Powell Industries Q2 Earnings Call Highlights

Key Points

• Powell booked $490 million of new orders in Q2 (nearly $1 billion in H1) with a book-to-bill of 1.7x, pushing backlog to $1.8 billion—up 12% sequentially and 33% year‑over‑year, providing visibility into fiscal 2028.
• Post-quarter the company secured a record greenfield data center “mega” award in excess of $400 million, the largest project in Powell’s history, covering initial behind‑the‑meter work of a couple gigawatts across multiple phases and expected to run through fiscal 2028.
• Q2 revenue was $297 million (+6% y/y) with net income of $45.9 million; Powell generated $51 million in operating cash flow, held $545 million in cash and short‑term investments with no debt, and completed a three‑for‑one forward stock split.

Powell Industries NASDAQ: POWL reported fiscal 2026 second-quarter results showing continued order momentum and a growing backlog, driven by activity across liquefied natural gas, electric utilities, and data center-related demand.

Orders surge and backlog expands

Chairman and CEO Brett Cope said the company delivered “another solid quarter of operational efficiency and order growth,” with activity levels “healthy” across end markets and “notable strength” in LNG projects, utility distribution and generation work, and data center projects.

Powell booked $490 million of new orders in the quarter, bringing first-half new awards to “nearly $1 billion,” Cope said. CFO Mike Metcalf noted the second-quarter orders were “nearly double” the level from the same period a year ago. The quarter included two “mega” projects, each exceeding $75 million:

• A large electric utility generation facility in the Eastern U.S., which Metcalf said was the largest utility order the company has ever recorded.
• Medium-voltage distribution equipment for a data center in the Central U.S.

Metcalf said the book-to-bill ratio was 1.7x for both the second quarter and the first half of fiscal 2026. Backlog rose to $1.8 billion, which Cope said was 12% higher than the prior quarter and 33% higher than a year earlier—providing “visibility well into our fiscal 2028.”

Management also broke down backlog mix. Cope said electric utility represented 30% of total backlog, with oil and gas (excluding petrochemical) and commercial/other industrial each at 29%. Metcalf provided additional detail on the quarter-end mix:

• 30% electric utility
• 29% oil and gas
• 29% commercial and other industrial (including data centers, which he said are in the “low-20s” of that 29%)
• 6% traction
• 5% petrochemical

Record post-quarter data center award

After the quarter ended, Powell secured what Cope described as a “mega project” for the first phase of a greenfield data center. Cope said the award is in excess of $400 million and is the largest project award in Powell’s history. Metcalf added that the order is not reflected in second-quarter orders or backlog and will be included in fiscal third-quarter reported numbers.

In the Q&A, Cope said the order was a single purchase order and supports a “behind-the-meter design” with on-site generation and added complexity. He said the initial award is “all outside the data center” and represents “a couple of gigawatts” in the initial phase, with “multiple planned phases” that could develop over time. Cope said the project has “roughly a two-year burn” and will run “through the end of fiscal 2028.”

Discussing execution, Cope said the company broke the work across its footprint, calling it a competitive advantage that allows Powell to respond to demanding schedules. He also said the company is beginning to see “nice engineering efficiency” on large data center jobs, which could reduce engineering burden as work becomes more product-centric.

Second-quarter financial results

Metcalf reported fiscal second-quarter revenue of $297 million, up from $279 million in the prior-year period. Cope said revenue grew 6% year over year.

By geography, Metcalf said domestic revenue increased $4 million (2%), while international revenue rose $14 million, driven primarily by offshore projects in the Far East and Africa and increased project volume in the U.K.

By market sector, Metcalf said revenue rose:

• 35% in commercial and other industrial
• 14% in electric utility
• 11% in oil and gas

These gains were partially offset by a 37% decline in petrochemical revenue and a 10% decline in light rail traction power revenue.

Gross margin was 29.6%, down 30 basis points year over year but up 120 basis points sequentially. Metcalf said margin performance benefited from execution and volume leverage, with favorable project closeouts adding roughly 90 basis points in the quarter.

Selling, general, and administrative expenses were $26 million, up $4 million year over year, which Metcalf attributed primarily to higher compensation. SG&A was 8.7% of revenue, up 90 basis points year over year but down 130 basis points sequentially due to higher revenue.

Net income was $45.9 million, or $1.25 per diluted share, compared with $46.3 million, or $1.27 per diluted share, in the year-ago quarter.

Cash, capex, and stock split

Metcalf said Powell generated $51 million in operating cash flow in the quarter. Capital spending totaled $1.8 million, including expenditures related to the Jacintoport expansion. He said most of the company’s planned $12 million to $13 million investment to upgrade the Jacintoport fabrication yard is expected in the second half of fiscal 2026.

As of March 31, 2026, Powell had $545 million in cash and short-term investments and no debt, compared with $476 million at Sept. 30, 2025 and $501 million at Dec. 31, 2025.

Metcalf also noted that the company completed a three-for-one forward stock split on April 2, 2026, with trading beginning on a split-adjusted basis April 6, 2026. He said share and per-share amounts have been retroactively adjusted.

Capacity, costs, and market dynamics

Cope said Powell is making “prudent additions” in manufacturing capacity. He noted the company signed a lease last quarter for additional space near its Ohio facility and, in the second quarter, leased office space in the Houston metro area to serve as a second satellite engineering center. Powell is also evaluating a roughly 50,000-square-foot leased facility near the Moseley campus to support an $8 million investment in fabrication equipment to expand metal fabrication capacity.

Cope reiterated the company continues to assess a larger $70 million to $100 million capital project that could add 250,000 to 300,000 square feet of factory capacity, with a decision expected “within the next few quarters.” In response to an analyst question, Cope said a greenfield facility would likely take about two years, and a leased facility could become productive within about six months. He estimated such a facility could support $100 million to $250 million in revenue, depending on mix.

On costs, Metcalf said SG&A as a percentage of revenue is expected to remain in the upper single digits as the company invests in new initiatives, including the integration and expansion of Remsdaq and a government-related business development effort. He also said R&D was about 1.4% of revenue in the quarter and could remain in the 1% to 1.5% range.

Asked about commodities, Metcalf said Powell uses a copper hedging program that acts “as an insurance policy to protect margins that we have in backlog,” and said the company stays proactive on steel and aluminum as well.

Looking ahead, Metcalf said the company remains encouraged by sustained commercial activity and views Powell as well-positioned to deliver “strong cash flows and earnings performance” in the remainder of fiscal 2026, supported by execution, volume leverage, and backlog quality. Cope added that activity entering the third quarter showed “no letup,” and he and Metcalf said they continue to expect another strong year.

About Powell Industries NASDAQ: POWL

Powell Industries, Inc is an industrial electrical engineering company specializing in the design, manufacture and integration of customized power control and distribution solutions. The firm's offerings range from medium‐voltage switchgear and power control centers to bus duct, motor control centers and specialty transformers. Powell also provides automation systems, protective relaying, metering, supervisory control and data acquisition (SCADA) platforms, and turnkey engineering services to help clients manage critical power infrastructure.

Serving the oil and gas, petrochemical, refining, utility, mining and industrial sectors, Powell's products are engineered to meet demanding performance, safety and reliability requirements.

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