Powell Industries, Inc.

And welcome to the PAL industry's second quarter fiscal 2021 results earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. As requested by management, please hold to one question and one follow-up. Brian Coleman, please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us for Powell Industries' conference call to review fiscal year 2021 second quarter results. With me on the call are Brett Cope, Powell's chairman and CEO, and Mike Metcalf, Powell's CFO. There will be a replay of today's call, and it will be available via webcast by going to the company's website, powellind.com, or a telephonic replay will be available until May 12th. The information on how to access the replay was provided in yesterday's earnings release. Please note that information reported on this call speaks only as of today, May 5th, 2021, and therefore you are advised that any time-sensitive information may no longer be accurate at the time of replay listening or transcript reading. This conference call includes certain statements, including statements related to the company's expectations of its future operating results that may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties and that actual results may differ materially from those projected in these forward-looking statements. These risks and uncertainties include, but are not limited to, competition and competitive pressures, sensitivity to general economic and industry conditions, international political and economic risks, availability and price of raw materials, and execution of business strategies. For more information, please refer to the company's filings with the Securities and Exchange Commission. With that, I'll now turn the call over to Brett.

Thank you, Ryan, and good morning, everyone. Thank you for joining us today to review Powell's fiscal 2021 second quarter results. I will make a few comments and then turn the call over to Mike for more financial commentary before we take your questions. Our second quarter results were mixed relative to our expectations. Revenues for the quarter improved to $119 million, an increase of 11% sequentially over our first quarter. I would note that this growth was achieved in spite of the challenging operating environment that we continue to experience across our industrial markets. as well as the adverse impact of severe winter storm effects in Texas during the month of February that idled a majority of our Houston-based teams for nearly a week. Compared to the prior year, second quarter revenues were down 22%, mainly driven by lower revenue from the petrochemical sector, which was down 78%, compared to the second quarter of fiscal 2020. Oil and gas was down 3% year over year, while utility and municipal markets, which include traction, grew by 17% and 9% respectively compared to last year. This marks another consecutive quarter of year-over-year growth in these segments, partially offsetting the softness across the industrial sectors. Second quarter gross margin as a percentage of revenue was 14.4%, which compares to 19.6% one year ago. The year-over-year decline is mainly the result of underutilized overhead on the lower revenue, as well as raw material cost pressure resulting from higher copper prices and other industrial metals. These headwinds were partially offset by the restructuring activities taken in the third quarter of fiscal 2020. We continue to prudently manage discretionary expenses and are also closely monitoring our cost structure to ensure that we are aligned with the current environment. We are a long-cycle business, and it is imperative that we retain the domain expertise and know-how, maintaining our capabilities and readiness to serve for the eventual recovery of our major end markets. Moving to the bottom line, we were slightly below break-even as we reported a net loss of $225,000 in the quarter compared to net income of $7.4 million in the prior year. The decline was the result of lower operating earnings driven by the decrease in revenues and gross profit amidst an environment of lower new orders and adverse market conditions. We ended the quarter with $154 million of cash and short-term investments and essentially zero debt as we retained our strong liquidity position and continued to have optionality as we managed through this down cycle. New orders in the second quarter totaled $89 million compared to $91 million of new orders in the first quarter of 2021 and $301 million of new orders in the second quarter of fiscal 2020. The $301 million of new orders during this comparable period of the prior year was attributable to the large industrial award booked and reported in the second quarter of fiscal 2020. We ended the quarter with backlog totaling $437 million which represents a sequential decline of 6% and compares to $566 million as of the end of the second quarter last year. The industrial markets where we compete continue to be characterized by limited customer visibility and capital spending, as well as project delays. We are now more than one year since the pandemic hit and began impacting our end markets. And while conditions have started to improve, our industrial end market customers remain cautious as they evaluate future capital investment. Notwithstanding this, I am pleased with the level of execution across the company. We have a strong focus on driving efficiencies and project execution, while identifying the creative growth opportunities as we continue to work closely with our customers to adapt to the current environment, by both responding quickly to any requested changes to ongoing work currently in our backlog, while also providing the needed support they require for future capital spending plans. Looking forward, as the energy complex across the globe transitions to a cleaner future, we continue to believe the economics of natural gas will offer favorable opportunities in the LNG, gas pipeline, and gas to chemical process industries. We also see developing opportunities in the renewable markets of hydrogen, biofuels, biodiesel, as well as carbon capture and sequestration. These markets are more nascent but are growing. We are also closely monitoring the possibility of tightened environmental regulations that may require additional investment in existing infrastructure. We possess a leading reputation and operating history that differentiates Powell from a customer service and technological perspective. Our financial position enables us to maintain our strength while we navigate through these challenging economic cycles. We have and continue to build long and valued relationships with our customers and we believe that these core elements of our foundation remain solid and important attributes as we aspire to be the partner of choice for critical electrical infrastructure delivered on time and on budget. Before I turn the call over to Mike, I'd like to reiterate our key focus areas for fiscal 2021. First and foremost is the health and safety of our employees, customers, and suppliers. We are also focused on maintaining our solid execution performance to ensure that we continue to meet the high expectations stakeholders have of Powell. Next is the continuous evaluation of our current cost structure, supply chain, and resource planning to optimize operations across the geographies and markets that we serve. And last, it is also critical that we continue to lay the foundation for future growth opportunities while also broadening the markets for Powell. Our human capital, balance sheet strength, and technological expertise allow us to be proactive in the current environment. With that, I'll turn the call over to Mike to provide more detail around our financial results before we take your question.