Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Powell Industries Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. I will now turn the conference over to your host, Zach Vaughan with Dennard Lascar Investor Relations. Thank you. You may begin.

Thank you, operator and good morning everyone. We appreciate you joining us for Powell Industries conference call today to review fiscal 2020 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 where a telephonic replay will be available until August 12. 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 5th, 2020 and therefore you're 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 result 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. Now I will turn the call over to Powell's CEO, Brett Cope. Brett?

Thanks, Zach and good morning everyone. Thank you for joining us today to review Powell's fiscal 2020 third quarter results. I will make a few comments and then I will turn the call over to Mike for more financial commentary before we take your questions. As a result of the ongoing challenges created by the pandemic, the enhanced safety procedures and protocols that have been implemented across all of our operations continue to be in place across the business. Our top priority has been and remains the safety of our employees, customers, and suppliers. I am proud of our people and our partners who have stepped up to this global challenge. We continue to support each other and our customers as an essential business and all of our facilities remain open and 100% operational. Despite the COVID-related operational challenges, we experienced solid margin performance and reasonable cost efficiencies during the quarter. Third quarter revenues were $118 million, down 13% when compared to $136 million from the third quarter fiscal 2019. Revenue declined slightly in the quarter, largely due to a shift in our backlog profile. Over the past few months, as we have completed and shipped a large amount of shorter duration work, we have started work on new projects that have a longer execution schedule and complexity profile. Despite lower year-over-year quarterly revenues, third quarter gross margin as a percentage of revenue was 18.1%, up 60 basis points from 17.5% in the third quarter last year. In addition to increased efficiencies and a stronger focus on cost, we took the difficult but necessary step to restructure the business by making adjustments to both our fixed and variable costs in order to align the business with current and expected activity levels. We reported net income of $3.5 million in the quarter, down from $5.1 million in the prior year, primarily due to a decline in revenues and gross profit resulting from a decrease in new orders, adverse market conditions, and separation costs. This was partially offset by a favorable impact from the reversal of an income tax reserve, which Mike will discuss in more detail. Our continued focus on maintaining margin and reducing costs allowed us to generate over $45 million in free cash flow during the quarter, which set a new quarterly record for free cash flow generation. New orders booked were $81 million in the third quarter compared sequentially to $301 million in the second quarter and down from $145 million in the third quarter of fiscal 2019. At the end of the third quarter, total backlog was $532 million, which includes the previously announced large industrial order that was booked in the second quarter to support the design, manufacture, integration, and testing of a Powell custom-integrated electrical distribution solution. Powell designs, builds, and delivers multiple power control rooms in support of the project. This contract will convert to revenue over a three-year period. Throughout the third quarter, we experienced an overall weakening of industrial demand due to the global health crisis. In response to the current macroeconomic environment, our core oil, gas, and petrochemical customers began to review capital spending plans and take steps to conserve cash. As we previously reported, our domestic operations have been experiencing stronger project activity supported by low-priced abundant natural gas. Inquiry activity for this sub-sector began to slow early in the quarter as lockdowns and transitions to remote working were instituted across the industry. As our markets adapted to these new work conditions and activity resumed in June, our customers and their EPC partners have and continue to evaluate the future return of their projects. Several midsize and large projects have now moved their schedules into 2021 at the earliest while a handful of projects continue to evaluate their direction. Activity in the utility and traction markets largely remained steady in the third quarter. Short cycle, service, parts, and OEM work also slowed early in the quarter as we worked to safely return our service personnel from domestic and international work sites, but improved steadily as we progressed through June. Now I'll update some of our operational initiatives as a result of the pandemic. First, as an essential manufacturer providing critical electrical distribution solutions across many industries and geographies, we have been meeting regularly to review the state of our operation, to assess any new issues within our manufacturing facilities and supply chain, and to share critical learnings among the management team, including the areas of health and safety best practices, workforce utilization, and resource planning. Second, we are proactively collaborating with customers and taking the necessary steps to address project and services. While we have been successful in fulfilling project commitments to date, we continue to see a shift in project schedules, resulting in planned fiscal 2020 revenue converting to 2021. Finally, we continue to work with our suppliers to enhance existing safety best practices and mitigate supply chain and logistical challenges. Over the past few months, we have been able to successfully work through any downside effects of the current environment on our operations. On the last call, I mentioned several challenges we were experiencing with an important supplier based in Mexico. Our supply chain leadership worked to support our local partners as they navigated their review and implementation of safe work practices. In parallel, we worked quickly to coordinate a short-term adjustment in our global operations to limit any potential impact on project schedules. This included steps to temporarily move these operations back into each of our facilities in the United States, Canada, and the United Kingdom. Our Mexico-based partner resumed operations in June and we continue to run full operations today. Going forward, we will continue to monitor and support all of our key suppliers. Despite the ongoing uncertainty presented by this pandemic, our third quarter results demonstrate the sustainability and strength of our brand and 73 years of experience. Similar to our last market cycle, which lasted from 2015 through 2017, we are executing our playbook to take prudent steps to manage our cost structure while also working to systematically strengthen and build our business for the future. Then and now Powell remains committed to our plans and investments in research and development to create innovative products and services to capitalize on opportunities and maximize profitability in an uncertain market environment. We have and will continue to focus on protecting the business through cash conservation, cost management, and productivity gains to ensure that Powell emerges stronger from this cycle and is well positioned to take advantage of future opportunities. Our balance sheet remains strong and we will continue to support our customers across a diverse set of end markets to ensure a disciplined approach to the mix and quality of our backlog as we pursue new orders. We remain focused on the health and safety of our employees and communities, and we are prepared to take additional actions as warranted to respond to the evolving business environment. With that, I'll turn the call over to Mike to provide more detail around our financial results before we take your questions.

