What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-02-04 compared with 2025-08-06 · 179 added, 142 removed, 461 unchanged (41% of the section changed)

4 unchanged sentences

(In thousands, except share and per share data)

June 30, 2025 September 30, 2024

December 31, 2025 September 30, 2025

Current Assets:

10 unchanged sentences

Operating lease assets, net 1,458 1,664

Goodwill and intangible assets, net 1,503 1,503

Goodwill 6,130 6,125

Intangible assets, net 5,921 6,138

Deferred income tax assets 29,912 33,440

16 unchanged sentences

Total Liabilities 425,482 468,214

Commitments and Contingencies (Note F)

Commitments and Contingencies (Note G)

Stockholders’ Equity:

19 unchanged sentences

(In thousands, except per share data)

Three months ended June 30, Nine months ended June 30,

2025 2024 2025 2024

Three months ended December 31,

Revenues $ 251,184 $ 241,431

3 unchanged sentences

Research and development expenses 3,267 2,476

Amortization of intangible assets 222 —

Operating income 42,771 35,572

16 unchanged sentences

(In thousands)

Three months ended June 30, Nine months ended June 30,

2025 2024 2025 2024

Three months ended December 31,

Net income $ 41,390 $ 34,763

16 unchanged sentences

Balance, December 31, 2025 12,946 $ 129 $ 50,721 $ 667,941 ( 806 ) $ ( 24,999 ) $ ( 24,906 ) $ 668,886

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

Net income — — — 48,234 — — — 48,234

Foreign currency translation adjustments — — — — — — 7,479 7,479

Stock-based compensation 1 — 1,131 — — — — 1,131

Shares withheld in lieu of employee tax withholding — — ( 35 ) — — — — ( 35 )

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

Balance, June 30, 2025 12,875 $ 129 $ 62,086 $ 581,703 ( 806 ) $ ( 24,999 ) $ ( 24,014 ) $ 594,905

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

POWELL INDUSTRIES, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(In thousands)

Additional Other

8 unchanged sentences

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

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

Net income — — — 46,223 — — — 46,223

Foreign currency translation adjustments — — — — — — ( 986 ) ( 986 )

Stock-based compensation — — 957 — — — — 957

Dividends — — — ( 3,240 ) — — — ( 3,240 )

Balance, June 30, 2024 12,794 $ 128 $ 69,305 $ 419,384 ( 806 ) $ ( 24,999 ) $ ( 27,079 ) $ 436,739

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

3 unchanged sentences

(In thousands)

Nine months ended June 30,

Three months ended December 31,

Operating Activities:

1 unchanged sentence

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 5,215 5,074

Depreciation and amortization 2,149 1,755

Stock-based compensation 1,572 1,513

Unrealized mark-to-market gain on derivative contracts ( 433 ) ( 113 )

Bad debt (recovery) expense, net ( 149 ) 294

Unrealized mark-to-market loss (gain) on derivative contracts — 194

Bad debt expense (recovery), net 127 ( 90 )

Deferred income taxes 3,585 13

13 unchanged sentences

Purchases of property, plant and equipment ( 2,029 ) ( 2,189 )

Purchase of intangible assets — ( 250 )

Proceeds from sale of property, plant and equipment 20 26

Net cash used in investing activities ( 4,215 ) ( 12,976 )

Net cash provided by (used in) investing activities 12,924 ( 9,494 )

Financing Activities:

18 unchanged sentences

Powell (UK) Limited;

and Powell Industries International, B.V.

and Powell Industries International Limited.

We are headquartered in Houston, Texas, and primarily serve the oil and gas and petrochemical markets, the electric utility market, and commercial and other industrial markets.

3 unchanged sentences

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.

All 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.

10 unchanged sentences

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.

The amounts recorded for warranties, legal, income taxes, impairment of long-lived assets, intangible assets and goodwill (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.

2 unchanged sentences

Actual results may differ from our prior estimates.

Accounting Standards Updates and Disclosure Rules 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 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 will implement the new disclosure requirements beginning with our Fiscal 2025 Form 10-K.

Recently Adopted Accounting Standards Update

The Company adopted the Financial Accounting Standard Board (FASB) Accounting Standards Update (ASU) 2023‑07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , effective October 1, 2024, on a retrospective basis.

This standard requires expanded annual and interim segment disclosures, including significant segment expenses regularly reviewed by the chief operating decision maker (CODM), along with disclosure of the CODM’s title and how segment information is used in evaluating performance and allocating resources.

It also clarifies that entities with a single reportable segment must provide all required Topic 280 disclosures.

