Powell Industries (POWL) FY Conference Summary Company Overview - Powell Industries is an electrical distribution company specializing in industrial electrical components, primarily located in the Gulf Coast and Houston [3][4] - The company celebrated its 70th anniversary and reported revenues exceeding $1 billion last year [4] Product and Service Offerings - Powell manufactures medium and low voltage switchgear and circuit breakers, with a focus on engineered-to-order (ETO) operations [6][9] - The company is agnostic to the power source (solar, wind, coal, hydro) and the application of power [10][11] - Powell's product range includes power control rooms and offshore modules, which are customized for specific electrical configurations [14][15] Market Segmentation - Core industrial markets account for 50-60% of revenue, including sectors like LNG, carbon capture, hydrogen, and legacy refineries [19][20] - The utility sector is also significant, focusing on generation and distribution, with no current involvement in transmission [30] - Data centers have emerged as a new sector, contributing approximately 15% of total revenue, with half of that attributed to data centers [22][45] Financial Performance - The company reported over $400 million in cash and zero debt as of the last fiscal quarter [32] - Powell has a robust R&D pipeline, with recent product launches across various sectors [33] - The backlog surpassed $1 billion in 2023, with a steady order cadence and a book-to-bill ratio of 1.1 in 2024 [40][41] Strategic Focus - Powell aims to enhance its automation and control solutions, recently acquiring a UK operation called REM Stack [19][28] - The company is focused on organic and inorganic growth, with plans to expand its product portfolio and services [30][31] - Powell's business model emphasizes flexibility and customer collaboration, allowing for on-site adjustments during projects [24][26] Geographic Revenue Distribution - Over 80% of revenues are generated in the United States, with a significant portion adhering to ANSI electrical standards [42][43] - International revenue includes operations in Canada and the UK, with a growing presence in IEC standards [13][43] Challenges and Risks - The company is monitoring potential tariff impacts, particularly concerning materials sourced from India and copper price fluctuations [50][52] - Powell has hedged against copper price spikes but remains vigilant about future supply chain challenges [51][53] Conclusion - Powell Industries is well-positioned in the electrical distribution market, with a strong financial foundation, diverse product offerings, and a strategic focus on growth and innovation across various sectors [46]

Core Viewpoint - Powell Industries, Inc. announced a $12.4 million investment to expand production capacity at its Jacintoport manufacturing facility, bringing total investments in the facility to approximately $20 million over the past eight years and nearly $40 million across its three Houston facilities to support organic growth plans [1][2]. Group 1: Investment Details - The investment will add 335,000 square feet of productive capacity for Power Control Room laydown area, representing a 62% increase from the current capacity [2]. - The length of the existing shoreline bulkhead will be doubled to 1,150 feet to enhance schedule flexibility and accommodate multiple ship lanes for various project needs [2]. Group 2: Market Outlook - The expansion is expected to support a strong cycle of Oil & Gas order activity driven by LNG project development over the next three to five years [2]. - Powell's facility will provide customers with a premier location for building onshore and offshore Power Distribution solutions, reinforcing the company's position in the market [2]. Group 3: Construction Timeline - Construction is anticipated to begin in the first quarter of Fiscal 2026 and is expected to be completed by late Fiscal 2026 [3]. Group 4: Company Overview - Powell Industries, Inc. designs, manufactures, and services custom-engineered equipment and systems for the distribution, control, and monitoring of electrical energy, serving large industrial customers including utilities and oil and gas producers [4].

Core Insights - The article discusses the investment potential of Powell Industries (NASDAQ: POWL), with an upgraded rating to "buy" and a price target of $233 per share, indicating a positive outlook for the company's future performance [1]. Company Overview - Powell Industries is highlighted as a company that may benefit from sustainable, growth-driven investment strategies aimed at maximizing shareholder equity [1]. Investment Strategy - The investment strategy focuses on identifying companies that meet growth-oriented goals, which aligns with the objectives of the family office fund led by Amrita, who emphasizes democratizing financial literacy [1]. Market Context - The article suggests that the current market conditions may provide opportunities for maximizing returns, particularly in the context of Powell Industries and similar companies [1].

