POWL

A month has gone by since the last earnings report for Powell Industries (POWL). Shares have lost about 18.6% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Powell Industries due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Powell Industries, Inc. before we dive into how investors and analysts have reacted as of late. Powell reported third-quarter fiscal 2026 (ended June 2026) earnings of $1.42 per share, up 7.6% year over year, but missed the Zacks Consensus Estimate of $1.49. Revenues rose 9% year over year to $311.7 million but missed the consensus mark of $318 million.Growth reflected strength in commercial and other industrial and electric utility markets, partly offset by weakness in petrochemicals. Commercial and other industrial revenues increased 54% year over year in the fiscal third quarter. Electric utility revenues advanced 18%, showing broad demand across two of Powell’s core markets. However, Petrochemical revenues declined 49% from the prior-year period and partly offset the gains. Gross profit increased 8% year over year to $95.3 million as higher volumes and a strong, stable pricing environment supported profitability. Gross margin was 30.6% compared with 30.7% a year earlier.On a sequential basis, gross profit rose 8% to $95.3 million. Gross margin improved 100 basis points from 29.6% in the preceding quarter, indicating stronger conversion on the higher revenue base despite ongoing investment needs. New orders totaled $934 million, up 158% from $362 million in the year-ago quarter and well above $490 million in the fiscal second quarter. The book-to-bill ratio was 3.0, indicating orders were three times the quarter’s revenues.The company secured three mega orders, defined as contracts above $50 million. These included a data center award of more than $400 million, a petrochemical fertilizer project of about $75 million and an LNG project of roughly $60 million in the U.S. Gulf Coast. Backlog reached $2.4 billion, up 69% year over year, supported by record quarterly orders. Improved bookings were concentrated in commercial and other industrial, oil and gas, and petrochemical markets, broadening the project base beyond the quarter’s reported revenue mix. Net income increased 8% year over year to $52.2 million from $48.2 million. Higher revenues and strong gross margins drove the increase, while operating income rose to $64.1 million from $60.1 million.Cost of goods sold grew 9.1% to $216.4 million. Selling, general and administrative expenses were $26.7 million, while research and development expenses totaled $4.3 million in the quarter, reflecting an increase of 6.3% and 61.7% year over year, respectively. Cash, cash equivalents and short-term investments totaled $633.6 million as of June 30, 2026, up from $475.5 million at the end of fiscal 2025. Working capital stood at $606.5 million, while stockholders’ equity was $756.2 million.Capital expenditures were $6.5 million in the quarter and dividends paid totaled $3.3 million, reflecting continued investment alongside shareholder distributions. Management expects activity across the company’s core markets to remain robust. Demand drivers include the continued role of U.S. LNG, utility generation, grid-strengthening projects and rising requirements tied to data centers and AI capacity.Powell expects gross margins to remain consistent with the trailing-12-month level as it adds capacity to serve the expanding backlog. The company expects the Jacintoport fabrication yard expansion project to be completed by the end of fiscal 2026, with production then ramping to support recent industrial awards. The company is assessing greenfield capacity additions beyond recently added leased capacity in Houston and Ohio. Powell expects another solid year of financial results as it closes fiscal 2026 (ending September 2026) and looks toward fiscal 2027 (ending September 2027). The outlook rests on project execution, backlog composition and measured capacity additions across its manufacturing network. In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -6.95% due to these changes. At this time, Powell Industries has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a score of F on the value side, putting it in the fifth quintile for this investment strategy. Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Powell Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Powell Industries, Inc. (POWL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Powell’s second quarter results were met with a significant negative market reaction, as the company’s revenue and adjusted earnings per share both fell short of Wall Street expectations. Management pointed to robust order activity and continued strength in core end markets like commercial, electric utility, and oil and gas as the primary drivers of year-on-year sales growth. CEO Brett Cope cited strong new business wins, particularly in data centers and LNG infrastructure, as supporting top-line gains, but acknowledged the project-based nature of Powell’s business led to variability in quarterly revenue recognition. Is now the time to buy POWL? Find out in our full research report (it’s free). Revenue: $311.7 million vs analyst estimates of $316.9 million (8.9% year-on-year growth, 1.6% miss) Adjusted EPS: $1.42 vs analyst expectations of $1.49 (4.5% miss) Operating Margin: 20.6%, in line with the same quarter last year Backlog: $2.4 billion at quarter end, up 71.4% year on year Market Capitalization: $7.71 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. John Franzreb (Sidoti & Company) asked about Powell’s ability to maintain margins amid strong demand and competition. CEO Brett Cope said commercial markets provided more pricing opportunity, while CFO Michael Metcalf noted stable margins were driven by project mix and operational leverage. Tomohiko Sano (JPMorgan) questioned the causes behind the revenue shortfall versus Street expectations. Metcalf explained that timing and variability of project-based revenue recognition were primary factors, with no specific weaknesses identified. Manish Somaiya (Cantor) inquired whether margins have peaked and how incoming industry capacity might affect profitability. Cope responded that long-term strategies in automation and services could further support margins, though short-term results may remain variable. Alexander Rygiel (Texas Capital) sought details on the $400 million data center project’s revenue cadence and potential for similar contracts. Cope outlined a two-to-three-year revenue burn and described future phases as likely replicating the current scope if successful. Jon Braatz (Kansas City Capital) asked about Powell’s role in advancing data center efficiency and whether evolving industry standards could increase the company’s content in these projects. Cope indicated that behind-the-meter and grid-connected designs both expand Powell’s addressable market, especially as technology shifts. In the coming quarters, our team will closely track (1) the pace at which Powell’s record backlog converts into revenue, (2) the operational ramp-up and cost impact of new manufacturing capacity, and (3) progress on integrating the Remsdaq acquisition and launching new products tailored to data center and LNG markets. Continued monitoring of inflation and labor trends will also be important for assessing margin durability. Powell currently trades at $213.13, down from $219.72 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 11:00 a.m. ET Investor Relations - Robert Winters Chairman and Chief Executive Officer - Brett Cope Chief Financial Officer - Michael Metcalf Operator: Welcome to the Powell Industries Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mr. Robert Winters, Investor Relations. Thank you. Please go ahead. Robert Winters: Thank you, operator, and good morning, everyone. Thank you for joining us for Powell Industries conference call today to review fiscal year 2026 third 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 August 11. 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, August 4, 2026, 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. Brett Cope: Thank you, Bobby, and good morning, everyone. Thank you for joining us today to review Powell's fiscal 2026 third 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 very strong third quarter, highlighted by a record for new orders in a single quarter, which in turn has elevated our backlog to over $2 billion for the first time in our 79-year history. Revenue grew 9% compared to the prior year and our continued focus on productivity delivered a gross margin of 30.6%. Revenue growth in the quarter was once again driven by our commercial and other industrial and electric utility markets with continued strong results in the oil and gas sector. Each of our core end markets are exhibiting high levels of activity and the nature and scope of these projects are central to Powell's core competencies. The electric utility market remains very active, underwritten by structurally undersupplied power demand, while data center order activity for Powell has clearly inflected higher relative to just 1 year ago. Meanwhile, in our industrial end markets, the growing importance of U.S. LNG exports in the global energy landscape remains supportive of demand for the electrical infrastructure required across the natural gas supply chain. Overall, Powell's awarded a record $934 million of new orders in the third quarter which is nearly 3x higher than the prior year and nearly double the order total from last quarter. Included in this order total is the previously announced mega data center order which is in excess of $400 million for Phase 1 of a multiphase