What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-07 compared with 2025-02-07 · 83 added, 69 removed, 496 unchanged (23% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

Current Assets:

5 unchanged sentences

Inventories 89,016 85,873

Income taxes receivable 28 61

Prepaid expenses 5,259 7,487

44 unchanged sentences

(In thousands, except per share data)

Three months ended December 31,

Three months ended March 31, Six months ended March 31,

2025 2024 2025 2024

Revenues $ 278,631 $ 255,108 $ 520,062 $ 449,125

21 unchanged sentences

(In thousands)

Three months ended December 31,

Three months ended March 31, Six months ended March 31,

2025 2024 2025 2024

Net income $ 46,330 $ 33,488 $ 81,093 $ 57,573

16 unchanged sentences

Balance, December 31, 2024 12,871 $ 129 $ 59,959 $ 493,673 ( 806 ) $ ( 24,999 ) $ ( 32,430 ) $ 496,332

Net income — — — 46,330 — — — 46,330

Foreign currency translation adjustments — — — — — — 937 937

Stock-based compensation 3 — 1,031 — — — — 1,031

Dividends — — — ( 3,267 ) — — — ( 3,267 )

Balance, March 31, 2025 12,874 $ 129 $ 60,990 $ 536,736 ( 806 ) $ ( 24,999 ) $ ( 31,493 ) $ 541,363

Additional Other

8 unchanged sentences

Balance, December 31, 2023 12,766 $ 127 $ 68,854 $ 346,162 ( 806 ) $ ( 24,999 ) $ ( 23,824 ) $ 366,320

Net income — — — 33,488 — — — 33,488

Foreign currency translation adjustments — — — — — — ( 2,269 ) ( 2,269 )

Stock-based compensation 28 1 1,205 — — — — 1,206

Shares withheld in lieu of employee tax withholding — — ( 1,724 ) — — — — ( 1,724 )

Dividends — — 13 ( 3,249 ) — — — ( 3,236 )

Balance, March 31, 2024 12,794 $ 128 $ 68,348 $ 376,401 ( 806 ) $ ( 24,999 ) $ ( 26,093 ) $ 393,785

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

(In thousands)

Three months ended December 31,

Six months ended March 31,

Operating Activities:

3 unchanged sentences

Stock-based compensation 2,544 2,863

Unrealized mark-to-market loss on derivative contracts 194 41

Bad debt recovery, net ( 90 ) ( 29 )

Unrealized mark-to-market gain on derivative contracts ( 23 ) ( 30 )

Bad debt (recovery) expense, net ( 130 ) 100

Deferred income taxes ( 1,271 ) ( 41 )

14 unchanged sentences

Purchase of intangible assets — ( 250 )

Net cash used in investing activities ( 9,494 ) ( 1,485 )

Proceeds from sale of property, plant and equipment 20 —

Net cash provided by (used in) investing activities 4,564 ( 11,248 )

Financing Activities:

51 unchanged sentences

Early adoption is permitted.

We are currently evaluating the impacts of the new standard.

We will implement the new disclosure requirements beginning with our Fiscal 2025 Form 10-K.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures , which enhances the transparency of income tax disclosures.

3 unchanged sentences

We are currently evaluating the impacts of the new standard.

In March 2024, the SEC adopted final rules designed to enhance and standardize disclosures related to the risks and impacts of climate-related matters.

The final rules require registrants to disclose certain climate-related information in registration statements and annual reports.

Such information relates to climate-related risks and risk management processes for, and governance and oversight activities of, such risks.

The final rules also include requirements to disclose the financial effects of severe weather events and other natural conditions in the audited financial statements.

In addition, larger registrants will be required to disclose information about greenhouse gas emissions, which will be subject to a phased-in assurance requirement.

These disclosure requirements were scheduled to be effective for the Company's fiscal year beginning October 1, 2025.

However, in April 2024, the SEC voluntarily stayed the final rules as a result of pending legal challenges.

We are currently evaluating the impacts of the final rules on our consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU No.

7 unchanged sentences

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,

Three months ended March 31, Six months ended March 31,

2025 2024 2025 2024

Net income $ 46,330 $ 33,488 $ 81,093 $ 57,573

7 unchanged sentences

The components of inventories are summarized below (in thousands):

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

Raw materials, parts and sub-assemblies $ 95,257 $ 92,314

4 unchanged sentences

Property, plant and equipment are summarized below (in thousands):

December 31, 2024 September 30, 2024

March 31, 2025 September 30, 2024

Land $ 23,754 $ 24,110

6 unchanged sentences

Total property, plant and equipment, net $ 105,402 $ 103,421

There were no assets under finance lease as of December 31, 2024 or September 30, 2024.

