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| Statement |
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| We continue to see healthy levels of project activity across our end markets and believe that the fundamentals supporting our core industrial markets remain favorable and robust |
| Based upon the markets that we serve, we continue to believe that fiscal 2024 will be another strong year for Powell |
| I'm extremely proud and appreciative of every one of our employees and how they are meeting the challenge the market has presented to our company |
| We ended our fiscal year on a strong note as the Powell team delivered another great quarter to close out one of the best years in the company's history |
| The sharp recovery of our industrial end markets led to $1.4 billion of orders in fiscal 2024, by far the most we have ever recorded in a 12-month period and twice that of the prior year |
| As you've heard from both Mike and me this morning, we are very pleased with our fiscal 2023 and the fantastic financial performance that the Powell team delivered |
| I am incredibly proud of the entire polite performance |
| It is in years like these of elevated project activity delivering on time and on budget that we earn and build on our reputation with our customers as a reliable, trusted partner as we continue to differentiate ourselves from our competition |
| So, as I mentioned a couple of times last throughout the last couple of calls, really, really pleased with Powell's position and where we stand in the market on the domestic LNG landscape |
| Strength across our core industrial end markets, particularly within LNG as well as in our utility and commercial and other industrial market sectors drove the substantial growth compared to the prior year |
| The gross margin profile has been outstanding in the last couple of quarters |
| When I look at what made up in the sectors in the quarter, it was kind of on average with the core oil and gas, good strong utility content in the fourth quarter, along with a good contribution to the new sector that we're reporting out in the commercial and industrial market |
| While our margins have certainly benefited from these higher volumes, our productivity initiatives as well as strong project execution and subsequent closeouts are all helping to support significantly improved margins compared to recent years |
| We are confident that these measures, combined with our quality backlog can support gross margins above our fiscal 2023 targets set in the high teens and deliver margins consistent with total fiscal 2023 levels in the low 20s for fiscal 2024 |
| A little bit of timing, of course, in that Q3, what was going to book, and as we went into Q4, we were very pleased with the $171 million net for the quarter |
| Our backlog remains incredibly strong at just under $1.3 billion |
| Considering these variables, in addition to the strong commercial outlook across most of our end markets as well as our liquidity position and the strength of our balance sheet we are confident that we can sustain the solid results that we've delivered in fiscal 2023 and continue this into fiscal 2024 |
| We are also encouraged by the profitability resulting from the operating leverage as well as the commercial levers implemented over the past several quarters, and will remain acutely focused on executing our growing backlog as we navigate through fiscal 2024 |
| Looking forward, we remain optimistic that the commercial momentum across our core end markets will remain robust throughout fiscal 2024 |
| Gross profit as a percent of revenues grew 510 basis points year-over-year to 21.1% or $148 million demonstrating continued success in offsetting inflationary headwinds and supply chain challenges, while also leveraging higher volume and productivity initiatives throughout fiscal 2023 |
| Today, we are enjoying the benefits of those efforts, while the largest markets we serve have enjoyed a strong recovery |
| Orders were $1.4 billion, nearly double fiscal 2022 orders of $718 million, led by the strength in oil and gas and petrochemical end markets coupled with the sustained market activity in the utility sector as well as the incremental growth in all of the other end markets |
| We continue to see favorable opportunities within LNG, gas pipeline, and the gas-to-chemical end markets |
| We've also been pleased with overall activity within the renewable markets of hydrogen, biodiesel, and related biofuels, such as sustainable aviation fuel as well as carbon capture and sequestration |
| The higher margin rate is in large part the result of favorable volume leverage and productivity initiatives, strong project execution, and subsequent closeouts as well as the pricing actions that have been aimed at offsetting inflationary pressures as we continue to navigate through a challenging supply chain landscape |
| From a market sector perspective, revenues from our oil and gas and petrochemical sectors grew 56%, largely driven by higher LNG and petrochemical revenues |
| Overall, we're very pleased with the total year orders performance across the business and the resulting backlog position as we enter our fiscal 2024 |
| Revenues for the fourth fiscal quarter of 2023 increased by 28% to $209 million compared to the fiscal 2022 fourth quarter of $163 million and improved sequentially by $16 million, with strong growth across our core industrial, oil, and gas, and petrochemical market sectors |
| We are confident that our execution and our strategic initiatives, coupled with favorable industry dynamics will support another successful year for Powell |
| We've also taken successful steps to unlock operational efficiencies, improve staffing levels, and optimize our procurement of raw materials, all of which have had a significant positive impact on our profitability |
| Statement |
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| Net orders for the fourth fiscal quarter were $171 million, $87 million lower than the same period one year ago on a challenging year-over-year comparison as we secured a large LNG order in the fourth quarter of fiscal 2022 |
| But Q1, definitely, both on the factory side or productivity and some ramp downs and ramp-ups and then just timing of people in the office, getting things done and signed in the house is always a challenge from the November to end of the year run |
| The availability and cost of certain engineered components remains a challenge |
| So even with the backlog that we have, there's still challenges quarter-to-quarter on timing holds on projects, changes where can we pull things in and move slots, that fundamental part of our model never changes even with the rise in the backlog |
| This year-over-year growth was offset somewhat by the traction sector, which was lower by 52% as we successfully completed a large municipal project in Canada in the first half of fiscal 2023 combined with softer commercial order activity in this sector throughout fiscal 2023 |
| First quarter will be softer than the other three, and then it will ramp up 2Q, 3Q and then 4Q is typically the strongest quarter of the year |
| Franzreb, that there's still some uncertain timing circumstance around it |
| As far as staffing levels are concerned, availability of quality labor, while always front of mind is less of a headwind today than it was in recent quarters |
| The challenges that came with a period of lower project activity immediately after the pandemic, followed by the inflationary environment, required that we prioritize execution and identify efficiencies across the organization |
| Timing is a little bit more uncertain given the run we just went through over the last 12 months to 18 months, but there's still a lot in front of us |
| These risks and uncertainties include, but are not limited to, competition and competitive pressures, sensitivity to general economic and industry conditions, international, political and economic risks, availability and price of raw materials and execution of business strategies |
| What's the primary counterweight that makes it tougher to hold the second half 2023 gross margin on a go-forward basis? Brett Cope The big one is just timing quarter-to-quarter |
| Jon Braatz Brett, in your conversations with your clients, 2024 is going to be an election year and I don't know who's going to win, who's going to lose |
| Selling, general, and administrative expenses decreased by $1 million or 5% in the quarter versus the prior year, attributable to lower fiscal fourth quarter variable performance-based compensation expense |
| But then you have some of these other anomalies that you have to put on top of that |
| Overall, net SG&A expenses as a percentage of revenues were lower versus the prior year by 200 basis points at 11.3% of revenues in fiscal 2023 versus 13.3% in the prior year |
| Investors are cautioned that such forward-looking statements involve risks and uncertainties and that actual future results may differ materially from those projected in these forward-looking statements |
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