Powell Industries Announces Fiscal 2024 First Quarter Results

Rhea-AI Summary

Powell Industries, Inc. (NASDAQ: POWL) announced strong results for the Fiscal 2024 first quarter, with a 53% increase in revenues totaling $194 million, a gross profit of $48 million, and net income of $24 million. New orders totaled $198 million, and backlog nearly doubled to $1.3 billion. The company's CFO expressed optimism for the remainder of Fiscal 2024 and announced a 1% increase to the common stock dividend for the second consecutive year.

Insights

Financial Analyst

Examining Powell Industries' Q1 financial performance reveals a substantial 53% revenue growth year-over-year, which is a significant indicator of the company's market expansion and operational success. The gross profit margin improvement to 24.8% is particularly noteworthy, as it reflects not only increased sales but also enhanced operational efficiency and cost management. This margin expansion exceeds typical industrial growth rates and suggests a competitive advantage in cost structure or pricing power within their market segments.

Furthermore, the reported net income of $24 million, equating to $1.98 per diluted share, represents a substantial increase from the previous year's $1.2 million, or $0.10 per diluted share. This leap in profitability is a robust indicator of financial health, which could influence investor confidence positively. However, it's important to consider the sequential decline from Q4's $26.4 million, or $2.17 per diluted share, which may signal a need to analyze the sustainability of profit margins in the face of potential seasonal or market fluctuations.

Lastly, the backlog nearly doubling to $1.3 billion provides a clear visibility into future revenues, which is a critical metric for investor forecasting. This backlog serves as a buffer against market volatility and indicates a strong demand for Powell's products and services. The dividend increase, although modest, reflects a balanced approach to capital allocation, rewarding shareholders while retaining sufficient liquidity for growth.

Market Research Analyst

Powell Industries' performance in various sectors such as Petrochemical, Oil and Gas, Utility and Other Industrial sectors suggests a broad market strength. The mention of growth in the Commercial & Other Industrial sector is particularly interesting, as it includes emerging markets like data centers, hydrogen, biofuels and carbon capture and sequestration. These sectors are on the cusp of significant growth due to global trends in digitalization and the transition to renewable energy sources, positioning Powell Industries at the forefront of potential market expansion.

However, the reported lower volume within the Traction sector could indicate either a strategic shift away from this sector or potential challenges that may require strategic reassessment. It's essential to monitor how the company navigates these sector-specific trends and capitalizes on the growth opportunities presented by new energy markets.

The company's capacity expansion initiatives align with the increased backlog and market demand, suggesting a proactive approach to scaling operations. This strategic move could enable Powell to meet the rising demand and maintain its competitive edge, but it also involves execution risk and capital expenditure, which must be managed effectively to ensure continued profitability.

Economist

From an economic perspective, Powell Industries' results may reflect broader economic trends, such as increased industrial activity and investment in infrastructure, which are often seen in post-recession recovery periods or in response to governmental policy changes favoring industrial growth. The significant increase in new orders and backlog suggests that the company is benefiting from a favorable economic environment.

Moreover, the company's focus on sectors like renewable energy and digital infrastructure indicates alignment with long-term economic shifts towards sustainability and technology. These shifts often come with government incentives, which can further stimulate growth in these areas. The company's financial results and outlook may serve as a bellwether for the health of the industrial sector and could have broader implications for economic forecasting and industrial investment trends.

It is crucial to consider the potential impact of inflationary pressures on cost structures and the possibility of interest rate changes affecting capital costs. These factors could influence the company's profitability and its ability to finance growth sustainably. The balance between capital expenditures for capacity expansion and maintaining liquidity will be a delicate one in the face of potential economic headwinds.

HOUSTON, Jan. 30, 2024 (GLOBE NEWSWIRE) -- Powell Industries, Inc. (NASDAQ: POWL), a leading supplier of custom-engineered solutions for the management, control and distribution of electrical energy, today announced results for the Fiscal 2024 first quarter ended December 31, 2023. All comparisons are to the comparable period in the prior fiscal year, unless otherwise noted.