There were no assets under finance lease as of March 31, 2025 or September 30, 2024.

Accrued Product Warranty

Activity in our product warranty accrual consisted of the following (in thousands):

Three months ended December 31,

Three months ended March 31, Six months ended March 31,

2025 2024 2025 2024

Balance at beginning of period $ 6,106 $ 3,680 $ 5,822 $ 3,305

15 unchanged sentences

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 97 % and 94 % of revenues for the three months ended December 31, 2024 and December 31, 2023, respectively.

Revenues from our custom-engineered products and value-added services transferred to customers over time accounted for approximately 95 % of revenues for the three months ended March 31, 2025, 96 % of revenues for the six months ended March 31, 2025, 95 % of revenues for the three months ended March 31, 2024, and 94 % of revenues for the six months ended March 31, 2024.

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 5 % of revenues for the three months ended March 31, 2025, 4 % of revenues for the six months ended March 31, 2025, 5 % of revenues for the three months ended March 31, 2024, and 6 % of revenues for the six months ended March 31, 2024.

Additionally, some contracts may contain a cancellation clause that could limit the amount of revenue we are able to recognize over time.

16 unchanged sentences

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, 2024, we had backlog of $ 1.3 billion, of which approximately $ 893 million is expected to be recognized as revenue within the next twelve months .

As of March 31, 2025, we had

backlog of $ 1.3 billion, of which approximately $ 831 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.

7 unchanged sentences

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, 2024 and 2023, our operating results were positively impacted by $ 2.4 million and $ 5.4 million, respectively, as a result of net changes in contract estimates related to projects in progress at the beginning of the respective period.

For the six months ended March 31, 2025 and 2024, our operating results were positively impacted by $ 8.8 million and $ 7.8 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, 2024 and 2023.

Gross unfavorable changes in contract estimates were immaterial for both the six months ended March 31, 2025 and 2024.

Variable Consideration

15 unchanged sentences

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, 2024 and September 30, 2024 are summarized below (in thousands):

December 31, 2024 September 30, 2024

Contract assets and liabilities as of March 31, 2025 and September 30, 2024 are summarized below (in thousands):

March 31, 2025 September 30, 2024

Contract assets $ 115,943 $ 102,827

1 unchanged sentence

Net contract liability $ ( 167,429 ) $ ( 184,936 )

Our net contract billing position remained a net liability at both December 31, 2024 and September 30, 2024, primarily due to favorable contract billing milestones.

Our net contract billing position remained a net liability at both March 31, 2025 and September 30, 2024, primarily due to favorable contract billing milestones.

We typically allocate a significant percentage of the progress billing to the early stages of the contract.

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, 2024, we recognized revenue of $ 116.9 million that was related to contract liabilities outstanding at September 30, 2024.

During the six months ended March 31, 2025, we recognized revenue of $ 203.4 million that was related to contract liabilities outstanding at September 30, 2024.

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.

3 unchanged sentences

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, 2024 and September 30, 2024, we had retention amounts of $ 7.5 million and $ 7.1 million, respectively.

Of the retained amount at December 31, 2024, $ 6.7 million is expected to be collected in the next twelve months and is recorded in accounts receivable.

As of March 31, 2025 and September 30, 2024, we had retention amounts of $ 7.9 million and $ 7.1 million, respectively.

Of the retained amount at March 31, 2025, $ 7.6 million is expected to be collected in the next twelve months and is recorded in accounts receivable.

The remaining $ 0.3 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, 2024 and 2023 (in thousands):

Three months ended December 31,

The following tables present our disaggregated revenue by geographic destination and market sector for the three and six months ended March 31, 2025 and 2024 (in thousands):

Three months ended March 31, Six months ended March 31,

2025 2024 2025 2024

United States $ 227,834 $ 216,933 $ 425,606 $ 376,793

5 unchanged sentences

Total revenues by geographic destination $ 278,631 $ 255,108 $ 520,062 $ 449,125

Three months ended December 31,

Three months ended March 31, Six months ended March 31,

2025 2024 2025 2024

Oil and gas (excludes petrochemical) $ 101,167 $ 103,820 $ 196,846 $ 187,456

9 unchanged sentences

Revolver has an expiration date of October 4, 2028.

As of December 31, 2024, there were no amounts borrowed under the U.S.

As of March 31, 2025, there were no amounts borrowed under the U.S.

Revolver, and letters of credit outstanding were $ 64.4 million.

There was $ 85.6 million available for the issuance of letters of credit and borrowings under the U.S.

Revolver as of December 31, 2024.

As of December 31, 2024, we were in compliance with all of the financial covenants of the U.S.

Revolver as of March 31, 2025.

As of March 31, 2025, we were in compliance with all of the financial covenants of the U.S.