Adoption of the standard did not have a material impact on the unaudited condensed consolidated financial statements .

Additional details are included in Note K.

Segment Information.

Accounting Standards Updates Issued but Not Yet Adopted

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

1 unchanged sentence

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.

Retrospective application and early adoption were permitted.

We are currently evaluating the impacts of the new standard.

8 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 June 30, Nine months ended June 30,

2025 2024 2025 2024

Three months ended December 31,

Net income $ 41,390 $ 34,763

7 unchanged sentences

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

June 30, 2025 September 30, 2024

December 31, 2025 September 30, 2025

Raw materials, parts and sub-assemblies $ 91,038 $ 90,743

4 unchanged sentences

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

June 30, 2025 September 30, 2024

December 31, 2025 September 30, 2025

Land $ 24,510 $ 24,436

6 unchanged sentences

Total property, plant and equipment, net $ 111,832 $ 111,049

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

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

Accrued Product Warranty

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

Three months ended June 30, Nine months ended June 30,

2025 2024 2025 2024

Three months ended December 31,

Balance at beginning of period $ 6,356 $ 5,822

9 unchanged sentences

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.

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.

3 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 95 % and 96 % of revenues for the three and nine months ended June 30, 2025, respectively, and approximately 96 % and 95 % of revenues for the three and nine months ended June 30, 2024, respectively.

Revenues from our custom-engineered products and value-added services transferred to customers over time accounted for approximately 94 % and 97 % of revenues for the three months ended December 31, 2025 and December 31, 2024, respectively.

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 % and 4 % of revenues for the three and nine months ended June 30, 2025, respectively, and approximately 4 % and 5 % of revenues for the three and nine months ended June 30, 2024, respectively.

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 % and 3 % of revenues for the three months ended December 31, 2025 and December 31, 2024, respectively.

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

4 unchanged sentences

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 liability is reduced.

Once we have been paid by the customer, we pay the commission, and the deferred liability is reduced.

Performance Obligations

9 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 June 30, 2025, we had backlog of $ 1.4 billion, of which approximately $ 913 million is expected to be recognized as revenue within the next twelve months .

As of December 31, 2025, we had backlog of $ 1.6 billion, of which approximately $ 933 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.

2 unchanged sentences

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.

The cost estimation process is based on 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.

2 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 nine months ended June 30, 2025 and 2024, our operating results were positively impacted by $ 15.1 million and $ 14.2 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 three months ended December 31, 2025 and 2024, our operating results were positively impacted by $ 10.5 million and $ 2.4 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 nine months ended June 30, 2025 and 2024.

Gross unfavorable changes in contract estimates were immaterial for both the three months ended December 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 June 30, 2025 and September 30, 2024 are summarized below (in thousands):

June 30, 2025 September 30, 2024

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

December 31, 2025 September 30, 2025

Contract assets $ 121,543 $ 136,679

1 unchanged sentence

Net contract liability $ ( 180,600 ) $ ( 161,270 )

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

Our net contract billing position remained a net liability at both December 31, 2025 and September 30, 2025, 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 nine months ended June 30, 2025, we recognized revenue of $ 244.4 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.

During the three months ended December 31, 2025, we recognized revenue of $ 120.3 million that was related to contract liabilities outstanding at September 30, 2025.

The timing of our invoice process is typically dependent on the completion of certain milestones and contract terms and is 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.

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 June 30, 2025 and September 30, 2024, we had retention amounts of $ 8.0 million and $ 7.1 million, respectively.

Of the retained amount at June 30, 2025, $ 7.5 million is expected to be collected in the next twelve months and is recorded in accounts receivable.

As of December 31, 2025 and September 30, 2025, we had retention amounts of $ 7.2 million and $ 8.1 million, respectively.

Of the retained amount at December 31, 2025, $ 7.0 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 and nine months ended June 30, 2025 and 2024 (in thousands):

Three months ended June 30, Nine months ended June 30,

2025 2024 2025 2024

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

Three months ended December 31,

United States $ 194,878 $ 197,772

Canada 32,459 31,694

Europe 5,522 9,464 16,947 24,261

Middle East and Africa 9,872 4,558

Mexico, Central and South America 1,881 1,962 3,182 6,778

Europe 8,226 5,528

Asia/Pacific 5,303 1,580

Mexico, Central and South America 446 299

Total revenues by geographic destination $ 251,184 $ 241,431

Three months ended June 30, Nine months ended June 30,

2025 2024 2025 2024

Three months ended December 31,

Oil and gas (excludes petrochemical) $ 97,889 $ 95,679

Petrochemical 36,349 56,784 113,236 135,221

Electric utility 69,273 51,240

Commercial and other industrial 40,625 44,300

Petrochemical 22,778 33,183

Light rail traction power 8,614 8,228

1 unchanged sentence

Total revenues by market sector $ 251,184 $ 241,431

Goodwill and Other Intangible Assets

Our intangible assets include goodwill of $ 6.1 million, which is not being amortized, and other intangible assets of $ 5.9 million being amortized over their estimated useful lives.

No impairment expense has been recorded for the last three fiscal years.

The changes in the carrying amount of goodwill for the three months ended December 31, 2025 for our single reporting segment are as follows (in thousands):

Balance as of September 30, 2025 $ 6,125

Foreign currency translation adjustment 5

Balance as of December 31, 2025 $ 6,130

Other Intangible Assets

Intangible asset balances, subject to amortization, at December 31, 2025 and September 30, 2025 consisted of the following (in thousands):

December 31, 2025

Weighted Average Remaining Useful Lives in Years Gross

Value Accumulated

Amortization Net

Customer relationships 12 $ 2,204 $ ( 69 ) $ 2,135

Technologies 5 3,521 ( 227 ) 3,294

Trademarks 10 475 ( 18 ) 457

Order backlog 1 55 ( 20 ) 35

Total intangible assets $ 6,255 $ ( 334 ) $ 5,921

September 30, 2025

Weighted Average Remaining Useful Lives in Years Gross

Value Accumulated

Amortization Net

Customer relationships 12 $ 2,202 $ ( 23 ) $ 2,179

Technologies 5 3,518 ( 76 ) 3,442

Trademarks 10 475 ( 6 ) 469

Order backlog 1 55 ( 7 ) 48

Total intangible assets $ 6,250 $ ( 112 ) $ 6,138

We have an additional technology intangible asset of $ 0.5 million associated with an intellectual property acquired in December 2023 which has not yet been subject to amortization.

As of December 31, 2025, the estimated future amortization expense of intangible assets is as follows (in thousands):

Remainder of 2026 $ 662

Thereafter 1,594

Total $ 5,921

Long-Term Debt

2 unchanged sentences

Revolver has an expiration date of October 4, 2028.

As of June 30, 2025, there were no amounts borrowed under the U.S.

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

Revolver, and letters of credit outstanding were $ 65.1 million.

There was $ 84.9 million available for the issuance of letters of credit and borrowings under the U.S.

Revolver as of June 30, 2025.

As of June 30, 2025, we were in compliance with all of the financial covenants of the U.S.

Revolver as of December 31, 2025.

As of December 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 $ 76.0 million as of June 30, 2025.

We also had surety bonds totaling $ 432.6 million that were outstanding, with additional bonding capacity of $ 767.4 million available, at June 30, 2025.

We were contingently liable for letters of credit of $ 65.1 million as of December 31, 2025.

We also had surety bonds totaling $ 433.8 million that were outstanding, with additional bonding capacity of $ 766.2 million available, at December 31, 2025.

We have strong surety relationships;

1 unchanged sentence

We have a $ 20.2 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 June 30, 2025, we had outstanding guarantees totaling $ 7.0 million, with an additional capacity of $ 13.5 million available under this Facility Agreement.

At December 31, 2025, we had outstanding guarantees totaling $ 7.6 million, with an additional capacity of $ 12.6 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 June 30, 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.

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

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.

2 unchanged sentences

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

As of June 30, 2025, certain contracts had a probable exposure to liquidated damages claims of $ 2.9 million, which could possibly increase to $ 4.0 million under certain circumstances.

As of December 31, 2025, certain contracts had a probable exposure to liquidated damages claims of $ 4.0 million, which could possibly increase to $ 4.5 million under certain circumstances.

Based on our actual or projected failure to meet these various contractual commitments, $ 3.1 million has been recorded as a reduction to revenue.

8 unchanged sentences

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 June 30, 2025, there were 119,496 RSUs outstanding.

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

At December 31, 2025, there were 54,504 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 nine months ended June 30, 2025 is summarized below:

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

Units Weighted

3 unchanged sentences

Forfeited/canceled — —

Outstanding at June 30, 2025 119,496 $ 64.46

During the nine months ended June 30, 2025 and 2024, we recorded compensation expense of $ 3.1 million and $ 3.4 million, respectively, related to the RSUs.

