Cover Page
Cover Page - shares | 3 Months Ended | |
Dec. 31, 2023 | Jan. 29, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Dec. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-12488 | |
Entity Registrant Name | Powell Industries, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 88-0106100 | |
Entity Address, Address Line One | 8550 Mosley Road | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77075-1180 | |
City Area Code | 713 | |
Local Phone Number | 944-6900 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | POWL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,967,718 | |
Entity Central Index Key | 0000080420 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --09-30 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Current Assets: | ||
Cash and cash equivalents | $ 321,400 | $ 245,875 |
Short-term investments | 33,943 | 33,134 |
Accounts receivable, less allowance for credit losses of $244 and $273 | 169,477 | 206,591 |
Contract assets | 67,594 | 60,621 |
Inventories | 69,682 | 63,865 |
Income taxes receivable | 64 | 100 |
Prepaid expenses | 5,252 | 5,419 |
Other current assets | 7,413 | 6,380 |
Total Current Assets | 674,825 | 621,985 |
Property, plant and equipment, net | 98,318 | 97,625 |
Operating lease assets, net | 1,218 | 1,436 |
Goodwill and intangible assets, net | 1,503 | 1,003 |
Deferred income taxes | 17,229 | 17,064 |
Other assets | 14,856 | 13,129 |
Total Assets | 807,949 | 752,242 |
Current Liabilities: | ||
Accounts payable | 50,173 | 56,666 |
Contract liabilities | 328,888 | 279,796 |
Accrued compensation and benefits | 11,637 | 29,947 |
Accrued product warranty | 3,680 | 3,305 |
Current operating lease liabilities | 645 | 773 |
Income taxes payable | 11,985 | 6,517 |
Other current liabilities | 20,843 | 18,682 |
Total Current Liabilities | 427,851 | 395,686 |
Deferred compensation | 10,965 | 9,145 |
Long-term operating lease liabilities | 573 | 663 |
Other long-term liabilities | 2,240 | 1,722 |
Total Liabilities | 441,629 | 407,216 |
Commitments and Contingencies (Note F) | ||
Stockholders' Equity: | ||
Preferred stock, par value $0.01; 5,000,000 shares authorized; none issued | 0 | 0 |
Common stock, par value $0.01; 30,000,000 shares authorized; 12,765,936 and 12,668,001 shares issued, respectively; 11,959,918 and 11,861,983 shares outstanding, respectively | 127 | 127 |
Additional paid-in capital | 68,854 | 71,526 |
Retained earnings | 346,162 | 325,281 |
Treasury stock, 806,018 shares at cost | (24,999) | (24,999) |
Accumulated other comprehensive loss | (23,824) | (26,909) |
Total Stockholders' Equity | 366,320 | 345,026 |
Total Liabilities and Stockholders' Equity | $ 807,949 | $ 752,242 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 244 | $ 273 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, shares issued (in shares) | 12,765,936 | 12,668,001 |
Common stock, shares outstanding (in shares) | 11,959,918 | 11,861,983 |
Treasury stock, shares (in shares) | 806,018 | 806,018 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Statement [Abstract] | ||
Revenues | $ 194,017 | $ 126,858 |
Cost of goods sold | 145,823 | 107,394 |
Gross profit | 48,194 | 19,464 |
Selling, general and administrative expenses | 20,347 | 16,873 |
Research and development expenses | 1,967 | 1,501 |
Operating income | 25,880 | 1,090 |
Interest income, net | (3,998) | (523) |
Income before income taxes | 29,878 | 1,613 |
Income tax provision | 5,793 | 451 |
Net income | $ 24,085 | $ 1,162 |
Earnings per share: | ||
Basic (in dollars per share) | $ 2.02 | $ 0.10 |
Diluted (in dollars per share) | $ 1.98 | $ 0.10 |
Weighted average shares: | ||
Basic (in shares) | 11,941 | 11,859 |
Diluted (in shares) | 12,174 | 12,077 |
Dividends per share (in dollars per share) | $ 0.2625 | $ 0.2600 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 24,085 | $ 1,162 |
Foreign currency translation adjustments | 3,085 | 2,178 |
Gain on cash flow commodity hedge | 0 | 218 |
Comprehensive income | $ 27,170 | $ 3,558 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income/(Loss) |
Balance (in shares) at Sep. 30, 2022 | 12,588,000 | |||||
Balance Treasury Stock (in shares) at Sep. 30, 2022 | (806,000) | |||||
Balance at Sep. 30, 2022 | $ 297,206 | $ 126 | $ 67,439 | $ 283,638 | $ 24,999 | $ (28,998) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 1,162 | 1,162 | ||||
Foreign currency translation adjustments | 2,178 | 2,178 | ||||
Stock-based compensation (in shares) | 53,000 | |||||
Stock-based compensation | 1,307 | 1,307 | ||||
Shares withheld in lieu of employee tax withholding | (423) | (423) | ||||
Dividends | (3,176) | 131 | (3,307) | |||
Gain on cash flow commodity hedge | 218 | 218 | ||||
Balance (in shares) at Dec. 31, 2022 | 12,641,000 | |||||
Balance Treasury Stock (in shares) at Dec. 31, 2022 | (806,000) | |||||
Balance at Dec. 31, 2022 | $ 298,472 | $ 126 | 68,454 | 281,493 | $ 24,999 | (26,602) |
Balance (in shares) at Sep. 30, 2023 | 11,861,983 | 12,668,000 | ||||
Balance Treasury Stock (in shares) at Sep. 30, 2023 | (806,018) | (806,000) | ||||
Balance at Sep. 30, 2023 | $ 345,026 | $ 127 | 71,526 | 325,281 | $ 24,999 | (26,909) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 24,085 | 24,085 | ||||
Foreign currency translation adjustments | 3,085 | 3,085 | ||||
Stock-based compensation (in shares) | 98,000 | |||||
Stock-based compensation | 1,657 | 1,657 | ||||
Shares withheld in lieu of employee tax withholding | (4,752) | (4,752) | ||||
Dividends | (2,781) | 423 | (3,204) | |||
Gain on cash flow commodity hedge | $ 0 | |||||
Balance (in shares) at Dec. 31, 2023 | 11,959,918 | 12,766,000 | ||||
Balance Treasury Stock (in shares) at Dec. 31, 2023 | (806,018) | (806,000) | ||||
Balance at Dec. 31, 2023 | $ 366,320 | $ 127 | $ 68,854 | $ 346,162 | $ 24,999 | $ (23,824) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Operating Activities: | ||
Net income | $ 24,085 | $ 1,162 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation | 1,641 | 2,136 |
Stock-based compensation | 1,657 | 1,307 |
Mark-to-market loss on derivative contracts | 41 | 0 |
Bad debt expense (recovery), net | (29) | 6 |
Deferred income taxes | (165) | (895) |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 38,095 | (44,547) |
Contract assets and liabilities, net | 41,711 | 78,298 |
Inventories | (5,604) | (4,406) |
Income taxes | 5,508 | 1,048 |
Prepaid expenses and other current assets | (826) | 368 |
Accounts payable | (6,992) | (24,149) |
Accrued liabilities | (16,387) | (12,741) |
Other, net | 1,163 | 1,864 |
Net cash provided by (used in) operating activities | 83,898 | (549) |
Investing Activities: | ||
Maturities of short-term investments | 0 | 3,690 |
Purchases of property, plant and equipment | (1,235) | (2,726) |
Purchase of intangible assets | (250) | 0 |
Proceeds from sale of property, plant and equipment | 0 | 11 |
Net cash provided by (used in) investing activities | (1,485) | 975 |
Financing Activities: | ||
Shares withheld in lieu of employee tax withholding | (4,752) | (423) |
Dividends paid | (3,124) | (3,074) |
Net cash used in financing activities | (7,876) | (3,497) |
Net increase (decrease) in cash and cash equivalents | 74,537 | (3,071) |
Effect of exchange rate changes on cash and cash equivalents | 988 | 749 |
Cash and cash equivalents at beginning of period | 245,875 | 101,954 |
Cash and cash equivalents at end of period | $ 321,400 | $ 99,632 |
Overview and Summary of Signifi
