POWL - Earnings call transcript Q1 2025

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Operator

Good day, and welcome to the Powell Industries Fiscal First Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ryan Coleman with Alpha IR. Please go ahead.

Ryan Coleman

Thank you, operator, and good morning, everyone. Thank you for joining us for Powell Industries conference call today to review fiscal year 2025 first quarter results. With me on the call are Brett Cope, Powell's Chairman and CEO; and Mike Metcalf, Powell's CFO. There will be a replay of today's call, and it will be available via webcast by going to the company's website, powellind.com, or a telephonic replay will be available until February 14. February to note replay this any that only or of how yesterday's provided call reading. time-sensitive on therefore, transcript time as release. Please and of longer earnings information today, at information information may access advised be was the in speaks you no The are XXXX, accurate that the X, reported listening on replay may future Act be Securities related call forward-looking to including the operating includes results of expectations Litigation conference the that This within statements its considered Private statements meaning of certain company's the statements, of XXXX. Reform are results involve risks may Investors in and future from forward-looking materially statements. actual projected those that that cautioned differ these such uncertainties statements forward-looking and limited to and raw pressures, to, competition and strategies. risks price availability of These and business general international, political and not sensitivity industry economic conditions; risks, and execution of and uncertainties include, materials are economic competitive but

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

Brett Cope

industrial major XX% one and while our commercial of XX%, to over financial oil other and sectors everyone. the take compared increased of strong comments review results. Mike XX%, order sectors questions. Powell prior Thank to joining today first from XX% by increased us XXXX and to the fiscal start utility more we growth fiscal recorded Powell's the growth and will Revenue morning, Ryan, turn call in then XX% the make for a grew I and sector good and commentary you few highlighted respectively. revenue every before new of for as and Thanks, a to your quarter year, gas year. electric the market revenue

the quarter of total saw Gulf strength award $XXX be domestic an project to by this a order large LNG million located U.S. broad for Coast. along Our led also

sectors. project across activity commercial and industrial, our balanced New be utility continues to

a was project from roughly bright the once typically line spot nearly fourth continues of This but our was to year, experienced of accounted in first prior see as for of utility benefit the closeouts be X/X unchanged again sector the in sequentially. as margin strategy XXXX. our challenges Our market lower the expectations Gross the quarter we seasonal as in the quarter in we with well the given backlog.

the million in first quarter On income share, $XX $X.XX prior was recorded or the per we bottom line, higher XX% of net which than diluted year. the

by sequentially. $X.X geographies by the and compared very remain backlog encouraged backlog, billion composition both across and which visibility year project of schedules fiscal We into increased million revenue $XX the to $XX by we compete markets prior and XXXX. well provides Our the overall million of and which balanced is in our

as of making which modest growth forward. help manufacturing execution going X planned the current advancing acres, important in are purchased our facility up the and progress already based Houston. to at capacity freed with continues as schedule we facilitate initiatives, backlog capacity on last are July, Remediation our good our room as largest has for volume work well at We progress to provide

development be revenue on remains incremental by our of position Houston in to fiscal be better schedule factory to will key and The Powell expansion expected of capacity products on completed in electrical focused The contribute supporting products improvement new in We XXXX. expect this and to also space incremental markets. fiscal is our XXXX. mid organic

XX% R&D to million our invest support year We R&D in was this as efforts $X.X ago up X continue versus quarter. spend to those function to in our

of we quarter, population office Houston, wider the adequately execute engineering the of west are of us critical the We our to far satellite are a to allowing X continue to talent better to we Efforts on our term, over workforce fuel talented qualified Last hire like to growth attract medium backlog. an us these opening our as strategic and attract the are strengthen engineers. detailed engage each side that plan and we from initiatives. and of allowing positioned confident

