Powell Industries (POWL) 20 Nov 242024 Q4 Earnings call transcript

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 Mr. Ryan Coleman of Investor Relations. Please go ahead, sir.

morning, good and you, everyone. Thank joining Thank call full Powell conference for to you year review and for today quarter fiscal Industries fourth us year results. XXXX CEO; Brett me Powell's With call Metcalf, are the Chairman CFO. on and and Mike Powell's Cope, of a to be be going call and company's available replay will website, powellind.com, until There available replay it webcast XX. via will today's be telephonic November by the will or a

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

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

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

year your full over for then full prior fiscal few in helping strong us total everyone. XXXX for for turn will make a a year and take and company. Powell's the $X a today questions. performance compared growth more significant company billion before of quarter marking XX% review and the revenue year Ryan, year, morning, I good a achieve and the delivered milestone joining you, you to we growth commentary fiscal Mike saw record call results. fourth that Thank the revenue fourth financial to quarter the a and comments for Powell to Thank

growth growing our compared XXXX. We XX% each key to XXXX, line top tremendous in markets of with by fiscal fiscal throughout experienced our

Oil within Petrochemical grew Gulf based supporting while revenues expansion the of and $XXX Our Utility notable new orders by Coast. XX%, increased Industrial XX% XX% & & and We million our U.S. the a and and respectively. capacity Gas sectors Other XX%, respectively, in sectors within continuing activity along Commercial Electric sector the the quarter, facility LNG an booking and led strong Utility booked of

We consecutive recorded fiscal orders than new second billion the $X for in year. more

to utilities, markets hydrogen, Our core more. while substantial centers, in progress markets to grow data we make and have and diversify such remained strong, as capture carbon industrial continue

remains execution of project for an margin. Our us reflected strength as area gross by our

quarter which underlying fourth of onetime XX.X% slightly performance discuss was margin aided margin continues improve. some Our the but Mike to will shortly, by items,

the to improvement year, compared of which year. a prior basis XX%, we margin For the XXX full was recorded an of gross points

outside core for processes We and in projects. continue more markets our of industrial these improvement profile to see manufacturing delivery in efficient sectors margin the our end we become as of

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

to $XXX per tripled $XX.XX For nearly share, full we fiscal delivered year, which diluted $X.XX per net million income in XXXX. translated diluted the of the share

$X.X unchanged year. billion, which at both continues prior as backlog was to compared hold quarter the to prior well as Our steady the

profile time of backlog order that and well margin as overall lines the We with book. constitute the are our pleased projects composition the of as our

fiscal our we which good schedule provides orders revenue have project expect visibility in backlog, we into our current XXXX. to as Our realize

for we We progress acquired of execution quarter, location. well of growth which of the neighboring X our provide our acres with backlog the current initiatives, fourth room property headquarters our forward. start are advancing as volume good planned Houston as help as making the facilitate modest are capacity going to At

incremental are will We making freeing incremental capacity manufacturing space, fiscal nearby in in revenue more already throughput up drive facility, use of this our which to contribute XXXX.

to is our be to of This coincides Houston launch fiscal on factory our XXXX. develop middle support The in of our of XX% remains we expansion products and products in new up fiscal in the our initiatives On product in broaden spend we with expected the future electrical also completed develop schedule initiative R&D effort and and technologies customers markets across to our portfolio. our advanced innovation as growth was XXXX serve. that new and point,

a October, to in our first we station report for medium the been commonly customers. very this pleased this as win our quarter in sectors. our thus I'm pleased order used process last our new product utility We and renewables recent is development received by market product far and breaker in which voltage breaker, we've with launched commercial reception a

and with are our project levels our backlog. current relatively to execute comfortable within staffing unchanged, we schedules labor remain the ability Our on

we throughout top for as medium- markets evaluate the plan and organization long-term qualified However, our volume a the growth, of and people identifying trajectories acquiring priority. and remains

satellite us in efforts the an far in engineering to located to will the this office. final qualified to continue X talent a population side office front, Houston, strategic our hire the growth and engineers. each enable are of of is part of steps better engage fuel us our As allowing initiatives. of This west wider opening on This we attract to from of

