Powell Industries Gains From Business Strength Amid Risks

Core Viewpoint - Powell Industries, Inc. is experiencing growth driven by energy transition projects and has established itself as a leading supplier of critical electrical infrastructure due to a solid project pipeline and high investments in LNG and related sectors [1]. Financial Performance - For the first quarter of fiscal 2025, Powell Industries reported a revenue increase of 24.4% year-over-year, reaching $241.4 million, attributed to strong project activity across its markets [2]. - The company ended the fiscal first quarter with a backlog of$1.3 billion, with new orders totaling $269 million compared to$198 million in the same quarter of the previous year [3]. Shareholder Returns - Powell Industries is committed to rewarding shareholders, distributing $3.2 million in dividends in the first three months of 2025, and increasing its total dividends for fiscal 2024 to$12.7 million, a 2.4% increase year-over-year [4]. Cost and Expense Challenges - The company faced challenges with high operating costs, as the cost of sales rose 24.8% year-over-year in the first quarter of fiscal 2025, driven by increased raw material costs, with the cost of sales representing 75.3% of revenues [7]. - Selling, general, and administrative expenses also increased by 5.6% during the same period [7]. Supply Chain Issues - Powell Industries utilizes various raw materials, including steel, copper, and aluminum, and is experiencing supply-chain constraints for engineered components, which may lead to increased costs and delivery delays [8].