First Quarter Key Highlights:

• Revenues totaled $194 million, an increase of 53%;
• Gross profit of $48 million, or 24.8% of revenue, an improvement of 950 basis points;
• Net Income of $24 million, or $1.98 per diluted share;
• New orders totaled $198 million;
• As of December 31, 2023, backlog had nearly doubled to $1.3 billion;
• Cash and short-term investments as of December 31, 2023, totaled $355 million.

Brett A. Cope, Powell’s Chairman and Chief Executive Officer, stated, “Our first fiscal quarter was very much a continuation of the trends and strong results that we saw in our fourth quarter. Despite what is typically a seasonally slower period, we recorded $198 million of new orders which was higher sequentially by 15%. We also delivered revenue growth of 53% compared to the prior year, as we saw broad strength across most of our end market sectors. The solid revenue growth driven by the strength and quality of our backlog, coupled with terrific project execution and associated efficiency gains are translating to the improved profitability that we experienced in the quarter. Our gross margin of 24.8% was 950 basis points better than the prior year, while delivering $1.98 of earnings per diluted share in the first quarter.”

First Quarter 2024 Results   
Revenues totaled $194.0 million compared to $208.6 million and $126.9 million in the fourth and first quarter of Fiscal 2023, respectively. The increase compared to the first quarter of Fiscal 2023 was driven by strong growth across the Petrochemical, Oil and Gas, Utility and Commercial and Other Industrial sectors, partially offset by lower volume within the Traction sector.

Gross profit totaled $48.2 million, or 24.8% of revenue, compared to $52.0 million, or 24.9% of revenue, in the fourth quarter of Fiscal 2023 and compared to $19.5 million, or 15.3% of revenue, in the first quarter of Fiscal 2023.

New orders totaled $198 million compared to net new orders of $171 million and $212 million in the fourth and first quarters of Fiscal 2023, respectively.

Backlog totaled $1.3 billion as of December 31, 2023, which was essentially flat sequentially compared to backlog as of September 30, 2023, and was significantly higher than $680 million of backlog as of December 31, 2022.

Net income was $24.1 million, or $1.98 per diluted share, compared to $26.4 million, or $2.17 per diluted share, in the fourth quarter of Fiscal 2023 and compared to $1.2 million, or $0.10 per diluted share, in the first quarter of Fiscal 2023.

Cope added, “Our backlog of $1.3 billion is almost twice that of the prior year and is well-balanced across most of our market sectors. We continue to see encouraging levels of project activity across the majority of our core Industrial end markets. In addition, we’re supporting healthy market activity across some of the faster-growing applications of Powell’s capabilities within the Commercial & Other Industrial sector such as data centers along with other transitional energy end markets like hydrogen, biofuels, as well as carbon capture and sequestration. Our capacity expansion initiatives continue to progress as planned, which will facilitate our growth across most of the markets we serve. Overall, we remain encouraged by our first fiscal quarter results and the current activity level across most of our markets, which supports our expectation of another strong fiscal year for Powell.”

OUTLOOK
Commenting on the Company's outlook, Michael Metcalf, Powell’s Chief Financial Officer, said, “We are encouraged by the commercial activity across most of our core end markets and optimistic that this will continue throughout the remainder of Fiscal 2024. Considering this, coupled with both the quality and size of our backlog, we are confident that we will sustain the solid financial results that we delivered in Fiscal 2023, and anticipate that this momentum will continue into Fiscal 2024. We also announced today that our Board has approved a 1% increase to our common stock dividend for the second consecutive year. This action demonstrates both our commitment to delivering shareholders’ return as well as our prudent approach to capital allocation in order to ensure sufficient liquidity to fund our expanding working capital requirements and growth aspirations.”

CONFERENCE CALL
Powell Industries has scheduled a conference call for Wednesday, January 31, 2024 at 11:00 a.m. Eastern time. To participate in the conference call, dial 1-833-953-2431 (domestic) or 1-412-317-5760 (international) at least 10 minutes before the call begins and ask for the Powell Industries conference call. A telephonic replay of the conference call will be available through February 7, 2024 and may be accessed by calling 1-877-344-7529 (domestic) or 1-412-317-0088 (international) and using passcode 9785040#.

Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by visiting powellind.com. To listen to the live call on the web, please visit the website at least 15 minutes before the call begins to register, download and install any necessary audio software. For those who cannot listen to the live webcast, an archive will be available shortly after the call and will remain available for approximately 90 days at powellind.com.

Powell Industries, Inc., headquartered in Houston, designs, manufactures and services custom-engineered equipment and systems for the distribution, control and monitoring of electrical energy. Powell markets include large industrial customers such as utilities, oil and gas producers, refineries, liquefied natural gas facilities, petrochemical plants, pulp and paper producers, mining operations and commuter railways. For more information, please visit powellind.com.

Any forward-looking statements in the preceding paragraphs of this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties in that actual results may differ materially from those projected in the forward-looking statements. In the course of operations, we are subject to certain risk factors, competition and competitive pressures, sensitivity to general economic and industrial conditions, international political and economic risks, availability and price of raw materials and execution of business strategy. For further information, please refer to the Company's filings with the Securities and Exchange Commission, copies of which are available from the Company without charge.

POWELL INDUSTRIES, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended December 31,
	2023				2022
(In thousands, except per share data)
	(Unaudited)
Revenues	$	194,017			$	126,858
Cost of goods sold	145,823				107,394
Gross profit	48,194				19,464
Selling, general and administrative expenses	20,347				16,873
Research and development expenses	1,967				1,501
Operating income	25,880				1,090
Interest income, net	(3,998		)		(523		)
Income before income taxes	29,878				1,613
Income tax provision	5,793				451
Net income	$	24,085			$	1,162
Earnings per share:
Basic	$	2.02			$	0.10
Diluted	$	1.98			$	0.10
Weighted average shares:
Basic	11,941				11,859
Diluted	12,174				12,077
SELECTED FINANCIAL DATA:
Depreciation	$	1,641			$	2,136
Capital Expenditures	$	1,235			$	2,726
Dividends Paid	$	3,124			$	3,074

POWELL INDUSTRIES, INC. & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

	December 31, 2023				September 30, 2023
(In thousands)
	(Unaudited)
Assets:
Cash, cash equivalents and short-term investments	$	355,343			$	279,009
Other current assets	319,482				342,976
Property, plant and equipment, net	98,318				97,625
Long-term assets	34,806				32,632
Total assets	$	807,949			$	752,242
Liabilities and equity:
Current liabilities	$	427,851			$	395,686
Deferred and other long-term liabilities	13,778				11,530
Stockholders’ equity	366,320				345,026
Total liabilities and stockholders’ equity	$	807,949			$	752,242
SELECTED FINANCIAL DATA:
Working capital	$	246,974			$	226,299

 

Contacts:	Michael W. Metcalf, CFO
	Powell Industries, Inc.
	713-947-4422
	Robert Winters or Ryan Coleman
	Alpha IR Group
	POWL@alpha-ir.com
	312-445-2870

FAQ

What are Powell Industries, Inc.'s (POWL) first quarter 2024 revenues?

Powell Industries, Inc. reported first quarter 2024 revenues of $194 million.

What is the gross profit of Powell Industries, Inc. (POWL) for the first quarter of Fiscal 2024?

The gross profit of Powell Industries, Inc. for the first quarter of Fiscal 2024 was $48 million.

What was the net income of Powell Industries, Inc. (POWL) for the first quarter of Fiscal 2024?

The net income of Powell Industries, Inc. for the first quarter of Fiscal 2024 was $24 million.

What are the new orders for Powell Industries, Inc. (POWL) in the first quarter of Fiscal 2024?

New orders for Powell Industries, Inc. in the first quarter of Fiscal 2024 totaled $198 million.

What is the backlog of Powell Industries, Inc. (POWL) as of December 31, 2023?

The backlog of Powell Industries, Inc. as of December 31, 2023, had nearly doubled to $1.3 billion.

What is the outlook for Powell Industries, Inc. (POWL) for the remainder of Fiscal 2024?

The company's CFO expressed optimism for the remainder of Fiscal 2024 and announced a 1% increase to the common stock dividend for the second consecutive year.