Powell Industries Q3 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 6, 2025

Key Takeaways

  • Positive Sentiment: Record Q3 EPS of $3.96 per share and a 30.7% gross margin (up 230 bps year-over-year) highlighted strong operational execution despite flat revenues.
  • Positive Sentiment: $362 M in new orders drove a book-to-bill ratio of 1.3 and sequential backlog growth of 7% to $1.4 B.
  • Positive Sentiment: Secured major project awards, including two offshore power control room modules (> $80 M combined), a $60 M electric utility generation facility, and a $30 M traction order.
  • Positive Sentiment: Announced acquisition of REMSAK, adding UK-based SCADA RTU technology to deliver a 100% Powell-built electrical automation solution.
  • Positive Sentiment: Maintained confidence in strong demand across oil & gas, electric utility, and data center markets, with margin guidance to approximate current levels into fiscal 2026.
AI Generated. May Contain Errors.
Earnings Conference Call
Powell Industries Q3 2025
00:00 / 00:00

There are 7 speakers on the call.

Operator

Welcome to the Powerwall Industries earnings conference call. At this time, all participants will be in a listen only mode. Should you need assistance, please signal an conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone phone.

Operator

Please note this event is being recorded. I would like to turn the conference over to Ryan Coleman, Investor Relations. Thank you. You may begin.

Speaker 1

Thank you, and good morning, everyone. Thank you for joining us for Powell Industries conference call today to review fiscal year twenty twenty five 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 13. The information on how to access the replay was provided in yesterday's earnings release.

Speaker 1

Please note that information reported on this call speaks only as of today, 08/06/2025, and therefore, you are advised that any time sensitive information may no longer be accurate at the time of replay listening or transcript reading. This conference call includes certain statements, including statements related to the company's expectations of its future operating results that may be considered forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward looking statements involve risks and uncertainties and that actual 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.

Speaker 1

With With that, I'll now turn the call over to Brett.

Speaker 2

Thank you, Ryan, and good morning, everyone. Thank you for joining us today to review Powell's fiscal twenty twenty five 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 strong third quarter as operationally the team continues to execute at a high level. Our gross profit dollars grew 8% despite roughly flat revenue, leading to a gross margin of 30.7%, which was two thirty basis points higher than the prior year.

Speaker 2

We continue to benefit from favorable volume leverage, effective project execution and the benefit of project closeouts. Revenue was largely unchanged compared to the prior year as lower revenue levels from the oil and gas and petrochemical markets were mostly offset by strong growth in the electric utility, commercial and other industrial and traction markets. This was mainly a function of project timing as our business can experience lumpiness in our project completion and delivery schedules from time to time. On the bottom line, we recorded net income of $48,000,000 in the quarter or $3.96 per diluted share, which was 4% higher than the prior year and a record quarterly EPS for Powell. We saw meaningful acceleration in order activity highlighted by a book to bill ratio of 1.3 times and sequential backlog growth of 7% to a total of 1,400,000,000 The $362,000,000 in new orders was well balanced across the end markets we serve and included multiple substantial awards that I'll detail in a moment.

Speaker 2

We remain very comfortable with the project schedules and overall composition of our order book. Our backlog is balanced across the market sectors we serve as well as across the Powell manufacturing footprint. The backlog possesses a healthy mix of both larger projects as well as what we would consider to be core smaller to medium sized projects. I'd like to briefly highlight a few of the larger awards we received during the third quarter. In the oil and gas market, we booked two large orders for custom power control room modules, which have a combined total of over $80,000,000 Each of these projects will be deployed to separate offshore production locations, one in the Gulf Of America and the second to be located offshore from the coast of Africa.

Speaker 2

We also booked a roughly $60,000,000 order in the electric utility market for a new power generation facility. This project is the largest in Powell's history for this market sector and is a testament to our strategic efforts to diversify our business and establish ourselves as a trusted partner to our utility customers. Our growth in this market has been more than a decade in the making and the investment of our time, effort and capital continues to contribute meaningful returns. In fact, of the $362,000,000 in new orders this past quarter, nearly half of the new awards are within the electric utility market. Lastly, we also booked a large traction order that totaled roughly $30,000,000 As we have shared over the last few years, we are committed to the traction market to take a highly selective approach in this market to ensure the alignment of the value we provide to our customers is well matched to our execution model.