Overview and Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Overview and Summary of Significant Accounting Policies | Overview and Summary of Significant Accounting Policies Overview Powell Industries, Inc. (we, us, our, Powell or the Company) is incorporated in the state of Delaware. Powell's predecessor companies were founded 77 years ago by William E. Powell in 1947. Our major subsidiaries, all of which are wholly owned, include Powell Electrical Systems, Inc.; Powell (UK) Limited; Powell Canada Inc.; and Powell Industries International, B.V. We develop, design, manufacture and service custom-engineered equipment and systems which (1) distribute, control and monitor the flow of electrical energy and (2) provide protection to motors, transformers and other electrically powered equipment. We are headquartered in Houston, Texas and serve the oil and gas and petrochemical markets, which include onshore and offshore production, liquefied natural gas (LNG) facilities and terminals, pipelines, refineries and petrochemical plants. Additionally, we manufacture products for the electric utility, light rail traction power, mining and metals, pulp and paper, data centers and other municipal, commercial and industrial markets. Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of Powell and our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP), have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with respect to the interim condensed consolidated financial statements have been included. The results of operations for the interim periods are not necessarily indicative of the results for the entire fiscal year. We believe that these financial statements contain all adjustments necessary so that they are not misleading. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Powell and its subsidiaries included in Powell’s Annual Report on Form 10-K for the year ended September 30, 2023, which was filed with the Securities and Exchange Commission (SEC) on December 6, 2023. References to Fiscal 2024 and Fiscal 2023 used throughout this report shall mean the current fiscal year ending September 30, 2024 and the prior fiscal year ended September 30, 2023, respectively. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying footnotes. The most significant estimates used in our condensed consolidated financial statements affect revenue recognition and estimated cost recognition on our customer contracts, allowance for credit losses, provision for excess and obsolete inventory, warranty accruals and income taxes. The amounts recorded for warranties, legal, income taxes, impairment of long-lived assets (when applicable), liquidated damages and other contingent liabilities require judgments regarding the amount of expenses that will ultimately be incurred. We base our estimates on historical experience, forecasts and various other assumptions, as well as the specific circumstances surrounding these contingent liabilities, in evaluating the amount of liability that should be recorded. Additionally, the basis for recognition of deferred tax assets requires estimates related to future income and other assumptions regarding timing and future profitability because the ultimate realization of net deferred tax assets is dependent on the generation of future taxable income during periods in which temporary differences become deductible. Estimates routinely change as new events occur, additional information becomes available or operating environments change. Actual results may differ from our prior estimates. Accounting Standards Updates Issued but Not Yet Adopted In November 2023, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires that public entities disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) on an annual and interim basis. It also requires that public entities disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures in assessing segment performance and resource allocation. Additionally, it requires that all existing annual disclosures about segment profit or loss and assets must be provided on an interim basis and clarifies that single reportable segment entities are subject to the disclosure requirement under Topic 280 in its entirety. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years beginning after December 15, 2024. A public entity should apply ASU 2023-07 retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. We are currently evaluating the impacts of the new standard. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures , which enhances the transparency of income tax disclosures. It requires greater disaggregation of information in the tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU is effective for fiscal years beginning after December 15, 2024, and should be applied on a prospective basis. Retrospective application and early adoption are permitted. We are currently evaluating the impacts of the new standard. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share We compute basic earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common and potential common share include the weighted average of additional shares associated with the incremental effect of dilutive restricted stock and restricted stock units. The following table reconciles basic and diluted weighted average shares used in the computation of earnings per share (in thousands, except per share data): Three months ended December 31, 2023 2022 Numerator: Net income $ 24,085 $ 1,162 Denominator: Weighted average basic shares 11,941 11,859 Dilutive effect of restricted stock and restricted stock units 233 218 Weighted average diluted shares 12,174 12,077 Earnings per share: Basic $ 2.02 $ 0.10 Diluted $ 1.98 $ 0.10 |
Detail of Selected Balance Shee
Detail of Selected Balance Sheet Accounts | 3 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Detail of Selected Balance Sheet Accounts | Detail of Selected Balance Sheet Accounts Inventories The components of inventories are summarized below (in thousands): December 31, 2023 September 30, 2023 Raw materials, parts and sub-assemblies $ 74,181 $ 68,631 Work-in-progress 2,056 1,379 Provision for excess and obsolete inventories (6,555) (6,145) Total inventories $ 69,682 $ 63,865 Property, Plant and Equipment Property, plant and equipment are summarized below (in thousands): December 31, 2023 September 30, 2023 Land $ 21,729 $ 21,526 Buildings and improvements 122,706 121,454 Machinery and equipment 93,636 92,477 Furniture and fixtures 3,792 3,726 Construction in process 4,434 4,129 $ 246,297 $ 243,312 Less: Accumulated depreciation (147,979) (145,687) Total property, plant and equipment, net $ 98,318 $ 97,625 There were no assets under finance lease as of December 31, 2023 or September 30, 2023. Intangible Asset In December 2023, we acquired intellectual property for a total consideration of $0.5 million, of which $250 thousand was paid in cash. Accrued Product Warranty Activity in our product warranty accrual consisted of the following (in thousands): Three months ended December 31, 2023 2022 Balance at beginning of period $ 3,305 $ 2,345 Increase to warranty expense 1,127 479 Deduction for warranty charges (774) (454) Change due to foreign currency translation 22 10 Balance at end of period $ 3,680 $ 2,380 |
Revenue
Revenue | 3 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Revenue Recognition Our revenues are primarily generated from the manufacturing of custom-engineered products and systems under long-term fixed-price contracts under which we agree to manufacture various products such as traditional and arc-resistant distribution switchgear and control gear, medium-voltage circuit breakers, monitoring and control communications systems, motor control centers, switches and bus duct systems. These products may be sold separately as an engineered solution but are typically integrated into custom-built enclosures which we also build. These enclosures are referred to as power control room substations (PCRs®), custom-engineered modules or electrical houses (E-Houses). Some contracts may also include the installation and the commissioning of these enclosures. Revenue from these contracts is generally recognized over time utilizing the cost-to-cost method. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. We believe that this method is the most accurate representation of our performance because it directly measures the value of the services transferred to the customer over time as we incur costs on our contracts. Contract costs include all direct materials, labor and indirect costs related to contract performance, which may include indirect labor, supplies, tools, repairs and depreciation costs. We also have contracts to provide field service inspection, installation, commissioning, modification, and repair services, as well as retrofit and retrofill components for existing systems. If the service contract terms give us the right to invoice the customer for an amount that corresponds directly with the value of our performance completed to date (i.e., a service contract in which we bill a fixed amount for each hour of service provided), then we recognize revenue over time in each reporting period corresponding to the amount that we have the right to invoice. Our performance obligations are satisfied as the work progresses. Revenues from our custom-engineered products and value-added services transferred to customers over time accounted for approximately 94% of revenues for the three months ended December 31, 2023 and 93% of revenues for the three months ended December 31, 2022. We also have sales orders for spare parts and replacement circuit breakers for switchgear that are obsolete or that are no longer produced by