Powell to Looking reason ahead, expect we another every solid have XXXX. performance fiscal in for

remains price activity We also are the $X.X our other fundamentals across and to and order U.S. market conducive of data in markets of does and billion global to for continued expectation that and book strong industrial petrochemical Specific an favorable export strength our and to incredibly for sectors. position comprised natural our best. the U.S. activity. includes market, within maintain and financial commercial remain gas support spreads The the projects market. Powell healthy central within these fundamentals markets gas Activity are for a center what oil

our to market further market continue penetrate We opportunity the and this expand center total content within for the efforts data sector. Powell

in new prime demand electricity leverage going to partner power we more concerted coming and we our new of stalled, up, capabilities win The is work new continue to when we rate, deliberate with projects has was to products a more than in position increased of we past invested services market materially this towards drive to than catch have resources utility relationships Powell our of Specifically, to are we investment customers. in working position presence of time falling market. Last, both considerable or and back generation position utility this outlook market higher energy now as to and demand been a to to success. remains help a era channels relationships the and customers to levels important market our to for work new market and years. our in qualify projects healthy. volume new Throughout very build Expanding the for and our a decade. effort higher the overall we years, also power succeed are ourselves this as U.S. to generation must this market end as our is result of And rising in and valued flat while capacity Today, infrastructure. and the leader

the As storied in manufacturing renaissance here a right that based and history with America's proud United and infrastructure believe jobs American companies company strengthening in than best we building States. back by Texas-based more is the that X a served stretches electrical decades,

continue leading Here call excited Mike to in at detail. our powering nation's to like role in over the play Powell, walk future. With through we a us greater our turn to are financial results that, I'd to to

Michael Metcalf

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

first higher order, than year which XX% the and the of our booked orders liquefied active. quarter in Notwithstanding period included most X fiscal cadence same million, New project the were orders large across gas reported this ago domestic sectors LNG the be of XXXX during a market continues mega quarter. order $XXX was to natural

XX% to XX% to of From driven domestic oil other million of and first our across in quarter sector $XX we quarter, a and continued our $XXX international X.Xx, increase year was current higher predominantly a were positive ago, than and billion $XX fiscal in our perspective, market an backlog $XX industrial commercial $X.X petrochemical, volume million Canadian markets higher book-to-bill the quarter. Increase in fiscal to the revenues was international ratio by utility gas, sector XXXX. operations. our As Compared revenues by from revenues by million in period oil revenues fiscal quarter. exited from XX% XXXX, the while our revenues their quarter revenues petrochemical $XX project higher or end fiscal from million XXXX, by first million, increased or with momentum higher while improved Compared fiscal $XX sequentially. and X gas and with sector first of the our the result, a as the were which fiscal was in current the XX%, million across

XX% market basis quarter Additionally, the same utility fiscal of in on increases revenue same we of into in ago. our that core sequentially base. Gross period Albeit growth These and absence experienced roughly markets fourth the XXX the by the and profit market and with reflect increased focus points in industrial seasonally quarter, of strong results rail X other a achieved our continued XX% was the the project Gross light lower profit closeouts XX%, XX.X% revenues year outside we small combined strategic traction ago period the in of commercial with on as to first respectively. substantial diversifying fiscal increase percentage of X by a versus expanding the $XX sectors versus and of $XX and current shop year of flat activity. revenues, the percentage lower million the million total end industrial quarter revenue modest power period a electric also an experienced in markets. the at first

across the challenging in a anticipated the were quarter year we SG&A release, and fiscal were fiscal fiscal share higher $XX.X year same the period that current on $X.X versus represents revenue our $XX.X period period as quarter general base period the XX% basis ago. fourth income income a in first in by the million XXXX. compensation or million, historically net administrative This XXX comparison our and percentage compared decreased share. $X.XX on generating in across X quarter same a our $XX.X of fiscal In is of net expenses fiscal increased revenue same expenses versus ago. the noted diluted the we points business of million year. Selling, quarter to reported million As per XXXX, per sequential considering first softest current increase to we of of diluted a $X.XX X.X% quarter the higher the

at of not commitment action to plant we our million does business. shareholder generation to we hold the an the also for earlier investments demonstrates September facility announced growth capital continue favorable continually to During we our working generated CapEx XXXX, large addition increase equipment to liquidity finally, the we period. share XX, $XXX consecutive XXXX, expansion dividend. million as to $XXX $XX our $X.X aspirations totaled while and This that board through quarter and per the XX, and This improving had project our of the action. operating any is in $X.XX fiscal requirements at company facility December on the stock the ensuring and property, in cash million common this this annualized XXXX, year Investments sufficient fund third short-term debt. And week, fund has the At first returns breaker taken million cash of to improvement flow and Houston. compared income in

and fiscal the we quality ahead revenue quantity commercial margin of maintain of the of we earnings throughout focus the to balance both is XXXX, strength in first optimizing allowed fiscal be levers encouraged to positioned to remainder sustained the As we'll our Combined the deliver ongoing on Powell end addition by to XXXX, quarter our us point, the sheet, and backlog. this look with happy robust rest well across XXXX. At of the answer through markets questions. our are has our fiscal to which of momentum your

