POWELL INDUSTRIES INC

Previous wording

In the first quarter of Fiscal 2025, we reported revenues of $241.4 million, net income of $34.8 million, and generated $37.1 million in cash from operating activities. As of December 31, 2024, we had total assets of $912.7 million.

Current wording

In the second quarter of Fiscal 2025, we reported revenues of $278.6 million, net income of $46.3 million, and generated $59.5 million in cash from operating activities. As of March 31, 2025, we had total assets of $965.4 million.

Previous wording

Our backlog remained at $1.3 billion as of December 31, 2024, of which approximately $893 million is expected to be recognized as revenue within the next twelve months. Although current commercial activity remains active in most of the markets that we compete in, we remain attentive to the macro environment and geopolitical events that may have an impact on future market activity.

Current wording

Our backlog remained at $1.3 billion as of March 31, 2025, of which approximately $831 million is expected to be recognized as revenue within the next twelve months. Although current commercial activity remains active in most of the markets that we compete in, we remain attentive to the macro environment and geopolitical events that may have an impact on future market activity.

Previous wording

Oil and gas and petrochemical markets. The North American market is responding to increased international demand for Liquefied Natural Gas (LNG) and gas-to-chemical processes utilizing low-cost gas feedstocks. We believe the fundamentals of the U.S. natural gas market, through abundant supply and low cost, will continue to support investments in LNG, related gas processing, and petrochemical processes, and as a result, will continue to sustain our order activity associated with such markets, which is evidenced by a large, domestic LNG project award during the current quarter. In addition to the traditional crude oil refining and other oil and gas downstream processes, we have recently expanded our end markets into hydrogen production, carbon capture as well as alternative fuels, such as biofuels and sustainable aviation fuel, in response to the demand for clean energy.

Current wording

Oil and gas and petrochemical markets. The North American market is responding to increased international demand for Liquefied Natural Gas (LNG) and gas-to-chemical processes utilizing low-cost gas feedstocks. We believe the fundamentals of the U.S. natural gas market, through abundant supply and low cost, will continue to support investments in LNG, related gas processing, and petrochemical processes, and as a result, will continue to sustain our order activity associated with such markets, which is evidenced by two large, domestic LNG project awards during the first half of Fiscal 2025. In addition to the traditional crude oil refining and other oil and gas downstream processes, we have recently expanded our end markets into hydrogen production, carbon capture as well as alternative fuels, such as biofuels and sustainable aviation fuel, in response to the demand for clean energy.

Previous wording

During the first quarter of Fiscal 2025, we experienced an increase in volatility for commodity prices, in addition to ongoing supply chain delays for specific engineered components that remain a persistent challenge. In response to the rising cost environment and persistent supply chain challenges, we are taking strategic measures to effectively manage our product pricing, refine delivery schedules, and manage bid validity dates with our customers. Our supplier engagement includes improving forecasting and negotiating favorable terms that allow us to meet or exceed customer timelines. Additionally, we remain focused on enhancing factory efficiencies and improving project execution to mitigate risks and maintain customer satisfaction.

Current wording

During the second quarter of Fiscal 2025, we experienced an increase in volatility for commodity prices and ongoing supply chain delays for specific engineered components that remain a persistent challenge. Moreover, recently announced changes and proposed changes to U.S. global trade policy, along with potential international retaliatory measures, have caused high volatility in global markets and uncertainty around short- and long-term economic impacts in the United States and other markets we serve, including concerns over inflation, recession and slowing growth. We continue to evaluate and monitor the potential impacts of these changes and measures, including the imposition of tariffs, on our business and operations. We could potentially face the challenge of increased costs of raw materials and engineered components as well as negative impacts on our margins; however, it is not possible to predict the impact, if any, of any changes or proposed changes to the U.S. global trade policy, or any international retaliatory measures, on our business and operations. In response to the rising cost environment and persistent supply chain challenges, we are taking strategic measures to effectively manage our product pricing, refine delivery schedules, and manage bid validity dates with our customers. Our supplier engagement includes improving forecasting and negotiating favorable terms that allow us to meet or exceed customer timelines. Additionally, we remain focused on enhancing factory efficiencies and improving project execution to mitigate risks and maintain customer satisfaction.