Commitments and Contingencies

4 unchanged sentences

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 $ 56.1 million as of December 31, 2024.

We also had surety bonds totaling $ 432.1 million that were outstanding, with additional bonding capacity of $ 767.9 million available, at December 31, 2024.

We were contingently liable for letters of credit of $ 64.4 million as of March 31, 2025.

We also had surety bonds totaling $ 420.3 million that were outstanding, with additional bonding capacity of $ 779.7 million available, at March 31, 2025.

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 an $ 18.8 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, 2024, we had outstanding guarantees totaling $ 7.7 million, with an additional capacity of $ 11.1 million available under this Facility Agreement.

We have a $ 19.4 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 March 31, 2025, we had outstanding guarantees totaling $ 4.0 million, with an additional capacity of $ 15.4 million available under this Facility Agreement.

The Facility Agreement provides for customary events of default and carries cross-default provisions with the U.S.

1 unchanged sentence

Additionally, we are required to maintain cash collateral for guarantees greater than two years .

As of December 31, 2024, we were in compliance with all of the financial covenants of the Facility Agreement.

As of March 31, 2025, we were in compliance with all of the financial covenants of the Facility Agreement.

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 for which the outcomes are not predictable.

3 unchanged sentences

Each individual contract defines the conditions under which the customer may make a claim against us.

As of December 31, 2024, certain contracts had a probable exposure to liquidated damages claims of $ 2.4 million, which could possibly increase to $ 3.1 million under certain circumstances.

As of March 31, 2025, certain contracts had a probable exposure to liquidated damages claims of $ 2.7 million, which could possibly increase to $ 3.6 million under certain circumstances.

Based on our actual or projected failure to meet these various contractual commitments, $ 2.5 million has been recorded as a reduction to revenue.

9 unchanged sentences

The performance-based shares vest based on the three-year earnings and safety performance of the Company following the grant date.

At December 31, 2024, there were 119,216 RSUs outstanding.

At March 31, 2025, there were 119,996 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, 2024 is summarized below:

Total RSU activity (number of shares) for the six months ended March 31, 2025 is summarized below:

Units Weighted

3 unchanged sentences

Forfeited/canceled ( 1,063 ) 45.09

Outstanding at December 31, 2024 119,216 $ 63.72

During the three months ended December 31, 2024 and 2023, we recorded compensation expense of $ 1.3 million and $ 1.6 million, respectively, related to the RSUs.

Outstanding at March 31, 2025 119,996 $ 64.81

During the six months ended March 31, 2025 and 2024, we recorded compensation expense of $ 2.2 million and $ 2.7 million, respectively, related to the RSUs.

Restricted Stock

2 unchanged sentences

The shares shall vest on the earlier of the grant anniversary date or the date of the next annual meeting of stockholders, whichever occurs first.

During the three months ended December 31, 2024 and 2023, we recorded compensation expense of $ 0.2 million and less than $ 0.1 million, respectively, related to restricted stock.

In February 2025, 3,500 shares of restricted stock were issued to our non-employee directors at a price of $ 200.02 per share.

During the six months ended March 31, 2025 and 2024, we recorded compensation expense of $ 0.4 million and $ 0.2 million, respectively, related to restricted stock.

Fair Value Measurements

9 unchanged sentences

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, 2024 (in thousands):

Fair Value Measurements at December 31, 2024

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 March 31, 2025 (in thousands):

Fair Value Measurements at March 31, 2025

Quoted Prices in

30 unchanged sentences

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, 2024.

There were no transfers between levels within the fair value measurement hierarchy during the quarter ended March 31, 2025.

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, 2024 and 2023, respectively (in thousands):

Three months ended December 31,

The following table provides a summary of lease cost components for the three and six months ended March 31, 2025 and 2024, respectively (in thousands):

Three months ended March 31, Six months ended March 31,

Lease Cost 2025 2024 2025 2024

Operating lease cost $ 247 $ 249 $ 445 $ 505

sublease income — —

Variable lease cost (1)

Short-term lease cost (2)

668 644 1,307 1,044

Total lease cost $ 962 $ 916 $ 1,833 $ 1,602

3 unchanged sentences

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, 2024 and September 30, 2024, respectively (in thousands):

Operating Leases December 31, 2024 September 30, 2024

The following table provides a summary of the operating lease assets and operating lease liabilities included in our Condensed Consolidated Balance Sheets as of March 31, 2025 and September 30, 2024, respectively (in thousands):

Operating Leases March 31, 2025 September 30, 2024

Operating lease assets, net $ 1,411 $ 1,216

2 unchanged sentences

Total lease liabilities $ 1,411 $ 1,216

The following table provides the maturities of our operating lease liabilities as of December 31, 2024 (in thousands):

The following table provides the maturities of our operating lease liabilities as of March 31, 2025 (in thousands):

Operating Leases

3 unchanged sentences

Present value of lease liabilities $ 1,411

The weighted average discount rate as of December 31, 2024 was 6.13 %.

