What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-11-19 compared with 2024-11-20 · 63 added, 20 removed, 282 unchanged (23% of the section changed)

7 unchanged sentences

The end markets that we serve have historically been cyclical and will continue to be vulnerable to general downturns, which in turn could materially and adversely affect the demand for our products and services.

Our customer projects, budgets for capital expenditures and the need for our services have in the past, and may in the future, be adversely affected by, among other things, the price of oil and gas, poor economic conditions, commodity prices, political uncertainties, cost of capital, and currency fluctuations.

Cyclicality is predominately driven by customer demand, global economic and geopolitical conditions and anticipated environmental, safety or regulatory changes that affect the manner in which our customers proceed with capital investments.

Our customer projects, budgets for capital expenditures and the need for our services have in the past, and may in the future, be adversely affected by, among other things, the demand and price for oil, gas and electrical energy, the overall economic and financial environment, governmental budgets, commodity prices, political uncertainties, cost of capital, currency fluctuations, regulatory actions and environmental concerns.

These variables may impact the number or the amount of new awards, delays in the timing of awards or potential cancellation of projects.

18 unchanged sentences

Accordingly, our inability to realize the full amount of our contract backlog may have an adverse impact on our business and results of operations.

Failure to place competitive bids and adequately project costs may result in losses on our fixed-price contracts with customers.

Failure to place competitive bids and adequately project future costs may result in losses on our fixed-price contracts with customers.

Our products and services are typically awarded in competitive bid situations.

4 unchanged sentences

labor shortage;

the cost of raw materials;

increases caused by tariffs;

delays incurred by the failure of third-party suppliers to deliver in the quality or quantity required;

29 unchanged sentences

Technological innovations may make existing products and production methods obsolete.

The development or use of Artificial Intelligence (AI) by our competitors or other third parties may impair our ability to compete effectively and adversely affect our business, financial condition and results of operations.

All of the products that we manufacture and sell depend upon optimizing available technology for success in the marketplace.

The industries in which we operate are characterized by intense competition and are highly sensitive to technological innovation and customer requirements.

Our competitors may develop products or production methods that are superior in price or quality, or incorporate artificial intelligence (AI) into their products that will make current products or services offered by us obsolete.

Our competitors may develop products or production methods that are superior in price or quality, or incorporate AI into their products that will make current products or services offered by us obsolete.

Our future success will depend, in part, on our ability to anticipate and offer products that meet changing industry and customer specifications, including by funding our research and development costs.

1 unchanged sentence

Failure to successfully develop new products, or to enhance existing products, could result in the loss of existing customers to competitors, the inability to attract new business or an overall reduction of our competitive position, any of which could adversely affect our business and results of operations.

Our competitors or other third parties may incorporate AI, including machine learning, data science and similar technologies, into their product development, product enhancement or product offerings more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our business, financial condition and results of operations.

We may not be successful in our AI initiatives, which could adversely affect our business, reputation, and results of operations.

4 unchanged sentences

Because AI technology is highly complex and rapidly developing, it is not possible to predict all of the legal, operational or technological risks that may arise relating to our use of AI.

The complex and rapidly evolving landscape around AI could expose us to claims, inquiries and proceedings by third parties and global regulatory authorities and subject us to legal liability as well as reputational harm.

Unforeseen difficulties with expansions, relocations, or consolidations of existing facilities could adversely affect our operations.

3 unchanged sentences

The success of our business depends upon the quality of our products and our relationships with customers.

In the event that one of our products fails to meet our customers' standards or safety requirements or fails to operate effectively, our reputation could be harmed, which would adversely affect our marketing and sales efforts.

In the event that our products fail to meet our customers’ standards or safety requirements or fail to operate effectively, our reputation could be harmed, which would adversely affect our marketing and sales efforts.

We provide warranties to our customers for our products and services, and the cost to satisfy customer warranty claims, which may include, among other things, costs for the repair or replacement of products could adversely impact our business and results of operations.