the original manufacturer. Revenues from these sales orders are recognized at the time we fulfill our performance obligation to the customer, which is typically upon shipment and represented approximately 6% of revenues for the three months ended December 31, 2023 and 7% of revenues for the three months ended December 31, 2022. Additionally, some contracts may contain a cancellation clause that could limit the amount of revenue we are able to recognize over time. In these instances, revenue and costs associated with these contracts are deferred and recognized at a point in time when the performance obligation is fulfilled. Selling and administrative costs incurred in relation to obtaining a contract are typically expensed as incurred. We periodically utilize a third-party sales agent to obtain a contract and will pay a commission to that agent. We record the full commission liability to the third-party sales agents at the order date, with a corresponding deferred asset. As the project progresses, we record commission expense based on percentage of completion rates that correlate to the project and reduce the deferred asset. Once we have been paid by the customer, we pay the commission and the deferred liability is reduced. Performance Obligations A performance obligation is a promise in a contract or with a customer to transfer a distinct good or service. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue as the performance obligations are satisfied. To determine the proper revenue recognition for contracts, we evaluate whether a contract should be accounted for as more than one performance obligation or, less commonly, whether two or more contracts should be combined and accounted for as one performance obligation. This evaluation of performance obligations requires significant judgment. The majority of our contracts have a single performance obligation where multiple engineered products and services are combined into a single custom-engineered solution. Our contracts include a standard one-year assurance warranty. Occasionally, we provide service-type warranties that will extend the warranty period. These extended warranties qualify as a separate performance obligation, and revenue is deferred and recognized over the warranty period. If we determine during the evaluation of the contract that there are multiple performance obligations, we allocate the transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Remaining unsatisfied performance obligations, which we refer to as backlog, represent the estimated transaction price for goods and services for which we have a material right, but work has not been performed. As of December 31, 2023, we had backlog of $1.3 billion, of which approximately $713 million is expected to be recognized as revenue within the next twelve months. Backlog may not be indicative of future operating results as orders may be cancelled or modified by our customers. Our backlog does not include service and maintenance-type contracts for which we have the right to invoice as services are performed. Contract Estimates Actual revenues and project costs may vary from previous estimates due to changes in a variety of factors. The cost estimation process is based upon the professional knowledge and experience of our engineers, project managers and financial professionals. Factors that are considered in estimating the work to be completed and ultimate contract recovery include the availability and productivity of labor, the nature and complexity of the work to be performed, the availability of materials, and the effect of any delays on our project performance. We periodically review our job performance, job conditions, estimated profitability and final contract settlements, including our estimate of total costs and make revisions to costs and income in the period in which the revisions are probable and reasonably estimable. We bear the risk of cost overruns in most of our contracts, which may result in reduced profits. Whenever revisions of estimated contract costs and contract values indicate that the contract costs will exceed estimated revenues, thus creating a loss, a provision for the total estimated loss is recorded in that period. For the three months ended December 31, 2023 and 2022, our operating results were positively impacted by $5.4 million and $3.6 million, respectively, as a result of net changes in contract estimates related to projects in progress at the beginning of the respective period. These changes in estimates resulted primarily from favorable project execution, reduced cost estimates and negotiations of variable consideration, discussed below, as well as revenue recognized from project cancellations and other changes in facts and circumstances during these periods. Gross unfavorable changes in contract estimates were immaterial for both the three months ended December 31, 2023 and 2022. Variable Consideration It is common for our long-term contracts to contain variable consideration that can either increase or decrease the transaction price. Due to the nature of our contracts, estimating total cost and revenue can be complex and subject to variability due to change orders, back charges, spare parts, early completion bonuses, customer allowances and liquidated damages. We estimate the amount of variable consideration based on the expected value method, which is the sum of the probability-weighted amounts, or the most likely amount method which uses various factors including experience with similar transactions and assessment of our anticipated performance. Variable consideration is included in the transaction price if legally enforceable and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur once the uncertainty associated with the variable consideration is resolved. Contract Modifications Contracts may be modified for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the enforceable rights and obligations under the contract. Most of our contract modifications are for goods and services that are not distinct from the existing performance obligation. Contract modifications result in a cumulative catch-up adjustment to revenue based on our measure of progress for the performance obligation. Contract Balances The timing of revenue recognition, billings and cash collections affects accounts receivable, contract assets and contract liabilities in our Condensed Consolidated Balance Sheets. Contract assets are recorded when revenues are recognized in excess of amounts billed for fixed-price contracts as determined by the billing milestone schedule. Contract assets are transferred to accounts receivable when billing milestones have been met, or we have an unconditional right to payment. Contract liabilities typically represent advance payments from contractual billing milestones and billings in excess of revenue recognized. It is unusual to have advanced milestone payments with a term greater than one year, which could represent a financing component on the contract. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period and are generally classified as current. Contract assets and liabilities as of December 31, 2023 and September 30, 2023 are summarized below (in thousands): December 31, 2023 September 30, 2023 Contract assets $ 67,594 $ 60,621 Contract liabilities (328,888) (279,796) Net contract liability $ (261,294) $ (219,175) Our net contract billing position remained a net liability at both December 31, 2023 and September 30, 2023, primarily due to favorable contract billing milestones. We typically allocate a significant percentage of the progress billing to the early stages of the contract. These favorable billing milestones are driving the increase in the net contract liability at December 31, 2023. To determine the amount of revenue recognized during the period from contract liabilities, we first allocate revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that balance. During the three months ended December 31, 2023, we recognized revenue of $103.5 million that was related to contract liabilities outstanding at September 30, 2023. The timing of our invoice process is typically dependent on the completion of certain milestones and contract terms and subject to agreement by our customer. Payment is typically expected within 30 days of invoice. Any uncollected invoiced amounts for our performance obligations recognized over time, including contract retentions, are recorded as accounts receivable in the Condensed Consolidated Balance Sheets. Certain contracts allow customers to withhold a small