Speaker 2

This particular project, which will be executed out of our Ohio facility is with a customer with whom we are building a long term mutually beneficial relationship. We also continue to execute against our strategy as we pursue Powell's profitable growth and long term success. A few weeks ago, we announced an agreement to acquire REMSAK Limited, a UK based manufacturer of SCADA remote terminal units for electrical substation control and automation in generation, transmission and distribution. For decades at Powell, we have delivered electrical distribution solutions to the market with nearly all of our projects requiring some level of electrical automation. We typically purchase a large amount of automation hardware today as part of the overall solution that we deliver to our customers.

Speaker 2

REMSAX Limited is an established name for electrical automation in the regulated utility market across The UK. The acquisition of REMSAX people and technology immediately strengthens our electrical automation platform, enhancing our ability to meet an underserved demand with a solution that is accretive to Powell. In addition to the existing utility market that REMSAX currently serves, the technology roadmap that the REMSAX team has been working towards to support the next generation of SCADA remote terminal units for their existing markets provides a clear opportunity to leverage this next generation platform into our North American utility market. Today at Powell, we are able to influence the hardware side of our electrical automation solutions roughly 30% of the time. With the addition of REMSAX, we will now be able to offer a 100% Powell built solution to the utility market.

Speaker 2

And as the next generation of REMS DAC solution is released to the market, we'll look to qualify, offer and implement Powell solutions to all of the markets served by Powell. In addition to the electrical automation pillar, our latest product initiatives and development activity are helping to build commercial momentum as we pursue further diversification and expansion of our product portfolio. As we discussed last quarter, we launched a few new and innovative products, including a grounding switch

Speaker 3

for our

Speaker 2

oil and gas market and a power control aisle, a compact substation that we are currently building in our recently expanded products factory in Houston, as well as our first design of a low voltage switchgear product targeted for inside the data center and associated commercial market. We believe that these new products will span multiple markets and serve as an important validation of our elevated R and D spend in recent years and the IP that we have developed. Most importantly, it furthers our aim of advancing our product centric strategy to improve the overall future mix of product versus project based revenues. Looking ahead, positive. The fundamentals for the oil and gas market support our expectation for continued order strength.

Speaker 2

Specific to the fundamentals of The U. S. Natural gas market, the pipeline of LNG projects that we are tracking continues to support our expectation for continued momentum for both greenfield and brownfield activities as we continue to experience increased LNG activity as the moratorium on permitting activity was lifted earlier this year. Activity within our commercial and other industrial market also remains healthy and includes broad and increased activity within the data center market. Multiple data points over the last few months confirm the ongoing momentum in data center capacity growth, and we continue to see growing opportunities for Powell as we seek to further penetrate this market with new products.

Speaker 2

Lastly, the outlook for our electric utility market remains very strong and balanced across the customers and geographies we serve in this market. Overall, we remain very encouraged by the strong demand across the markets we serve and confident in our ability to deliver value for our customers and stakeholders alike. I'll now turn the call over to Mike to walk through our third quarter financials in more detail.

Speaker 4

Thank you, Brett, and good morning, everyone. In the 2025, we reported total revenue of $286,000,000 compared to $288,000,000 versus the same period in fiscal twenty twenty four. New orders booked in the 2025 were $362,000,000 which was 2% higher than the same period one year ago. During the current quarter, we secured two mega projects with a combined value exceeding $100,000,000 One of these represents the largest electric utility project in Powell's history, while the other marks our first major offshore oil and gas substation award in several years. As a result of this significant utility project win, our electric utility backlog now accounts for 32% of the company's total backlog.

Speaker 4

In addition, we also booked a couple of other notable projects in the quarter, one being a large domestic traction order. This is the first substantial traction project we've added to the order book in several quarters, reflecting our disciplined and selective approach to this end market, as we've previously communicated. Finally, another notable win came from our international markets, where we secured a substantial offshore oil and gas project executed by our United Kingdom division, further reinforcing the strength of our global capabilities. Overall, these project wins are a testament to the activity level and dynamic nature across all the end markets that we participate in. This strong order activity during the quarter, combined with sustained commercial momentum across most of our other end markets, resulted in a book to bill ratio of 1.3 times and a reported backlog of $1,400,000,000 at the end of the third fiscal quarter, dollars 68,000,000 higher versus one year ago and $90,000,000 higher sequentially.

Speaker 4

Compared to the 2024, domestic revenues decreased by 8% to $225,000,000 on project timing across The U. S. Divisions, while international revenues were 30% higher, driven by increased project volume across our Canadian operations as well as an increase in activity in The Middle East And Africa. In total, international revenues were up by $17,000,000 to $62,000,000 in the third fiscal quarter. From a market sector perspective versus the 2024, revenues from our electric utility market increased by 31%, while revenues from the commercial and other industrial market and the traction market increased by 1861%, respectively, albeit the traction market starting from a small revenue base.

