POWL Q3 Earnings Call Highlights Record Orders and Capacity Push

POWL Sets a Record Order Pace

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.

Powell Expands Capacity for the Backlog

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.

POWL Defends Its Margin Profile

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.

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.

Powell Sees Demand Across Three Verticals

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.

POWL Details the Data Center Opportunity

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.

Powell Balances Growth With Execution

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.

Zacks Signals Reflect a Mixed Setup

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.

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