Powell(US:POWL)2022-12-06 20:49Financial Data and Key Metrics Changes - Total revenue in Q4 2022 was $163 million, a 26% increase year-over-year and a 20% increase sequentially [8][17] - Full year revenue increased by 13% to $533 million, driven by a 15% growth in oil and gas and a 13% growth in petrochemical [11][24] - Net income for Q4 was $8.7 million, or $0.73 per share, compared to $3.3 million, or $0.28 per share in the prior year [11][23] - Full year net income was $13.7 million, or $1.15 per diluted share, with three non-recurring events contributing $0.80 per diluted share [11][25] - Gross margin in Q4 was 20.6%, a sequential improvement of 650 basis points and 320 basis points higher than the prior year [10][21] Business Line Data and Key Metrics Changes - Revenue from oil and gas markets in Q4 totaled $60 million, a 24% increase year-over-year, while utility revenue grew by 42% to over $40 million [8][20] - Traction revenue saw a decline of 18% year-over-year, attributed to the winding down of a large municipal project in Canada [20][24] - The newly reported commercial and other industrial sector generated over $56 million in revenue for the full year, more than doubling compared to the previous year [8][24] Market Data and Key Metrics Changes - Domestic revenues increased by 41% to $133 million, while international revenues decreased by 15% to $30 million due to the winding down of large projects in the Middle East and Asia [20][24] - The book-to-bill ratio in Q4 was 1.6x, marking the fourth consecutive quarter with a ratio over one [9][18] Company Strategy and Development Direction - The company aims to create a more resilient and diversified future, focusing on strategic initiatives to improve profitability and operational excellence [7][12] - Powell is expanding its electrical automation solutions and has introduced new digital products to enhance customer service [13][14] - The company is also focusing on productivity and project closeouts to protect margins amid rising costs [12][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about entering fiscal 2023 with the highest backlog in the company's history at $592 million, representing a 43% increase from the end of fiscal 2021 [11][25] - The company anticipates solid revenue growth in fiscal 2023, driven by strong commercial activity and a robust order book [25][26] - Management acknowledged challenges in labor availability and rising costs but remains confident in the company's ability to navigate these issues [12][47] Other Important Information - The company ended fiscal 2022 with cash and short-term investments of $117 million and zero long-term debt [25] - A new Vice President of Research and Development has been appointed to enhance product development and innovation [15][55] Q&A Session Summary Question: Should the starting point for fiscal 2022 be $0.35 considering the $0.80 of one-time items? - Management confirmed that $0.35 is a reasonable starting point and noted the typical seasonality affecting Q1 [30][31] Question: What contributed to the services business profitability in the quarter? - Management attributed profitability to pent-up demand in aftermarket work and strategic expansion of services [32][33] Question: What is the expected gross margin run rate for the full year? - Management indicated that while a goal is to maintain margins, various headwinds may affect this [34][36] Question: Can you provide details on the LNG award? - Management described the LNG project as a complex mega project with a significant value, expected to span over two years [39][40] Question: What are the prospects for international market improvement in 2023? - Management expressed optimism about potential improvements in international markets, particularly in Asia and the Middle East [42][64] Question: What percentage of capacity is expected to be operated in fiscal 2023? - Management estimated operating capacity to be in the range of 60% to 75% [45][46] Question: Will the new commercial and other industrial segment replace the previous segments? - Management clarified that the new segment is a subset of previously reported categories, focusing on new growth areas [48][49]