Thank you, Brett and good morning everyone. Revenues for the third fiscal quarter of 2020 decreased 13% to $118 million compared to last year's third quarter of $136 million due to continued softness across our core industrial end markets. Orders for the third fiscal quarter were $81 million, a 44% decrease versus prior year. The fiscal third quarter book-to-bill ratio was 0.7 times revenue. Reported backlog at the end of the third fiscal quarter was $532 million, $125 million higher versus the same period in the prior year. Domestic revenues decreased by $12 million or 12% to $91 million versus the same period one year ago and international revenues decreased by $5 million or 16% versus the prior year. From an end-market perspective versus the prior fiscal year, revenues from our industrial sector decreased by 10%, the utility sector was lower by 37% while the traction sector increased by 23%. This volume reduction from the industrial and utility sectors is driven by the execution of the existing project backlog, the increase in the longer lead time projects in our current backlog, as well as the overall market softness across our industrial end markets. Gross profit in the third fiscal quarter of 2020 was lower by $8 million versus the second quarter to $21 million on a 22% sequential volume decrease. Gross profit as a percentage of revenues increased by 60 basis points compared to one year ago to 18.1% of revenues in the third fiscal quarter, primarily driven by the improved project execution and operational efficiencies across our US facilities. Selling, general and administrative expenses decreased by $1.6 million or 9% versus the prior year and were $15.5 million in the current quarter or 13.1% of revenue compared to 12.6% of revenue a year ago on the lower volumes. On a reported basis, fiscal third quarter net income was $3.5 million or $0.30 per diluted share. Our third quarter result included $1.4 million on a pre-tax basis or $0.12 per diluted share of separation costs as we align our operating expense with current market conditions. Offsetting these restructuring costs was a benefit from the successful conclusion of an IRS audit. We recorded a $1.7 million or $0.14 per diluted share tax benefit related to R&D credits that were not previously recognized for fiscal years 2014 through 2017. Cash flow was very strong in the fiscal third quarter, recording $45 million of free cash flow. This was driven by the completion of projects in the backlog and the unwinding of the associated working capital as well as achieving contract billing milestones for the large industrial project that was booked into backlog during the second fiscal quarter of 2020. CapEx spending during the quarter was $809,000. Year-to-date orders were $520 million, 1% higher versus the prior year, while revenues increased 10% to $404 million compared to the same period a year ago. Gross profit as a percentage of revenues for the first nine months of fiscal 2020 increased by 220 basis points to 18% of revenues on volume leverage and improved project execution. For the nine months ended June 30, 2020, we reported net income of $13.7 million or $1.17 per diluted share while year-to-date free cash flow totaled $49 million. At the end of our fiscal third quarter, we had cash and short-term investments of $163 million, $69 million higher than a year ago and $39 million higher than our fiscal 2019 year-end position. Long-term debt, including current maturities, was $800,000. Looking forward, we do anticipate continued uncertainty across our core end markets with many of our industrial customers operating on lower OpEx and CapEx spending. Considering this, we are prudently managing liquidity and operating costs in the near term while maintaining a focus on the overall profitability of the company. Notwithstanding the current market challenges, we have maintained our strong and conservative financial position with very little leverage and $163 million in cash and marketable securities on hand. As we near the close of our fiscal 2020, we anticipate that the fiscal fourth quarter will be marginally softer than the third quarter. However, based upon our financial position through the nine months ending June 2020, we are confident that Powell will close fiscal year 2020 with strong earnings, a healthy backlog, and in a solid cash position which situates the business well as we look forward to fiscal year 2021. At this point, we'll be happy to answer your questions.

