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].

Core Viewpoint - Powell Industries, Inc. (POWL) is positioned as a key player in the nuclear build-out and power capacity expansion driven by AI data centers, despite a recent revenue miss impacting short-term sentiment [1][5][6]. Group 1: Company Performance - Powell Industries reported strong earnings per share (EPS) but missed revenue expectations, leading to a sell-off in the stock [5][6]. - The recent performance of nuclear-adjacent companies like OKLO, Inc. and Centrus Energy Corp. highlights the ongoing investor interest in the energy sector [2]. Group 2: Market Sentiment and Strategy - The near-term sentiment has shifted negatively due to the revenue miss, causing a compression of multiples and a reaction from fast money investors [6][7]. - The company plans to leverage the post-earnings drop to establish a bullish options position, taking advantage of elevated put pricing while maintaining upside potential [9]. Group 3: Structural Drivers - The fundamental drivers for Powell Industries remain intact, including the increasing power needs of data centers, grid modernization, and the momentum in nuclear energy [8]. - Powell's role in supplying essential equipment for power distribution continues to be critical, unaffected by the fluctuations of a single quarter [8]. Group 4: Macro Context - The investment aligns with broader themes of Reindustrialization, Embodied AI, and Energy, emphasizing the need for robust power supply for factories, robots, and AI data centers [10].

Core Viewpoint - Powell Industries reported fiscal third-quarter earnings that missed revenue expectations but exceeded profit expectations, indicating a more favorable underlying trajectory than initially perceived [1][3]. Revenue Performance - The company's fiscal third quarter experienced a slight 1% decline in revenue compared to expectations, but showed a 3% increase relative to the prior quarter [3]. - The electric utility segment saw a significant increase of 31%, while commercial and light industrial revenue rose by 18% [4]. - In contrast, the oil and gas segment declined by 8%, and the petrochemical segment saw a substantial decline of 36% [5]. Earnings and Margins - Earnings per share reached $3.96, reflecting a 4% increase and beating expectations, supported by an encouraging expansion in gross margins [3]. Booking Trends - Overall booking trends appeared positive, with bookings growing by 45% quarter over quarter, leading to a 7% sequential growth in backlog [5]. Future Growth Potential - Powell Industries trades at a 16.7 multiple based on 2025 estimates, which may seem low for a company with modest growth; however, as the electric utility segment constitutes a larger portion of the business, there is potential for upside surprises [7]. - The electric utility segment accounted for 26% of revenue in the June quarter, while commercial and industrial segments made up another 17% [7]. - Continued growth in these segments could position them as major drivers of the business in the future [8].

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]

Financial Data and Key Metrics Changes - The company reported total revenue of $286 million, slightly down from $288 million in the same period last year, with net income increasing to $48 million or $3.96 per diluted share, a 4% increase year-over-year [17][23] - Gross profit increased by $6 million to $88 million, with a gross margin of 30.7%, which is 230 basis points higher than the prior year [20][6] - The book-to-bill ratio was 1.3 times, with a backlog growth of 7% to a total of $1.4 billion, reflecting strong order activity [8][18] Business Line Data and Key Metrics Changes - Revenue from the electric utility market increased by 31%, while revenues from the commercial and other industrial market and the traction market saw increases of 1861% and a notable traction order, respectively [19] - Domestic revenues decreased by 8% to $225 million, while international revenues increased by 30% to $62 million, driven by project volume growth in Canada and the Middle East [19] Market Data and Key Metrics Changes - The oil and gas and petrochemical markets saw revenue declines of 368% and 368%, respectively, due to challenging comparisons with prior year mega projects [20] - The fundamentals for the U.S. natural gas market remain strong, supporting expectations for continued order strength, particularly in LNG projects [14] Company Strategy and Development Direction - The company announced an agreement to acquire REMSAK Limited, enhancing its electrical automation platform and allowing for a 100% Powell-built solution for the utility market [11][12] - The company is focused on diversifying its product portfolio and advancing its product-centric strategy to improve the mix of product versus project-based revenues [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand across all markets and the ability to deliver value for customers and stakeholders [16] - The outlook for the electric utility market remains strong, with expectations for continued growth driven by electrification trends [28] Other Important Information - Selling, general, and administrative expenses increased by $3 million to $25 million, attributed to higher compensation and acquisition-related expenses [21][22] - The company does not hold any debt, with cash and short-term investments totaling $433 million [23] Q&A Session Summary Question: What does the opportunity pipeline look like now? - Management highlighted a strong utility market and ongoing activity in oil and gas, with significant opportunities tracked across various sectors [26][27] Question: How far does the revenue visibility extend? - The backlog is transparent, with bookings extending into late fiscal 2027, providing good visibility for revenue conversion [29][30] Question: How much did project closeouts contribute to gross margin improvement? - Approximately 115-120 basis points of the year-to-date margin improvement is attributed to project closeouts [31][32] Question: Was there anything unusual regarding the increase in SG&A expenses? - The increase was due to higher variable compensation and acquisition-related expenses, with no unusual items noted [33] Question: What is driving the momentum in the electric utility market? - The momentum is attributed to a combination of being a trusted partner and the demand driven by electrification and data centers [36][38] Question: Can you elaborate on the REMSAK acquisition? - The acquisition is expected to enhance the company's capabilities in electrical automation and provide significant growth potential in the North American market [39][40] Question: What is the outlook for pricing in the current market? - Pricing is stable but not improving significantly, with management closely monitoring market dynamics [58][60] Question: Was the $60 million electric utility award a combined cycle generating facility? - The project is a significant power generation facility, exceeding a gigawatt output, supporting commercial markets [61]