percentage of billings pursuant to retainage provisions, and such amounts are generally due upon completion of the contract and acceptance of the project by the customer. Based on our experience in recent years, the majority of these retainage balances are expected to be collected within approximately twelve months. As of December 31, 2023 and September 30, 2023, we had retention amounts of $7.3 million and $7.4 million, respectively. Of the retained amount at December 31, 2023, $7.1 million is expected to be collected in the next twelve months and is recorded in accounts receivable. The remaining $0.2 million is recorded in other assets. Disaggregation of Revenue The following tables present our disaggregated revenue by geographic destination and market sector for the three months ended December 31, 2023 and 2022 (in thousands): Three months ended December 31, 2023 2022 United States $ 159,860 $ 100,112 Canada 20,350 18,496 Europe 6,532 4,134 Middle East and Africa 3,275 2,425 Mexico, Central and South America 2,657 915 Asia/Pacific 1,343 776 Total revenues by geographic destination $ 194,017 $ 126,858 Three months ended December 31, 2023 2022 Oil and gas (excludes petrochemical) $ 83,636 $ 43,510 Petrochemical 28,367 22,490 Electric utility 40,703 28,407 Commercial and other industrial 24,672 17,050 Traction power 4,345 7,072 All others 12,294 8,329 Total revenues by market sector $ 194,017 $ 126,858 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt U.S. Revolver On October 4, 2023, we entered into a third amendment (the Third Amendment) to our credit agreement with Bank of America, N.A. (as amended, the U.S. Revolver). The Third Amendment added Texas Capital Bank as Syndication Agent and a lender, increased the amount of the revolving line of credit from $125.0 million to $150.0 million, and extended the expiry date to October 4, 2028. The aggregate commitment of $150.0 million consists of $100.0 million committed by Bank of America and $50.0 million committed by Texas Capital Bank. As amended by the Third Amendment, the lesser of (a) $60 million, (b) 60% of available cash, and (c) the aggregate face amount of the issued but undrawn letters of credit that are not cash-secured, shall be deducted from consolidated funded indebtedness, when calculating the consolidated net leverage ratio. We have the option to cash collateralize all or a portion of the letters of credit outstanding, which would favorably impact the consolidated funded indebtedness calculation and the consolidated net leverage ratio. As of December 31, 2023, there were no amounts borrowed under the U.S. Revolver, and letters of credit outstanding were $87.1 million. There was $62.9 million available for the issuance of letters of credit and borrowings under the U.S. Revolver as of December 31, 2023. As of December 31, 2023, we were in compliance with all of the financial covenants of the U.S. Revolver. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Letters of Credit, Bank Guarantees and Bonds Certain customers require us to post letters of credit, bank guarantees or surety bonds. These security instruments assure that we will perform under the terms of our contract. In the event of default, the counterparty may demand payment from the bank under a letter of credit or bank guarantee, or performance by the surety under a bond. To date, there have been no significant draws or claims related to security instruments for the periods reported. We were contingently liable for letters of credit of $87.1 million as of December 31, 2023. We also had surety bonds totaling $483.6 million that were outstanding, with additional bonding capacity of $716.4 million available, at December 31, 2023. We have strong surety relationships; however, a change in market conditions or the sureties' assessment of our financial position could cause the sureties to require cash collateralization for undischarged liabilities under the bonds. We have a $19.1 million facility agreement (Facility Agreement) between Powell (UK) Limited and a large international bank that provides Powell (UK) Limited the ability to enter into bank guarantees as well as forward exchange contracts and currency options. At December 31, 2023, we had outstanding guarantees totaling $6.8 million, with an additional capacity of $12.3 million available under this Facility Agreement. The Facility Agreement provides for customary events of default and carries cross-default provisions with the U.S. Revolver. If an event of default (as defined in the Facility Agreement) occurs and is continuing, per the terms and subject to the conditions set forth therein, obligations outstanding under the Facility Agreement may be accelerated and declared immediately due and payable. Additionally, we are required to maintain cash collateral for guarantees greater than two years. As of December 31, 2023, we were in compliance with all of the financial covenants of the Facility Agreement. Litigation We are involved in various legal proceedings, claims and other disputes arising from our commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. Although we can give no assurances about the resolution of pending claims, litigation or other disputes, and the effect such outcomes may have on us, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on our consolidated financial position or results of operations or liquidity. Liquidated Damages Certain of our customer contracts have schedule and performance obligation clauses that, if we fail to meet them, could require us to pay liquidated damages. Each individual contract defines the conditions under which the customer may make a claim against us. As of December 31, 2023, certain contracts had a probable exposure to liquidated damages claims of $3.6 million, which could possibly increase to $4.2 million under certain circumstances. Based on our actual or projected failure to meet these various contractual commitments, $1.5 million has been recorded as a reduction to revenue. We will attempt to obtain change orders, contract extensions or accelerate project completion, which may resolve the potential for any unrecorded liquidated damages claims. Should we fail to achieve relief on some or all of these contractual obligations, we could be required to pay additional liquidated damages, which could negatively impact our future operating results. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Refer to our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 for a full description of our existing stock-based compensation plans. Restricted Stock Units We issue restricted stock units (RSUs) to certain officers and key employees of the Company. The fair value of the RSUs is based on the price of our common stock as reported on the NASDAQ Global Market on the grant dates. Typically, these grants vest over a three-year period from the date of issuance and are a blend of time-based and performance-based shares. The portion of the grant that is time-based typically vests over a three-year period on each anniversary of the grant date, based on continued employment. The performance-based shares vest based on the three-year earnings and safety performance of the Company following the grant date. At December 31, 2023, there were 230,420 RSUs outstanding. The RSUs do not have voting rights but do receive dividend equivalents upon vesting which are accrued quarterly. Additionally, the shares of common stock underlying the RSUs are not considered issued and outstanding until vested and common stock is issued. Total RSU activity (number of shares) for the three months ended December 31, 2023 is summarized below: Number of Weighted Outstanding at September 30, 2023 292,497 $ 22.90 Granted 41,485 84.63 Vested (103,562) 23.65 Forfeited/canceled — — Outstanding at December 31, 2023 230,420 $ 33.68 During the three months ended December 31, 2023 and 2022, we recorded compensation expense of $1.6 million and $1.3 million, respectively, related to the RSUs. Restricted Stock |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements We measure certain financial assets and liabilities at fair value. Fair value is defined as an “exit price,” which represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in valuing an asset or liability. The accounting guidance requires the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. As a basis for considering such assumptions and inputs, a fair value hierarchy has been established which identifies and prioritizes three levels of inputs to be used in measuring fair value. The three levels of