Speaker 4

Across our core industrial end markets, the petrochemical and the oil and gas markets were lower by 368%, respectively, versus the same period one year ago on a challenging prior year comparisons as we near completion on the large petrochemical and LNG mega projects that were booked in fiscal twenty twenty three. Gross profit increased by $6,000,000 to $88,000,000 in the third fiscal quarter versus the same period one year ago. Gross profit as a percentage of revenue increased by two thirty basis points to 30.7% of revenues versus the same period a year ago and was 80 basis points higher sequentially. This performance was driven in large part by the strong margin rates exiting the backlog and the sustained volume leverage across the business, in addition to the continued benefit of strong project execution and the resulting favorable project closeouts. During the quarter, we had a small number of project cancellations resulting from customer scheduling changes and other miscellaneous unusual items that contributed roughly 85 basis points to the fiscal third quarter margin rate.

Speaker 4

Overall, we're very pleased with the company's continued operational performance during the third fiscal quarter. Margins have remained resilient and are benefiting from more short cycle product mix in addition to the market dynamics that had generated strong volume leverage and have supported modest pricing accretion, effectively offsetting any inflationary impacts across the business. Considering these variables in addition to the quality of the backlog, we anticipate that as we close fiscal twenty twenty five and establish our framework for fiscal twenty twenty six, margin levels should approximate the current year to date margin rate, excluding any unusual items and project closeout gains, which together comprise roughly 150 basis points on a year to date basis. Selling, general and administrative expenses were $25,000,000 in the current period, higher by $3,000,000 driven by an increased level of compensation expenses across the business as well as acquisition related expenses in the period. SG and A as a percentage of revenue increased 120 basis points to 8.8% in the current fiscal quarter.

Speaker 4

In the 2025, we reported net income of $48,200,000 generating $3.96 per diluted share compared to a net income of $46,200,000 or $3.79 per diluted share in the 2024. During the 2025, we generated $47,000,000 of operating cash flow on higher earnings generated in the quarter. Investments in property, plant and equipment in the fiscal third quarter totaled 5,100,000 driven by capital spending related to the completion of the facility expansion at our electrical products facility in Houston as well as new production equipment across our manufacturing footprint. At 06/30/2025, we had cash and short term investments of $433,000,000 compared to $358,000,000 at 09/30/2024 and $389,000,000 at 03/31/2025. The company does not hold any debt.

Speaker 4

In closing, we are very pleased with our operational and financial performance through the first nine months of fiscal twenty twenty five. As we approach fiscal year end, we remain confident in the company's strategic positioning and the momentum behind our growth initiatives. Looking ahead, the strength and consistency of commercial activity across all of our end markets reinforces the broadening of our business strategies and provides a solid foundation as we plan for fiscal twenty twenty six. Operationally, we are executing effectively and are well positioned to sustain our year to date financial performance through the 2025 and into the next fiscal year. At this point, we'll be happy to answer your questions.

Operator

Thank you. We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. First question comes from John Franzreb from Sidoti and Company.

Operator

Please go ahead.

Speaker 5

Good morning, guys, and congratulations on another great quarter. And thanks for taking the questions. Brett, I'd like to start with really the stellar bookings profile in the quarter, some really large projects you were able to bring across the finish line. I'm curious, what's the opportunity pipeline look like now? How many large projects start that they're bidding on?

Speaker 5

Maybe give us some context of what we're seeing out there?

Speaker 2

Well, good morning again, John. Appreciate the question. Really good quarter. We highlighted in the prepared comments the utility market specifically. As you know, this has been a a a a strategic strategy for us to go build our our home markets in The US and Canada.

Speaker 2

Know, the the big power generation award certainly is was an exciting win. It was very competitive And but the broad based participation from the other the broader market also very solid in the quarter. As we look forward, again, in the oil and gas segment, certainly the fundamentals of gas, as I've noted last couple quarters, continues to be very active. Timing is you know, a little bit more of a challenge this time around, but the amount of activity is is very, very broad and significant that's out there. So that's something we track working very hard across the teams.

Speaker 2

I think the utility market continues to be very solid for us looking forward given all the, various drivers of, electrification today in The US, Canada, and The UK. And commercial and other markets continues to be robust for us. It's, you know, from an absolute dollars number smaller, but percentage wise growing, still opportunistic. I would I would, say that we're still, a little bit more reacting than driving our future there, but it is very broad based and it is not showing any signs of relenting, at least in terms of where we're involved.

Speaker 5

That's great. I'm curious, what's your visibility in the revenue profile look like? How far does it extend compared to, I don't know, a year or two ago?

Speaker 4

Hey, John, this is Mike. Good morning. Our backlog is transparent and we're booking out into late fiscal twenty twenty seven at this stage and big projects would carry over probably into '28. There's a two to three year lead time for these large projects. So we have very good visibility.

Speaker 4

Our queue will come out later today. You'll see that roughly 65% of our backlog is slated to convert to revenue over the next twelve months. So yes, that's an area where we have a lot of visibility.

Speaker 5

Excellent. Thanks, Mike. And I'm just curious about the gross margin. You outlined three things, but I guess the project closeouts is the one I want to focus on. How much did that contribute to the improvement in gross margin year over year?

Speaker 4

Yes. Let me refer to the year to date margins, John. Through the first nine months of fiscal twenty twenty five, we've recorded 28.6% gross profit as it relates to revenues. That's two fifty basis points year over year favorable. So of that two fifty bps, there's roughly 100 of that that is attributable to just productivity, organic margin growth through increased throughput, volume leverage, some modest price accretion that's offsetting some of the inflationary pressures in the business.

Speaker 4

And there are remaining 150 bps is really project closeouts, the majority is project closeouts, then you have a small element, call it probably 30 of that is due to unusual items. So roughly 115, 120 basis points on a year to date basis for project closeout gains that we've seen.

Speaker 5

Okay. And one last question, I'll get back into queue. The SG and A took a noticeable tick up in quarter. Was something anything unusual there we should be aware of?

Speaker 2

Nothing unusual

Speaker 4

per se. We did have higher variable compensation expenses hit the quarter. And we also had some acquisition related expenses that hit the quarter from the REMSTAK acquisition.

Speaker 5

Got it. Thanks, Mike. I'll go back into queue.

Speaker 3

Okay.

Operator

The next question comes from Chip Moore with Roth. Please go ahead.

Speaker 3

Hey, thanks for taking the question, guys. I wanted to ask, I guess, first on electric utility, very impressive results there again. Just you've talked about this for a while, Brett, but how you've sort of gone after that market and become a trusted partner, just maybe expand on the visibility you're seeing there. Do you think that momentum should continue? Is that a function of becoming a more trusted partner?

Speaker 3

Is it load growth? What's the real driver there?

Speaker 2

Good morning, Chip. A little bit of both. I think that if you go back to the original strategy when we started years ago, we really focused on the distribution side of T and D and going after those enclosed solutions in the yard, moving clients into more reliable long term, better investment of their capital into what we build. And, you know, as this generation wave sort of crept up on everybody post pandemic, it's it's a combination of being, there with the end client, the utility, and also the engineering partners that are in this space. And so little bit of mix of both.

Speaker 2

And so we I'm very curious when I meet when I get the chance to talk with the end client is what is the driver? Is it just the typical sort of build out population and industrial support? And how much of that is the other big driver today, which a lot people talk about the data centers. There's clearly that element woven into the demand piece on generation, and I would say that was absolutely represented this past quarter. When we look out, it's pretty you know, I sit every week with the team and listen in and I'd say it's, there's a lot of opportunity out there still in the utility market.

Speaker 2

We're pretty excited about this sector for the future.

Speaker 3

Great. And maybe a follow-up on REM stack specifically, you talked about next gen SCADA units and potential there to leverage that into North America, maybe just expand on that. And I believe this is nicely margin accretive potential business, how you're thinking about that and just the acquisition itself, how it came about.

Speaker 2

So we've been looking for a while. When we put out our strategy a couple of years ago on the investor deck side and highlighted electrical automation, this is an area we do think we can move the needle on. We see it every project, you know, to some degree, sometimes it's smaller, sometimes it's quite significant as a percentage of the overall project. The RTU we identified as a key building block, and as we went around the world and looked at the markets, found a great company in REMSDAC. Three owners today, one of the owners is the MD.

Speaker 2

Family like environment, strong thirty plus year profile in in the regulated utility market with an extremely reliable, product, from a performance standpoint, which again, we love and and, fits right in the pile. And as we got to know them, and then and they know us and talked about, you know, where each group aspires to go, we we learned about, all their know how going into their next generation product, which, of course, was built to support their end markets. And we started, you know, understanding it better, how they were going about building this next generation. And we look across the broader RTU market globally, not just our markets, but globally, it has a really impressive potential. So for us, it really became clear this was something that made a lot of sense.

