Powell Industries, Inc.

Welcome to the PowerWell Industries earnings conference call. At this time, all participants are in a 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 that this event is being recorded. I would now like to turn the conference over to Ryan Coleman, Investor Relations. Thank you. You may begin.

Thank you, Operator, and good morning, everyone. Thank you for joining us for Powell Industries' conference call today to review fiscal year 2025 second quarter results. With me on the call are Brett Koch, 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 14th. 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 7th, 2025, 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 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 risk, availability and price of raw materials, and execution of business strategies. For more information, please refer to the company's filings for 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 2025 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 marked another solid performance. The team across Powell delivered gross profit dollar growth of 33% on revenue growth of 9%, which translated into record earnings per diluted share of $3.81 in the quarter. The electric utility and commercial and industrial sectors remain growing bright spots for Powell. As compared to the prior year, they grew by 48% and 16% respectively. Sectors have and will continue to become more meaningful contributors to our total results. New orders in the quarter totaled $249 million, an increase of 6% compared to the prior year. New project activity was driven by our commercial and other industrial markets, as well as the oil and gas sector. We booked two large projects in the quarter, one for a new Greenfield LNG facility to be located along the US Gulf Coast, as we have shared on previous updates, Fundamentals and market outlook for this sector remain very encouraging. The other significant award this past quarter is for a large mining project in Canada for the production of potash. This award underscores how our people and facilities are demonstrating the strength of Powell. Our investment in Canada has always been focused on building a diverse portfolio of customers across the sectors that we serve. Each of these projects were approximately $50 million. Our gross margin in the quarter was 29.9%, which reflects disciplined project execution, the benefit of closeouts, as well as continued operating efficiency across the business. Mike will discuss our margin outlook for the second half of the year, but more broadly, we remain encouraged by our second quarter margin results. On the bottom line, we recorded net income of $46 million in the second quarter, or $3.81 per diluted share, which was 38% higher than the prior year, and a record quarterly earnings per diluted share for Powell. Our backlog remains strong at $1.3 billion. The overall composition, margin profile, and project schedules of our backlog remain very encouraging. We have revenue visibility well into fiscal 2027, and our order book is well balanced across the sectors we serve. In addition to our strong financial results in the quarter, we continue to make important strategic progress to expand and diversify our product portfolio. During the quarter, we commercially launched several new and innovative products. The first is the grounding switch. Widely used in international IEC switchgear designs, our new product will be the first to meet a new developing standard for the North American ANSI market. This product is mainly focused on industrial markets, such as oil and gas, but is an enhancement that we will ultimately seek to commercialize into all three of our major sectors. We have also received orders for a new compact substation that our team have engineered and recently introduced to the market. The Powell Control Aisle substation provides optimized workspace along with environmental protection for utility and unit substations. This configured to order medium voltage substation reduces the installed cost of the substation while providing our customers with a safe, environmentally protected aisle to service the switchgear. Our initial awards for this are in support of battery energy storage projects being developed and installed to support the utility grid. We also showcased our first design of a low voltage switchgear product specifically designed for the data center and associated commercial market. This product increases our ability to compete within the four walls of the data center where there are significant incremental content opportunities. We are also working towards adding the commercial infrastructure and the required sales channels necessary to better compete in this important vertical for Powell. The launch of these latest products serves as continued validation of the increased R&D spend that we have undertaken over the past several quarters, and it monetizes intellectual property that has been on our balance sheet for nearly two years. Most importantly, it furthers our aim of advancing our product centric strategy to improve the overall future mix of product versus project based revenues. We have just completed and received our occupancy permits on the capacity expansion at our electrical products facility here in Houston. I am pleased to share that this investment is on time and was finished on budget. This incremental capacity will play a critical role in advancing our key strategic priority commercialize new products through organic investment in our R&D function, positioning us to better compete and capture greater share in all three of our key market sectors. Manufacturing of both the station breaker that we launched last summer and our new power control aisle substation will start in the third fiscal quarter. We will begin to recognize revenue through the balance of this year with more modest accretive additions in fiscal 2026. Looking ahead, the outlook of for each of our end markets remains positive. The fundamentals for our oil, gas, and petrochemical markets support our expectation for continued strength in these sectors. Specific to the fundamentals of the U.S. natural gas market, price spreads across global markets remain favorable and conducive to U.S. export activity. The funnel of LNG projects that we are tracking continues to support our expectation for a strong cycle of greenfield and brownfield activity with generally a higher volume of projects that are either in process or currently being evaluated compared to the prior cycle. Activity within our commercial and other industrial market also remains healthy and includes activity within the data center market. Over the past few months, we have not seen any change or slowdown in activity within the data center market, and our efforts to further penetrate the data center market and expand the total content opportunity for Powell within this market sector are progressing well. Lastly, the outlook for our electric utility market remains positive. We continue our sustained and decade-long effort to drive success for Powell in each of our three home geographies, the US, Canada, and the United Kingdom. Overall, we are very pleased with our financial results in the first half of this fiscal year and confident in how we position Powell to grow in each of our three major sectors. Our volume expectation in each of these sectors remain a tailwind, and we expect continued strong performance for the remainder of fiscal 2025. With that, I'd like to turn the call over to Mike to walk us through our financial results in greater detail.