Powell’s first quarter results were met with a negative market reaction, as the company missed Wall Street’s revenue expectations despite delivering year-over-year sales growth and higher non-GAAP profit. Management attributed the quarter’s performance to strong execution in the electric utility and commercial and industrial sectors, which grew 48% and 16% respectively. CEO Brett Cope highlighted successful launches of new products and robust project closeouts as key contributors to gross margin expansion. He also noted, “Our investment in Canada has always been focused on building a diverse portfolio of customers across the sectors that we serve.”
Is now the time to buy POWL? Find out in our full research report (it’s free).
Powell (POWL) Q1 CY2025 Highlights:
- Revenue: $278.6 million vs analyst estimates of $282.7 million (9.2% year-on-year growth, 1.4% miss)
- Adjusted EBITDA: $60.64 million vs analyst estimates of $51.61 million (21.8% margin, 17.5% beat)
- Operating Margin: 21.1%, up from 15.5% in the same quarter last year
- Backlog: $1.3 billion at quarter end
- Market Capitalization: $2.41 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Powell’s Q1 Earnings Call
- Jon Braatz (Kansas City Capital) asked whether recent LNG project wins were influenced by changes in U.S. energy export policy, and CEO Brett Cope responded that overall activity is up, with robust forward-looking client engagement.
- Jon Braatz (Kansas City Capital) inquired about the risk of LNG projects being delayed due to tariffs and lower energy prices. Cope acknowledged risks but said current customer dialogues remain positive, with no immediate indications of delays.
- John Franzreb (Sidoti & Company) sought clarification on the sustainability of elevated gross margins from project closeouts. CFO Mike Metcalf explained that while recent closeouts have boosted margins, normalized rates should be expected going forward.
- Chip Moore (ROTH Capital) questioned Powell’s approach to capital deployment, including potential share buybacks and M&A. Cope explained that organic growth initiatives and market expansion take precedence, but M&A remains under consideration.
- Chip Moore (ROTH Capital) asked about the growth outlook for electric utility and data center markets. Cope highlighted strategic investments in both, clarifying that while the commercial and other industrial segment is now in the mid-teens as a percentage of company revenue, data center revenue itself remains in the single-digit percent range of total company revenue, with expectations for further growth.
Catalysts in Upcoming Quarters
In the quarters ahead, the StockStory team will be monitoring (1) Powell’s ability to ramp new product sales in the electric utility and data center sectors, (2) normalization of gross margins as project closeout contributions decline, and (3) execution on capacity expansion and potential capital deployment for further growth. The evolution of tariffs, supply chain dynamics, and order activity in LNG and commercial markets will also be key factors to track.
Powell currently trades at $199.49, up from $190.17 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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