behind-the-meter design of on-site generation assets. In addition, Powell was awarded $75 million for the electrical distribution equipment, supporting a new petrochemical facility for the production of fertilizer, and we received an award of approximately $60 million for a new LNG liquefaction facility. Both of these projects are located along the U.S. Gulf Coast. Outside of these 3 mega awards, our order book in the quarter was comprised of more than $350 million of new awards balanced across the market verticals in which we compete and a testament to the volume and diversity of our order intake. Our backlog is now nearly $2.4 billion, again, the highest in Powell's history and it is notable that we have booked over $1.8 billion of new awards over the past 3 quarters. The visibility provided by our backlog continues to extend as we are booking awards that we'll be executing deep into our fiscal 2028. The order book also remains balanced across the Powell footprint, which, combined with actions we are taking to create incremental capacity will improve opportunities to further drive productivity across our facilities. Those actions include a lease that we entered into late last year, providing an incremental 30,000 square feet of manufacturing capacity near our Ohio facility. Part of that agreement included the option to expand that lease, which we expect to execute in response to accelerating order activity. And in April, we entered into a lease agreement for a facility near our Houston facilities that is providing another 50,000 square feet of manufacturing capacity. We are now operating 2 satellite engineering offices around the Houston metro area to add critical engineering talent to our world-class electrical and mechanical engineering and design teams. These facilities are strategically located in the energy corridor and North Houston to expand our coverage of the metro area. Lastly, the expansion of our Jacintoport facility that we announced 1 year ago is nearing completion. This investment will add 335,000 square feet of capacity to initially meet the accelerating demand for custom power control rooms for the LNG market. However, over the long term, this capacity is fungible and can be utilized to serve our customers across any of our markets. We expect the work at Jacintoport to be completed in the next month or 2 and for utilization to ramp fairly quickly. When fully utilized, we would expect the expanded yard to support well in excess of $100 million of incremental annualized revenue. Each of the incremental initiatives that we have taken across the company over the last 12 to 18 months will result in an expansion of our total footprint of manufacturing, office and warehouse facilities of over 20% by the end of fiscal 2026 as compared to the end of our fiscal 2025. Further, during our third quarter, the Board has authorized the acquisition of the lease facility that will support approximately 300,000 square feet of manufacturing space. Over the last several quarters, our manufacturing and service leadership teams have progressed several options in proximity to our existing facilities. We are planning to have this future facility available for manufacturing activity late in our second or early third quarter of our fiscal 2027. The facility will be supported by increased fabrication throughput and as part of a previously announced $8 million investment in new equipment and upgrades at our Mosley facility. We continue to evaluate the prospect of a greenfield Powell owned facility that would require $70 million to $100 million of capital, to provide upwards of an owned 250,000 to 300,000 square foot factory which would also support increased fabrication. This planning process continues to progress, and we expect to make a decision in the near future. Our M&A pipeline also remains healthy and growing, and we are evaluating a number of opportunities to better position us within key growth markets. These include complementary products and/or capabilities to our current portfolio, or oriented toward building out our growing services franchise. Our efforts here are tempered in part by what we regard as rich valuations across the space, though we continue to engage where we see value and a strategic fit. In closing, we are very pleased with our third quarter results. Commercial activity in our core end markets remain strong, underpinned by durable and secular demand drivers that should continue our momentum as we close fiscal 2026 and prepare for our fiscal 2027. With that, I'll turn the call over to Mike to walk us through our financial results in greater detail. Michael Metcalf: Thank you, Brett, and good morning, everyone. In the third quarter of fiscal 2026, we reported total revenue of $312 million compared to $286 million or 9% higher versus the same period in fiscal 2025. New orders booked in the third fiscal quarter of 2026 reached a record high of $934 million, which was anchored by the $400 million plus data center order that was awarded in April and discussed in our prior quarter release as well as 2 additional core industrial mega orders booked during the third fiscal quarter, one for an LNG project for roughly $60 million and the second for a petrochemical project totaling about $75 million. With these wins, orders in the third fiscal quarter were higher by $572 million versus the same period in the prior year, and higher sequentially by $445 million. The resulting book-to-bill ratio for the third fiscal quarter is 3.0x while this ratio on a fiscal year-to-date basis is 2.2x, with reported backlog reaching a new high of $2.4 billion at the end of the third fiscal quarter, $967 million higher versus 1 year ago and $619 million higher sequentially. At the close of our third fiscal quarter, our core industrial end markets across petrochemical and oil and gas represent 30% of the total backlog while the electric utility and commercial and other industrial markets each represent 24% and 40% of the $2.4 billion of backlog, respectively. Now turning to revenue. Compared to the third quarter of fiscal 2025, domestic revenues were higher by $26 million or 12% while international revenues were slightly lower by $1 million to $61 million on the softer Canadian market. From a market sector perspective, revenues were higher by $27 million or 54% in the commercial and other industrial market versus the third quarter of fiscal 2025, while the electric utility market increased by $14 million or 18% versus the prior year. Across our core industrial end markets, the oil and gas sector was relatively flat versus the prior year while the petrochemical market was lower by 49%. The light rail traction power sector was 7% lower versus the same period 1 year ago on light volume levels relative to the total business. Gross profit increased by $7 million to $95 million in the third fiscal quarter of 2026 versus the same period 1 year ago. Gross profit as a percentage of revenue was roughly flat versus the same period 1 year ago at 30.6% of revenue and was 90 basis points higher sequentially versus the same period 1 year ago, the mix of projects and the associated margin rates exiting backlog remain very consistent and are continuing to benefit from strong execution and volume leverage across Powell's global footprint. Selling, general and administrative expenses were $27 million in the current period an increase of $1.6 million compared with the same period a year ago, primarily driven by the higher compensation expenses across the business, which is inclusive of the current year impact of the Remsdaq acquisition. SG&A as a percentage of revenue was lower by 20 basis points year-over-year to 8.6% in the current fiscal quarter and lower sequentially by 10 basis points. In the third quarter of fiscal 2026, we reported net income of $52.2 million, generating $1.42 per diluted share compared to net income of $48.2 million or $1.32 per diluted share in the third quarter of fiscal 2025. During the third quarter of fiscal 2026, we generated $100 million of operating cash flow, principally driven by higher earnings generated in the third fiscal quarter while also benefiting from favorable working capital resulting from the strong booking activity. Investments in property, plant and equipment in the fiscal third quarter totaled $6.5 million reflecting an uptick in capital deployed for the offshore fabrication yard expansion project, but also strategic spending for CapEx to accommodate the increased throughput resulting from commercial activity. At June 30, 2026, we had cash, cash equivalents and short-term investments of $634 million compared to $476 million at September 30, 2025, and $545 million at March 31, 2026. The company does not hold any debt. Looking forward, we remain encouraged by the sustained commercial activity across our core end markets, as highlighted by record bookings in the third quarter and a record backlog at quarter end. The continued momentum we are seeing in the electric utility and data center markets, coupled with early signs of a recovery in the petrochemical market reinforces our confidence in the quality and the durability of future demand. These achievements reflect both the strength of customer investment and our ability to secure and execute large strategic projects, providing meaningful momentum as we enter fiscal 2027. Considering this backdrop, together with a stable pricing environment, disciplined project execution and a strong liquidity position, we believe that Powell is well positioned to deliver another year of strong financial performance in fiscal 2027. At this point, we'll be happy to answer your questions. Operator: [Operator Instructions] The first question comes from John Franzreb with Sidoti & Company. John Franzreb: I'd really like to start with the gross margin profile. It continues to be elevated and impressive. I'm curious can you talk a little bit about what the competitive landscape is like and what kind of ability you have maybe to be more aggressive on pricing given this incredible demand that you have? Brett Cope: John, it's Brett. Let me take the second part first, and I'll have Mike jump in on some of the color on the margin. We are seeing some opportunity for price in the market. On the commercial side, I think you'll find a theme that delivery speed is still driving the overall value prop to the market. But that's not -- I wouldn't say that's across all the sectors we're in, in Powell. So the industrial market probably a little more price sensitive overall. Margins are good and equivalent, but more opportunity on the commercial market, I'd say, of the 3 verticals that we chase. And I'd say the competition follows the same sort of theme. So a little bit more sensitive in the industrial market, and less so not competitive in the commercial market, but it is about speed and capacity and what you can do to serve that market as quickly as you can. Michael Metcalf: John, I'll jump in to add some commentary there on the margins. But overall, we're really pleased about the margin performance in the quarter. But some of the core pillars driving margins in the quarter, the product mix across the business, continued operating leverage across our footprint. And as Brett said, the pricing stability in the markets continue to meet our expectations. And combined, we were just over 30% GP for the quarter on a year-to-date basis just shy of that 29.6%. We are watching inflation closely. We are seeing moderate inflation on core commodities, copper, aluminum, steel, things of that nature, engineered components. But we're -- we've got some actions in place, whether it's a commodity hedging, strong commercial discipline practices that are helping offset some of this, but we are seeing a little bit of a headwind from an inflation perspective. And then finally, project closeouts. With respect to project closeouts on a year-to-date basis, project closeouts have contributed roughly 100 basis points through the first 9 months. That compares to about 130 bps a year ago on a year-to-date basis. So we are still seeing strong project execution through the system and across the footprint. John Franzreb: Got it. Got it. And just -- it's great to see you leaning into capacity expansion. I'm actually curious, maybe you can provide a little color if you decide to do a new greenfield facility, what's going into that thought process? And maybe talk a little bit about what you're seeing on available labor as you expand the capacity. Brett Cope: Yes. We talked last quarter about the capacity piece. During the last quarter, we had a really thorough discussion with the Board, so pleased to be working towards the leased facility, with the growth of the backlog, certainly accelerating over last 2, 3 quarters, more efficient to do the lease facility. We are going to spend some capital doing some cranes and things that we'll leave there over the term of the lease. And we feel pretty good that we can support that with throughput of our existing fabrication. And so that was one of the discussions that we're having sort of in the prepared comments the efficient use of capital in the lease. But as we bring products still out of the R&D pipeline supporting our organic strategy, depending on what we do M&A-wise, we do see a future need for increased Powell fabrication, and that will drive the owned facility. So near term, we're going to pivot to the lease to handle the backlog growth and grow the company that way, and then we'll time the owned facility to handle the methodic growth of the expanded pipeline for all of our verticals. On the labor side, again, consistent with my comments in prior quarters, John, I wouldn't tell you we're -- there's not a day goes by, there's not something we're out looking at. It is interesting to watch our peers in the industry. There's a lot of construction labor being put to work right now. We've seen this cycle before. It's a little bit wider. We used to -- we're really comfortable with what happens in the Gulf from Louisiana around the South Texas down the Mexican border when you get a lot of construction, what happens and how that pulls from -- across the contiguous states and even into Canada when it gets really busy. And now we're seeing other parts pull labor, North Texas up to the Midwest and even up to the Northwest parts of the states. And so a little different dynamic on craft labor. It hasn't impacted us yet. I do think eventually it will be something we're going to have to deal with creatively. We don't see it in the next couple of quarters. So nothing immediate, but our radar is up, and I do believe it will be a challenge in the '27, '28. Operator: The next question comes from Tomo Sano with JPMorgan. Tomohiko Sano: If you could talk about the modest revenue shortfall versus Street expectations. Could you help us understand the drivers? Was it primarily segment mix coming from Canadian market, you talk about petrochemical softness versus timing and backlog conversions. Any color on which factors moderates most, would be helpful. Michael Metcalf: Tomo, this is Mike. I'll address that question. First of all, being a project-based business, there's some variability with the ins and outs in the quarter and the timing of some of the big components that are going into our projects. So nothing specific to call out at all on the revenue cadence. It was a 9% V versus the prior year, which we felt pretty comfortable with. As we build the backlog, that's probably a good barometer to kind of pinpoint it's, we're not going to see double-digit Vs probably given the backlog conversion rate that we've seen over the last, call it, trailing 12 months or year-to-date anyway. So nothing specific to call out. It's going to be lumpy as we go forward. And this quarter was really no exception. It was -- as I said, we were very happy with the 9% V overall for the quarter. Tomohiko Sano: I appreciate it. And a follow-up on orders and demand trends. Could you share more color like what are you seeing on the demand side by 3 verticals going forward? Brett Cope: Yes. I'll take that one, Tomo, it's Brett. All 3 verticals heading in today, very active. We watch it very close every week. I dig into the color of our database to see what the activity is going forward and looking for any signs of a major concern, but in terms of commercial and other, which includes the data center market, next couple of quarters, there's plenty of activity. The LNG market remains very robust for us. I feel very good about the investment we're making in offshore. Again, very -- feel good about the timing of that yard coming online here in the next month or so. We'll get some revenue laid down there on a POC basis, pretty quick and utility market, again, very robust, especially in the United States, little less so in Canada, a little softer there generally. And as compared to the state, but we're able to use some of that capacity to help support some of the ongoing work here in the states and bring it across the border. So I feel pretty good heading through the back half of the calendar year and into calendar '27, where we sit today. Operator: Your next question comes from Manish Somaiya with Cantor. Manish Somaiya: A couple of questions. One, maybe for both of you, have margins peaked? Brett Cope: Following up on John's comment, I don't say they peaked. The opportunity to grow would be continued opportunity in the commercial and data center and speed and as long as we continue to serve that. Now that blends into the existing backlog, Manish. So at Powell, the convertibility takes 1 to 3 years. So you got to kind of phase that in on the model. The other opportunity that is the other parts of the strategy, which we continue to work pretty hard with the automation and traction we make in the service strategy. So those are all -- both of those strategic pillars are accretive to our current gross margin levels. And there's a lot of activity as well in those strategies across the markets we serve. And so that will continue to blend in higher and help us raise margins. But as Mike noted earlier, we are a chunky business when it comes to reporting out. So it could be a little chunky quarter-to-quarter. But overall, I think there's still positivity over the long term in our margin profile. Manish Somaiya: Secondly, there's been a lot of discussions about capacity coming online in the industry. Obviously, it doesn't pertain to each and every part of the business you might be participating in. But just more broadly, Brett, how do you think about the capacity that's coming online pertaining to your specific business. At this juncture, clearly, it seems that demand is outstripping supply, but at some point, it may catch up. And I guess there's been a lot of debate recently about how that might potentially impact margins for all the companies, including yourselves. So maybe if you can help us understand from a big picture standpoint and how it might be potentially different for you? Brett Cope: I love the question. This is a good chat that we have at the Board and what we're -- how we're driving our strategy forward. And so I think it's safe to say, Mike and I are building a strategy that is 10, 15, 20 years out in time. And so I think there are parts of what we're doing today that are opportunistic, maybe slightly moving into the strategy side of things with the commercial and other. But the rate of this market at some point will attenuate and what we're doing with even on the lease facility. We want to pivot that to the commercially-owned facility, but it's supportive of good organic and M&A adds to the business for portfolio filling, how we're going to attack the utility market long term, taking the long-term look at those markets on distribution, transmission, things like urbanization. So yes, there's the short-term things that are going on in the market. We're certainly aware of that and watching that, and we understand the risks. But we're really driving the business long term. And so we make the investment in the fixed asset to add a factory, whether it be here in the Houston area or other states that we're looking at, it will be supported by a long-term strategy against primarily utility and in the industrial market. And I'm not discounting our long-term play in the commercial and other, but we're allocating a small amount of capital to that. It's increased a little bit over the last couple of years on the strategy side around products and services. But the bulk of our investments are still built around industrial and utility. And that's really where we're gaining the confidence to make that -- will gain the confidence to make that fixed asset investment on behalf of our investors. Manish Somaiya: And just on the backlog, Brett, obviously, a very impressive backlog. Perhaps if you can just talk about how we should think about the backlog burn over the next 12, 18 months? And Mike, just on that, it would be helpful to have the next 12 months backlog number, if you might have it. Brett Cope: Yes. There is a slight -- I mean given the numbers, it's kind of math now, Manish. We had a really strong quarter. Activity looks robust going out. So Mike will jump in here on the convertibility, it has attenuated a little bit. The overall market is still, as I noted, 1 to 3 years, but if you just look at the slug that just came in, I think as a team sport across Powell, really, really pleased with how well our teams operationally are working together to continue to maximize and find opportunity to drive productivity to find increased capacity to help serve and break up projects at different facilities and work with our clients to meet the need on the delivery. So that's been a real positive. But on the math side, Mike, let's... Michael Metcalf: Yes. So of the other $2.4 billion of backlog, roughly $1.3 billion -- just under $1.3 billion will be convertible over the next 12 months so roughly 54%. So as we spoke last quarter, that was in the low 60s with this big slug of orders, the $900-plus million order bookings that we recognized this quarter that went down to about 54%. And on the book and burn cadence, that's still a very healthy burn we're seeing about -- on average, it's going to vary from quarter-to-quarter. But on average, it's about $75 million a quarter of book and bill. Operator: Next question comes from Alex Rygiel with Texas Capital. Alexander Rygiel: Very nice quarter. Could you more specifically talk to the $400 million data center project what that revenue recognition cadence looks like over the next few quarters? And what the future phases of work could look like on this project? Brett Cope: Alex, it's Brett. Thanks for joining today. The project came in pretty quick from its initial arrival of Powell to closing the award. The burn rate from inception isn't really too dissimilar from any of our other large projects, the other jobs we take around $100 million, $120 million, $150 million. It's roughly a 2, 2.5-year burn. It is a job that we broke up into multiple factories. It's touching at least 5 facilities here in North America, worked with the client on the approach. So they're fully transparent on how we're addressing the job. It is going to have some interesting dynamics that we're anxious to put through the system relative to not a lot of design work. And so we're anxious to see how it goes through the system on a product side from a flow standpoint. It is a behind-the-meter generation asset, and there are multiple phases in the future. And so we're excited. And we believe the future phases will be a copy to the job that we just took, assuming we're successful. Alexander Rygiel: And to follow up on that, with this customer or other similar customers? Are you looking at other projects that are maybe in your big pipeline of this size for this exact same type of product? Brett Cope: This is a pretty big one. I mean, if you look at the $100 million to $200 million or maybe just sub-$100 million kind of area on the commercial side, there are clearly more of those that have amped up what we qualify as a mega project and a lot of that is being driven by -- or a fair amount of that one that was being driven by the commercial. There's still a fair amount of LNG work out there that we're very comfortable with as well. But yes, the commercial markets are bringing us what we call mega jobs over $100 million in a little bit more frequent. Upwards of $400 million, there's not a lot in the pipeline that's that large other than the future phases of this. There is potential for that, but nothing in the near term. Alexander Rygiel: Very helpful. And then could you touch up on the Remsdaq acquisition, how that's performing? Brett Cope: Yes. The Remsdaq, I go back to what I said when we actually talked about this job and some of the data center jobs. We always plan to bring the Remsdaq product portfolio into in the U.S. utility market and the Canadian utility market for that matter. And having Remsdaq on board, we are very fortunate on timing that when the data center market started looking for some of the products that we have that required some automation to do some creative power switching, if you will, in the design of the facility. We would have typically gone back out to the market and bought those boxes, those automation boxes from some other companies. And so we're able to use our own box now. And we have been doing that really since the end of last calendar year so beginning of our first fiscal quarter of '26, we've been bringing their product into the states into the commercial market largely. And so really well timed there. And then just the core operation of Remsdaq very pleased with the progression. One of the things that attracted us to the Remsdaq was, a, the box, but b, their road map for technology. And we've now done a good job of integrating their team and our team together, understood really all the particulars on the road map and we anticipate that the next generation of the controller that attracted us will be out in the market here in the next couple of quarters. So we're pretty excited. Operator: The next question comes from Chip Moore with ROTH MKM. Alfred Moore: Brett and Mike, I guess for me, I think in data center today, there were some news around optical equipment and some communications equipment getting sort of clamped down from China. Not that, that extends to switchgear, but just curious your thoughts on some of the domestic opportunities for Powell, whether it's defense-centric or public power. What are you seeing there? And how do you like that opportunity? Brett Cope: Yes, I have to look for that update. As I think you know, Chip pretty well, we don't really have a tie to the Asian supply side of things, not because the company has ever been anti that part of supply. It's just not something we've done. So we do sit in a unique position in that our content as we manufacture has really little tie to that. So there is an element we've talked on a couple of calls in the past around defense spending, we are pursuing that. We have a very good story to tell. I'd say that our opportunity funnel there is also growing. I can't report our results yet, but I do anticipate we'll get over the hump on that here in the next couple of quarters, and we'll have a really solid story to add into the color on future results. And so as that permeates and serves other secular markets such as utility or even the commercial side from a supply chain side and risk, I feel really strong that Powell is in a great position to serve that market with how we're set up on supply chain and manufacturing. Alfred Moore: Great. And maybe for my follow-up, just an update around new products and maybe tie that into some of the potential capacity expansions that you might make? Any color there? Brett Cope: Yes. We've had -- definitely R&D is trending up. Some of these newer projects, when you look at the portfolio of electrical kit that we provide to the market require certain testing and certificates. And you've got to go to third-party labs, all of us do. Anybody in the electric business has to do this in the switchgear. And so we've had some increased R&D and a little, I don't want to call it -- it's all for good because it's supporting these large orders, but we've had to take some of our resources and divert it to short-term need on the R&D side, where you have to go build samples to get a rating to either handle the heat or the short circuit around the switchgear. And so as we've grown business, we've grown in these market verticals, we've had to pivot a little bit in the short term and divert spend some more R&D and divert some R&D resources to address those needs in our portfolio gap, we felt good that we took the job that we would meet the rating, but you've got to go and get the rating. And so that's a little bit of the R&D build that you've seen. On the organic R&D side, it pulls some of the resources away in the short term. But yes, I do feel good that everything we're progressing will support that eventual new facility that we're going to own, and that will be critical. Those 2 are