Powell Industries (NASDAQ:POWL) reported record third-quarter order bookings and a backlog that surpassed $2 billion for the first time in its 79-year history, as demand remained strong across data centers, electric utilities, LNG and other industrial markets.
For the fiscal third quarter ended June 30, Powell reported revenue of $312 million, up 9% from $286 million in the year-earlier period. Net income rose to $52.2 million, or $1.42 per diluted share, compared with $48.2 million, or $1.32 per diluted share, a year earlier.
Major Awards Lift Bookings
The quarterly order total included Powell’s previously disclosed data center award exceeding $400 million for the first phase of a multistage, behind-the-meter onsite power-generation project. Cope said the project is expected to be executed over roughly two and a half years and will involve at least five North American facilities.
Powell also received an approximately $75 million award for electrical distribution equipment supporting a new Gulf Coast fertilizer-producing petrochemical facility, as well as an approximately $60 million award for a new LNG liquefaction project on the U.S. Gulf Coast.
Beyond those three large projects, the company booked more than $350 million in awards spread across its market verticals. Cope said Powell has secured more than $1.8 billion in new awards over the past three quarters and is now booking projects that will be executed into fiscal 2028.
Chief Financial Officer Mike Metcalf said the company’s third-quarter book-to-bill ratio was 3.0 times, while the year-to-date ratio was 2.2 times. About $1.3 billion, or roughly 54%, of the $2.4 billion backlog is expected to convert over the following 12 months, he said.
- Commercial and other industrial markets represented 40% of backlog.
- Core industrial markets, including petrochemical and oil and gas, represented 30%.
- Electric utility markets represented 24%.
Margins Remain Above 30%
Gross profit increased by $7 million from the prior-year quarter to $95 million, while gross margin was essentially flat year over year at 30.6% and improved 90 basis points sequentially. Metcalf attributed the performance to project mix, operating leverage, stable pricing and project execution.
Selling, general and administrative expense increased $1.6 million to $27 million, primarily reflecting higher compensation costs, including the current-year impact of the Remsdaq acquisition. Still, SG&A declined 20 basis points from a year earlier to 8.6% of revenue.
Management said it is monitoring moderate inflation in commodities such as copper, aluminum and steel, as well as engineered components. Metcalf said Powell is using commodity hedging and commercial discipline to offset some inflationary pressure. Project closeouts added approximately 100 basis points to year-to-date margins through the first nine months, compared with about 130 basis points in the prior-year period.
Cope said the company sees continued margin opportunity in commercial markets, where delivery speed and available capacity can be important differentiators. He also cited automation and the expansion of the company’s service strategy as potentially accretive to gross margins over time, while cautioning that quarterly results can be uneven because of the project-based nature of the business.
Capacity Expansion Underway
Powell is expanding its manufacturing, engineering and warehouse footprint to support its growing order book. The company expects its total facility footprint to increase by more than 20% by the end of fiscal 2026 compared with the end of fiscal 2025.
Actions include an additional 30,000 square feet of manufacturing capacity near its Ohio operation, with Powell expecting to exercise an option to expand that lease. The company also leased a facility near Houston that provides 50,000 square feet of added manufacturing space and opened two satellite engineering offices in the Houston metropolitan area.
Meanwhile, Powell’s Jacintoport expansion is nearing completion. The project will add 335,000 square feet of capacity initially intended for custom power control rooms serving the LNG market. Cope said the work should be completed within the next month or two, with utilization expected to ramp quickly. At full utilization, the expanded yard is expected to support well over $100 million in incremental annualized revenue.
The board also authorized the acquisition of a leased facility that will support approximately 300,000 square feet of manufacturing space. Powell expects that site to be available for activity late in the second or early in the third quarter of fiscal 2027. The facility will be supported by an earlier announced $8 million investment in fabrication equipment and upgrades at the company’s Moseley facility.
Powell continues to evaluate a potential greenfield, company-owned plant that could require $70 million to $100 million of capital and provide 250,000 to 300,000 square feet of factory space. Cope said a decision is expected in the near future.
Demand Outlook and Financial Position
Management said activity remains robust in commercial, utility and LNG markets. Cope said data center activity has “clearly inflected higher” from a year ago, while the electric utility market is being supported by structurally undersupplied power demand. He added that LNG-related investment continues to support demand for electrical infrastructure across the natural gas supply chain.
Revenue in commercial and other industrial markets increased 54% year over year, while electric utility revenue rose 18%. Oil and gas revenue was relatively flat, petrochemical revenue declined 49%, and light rail traction power revenue fell 7% on low volume levels. International revenue declined slightly to $61 million amid softer Canadian market conditions, while domestic revenue rose 12%.
Powell generated $100 million in operating cash flow during the quarter and spent $6.5 million on capital expenditures. At June 30, the company had $634 million in cash equivalents and short-term investments and no debt.
Metcalf said Powell expects stable pricing, disciplined project execution and strong liquidity to support another year of strong financial performance in fiscal 2027.
About Powell Industries (NASDAQ:POWL)
Powell Industries, Inc is an industrial electrical engineering company specializing in the design, manufacture and integration of customized power control and distribution solutions. The firm’s offerings range from medium‐voltage switchgear and power control centers to bus duct, motor control centers and specialty transformers. Powell also provides automation systems, protective relaying, metering, supervisory control and data acquisition (SCADA) platforms, and turnkey engineering services to help clients manage critical power infrastructure.
Serving the oil and gas, petrochemical, refining, utility, mining and industrial sectors, Powell’s products are engineered to meet demanding performance, safety and reliability requirements.
