POWL - Earnings call 1 2024 | Powell Industries, Inc.

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Operator

Good morning, and welcome to the Powell Industries Fiscal First Quarter 2024 Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ryan Coleman, Alpha IR, Investor Relations. Please go ahead.

Ryan Coleman

Thank you, and good morning, everyone. us year Industries XXXX joining to call for fiscal review first you for conference Powell today Thank quarter results. the Mike on and me call Cope, Brett With Powell's CEO, and Metcalf, CFO. Powell's are Chairman a be available X. powellind.com, until made or by will webcast telephonic replay will call, will and replay There via company's the February it to going a be today's website, available of be how in on information yesterday's to release. replay provided The access was earnings the

of no as January that on that time this accurate transcript call and or meaning of note you XX, XXXX. at listening including Securities Please This related its information company's therefore, only XXXX, that Act reported to may any speaks time-sensitive longer call of the Litigation today, are forward-looking advised replay Reform the information results, of of be may be within statements the certain reading. considered conference Private the statements, statements expectations operating includes future

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

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

Brett Cope

the then to call take was higher Powell but of joining to XXXX today is year, project quarter make recorded and quarter of financial a first your orders, more still a comments strong our by first strong slow Thanks, in which will fiscal line Ryan, the morning, of quarter. in prior we a expectations you turn a strong over we delivered before and sequentially for review to typically new we results. cadence and good $XXX the fiscal start as normalized Despite very Powell's questions. much million for more what Thank and our with results our us saw continuation seasonally Mike trends was period, bookings. commentary everyone. I XX%, for few a

of sector sectors. delivered also utility the additional broad Mike saw to provide growth across our revenue oil gas, commercial as in XX% our prior moment. may compared and We revenue a a year, petrochemical, industrial other and detail by strength and market growth on we

help are maintaining revenue growth, together working focus on to improved profitability. our all and both Our deliver coupled operational strong with significantly efficiency, project execution

the first compared quarter on also puts gross gross improvement guidance our XXs margin communicated of Our and margin low in us XXX track in fiscal was quarter the year, last to best fiscal since XXXX. points performance gross previously in XX.X%, of on margin the an deliver It comfortably to basis XXXX.

line, share, the income diluted net of bottom per million, recorded significantly million, per of $XX the year we On share, income net which $X.XX was $X.X $X.XX in period. above ago or or diluted

billion. $X.X very was at roughly remains unchanged and backlog Our sequentially strong

projects new large last that year and feel last on our our across with serve. facilitate of the customers us and markets modest The XX power launch by is as Coast future Gulf that development million complete. was products our for completed Powell's we delivery plans a products This quarter. is investment quarter, The the backlog we of factory to fabrication expansion rooms, transport Also, projects that integration in expansion support more control expect confident approximately expansion will as noted planned to support expanded to noted mainly facility continue support water to release Houston of and based for we give to $XX growth helping especially we We to in capacity last our current effectively months our coincides investment initiatives, competencies. speak Houston. of comprised electrical access. This core take

have We meet levels project with the of people the right we remain are our and our demanding in comfortable confident place to that schedules current current staffing backlog.

also continue select as Our components. to manage price teams key successfully general the of availability fluctuations as well of materials engineered

continue We gas, our of levels see petrochemical to within encouraging project markets. and oil, activity

global oddly we favorable uncertainty creating of current by schedules, noted the fundamentals administration the gas for have project remain believe our we support actions As environmental pace for bit core to serve over over market Recent to the near goals U.S. slow long-term some term. of and timing timed more many around natural a likely the economic project the slightly and U.S. markets will horizon. the time, most

to as also to uncertainty some in that active such hydrogen, compete. XXXX lithium during Energy continue activity our quarter and and across of will but support carbon capture our and to would biofuels, have time, financial battery projects fiscal we sequestration for healthy to vehicle including book electric other the in we storage. and note large-scale in markets also continue future the XXXX. been and demand that newer see projects larger solid related activity enjoyed contributions our other experienced be data industrial transition the We first solid sectors, markets be a process results increased and contributors In sector We where in centers quarter. commercial order for

and median-term XXXX. remain unchanged fiscal near in Our priorities

existing franchise, products on focused automation platform, growing electrical solutions expanding electrical our expanding portfolio. and our diversifying services are and our and We

of to and nearly In summary, is a prior million the profitability another to fiscal strong of compared our year. XXXX orders off improved significantly start with booked quarter $XXX

projects. of future of levels continue in healthy The our profitability XXXX. mix favorable, will to fiscal Our remain the their and XXXX strong exhibit into a that sustain effect recent through with we continues select projects of markets monitor we on and backlog serve and activity to remains markets we developments project for believe encouraging timing

our year detail. for I'll confident successful financial another in that, will commitment With to results Mike the continued strategic over us through call that our more Powell. highly walk are and of greater initiatives financial against turn execution support to to our position, We progress