the fair value hierarchy are as follows: Level 1 — Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 — Inputs other than the quoted prices in active markets that are observable either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data. Level 3 — Unobservable inputs that are supported by little or no market data and require the reporting entity to develop its own assumptions. The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2023 (in thousands): Fair Value Measurements at December 31, 2023 Quoted Prices in Significant Other Significant Fair Value at Assets: Cash and cash equivalents $ 321,400 $ — $ — $ 321,400 Short-term investments 33,943 — — 33,943 Rabbi trust assets — 9,901 — 9,901 Liabilities: Deferred compensation — 10,965 — 10,965 The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2023 (in thousands): Fair Value Measurements at September 30, 2023 Quoted Prices in Significant Other Significant Fair Value at Assets: Cash and cash equivalents $ 245,875 $ — $ — $ 245,875 Short-term investments 33,134 — — 33,134 Rabbi trust assets — 9,117 — 9,117 Liabilities: Deferred compensation — 9,145 — 9,145 Fair value guidance requires certain fair value disclosures be presented in both interim and annual reports. The estimated fair value amounts of financial instruments have been determined using available market information and valuation methodologies described below. Cash and cash equivalents – Cash and cash equivalents, primarily funds held in money market savings instruments, are reported at their current carrying value, which approximates fair value due to the short-term nature of these instruments and are included in cash and cash equivalents in our Condensed Consolidated Balance Sheets. Short-term investments – Short-term investments include time deposits with original maturities of three months or more. Rabbi trust assets and deferred compensation – We hold investments in an irrevocable rabbi trust for our deferred compensation plan. The assets are primarily related to company-owned life insurance policies and are included in other assets in the accompanying Condensed Consolidated Balance Sheets. Because the mutual funds and company-owned life insurance policies are combined in the plan, they are categorized as Level 2 in the fair value measurement hierarchy. The deferred compensation liability represents the investment options that the plan participants have designated to serve as the basis for measurement of the notional value of their accounts. Because the deferred compensation liability is intended to offset the plan assets, it is also categorized as Level 2 in the fair value measurement hierarchy. There were no transfers between levels within the fair value measurement hierarchy during the quarter ended December 31, 2023. |
Leases
Leases | 3 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Leases | Leases Our leases consist primarily of office and construction equipment. All of our future lease obligations are related to non-cancelable operating leases. The following table provides a summary of lease cost components for the three months ended December 31, 2023 and 2022, respectively (in thousands): Three months ended December 31, Lease Cost 2023 2022 Operating lease cost $ 256 $ 378 Less: sublease income — (162) Variable lease cost (1) 30 108 Short-term lease cost (2) 400 387 Total lease cost $ 686 $ 711 (1) Variable lease cost represents common area maintenance charges related to our Canadian office space lease. (2) Short-term lease cost includes leases and rentals with initial terms of one year or less. We recognize operating lease assets and operating lease liabilities representing the present value of the remaining lease payments for leases with initial terms greater than twelve months. Leases with initial terms of twelve months or less are not recorded in our Condensed Consolidated Balance Sheets. The following table provides a summary of the operating lease assets and operating lease liabilities included in our Condensed Consolidated Balance Sheets as of December 31, 2023 and September 30, 2023, respectively (in thousands): Operating Leases December 31, 2023 September 30, 2023 Assets: Operating lease assets, net $ 1,218 $ 1,436 Liabilities: Current operating lease liabilities 645 773 Long-term operating lease liabilities 573 663 Total lease liabilities $ 1,218 $ 1,436 The following table provides the maturities of our operating lease liabilities as of December 31, 2023 (in thousands): Operating Leases Remainder of 2024 $ 550 2025 370 2026 180 2027 147 2028 19 Thereafter — Total future minimum lease payments $ 1,266 Less: present value discount (imputed interest) (48) Present value of lease liabilities $ 1,218 The weighted average discount rate as of December 31, 2023 was 3.4%. The weighted average remaining lease term was 2.61 years at December 31, 2023. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The calculation of the effective tax rate is as follows (in thousands): Three months ended December 31, 2023 2022 Income before income taxes $ 29,878 $ 1,613 Income tax provision 5,793 451 Net income $ 24,085 $ 1,162 Effective tax rate 19 % 28 % |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Quarterly Dividend Declared On January 30, 2024, our Board of Directors approved an increase to the quarterly cash dividend on our common stock to $0.2650 per share, equating to an annualized dividend of $1.06 per share from the current amount of $1.05 per share. The dividend is payable on March 13, 2024 to shareholders of record at the close of business on February 14, 2024. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Pay vs Performance Disclosure | ||
Net loss | $ 24,085 | $ 1,162 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Overview and Summary of Signi_2
Overview and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of Powell and our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP), have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with respect to the interim condensed consolidated financial statements have been included. The results of operations for the interim periods are not necessarily indicative of the results for the entire fiscal year. We believe that these financial statements contain all adjustments necessary so that they are not misleading. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Powell and its subsidiaries included in Powell’s Annual Report on Form 10-K for the year ended September 30, 2023, which was filed with the Securities and Exchange Commission (SEC) on December 6, 2023. References to Fiscal 2024 and Fiscal 2023 used throughout this report shall mean the current fiscal year ending September 30, 2024 and the prior fiscal year ended September 30, 2023, respectively. |
Use of Estimates | Use of Estimates |
Accounting Standards Updates Issued but Not Yet Adopted | Accounting Standards Updates Issued but Not Yet Adopted In November 2023, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires that public entities disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) on an annual and interim basis. It also requires that public entities disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures in assessing segment performance and resource allocation. Additionally, it requires that all existing annual disclosures about segment profit or loss and assets must be provided on an interim basis and clarifies that single reportable segment entities are subject to the disclosure requirement under Topic 280 in its entirety. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years beginning after December 15, 2024. A public entity should apply ASU 2023-07 retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. We are currently evaluating the impacts of the new standard. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures , which enhances the transparency of income tax disclosures. It requires greater disaggregation of information in the tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU is effective for fiscal years beginning after December 15, 2024, and should be applied on a prospective basis. Retrospective application and early adoption are permitted. We are currently evaluating the impacts of the new standard. |
