Powell Industries Roars into FY2025 with Strong Start
Powell Industries has kicked off its fiscal year 2025 on a high note, delivering a 24% surge in revenue and 36% growth in new orders compared to the same period last year. The company's Chairman and CEO Brett Cope highlighted this impressive performance during Powell's recent conference call.
According to Cope, revenue increased across all major market sectors, with the oil and gas sector witnessing a 14% rise, while the electric utility and commercial and other industrial sectors grew by 26% and 80%, respectively. The order total of $269 million also saw broad strength, led by an award for a large domestic LNG project to be located along the U.S. Gulf Coast.
The company's strategy in the utility market remains a bright spot, accounting for nearly one-third of its backlog. Gross margin was roughly unchanged from the prior year but lower sequentially, in line with expectations due to seasonal challenges and benefits from project closeouts experienced in the fourth quarter of 2024.
On the bottom line, Powell recorded net income of $35 million in the first quarter or $2.86 per diluted share, which was 44% higher than the prior year. The company's backlog of $1.3 billion increased by $48 million compared to the prior year and by $14 million sequentially.
Powell remains very encouraged by the overall composition and project schedules of its backlog, which is well-balanced across both markets and geographies in which it competes. This provides revenue visibility into fiscal 2027. The company is also making good progress with its capacity initiatives, which are advancing as planned to facilitate the execution of its current backlog and provide room for modest volume growth going forward.
Remediation work at the 9 acres purchased last July continues to progress on schedule, freeing up important capacity at Powell's largest manufacturing facility based in Houston. The expansion and improvement of its electrical products factory in Houston also remain on schedule and are expected to be completed by mid-fiscal 2025.
Powell is continuing to invest in its R&D function to support organic development of new products, better positioning the company in its key markets. Its R&D spend was up 26% versus one year ago to $2.5 million in this quarter. The company continues to attract and strengthen its talented workforce and remains confident that it is adequately positioned to execute its backlog.
