Welcome to the Powell Industries’ Earnings Conference Call. All participants will be in a listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Mr. Ryan Coleman of Investor Relations. Please go ahead, sir.

Thank you, and good morning, everyone. Thank you for joining us for Powell Industries' conference call today to review fiscal year 2024 Q4 and full year 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 November 27. 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, November 20, 2024, 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. With that, I'll now turn the call over to Brett.

Thank you, Ryan, and good morning, everyone. Thank you for joining us today to review Powell's fiscal 2024 fourth quarter and full year 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 Q4 performance that saw revenue grow 32% compared to the prior year, helping the company achieve a total of $1 billion in revenue for the full fiscal year and marking a significant growth milestone and record year for the company. We experienced tremendous growth in each of our key markets throughout fiscal 2024 with our top-line growing by 45% compared to fiscal 2023. Our oil and gas and petrochemical sectors grew 53% and 97% respectively, while revenues within the commercial and other industrial and electric utility sectors increased 44% and 18% respectively. We booked $267 million of new orders in the quarter led by continuing strong activity within our utility sector and a notable booking supporting the capacity expansion of an LNG facility based along the U.S. Gulf Coast. We recorded more than $1 billion in new orders for the second consecutive fiscal year. Our core industrial markets have remained strong, while we continue to make substantial progress to diversify and grow in markets such as utilities, data centers, hydrogen, carbon capture, and more. Our project execution remains an area of strength for us as reflected by our gross margin. Our fourth-quarter margin of 29.2% was aided slightly by some one-time items, which Mike will discuss shortly, but the underlying margin performance continues to improve. For the full year, we recorded a gross margin of 27%, which was an improvement of 590 basis points compared to the prior year. We continue to see improvement in the margin profile of sectors outside of our core industrial end markets as we become more efficient in our manufacturing and delivery processes for these projects. On the bottom line, we recorded net income of $46 million in the fourth quarter, or $3.77 per diluted share, which was 74% higher than the prior year. For the full year, net income of $150 million translated to $12.29 per diluted share, which nearly tripled the $4.50 per diluted share we delivered in fiscal 2023. Our backlog continues to hold steady at $1.3 billion, which was unchanged compared to both the prior quarter as well as the prior year. We are pleased with the overall composition of our backlog, as well as the timelines and margin profile of the projects that constitute our order book. Our current project schedule provides good visibility as we have orders in our backlog, which we expect to realize revenue into our fiscal 2027. We are making good progress with our capacity initiatives, which are advancing as planned to help facilitate the execution of our current backlog, as well as provide room for modest volume growth going forward. At the start of the fourth quarter, we acquired nine acres of property neighboring our Houston headquarters location. We are already making use of this incremental space, freeing up capacity to drive more throughput at our nearby manufacturing facility, which will contribute incremental revenue in fiscal 2025. The expansion of our electrical products factory in Houston also remains on schedule and is expected to be completed in the middle of fiscal 2025. This effort coincides with our initiative to develop and launch new products in support of our future growth across the customers and markets we serve. On that point, our R&D spend in fiscal 2024 was up 52% as we advanced our innovation initiatives to develop new technologies and broaden our product portfolio. I'm pleased to report a recent win in our product development process as last quarter, we launched our new station breaker, which is a medium voltage breaker commonly used in the commercial and utility renewables market sectors. We received our first order for this product in October, and we've been very pleased thus far with this reception by our customers. Our labor staffing levels are relatively unchanged and we remain comfortable with our ability to execute on the project schedules within our current backlog. However, as we evaluate the medium and long-term trajectories of our markets and plan for volume growth, identifying and acquiring qualified people throughout the organization remains a top priority. As part of our efforts on this front, we are in the final steps of opening an engineering satellite office. This office is located on the far west side of Houston allowing us to better engage and hire from a wider population of qualified engineers. This will enable us to continue to attract the talent to fuel each of our three strategic growth initiatives. Looking forward, our expectations for project activity and new orders across our markets remain healthy. The balanced nature of our quoting activity coupled with our recent win rate leaves us optimistic as we head into fiscal 2025. The fundamentals for our oil and gas and petrochemical markets support our expectation for continued strength for these sectors. In addition to the legacy work Powell does in these markets, our oil and gas sector includes energy transition projects such as biofuels, carbon capture, and hydrogen, areas where Powell has not historically participated but where we are seeing substantially higher volume of project activity. Specific to the fundamentals of the U.S. natural gas market, price spreads across global markets remain favorable and conducive to U.S. export activity. While recent activity has been more muted as a result of the U.S. Department of Energy policy regarding LNG export permitting, activity around future projects continues to be very strong. And we believe that projects which are currently on hold will come to market at some point and as such we have not altered our long-term planning for this market. Activity within our commercial and other industrial market also remains healthy and includes activity within the data center market. We continue to evaluate ways to further penetrate the data center market and expand the total content opportunity with these customers which requires that we qualify more of our products and services for the future of this important end market. Lastly, the outlook for our utility market remains very strong. Activity levels in this sector have clearly accelerated in recent quarters and our Q4 was the second consecutive quarter where new order totals were led by the utility sector. It is becoming increasingly clear that the reliable supply of electrical energy must grow significantly over the next several years to meet rising demand. Powell has the right industry breadth, technical knowledge, talent, and strategy to leverage our more than 75 years of expertise in these markets to deliver for all of our stakeholders. With that, I'd like to turn the call over to Mike to walk us through our financial results in more detail.