The weighted average remaining lease term was 2.46 years at December 31, 2024.

The weighted average discount rate as of March 31, 2025 was 6.55 %.

The weighted average remaining lease term was 2.34 years at March 31, 2025.

The calculation of the effective tax rate is as follows (in thousands):

Three months ended December 31,

Three months ended March 31, Six months ended March 31,

2025 2024 2025 2024

Income before income taxes $ 62,474 $ 43,917 $ 101,911 $ 73,795

2 unchanged sentences

Effective tax rate 26 % 24 % 20 % 22 %

Our income tax provision reflects an effective tax rate on pre-tax income of 12 % for the three months ended December 31, 2024 compared to 19 % for the three months ended December 31, 2023.

The effective tax rates for the first quarter of Fiscal 2025 and Fiscal 2024 were favorably impacted by discrete items related to the vesting of RSUs and the estimated Research and Development (R&D) Tax Credit, which were partially offset by the tax expense related to certain nondeductible items.

In addition, the favorable tax impact in the first quarter of Fiscal 2024 was partially offset by an income inclusion related to U.S.

Our income tax provision reflects an effective tax rate on pre-tax income of 26 % and 20 % for the three and six months ended March 31, 2025, respectively, compared to 24 % and 22 % for the three and six months ended March 31, 2024, respectively.

The effective tax rates for the three and six months ended March 31, 2025 were favorably impacted by the estimated Research and Development (R&D) Tax Credit, which was offset by the tax expense related to certain nondeductible items.

In addition, discrete items related to the vesting of RSUs recorded in the first quarter of Fiscal 2025 favorably impacted the effective tax rate for the six months ended March 31, 2025.

Similarly, the effective tax rates for the three and six months ended March 31, 2024 were favorably impacted by the estimated R&D Tax Credit and discrete items related to the release of a reserve for unrecognized tax benefits upon expiration of the statute of limitations.

These items were offset by an income inclusion related to U.S.

global intangible income.

1 unchanged sentence

Quarterly Dividend Declared

On February 4, 2025, our Board of Directors approved an increase to the quarterly cash dividend on our common stock to $ 0.2675 per share, equating to an annualized dividend of $ 1.07 per share from the current amount of $ 1.06 per share.

The dividend is payable on March 19, 2025 to shareholders of record at the close of business on February 19, 2025.

On May 6, 2025, our Board of Directors declared a quarterly cash dividend on our common stock in the amount of $ 0.2675 per share.

The dividend is payable on June 18, 2025 to shareholders of record at the close of business on May 21, 2025.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

3 unchanged sentences

All statements, other than statements of historical fact, included in this report are forward-looking statements.

Such forward-looking statements include, but are not limited to, projections and estimates of the timing and success of specific projects and our future backlog, revenues, income, acquisitions, liquidity and capital expenditures, as well as other statements that are not historical facts contained in or incorporated by reference into this report.

Such forward-looking statements include, but are not limited to, projections and estimates of the timing and success of specific projects and our future backlog, revenues, income, acquisitions, liquidity and capital expenditures, the effect of tariffs, as well as other statements that are not historical facts contained in or incorporated by reference into this report.

Statements that contain words such as “believes,” “expects,” “anticipates,” “intends,” “estimates,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “potential,” “possible,” “would,” “outlook,” “will” or similar expressions are forward-looking statements.

4 unchanged sentences

While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties that could cause actual results to differ materially from those included in this report, most of which are difficult to predict and many of which are beyond our control.

These risks, contingencies and uncertainties include, but are not limited to, the potential failure to adequately predict costs (including in connection with our fixed-price contracts) and prevent cost overruns, including the impacts of inflation, potentially disruptive or unanticipated changes in suppliers, the availability of cash on hand and other sources of liquidity to fund our operating expenses and capital expenditures, the impacts of future legislative and regulatory initiatives, electronic, cyber or physical security breaches, and other factors detailed herein and in our other SEC filings.

These risks, contingencies and uncertainties include, but are not limited to, the potential failure to adequately predict costs (including in connection with our fixed-price contracts) and prevent cost overruns, including the impacts of inflation, the effect of tariffs, potentially disruptive or unanticipated changes in suppliers, the availability of cash on hand and other sources of liquidity to fund our operating expenses and capital expenditures, the impacts of future legislative and regulatory initiatives, electronic, cyber or physical security breaches, and other factors detailed herein and in our other SEC filings.

Additional important risks, uncertainties and other factors are detailed below.

53 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements