Powell Industries, Inc.

Good morning and welcome to the Powell Industries Fiscal First Quarter 2024 Results 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. I would now like to turn the conference over to Ryan Coleman, Alpha IR Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Thank you for joining us for Powell Industries' conference call today to review fiscal year 2024 first 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 made available via webcast by going to the company's website, powellind.com, or a telephonic replay will be available until February 8th. 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, January 31st, 2024. 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 meeting of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, and that actual future 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.

Thanks, Ryan, and good morning, everyone. Thank you for joining us today to review Powell's fiscal 2024 first 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. Powell delivered a strong start to our fiscal year, as our first quarter was very much a continuation of the trends and strong results we saw in the prior quarter. Despite what is typically a seasonally slow period, we recorded $198 million of new orders, which was sequentially higher by 15%, and in line with our expectations for a more normalized but still strong cadence of project bookings. We also delivered revenue growth of 53% compared to the prior year, as we saw broad strength across our petrochemical, oil and gas, utility, and commercial and other industrial sectors. Mike will provide additional detail on our revenue growth by market sector in a moment. Our strong revenue growth coupled with maintaining our focus on both project execution and operational efficiency are all working together to help deliver significantly improved profitability. Our gross margin in the quarter was 24.8%, an improvement of 950 basis points compared to last year, and the best first quarter gross margin performance since fiscal 2010. It also puts us comfortably on track to deliver on our previously communicated guidance on of gross margin in the low 20s in fiscal 2024. On the bottom line, we recorded net income of $24 million, or $1.98 per diluted share, which was significantly above net income of $1.2 million, or 10 cents per diluted share, in the year-ago period. Our backlog remains very strong and was roughly unchanged sequentially at $1.3 billion. We continue to feel confident that our current backlog is comprised mainly of projects that speak to Powell's core competencies. The capacity expansion of our Houston facility on the Gulf Coast is effectively completed, as we noted last quarter. This investment was planned last year to give us expanded fabrication and integration support for large power control rooms, especially for projects that support delivery and transport by water access. Also, as we noted last quarter, we expect to launch a more modest expansion of our electrical products factory based in Houston. This $11 million expansion will take approximately 18 months to complete. The investment coincides with our development plans to release new products in support of our initiatives, helping facilitate future growth across the customers and markets we serve. We remain comfortable with our current staffing levels and are confident that we have the right people in place to meet the demanding project schedules of our current backlog. Our teams also continue to successfully manage price fluctuations of key materials, as well as the general availability of select engineered components. We continue to see encouraging levels of project activity within our oil, gas, and petrochemical markets. As we have noted for some time, we believe the fundamentals of the U.S. natural gas market remain favorable for our core markets and support many global economic and environmental goals over the long-term horizon. Recent and oddly timed actions by the current U.S. administration will most likely serve to slightly slow the pace of project schedules, creating a bit more uncertainty around project timing over the near term. We also continue to see healthy activity across the other markets where we compete. We enjoyed solid contributions to the order book in our first quarter. In our newer sector of commercial and other industrial sectors, we experienced solid activity during the quarter from markets such as data centers but would also note increased uncertainty in lithium-related projects that support a future electric vehicle demand and large-scale battery storage. Energy transition projects that have been in process for some time, including hydrogen, biofuels, and carbon capture and sequestration, continue to be active and will be larger contributors to our financial results in fiscal 2024 and 2025. Our near and median term priorities remain unchanged in fiscal 2024, we are focused on growing our electrical automation platform, expanding our existing services franchise, and diversifying and expanding our electrical products and solutions portfolio. In summary, our fiscal 2024 is off to a strong start with another quarter of nearly $200 million of booked orders and significantly improved profitability compared to the prior year. Our backlog remains strong with a healthy mix of projects that we believe will sustain our profitability through fiscal 2024 and into 2025. The markets we serve continue to exhibit encouraging levels of project activity and remain favorable, and we continue to monitor recent developments and select markets for their effect on the timing of future projects. We are highly confident that our financial position, commitment to execution, and continued progress against our strategic initiatives will support another successful year for Powell. With that, I'll turn the call over to Mike to walk us through more of our financial results in greater detail.