Speaker 2

And so we feel very excited to bring it on to not just for The UK market, which is accretive to our utility sector there, but I feel pretty good we'll be able to port it over pretty quickly here to the utility market and then we'll work to get it in the balance of the markets through taking it through and getting into the AVL, doing your typical awareness meetings and really growing this throughout all Apollo. Feel pretty positive about that.

Speaker 3

Great. Very, very helpful. Maybe just one last one, if I could sneak it in on gross margins. Mike, you talked about that already. I think you also called out, you know, cycle business, maybe increasing here.

Speaker 3

Just maybe update us on what you're seeing there and how we should think about that going forward?

Speaker 4

Yeah, sure. Yeah, we track our book to bill cadence every quarter. And if you look back, you go back eighteen, twenty four months, and we've communicated this on prior calls, it ran 30 to 40,000,000 a quarter. That's ticked up through productivity, throughput, volume, and the like. And that's running today in the 50 ish million per quarter cadence.

Speaker 4

So we are seeing some good throughput uptick in that book to bill cadence.

Speaker 3

Appreciate it. Okay, thanks.

Operator

Thank you. The next question comes from John Bratz with Kansas City Capital. Please go ahead.

Speaker 4

Good morning, Brett. Good morning, Mike. Good morning, Jon.

Speaker 6

Brett, you saw a couple of new orders in the offshore oil and gas production area. And obviously, that was a large piece of your business years ago. Are you seeing something different in that market that suggests that these orders are more than just sort of one off? Is the market changing?

Speaker 2

Well, think when it comes to the offshore market, the theme over the last couple of decades has been how capital intensive it has been. It's a very expensive area for our clients to build in. I wouldn't say there's a change, John, but I'd say the some of the work that's going on in the development side, these are good fields, at least from what I understand. I'm not an expert on the geology of these fields, but from what I've read and understand from the client and how they're pulling the trigger on FID. You know, I just read this morning about Darren Woods at Exxon talking about the strong supply the strong demand outlook on oil for, a while on his crystal ball.

Speaker 2

So I do think that there's some of that globally speaking that's underpinning these decisions. And so for Powell and our capability, it is exciting to see it come back where We have a lot of know how in the company on these offshore modules. Are very difficult technically speaking, not just electrically speaking, but mechanically, a lot of marine codes and lot can really get a ride if you don't do it right. So for us, super exciting to have not just one, but two hit in the quarter. So both here in Houston and The UK, we've actually put the teams together from a project delivery standpoint to really focus and make sure we deliver for our clients in these difficult projects.

Speaker 6

Okay. They were relatively small projects compared to maybe prior ones you did years ago. Am I correct in that? Some of them were like $100,000,000 weren't they?

Speaker 2

No. When we look at an offshore module, I arrived in 2011 and a thirty, forty, fifty would be a big one back in 'eleven, 'twelve, 'thirteen. One of these is right up that alley. It's a significant project. And the other one is, not quite half, but also pretty significant.

Speaker 2

Each one has a different construction methodology for how it's going to go into the offshore environment. There's lots mechanical technology for how they develop their fields. But at the electrical distribution piece, there's a lot of commonality in terms of how we build that mechanical structure and the electrical solution inside to meet all the codes. These are these are pretty, I'd call them both pretty, pretty significant, both very strategic for us with great long term clients. And, you know, it was, again, both very competitive.

Speaker 2

But again, I think the strength of Powell really and our capability and depth of knowledge really helped win the day on these.

Speaker 6

Okay. Mike, made some comments about gross margins for the full year and sort of into 2026. And for the first nine months, you're at 28.6%. But maybe could you clarify sort of what you were suggesting? Because the margins in the third quarter were, what, 30.7%.

Speaker 6

Were you trying to suggest that we're going to be in that 30% area as opposed to 27%, 28%? Can you help us out a little bit about that?

Speaker 4

Yes, sure. I'll try to clarify. As you know, in this long cycle projects business, it's best to look at whether it's trailing twelve months or at this point in the fiscal year, a year to date number or nine months through the year. So you correctly stated, year to date, our margins are 28.6 and we had roughly 150 basis points of project closeout gains and onetime unusual items in that number. And once you strip that out, that should approximate the as sold margins that we see in our $1,400,000,000 backlog.

Speaker 6

Okay. Okay. That's good. Okay. And then finally, you talked a little bit about pricing.