Core Insights - The article emphasizes the importance of conducting personal in-depth research and due diligence before making investment decisions, highlighting the inherent risks involved in trading [3]. Group 1 - The analysis is intended solely for informational purposes and should not be interpreted as professional investment advice [3]. - There is a clear disclaimer regarding the lack of any stock, option, or similar derivative positions in the companies mentioned, indicating a neutral stance [2]. - The article expresses that past performance does not guarantee future results, reinforcing the need for careful consideration by investors [4].

Core Insights - Mr. Mavroudis is a professional portfolio manager with expertise in institutional and private portfolios, focusing on risk management and financial market analysis [1] - He has successfully navigated major crises, including the COVID-19 pandemic, demonstrating resilience and adaptability in investment strategies [1] - Mr. Mavroudis is the CEO of FAST FINANCE Investment Services, a registered Greek company, and holds multiple advanced degrees and certifications in finance and law [1] Company Overview - FAST FINANCE Investment Services is a registered company by the Hellenic Capital Market Commission, indicating regulatory compliance and credibility in the financial services sector [1] - The company specializes in restructuring investment portfolios based on prevailing market conditions and client needs, showcasing a client-centric approach [1] Professional Background - Mr. Mavroudis has published three books on investments and contributes articles to reputable financial media, enhancing his visibility and authority in the investment community [1] - He is a certified portfolio manager and holds various certifications related to financial instruments, derivatives, and securities, reflecting a high level of expertise [1]

Company Overview - Powell Industries, headquartered in Houston, TX, specializes in manufacturing and supplying custom-engineered equipment and systems for distributing, controlling, and monitoring electrical energy flow [11] - The company was founded in 1947 and employs 2,748 individuals as of September 30, 2024 [11] - Key products include integrated power control room substations, electrical houses, medium-voltage circuit breakers, monitoring and control communications systems, switches, motor control centers, bus duct systems, and arc-resistant distribution switchgears [11] Investment Potential - Powell Industries holds a Zacks Rank of 2 (Buy) and has a VGM Score of B, indicating strong investment potential [12] - The company is particularly appealing to growth investors, with a Growth Style Score of B and a forecasted year-over-year earnings growth of 17.1% for the current fiscal year [12] - Recent upward revisions in earnings estimates by two analysts over the last 60 days have led to an increase in the Zacks Consensus Estimate by $0.22 to $14.39 per share [12] - Powell Industries has demonstrated an average earnings surprise of +7.3%, further enhancing its attractiveness to investors [12][13]

Core Viewpoint - Powell Industries (POWL) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in a company's earnings picture, which is a powerful determinant of near-term stock price movements [2][4]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in stock price movements [4]. Powell Industries' Earnings Outlook - The upgrade for Powell Industries reflects an improvement in its underlying business, which is expected to positively influence its stock price [5]. - For the fiscal year ending September 2025, Powell Industries is projected to earn $14.26 per share, unchanged from the previous year, with a 0.6% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [7]. - The upgrade of Powell Industries to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Viewpoint - Powell Industries (POWL) has reached a significant support level and shows potential for investors from a technical perspective, having recently broken through the 20-day moving average, indicating a short-term bullish trend [1]. Technical Analysis - The 20-day simple moving average is a popular tool among traders, providing insights into a stock's price over a 20-day period, which is beneficial for short-term traders as it smooths out price trends and signals trend reversals more effectively than longer-term averages [2]. - A stock price above the 20-day moving average indicates a positive trend, while a price below suggests a downward trend [2]. Performance Metrics - POWL shares have increased by 9.7% over the past four weeks, indicating a positive momentum [4]. - The company holds a Zacks Rank 2 (Buy), suggesting that POWL may continue to experience upward movement [4]. Earnings Estimates - There have been positive revisions in earnings estimates for POWL, with no estimates decreasing in the past two months and one estimate increasing, alongside a rise in the consensus estimate [4]. - The combination of positive earnings estimate revisions and favorable technical indicators suggests that investors should monitor POWL for potential gains in the near future [5].

Part I — Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Powell Industries, Inc.'s unaudited condensed consolidated financial statements show total assets of $1.04 billion and nine-month net income of $129.3 million [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $1.04 billion by June 30, 2025, driven by cash growth, while stockholders' equity rose to $594.9 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $880,159 | $776,481 | | **Total Assets** | $1,042,216 | $928,180 | | **Total Current Liabilities** | $427,345 | $428,015 | | **Total Liabilities** | $447,311 | $445,107 | | **Total Stockholders' Equity** | $594,905 | $483,073 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q3 2025 revenues were $286.3 million with net income of $48.2 million, while nine-month revenues grew to $806.3 million and net income rose to $129.3 million Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2025 | Q3 2024 | 9 Months 2025 | 9 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $286,273 | $288,168 | $806,335 | $737,293 | | **Gross Profit** | $87,899 | $81,740 | $230,855 | $192,654 | | **Operating Income** | $60,124 | $57,288 | $154,615 | $122,657 | | **Net Income** | $48,234 | $46,223 | $129,327 | $103,796 | | **Diluted EPS** | $3.96 | $3.79 | $10.63 | $8.52 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for Q3 2025 increased to $55.7 million, driven by foreign currency adjustments, with the nine-month total reaching $129.7 million Comprehensive Income (in thousands) | Metric | Q3 2025 | Q3 2024 | 9 Months 2025 | 9 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net Income** | $48,234 | $46,223 | $129,327 | $103,796 | | **Foreign currency translation adjustments** | $7,479 | $(986) | $347 | $(170) | | **Comprehensive Income** | $55,713 | $45,237 | $129,674 | $103,626 | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity grew to $594.9 million by June 30, 2025, primarily due to $129.3 million in net income, partially offset by dividends - The primary driver for the increase in **stockholders' equity** during the nine months ended June 30, 2025, was the **net income** of **$129.3 million**[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Nine-month operating cash flow was $106.9 million, with investing and financing activities using $4.2 million and $21.7 million respectively, leading to an $83.1 million increase in cash Cash Flow Summary (in thousands) | Activity | Nine months ended June 30, 2025 | Nine months ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $106,862 | $114,652 | | **Net cash used in investing activities** | $(4,215) | $(12,976) | | **Net cash used in financing activities** | $(21,670) | $(15,951) | | **Net increase in cash and cash equivalents** | $80,977 | $85,725 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, revenue recognition, and commitments, highlighting a $1.4 billion backlog, the Remsdaq Ltd. acquisition, and tax reform evaluation - The company's primary markets include **oil and gas**, petrochemical, **electric utility**, and other commercial and industrial sectors[25](index=25&type=chunk) - As of June 30, 2025, the company's **backlog** of remaining unsatisfied performance obligations was **$1.4 billion**, with approximately **$913 million** expected to be recognized as revenue within the next twelve months[45](index=45&type=chunk) - Subsequent to the quarter end, the company entered into a definitive agreement to acquire Remsdaq Ltd. for approximately **$16.3 million**, declared a quarterly dividend of **$0.2675** per share, and is evaluating the impact of the new 'One Big Beautiful Bill Act' tax legislation[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, noting a $1.4 billion backlog, positive market outlook, and strong liquidity with $433.0 million in cash and short-term investments [Executive Overview and Outlook](index=26&type=section&id=Executive%20Overview%20and%20Outlook) Q3 2025 saw $286.3 million in revenues and $48.2 million net income, with a positive outlook driven by a $1.4 billion backlog and strong market activity - **Backlog** increased to **$1.4 billion** as of June 30, 2025, with approximately **$913 million** expected to be recognized as revenue within the next twelve months[94](index=94&type=chunk) - Key market drivers include: - **Oil & Gas:** Strong demand for LNG and related gas processing - **Electric Utility:** A record-sized award for a new power generation plant was won in Q3 - **Commercial & Industrial:** Strong growth from data centers supporting cloud computing and AI[95](index=95&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q3 2025 revenues were $286.3 million with a 31% gross margin, while nine-month revenues grew 9% to $806.3 million, and the order backlog reached $1.4 billion Q3 2025 vs. Q3 2024 Performance | Metric | Q3 2025 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | **Revenues** | $286.3M | $288.2M | -1% | | **Gross Profit** | $87.9M | $81.7M | +8% | | **Gross Margin** | 31% | 28% | +300 bps | | **Net Income** | $48.2M | $46.2M | +4.3% | Nine Months 2025 vs. Nine Months 2024 Performance | Metric | 9M 2025 | 9M 2024 | Change | | :--- | :--- | :--- | :--- | | **Revenues** | $806.3M | $737.3M | +9% | | **Gross Profit** | $230.9M | $192.7M | +20% | | **Gross Margin** | 29% | 26% | +300 bps | | **Net Income** | $129.3M | $103.8M | +24.6% | - The order **backlog** increased to **$1.4 billion** at June 30, 2025, up **7%** from March 31, 2025, driven by **electric utility**, **oil and gas**, and light rail traction power markets[111](index=111&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity remains strong with $433.0 million in cash and short-term investments, $106.9 million in nine-month operating cash flow, and $74.0 million available on the credit facility - **Cash, cash equivalents, and short-term investments** increased to **$433.0 million** at June 30, 2025, from **$358.4 million** at September 30, 2024, driven by improved earnings[123](index=123&type=chunk) - As of June 30, 2025, there were no amounts borrowed under the **$150.0 million U.S. Revolver**, with **$74.0 million** available for borrowings and letters of credit[127](index=127&type=chunk) - **Net cash from operating activities** decreased to **$106.9 million** for the nine months ended June 30, 2025, from **$114.7 million** in the prior year, primarily due to working capital impacts[128](index=128&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to the company's market risks have occurred as of June 30, 2025, compared to the prior fiscal year's Form 10-K disclosures - There have been no material changes to the company's market risks from those disclosed in the fiscal year 2024 Form 10-K[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during Q3 Fiscal 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[136](index=136&type=chunk) - No changes occurred during the third quarter of Fiscal 2025 that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[137](index=137&type=chunk) Part II — Other Information [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in legal proceedings, but management anticipates no material adverse effect on financial position, results of operations, or liquidity - Management does not expect ongoing legal proceedings to have a material adverse effect on the company's financial condition or results[138](index=138&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the fiscal year 2024 Annual Report on Form 10-K - No material changes to risk factors have occurred since the last Annual Report on Form 10-K[139](index=139&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q3 Fiscal 2025 - No **directors** or **officers** adopted or terminated any **Rule 10b5-1** trading arrangements during the quarter[140](index=140&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate documents and certifications from the Chief Executive Officer and Chief Financial Officer - The report includes certifications from the CEO and CFO as required by the **Sarbanes-Oxley Act**, along with financial statements formatted in **Inline XBRL**[141](index=141&type=chunk)