Thank you, Brett, and good morning, everyone. I'll first begin with the fiscal fourth quarter business results and then move to the total fiscal year 2024 results. Revenues for the fourth fiscal quarter of 2024 increased by 32% to $275 million compared to the same quarter in fiscal 2023 of $209 million, and was lower sequentially by $13 million primarily due to the project timing within the electric utility sector. Net orders for the fourth fiscal quarter were $267 million, $96 million higher than the same period one year ago, driven by a strong year-over-year increase in our petrochemical, oil and gas, and electric utility sectors. Notably, during the quarter, we secured a large oil and gas order for an LNG facility expansion on the Gulf Coast. Overall, we remain encouraged with the commercial activity across our core industrial and electric utility markets, thanks to another strong quarter of new order bookings and the sustained strength of our top-line performance. The book-to-bill ratio was 1.0x for both the fourth quarter and the full year of fiscal 2024. Reported backlog at the end of fiscal 2024 remained at $1.3 billion, $41 million higher than the end of fiscal 2023 on a favorable mix of electric utility and commercial and other industrial backlog, partially offset by lower petrochemical and oil and gas backlog levels versus the prior year. In general, we are very pleased with both the execution across the business driving record revenue levels for the year, as well as our orders performance, sustaining our backlog position as we enter into fiscal 2025. Compared to the fourth quarter of fiscal 2023, domestic revenues of $226 million increased by $56 million or 33%, while international revenues increased by 28% to $49 million on higher volume across most of our international manufacturing and service locations. From a market sector perspective, revenues from our petrochemical sector grew by 112%, driven primarily by the large petrochemical order booked in mid fiscal 2023, while our oil and gas sector was higher by 23%, driven by strong revenues generated from our traditional oil and gas end markets, along with sustained LNG revenues. In the fourth quarter of fiscal 2024, the electric utility sector was lower by 5%, primarily as a function of project timing, while the commercial and other industrial sector was higher by 66% and continued momentum in the data center space. And finally, the light rail traction power sector increased by 19% on a small revenue base. As we continue to selectively target pursuits in this market. We reported $80 million of gross profit in the fiscal fourth quarter of 2024, which was $28 million or 55% higher than the same period of fiscal 2023. Gross profit as a percentage of revenues increased by 430 basis points to 29.2% of revenues in the fourth fiscal quarter. The higher quarterly margin rate is in large part attributable to the strong project execution across the business, resulting in favorable project closeouts. In addition to the volume leverage and associated productivity across all of our manufacturing operations, which is helping to drive these incremental margin gains. Although negligible, the current quarter margin rate also benefited from three order cancellations, which generated $2.2 million of gross profit or an incremental 60 basis points to the margin rate in the quarter. Selling general and administrative expenses increased by $1.1 million or 6% due to higher levels of infrastructure spending. SG&A expenses were $21.6 million in the fiscal fourth quarter, or 7.8% of revenue compared to 9.8% of revenues a year ago on a higher revenue base. These results demonstrate our continued focus on thoughtfully managing overhead, while also addressing the critical resource requirements necessary to execute on the order book. In the fourth quarter of fiscal 2024, we reported net income of $46.1 million generating $3.77 per diluted share compared to net income of $26.4 million or $2.17 per diluted share in the fourth quarter of fiscal 2023. We used $6 million of operating cash flow in the fiscal fourth quarter due to a buildup in our working capital as we continue to execute on the project backlog. CapEx spending during the quarter was $8.5 million with the majority of the spend attributable to both the purchase of the new property neighboring our largest Houston facility, which consumed $5.6 million as well as the facility expansion at our products factory in Houston, consuming the first $1.5 million of a projected $11 million total spend. Now recapping our total year fiscal 2024. Revenues of $1 billion increased by $313 million or 45% compared to fiscal 2023. Orders were $1.1 billion 24% or $340 million lower versus fiscal 2023 as fiscal 2024 contains a mix of very healthy medium to large projects. However, no repeat mega projects as were booked in fiscal 2023. Overall, we've been very pleased with the orders mix and cadence throughout fiscal 2024. Gross profit as a percentage of revenues grew 590 basis points year-over-year to 27% or $126 million higher than fiscal 2023. The margin rate continues to benefit from efficient project execution, optimal volume leverage and successful operational and commercial strategies that help to offset the ongoing inflationary headwinds and supply chain challenges. Selling, general, and administrative expenses were higher by $6 million versus the prior year. Overall, net SG&A expenses as a percentage of revenues were lower versus the prior year by 290 basis points at 8.4% of revenues in fiscal 2024 versus 11.3% in the prior year. In fiscal 2024, research and development spending increased $3 million or 52% versus the prior fiscal year as we continue to make good progress on new product design and development in addition to advancing our current product offerings. R&D spending in fiscal 2024 was $9.4 million or 0.9% of revenues. We reported net income of $149.8 million or $12.29 per diluted share in fiscal 2024 compared to $54.5 million or $4.50 per diluted share in the prior year. Operating cash flow generated in fiscal 2024 was $109 million versus $183 million in the prior year. The reduction was driven by cash used for the execution of our existing backlog in the current fiscal year versus the advanced payments received in the prior fiscal year when large petrochemical and LNG projects were booked into the backlog in fiscal 2023. Total capital spending was $12 million in fiscal 2024, $4 million higher than the prior year attributable in large part to the purchase of the new property neighboring our largest facility in Houston. At the end of fiscal 2024, we had cash, cash equivalents and short-term investments of $358 million, $79 million higher than our fiscal 2023 year-end position, reflecting the sustained level of commercial activity across our end markets, as well as the healthy focus on working capital management. The company holds zero debt. As we look ahead to fiscal 2025, we expect continued strength across most of our end markets, spanning across all of the geographies that we compete in. We're pleased with our fiscal 2024 results and remain focused on carrying forward the strong operational execution and commercial momentum that we've experienced this year into fiscal 2025. With this healthy backdrop, robust backlog, strong liquidity, and a solid balance sheet, we anticipate that fiscal 2025 will be another successful year for Powell. At this point, we'll be happy to answer your questions.

And the first question will come from John Franzreb with Sidoti & Company.

Congratulations on another great quarter. I'd like to start by revisiting a question I asked in the previous quarter. First on, how did the closeouts impact the gross margin on the quarter?

Yes, hi John. This is Mike. We were very pleased with where we landed margins for both the year to date at 27%, and on the discrete fourth quarter at 29.2%. That said, as you know project-based business, we do anticipate fluctuations across the quarterly landscape and similar to Q3, we did experience approximately 150 to 200 basis points of uplift in our margins due to project closeouts as some of the larger projects make their way through the system. In addition to that, we also recognized roughly 60 basis points of upside due to three project cancellations due to customer schedule changes. So that really was the significant impact for the quarter from a margin standpoint. Once you normalize for that, you're roughly aligned with where we exited the year on a trailing twelve-month basis, 27%.

Understood, Mike. And it seems odd for me, I can't recall a cancellation of any kind of magnitude in quite some time, much less three. Is anything unusual hopping out there we should be cognizant of?

No, it was nothing unusual. In fact, it was geographically dispersed, two in the U.S. and one at our UK facility. And really given the capacity constraints that the industry is seeing, if the schedules change from a customer, it really creates a pinch point and they have to reset. So that's what all that was about.

Again, revisiting a question from the previous quarter. Are new jobs being written at higher profit margins than the past?

Hey John, it's Brett. No, just as our conversation flowed this fiscal year, no significant change in price. We continue to watch it on either side, certainly looking for opportunities to sell the value we offer, but also looking for any changes in the market. But it's kind of held where it's been all year.

Okay. And just on the capacity expansion, anyway we could quantify how much additional revenue opportunity the expansions will bring the firm.

The two ongoing initiatives involve different strategies. The factory expansion aims to enhance the product-focused, non-cyclic aspect of our business. The investment in research and development for the 0 to 38 product expansion, along with the station breaker mentioned earlier, will contribute to this area. We have set initial targets for fiscal 2025 and are optimistic about exceeding them in the coming years. Market feedback on the developed product has been positive, and I see a lot of potential. The immediate goal for the Hansen facility is to streamline the current operation of 0.5 million square feet near our headquarters, allowing us clearer visibility on its productive capacity. We expect to increase production there, which should contribute an additional $20 million to $40 million over the next year or two.

Fair enough. I'm going to actually get back in the queue and give somebody else a shot. Thanks, Brett.

Brett, on the LNG pause, I assume the pause will end January 26 or 27 something like that. And my question would be how quickly do things start moving forward in that sector? And how quickly can after the pause some of these projects reach final investment decision and project awards?