3 unchanged sentences

Each individual contract seeks to define the conditions under which the customer may make a claim against us.

Due to the growth in our backlog, our manufacturing and fabrication capacity as well as ability to recruit and retain qualified labor is challenged resulting in an increased risk of meeting delivery dates and other contract performance obligations.

Due to the growth in our backlog, our manufacturing and fabrication capacity as well as our ability to recruit and retain qualified labor is challenged resulting in an increased risk of meeting delivery dates and other contract performance obligations.

It is possible that adjustments arising from such claims, or our failure to manage our contract risk, may not be covered by insurance and could have an adverse impact on our results of operations.

3 unchanged sentences

however, we may be unable to successfully implement this strategy.

Acquisitions involve certain risks, including distraction of management, difficulties in the integration of operations and systems;

failure to realize cost savings;

the termination of relationships by key personnel and customers of the acquired company and a failure to retain or add additional employees to handle the increased volume of business.

Acquisitions involve certain risks, including distraction of management, possible disruption to ongoing business, difficulties in the integration of operations and systems, failure to realize cost savings and achieve anticipated synergies, complications arising from merging differing cultures, systems, or technologies, the termination of relationships by key personnel and customers of the acquired company and a failure to retain or add additional employees to handle the increased volume of business.

Additionally, financial and accounting challenges and complexities in areas such as valuation, tax planning, treasury management, systems integration and financial reporting from our acquisitions may impact our operating results.

14 unchanged sentences

Global economic uncertainty and financial market conditions may impact our customer base, suppliers and backlog.

Various factors drive demand for our products and services, including the price and demand for oil and gas, capital expenditures, economic forecasts, global political environments (including war and terrorism) and the cost of capital.

Various factors drive demand for our products and services, including the price and demand for oil, gas and electrical energy, capital expenditures, economic forecasts, global political environments (including war and terrorism), anticipated environmental, safety or regulatory changes and the cost of capital.

Unanticipated increases in raw material and component requirements or prices, the imposition of tariffs, and changes in supplier availability or supplier consolidation could increase production costs and adversely affect profitability.

18 unchanged sentences

Our credit agreement contains various financial covenants and restrictions, which includes maintaining a consolidated net leverage ratio of less than 3.0 to 1.0 and a consolidated interest coverage ratio of greater than 3.0 to 1.0.

For more information on our credit agreement and the restrictions thereunder, see Note G of the Notes to Consolidated Financial Statements.

For more information on our credit agreement and the restrictions thereunder, see Note G.

Long-Term Debt of the Notes to Consolidated Financial Statements.

Our ability to remain in compliance with such financial covenants and restrictions may be affected by factors beyond our control, including general or industry-specific economic downturns.

If we fail to remain in compliance with such covenants and restrictions, absent an amendment or waiver, this could result in an event of default under the credit agreement.

Among other things, the occurrence of an event of default could limit our ability to pay dividends, issue letters of credit, or obtain additional financing or result in acceleration of outstanding amounts under the credit agreement or a termination of the agreement, any of which could have an adverse impact on our liquidity, business and results of operations.

Among other things, the occurrence of an event of default could limit our ability to pay dividends, issue letters of credit, obtain additional financing or result in acceleration of outstanding amounts under the credit agreement or a termination of the agreement, any of which could have an adverse impact on our liquidity, business and results of operations.

We extend credit to customers in conjunction with our performance under fixed-price contracts which subjects us to potential credit risks.

25 unchanged sentences

dollar, and such fluctuations could adversely impact our financial position and results of operations.

Risk Factors Related to our Common Stock

Our ability to access credit and capital markets may be limited, which could adversely affect our liquidity, operations, and growth strategy.

We may be unable to obtain financing when needed or on favorable terms, particularly during periods of market volatility or reduced liquidity.

Unstable market conditions, changes in our financial performance, or factors affecting our industry could increase borrowing costs or restrict access to debt and equity financing.

In addition, fluctuations in our common stock price, driven by market conditions or events beyond our control, could limit our ability to raise funds through equity markets.