Operator

Instructions] comes with [Operator first The question from Roth. Moore today Chip

Alfred Moore

the start particularly, -- Brett, in elections you could more Mike, this project maybe any I guess, LNG on seeing seeing on won pipeline quarter? new on we that and year post you're color you're order here the in what

Brett Cope

$XX Chip, roughly give booking Yes, quarter, it's Brett. first number. quarter the take nice first or of the award in million,

the I pick think the that quarter last up. funnel market I started on activity to noted

started that gotten change that Secretary with in as has the up until the end And activity in say of see QX to year process has in least the administration, that much more. this I again the that in I'd DOE from at picked they there. of new think line nice the anticipation permitting

for So we're very outlook encouraged market. particular that by the

Alfred Moore

margin be and or potential you on competitive call Anything Can tariffs? we weaker impact holidays there? there or sort like any then QX out Great. that? obviously, I know ask to bit this seasonally on on year. And some of are expansion margins, the talk that. quarter anything year things should forward, flattish And tariffs thoughts quarter-over-quarter. out last on more go was seeing thinking And any any about with -- if then like could a I you little pressures shutdowns,

Michael Metcalf

Mike. I'll margins question by on is this first. a Chip, start Yes. addressing off

noted -- resulting lower versus operating our the remainder compared first to results XQ of and the And it number As seasonal the the it in is we under-recovery prepared fiscal holiday every quarter period. year. the much really comments, XQ, We leverage fiscal historically year it in a from softer to really see XQ. due

basis the XXX XXXX, forward, fiscal which, second probably to of That's project at points XX excluding is, probably to basis, of align look right use as you annualized on that right So were saw I margin that of think on look to months trailing we closeouts basis. half in the an a exiting the barometer lift the margins contributed margins. those if we backlog, strong in barometer

Brett Cope

Watching that commodities quick tariffs not Mike X really Mexico with the all out and factory I'll anything product Yes, it we Far we locations. there America, part I'd philosophy in our on of comment out Canada, intercompany, Relative direct back specifically. don't in. East, closely, and and roof in jump significant source to as a remind everybody under is some North

So little went we'll a more ago indirect on backup challenges of sort impact this any bit we saw logistic effect. when really of was or intercompany. what And of be indirect some years of

with we can impacted, watching. acquire then sourcing a kind we We now it. specific to where couple feel our areas products to pretty could of but good of get other And have go and that's that we're certain so every do aluminum we strategies some that and

that effect probably like us could the feel well So concerned that would anything have and model. direct, indirect really handle it's in we pretty we most

Michael Metcalf

currency just as may threat follow the we're any And well a mean, costs may imported not foreign the it as fluctuations that as from materialize. both to Chip. or may tariffs on material very result staying of there, close I

And of cost Fortunately, we pricing the as our sourced headwinds, our through operate of geographies passed along costs be we of the each majority in these one do Brett our in mentioned, in. form domestically tariff in models. that encounter that event price will the are product

it. very we're So to close staying

Alfred Moore

X ask Got like, it. it could particularly think increase. sounded I XX% guess, said I commercial, on you If center, more, data helpful. Very I

new So very new headed? expand customers, cable bus there, of that of relationships out that maybe that's strong. still Is And where and new in that on to then mostly terms Chicago? market channels opportunity

Brett Cope

to relationships activity very Also and build way and within we our impact revenue direct early We're encouraged. to market. and number. the still No. continue we opportunity, build our the quarter-to-quarter to make client total continue to But Yes. total and continue growth channels, that into as

beyond the are We cable product. bus

different that gear the definitely nice bookings. through within market. wins are channels supplying were We into some There quarter

of feel where notwithstanding to the happened huge long I that a think good the in term. is global I so weeks, market. macro headed good we're opportunity, going things It's that couple And mid- this for to over be last over market Powell