Previous wording

Revenues increased by 24%, or $47.4 million, to $241.4 million in the first quarter of Fiscal 2025, primarily driven by strong project backlog at the end of Fiscal 2024 and strong bookings that continued in the first quarter of Fiscal 2025. Domestic revenues increased by 24%, or $37.9 million, to $197.8 million in the first quarter of Fiscal 2025. International revenues increased by 28%, or $9.5 million, to $43.6 million in the first quarter of Fiscal 2025, primarily driven by increased project volume from our Canada operations. Our international revenues include both revenues generated from our international facilities as well as revenues from export projects generated at our domestic facilities.

Current wording

Revenues increased by 9%, or $23.5 million, to $278.6 million in the second quarter of Fiscal 2025, primarily driven by strong project backlog at the end of Fiscal 2024 and strong bookings that continued through the first half of Fiscal 2025. Domestic revenues increased by 5%, or $10.9 million, to $227.8 million in the second quarter of Fiscal 2025. International revenues increased by 33%, or $12.6 million, to $50.8 million in the second quarter of Fiscal 2025, primarily driven by increased project volume from our Canada operations and increased activity in the Middle East and Africa region. Our international revenues include both revenues generated from our international facilities as well as revenues from export projects generated at our domestic facilities.

Previous wording

In the first quarter of Fiscal 2025, revenue from our oil and gas market (excluding petrochemical) increased by 14%, or $12.0 million, to $95.7 million; petrochemical market revenue increased by 17%, or $4.8 million, to $33.2 million; revenue from our electric utility market increased by 26%, or $10.5 million, to $51.2 million; commercial and other industrial market revenue increased by 80%, or $19.6 million, to $44.3 million; and revenue from our light rail traction power market increased by 89%, or $3.9 million, to $8.2 million. These increases in revenue were driven by improved market conditions in our end markets, increased capital spending in our core oil, gas and petrochemical markets, as well as our strategic effort to expand our business into electric utility and commercial and other industrial markets. Revenue from all other markets combined decreased by 28%, or $3.5 million, to $8.8 million in the first quarter of Fiscal 2025 due to less project volume.

Current wording

In the second quarter of Fiscal 2025, revenue from our oil and gas market (excluding petrochemical) decreased by 3%, or $2.7 million, to $101.2 million; petrochemical market revenue decreased by 13%, or $6.4 million, to $43.7 million; revenue from our electric utility market increased by 48%, or $22.8 million, to $70.3 million; commercial and other industrial market revenue increased by 16%, or $5.5 million, to $40.4 million; and revenue from our light rail traction power market increased by 122%, or $5.5 million, to $10.0 million. These increases in revenue were primarily driven by our strategic effort to expand our business into electric utility and commercial and other industrial markets and the improved market conditions in these end markets. Revenue from all other markets combined decreased by 9%, or $1.3 million, to $13.0 million in the second quarter of Fiscal 2025 due to less project volume.

Previous wording

Gross profit increased by 24%, or $11.3 million, to $59.5 million for the first quarter of Fiscal 2025. Gross profit as a percentage of revenues remained flat at 25% in the first quarter of Fiscal 2025, as compared to the first quarter of Fiscal 2024. The increase in gross profit was primarily driven by higher revenues in the first quarter of Fiscal 2025.

Current wording

Gross profit increased by 33%, or $20.7 million, to $83.4 million for the second quarter of Fiscal 2025. Gross profit as a percentage of revenues increased to 30% in the second quarter of Fiscal 2025, as compared to 25% in the second quarter of Fiscal 2024. The increase in gross profit was primarily driven by higher revenues, favorable volume leverage, strong project execution, as well as benefit from project closeouts in the second quarter of Fiscal 2025.

Previous wording

We recorded an income tax provision of $4.7 million in the first quarter of Fiscal 2025, compared to an income tax provision of $5.8 million in the first quarter of Fiscal 2024. The effective tax rate for the first quarter of Fiscal 2025 was 12%, compared to an effective tax rate of 19% for the first quarter of Fiscal 2024. For each of the three months ended December 31, 2024 and 2023, the effective tax rate was favorably impacted by discrete items related to the vesting of restricted stock units (RSUs) and the estimated Research and Development (R&D) Tax Credit. The decreased effective tax rate for the first quarter of Fiscal 2025 was primarily driven by higher stock prices associated with the vested RSUs. For further information regarding our income taxes, see Note J of Notes to Condensed Consolidated Financial Statements.

Current wording

We recorded an income tax provision of $16.1 million in the second quarter of Fiscal 2025, compared to an income tax provision of $10.4 million in the second quarter of Fiscal 2024. The effective tax rate for the second quarter of Fiscal 2025 was 26%, compared to an effective tax rate of 24% for the second quarter of Fiscal 2024. For each of the three months ended March 31, 2025 and 2024, the effective tax rate was favorably impacted by the estimated Research and Development (R&D) Tax Credit. Additionally, for the second quarter of Fiscal 2024, we recognized a benefit for discrete items related to the vesting of restricted stock units (RSUs) and the release of a reserve for unrecognized tax benefits. For further information regarding our income taxes, see Note J of the Notes to Condensed Consolidated Financial Statements.

Previous wording

In the first quarter of Fiscal 2025, we recorded net income of $34.8 million, or $2.86 per diluted share, compared to net income of $24.1 million, or $1.98 per diluted share, in the first quarter of Fiscal 2024. The increase in net income was primarily driven by higher revenues in the current quarter.

Current wording

In the second quarter of Fiscal 2025, we recorded net income of $46.3 million, or $3.81 per diluted share, compared to net income of $33.5 million, or $2.75 per diluted share, in the second quarter of Fiscal 2024. The increase in net income was primarily driven by higher revenue and improved gross profit margin in the second quarter of Fiscal 2025.

Previous wording

The order backlog, which is our remaining unsatisfied performance obligations, represents the estimated transaction price for goods and services for which we have a material right, but work has not been performed. The order backlog at December 31, 2024 was $1.3 billion, consistent with our backlog at September 30, 2024. Bookings, net of cancellations and scope reductions, increased by 36% in the first quarter of Fiscal 2025 to $268.6 million, compared to $197.5 million in the first quarter of Fiscal 2024.

Current wording

The order backlog, which is our remaining unsatisfied performance obligations, represents the estimated transaction price for goods and services for which we have a material right, but work has not been performed. The order backlog at March 31, 2025 was $1.3 billion, consistent with our backlog at December 31, 2024. Bookings, net of cancellations and scope reductions, increased by 6% in the second quarter of Fiscal 2025 to $249.0 million, compared to $235.4 million in the second quarter of Fiscal 2024.

Previous wording

Selling, general and administrative expenses increased by 6%, or $1.1 million, to $21.5 million in the first quarter of Fiscal 2025, primarily due to increased compensation expense. Selling, general and administrative expenses as a percentage of revenues decreased to 9% during the first quarter of Fiscal 2025, compared to 10% during the first quarter of Fiscal 2024, resulting from higher revenues on our existing cost structure.

Current wording

Selling, general and administrative expenses increased by 5%, or $1.9 million, to $43.2 million in the six months ended March 31, 2025, primarily due to increased compensation expense. Selling, general and administrative expenses as a percentage of revenues decreased to 8% during the first half of Fiscal 2025, compared to 9% during the first half of Fiscal 2024, resulting from higher revenues on our existing cost structure.

Previous wording

As of December 31, 2024, current assets exceeded current liabilities by 1.9 times.

Current wording

As of March 31, 2025, current assets exceeded current liabilities by 2.0 times.

Previous wording

Cash, cash equivalents and short-term investments increased to $373.4 million at December 31, 2024, compared to $358.4 million at September 30, 2024. The increase in cash, cash equivalents and short-term investments was primarily driven by our improved earnings due to higher revenues, partially offset by capital spending, dividend payments, and cash payments related to shares withheld in lieu of employee tax withholding. We believe that our cash, cash equivalents and short-term investments, as well as available borrowings under our U.S. credit facility, will be sufficient to support our future operating activities, working capital requirements, payment of dividends and capital spending, as well as research and development initiatives for the next twelve months and beyond.

Current wording

Cash, cash equivalents and short-term investments increased to $389.3 million at March 31, 2025, compared to $358.4 million at September 30, 2024. The increase in cash, cash equivalents and short-term investments was primarily driven by our improved earnings due to higher gross profit, partially offset by capital spending, dividend payments, and cash payments related to shares withheld in lieu of employee tax withholding. We believe that our cash, cash equivalents and short-term investments, as well as available borrowings under our U.S. credit facility, will be sufficient to support our future operating activities, working capital requirements, payment of dividends and capital spending, as well as research and development initiatives for the next twelve months and beyond.