Risk Factors Related to our Corporate Structure and our Common Stock

Provisions of our charter documents or Delaware law could delay or prevent a change in control of our company, even if that change would be beneficial to our shareholders.

The existence of some provisions in our corporate documents and certain aspects of Delaware law could delay or prevent a change of control of our company, even if that change would be beneficial to our shareholders.

Provisions of our certificate of incorporation and our bylaws include provisions related to the classification, nomination and removal of directors and the ability of our shareholders to bring matters for action at our annual meetings, among other provisions.

Provisions of Delaware law include certain restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock.

Such provisions may discourage, delay or prevent a merger, acquisition or other change in control that shareholders might otherwise consider favorable, including transactions in which shareholders might otherwise receive a premium for their shares, and may frustrate or prevent any attempt by our shareholders to replace or remove our current management by making it more difficult to replace or remove our Board of Directors.

The personal liability of our directors and officers for monetary damages for breach of their fiduciary duty of care is limited by the Delaware General Corporation Law and by our certificate of incorporation.

The Delaware General Corporation Law allows corporations to limit available relief for the breach of directors’ or officers’ duty of care to equitable remedies such as injunction or rescission.

Our certificate of incorporation limits the liability of our directors and officers to the fullest extent permitted by Delaware law.

Specifically, our directors and officers will not be personally liable for monetary damages for any breach of their fiduciary duty, except for liability:

• for any breach of their duty of loyalty to the Company or our stockholders;

• for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;

• for any transaction from which the director or officer derived an improper personal benefit;

• solely with respect to directors, under provisions relating to unlawful payments of dividends or unlawful stock repurchases or redemptions;

• solely with respect to officers, for any action by or in the right of the Company.

This limitation may have the effect of reducing the likelihood of derivative litigation against directors or officers and may discourage or deter stockholders (or, with respect to directors, management) from bringing a lawsuit against directors or officers, as applicable, for breach of their duty of care, even though such an action, if successful, might otherwise have benefited our stockholders.

The exclusive-forum provision contained in our bylaws could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.

Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf of us, (2) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or stockholder of Powell to Powell or our stockholders, including a claim for breach of fiduciary duty, (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our bylaws or certificate of incorporation or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware or (4) any action asserting a claim governed by the internal affairs doctrine or asserting an "internal corporate claim" shall, to the fullest extent permitted by law, be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court located within the State of Delaware or, if no court located within the State of Delaware has jurisdiction, the federal district court for the State of Delaware).

To the fullest extent permitted by applicable law, this exclusive-forum provision applies to state and federal law claims, including claims under the federal securities laws, including the Securities Act of 1933, as amended, and the Exchange Act, although our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

This exclusive-forum provision may limit the ability of a stockholder to bring a claim in a judicial

forum of its choosing for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees.

Alternatively, if a court were to find this exclusive-forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, we may incur additional costs associated with resolving such matters in other jurisdictions, which could negatively affect our business, results of operations and financial condition.

In addition, stockholders who do bring a claim in a state or federal court located within the State of Delaware could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware.

In addition, the court located in the State of Delaware may reach different judgments or results than would other courts, including courts where a stockholder would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders.

Our stock price could decline or fluctuate significantly due to unforeseen circumstances that may be outside of our control.

42 unchanged sentences

A change in tax laws, deductions or credits, treaties or regulations, or their interpretation, in the countries in which we operate, could result in a higher tax rate on our pre-tax income, which could have a material impact on our net income.

For example, several jurisdictions have implemented or are expected to implement in the future, the Organization for Economic Co-operation and Development Pillar 2, which is aimed at preventing base erosion and profit shifting, ensuring income is subject to a minimum level of taxation and preventing treaty misuse.

For example, several jurisdictions have implemented or are expected to implement in the future, the Organization for Economic Co-operation and Development Pillar

2, which is aimed at preventing base erosion and profit shifting, ensuring income is subject to a minimum level of taxation and preventing treaty misuse.