Our first question is from John Franzreb with Sidoti.

Good morning, everyone. How are you? I want to start by discussing the deferrals you've mentioned, specifically the jobs that are shifting from the fourth quarter into 2021. Are they moving to the first half of 2021 or the second half? What does the timing look like for your customers at this point?

So, hey John, it's Brett. The deferrals would be for Q3 and Q4. I don’t have the precise timing or the total amount, but it's approximately $15 million in planned revenue that is now expected in the first half of 2021. The timing is somewhat uncertain because some of these projects are being postponed, and we need to pause engineering work. As a result, the schedule may not be confirmed yet and could be revised again as they reorganize their plans.

No, but I want to clarify that this refers to existing projects in backlog, not new quotation activity or new orders that you would expect to receive.

That's accurate.

Okay, great. And the sizable drop you saw in the utility market in the third quarter, can you kind of expand upon what you're seeing in the utility market minding what happened in the June quarter? Which I am kind of surprised about but also you expected to see in the coming six to nine months?

John, I'm sorry, I didn't catch the very first part of your question.

You just saw a decline in revenue in the utility market.

Drop from the utility market?

Yes. John, this is Mike. That was really just a function. We had some large jobs that we've burned out of backlog. The utility market is, as we sit here today, is stable as is the traction market. But that's really just a function of the project timing.

Sorry, John, I misunderstood. Yes, it was on the report.

I'm currently on a sale, so I apologize if the connection is spotty. With that in mind, one last question. Regarding your restructurings, are there certain units that you're winding down more than others as you reevaluate the outlook in the marketplace? I'll get back into the queue.

So the restructuring of the business, John, hit predominantly a larger percentage of the Houston-based operations where we do see a larger part of our revenue from the oil, gas, and petrochemical market along the Gulf Coast. So, yes, it was heavier here in the southern part of the United States. All the operations did adjust but heaviest here.

We have a follow-up question from John Franzreb with Sidoti.

Okay, guys. I actually want to ask about pricing of new jobs in the competitive landscape. Can you talk about what you're seeing out there and how new jobs pricing out for you?

So a lot of variability. I think for the what's available when you look at our comments around utility and T&D, generation as well as traction jobs, no real change albeit those jobs typically are more competitive anyway. They tend to be a little smaller in size, a little less complex in comparison to a large LNG job or a large refiner job, a little more straightforward, not as much low voltage content sometimes. So there aren't as many changes throughout the job, straight medium voltage. So typically those prices are lower anyway. So I haven't seen any marked changes in the overall pricing environment, but I would expect that to hold as the uncertainty continues. And if we look back and compare to '16, '17 as we entered the last economic down cycle, price competition I would expect to increase for infrastructure-related projects.

No, I guess along those lines what would your expectations be? It sounds like you're preparing for at least a modestly long downturn. How long do you think it will last? Are you considering a year, two, three, five? What are you planning for the business at this point?

It's still early to determine how things will unfold, John. There’s a significant amount of data available, and some of it indicates that LNG pricing could recover, potentially allowing certain sectors affected by the current crisis to bounce back more quickly than expected. However, major companies are making substantial moves to conserve cash, which is likely to impact their capital and operational expenditures. We're analyzing these situations just like everyone else. As mentioned in today’s prepared remarks, some projects have already been delayed this quarter while others are being prioritized. We are seeing robust inquiry activity, although many clients are reassessing costs and trying to determine the viability of their contracts. Given all these variables, there will likely be uncertainty until the end of the year, and it's difficult to predict what next year might hold. There are many factors we are monitoring closely.

Ladies and gentlemen, we have reached the end of the question-and-answer session and I would like to turn the call back to management for closing remarks.

Thank you, David. The pandemic has caused a shift in how we manage our business; think about workforce planning and how we execute our work across our footprint. What has not changed is our commitment to our customers and to our highly talented and dedicated employees. The strength of Powell, including our proven operating expertise, is extraordinary economic environment. Beyond COVID-19, we continue to focus on our employees, customers, and communities and maintaining liquidity without compromising our financial stability. By managing our business and aligning our cost structure to support customer activities, we will be well prepared to respond to favorable industry trends that remain a critical driver to the recovery. With that thank you for your participation on today's call. We appreciate your continued interest in Powell and look forward to speaking with you all next quarter.

This concludes today's conference. Powell Industries thanks you for your participation. You may disconnect your lines at this time.