Outstanding at December 31, 2025 54,504 $ 173.93

During the three months ended December 31, 2025 and 2024, we recorded compensation expense of $ 1.4 million and $ 1.3 million, respectively, related to the RSUs.

Restricted Stock

Each non-employee director receives restricted shares of the Company's common stock valued at $ 0.1 million annually.

Each year, every non-employee director receives restricted shares of the Company’s common stock with a grant-date value of $ 0.1 million.

The number of granted shares is calculated by dividing the $ 0.1 million by the average of high and low prices of our common stock on the grant date.

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.

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 nine months ended June 30, 2025 and 2024, we recorded compensation expense of $ 0.5 million and $ 0.4 million, respectively, related to restricted stock.

During both the three months ended December 31, 2025 and 2024, we recorded compensation expense of $ 0.2 million 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 June 30, 2025 (in thousands):

Fair Value Measurements at June 30, 2025

Recurring Fair Value Measurements

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, 2025 (in thousands):

Fair Value Measurements at December 31, 2025

Quoted Prices in

8 unchanged sentences

Deferred compensation — 15,394 — 15,394

Contingent future payments related to the acquisition of Remsdaq — — 2,344 2,344

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, 2025 (in thousands):

11 unchanged sentences

Deferred compensation — 13,707 — 13,707

Contingent future payments related to the acquisition of Remsdaq — — 2,344 2,344

Fair value guidance requires certain fair value disclosures be presented in both interim and annual reports.

7 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 June 30, 2025.

Our leases consist primarily of office and construction equipment.

Contingent future payments related to the acquisition of Remsdaq – The contingent future payments were calculated using a

probability outcome model based on internally developed assumptions;

accordingly, they are categorized as Level 3 in the fair

value measurement hierarchy.

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

Our leases consist primarily of office and warehouse space 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 and nine months ended June 30, 2025 and 2024, respectively (in thousands):

Three months ended June 30, Nine months ended June 30,

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

Three months ended December 31,

Lease Cost 2025 2024

2 unchanged sentences

Short-term lease cost (2)

647 754 1,954 1,798

Total lease cost $ 918 $ 871

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 June 30, 2025 and September 30, 2024, respectively (in thousands):

Operating Leases June 30, 2025 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 December 31, 2025 and September 30, 2025, respectively (in thousands):

Operating Leases December 31, 2025 September 30, 2025

Operating lease assets, net $ 1,458 $ 1,664

2 unchanged sentences

Total lease liabilities $ 1,458 $ 1,664

The following table provides the maturities of our operating lease liabilities as of June 30, 2025 (in thousands):

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

Operating Leases

3 unchanged sentences

Present value of lease liabilities $ 1,458

The weighted average discount rate as of June 30, 2025 was 6.60 %.

The weighted average remaining lease term was 2.19 years at June 30, 2025.

The weighted average discount rate as of December 31, 2025 and 2024 were 7.15 % and 6.13 %, respectively.

The weighted average remaining lease term was 1.92 years and 2.46 years, respectively, at December 31, 2025 and 2024.

Segment Information

We manage our business as one reportable operating segment and our revenues are primarily generated from the development,

design, manufacturing and servicing of custom-engineered equipment and systems for the distribution, control and monitoring

of electrical energy.

Our chief operating decision maker (“CODM”) is our chief executive officer.

The CODM manages and allocates resources on a

total consolidated basis by assessing performance of revenues and earnings before interest and taxes (“EBIT”) using actual-to-actual, actual-to-plan and actual-to-forecast variance analysis.

The measure of segment profit and loss regularly provided to the

CODM that is most consistent with GAAP is consolidated net income, as presented in our Consolidated Statements of Operations.

The CODM does not manage cost components by product, customer type or service type, nor does the CODM regularly receive disaggregated information at this level.

For the three months ended December 31, 2025 and 2024, the summary of segment net income, including segment expenses, for our single reportable segment were as follows (in thousands):

Three months ended December 31,

Revenues $ 251,184 $ 241,431

Segment operating expenses:

Cost of goods sold 179,766 181,907

General and administrative expenses 17,292 14,851

Sales and marketing expenses 7,745 6,731

Research and development expenses 3,267 2,476

Other expense (income) (1)

Total segment operating expenses 208,413 205,859

Operating income / EBIT 42,771 35,572

Interest income, net ( 4,265 ) ( 3,865 )

Income tax provision 5,646 4,674

Segment net income $ 41,390 $ 34,763

Gross profit 71,418 59,524

(1) Other expense includes realized currency loss (gain) of $ 0.1 million and $( 0.1 ) million, respectively.

Revenues by country represent sales to unaffiliated customers as determined by the ultimate destination of our products and services, summarized for the three months ended December 31, 2025 and 2024 (in thousands):

Three months ended December 31,

United States $ 194,878 $ 197,772

Canada 32,459 31,694

Middle East and Africa 9,872 4,558

Europe 8,226 5,528

Asia/Pacific 5,303 1,580

Mexico, Central and South America 446 299

Total revenues $ 251,184 $ 241,431

Long-lived assets by country consist of property, plant and equipment, net of accumulated depreciation and are determined based on the location of the tangible assets, summarized below (in thousands):

December 31, 2025 September 30, 2025

Long-lived assets:

United States $ 71,437 $ 70,699

Canada 32,931 32,744

United Kingdom 7,464 7,606

Total $ 111,832 $ 111,049

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

Three months ended June 30, Nine months ended June 30,

2025 2024 2025 2024

Three months ended December 31,

Income before income taxes $ 47,036 $ 39,437

2 unchanged sentences

Effective tax rate 12 % 12 %

Our income tax provision reflects an effective tax rate on pre-tax income of 25 % and 22 % for the three and nine months ended June 30, 2025, respectively, compared to 25 % and 23 % for the three and nine months ended June 30, 2024, respectively.

The effective tax rates for the three and nine months ended June 30, 2025 and 2024 were favorably impacted by the estimated Research and Development (R&D) Tax Credit and discrete items primarily related to the vesting of RSUs.

These benefits were offset by the tax expense related to certain nondeductible items.

In addition, for Fiscal 2024, favorable impacts were offset by an income inclusion related to U.S.

global intangible income.

Our income tax provision reflects an effective tax rate on pre-tax income of 12 % for both the three months ended December 31, 2025 and 2024.

The effective tax rates for the first quarters of Fiscal 2026 and Fiscal 2025 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.

Subsequent Events

Business Acquisition

As previously announced, on July 15, 2025, we entered into a definitive agreement to acquire Remsdaq Ltd.

(Remsdaq), a U.K.-based manufacturer of Supervisory Control and Data Acquisition Remote Terminal Units for electrical substation control and automation in generation, transmission and distribution, for total consideration of £ 12.2 million Pounds Sterling, or approximately $ 16.3 million, which will be funded with cash on hand.

The consideration included an upfront payment of £ 9.2 million Pounds Sterling with the remaining portion contingent upon Remsdaq meeting certain technical and financial milestones.

We expect the transaction to close during the fourth quarter of Fiscal 2025, subject to customary closing conditions.

One Big Beautiful Bill Act

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (the OBBBA), which 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 currently evaluating the impact of the OBBBA on our operations, financial results and liquidity.

Quarterly Dividend Declared

On August 5, 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 September 17, 2025 to shareholders of record at the close of business on August 20, 2025.

On February 3, 2026, our Board of Directors approved an increase to the quarterly cash dividend on our common stock to $ 0.27 per share, equating to an annualized dividend of $ 1.08 per share from the current amount of $ 1.07 per share.

The dividend is payable on March 18, 2026 to shareholders of record at the close of business on February 18, 2026.

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, the effect of tariffs, completion of the Remsdaq acquisition, 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, 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.

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, the potential effects of ongoing military disputes, 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.

4 unchanged sentences

• Our backlog is subject to unexpected adjustments, cancellations and scope reductions and, therefore, may not be a reliable indicator of our future earnings.

• 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.

• Supplier concentration and limited supplier capacity may adversely impact our business and results of operations.

3 unchanged sentences

• Technological innovations may make existing products and production methods obsolete.

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

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.

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

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

12 unchanged sentences

• Our international operations expose us to risks that are different from, or possibly greater than, the risks we are exposed to domestically and may adversely affect our operations.

Risk Factors Related to our Common Stock

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

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

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

These fluctuations may cause our stockholders to incur losses.

6 unchanged sentences

• Failure to develop, obtain, enforce, and protect intellectual property rights or third-party claims that we are infringing on their intellectual property could harm our business.

• 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.

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

2 unchanged sentences

• We carry insurance against many potential liabilities, but our management of risk may leave us exposed to unidentified or unanticipated risks.

• Catastrophic events, including natural disasters, health epidemics, acts of war or terrorism, climate change, among others, could disrupt our business.

• Catastrophic events, including natural disasters, health epidemics, acts of war and terrorism, climate change, among others, could disrupt our business.

• A failure in our business systems or cybersecurity attacks on any of our facilities, or those of third parties, could adversely affect our business, results of operations and reputation.

10 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