The application of these provisions is not always certain, and jurisdictions are still developing their rules and interpretations with regard to the same.

The One Big Beautiful Bill Act (the OBBBA) was recently signed into law and includes a broad range of tax reform provisions affecting businesses.

The OBBBA extends and modifies certain key 2017 Tax Cuts & Jobs Act (TCJA) provisions (both domestic and international) and revamps some of the TCJA’s provisions on the taxation of corporations’ foreign income.

The OBBBA also expands certain Inflation Reduction Act incentives while accelerating the phase-out of others.

We are regularly under audit by tax authorities, and our tax estimates and tax positions could be materially affected by many factors including the final outcome of tax audits and related litigation, the introduction of new tax accounting standards, legislation, regulations and related interpretations, our global mix of earnings, the extent to which deferred tax assets are realized and changes in uncertain tax positions.

14 unchanged sentences

If we are unable to sufficiently protect our patent and other proprietary rights or if we infringe on or misappropriate proprietary rights of others, our business, financial condition, results of operations, and cash flows could be adversely impacted.

Provisions of our charter documents or Delaware law could delay or prevent a change in control of our company, even if that change would be beneficial to our shareholders.

Provisions of Delaware law include certain restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock.

Significant developments arising from tariffs and other economic proposals could adversely impact our business.

There is uncertainty about the future relationship between the U.S.

and various other countries with respect to trade policies and tariffs.

There is also uncertainty as to whether trade between the U.S.

and other countries, including countries in which we operate and countries where our customers or suppliers operate, may be impacted by these policy developments.

Additional restrictions or economic disincentives on United States or international trade such as significant increases in tariffs on goods could adversely impact our business.

Moreover, announced changes and proposed changes to U.S.

global trade policy, along with potential international retaliatory measures, have caused high volatility in global markets and uncertainty around short- and long-term economic impacts in the U.S., including concerns over inflation, recession and slowing growth.

We continue to evaluate and monitor the potential impacts of these changes and measures, including the imposition of tariffs and ongoing legal challenges to such tariffs, on our business and operations, including increased costs of raw materials and engineered components as well as negative impacts on our margins;

however, it is not possible to predict the impact, if any, of any changes or proposed changes to the U.S.

global trade policy, or any international retaliatory measures, on our business and operations.

Changes in United States or international social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently develop and sell our products, and any negative sentiment towards the United States as a result of such changes, could adversely impact our business and results of operations.

45 unchanged sentences

Changes in and compliance with ESG initiatives could adversely impact our business.

There has been an increased focus on ESG matters by consumers, investors, as well as by governmental and non-governmental organizations.

ESG matters have been a focus for consumers, investors, as well as by governmental and non-governmental organizations.

For example, organizations that provide ESG information to investors have developed ratings processes for evaluating a business entity’s approach to ESG matters.

4 unchanged sentences

Certain environmental laws may make us potentially liable for the remediation of contamination at or emanating from our properties or facilities.

Although we seek to obtain indemnities against liabilities relating to historical contamination at the facilities we own or operate, we cannot provide any assurance that we will not incur liabilities relating to the remediation of potential contamination, including contamination we did not cause.

potential contamination, including contamination we did not cause.

These potential environmental liabilities may or may not be fully covered by our various insurance policies and may adversely affect our business and results of operations.

2 unchanged sentences

The potential for future ESG and climate risk reporting requirements may result in additional costs to monitor, track and report sustainability measures.

For example, the State of California has published new rules that would require companies doing business in California to provide significantly expanded climate-related disclosures in their periodic reporting.

New and proposed regulatory requirements may require us to incur significant additional costs to monitor and comply, and may also include additional internal control processes and procedures.

Additionally, increased attention to climate change, conservation measures, energy transition, negative attitudes toward oil and natural gas production and consumer demand for alternatives to hydrocarbons could reduce the demand for oil and gas applications.

5 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-K

Item 1A. Risk Factors