial results contributors

sector. on other has products capitalize active and and to commercial our been and across market breadth continue centers the is example this efforts. in like market of Expanding perfect a an fast-growing a our our we sector. expertise into within to our opportunities a of and ability leverage centers industrial growth data Data have business Additionally, focus area been remain these

core book this growth market of reduces order that Critically, a in markets. is perfect our complement is secular to industrial the a cyclicality and our

enter Our fiscal unchanged medium-term as priorities near- we and XXXX. remain

expanding focused our product of into on as our scope offerings services technologies. are platform, that complement catalog automation electrical growing our through applications the new as and tangential existing diversifying electrical existing We either franchise product our portfolio, our expanding well

We R&D in this XXXX to toward expect spend end. our increase work as we

durable which backlog, upon. we summary, fiscal In with are to build roughly and $X.X schedules billion project predictable XXXX entering of provides

favorable We core continue fundamentals remain levels industrial of the optimize of markets improve that also profitability. steps supporting levels project all robust. raw healthy on impact a efficiencies, taken to our positive activity see materials, had which staffing our of our operational procurement to successful our believe We've and across markets and and significant end unlock have

that strategic another successful favorable and confident support dynamics our for our with are year Powell. initiatives, will coupled We execution industry

financial detail. the turn our I'll results With greater Mike through in walk call over to us that, to

Michael Metcalf

business petrochemical Thank fiscal for fiscal the then XXXX XXXX total fourth million everyone. first by and our improved results quarter fourth and move oil with and good quarter the year morning, Brett, I increased begin gas the results. Revenues will of fiscal market with and industrial, XX% to strong million, you, $XXX to quarter across XXXX of and by to the compared core $XXX fiscal million $XX fourth sequentially growth sectors.

the as within large million, lower active, markets fourth order Net XXXX. we to general, chemical and year secured the challenging a remain gas fiscal $XX LNG industrial for in orders same were the end comparison quarter X fourth of end $XXX LNG period than year-over-year a on the hydrogen markets. quarter specifically ago fiscal million In the

We commercial sectors. also other utility our commercial industrial see and across to well market continue the sustained as as activity

X.Xx orders fiscal performance book-to-bill result As of in the a moderate quarter. fourth by a revenue healthy our strong ratio cadence, but was offset

end Reported of and book was market petrochemical, backlog markets. our of well majority in gas, the fourth the billion, increase end as higher the substantial million at was fiscal oil The versus utility fiscal the and industrial commercial across order as of quarter $X.X end sectors, the our $XXX XXXX. other

with enter our XXXX, by of increased on very volume we $XXX pleased while to fourth the and performance increased Overall, total across our fiscal international year as revenues of the of also across quarter business to million international we're higher Compared $XX locations. million or fiscal all XX% the revenues by domestic backlog XX%, million $XX position orders the XXXX. resulting

XX%, X%, grew the from From our fiscal utility a fourth the gas higher XXXX, In revenues. and largely and by was year. of XX% and while and sectors market petrochemical LNG sector perspective, the was sector oil driven revenues industrial prior higher higher by versus by other quarter the petrochemical commercial sector

profit as year-over-year of was a was large commercial XXXX first the successfully the This fiscal XX% in traction offset we Canada growth softer by project sector, combined somewhat period which was year. XXXX. million fiscal or by We in of million higher versus prior the $XX sector of this the in fiscal in same fourth gross reported XX% throughout XXXX, quarter lower completed activity which municipal by order $XX in with the half

offsetting as pricing navigate we initiatives, subsequent productivity in increased by the points in of challenging supply actions to fiscal the and XXX a part quarter X a ago. well and as result compared continue the of as execution project revenues Gross leverage at large year pressures landscape. fourth margin profit been chain The closeouts XX.X% inflationary strong revenues to percentage to basis rate that is have higher volume through aimed as of favorable

in from Albeit Selling, an performance-based negligible, quarter which decreased to in the fourth or the million versus XX gross $X expenses expense. the or points by quarter and incremental also $X to margin the quarter. rate margin order lower X% variable compensation the year, attributable generated profit rate administrative million benefited fiscal of general prior cancellations, basis X

book. the to on fourth order of revenues leverage also of of continued fiscal both the the a to management $XX quarter on cost necessary volume These expenses focus results year in focusing critical while were on SG&A compared the million lower or fourth X.X% requirements fiscal expenses and quarter on execute XX.X% resource ago demonstrate in revenue our XXXX.

fourth million the net We quarter, the generally this working strong operating fiscal capital couple projects early by added share flow quarter advanced share of through business $XX the the the addition across diluted quarter diluted over fourth or fourth performance order to million cycle to $X.XX fiscal driven net compared of we income of per $X.XX reported In to of $XX.X million in income the XXXX. XXXX, generating of fiscal of per $X.X generated past in book payments in cash on quarters period. the

CapEx the the our spending million quarter the Houston the $X.X expansion with spending attributable to capacity a quarter. portion was during during at in facility offshore of large

of $XXX our the million, by total billion, $XXX XX% of fiscal the other market recapping strength the million compared gas year fiscal orders nearly and XXXX. as XXXX markets with as double sector of in Revenues $XXX growth million utility XXXX. well fiscal coupled end in increased or activity markets. end Now oil Orders all $X.X were the petrochemical incremental to led the by sustained and in

productivity demonstrating in basis the revenues XX.X% chain quarter profitability XXXX impact initiatives a also $XXX points challenges, we volume million total success backlog, as fiscal level while leveraging and fiscal addition year Considering profitability profit Gross XXXX. in can resulting on percent and supply first basis headwinds offsetting that to this these inflationary the year-over-year of we throughout and or XXX maintain the of grew fiscal in a anticipate higher of notwithstanding factors, XXXX. to volume seasonality lower do in from quality continued our

the by revenues XX.X% versus year. prior versus versus the higher at by of in and expenses net SG&A the year. prior XXXX XX.X% Overall, revenues prior general a were expenses were XXX of fiscal lower year as Selling, administrative percentage $X in points million basis

million the diluted per share in prior income share or reported to million diluted year. $XX.X of net compared $XX.X $X.XX $X.XX We per or

we from items diluted include which per order XXXX, Kingdom entity. fiscal a credit reversal established from During resulting recognized share of of our valuation United cancellations $X.XX and allowance gains a the unusual tax in previously noncash

had cash operating was strong higher combined $XXX year-end with generated million the than usage for end $XXX year. fiscal short-term prior versus investments the cash fiscal cash XXXX backlog of working $X our XXXX fiscal associated of the year our industrial projects At $XXX million, advanced we in XXXX, and a the million Total position the growth flow large million management. reflecting capital in payments and of

fiscal fiscal the projects balance cash our a recede we anticipate ultimately continue holds X As the somewhat direct plateau capital increasing the that in of or levels a requirements middle support project we towards build working cash of year, to back The result coming company order as result before to in XXXX half long-term will of debt. navigate execution. and the through as backlog large

entered October our into and increased million. Capital credit the $XXX of this facility a ceiling an from to amendment this with under lender previous of Bank Texas XXXX, Combined, we Finally, of in million included Bank capacity amendment third as additional agreement. our facility America $XXX

markets. our a letters we prudent facility in for As of our this success was end ensure across solely action this commercial to we that utilize order credit, felt continued

momentum remain end across throughout core XXXX. fiscal forward, commercial we our robust that remain the will Looking markets optimistic

the as past remain well operating the levers from We growing the also several will our through encouraged are commercial leverage executing on by navigate over quarters, backlog acutely the and focused profitability fiscal XXXX. as as we implemented resulting

we As addition the fiscal delivered well variables, anticipate confident to sustain our fiscal fiscal we we backlog, our strong notwithstanding our in of most outlook of these as that impact and in strength sheet XXXX challenges year margins these to XXXX associated and balance the we liquidity solid the we've timing quality of Considering mix, our position the what to across the end total assess and for typical levers markets experienced continue 'XX. project and into fiscal continue results be to as this in we that similar of are commercial XXXX. our can of

to point, your answer we'll happy At this questions. be

Operator

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

John Franzreb

compare a incoming million I'd doing to booking years order million start the profile. like incoming -- it with $XXX The you're great Congratulations roughly I prior book to about quarter. book. to $XXX of the order XXXX, XX on if of fiscal

of But we off year? X of booking $XXX profile like, bookings. consecutive into what like what came coming million would expect context put the profile kind you in the you just look of quarters over the opportunity looks Can

Brett Cope

appreciate was going into went comments were that as million When oil strong the the sectors out core the for on little It's X the a with look book and John, that of good net reporting course, the commercial for and with quarter, in market. in at contribution the in thanks pleased QX, quarter. quarters. on fourth kind along I light industrial the I the content what leading what up $XXX of utility made and we're of previous with the gas, question question. A Brett. Yes. good very in was to new the to bit the sector and we on the we timing, QX, -- quarter, in it the average

QX -- prepared There's or asked was today, a question, are X halftime to we had said, in given my As that previous we in the which relative in I still X you I I question activity quarters asked thinking But a any weren't continues. comments, for robust. run we cadence at in call the you that? the or about that projects forward, mega QX. me the at to look are where a prepared fact, There is think as we about

there. in XX there's hold is to run We're more XX of a us. a There's last going just still last lot I'm bit the that very my uncertain the went still little months, front answer Timing over given call. lot but through a on to we out engaged.

John Franzreb

that QX. again, QX, prepared narrow eyeball year around norms? also versus release press down, normal some seasonality declines the and it XX% about versus cognizant we this about Okay. we've bookings. real the to your so back, it historical revenue in QX be basis should be How looking or I QX comments you of a in on had should seasonality sequential in And but And to versus we strong mentioned just seasonal pre-COVID think the

Michael Metcalf

take is This I'll that Mike. one.

talked the Given than backlog, coming we've range comments, typical more -- historically, year? with in backlog, I'd are that little XX% calibrate our I that the we aggressive prepared where seen of healthy kind as somewhere in this probably a about very we the would XX%

John Franzreb

the on Got X a year The full just queue. full primary outstanding What's that be XXXX it. into couple question tally back Got 'XX get year like margin fiscal gross of it gross the counterweight then ask profile of it. more makes I'll tally. quarters. second has go-forward hold you've a that been the But last should and margin indicated kind tougher in more the basis? to half versus

Brett Cope

is quarter-to-quarter. The timing one just big

as remarks, business the that prepared Mike we project always comments is timing. framed So shared up the in his

timing, So even on fundamental that and never pull there's our with backlog. have, project changes changes the the quarter-to-quarter part of the on where That with in we rise we still challenges backlog in even can holds model slots. things move

QX, is and back the things the some you in given But office, the on So just or things fiscal people getting done profiled both the number of and from people of and in against the the we November are of timing year definitely, that done lays the end and end year, ramp getting the QX, of always signed ramp-ups and then morning, to our a downs the calendar side this do house over run. years, well challenge factory productivity looking when schedules construction closeouts. of timing and

Michael Metcalf

into XXXX, business I trailing what gross could of the at. to targeting on at rate the we're we're range we That's going kind low That's if And XXs. profit, XX-month XX.X%. XX.X%, unusuals, the ex of calibrate add, John, our looking if that

Operator

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

Jon Braatz

landscape planned? about being talk projects added Are you the existing there maybe current forward? big at a still can And being at LNG about little facilities. additional capacity Brett, going bit what --

guess read possible LNG little lot a remain? discuss a confused and what's new about opportunities I a what's I facilities, but little I about get LNG you bit Can the what sometimes not.

Brett Cope

Jon. Thanks, Yes.

times mentioned So on as couple landscape. Powell's calls, the where last and market really, couple of stand domestic last LNG the the we a I pleased -- of in with really throughout position

was certainly there some with that ones that don't I brought last happened weren't booked. year that and in think involved a capacity, the including home we we that project

number greenfields that a still Franzreb, Mr. of it. out, some uncertain out circumstance Comment As there. timing around there sitting there's there I are LNG are to on earlier and expansions still look some that FID

go But of that back estimating I year engineering ago started these hydrogen. last if clients. and engineering them working seeing size you add out, that, opportunities. partners a firms, And cost prior X We're to the of business on we up sizable. a They're into the the way with end the years very, active very to the lot summer, growing around a and then with the number those

are very we're scale and the down -- the the from all and get seeing future. drive IRA there's the as utility plants side, the -- batteries money, to applied to then renewable a around to on way of EV And how a in going process those well number

about forward. again, it kind looking broad, comment the was X LNG some is very feel sectors around ago, pretty what's years than for Powell. But all timing, of scope, of the again, So right broad we good X but more much just sort activity same

Jon Braatz

who's significant I a of XXXX your your But under know you oil more gas. has regime? clients, and don't who's little we capital to to programs going year in election clients bit oil friendly have in any going win, new executive spending a with Would towards your change branch Brett, see to the and gas an is lose. and going if an conversations be