Revenue Recognition | Revenue Recognition Our revenues are primarily generated from the manufacturing of custom-engineered products and systems under long-term fixed-price contracts under which we agree to manufacture various products such as traditional and arc-resistant distribution switchgear and control gear, medium-voltage circuit breakers, monitoring and control communications systems, motor control centers, switches and bus duct systems. These products may be sold separately as an engineered solution but are typically integrated into custom-built enclosures which we also build. These enclosures are referred to as power control room substations (PCRs®), custom-engineered modules or electrical houses (E-Houses). Some contracts may also include the installation and the commissioning of these enclosures. Revenue from these contracts is generally recognized over time utilizing the cost-to-cost method. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. We believe that this method is the most accurate representation of our performance because it directly measures the value of the services transferred to the customer over time as we incur costs on our contracts. Contract costs include all direct materials, labor and indirect costs related to contract performance, which may include indirect labor, supplies, tools, repairs and depreciation costs. We also have contracts to provide field service inspection, installation, commissioning, modification, and repair services, as well as retrofit and retrofill components for existing systems. If the service contract terms give us the right to invoice the customer for an amount that corresponds directly with the value of our performance completed to date (i.e., a service contract in which we bill a fixed amount for each hour of service provided), then we recognize revenue over time in each reporting period corresponding to the amount that we have the right to invoice. Our performance obligations are satisfied as the work progresses. Revenues from our custom-engineered products and value-added services transferred to customers over time accounted for approximately 94% of revenues for the three months ended December 31, 2023 and 93% of revenues for the three months ended December 31, 2022. We also have sales orders for spare parts and replacement circuit breakers for switchgear that are obsolete or that are no longer produced by the original manufacturer. Revenues from these sales orders are recognized at the time we fulfill our performance obligation to the customer, which is typically upon shipment and represented approximately 6% of revenues for the three months ended December 31, 2023 and 7% of revenues for the three months ended December 31, 2022. Additionally, some contracts may contain a cancellation clause that could limit the amount of revenue we are able to recognize over time. In these instances, revenue and costs associated with these contracts are deferred and recognized at a point in time when the performance obligation is fulfilled. Performance Obligations A performance obligation is a promise in a contract or with a customer to transfer a distinct good or service. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue as the performance obligations are satisfied. To determine the proper revenue recognition for contracts, we evaluate whether a contract should be accounted for as more than one performance obligation or, less commonly, whether two or more contracts should be combined and accounted for as one performance obligation. This evaluation of performance obligations requires significant judgment. The majority of our contracts have a single performance obligation where multiple engineered products and services are combined into a single custom-engineered solution. Our contracts include a standard one-year assurance warranty. Occasionally, we provide service-type warranties that will extend the warranty period. These extended warranties qualify as a separate performance obligation, and revenue is deferred and recognized over the warranty period. If we determine during the evaluation of the contract that there are multiple performance obligations, we allocate the transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Contract Estimates Actual revenues and project costs may vary from previous estimates due to changes in a variety of factors. The cost estimation process is based upon the professional knowledge and experience of our engineers, project managers and financial professionals. Factors that are considered in estimating the work to be completed and ultimate contract recovery include the availability and productivity of labor, the nature and complexity of the work to be performed, the availability of materials, and the effect of any delays on our project performance. We periodically review our job performance, job conditions, estimated profitability and final contract settlements, including our estimate of total costs and make revisions to costs and income in the period in which the revisions are probable and reasonably estimable. We bear the risk of cost overruns in most of our contracts, which may result in reduced profits. Whenever revisions of estimated contract costs and contract values indicate that the contract costs will exceed estimated revenues, thus creating a loss, a provision for the total estimated loss is recorded in that period. Variable Consideration It is common for our long-term contracts to contain variable consideration that can either increase or decrease the transaction price. Due to the nature of our contracts, estimating total cost and revenue can be complex and subject to variability due to change orders, back charges, spare parts, early completion bonuses, customer allowances and liquidated damages. We estimate the amount of variable consideration based on the expected value method, which is the sum of the probability-weighted amounts, or the most likely amount method which uses various factors including experience with similar transactions and assessment of our anticipated performance. Variable consideration is included in the transaction price if legally enforceable and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur once the uncertainty associated with the variable consideration is resolved. Contract Modifications Contracts may be modified for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the enforceable rights and obligations under the contract. Most of our contract modifications are for goods and services that are not distinct from the existing performance obligation. Contract modifications result in a cumulative catch-up adjustment to revenue based on our measure of progress for the performance obligation. Contract Balances The timing of revenue recognition, billings and cash collections affects accounts receivable, contract assets and contract liabilities in our Condensed Consolidated Balance Sheets. Contract assets are recorded when revenues are recognized in excess of amounts billed for fixed-price contracts as determined by the billing milestone schedule. Contract assets are transferred to accounts receivable when billing milestones have been met, or we have an unconditional right to payment. Contract liabilities typically represent advance payments from contractual billing milestones and billings in excess of revenue recognized. It is unusual to have advanced milestone payments with a term greater than one year, which could represent a financing component on the contract. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic and Diluted Weighted Average Shares used in Computation of Earnings Per Share | The following table reconciles basic and diluted weighted average shares used in the computation of earnings per share (in thousands, except per share data): Three months ended December 31, 2023 2022 Numerator: Net income $ 24,085 $ 1,162 Denominator: Weighted average basic shares 11,941 11,859 Dilutive effect of restricted stock and restricted stock units 233 218 Weighted average diluted shares 12,174 12,077 Earnings per share: Basic $ 2.02 $ 0.10 Diluted $ 1.98 $ 0.10 |
Detail of Selected Balance Sh_2
Detail of Selected Balance Sheet Accounts (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Components of Inventories | The components of inventories are summarized below (in thousands): December 31, 2023 September 30, 2023 Raw materials, parts and sub-assemblies $ 74,181 $ 68,631 Work-in-progress 2,056 1,379 Provision for excess and obsolete inventories (6,555) (6,145) Total inventories $ 69,682 $ 63,865 |
Property, Plant and Equipment | Property, plant and equipment are summarized below (in thousands): December 31, 2023 September 30, 2023 Land $ 21,729 $ 21,526 Buildings and improvements 122,706 121,454 Machinery and equipment 93,636 92,477 Furniture and fixtures 3,792 3,726 Construction in process 4,434 4,129 $ 246,297 $ 243,312 Less: Accumulated depreciation (147,979) (145,687) Total property, plant and equipment, net $ 98,318 $ 97,625 |