Core Insights - Powell Industries, Inc. reported adjusted earnings of $3.96 per share for Q3 fiscal 2025, exceeding the Zacks Consensus Estimate of $3.73, marking a 4% year-over-year increase [1][10] - Total revenues for the quarter were $286 million, falling short of the consensus estimate of $295 million, representing a 1% year-over-year decline primarily due to weakness in the oil & gas and petrochemical markets [2][10] Revenue Breakdown - Revenues from the electric utility sector increased by 31% year over year, while the commercial & other industrial sector saw an 18% increase [3] - Conversely, revenues from the oil & gas sector declined by 8%, and the petrochemical sector experienced a significant 36% decrease year over year [3] Orders and Backlog - New orders totaled $362 million, up from $356 million in the same quarter last year, driven by strong activity in the oil & gas and commercial sectors [4] - The backlog at the end of the quarter reached $1.4 billion, reflecting a 7% sequential increase and a 5% year-over-year increase [4] Margin Profile - The cost of sales decreased by 3.9% year over year to $198.4 million, while gross profit increased by 7.5% to $87.9 million, resulting in a gross margin of 30.7%, up 230 basis points [5] - Selling, general and administrative expenses rose by 14.1% to $25.1 million, with operating income increasing by 4.9% to $60.1 million, leading to an operating margin of 21%, up 110 basis points year over year [5] Balance Sheet and Cash Flow - As of the end of Q3 fiscal 2025, Powell Industries had cash equivalents and short-term investments of $433 million, an increase from $358.4 million at the end of fiscal 2024 [6] - Current liabilities were slightly reduced to $427.3 million from $428 million at the end of fiscal 2024, with stockholders' equity totaling $594.9 million [6] - Capital expenditures for the first nine months of fiscal 2025 amounted to $11.4 million, reflecting a significant year-over-year increase of 225.7% [6] Dividend Distribution - The company distributed $9.6 million in dividends during the same period, which is a 1.1% increase year over year [7] Future Outlook - Powell Industries anticipates solid revenues and earnings for fiscal 2025, supported by a robust backlog, strong liquidity, and a healthy balance sheet [8]