Michael Metcalf

you, Thank first to reported the fiscal compared the morning, XXXX, net in million, of million, higher quarter good same revenue Brett, period we or fiscal versus XXXX. everyone. $XXX of XX% In $XXX and

orders as booked quarter first fiscal included large booking. the New same in X% project $XXX of prior LNG were X was the ago, XXXX a period than lower which year million, period the

the new as As bookings XXXX. other market improved industrial utilities, effort as the with well diversification quarter of on in commercial our continues, fiscal continued compared and current first quarter and markets end

fiscal revenues quarter maintaining $XXX million(sic) Compared billion, million, international Canadian international facilities. were by In X was up improved $X were $XXX at and first and the while domestic total, the driven book-to-bill first $XXX to $X.X by higher, quarter increased sequentially. by flat X.Xx to million revenues Our U.K. ending ratio backlog current in our in $XX quarter. the the XX% higher revenues project fiscal [ versus ] million million period, across XX% ago, XXXX, volume of to fiscal year first

sector of maintained end market perspective markets the industrial momentum. XXXX, across positive revenues our fiscal a From the first quarter versus

higher sector nearly by Our gas XX%, higher and oil XX%. by doubled petrochemical while sector was

XX% diversification. market in lower sector XX% increases industrial notable strategic we as traction sectors, XX%, and by this other increasing respectively, remains commercial Additionally, The continued and the our sector both focus soft. the by was and market market experienced reflecting utility, on

same volume strong rates $XX the the execution. we profit in margin and do to period $XX quality our profit to facilities, points quarters, fiscal Gross fiscal X a the of revenue our million based of period basis margin XXXX. X on by year and increased the over manufacturing to were flat versus anticipate, year leverage, well the quarter operational exiting of The XXX Gross as levels million margin versus percentage most XX.X% in will the X by ago mid-XXs driven first to our sustain roughly enhancements backlog favorable by of our the that sequentially. ago. low trend the largely same We throughout as across past rates the increased project a as backlog

period in current basis million $XX increased fiscal current base. XX.X% higher quarter to the a expenses the percentage period, on were by administrative same XXX as of and higher performance-based points decreased year SG&A revenue general variable million the in X revenue Selling, on compensation by versus the $X.X ago.

million, In per $X.XX quarter the first $X.XX quarter per net net $XX.X share reported in generating or diluted income compared the fiscal of of to a of fiscal XXXX. income XXXX, million, we $X.X diluted of first share,

execute flow generated allocated we advanced At projects million quarter of $XX cash our across cash not operating build to and plant we target property, and in order the of we to we XX, as December $X.X as had resulting September XXXX, a book any first compared $XXX in enhancements million Investments will portion the from cash totaled of hold of at backlog. continue the efficiencies, as working business. productivity company investments short-term which capital debt. to does balance, and million project XX, million to fiscal we payments the be XXXX, our $XXX fund equipment continue During the and XXXX,

second yesterday, common that growth fund growing has we improve our our sufficient is and capital our approach increase this also the consecutive And ensuring taken requirements action. to finally, Board liquidity shareholder a announced stock while this demonstrates returns year modest, to dividend. prudent Albeit This aspirations. X% the increase to working

activity near-term have this and across that the financial our fiscal we we XXXX. this Considering factors that of our the level At Looking will to are solid could We most however, we results we'll these optimistic encouraged happy impact are some that momentum will XXXX market be to macro both continue recognize sustain forward, of activity. recent and commercial end point, exiting well-positioned anticipate delivered do, of with throughout answer questions. that this fiscal on by combined the and and your backlog, continue throughout uncertainties quality the fiscal in XXXX. timing remain environment a markets the

Operator

John [Operator Franzreb instructions] from is with The first Sidoti & question Company.