Activity in Product Warranty Accrual | Activity in our product warranty accrual consisted of the following (in thousands): Three months ended December 31, 2023 2022 Balance at beginning of period $ 3,305 $ 2,345 Increase to warranty expense 1,127 479 Deduction for warranty charges (774) (454) Change due to foreign currency translation 22 10 Balance at end of period $ 3,680 $ 2,380 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Contract Asset and Liabilities | Contract assets and liabilities as of December 31, 2023 and September 30, 2023 are summarized below (in thousands): December 31, 2023 September 30, 2023 Contract assets $ 67,594 $ 60,621 Contract liabilities (328,888) (279,796) Net contract liability $ (261,294) $ (219,175) |
Disaggregation of Revenue | The following tables present our disaggregated revenue by geographic destination and market sector for the three months ended December 31, 2023 and 2022 (in thousands): Three months ended December 31, 2023 2022 United States $ 159,860 $ 100,112 Canada 20,350 18,496 Europe 6,532 4,134 Middle East and Africa 3,275 2,425 Mexico, Central and South America 2,657 915 Asia/Pacific 1,343 776 Total revenues by geographic destination $ 194,017 $ 126,858 Three months ended December 31, 2023 2022 Oil and gas (excludes petrochemical) $ 83,636 $ 43,510 Petrochemical 28,367 22,490 Electric utility 40,703 28,407 Commercial and other industrial 24,672 17,050 Traction power 4,345 7,072 All others 12,294 8,329 Total revenues by market sector $ 194,017 $ 126,858 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Restricted Stock Units Activity | Total RSU activity (number of shares) for the three months ended December 31, 2023 is summarized below: Number of Weighted Outstanding at September 30, 2023 292,497 $ 22.90 Granted 41,485 84.63 Vested (103,562) 23.65 Forfeited/canceled — — Outstanding at December 31, 2023 230,420 $ 33.68 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Assets and Liabilities Measured on Recurring Basis | The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2023 (in thousands): Fair Value Measurements at December 31, 2023 Quoted Prices in Significant Other Significant Fair Value at Assets: Cash and cash equivalents $ 321,400 $ — $ — $ 321,400 Short-term investments 33,943 — — 33,943 Rabbi trust assets — 9,901 — 9,901 Liabilities: Deferred compensation — 10,965 — 10,965 The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2023 (in thousands): Fair Value Measurements at September 30, 2023 Quoted Prices in Significant Other Significant Fair Value at Assets: Cash and cash equivalents $ 245,875 $ — $ — $ 245,875 Short-term investments 33,134 — — 33,134 Rabbi trust assets — 9,117 — 9,117 Liabilities: Deferred compensation — 9,145 — 9,145 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Leases [Abstract] | |
Lease Cost | The following table provides a summary of lease cost components for the three months ended December 31, 2023 and 2022, respectively (in thousands): Three months ended December 31, Lease Cost 2023 2022 Operating lease cost $ 256 $ 378 Less: sublease income — (162) Variable lease cost (1) 30 108 Short-term lease cost (2) 400 387 Total lease cost $ 686 $ 711 (1) Variable lease cost represents common area maintenance charges related to our Canadian office space lease. (2) Short-term lease cost includes leases and rentals with initial terms of one year or less. |
Operating Lease Assets and Liabilities | The following table provides a summary of the operating lease assets and operating lease liabilities included in our Condensed Consolidated Balance Sheets as of December 31, 2023 and September 30, 2023, respectively (in thousands): Operating Leases December 31, 2023 September 30, 2023 Assets: Operating lease assets, net $ 1,218 $ 1,436 Liabilities: Current operating lease liabilities 645 773 Long-term operating lease liabilities 573 663 Total lease liabilities $ 1,218 $ 1,436 |
Maturities of Operating Lease Liabilities | The following table provides the maturities of our operating lease liabilities as of December 31, 2023 (in thousands): Operating Leases Remainder of 2024 $ 550 2025 370 2026 180 2027 147 2028 19 Thereafter — Total future minimum lease payments $ 1,266 Less: present value discount (imputed interest) (48) Present value of lease liabilities $ 1,218 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Calculation of the Effective Income Tax Rate | The calculation of the effective tax rate is as follows (in thousands): Three months ended December 31, 2023 2022 Income before income taxes $ 29,878 $ 1,613 Income tax provision 5,793 451 Net income $ 24,085 $ 1,162 Effective tax rate 19 % 28 % |
Overview and Summary of Signi_3
Overview and Summary of Significant Accounting Policies (Details) | 3 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Predecessor companies founded | 77 years |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Numerator: | ||
Net income | $ 24,085 | $ 1,162 |
Denominator: | ||
Weighted average basic shares (in shares) | 11,941 | 11,859 |
Dilutive effect of restricted stock units (in shares) | 233 | 218 |
Weighted average diluted shares (in shares) | 12,174 | 12,077 |
Earnings per share: | ||
Basic (in dollars per share) | $ 2.02 | $ 0.10 |
Diluted (in dollars per share) | $ 1.98 | $ 0.10 |
Detail of Selected Balance Sh_3
Detail of Selected Balance Sheet Accounts - Components of Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials, parts and sub-assemblies | $ 74,181 | $ 68,631 |
Work-in-progress | 2,056 | 1,379 |
Provision for excess and obsolete inventories | (6,555) | (6,145) |
Total inventories | $ 69,682 | $ 63,865 |
Detail of Selected Balance Sh_4
Detail of Selected Balance Sheet Accounts - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment gross | $ 246,297 | $ 243,312 |
Less: Accumulated depreciation | (147,979) | (145,687) |
Total property, plant and equipment, net | 98,318 | 97,625 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment gross | 21,729 | 21,526 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment gross | 122,706 | 121,454 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment gross | 93,636 | 92,477 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment gross | 3,792 | 3,726 |
Construction in process | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment gross | $ 4,434 | $ 4,129 |
Detail of Selected Balance Sh_5
Detail of Selected Balance Sheet Accounts - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Finance lease, assets | $ 0 | $ 0 | $ 0 | |
Asset Acquisition [Line Items] | ||||
Payment to acquire intangible assets | $ 250,000 | $ 0 | ||
Intellectual Property | ||||
Asset Acquisition [Line Items] | ||||
Intangible asset acquisition, consideration | 500,000 | |||
Payment to acquire intangible assets | $ 250,000 |
Detail of Selected Balance Sh_6
Detail of Selected Balance Sheet Accounts - Activity in Product Warranty Accrual (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at beginning of period | $ 3,305 | $ 2,345 |
Increase to warranty expense | 1,127 | 479 |
Deduction for warranty charges | (774) | (454) |
Change due to foreign currency translation | 22 | 10 |
Balance at end of period | $ 3,680 | $ 2,380 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - Product Concentration Risk - Revenue from Contract with Customer Benchmark | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Transferred over Time | ||
Revenue from External Customer [Line Items] | ||
Concentration risk, percentage | 94% | 93% |
Transferred at Point in Time | ||
Revenue from External Customer [Line Items] | ||
Concentration risk, percentage | 6% | 7% |
Revenue - Performance Obligatio
Revenue - Performance Obligations and Contract Estimates (Details) - USD ($) $ in Millions | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Standard assurance warranty, period | 1 year | |
Remaining performance obligation, amount | $ 1,300 | |
Changes in contract estimates related to projects in progress | 5.4 | $ 3.6 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation, amount | $ 713 | |
Remaining performance obligation, expected timing of satisfaction, period | 12 months |
Revenue - Contract Balances (De
Revenue - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 67,594 | $ 60,621 |
Contract liabilities | (328,888) | (279,796) |
Net contract liability | (261,294) | (219,175) |
Revenue recognized related to contract liabilities | 103,500 | |
Retention amounts included in accounts receivable | 7,300 | $ 7,400 |
