Powell Industries (NASDAQ:POWL) reported fiscal first-quarter 2026 results that management described as a “strong start” to the year, highlighting revenue growth, margin expansion, and a rebound in quarterly order activity driven by liquefied natural gas (LNG), data centers, and electric utility demand.
First-quarter financial performance
For the quarter, Powell posted net revenue of $251 million, up from $241 million in the same period of fiscal 2025. CFO Mike Metcalf said the quarter benefited from “ongoing high levels of project execution,” while also noting the company’s first fiscal quarter is typically the softest due to the holiday period and fewer working days.
SG&A expenses were $25.2 million, up $3.7 million from the prior-year quarter, driven by higher compensation expenses. As a percentage of revenue, SG&A increased 110 basis points to 10%.
Net income was $41.4 million, or $3.40 per diluted share, compared with $34.8 million, or $2.86 per diluted share, in the prior-year quarter.
Orders surge, backlog reaches record high
New orders totaled $439 million, up 63% year-over-year, and represented the highest quarterly total in more than two years, according to management. The company’s book-to-bill ratio for the quarter was 1.7x.
Powell ended the quarter with backlog of $1.6 billion, which CEO Brett Cope said was the highest in company history. Metcalf added backlog was $219 million higher than a year ago and $191 million higher sequentially, reflecting strength across oil and gas, utilities, and commercial and other industrial markets.
Management emphasized the evolving mix of backlog, noting that oil and gas and utilities each represent roughly 30% of total backlog, while commercial and other industrial has grown to 22%. Cope said electric utility and commercial and other industrial now account for the majority of backlog “for the first time ever,” and added that project visibility extends into fiscal 2028.
Asked about the durability of the backlog amid strong demand and discussions in the market around reserving capacity, Cope said he feels “pretty good” about the current $1.6 billion level, while acknowledging management is monitoring the risk of capacity-reservation behavior as a “future concern” and taking it “quarter by quarter.”
Data center and LNG wins drive “mega” orders
Management said the quarter included two “mega” orders. One was a large domestic LNG project valued at more than $100 million to support gas liquefaction and export along the U.S. Gulf Coast. Cope said LNG activity resumed as permitting restarted about a year ago, and Powell anticipates LNG market activity to continue in 2026 relative to more modest levels during 2024 and most of 2025.
The other notable win was in data centers: Powell booked its first mega project order for a single data center, totaling roughly $75 million. Metcalf said data center-related orders collectively exceeded $100 million during the quarter.
Cope said commercial and other industrial accounted for nearly half of the quarter’s order total, and he characterized the data center opportunity as both project-oriented and increasingly “design one, build many,” which management believes could translate into more repeatable production-line work over time. He also said Powell continues to see increasing interest from a growing list of data center customers.
In response to questions about the cadence of data center deliveries and phased build-outs, Cope said the company is in “thoughtful conversations” with customers about phasing, aligning schedules, and matching capacity investments to demand. He noted that higher power levels in some designs are increasing demand for certain products, while other configurations still fit within existing capacity.
Capacity expansion, labor, and supply chain considerations
Cope said Powell is taking steps to expand productive capacity, including adding leased facilities, increasing inventory, collaborating with suppliers to improve cycle times, and rebalancing manufacturing across North American facilities. He noted the company added a 50,000-square-foot leased facility during the quarter to support production flow and inventory needs tied to growing demand.
Separately, the expansion of Powell’s Jacintoport facility remains on schedule and is expected to be completed in the second half of fiscal 2026. Cope said the added capacity will be important for supporting end markets, particularly oil and gas customers, as the company anticipates LNG development work over the next three to five years.
On potential longer-term investments, Cope said Powell is evaluating a facility investment “on the order of about another $100 million type facility,” though no decision has been made. He said leasing makes sense in the near term while the company builds confidence and better understands demand.
Management also addressed labor constraints. Cope said skilled labor is “always a concern” and remains an active topic. He noted the company has made progress in recent quarters on variable labor needs, but said growth—particularly in commercial—has created needs in engineering that Powell is working to address, with an expectation to “solve that one” in roughly the next 90 days.
Margins, pricing, and balance sheet position
On margin sustainability, Metcalf pointed to trailing 12-month gross margins running around 30%, including approximately 175 basis points of project closeout gains. He said maintaining a base margin in the upper 20s, with an additional 150 to 200 basis points from favorable closeouts, was a “reasonable assumption,” and said the base view reflects what Powell sees in its backlog.
Cope said the pricing environment across the company’s end markets has remained “pretty steady” in recent quarters. Metcalf said Powell monitors input costs closely, hedges copper to some extent, and incorporates commodity movements into pricing models. He added that the company locks in pricing for many engineered components at contract signing given projects that can range from one to three years.
Powell generated $43.6 million in operating cash flow during the quarter. Capital spending was $2 million, primarily focused on capacity and productivity initiatives. The company ended the quarter with $501 million in cash and short-term investments and no debt.
During Q&A, Metcalf said roughly 40% to 50% of the cash balance is expected to be deployed over time to support working capital needs tied to the $1.6 billion backlog, and characterized free cash available for potential capital deployment as approximately $200 million to $225 million. Cope said management continues to evaluate uses of cash including capacity investments and potential M&A, following the Remsdaq Limited acquisition.
Looking ahead, management said it remains encouraged by demand across all major end markets, citing robust activity in North American natural gas and LNG, continued strength in electric utilities driven by grid investment, and accelerating order trends in commercial and other industrial markets led by data centers.
About Powell Industries (NASDAQ:POWL)
Powell Industries, Inc is an industrial electrical engineering company specializing in the design, manufacture and integration of customized power control and distribution solutions. The firm’s offerings range from medium‐voltage switchgear and power control centers to bus duct, motor control centers and specialty transformers. Powell also provides automation systems, protective relaying, metering, supervisory control and data acquisition (SCADA) platforms, and turnkey engineering services to help clients manage critical power infrastructure.
Serving the oil and gas, petrochemical, refining, utility, mining and industrial sectors, Powell’s products are engineered to meet demanding performance, safety and reliability requirements.