The project and fiscal expectation rate, nature head activity, with our healthy. orders our across markets coupled remain for new activity for Oil leaves recent for forward, these support of and our balanced & for as markets continued optimistic fundamentals sectors. win quoting XXXX. Gas we our Petrochemical our The our expectations us strength Looking into

our capture hydrogen, biofuels, where areas markets, does these not Oil has to are seeing but Powell addition where volume we of & project sector projects, historically higher as the transition activity. In energy in Gas and carbon Powell substantially participated includes legacy such work

spreads the activity. fundamentals natural gas markets U.S. of conducive the favorable Specific and across U.S. remain market, price to export to global

While of recent such, the more market. activity as around Energy regarding projects to our as altered of very long-term that strong. permitting, this Policy point, result planning has have some future to Department for currently are hold we be come U.S. been will at market not continues projects activity export a we which LNG muted And and believe on

Industrial the Activity our Other within market within also center & market. healthy data includes activity Commercial and remains

total customers, which requires and with penetrate we of these to We products content opportunity important ways qualify continue center evaluate to the for further market of services end that our the future more market. this the data expand and

the remains where were stakeholders. our Utility sector clearly reliable than in breadth, energy several deliver the the grow Powell the sector. rising new significantly very more for in demand. meet strategy accelerated strong. totals Activity our expertise for markets clear to the have talent leverage Utility Lastly, second levels recent years over order is quarters, in supply electrical consecutive years was this quarter the outlook led to fourth quarter our that of and market It next of to and our XX increasingly industry technical of by must has these becoming knowledge, all right

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

was to $XXX first $XXX everyone. XXXX the Gas higher to and quarter the the million within Oil total our good increased X year business by the $XX Thank by of morning, you, compared million, Revenues sectors. $XXX XXXX strong orders $XX fourth for year-over-year fiscal fiscal million Petrochemical, Utility million Brett, by and results project than the increase lower same with million, of Utility due period quarter I'll were primarily the Net sequentially in then ago, in quarter to Electric XXXX sector. the quarter fiscal fourth XX% to the and year same & for begin driven fourth fiscal timing results. a and fiscal move Electric

Gulf an encouraged Overall, secured activity the expansion Oil core Gas during Coast. the we the remain for we Notably, quarter, across order facility Utility with Electric and large on a LNG Industrial the & of our fourth commercial line and was bookings of top another to quarter fiscal strong our and of strength Thanks the for XXXX. X.Xx the year ratio full markets. both quarter book-to-bill the sustained performance, new order

backlog levels the as execution XXXX the Other performance, the across Gas sustaining Petrochemical pleased and In $X.X well $XX Reported at end end billion, enter a fiscal are for position business, revenue of on partially remained by backlog very we and mix versus higher year. than record Commercial offset the year backlog orders with our general, of of XXXX. Electric levels the & fiscal favorable both into as at driving our we as prior lower Industrial backlog, Oil the million fiscal XXXX Utility &

driven quarter to $XXX From the sector while by international a grew service $XX increased international and revenues across traditional by was locations. million Compared XX% revenues of on manufacturing of markets, & by revenues. oil primarily from XXXX, Gas and while LNG revenues by with Oil driven by sector booked sector our end large XX%, order to by fourth million million, market of petrochemical XXXX, XXX%, volume Petrochemical revenues higher fiscal our higher in along our fiscal $XX most or sustained domestic the mid our perspective, strong increased from gas generated XX%,

was small as sector momentum selectively project we sector rail in by quarter XX% Industrial in In this primarily the finally, pursuits was a fiscal of the lower space. by function continue on power higher while traction as base the Utility And market. sector X%, data center revenue Commercial to light Electric timing, the increased XX% target by of the a & Other fourth XXXX, and continued

in resulting a margin the quarterly helping volume profit higher XXXX. of basis was XXX XX.X% our million revenues project the the reported Gross the across fiscal in $XX rate addition points profit to period which of in revenues associated strong the gains. of percentage manufacturing higher The favorable the attributable in or across of execution same quarter to million to margin large as fourth in drive is which closeouts, productivity XX% all and these $XX to operations, business, by than increased quarter. We is XXXX, project incremental fourth fiscal of gross leverage of fiscal part

expenses million to ago of basis the the expenses gross compared revenues X.X% fiscal SG&A generated in of infrastructure incremental Selling, X.X% or current or million which X profit on general to an or a year levels quarter. $XX.X negligible, million quarter of revenue base. rate a quarter revenue due in higher of higher to increased $X.X by spending. XX the X% Although were fourth cancellations, from the and points $X.X rate margin benefited also order administrative margin

on execute the continued These book. fourth results net also per $XX.X addressing or overhead per fiscal reported our demonstrate we in project fourth income working our cash million as diluted In of $XX.X focus share thoughtfully the the backlog. critical order XXXX, managing fiscal compared to net flow $X.XX while fourth quarter operating requirements on the a resource quarter due We diluted of to on million share generating the quarter in of to income to of of million, continue used buildup $X.XX the fiscal execute capital we necessary $X in XXXX.

projected $X.X largest spending $X.X products the in as neighboring million attributable which Houston, expansion new first of with our million the facility a consumed the spend consuming the was well CapEx the as million $X.X during spend. purchase Houston both of factory of our to total quarter million, the the at $XX majority property facility,

XXXX our of or billion, fiscal recapping million fiscal year XX% lower mix $X XXXX. versus by large XXXX compared a Orders fiscal XXXX. projects. million or very increased $XXX contains Now $X.X to Revenues XX% healthy to fiscal medium $XXX billion, were as of total

However, as we've profit no XXXX. grew orders were higher repeat fiscal of points a XXXX. pleased mega fiscal booked with mix in XX% $XXX and revenues projects percentage or been than very XXX cadence basis as throughout the million Overall, to year-over-year XXXX. Gross fiscal

versus at revenues net were lower supply SG&A and versus rate general prior operational optimal year. strategies $X in basis offset of XX.X% the project the higher and challenges. percentage helped inflationary and million leverage and points continues year. expenses execution, revenues volume the as fiscal successful prior commercial the Overall, XXXX to prior that by margin a efficient year X.X% of benefit chain ongoing from were Selling, XXX in administrative versus expenses The headwinds to by

prior share of the million offerings. year. $XXX.X fiscal XXXX we million diluted $X.XX million reported or research to in current spending or net revenues. increased $X.X the fiscal In share versus in and good fiscal make product prior $X new $XX.XX or design was income to XX% XXXX, progress fiscal product diluted development and continue as million year development per advancing X.X% in XXXX We spending R&D or in to in of our compared $XX.X per addition

large the $XXX generated fiscal our Operating prior current existing in fiscal driven booked in million Houston. purchase new the in $XXX $XX into year backlog in XXXX. execution our of than fiscal property in cash prior million flow by cash higher year. petrochemical fiscal The the capital versus and in in reduction million when backlog payments LNG large fiscal year the were XXXX, XXXX was projects prior year, spending largest $X part used the the the neighboring of to Total advanced in the was was facility versus million the received for attributable

investments had higher level of reflecting our management. well million, the company X end capital fiscal XXXX, commercial across healthy as debt. end markets XXXX of short-term activity our focus the sustained At than $XXX year-end fiscal and cash, position, cash The million equivalents working $XX on the of as we holds

As expect fiscal the of experienced all XXXX continued in. forward geographies across results momentum compete that commercial we ahead execution we've spanning We're fiscal that of this operational we with XXXX. XXXX, our year focused markets, look and pleased end most carrying remain across into strong our the strength on fiscal we and to

questions. this balance With be and to fiscal a Powell. happy healthy that backlog, this we point, robust strong successful answer we'll will your liquidity anticipate year for backdrop, be solid At another XXXX sheet,

question [Operator first from Instructions] will the John Sidoti Company. & come Franzreb with And

I'd and quarter. Brett asked to I start like another quarter. the question the previous on Mike, by great congratulations revisiting in

quarter? closeouts did the First on how the gross impact on the margin

in And very to know, That anticipate Mike. you with basis we do X. make the some we projects XXX due this pleased XX% points project-based across XQ XQ, of as larger XX for discrete both the on quarterly our year-to-date landscape. system. through John, choppiness similar we the is Yes. did landed we're as project way and closeouts where Yes, XXX the at at said, business, uplift to to experience approximately margins their of margins

we X schedule upside project that, customer bps to XX due to roughly also addition of due cancellations recognized changes. In to

exited roughly year So the was with that standpoint. basis, for you where aligned from Once -- XX%. a XX-month really that, on a based quarter anomalies margin the for we you're normalize the trailing

for me. can't there anything of Understood, Mike. magnitude cancellation we much should any And kind recall it in a seems of? time, cognizant odd X. some I quite of less Is out unusual be happening

unusual. nothing was it No,

In from creates the and to constraints And capacity a fact, dispersed, in really and it U.K. was seeing, industry geographically point customer, if at schedules the that a have is U.S. our reset. it really, given the change they X the pinch X facility.

was all what that that's So about.

And than from Okay. jobs question margins quarter, previous new again, a profit revisiting higher are written the the at past? being

John, No. it's Brett.

in no price. Just this year, change as fiscal our flow in conversations significant

opportunities side, how but looking on in changes it watch we value year. either also to for all to certainly market, the the any spend of continue We it's we offer, kind sell but looking do for

way Okay. on And will the the much bring just the expansions could how any firm? revenue capacity additional we expansion, quantify opportunity

of is noncyclic our Well, -- the there's factory both. there that X the of The central business. airport around more are side last strategies a the product -- build are ongoing, to different different expansion

have R&D is So on. side, set product I we targets of years to in expansion for we're space, into market pretty in prepared the -- good investing fitting the initial product, that it's It go hope that team that the to fiscal the that noted organically we've some X the XX in. going how feedback those the it like breaker the station and has developed looks terms 'XX. as or We in the where go looks exceed certainly anticipate comments

million have operation, the I'm here square more on there, over headquarters million or The over potential. the facility, the us next year would do to we to it's excited the at the near-term existing will sight there declutter over X.X sort XX [ million give facility, production be we put range goals of that anticipate near to but X. the the as over So of line better productive XX this be feet for ] capacity we in Hansen

Capital. with will next Our Instructions] City from question [Operator come Jon Kansas Braatz

to LNG how things I going -- projects projects forward the move after begin decision Brett, January sector? on like quickly start things investment pause the these pause, assume in can -- mean, will the project pause end some and reach awarded? how that. question 'XX be something And are to that I And projects final 'XX -- my awards of or be to quickly would

tell by build partners from tell an We I of think, and timing 'XX put all we search activity we're is has the on look you all us activity you up. and , our as these it studied noted I definitely cost I But at outs, that say is building that is up the you're early client. every would with Jon, always standpoint, has of couple 'XX definitely, effort we as The definitely positively this of question that into the point. can can the the question structure, ramped being timing picked projects very cost looking in ago. I and momentum and for, element a the 'XX, into but I see that large that day. part, a quarters as end

being potential there's definitely out a crescendo So work there.

correct? timing, that Brett, that projects are I matter I just and am of these understanding you actually assume some on already, working of am and correctly I a -- it's

couple there amount this you that one. was ambitious permitting our money with to like out new a appreciative partners award. been out there an over on it's and project we've a award at get that the the just this complete of a the Jon. see that -- with look line projects last both that there, over if they years. it to be space expansion Nice We're very some on much of past greenfields fair funding quarter out with on are just new projects There very coming for subsequent more industry. will for expansion new But decade. the There of into there, are are piece, too, going They are the FID

look you quarter would how sort quarter, Mike, know talked and million the Okay. at the book a business? maybe but I you burn of of all? fourth the in sort at changed -- has about that $XX

Yes. I over months, productivity are It's in million now we mean the the last all embarked the is seeing tick it's given up. million initiatives XX XX the $XX business that that -- to $XX range. throughput to The in has up. upon

and that -- of tied So we've plus the really taken all projects project place. have -- to that's investment the productivity all made,

Mike, better? can that get even

pretty We're to going where XXs. happy from up with now is XXs it to

stopped So always trying. we're trying. we've never

And When years duration the cycle where you see excited as duration about think you sort the Brett, more you opposed annual are question. Okay. to that gains? it forward the the about that more gets might business necessarily cycle the picture the and about ahead? of of more that optimistic stand today, you Is you big the gains going one incremental volume a

would Jon. agree, I

okay, the to do strategy breadth on, on how alter. of strategies should you or it re-examining 'XX, to do team, I initially, 'XX X our aligned think blind to was add focus out we are thing the you where the as post-pandemic keep this we always came

believer today and and it, in thing. for maybe market. the in definitely a the I Mike definitely, here sitting about I'd bigger talk the has a legs say it so And this I longer become of duration duration, lot

the where feel as really our I to -- strategies clarity providing and we're our it today going really here, on as because well. good on a feel the of -- running hit those we've strategies, it's of And good I the about duration, we're direction X kind year

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

of I want as center quarter with quarter. sales? guess fourth the I was How a start fourth percent to much data

digits, John, XX-ish sales. going it's in the of say I'm low percent to the total double

that forward? you the do how And anticipate goes year progresses as

Looking in at strong, the if potential activity as some upside. funnel, it's the not for

bigger least increase is again, product. consumption. we jobs in X, as first of think timing trend our in see in and in into for total one look quarters, power that I -- But kV, X of over getting they're the that products we getting terms an RFQs we're XX those coming at of seeing

size So bigger, these But increases their or similar that's large projects, side, just getting total FID -- the and and words their the to certainly activity but things ensure that the to -- that equivalent other validates fund their the that healthy. also spend return. power part are on on the projects is

your you change backlog end So meaningful you Brett, X ago? maybe the composition than fiscal at are seeing a years the in of saw year of the

to that. but -- to part are, is more on the of years by We I'd and an but the mix better the XX intentional strategy both data factories. That's brought Utility now, piece infrastructure of John, which and point as centers also of a strategies, their that's to of XX evidence being over new investment secondary demand by the meet onshoring the Utility

And to to their the healthy projects, because Utility build-out on a develop so optimize relationship, both groups our is can which structure cost immediate approaches and for help Powell allows the then between second the changing longer-term work clients it is that conversation but not only into needs. that effect them and near-term together,

as really we've Commercial the overall near Utility on piece digits, of Yes, term Utility It's size but & revenue quickly piece and some the that seeing sector. effect changed grown Other change per the backlog approaching we're Industrial low the so there's is a backlog. the single outlook complexion in our the the been been double-digit And quarter. profile on

and it? -- just on rather at what M&A. cash, it. getting with time talk the the to priorities Cash there do about I is Got it. one was And for Got thoughts What your of cash guess sizable. potential are

Yes.

the sort activity Board. the nothing don't last working some M&A duration quarter, active couple and we've discussions, ramp funnel over the I and the of in the where now given the We're doing, up of very morning the thing, we've funnel, last of recall But that much than with but been space. crystallize the I work are -- sort term. the think, in some we opportunities of years, breadth indicated is this of haven't we're We seeing clear more in this strategic definitely the the long about And immediate. questions it's having midterm so and

conclude question-and-answer to And session. the conference remarks. any this over will our I would closing like to Cope back Brett for turn Mr.

Thank you, Chuck.

you've the for our belief commitment pleased I, talented to to are for company. as future and the markets we their from efforts, we Powell As employees our we delivered to performance fiscal for strong continue be year. serve financial Powell. thank heard like and hard work goals continued our The past incredibly our to elevate Mike will year valued I another customers continue meet and our very the with XXXX this that team would support focus to that performance

With your Powell that, today's for forward you quarter. on to look you speaking all call. appreciate continued your participation in and interest We thank next with

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

disconnect. now may You