Retained amount expected to be collected in the next twelve months | 7,100 | |
Retained amount expected to be collected | $ 200 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 194,017 | $ 126,858 |
Oil and gas (excludes petrochemical) | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 83,636 | 43,510 |
Petrochemical | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 28,367 | 22,490 |
Electric utility | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 40,703 | 28,407 |
Commercial and other industrial | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 24,672 | 17,050 |
Traction power | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 4,345 | 7,072 |
All others | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 12,294 | 8,329 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 159,860 | 100,112 |
Canada | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 20,350 | 18,496 |
Europe | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 6,532 | 4,134 |
Middle East and Africa | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 3,275 | 2,425 |
Mexico, Central and South America | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 2,657 | 915 |
Asia/Pacific | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 1,343 | $ 776 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) - Revolving Credit Facility - USD ($) | Dec. 31, 2023 | Oct. 04, 2023 | Oct. 03, 2023 |
Credit Agreement Second Amendment | |||
Line Of Credit Facility [Line Items] | |||
Revolving credit facility | $ 125,000,000 | ||
Credit Agreement Third Amendment | |||
Line Of Credit Facility [Line Items] | |||
Revolving credit facility | $ 150,000,000 | ||
Readily available cash deductible from letters of credit outstanding (lesser of) | $ 60,000,000 | ||
Readily available cash percentage deductible from letters of credit (lesser of) | 60% | ||
Credit Agreement Third Amendment | Bank of America | |||
Line Of Credit Facility [Line Items] | |||
Revolving credit facility | $ 100,000,000 | ||
Credit Agreement Third Amendment | Texas Capital Bank | |||
Line Of Credit Facility [Line Items] | |||
Revolving credit facility | $ 50,000,000 | ||
U.S. Revolver | |||
Line Of Credit Facility [Line Items] | |||
Revolving credit facility borrowings, outstanding amount | $ 0 | ||
Amount available under the credit facility | 62,900,000 | ||
U.S. Revolver | Financial Standby Letter of Credit | |||
Line Of Credit Facility [Line Items] | |||
Guarantee liability | $ 87,100,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 3 Months Ended |
Dec. 31, 2023 USD ($) | |
Guarantee Obligations [Line Items] | |
Additional bonding capacity | $ 716.4 |
Cash collateral required for guarantees, period (greater than) | 2 years |
Contracts with probable exposure to liquidated damages | $ 3.6 |
Probable exposure potential increase | 4.2 |
Change in contract estimates, reduction to revenue | 1.5 |
Surety Bonds | |
Guarantee Obligations [Line Items] | |
Guarantee liability | 483.6 |
Facility Agreement | Powell (UK) Limited | |
Guarantee Obligations [Line Items] | |
Guarantee liability | 6.8 |
Revolving credit facility | 19.1 |
Amount of credit facility remaining borrowing capacity | 12.3 |
Revolving Credit Facility | U.S. Revolver | |
Guarantee Obligations [Line Items] | |
Amount of credit facility remaining borrowing capacity | 62.9 |
Revolving Credit Facility | U.S. Revolver | Financial Standby Letter of Credit | |
Guarantee Obligations [Line Items] | |
Guarantee liability | $ 87.1 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2023 | |
Restricted Stock Units (RSUs) | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Unvested restricted stock outstanding (in shares) | 230,420 | 292,497 | |
Compensation expense | $ 1.6 | $ 1.3 | |
Restricted Stock Units (RSUs) | Time-Based Restricted Stock Unit | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Restricted Stock Units (RSUs) | Performance-Based Restricted Stock Unit | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Restricted Stock | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Compensation expense | $ 0.1 | $ 0.1 | |
Shares issued annually, grant date value | $ 0.1 | ||
Restricted Stock | Non-Employee Director Equity Incentive Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Shares issued under the plan (in shares) | 2,400 | ||
Restricted Stock | Non-Employee Director Equity Incentive Plan | Immediate Vesting | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting, percentage | 50% | ||
Restricted Stock | Non-Employee Director Equity Incentive Plan | Anniversary of Grant Date | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting, percentage | 50% |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) | 3 Months Ended |
Dec. 31, 2023 $ / shares shares | |
Number of Restricted Stock Units | |
Outstanding at beginning of period (in shares) | shares | 292,497 |
Granted (in shares) | shares | 41,485 |
Vested (in shares) | shares | (103,562) |
Forfeited/canceled (in shares) | shares | 0 |
Outstanding at end of period (in shares) | shares | 230,420 |
Weighted Average Grant Value Per Share | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 22.90 |
Granted (in dollars per share) | $ / shares | 84.63 |
Vested (in dollars per share) | $ / shares | 23.65 |
Forfeited/canceled (in dollars per share) | $ / shares | 0 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 33.68 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Assets: | ||
Cash and cash equivalents | $ 321,400 | $ 245,875 |
Short-term investments | 33,943 | 33,134 |
Liabilities: | ||
Deferred compensation | 10,965 | 9,145 |
Rabbi trust assets | ||
Assets: | ||
Rabbi trust assets | 9,901 | 9,117 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Cash and cash equivalents | 321,400 | 245,875 |
Short-term investments | 33,943 | 33,134 |
Liabilities: | ||
Deferred compensation | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Rabbi trust assets | ||
Assets: | ||
Rabbi trust assets | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Cash and cash equivalents | 0 | 0 |
Short-term investments | 0 | 0 |
Liabilities: | ||
Deferred compensation | 10,965 | 9,145 |
Significant Other Observable Inputs (Level 2) | Rabbi trust assets | ||
Assets: | ||
Rabbi trust assets | 9,901 | 9,117 |
Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Cash and cash equivalents | 0 | 0 |
Short-term investments | 0 | 0 |
Liabilities: | ||
Deferred compensation | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Rabbi trust assets | ||
Assets: | ||
Rabbi trust assets | $ 0 | $ 0 |
Leases - Lease Costs (Details)
Leases - Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases [Abstract] | ||
Operating lease cost | $ 256 | $ 378 |
Less: sublease income | 0 | (162) |
Variable lease cost | 30 | 108 |
Short-term lease cost | 400 | 387 |
Total lease cost | $ 686 | $ 711 |
Leases - Narrative (Details)
Leases - Narrative (Details) | Dec. 31, 2023 |
Leases [Abstract] | |
Weighted average discount rate, percent | 3.40% |
Weighted average remaining lease term | 2 years 7 months 9 days |
Leases - Summary of Operating L
Leases - Summary of Operating Lease Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Assets: | ||
Operating lease assets, net | $ 1,218 | $ 1,436 |
Liabilities: | ||
Current operating lease liabilities | 645 | 773 |
Long-term operating lease liabilities | 573 | 663 |
Total lease liabilities | $ 1,218 | $ 1,436 |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Sep. 30, 2023 |
Leases [Abstract] | ||
Remainder of 2024 | $ 550 | |
2025 | 370 | |
2026 | 180 | |
2027 | 147 | |
2028 | 19 | |
Thereafter | 0 | |
Total future minimum lease payments | 1,266 | |
Less: present value discount (imputed interest) | (48) | |
Present value of lease liabilities | $ 1,218 | $ 1,436 |
Income Taxes - Schedule of Calc
Income Taxes - Schedule of Calculation of the Effective Tax Rate (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Income before income taxes | $ 29,878 | $ 1,613 |
Income tax provision | 5,793 | 451 |
Net income | $ 24,085 | $ 1,162 |
Effective tax rate | 19% | 28% |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 19% | 28% |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | 3 Months Ended | ||
Jan. 30, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | |
Subsequent Event [Line Items] | |||
Quarterly cash dividend (in dollars per share) | $ 0.2625 | $ 0.2600 | |
Annualized dividends (n dollars per share) | $ 1.05 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Quarterly cash dividend (in dollars per share) | $ 0.2650 | ||
Annualized dividends (n dollars per share) | $ 1.06 |