Powell Industries (NASDAQ: POWL) experienced a sharp decline in after-hours trading on Monday, with shares falling 13.8% to $189.50, erasing a 5.3% gain from the regular session. The drop came despite the company reporting higher revenue and profit for its fiscal third quarter, as investors shifted focus to the challenges of fulfilling a record backlog.
The company announced quarterly orders of $934 million, an all-time high, while its backlog surged 69% year-over-year to $2.4 billion. This backlog now represents approximately 7.7 quarters of current sales, up from about 4.9 quarters a year ago, signaling a significant increase in delivery obligations.
Chief Executive Brett Cope noted that commercial activity in major end markets is accelerating, with a book-to-bill ratio of 3.0 times. However, the concentration of large orders—three mega-contracts accounted for at least 57% of quarterly bookings, including a single data-center contract worth over $400 million—heightens the importance of timely execution and customer scheduling.
For the quarter, Powell reported revenue of $311.7 million, up 9% from $286.3 million a year earlier, and diluted earnings per share of $1.42, up 7.6% from $1.32. Both figures fell slightly short of FactSet consensus estimates of $316.7 million in revenue and $1.46 in EPS, contributing to the negative market reaction.
Gross margin contracted marginally to 30.6% from 30.7%, while new orders more than doubled from $362 million to $934 million. The company's backlog grew 35% sequentially, outpacing a 5% rise in quarterly revenue, further straining the backlog-to-sales ratio.
Chief Financial Officer Michael Metcalf indicated that margins are expected to remain near the trailing-12-month range. Powell is on track to complete its Jacintoport expansion before the fiscal year-end and is evaluating additional greenfield capacity options to address the growing order book.
Following the after-hours decline, Powell's trailing price-to-earnings multiple stood at roughly 37 times, higher than Hubbell's 28 times but lower than Eaton and Vertiv, reflecting continued expectations for strong performance. Cash and short-term investments totaled $633.6 million, and the company declared a quarterly dividend of $0.09 per share, with a record date of August 19 and payment on September 16.
Investors will look for updates on backlog scheduling, capacity progress, and project mix during the conference call scheduled for Tuesday at 11:00 a.m. EDT. Risks include potential delays in mega-project timelines, order cancellations, and margin pressure from tariffs or rising material costs.