John Franzreb

on there weak I'd that? unusual in elevated gross period. level Congratulations to quarter. an And was that great about profile Can talk first you just that first it in kept any foremost. I'm the a curious, there with start at quarter. like the and seasonally in margin another -- items

Michael Metcalf

Mike. Yes, one. take that this I'll is

the the to by It's execution. months. really very, team and and exited very no XX backlog, been the X we're margin We've that to division we've X were pleased the in margin seen the events volume unusual driven work quarters, the nonrecurring got healthy really quarter. business. and has project the being of lot over good there the no, done the resulting that we last has XX operating very every leverage First, rates a from expansion across last as the seeing really, Really with

be we'll able in So, sustain rates considering of fiscal the the and low these -- mid-XXs variables, year. these addition the margin we to XX size low that to the quality more have the to of backlog, in throughout rest confidence

John Franzreb

you But this excellent threshold It's results downtime couldn't could up gross margin beyond gross the -- it I quarter? profile. a basis? the why on some assumed step first in had improve take a profile go-forward you the margin on Why considering in --

Brett Cope

now, good every volume leverage a we're quite like we said, standpoint, business. is Right capacity the seeing loaded, from and across division almost -- in are very Yes. every division we're -- I very,

that target. Given that the range we feel comfortable is to fixed good low on probably our mid-XXs a XXs volume to base, range leverage in our pretty

John Franzreb

draw for a down basis? should Okay. cash bit the How a on you Fair think that have go-forward little on enough, talk of about go-forward to a and basis? you needs? think a books. cash How we it about Can on capital you when do on working that lot start about you

Brett Cope

Sure.

earnings million XXXX. did in I and mentioned last think will I the we sometime quarter, As it mention call $XXX to mid-fiscal as plateau we were last early that well,

to I and begin that begin backlog, midyear projects fiscal level XXXX. think down we much we're probably execute the that as these draw cash in larger close to level, to we'll

John Franzreb

should Any sense of much down, how drawn be cash Mike?

Michael Metcalf

capital. earmark we XX% the the of working to level, Yes. Typically, revenue roughly volume level,

half roughly think roughly XX% about to our is the So, backlog billion, that for going $X.X working deployed capital. when be of of That's cash. at you

will expect to down, that drawdown projects draw would we considering other to to in in no lot the till, big see but mid- cash coming late lot cash fill a fiscal So, of a of 'XX. occur new that

John Franzreb

maybe plants. Great. about talk LNG impact Any could bit? no? Can very you administration's a just on on And or the maybe, this. new in you? That's Brett, touch freeze that Yes that thoughts Does helpful. about you

Brett Cope

think early of I prepared [ timed the put a projects, little per don't Powell, comment, and see Do is wrestle It it I on what I mean, -- think they timing, uncertainty just same much oddly and very my not word will I the our much going create for what yet I look, more explained really thing. CEO with did in but given why -- I ] so, lot the John, mean, as to how near-term to kind -- stop me a tea there. clearly bit it to from they've did. don't personally, they is what of as customers, leaves

work other folks I clients, I we the did it, is this along way their get kind and quick think in at marketplace, together as our of head, with our we'll they think scratching can. Looking just everybody and through but as

Operator

with from Kansas Jon is question Capital. next Braatz The City

Jon Braatz

overtime labor? charges would incur On you expenses the expect you to forward terms any this go in incurring, gross you margin of year, or as front, Mike, or are

Michael Metcalf

comments business, backlog. utilization my levels we OT execute modest the given incurring of divisions, on across the of are levels Most the the capacity as Yes.

Jon Braatz

Well, would OT you the year? growing levels of anticipate throughout forward going Okay.

Michael Metcalf

No, are strongly. diminishing operating that there's a returns and point on the of teams quite

no, that. So anticipate wouldn't I

Jon Braatz

Yes. within new done but Brett, of to and reasons industry there these delay maybe in and there on industry? the that consideration lay expansions Is picture only on? administration terms change political facilities. it, the so administration any the any the terms in obviously, amongst a Is for big will projects not in of it's these decision -- nix thought has what that front LNG will of climate they the

Brett Cope

now. say minds that, -- on that's say outcome interacting trying their more with through right certainly to owners work would be of severe isn't and the I I mean, project thoughts they're it the their way government. as process to hard and that the the wouldn't case

certainly, if to on it the feels is I to -- practical get early a that a where seem we're the from be at sit, here of world. lot for back seems outlook not reasons, be really it slowdown to this I around do doesn't again, political to hurts person and It what will a think be global trying here, anything, but track. and everybody states on and slight least things the

knot interactions to I would the [ folks of the with positions thatâ€™s in that's much tenor this believe being ] with bigger and sort the engineering myself, had partners, seem with So, our at moment. got weâ€™ve than indicate our echoed clients and to

Operator

John question next The from Pinnacle. is Deysher with

John Deysher

going any this But backlog, that can I to canceling expansions. existing backlog us is front, give projects realize on LNG roughly? the On idea at or related that we're in an you not a percentage be of, point, basis, of the how LNG much

Brett Cope

depth kind to started the 'XX in We experienced We really it the that of is job. the about XX-XX%-ish, given sharing never back size what range. at Thinking updates end any -- But really over -- John. one of Powell the so breadth we of quantified and and in market. with it's years, can't, you've

John Deysher

related? XX%, LNG That's to okay, helpful. XX% is

Good. Okay.

