Powell Industries, Inc. (POWL) Earnings & Analysis

Latest quarter

Powell reported Q3 FY2026 revenue of $311.7 million, below the $318.3 million consensus. Adjusted earnings per share of $1.42 also missed the $1.49 consensus.

Revenue rose from $286.3 million a year earlier. Powell’s filing said commercial and other industrial revenue increased 54% to $76.3 million, while electric utility revenue grew 18% to $88.6 million. The company attributed the increases to its expansion into those markets, supported by backlog and bookings. Petrochemical revenue fell 49% to $18.5 million, primarily because of lower backlog.

The filing reported net income of $52.2 million, up from $48.2 million a year earlier, as higher gross profit more than offset higher expenses. Gross margin was 30.6%, compared with 30.7% a year earlier, while operating margin was 20.6%, compared with 21.0%. Powell reported free cash flow of $93.7 million, up from $42.3 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Brett Cope said data center ordering had risen from a year earlier, while electric utility activity remained high and LNG exports supported demand for electrical infrastructure. He said third-quarter orders included a data center award exceeding $400 million, a $75 million fertilizer facility award and an approximately $60 million LNG award. Outside those projects, Cope said Powell booked more than $350 million of other awards.

CFO Michael Metcalf said backlog reached $2.4 billion at quarter-end. Asked about conversion, he said just under $1.3 billion was expected to convert over the next 12 months, while orders booked and billed in the same quarter averaged about $75 million per quarter.

On pricing, Cope told analysts that delivery speed was central to commercial customers, whereas industrial customers were more price-sensitive. He said competition followed a similar pattern across those markets. Metcalf attributed quarterly margins to product mix, operating leverage and pricing stability, while noting moderate inflation in commodities and engineered components. He said hedging and commercial practices were helping offset those costs.

Cope said Powell planned to have a leased manufacturing facility available late in its second or early third quarter of fiscal 2027. He said the company was also evaluating a greenfield owned facility requiring $70 million to $100 million of capital. Asked about labor, Cope said construction was drawing craft workers across a wider geography and could present a challenge in fiscal 2027 and 2028.

Asked about revenue timing, Metcalf said project and component timing made quarterly results variable. He said revenue would be lumpy going forward and that, given recent backlog conversion rates, Powell probably would not see double-digit growth rates.

Guidance

Powell expects gross margins to remain consistent with trailing twelve-month levels for the remainder of FY2026, while adding capacity to support the acceleration in its backlog.