Brett Cope

there have impact. I Jon, happened in think administration, put could that It always don't mean If an I -- regulation go phasing administration the I in place. as it long-term, does was have to more time the it. to change, but back last there's I election, certainly a

and all hold, all I mean go on redos the can facilities was. on-site to power how and renew down the it the design designs. way saw engineering the there they're environmental going the having just see We from side. on products turbines to simply We putting to studies electric

reworked So of a studies projects. some were impact and done it lot

to see into to of now. starting or -- are not, the believe starting of some are to not again, more it's the We good see right some we leaking with projects you IRA projects whether credits

think will for have the gas clearly, it an yes, the So an it have longer-term, and on core if stuff oil I think sure. current from administration effect it have parties I an we turns if change, impact would regime,

Jon Braatz

cash and the Okay. -- half. talked before much bit about a how could here in to them million, when yours are is second as little if little opposed I build the bit $XXX and look at $XXX a cash the your cash million, advances? fading Mike, flow you you expect of it, you balances say, to at But

Brett Cope

Jon, real quick, Brett. it's

missed just I -- realized part the me Let capacity. back question, I of your

looking are an expansion in at 'XX. We additional

report So a 'XX, our on QX. we'll of we're one 'XX, in in looking we at the and at that facilities production in did capacity X

Michael Metcalf

requires to $XX Jon, this typically percent rule for into your comments of million time. working us I is kind facility in address thumb entered of that about the about We of that in point new at any to hold that we to the This earmark prepared capital. of question, just revenues spoke us. XX-or-so And liquidity

math kind a get of do that number million. you in range $XXX the So of you and

Operator

from comes Franzreb Sidoti question next The with John & Company.

John Franzreb

go-forward What kind bit tax Yes. the tax just our should about building fiscal little a be basis. I for rate guess models into on rate XXXX? of a

Michael Metcalf

building in on ETR an of XX% basis, a Yes. global We're John.

John Franzreb

What what's budget CapEx the the XXXX budget? to CapEx win final you for and was XXXX? And expect in Okay.

Michael Metcalf

of that, initiatives through the the that as as move early In capacity as expansion. mentioned, are we mentioned, XXXX, Brett of We could some capacity offshore part considering large navigate we spent XXXX. I $X.X in A million portion the number was 'XX. other

John Franzreb

What expansion should be the the baseline excluding maybe? number then

Michael Metcalf

these But some of $X you to on of have to be then anomalies that. put million typical spend you million $X probably top other per say would annum. I would that Typically, have our

John Franzreb

Okay.

of recognition Okay. more guess cadence about question just maybe And I XXXX. the in X revenue

of flow typically seasonality there is quarter You we fourth improving book a an quarter. Or QX have but talked the year the the -- fair seasonality and amount as QX Did the look progresses? business profile through, first in the and the of similar? about

Michael Metcalf

Yes.

the years, past I think kind I the we fiscal of trajectory. of at don't would trajectory a think if you see different looked

quarter will XQ the it and First strongest will be other softer up ramp year. XQ X, typically then than quarter the XQ, and of is then the

Brett Cope

I Yes. about And 'XX to the pretty way level of out about we steady John. laid then kind spikes, entered talked want planning trends. that following call up -- finished goes, I kind we you just question it of as asked a the it's pretty of kind and the did don't

So...

John Franzreb

And the P&L? X small question, may. or Or flow margin book amount all way is profile work? jobs I if of the turn seeing last this all you and still other? at Are a does fair project-based the one that through I guess impact And

Brett Cope

-- X event small or units all care facility only remind service-led needs operating to turns and gear sections. of are there quick whether those of attention job our an a We the that was side service or a X our take quick at absolutely a on jobs We all customers. because they

ones. chase not at Absolutely, big lose And all. to the reminding we those of don't just constantly sight we're everybody

Operator

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

Brett Cope

Thank Dave. you,

fantastic Powell the every and extremely performance morning, pleased I'm our our how employees our the fiscal this are As we challenge company. they meeting very of one the delivered. team the you've and that heard with and has proud Mike appreciative me market to both presented are financial of and XXXX from

strong that to XXXX Powell markets fiscal and quarter. that, We Powell. speaking continue today's forward for look on continued in to that your for you you serve, we be call. thank the another upon participation Based with next With we believe will interest your appreciate year

Operator

The Thank today's conference now you presentation. has concluded. attending for

now disconnect. may You

Powell Industries (POWL) 6 Dec 232023 Q4 Earnings call transcript