CapEx for the think, 'XX one facilities. What for fiscal of is budget of the this talked the is, $XX question you point? about CapEx The expansion I at other million,

Michael Metcalf

John, normal are $XX mentioned, is to roughly Yes, our $X burn here Houston our initiating - one of is is expansion as $X million $XX at Mike. million. Typically, rate CapEx facilities Brett an And in million. we that roughly million this

Brett Cope

today, -- is actually other like A the government you timing involved, little of whenever because we've get when out, lot John, conversation report that the kind always, just on permitting the like would h***. you process, the a suspect get of had

the and of us. with been in have products we're years shared last get calls that market We're it out R&D the things the where in through getting X the working and going teams the what some the delivering by we're new for about now. prospect So, excited we've

John Deysher

Okay. do expansion expect you it to And complete? million that When $XX take start? long would to how

Brett Cope

a We prime Yes. got started the We've process. contractor.

use hone permits, final think all that construction to X and costs. we'll little in next slower the as through in we'll of X go to just our kind all I get a we time the probably months,

frankly, Today, building going, tilt-wall So, sort And it's to team the of summer. time factory, we nice mid-/late too once there. think in the a a up earnest, over plan -- nice we room and the really the put long the future. need for quite I off into isn't of the at build with cut came really to base, adding backside building get the

be So we'll pretty excited through get up to but going, to that mid-fiscal and just ought we get going. permitting to process, have sometime year, next then and

John Deysher

Okay.

until ground like summer, sounds it break year so and it? won't then you complete or probably to So, late a

Brett Cope

process. get hope ready X permitting we We the absolutely X to just correct. to case, move quicker. the or are I move That's we If first the months. that's can through have

Operator

The is Company. & from a Franzreb follow-up John next question Sidoti with

John Franzreb

was Anything about be tax I the It's in that should curious than we the just quarter. bit of? lower on expected there going little rate. a cognizant

Michael Metcalf

the lower John, was favorable stock-based tax a by Yes, item relative to the onetime compensation. rate, U.S. to effective tax driven rate relative it statutory

our further: to you throughout benefit, original price. than And price So, the higher grant generated vesting percent. significantly stock has they vested, value is a favorable a the appreciated reducing XXXX. explain just little actually such, know, difference, the That that as tax considerably ETR when as

kind was tax item was perspective benefit of a in XQ. a from So that a onetime that

John Franzreb

on should Mike? how look go-forward number the So, a basis, tax

Michael Metcalf

navigate through are targeting the We as still XX% the remainder year. ETR we of

John Franzreb

and ] booking revisit Great, to think, do want $XXX Okay. I good X the at million? recent how was it-ing let's at, I've most put the What you quarter especially rate I of revisit the Brett, question. this, order in light quarters and now, asked ago, [ you it

Brett Cope

Yes.

feel good. over has the still weeks. the On on up a I few the timing remarks, gas-related the last ticked comments prepared bit in mean, I uncertainty I little John, clearly, made

at also that Yes, Powell has we since as in when things reason little well. spin there's the on other the been a of activity. draw channels the So, going uncertainties lithium was a the side. could the is the I post-pandemic. -- still out look and anticipate market new we're it may are transition, down I comment for build of the it industrial The increasing? as kind the But Are experience how the a energy quick great commercial new but further, out that what slowly on just lot build

term, out it about feel So, a that uncertainty in segment. as midterm. lot there's go more near still we activity of maybe good the in slightly We but

Operator

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

Brett Cope

Thank Gary. you,

from for heard a of with updating and joining and you've Powell balance in As demonstrating us and customers. and morning. results the part thank that, do first Powell talented of the of full provides on group fiscal a to individuals, display proud a focus forward through to Mike what interest this fortunate look me, well our everyone done. be appreciate are continued quarter. pleased your you XXXX next We laser and can our on our success incredible With employees, we am and the I of momentum quarter it to

Operator

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

You may now disconnect.

Powell Industries (POWL) 31 Jan 242024 Q1 Earnings call transcript