very closely linked. And we're not going to go invest in that facility, which will require an expanded fabrication support until those products are solid and ready to be released into the market, and that's the timing we're working through right now. Operator: [Operator Instructions] The next question comes from John Braatz with Kansas City Capital. Jon Braatz: Brett, sort of a data center question. We've seen some growing resistance publicly from consumers about data centers and moratoriums and so on. And I think it's going to be incumbent upon data centers to improve the efficiency, improve -- reduce electrical consumption and so on. And I've been reading about 800-volt data centers and so on. And I guess my question is, what role might Powell and its products have in improving the efficiency of data centers? Could we see an incremental benefit to Powell as data centers evolve, could we see more Powell content possibly? Brett Cope: Possibly. On the utility connection, whether you're connecting on a grid load, utility scale, or you're going off the meter. Let's look at those 2 cases. If you're connected to the utility, both of those are around the 38 -- which steps in the 38 kV, very strong market for Powell. So when you talk about behind the meter, like this large one that we took. That will -- kind of to Alex's question earlier, John, that actually does drive up our content because that is more like a power island, we would call it, more like an offshore oil and gas platform where they're self-generating and they're not able to run a cable from shore several hundred miles into the sea. That actually does increase the content for Powell from a switchgear, switches, control and services, total package. It actually increases our addressable spend on the outside the data center. And to date, we really aren't in the inside of the data center. The 800-volt design, it is going to happen. I continue to like a lot of people on the call today and then the market, watch the different progression of the technology. We certainly have our fingers into what's going on there. We are contemplating things that may pivot us into that area as much as it might stay AC gear or DC gear to support either design or a mix of the designs. But at the compute level, where we don't compete, the 1-megawatt rack is definitely on its way and it is built around DC distribution technology. And so as that moves up the power curve, the outside of the data center will remain largely AC Energy. There's a mix of ideas to do DC. I mean a really wide-ranging mix of DC stuff that will get inside the data center. And yes, I still see an opportunity for Powell more midterm on the DC side, but we definitely are looking at it. Jon Braatz: Okay. All right. And Mike, as we think about the expansion plans and over the next couple of years, would you think that there would have to be some lift to your SG&A spend to meet those expansion plans? Michael Metcalf: Yes. I do think there will be some pressure on SG&A as we stand up these new facilities. I mean you can't switch them on immediately. So there's a transitional period where you stand them up and get them ready for production. We're doing all that we can to offset any impact to the business from both whether it's a gross profit percentage or an SG&A percentage, the cost of the business. We're doing everything we can to mitigate any impact that we see. But I think as we go forward and some of these larger initiatives, as Brett mentioned, the large facility that we're preparing to get under lease, there will be a transitional period there where we're standing it up and we're spending money for it to actually be productive. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Brett Cope, CEO, for any closing remarks. Please go ahead. Brett Cope: Thank you, Ashia, and thank you, everyone, for joining us on the call this morning. We are very pleased with the results of our third fiscal quarter, and we are encouraged by the commercial activity across each of our core end markets. We believe the momentum that our team has built throughout the year will continue into our fiscal 2027. I would like to thank our incredible employees through their talent, leadership and focus have prepared Powell well for this growth cycle in our business. Thank you to our valued customers and our supplier partners for their continued trust and support of Powell. Mike and I look forward to talking with you all next quarter. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Powell Industries, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Powell Industries wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $399,832!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,374,595!* Now, it’s worth noting Stock Advisor’s total average return is 968% — a market-crushing outperformance compared to 215% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 10, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Powell Industries (POWL) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Powell Industries, Inc. POWL centered its third-quarter fiscal 2026 call on record orders that pushed backlog to a new high, even as reported results came in below the Zacks Consensus Estimate. Management emphasized capacity additions, stable pricing and broad demand across data centers, utilities and energy projects. The execution challenge is converting a longer-duration backlog without sacrificing margins. Chairman and chief executive officer Brett Cope said new orders reached $934 million, nearly three times the prior-year level. Backlog climbed to about $2.4 billion after more than $1.8 billion of awards over three quarters. The total included a data center award exceeding $400 million, a roughly $75 million petrochemical project and an approximately $60 million LNG project. More than $350 million of other orders spanned Powell’s markets. Chief financial officer Michael Metcalf said the quarterly book-to-bill ratio was 3.0, while 54% of backlog is expected to convert over the next 12 months. The order book extends deep into fiscal 2028. Cope said Powell expects to add space near its Ohio operation and has leased 50,000 square feet near Houston. Two satellite engineering offices are helping recruit specialized talent. The Jacintoport expansion will add 335,000 square feet. Cope said the site could support well above $100 million of incremental annualized revenues when fully utilized. The board also authorized a leased facility with about 300,000 square feet of manufacturing space. Powell continues evaluating a $70 million to $100 million greenfield plant, with capital efficiency and long-term product needs guiding the decision. Revenues increased almost 9% to $311.7 million, missing the Zacks Consensus Estimate of $318.3 million. Earnings of $1.42 per share fell short of the $1.49 consensus estimate. Powell Industries, Inc. price-consensus-eps-surprise-chart | Powell Industries, Inc. Quote Gross margin was 30.6%, roughly stable year over year and up 90 basis points sequentially. Metcalf credited project mix, execution, operating leverage and stable pricing. A Sidoti analyst asked about pricing and competition. Cope said delivery speed remains central in commercial markets, while industrial customers are more price sensitive. Metcalf said moderate commodity inflation is being partly offset by hedging and commercial discipline. Cope described activity in commercial, utility and industrial markets as robust. Data center orders have accelerated, utility demand remains supported by power needs, and LNG investment continues to drive infrastructure spending. Commercial and other industrial revenues grew 54%, while electric utility revenues increased 18%. Petrochemical revenues declined 49%, although management cited early signs of recovery. A JPMorgan analyst asked about the revenue shortfall. Metcalf attributed quarterly variability to project timing rather than a specific operating issue, while Cope said activity remains strong into calendar 2027. Cope said the more than $400 million data center project should burn over roughly two to two-and-a-half years and involve at least five North American facilities. Future phases are expected to resemble the initial award if execution is successful. The project uses behind-the-meter generation, increasing Powell’s content across switchgear, controls and services. Cope compared the configuration to a self-contained power island. A Kansas City Capital Associates analyst asked about evolving power architecture. Cope said Powell is evaluating higher-voltage and direct-current opportunities, although its current strength remains outside the compute area. Management’s tone remained confident on demand and disciplined on expansion. Cope said leased capacity addresses near-term needs, while an owned factory would support longer-term utility, industrial, product and acquisition strategies. Metcalf expects gross margins to remain consistent with trailing-12-month levels. He cautioned that standing up new facilities will create transitional spending before capacity becomes productive. Powell enters fiscal 2027 focused on backlog conversion, workforce planning and incremental capacity. Cope identified craft-labor availability as a challenge for fiscal 2027 and 2028 rather than an immediate constraint. POWL carries a Zacks Rank #3 (Hold), a neutral near-term signal based on earnings-estimate revisions. Its Momentum Score of B is favorable, while the Growth Score of C and Value Score of F provide weaker support. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The VGM Score of D reflects an unfavorable combined style profile. The Zacks Rank can change as analysts revise estimates following the newly reported results, so the current rating is not permanent. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Powell Industries, Inc. (POWL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Record quarterly orders of $934 million were driven by a major inflection in data center demand and sustained strength in the U.S. LNG and electric utility sectors. Revenue growth of 9% was supported by commercial and industrial markets, though partially offset by a softer Canadian market and timing-related lumpy project conversions. Gross margin of 30.6% reflects strong operational execution and volume leverage, despite moderate inflationary headwinds in copper, aluminum, and steel. The company is aggressively expanding its footprint by over 20% through fiscal 2026, utilizing a mix of leased satellite facilities and a nearing-completion 335,000 square foot expansion at Jacintoport. Management is prioritizing speed and capacity as the primary value proposition in the commercial market, while maintaining price sensitivity in industrial sectors. Strategic engineering expansion includes two new satellite offices in Houston to capture critical talent in the energy corridor and support complex project design. Backlog visibility now extends deep into fiscal 2028, with approximately $1.3 billion expected to convert to revenue over the next 12 months. Management is evaluating a $70 million to $100 million greenfield facility to provide up to 300,000 square feet of owned manufacturing space for long-term organic growth. A new leased manufacturing facility is expected to be operational by late Q2 or early Q3 of fiscal 2027 to handle immediate backlog acceleration. The M&A pipeline is active with a focus on complementary products and services, though management remains disciplined due to currently rich market valuations. Future data center opportunities are expected to shift toward 'behind-the-meter' generation assets, which increases Powell's addressable content per project. Project closeouts contributed approximately 100 basis points to year-to-date gross margins, a slight decrease from 130 basis points in the prior year. Labor availability for craft workers is identified as a potential challenge for 2027 and 2028 as construction demand pulls talent across North America. The Remsdaq acquisition is being leveraged to integrate proprietary automation technology into domestic data center and utility projects. The company maintains a debt-free balance sheet with $634 million in liquidity to fund upcoming capital-intensive capacity expansions. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management believes margins have not necessarily peaked, citing opportunities in high-value commercial sectors and accretive service strategies. Cautioned that margins may be 'chunky' quarter-to-quarter due to project mix and the 1-to-3 year conversion cycle of the current backlog. The project is a 2 to 2.5-year burn that will touch at least five North American facilities to optimize throughput. The award represents Phase 1 of a multiphase design, with future phases expected to be 'copies' of the initial high-content generation asset. Powell is focusing on long-term utility and industrial strategies (10-20 years) rather than just short-term opportunistic commercial gains. Management is allocating capital to owned assets only where they see durable demand beyond the current market cycle. R&D spending has trended up to support specific testing and certification requirements for mega-projects. Resources are being balanced between short-term project ratings and long-term organic product releases that will fill the new manufacturing capacity.

This article first appeared on GuruFocus. Revenue: Total revenue of $312 million, up 9% year-over-year. New Orders: Record $934 million in new orders for the quarter, nearly 3 times higher than the prior year. Backlog: Reached a record $2.4 billion, up $967 million year-over-year. Gross Margin: 30.6% of revenue, roughly flat year-over-year. Net Income: $52.2 million, or $1.42 per diluted share, compared to $48.2 million ($1.32 per diluted share) in the prior year. Operating Cash Flow: $100 million generated in the quarter. SG&A Expenses: $27 million, up $1.6 million year-over-year, but lower as a percentage of revenue at 8.6%. Cash Position: $634 million in cash, cash equivalents, and short-term investments, with no debt. Capital Expenditures: $6.5 million invested in property, plant, and equipment during the quarter. Warning! GuruFocus has detected 2 Warning Sign with NMFC. Is POWL fairly valued? Test your thesis with our free DCF calculator. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record new orders of $934 million in Q3, nearly 3x higher than the prior year, driving backlog to a record $2.4 billion. Gross margin remained strong at 30.6%, supported by favorable project mix, operating leverage, and stable pricing. Robust demand across all core end markets, including electric utility, data centers, LNG, and petrochemicals, with early signs of petrochemical recovery. Strategic capacity expansions underway, including new leases and the Jacintoport facility, expected to support over $100 million in incremental annualized revenue. Strong liquidity position with $634 million in cash and no debt, providing flexibility for future investments and M&A. Revenue growth of 9% was modest and slightly below Street expectations due to project timing and lumpiness. International revenues declined slightly, driven by softer Canadian market conditions. Petrochemical market revenues were down 49% year-over-year, though early recovery signs are emerging. Potential labor shortages anticipated in fiscal 2027-2028 due to increased construction activity across the U.S., which could impact operations. SG&A expenses increased due to higher compensation and the Remsdaq acquisition, with further pressure expected from facility expansions. Q: Can you talk about the gross margin profile and your ability to be more aggressive on pricing given the incredible demand?A: Brett Cope (CEO) noted that there is some opportunity for price in the market, with delivery speed driving the overall value proposition, particularly in the commercial market. The industrial market is more price-sensitive, but margins remain good. Mike Metcalf (CFO) added that margins are benefiting from product mix, operating leverage, and pricing stability. He noted moderate inflation on core commodities like copper and steel, which is being offset by hedging and commercial discipline. Project closeouts contributed roughly 100 basis points to margins year-to-date. Q: Can you provide color on the decision to expand capacity, including the thought process behind a potential greenfield facility and the available labor situation?A: Brett Cope (CEO) explained that the company is pivoting to a lease facility to handle near-term backlog growth more efficiently, while timing an owned facility to support the methodic growth of its expanded product pipeline. On labor, he noted that while there is no immediate impact, the broader construction boom is pulling craft labor to other regions, and he expects labor to become a challenge in fiscal 2027 and 2028. Q: Can you discuss the drivers behind the modest revenue shortfall versus Street expectations?A: Mike Metcalf (CFO) attributed the revenue cadence to the lumpy nature of a project-based business and the timing of large components. He stated that the 9% year-over-year growth was in line with expectations, and given the backlog conversion rate, the company does not expect to see double-digit year-over-year growth going forward. Q: Have margins peaked?A: Brett Cope (CEO) stated that margins have not peaked, citing continued opportunities in the commercial and data center markets, as well as accretive contributions from automation and the services strategy. He acknowledged that results can be "chunky" quarter to quarter but expressed positivity about the long-term margin profile. Q: How should we think about the backlog burn over the next 12 to 18 months, and what is the next 12-month backlog number?A: Mike Metcalf (CFO) reported that roughly $1.3 billion, or about 54% of the $2.4 billion backlog, is convertible over the next 12 months. This is down from the low 60s last quarter due to the large slug of orders booked in Q3. The average book-and-burn cadence is approximately $75 million per quarter. Q: Can you detail the revenue recognition cadence for the $400 million data center project and the potential for future phases?A: Brett Cope (CEO) explained that the project has a roughly 2 to 2.5-year burn rate, similar to other large projects, and is being executed across at least five North American facilities. The project is a behind-the-meter generation asset with multiple future phases, which the company expects to be "copy jobs" of the initial award, assuming successful execution. Q: How is the Remsdaq acquisition performing?A: Brett Cope (CEO) stated that the timing of the acquisition has been fortunate, as Powell has been able to use Remsdaq's automation products for data center projects since the beginning of fiscal 2026, rather than buying from third parties. The core operation is performing well, and the next-generation controller is expected to be released to the market in the next couple of quarters. Q: What are your thoughts on domestic opportunities for Powell, particularly around defense-centric or public power markets?A: Brett Cope (CEO) noted that Powell has little tie to Asian supply chains, positioning it well for domestic opportunities. The company is actively pursuing defense spending opportunities, and while no results have been reported yet, the opportunity funnel is growing. He expects to have a solid story to share in the next couple of quarters. Q: Could Powell see an incremental benefit from the evolution of data centers, such as the move to 800-volt designs, in terms of increased content?A: Brett Cope (CEO) explained that behind-the-meter designs, like the large data center order, increase Powell's content because they are more akin to a "power island," similar to offshore oil and gas platforms. While the company does not currently compete inside the data center, it is contemplating products that could pivot it into the DC distribution space as the technology evolves. Q: Will the expansion plans require a lift in SG&A spend over the next couple of years?A: Mike Metcalf (CFO) confirmed that there will be some pressure on SG&A as new facilities are stood up, given the transitional period before they become productive. The company is doing everything it can to mitigate the impact on both gross profit and SG&A percentages. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Powell Industries, Inc. POWL reported third-quarter fiscal 2026 (ended June 2026) earnings of $1.42 per share, up 7.6% year over year, but missed the Zacks Consensus Estimate of $1.49. Revenues rose 9% year over year to $311.7 million but missed the consensus mark of $318 million.Growth reflected strength in commercial and other industrial and electric utility markets, partly offset by weakness in petrochemicals. Commercial and other industrial revenues increased 54% year over year in the fiscal third quarter. Electric utility revenues advanced 18%, showing broad demand across two of Powell’s core markets. However, Petrochemical revenues declined 49% from the prior-year period and partly offset the gains. Gross profit increased 8% year over year to $95.3 million as higher volumes and a strong, stable pricing environment supported profitability. Gross margin was 30.6% compared with 30.7% a year earlier.On a sequential basis, gross profit rose 8% from $87.9 million. Gross margin improved 100 basis points from 29.6% in the preceding quarter, indicating stronger conversion on the higher revenue base despite ongoing investment needs. Powell Industries, Inc. price-consensus-eps-surprise-chart | Powell Industries, Inc. Quote New orders totaled $934 million, up 158% from $362 million in the year-ago quarter and well above $490 million in the fiscal second quarter. The book-to-bill ratio was 3.0, indicating orders were three times the quarter’s revenues.The company secured three mega orders, defined as contracts above $50 million. These included a data center award of more than $400 million, a petrochemical fertilizer project of about $75 million and an LNG project of roughly $60 million in the U.S. Gulf Coast. Backlog reached $2.4 billion, up 69% year over year, supported by record quarterly orders. Improved bookings were concentrated in commercial and other industrial, oil and gas, and petrochemical markets, broadening the project base beyond the quarter’s reported revenue mix. Net income increased 8% year over year to $52.2 million from $48.2 million. Higher revenues and strong gross margins drove the increase, while operating income rose to $64.1 million from $60.1 million.Net income advanced 8% year over year to $52.2 million. Cost of goods sold grew 9.1% to $311.7 million. Selling, general and administrative expenses were $26.7 million, while research and development expenses totaled $4.3 million in the quarter, reflecting an increase of 6.4% and 61.7% year over year, respectively. Cash, cash equivalents and short-term investments totaled $633.6 million as of June 30, 2026, up from $475.5 million at the end of fiscal 2025. Working capital stood at $606.5 million, while stockholders’ equity was $756.2 million.Capital expenditures were $6.5 million in the quarter and dividends paid totaled $3.3 million, reflecting continued investment alongside shareholder distributions. Management expects activity across the company’s core markets to remain robust. Demand drivers include the continued role of U.S. LNG, utility generation, grid-strengthening projects and rising requirements tied to data centers and AI capacity.Powell Industries expects gross margins to remain consistent with trailing-12-month level as it adds capacity to serve the expanding backlog. The company expects the Jacintoport fabrication yard expansion project to be completed by the end of fiscal 2026, with production then ramping to support recent industrial awards. The company is assessing greenfield capacity additions beyond recently added leased capacity in Houston and Ohio. Powell Industries expects another solid year of financial results as it closes fiscal 2026 (ending September 2026) and looks toward fiscal 2027 (ending September 2027). The outlook rests on project execution, backlog composition and measured capacity additions across its manufacturing network. The company currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are discussed below:Applied Industrial Technologies AIT carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Applied Industrial’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 4.0%.  In the past 60 days, the Zacks Consensus Estimate for Applied Industrial’s fiscal 2026 bottom line has inched up 0.1%.IDEX Corporation IEX presently carries a Zacks Rank of 2. IDEX’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 7.7%. In the past 60 days, the Zacks Consensus Estimate for IEX’s 2026 earnings has increased 1.4%.The Middleby Corporation MIDD currently carries a Zacks Rank of 2. Middleby’s earnings topped the consensus estimate in each of the trailing four quarters. The average earnings surprise was 10.4%. In the past 60 days, the Zacks Consensus Estimate for MIDD’s 2026 earnings has increased 0.3%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Powell Industries, Inc. (POWL) : Free Stock Analysis Report Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report IDEX Corporation (IEX) : Free Stock Analysis Report The Middleby Corporation (MIDD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Powell Industries, Inc.? Here are five stocks we like better. Record demand drove a $934 million quarterly order haul, nearly triple the prior year, pushing Powell’s backlog above $2 billion to approximately $2.4 billion. Major awards included a data center power project exceeding $400 million, a $75 million petrochemical facility project and a $60 million LNG project. Third-quarter revenue rose 9% to $312 million, while net income increased to $52.2 million, or $1.42 per share. Gross margin remained strong at 30.6%, supported by favorable project mix, operating leverage and disciplined execution. Powell is expanding manufacturing and engineering capacity by more than 20% through fiscal 2026 to meet robust data center, utility and LNG demand. The company ended the quarter with $634 million in cash and short-term investments, no debt and $100 million in operating cash flow. 3 Non-Tech Stocks Still Winning Big on AI 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. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control 3 Industrial Stocks That Just Crushed Earnings Chairman, President and CEO Brett Cope said the quarter was highlighted by a record $934 million in new orders, nearly three times the prior-year level and almost double the preceding quarter's total. The company finished the period with backlog of nearly $2.4 billion, up $967 million from a year earlier and $619 million sequentially. 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. → Financials Hit Record Highs as the AI Trade Unravels—Can They Keep Leading? 3 Small-Cap Leaders Poised for Significant Growth 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. → Why Rare Earth Processing Could Be the Real 2027 Opportunity 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%. 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. 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. 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. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Powell Industries Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Powell Industries (POWL) came out with quarterly earnings of $1.42 per share, missing the Zacks Consensus Estimate of $1.49 per share. This compares to earnings of $1.32 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -4.70%. A quarter ago, it was expected that this energy equipment company would post earnings of $1.34 per share when it actually produced earnings of $1.25, delivering a surprise of -6.72%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Powell Industries, which belongs to the Zacks Manufacturing - Electronics industry, posted revenues of $311.74 million for the quarter ended June 2026, missing the Zacks Consensus Estimate by 2.05%. This compares to year-ago revenues of $286.27 million. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Powell Industries shares have added about 96.4% since the beginning of the year versus the S&P 500's gain of 9.4%. While Powell Industries has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Powell Industries was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.63 on $334.71 million in revenues for the coming quarter and $5.47 on $1.2 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Manufacturing - Electronics is currently in the top 36% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. EnerSys (ENS), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 12. This maker of industrial batteries is expected to post quarterly earnings of $2.82 per share in its upcoming report, which represents a year-over-year change of +35.6%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. EnerSys' revenues are expected to be $922.82 million, up 3.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Powell Industries, Inc. (POWL) : Free Stock Analysis Report Enersys (ENS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