Speaker 6

You're seeing some pricing. And maybe some of that comes from the shorter cycle business where maybe the pricing is a little bit better. But on net, could you see even better pricing going forward? Obviously, your markets are strong. Are you able to take a little bit more?

Speaker 2

John Sprout, let me jump in here first and Mike can jump in behind me. I think there's a couple elements of pricing. Definitely the short cycle, some of the things we're trying to do within the strategy do carry better price than the aggregate backlog margin for sure, albeit smaller absolute dollars. That is part of the strategy. All three of those drive accretive margin.

Speaker 2

In the project side, the large revenue driver that's going to drive Powell for a while, I've noted last couple of quarters, the pricing is not improving. It's good, but I'd say there are more I wouldn't say challenges, but we're we're tuned and watching out really closely to, you know, all the various dynamics that every competitive pursuit and what's going on, every makeup of the job, you know, what is what is in the job in terms of switchgear and solutions that power contribute versus the mechanical part of the solution. So it's it's it would be difficult for me to say we could take more there. I think if anything, it's it's it could change. It depends what happens in the market next twenty four months.

Speaker 2

But right now, I don't see that, but I think the strategies that we're chasing and bringing to market do provide the upside to Powell as we build successful outcomes on those.

Speaker 4

And John, just to clarify my comment in my prepared comments, remember what we're seeing exit the backlog today was booked a year plus ago. So at that point in time, we were getting some accretive pricing, but also offsetting some inflation with that. So, yes, we are retrospectively, we were getting price to Brett's point prospectively, it's a little softer.

Speaker 6

Okay. And one final question, Brett, on your $60,000,000 electric utility award. Was that a combined cycle generating facility?

Speaker 2

John, a lot of these have NDAs, so it is just a big power generation facility. I will tell you that it in is excess of a gig output there is definitely an element of supporting the commercial markets as part of that when I got a chance to talk to the client.

Speaker 6

Okay. All right. Thank you.

Speaker 2

Bet.

Operator

We have a follow-up question. It's from the line of Chip Moore with Roth. Please go ahead.

Speaker 3

Yeah. Hey, thanks for taking the follow-up. Just a quick one on capacity expansion. You've talked about that, I guess, in a few different areas, just an update there, particularly around some of the newer products, what you're thinking?

Speaker 2

Chip, it's Brett. I'll jump in here. I appreciate the question. Yeah, so the facility that was brought online in April, no real change from last quarter. We do have revenue in the factory today.

Speaker 2

There are projects laid down and the team are building out that facility methodically and incrementally. We did note last quarter, and so I'll take the opportunity with the question just to highlight, we continue to work in offshore expansion. I brought that up that that might be a possibility based on the future outlook of the market. We continue to progress that. Our internal teams have put together a really nice couple of options.

Speaker 2

We're not quite at the point being able to announce it, but I would say we are doing a little bit of pre work out there. We spent a little bit of money to move some dirt just in anticipation, so we don't lose anything on timing. Because if we do decide to spend the capital, we feel the return is warranted. We don't lose a time element of that as we look out the twenty four, thirty six months on what could be coming should we be successful in the market. So that would be an area we are looking for a potential expansion.

Speaker 2

And then the other area I wouldn't call it an expansion, but we've talked in the calls before about, you know, on the big substations side of things, you know, how does Powell replicate our model without maybe a large investment in fixed assets, brick and mortar to build large substations? So we have in the past looked at models and we are doing some of that again. We've done one three, four years ago where we took all of our know how and did the engineering and the fabrication and manufacturing of, you know, a majority of the project, but then outsourced some of that. And so that's an area that we're looking at again today, to, again, augment, the core part of Powell. So each of those would be, you know, revenue accretive in the future.

Speaker 3

Appreciate it. Thanks. Thank

Operator

you. This concludes our question and answer session. I would like to turn the conference back over to Brett Cope, CEO, for closing comments.

Speaker 2

Thank you, Steve. Our third quarter delivered solid performance. Powell's operational teams are the absolute best in the industry. Our engineering, manufacturing, and project delivery teams set the standard for delivering critical electrical distribution solutions to the market, beating our customers' delivery timelines and budgets. I would like to welcome the employees, customers, and supplier partners of Rumsdack Limited to Powell.

Speaker 2

We are very excited to grow the electrical automation business across all of Powell's end markets and REMSAK will play an important role in meeting our aspirations. Thank you to everyone for joining us this morning. We appreciate your continued interest and support and look forward to updating everyone next quarter.

Operator

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Powered by Quartr