Previous wording

Approximately $65.1 million of our cash, cash equivalents and short-term investments at December 31, 2024 was held outside of the U.S. for our international operations. It is our intention to indefinitely reinvest all current and future foreign earnings internationally in order to ensure sufficient working capital to support our international operations. In the event that we elect to repatriate some or all of the foreign earnings that were previously deemed to be indefinitely reinvested outside the U.S., we may incur additional tax expense upon such repatriation under current tax laws.

Current wording

Approximately $75.4 million of our cash, cash equivalents and short-term investments at March 31, 2025 was held outside of the U.S. for our international operations. It is our intention to indefinitely reinvest all current and future foreign earnings internationally in order to ensure sufficient working capital to support our international operations. In the event that we elect to repatriate some or all of the foreign earnings that were previously deemed to be indefinitely reinvested outside the U.S., we may incur additional tax expense upon such repatriation under current tax laws.

Previous wording

As of December 31, 2024, there were no amounts borrowed under the U.S. Revolver, and letters of credit outstanding were $56.1 million. There was $93.9 million available for the issuance of letters of credit and borrowings under the U.S. Revolver as of December 31, 2024. For further information regarding our debt, see Notes E and F of Notes to Condensed Consolidated Financial Statements.

Current wording

As of March 31, 2025, there were no amounts borrowed under the U.S. Revolver, and letters of credit outstanding were $64.4 million. There was $85.6 million available for the issuance of letters of credit and borrowings under the U.S. Revolver as of March 31, 2025. For further information regarding our debt, see Notes E and F of the Notes to Condensed Consolidated Financial Statements.

Previous wording

Operating activities provided net cash of $37.1 million during the three months ended December 31, 2024 and provided net cash of $83.9 million during the same period in Fiscal 2024. Cash flow from operations is primarily influenced by project volume and margins, as well as working capital requirements, the timing of milestone payments from our customers, and payment terms with our suppliers. The decrease in operating cash flow was primarily due to working capital impact as we allocate capital to projects in the order book, partially offset by improved net income driven by higher revenues.

Current wording

Operating activities provided net cash of $59.5 million during the six months ended March 31, 2025, and provided net cash of $100.9 million during the same period in Fiscal 2024. Cash flow from operations is primarily influenced by project volume and margins, as well as working capital requirements, the timing of milestone payments from our customers, and payment terms with our suppliers. The decrease in operating cash flow was primarily due to working capital impact as we allocate capital to projects in the order book, partially offset by higher earnings.

Previous wording

Investing activities used $9.5 million of cash during the three months ended December 31, 2024 and used $1.5 million of cash during the same period in Fiscal 2024. The increase in cash used in investing activities in the first quarter of Fiscal 2025 was primarily due to increased net purchases of short-term investments and higher capital spending. During the first quarter of

Current wording

Investing activities provided $4.6 million of cash during the six months ended March 31, 2025 and used $11.2 million of cash during the same period in Fiscal 2024. Cash provided by investing activities in the first half of Fiscal 2025 was primarily due to net maturities of short-term investments, partially offset by capital spending on the facility expansion and improvement project at our electrical products facility in Houston. In December 2023, we acquired intellectual property for a total consideration of $0.5 million, of which $250 thousand was paid in cash.

Previous wording

We have planned capital spending of approximately $11 million on a facility expansion and improvement project at our products factory in Houston. We are on schedule to complete the expansion project by mid-Fiscal 2025.

Current wording

We have planned capital spending of approximately $11 million on a facility expansion and improvement project at our electrical products facility in Houston. We recently completed the expansion and improvement project and the incremental capacity will be in service in the third quarter of Fiscal 2025.

Previous wording

Net cash used in financing activities was $15.2 million during the three months ended December 31, 2024 compared to $7.9 million used during the same period in Fiscal 2024. The increase in cash used in financing activities was primarily due to cash payments related to shares withheld in lieu of employee tax withholding, largely driven by the significant increase in our share price in the first three months of Fiscal 2025 compared to the same period of Fiscal 2024.

Current wording

Net cash used in financing activities was $18.4 million during the six months ended March 31, 2025 compared to $12.8 million used during the same period in Fiscal 2024. The increase in cash used in financing activities was primarily due to cash payments related to shares withheld in lieu of employee tax withholding, largely driven by the significant increase in our share price in the first half of Fiscal 2025 compared to the same period of Fiscal 2024.