Yes, John, I can tell you on the timing portion, that question is being studied by us every day. I can tell you that from an activity standpoint it definitely has picked up a couple of quarters ago. We always see the early build of the cost structure, the cost out, all that effort that we put into these large projects with our partners and the end-client, but that activity is definitely ramped up. The timing element, as I noted and as you're looking for, is a question we're all in search of, but I would say the momentum is building very positively as we look into '25 and '26 and into '27, I think at this point. So there's definitely a crescendo of work being potential out there.

Brett, am I understanding correctly that, and I assume I am that you are actually working on some of these projects already and it's just a matter of timing, correct?

They are both out there, John. There are a fair amount of expansions. This past quarter was an expansion on a project that we've been on for a couple of years. Nice subsequent award with our partners on that one. We're very appreciative of the award. But there are new projects out there too, just complete new greenfields like you see out there with new money coming into this space over the last decade. There are some very ambitious projects that if they get over the line with permitting and the FID funding piece, it's going to be just that much more to look at for the industry.

Okay, Mike, how do you view the book and burn business in the fourth quarter? I know you mentioned it could be around $35 million a quarter, but has that changed?

Yes, given all the productivity initiatives the business has pursued over the last 18 to 24 months, we are observing an increase. The throughput is now in the $40 million to $50 million range. This is closely linked to all the investments we have made, along with the productivity projects that have been implemented.

Mike, can that get even better?

We're pretty happy with where it is now going from the $30s to up to $50s. So we're always trying. We’ve never stopped trying.

Okay. And Brett, one sort of a big picture question. When you think about the business going forward and where you stand today, are you more optimistic about the duration of the cycle as opposed to necessarily the incremental annual gains that you might see in volume?

I would agree, Jon. I think as this thing came on post-pandemic '22 to '23, the breadth of it was initially, okay, where do you focus on, how do you keep the team aligned to the three strategies we outline while always re-examining our strategy to see if we should add to or alter. And so definitely, the duration, I become maybe a bigger believer in the duration of this thing. Mike and I talk a lot about it, and it definitely has, I'd say today sitting here, legs for longer in the market. And it really — I feel today on our strategies, the clarity because of the duration is providing a really good direction to our three strategies as we've kind of hit the year running here, and I feel good about where we're going on those as well.

The next question is a follow-up from John Franzreb with Sidoti & Company.

I guess I want to start with the fourth quarter. How much was data center as a percent of fourth quarter sales?

I'm going to say it's in the low double-digits, John, 10% of the total sales.

And how do you anticipate that progresses as the year goes forward?

Looking at the activity in the funnel, it's as strong, if not potential for some upside. I think as we look into at least in the first two or three quarters, again, timing of getting those jobs over and they're getting bigger in terms of total power consumption. But we're seeing that trend — one of our products is 38 kV, we see an increase in RFQs coming in for that product. So that's just — that validates that the power size these things are getting bigger, but that also increases the total spend and certainly on their side, similar to other large projects, FID or equivalent words on their part to fund the projects and ensure the return. But their — the activity is healthy.

So Brett, are you seeing a meaningful change in the composition of your backlog at the end of the fiscal year than maybe you saw two years ago?

We are, but I'd point more to the utility piece as evidence of that. That's an intentional strategy over the better part of 10 to 12 years now, John, which is both a mix of infrastructure investment by the utility and their strategies, but also to meet the secondary demand that's being brought on by data centers and onshoring of new factories. And so that second effect is changing the conversation between Powell and our utility clients into a longer-term relationship, which is healthy because it allows both groups to work together, not only on the immediate near-term projects, but then to develop approaches that can help optimize the cost structure for them and their build-out needs. And so we're seeing the utility piece really change that complexion on the backlog. Yes, there's been some effect near term on the Commercial & Other Industrial sector. It's been low single-digits, but the utility piece is quickly approaching a double-digit change in our profile as we've grown the overall size of the backlog and the revenue outlook per quarter.

Got it. Got it. And I guess just on the cash, there was talk at one time about potential M&A. Cash is getting rather sizable. What are your thoughts of — what to do with the cash and priorities for it?

Yes. We haven't — I don't recall last quarter, but the M&A activity is the funnel, the work that we've been doing, I think, over the last couple of years, we've indicated sort of the ramp-up in the funnel and working with the Board. We're very active in the space. And nothing immediate. But given some of the questions this morning about the breadth and duration of this thing, it's sort of crystallized where we're having strategic discussions, and we are definitely seeing some clear opportunities more in the midterm now than so much long term.

And this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Brett Cope for any closing remarks.

Thank you, Chuck. As you've heard from Mike and me, we are very pleased with the financial performance that the Powell team delivered this past year. The markets we serve continue to support our belief that fiscal 2025 will be another strong year for Powell. I would like to thank our incredibly talented employees for their hard efforts, focus and continued commitment to our valued customers as we continue to elevate our performance and work to meet our future goals for the company. 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.

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