Operator

from comes John Sidoti. The with next question Franzreb

John Franzreb

about I'd overall expansion, towards is of to quarter. capacity bit Congratulations update. maybe there any that? like it's a largely capacity? of can I another you on great know expanding about guess, quantify an little new Brett, thoughts I And if hear your the production so, but kind geared product thoughts development,

Brett Cope

X Thank on Yes. comments, as John. factory, prepared question. Yes, noted the we you, Good last quarters product in track.

in. are be mid another [ will of are buildings couple So 'XX, ] months ropes which up, on, cranes fiscal

So great. just over there looks days of a taking it couple ago, out,

right the Powell X for options acres quickly about and free opportunities outside move can that can undergone for So be there's say as half have last we more addition half -- the we're even offshore that capacity we elsewhere X roof substation then to bit -- more that especially the then if could for sampling to the able and acres R&D. all move, on soil to in space of at up you bought currently over some product XX so and acres, in in that June to opportunity another a take products that year acres. Powell, has there pivoting And including about doing convert roll to the channel gear. up, if consider We move factory, maybe little all, needed now of on -- -- potential. that that's at other And there, optionality. out organically, we other spin in about of look We we that XX

inorganic as to alluded QX So looking the of as continue December I we it to kind maybe little in that well are back do other a midterm. bit at that more footprint, opportunities in

it kind to understanding and much and market. that closely watching CapEx and very of just is how So how quick it matching active, the more and we're

pull trigger, can the we if So do the we we maximize return. can --

John Franzreb

All right. pricing is profile about you hear. to That's able demand the little to Are talk you projects? a great environment, the the higher prices implement Can high? bit on so

Brett Cope

closely, get look overall. to market. no. we the value-add We're capital very momentum around which gear equation, It's that watch over And holding consistent been the has looking not -- front, pretty last some and you side be bring seems the in They're continues of and to When We're heavy side. watching good opportunities over service expanding automation the Yes well the strategy starting substations, before in that erosion at side built some now, OpEx talked there. we've on the the a for any right something the calories. to about of then the year.

We are within quietly the growing well that business as company.

value And think, at big any the tough, if watching side. there, of real any so into be is go to see no into on and this and -- we kind around can brownfield point, the jobs. the additions could They're we more I for threat kind downside. extend to more upside it capital But holding, there's the good. capital we're say the of looking We're which model a in job where would

John Franzreb

Really.

is enough. Fair about ignore fourfold it's up the And are nearly to Okay. XXXX. What the quarter cash? hard thoughts first your that cash since fact the of

Brett Cope

quarter, comments. off to it the asked work with bracketed this hold started I yourself. in I the term near last more those Mike on and M&A. years talking more took of of you ago long Kind It's kind -- I'd midterm.

folks in has the picked with of think activity I across are within us you We've up. And the expanded story. team that. that the the that team follow involved

pretty we if identified out working good that hard and figure would go. be to can I So -- opportunities think make them some we've

Michael Metcalf

I it's in or working also to a less capital. John, at billion note $X.X little given than And million prudent will half roughly that, of would our to deployed ability understand so point, that probably some backlog $XXX execute to probably our half, be,

will cash that's that So the deployed good that be working a of chunk to capital.

John Franzreb

down half projects. about new So drawn the execute you as cash gets on

really, half that. of is what's available So roughly

you And qualify size kind the care Okay. any Is it you're Brett, would way kind at? just, frame enough. looking of of could you of Fair to Is it niche? acquisitions it.