HOUSTON, Aug. 03, 2026 (GLOBE NEWSWIRE) -- Powell Industries, Inc. (NASDAQ: POWL) (“Powell” or the “Company”), a leading supplier of custom-engineered solutions for the management, control and distribution of electrical energy, today announced results for the third quarter Fiscal 2026 ended June 30, 2026. All comparisons are to the third quarter of Fiscal 2025, unless otherwise noted. Key Highlights: Revenues of $312 million increased 9%; Gross profit of $95 million, or 30.6% of revenue, increased 8%; Net income of $52 million, or $1.42 per diluted share(1), increased 8%; New orders(2) totaled $934 million, an increase of 158%; Backlog(3) as of June 30, 2026 totaled $2.4 billion, an increase of 69%; Cash and short-term investments as of June 30, 2026 totaled $634 million; Powell was awarded three mega(4) orders during the fiscal third quarter, including the previously announced data center order with a value exceeding $400 million, as well as orders in the Petrochemical market and the LNG end market. Brett A. Cope, Powell’s Chairman and Chief Executive Officer, stated, “Commercial momentum across our key end markets continues to accelerate as Powell was awarded a record $934 million of new orders(2) in the quarter and reported a book-to-bill ratio of 3.0x. Activity levels across Oil and Gas, Electric Utility and Commercial and Industrial end markets have remained very robust, highlighted in this most recent quarter by our previously announced mega(4) data center order with a value in excess of $400 million, as well as two additional mega(4) orders; one within the LNG end market that approximated $60 million and the other a Petrochemical order for roughly $75 million. The Powell team also continues to focus on strong project execution as we deliver our record backlog(3), demonstrated by a strong gross margin performance of 30.6%.” Third Quarter Fiscal 2026 ResultsRevenues totaled $312 million, an increase of 9% compared to $286.3 million in the prior year, and a sequential increase of 5% compared to $296.6 million in the second quarter of Fiscal 2026. The growth compared to the prior year was driven by higher revenue levels from the Commercial & Other Industrial market, which grew 54%, as well as from the Electric Utility market, which grew 18%. This was partially offset by lower revenue within the Petrochemical market, which declined 49%. Gross profit of $95.3 million, or 30.6% of revenue, increased 8% compared to $87.9 million, or 30.7% of revenue, in the prior year and increased sequentially by 8% compared to $87.9 million, or 29.6% of revenue in the second quarter of Fiscal 2026. The increases in gross profit were primarily driven by higher volume levels and a continued strong and stable pricing environment. New orders(2) totaled $934 million compared to $362 million in the prior year and $490 million in the second quarter of Fiscal 2026. The increases were driven by improved bookings predominantly within the Commercial & Other Industrial, Oil & Gas, and Petrochemical markets. During the quarter, the Company was awarded three mega(4) orders; one for a data center with a value exceeding $400 million related to a behind-the-meter design of on-site generation assets, a Petrochemical order with a value of approximately $75 million in the fertilizer industry, and a LNG order with a value of approximately $60 million to support the liquefaction and export of LNG along the U.S. Gulf Coast. Backlog(3) totaled $2.4 billion as of June 30, 2026, an increase of 69% compared to $1.4 billion as of June 30, 2025, and a sequential increase of 35% compared to $1.8 billion as of March 31, 2026. Net income of $52.2 million, or $1.42 per diluted share(1), increased 8% compared to $48.2 million, or $1.32 per diluted share(1) in the prior year. The increase was the result of higher revenues coupled with strong gross margins during the quarter. Net income in the quarter increased sequentially by 14% compared to $45.9 million, or $1.25 per diluted share(1) in the second quarter of Fiscal 2026. On April 2, 2026, Powell effected a three-for-one forward split of our common stock and proportionately increased the number of authorized common stock from 30,000,000 to 90,000,000. Each shareholder of record as of the close of trading on March 20, 2026 (the “Record Date”) received, after the close of trading on April 2, 2026, two additional shares for every one share held on the Record Date. Trading began on a split-adjusted basis at market open on April 6, 2026. OUTLOOKCommenting on the Company’s expectations for the remainder of Fiscal 2026, Cope added, “The outlook for each of our core end markets are highly favorable, supported by durable and diverse demand drivers, including the continuation of U.S. LNG in the global energy landscape, growth in utility generation coupled with ongoing grid strengthening initiatives, as well as increasing demand to support data centers and related AI capacity demand. We anticipate activity across each of our core markets will remain robust. Our near-to-midterm focus remains on ensuring that Powell is adequately positioned to address these thematic, secular tailwinds driving the growing demand for electrical distribution equipment and custom, engineered-to-order solutions.” Michael Metcalf, Powell’s Chief Financial Officer, commented, “Our strong project execution levels, combined with our growing backlog(3) and its overall composition across our core end markets, make us confident that Powell will deliver another very strong year of financial results as we close out Fiscal 2026 and look ahead to Fiscal 2027. We expect that gross margins will maintain levels consistent to the trailing twelve months, while prudently adding capacity to support the acceleration in our backlog(3). The expansion of our Jacintoport fabrication yard is expected to be completed by the close of Fiscal 2026, and we anticipate production to ramp up as we leverage this additional capacity to support recent core industrial project awards. We are also evaluating greenfield capacity expansions incremental to our added leased capacity in Houston and Ohio, while prioritizing adequate returns and ensuring the optimal manufacturing footprint for Powell over the long term.” CONFERENCE CALL Powell Industries has scheduled a conference call for Tuesday, August 4, 2026 at 11:00 a.m. Eastern time. To participate in the conference call, dial 1-833-953-2431 (domestic) or 1-412-317-5760 (international) at least 10 minutes before the call begins and ask for the Powell Industries conference call. A telephonic replay of the conference call will be available through August 11, 2026 and may be accessed by calling 1-855-669-9658 (domestic) or 1-412-317-0088 (international) and using passcode 3105582#. Investors, analysts and the general public will also have the opportunity to listen to the conference call over the Internet by visiting powellind.com. To listen to the live call on the web, please visit the website at least 15 minutes before the call begins to register, download and install any necessary audio software. For those who cannot listen to the live webcast, an archive will be available shortly after the call and will remain available for approximately twelve months at powellind.com. About Powell IndustriesPowell Industries, Inc., headquartered in Houston, Texas, develops, designs, manufactures and services custom-engineered equipment and systems that distribute, control and monitor the flow of electrical energy and provide protection to motors, transformers and other electrically powered equipment. Powell Industries, Inc. primarily serves the oil and gas and petrochemical markets, the electric utility market, and commercial and other industrial markets. Beyond these major markets, we also provide products and services to the light rail traction power market and other markets that include universities and government entities. We are continuously developing new channels to electrical markets through original equipment manufacturers and distribution market channels. For more information, please visit powellind.com. Any forward-looking statements in the preceding paragraphs of this release, including those related to our outlook, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties in that actual results may differ materially from those projected in the forward-looking statements. In the course of operations, we are subject to certain risk factors, competition and competitive pressures, sensitivity to general economic and industrial conditions, international political and economic risks, availability and price of raw materials, the impact of tariffs and execution of business strategy. In addition, our backlog(3) may not be indicative of future operating results as orders may be cancelled or modified by our customers and associated backlog may not be recognized as revenue on the timeline we expect or at all. For further information, please refer to the Company’s filings with the Securities and Exchange Commission (the “SEC”), copies of which are available from the Company without charge. Investors should note that we announce material financial information in SEC filings, press releases and public conference calls. Based on guidance from the SEC, we may use the Investors section of our website to communicate with investors. It is possible that the financial and other information posted there could be deemed to be material information. The information on our website is not part of, and is not incorporated to, this release.