Brett Cope

to for organically. strategy spend R&D start to looking side. certainly back We're go product on I'll the with. on the up always We're the Well, opportunities

QX, running revenue, dollar has right what's currently be grown, percent million up a total take I potential has strategy things are something it's most we still of there, the really to that the terms We attractive feel range we're is we higher of think space, in could at When $XX affordable and now. as lever the forward. it's our I attractive. look at a $XX the model. in in to added there absolute step the there with say but the automation business us. some that grown the I'd what helps that million could that really and area accretion if look out But found was That's board,

Operator

John The Capital. with City Kansas next comes question from Braatz

Jon Braatz

million there's waiting they're lot nothing move noise forth to make and quarter, requirements that forward want there's just just sector. the and I so to the the has Brett, LNG necessary permits, all for. and $XX of in And been a in so on this that award sure

Brett Cope

that go. their Yes. has the different historically was been than there for other permit and one out permitting pause It's permits always for This but a years, full one -- good. is reasons has all

Jon Braatz

Okay.

that? say up their on be flattering issued to I not think thinking administration it. forward as that -- too some December report they the your we as so again, move How lawsuits March, speak into but a of about DOE the with to they And LNG are ahead, And put secondly, has understand will optimistic clients, prospects And April, some about everything. when LNG, come proposals. how you then And were the they snag hit rebuttal, to be in with a are for with they LNG although speak. it, against they maybe to didn't a wasn't that indeed so in that able Okay.

Brett Cope

Yes.

say, in the sector. all we say be that timing, lot a is, not a heightened that XX So last over puts encouragement wave months kind senior talking in isn't suspect as and to indicated the us question. It's you're hit in with there once. is levels those to 'XX, the of are within big going of absolutely at at days, renewed I'd the sharing share what all I -- takes with that 'XX, the the last could understand in we've back to XX somewhat more folks

[indiscernible] a of taking the an next think I up your is engagements out step still and the question we So we're had clients more over do to are be look encouraging ones going But activity couple it. clear we a process. are I people but first of definitely support to optimistic. when the exactly and say from at for level timing today. that timing I activity that gets FID say the get to can't and that here full and what and when think permitting through It's can won't the question, I, the issue. planning to towards sector say The we planning there's Not very tracking is everything getting way for with years. Mike much look we've in asked being

Jon Braatz

floodgates open Obviously, would you up, table you player And the Okay. guys the now. notice have projects? should are a say to at

Brett Cope

capital Houston, expansion, X.X I at that to for years X-foot with we've to up the soil. the with reason the idea came we over team done hope just -- Powell the kind the a deploy could so capital great -- weight but opposed you foot in historically offshore, down renewed has look though that own here the we a laydown Franz' there, minimize We area sure, supports earlier we more we put John, that's previous out not. the displacement engineered at done only came And energy that expansions need if did the and require. deeper capital there, that acreage quick into question, can dig we've Unlike way how with to we not a last as we maximize of out up gone that is

in And time the quarter materials. got really good some so spent we've on good quarter contractors folks some supplier

So that of we together, wave that the happen. next put drawing to have process could that all want we going, of we engineering we're the noted that with were And to sure on if done, down sub get you get get engineering the as at resource have so kind last we we couple laid of through up if each process, we're and the that quarters, do you that can and when look can other kind that wave we the the upfront and through really we pile that drawings [indiscernible] time to that maximize. refreshing office the along and that make what "Okay, process so engineering we were

Jon Braatz

Okay.

and slew So of there, that what when were you back the in look you years awarded opportunities it being it few you out look you 'XX, are back materially larger you aggregate see your there, in when projects XXXX, are out at saw that at than the would a -- back ago.

Brett Cope

wave. come to in it answer although won't X that My Yes. big yes, is

of front timing years, more just just tracking. but happen the uncertain, is of potential I I intermittently that going definitely there we're is think last there's be amount it's us than way think all planned believe is a that X to will versus, that say, of calls you couple of in definitely midterm but my lot next of noted. bigger in the maybe more that's over -- I there I the comments in that So shared out the

Operator

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

Brett Cope

opportunity our to I you, together for their dose thank open our risen spirit. employees, have we to would incredible continued like and support can thank a as you of customers for Thank with and valued healthy your and to trust and And of Powell. commitment meet energy supplier Powell partners do minds our Betsy.

and updating and this with pleased expect to next you Mike year all you are morning. forward another for joining We very Thank quarter our Powell. strong look for first I quarter.

Operator

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

You disconnect. may now

Powell Industries (POWL) 7 Feb 252025 Q1 Earnings call transcript