My name's John Franzreb. I'm an analyst here at Sidoti & Company. Our next presentation of the day is Powell Industries, ticker POWL. For those who are not familiar with the company, Powell is a manufacturer of equipment that manages the flow of electricity, typically in large industrial facilities. We are fortunate to have with us today CEO Brett Cope and CFO Michael Metcalf. They will do a presentation. Following Following their presentation, there'll be time for Q&A. If you have a question, please present it in the Q&A section, and I'll present it to management. With that said, gentlemen, thanks for being with us. The floor is yours. Thank you, John, and appreciate you and the team at Sidoti for the opportunity to be part of the conference today. As John noted, I'm Brett Cope, CEO of the company, and with me is Mike Metcalf, CFO. I'll cover the first couple of slides on who we are and what we do, and then turn it over to Mike here for some granularity on the numbers. On the slide here, who are we? We're a global manufacturer of technology, as John noted, for the distribution of electrical power. We do that through 7 facilities, 6 of them based in North America and 1 of them based in the U.K. Then we have some sales and service offices out in other parts of the world. Being largely based in North America, we are largely focused on the ANSI electrical standard that was born and raised here in North America and taken out into the world. The UK footprint gives us the ability to chase IEC, which is the electrical standard used in the balance of the world. As our footprint goes, most of our people, along with where our products end up, follow that same footprint, most of them, again, here domestically and in other parts of the world for export. When I look at what we do, it starts with, on the left of your picture there, the breaker. So that is basically a big version of what you might have in your home or in your apartment or townhome, basically a device that controls the flow, an on-off switch, if you will, in a simplistic version of energy. And so when it comes from the utility, or if you're self-generating or you have solar panels, you're creating electrical energy. We get involved at the point where you are controlling that energy up into a bulk power transmission, or on the other side, when you come off the power line and it's distributed out to the neighborhood or to a factory. We take that breaker and we build switchgear, which is a bigger metal box that has electrical buses that conduct larger amounts of energy that flow between the breakers, along with a lot of control and protection devices to help monitor and manage safely the flow of energy. And that's the middle picture. That's the inside of a substation. And then the far picture is a version of a modular substation. In this case, this is an offshore design, very heavy build, very heavy mechanical and energy codes and fire codes that go into that, and I'll come back to that here in a minute. The way we approach the market is very relationship-based. We are largely engineered to order, ETO. A lot of our products will go into the market through different channels as standalone products. Either the breaker or the switchgear can both be sold into a project or into a utility as a standalone product. But the majority of what we do is project-based, where we're working with long-term end-user clients, building relationships, working with their partners to deliver our solutions into the market. And as I noted, we are very bracketed between the 480 volt up to 38,000, 38 kV. Those are the bookends for where we compete. And as the middle bar there, typically, the more complex the problem, we're built to really solve that, given the amount of engineering folks that we have at our facilities to work with our clients, to really go through the engineering drawing development, the solution development, and ensure that when they get the substations installed and energized, that they're exactly what they need them to do safely and effectively and reliably day in and day out. This picture just sort of, in the world of electricals, a little bit crude, but it shows you where we exist in the world, again, agnostic to the generating source. However, you generate the electrical energy. We then get involved when you're controlling the power of that device into a step-up transformer that ultimately may make its way into bulk power transmission, the power lines, if you will. On the other end of those power lines, when they go into the substation and they get transformed down in energy to where they ultimately might get to 480 in your place of business, we'll get very involved there. Then bullet three off to the right, I'll come back to that as well, another area for Powell that we've been involved for many decades and an area we foresee growing. This is the application of digital technologies into a field that's been largely scopes and meters. So digital technology is providing a reliability and a productivity return for Powell and for our clients for the future. I mentioned these already. We compete in both standards, both the North American ANSI standard as well as the international standard. These are the two global standards that exist, and largely, 85%-90% of what we do is on the ANSI side. Back to the Power Control Room. That is a Powell name. You'll find these things called different names out in the world: LERs, Local Equipment Room, or PDC, Power Distribution Center. Basically, they're modular substations and largely made out of metal. They'll have a base, and then you'll frame it in. There's actually a lot of technology that's built, especially in the last 10 years. As the world is increasing its focus on the transition, so goes the energy codes. So in the States here, in Canada, really around the world, the energy codes have really become more front and center about how people are applying energy. We've embraced that from a code standpoint. So these buildings have become quite efficient in their thermal management. When you're doing substations and you're running a lot of electrical energy through copper or aluminum conductors, it gives off a lot of heat. And so thermal management has become a big mechanical challenge in today's world, whether it's at a refinery or a data center or a hospital. Thermal management is a big deal. And so as we develop these solutions as a means to deliver our solutions to the market, to provide more electrical distribution solutions, we've also become a stronger engineering firm in the integration side of our business for developing different solutions to the market for the different sectors that we pursue. This is a typical Power Control Room in your upper left hand, again, a version of a building. You've got some ground transformers and things that feed the building. You can see on the right-hand side of that building, some HVAC that's hung in this case. The building's a little smaller and so cooling, engineered to cool inside the building. Some earlier pictures, you've got the switchgear inside the building. But these projects run anywhere from 6 months to 3 or 4 years. There are just thousands of drawings that we produce when we earn an award. We go into a drawing phase to work with our client, their engineering partners, and just thousands of drawings that get produced before we can go into the manufacturing process. Most of what you see on this picture in terms of the gear, the breaker, we manufacture largely within our facilities. We are very vertically integrated within our facilities. Some outsourcing of certain components to grab efficiencies that make sense. But in terms of controlling the supply chain and managing, Powell's structure is different. It is an area of differentiation compared to some of the other models that we compete. We feel that that gives us an advantage due to the complexity to tweak things throughout the entire process and make sure that at the end of the process, we aren't sacrificing the schedule, which is so critical in every one of these projects. Back on the automation side, this is an area that we have a rich history in, and we see it growing globally, somewhat by demographics, just fewer and fewer people going into the electrical side that are managing all these substations that are not going away, whether you're in oil and gas or you're utility or you're in a transitional industry. There are more and more electrical assets, and in the last three years become more mainstream in the press about what's going on in the world electrically. So in order to solve that problem, I would love to see all the universities pump out more electrical folks that are going to come into our business. That's just not happening. So really, the only way that the industry is going to solve this problem is coming up with more technology that can help provide information around what's going on in the substation to ensure that it's running as it should, and then, of course, to help maintain it over its installed life. And given our close association to up to that 38 kV sub, we've been organically inventing and developing products and working with our clients, listening to what they need to solve those problems. We see this as an opportunity for the future. Our primary markets, having been based here in Houston, we grew up with oil and gas. So a lot of our products over the 75-year history of our market have been built around serving that industry. But in the last 20 years, more recently, 10 years, as we've diversified and built out our model to utility and into the commercial markets, we're now developing versions of our products that have a little bit better cost structure. They flow through the factories a little bit differently and will help meet those types of needs in the market more competitively for the future. What's going on in the energy transition, the biofuels, the carbon capture, sequestration, the hydrogen market, which is from an estimating and bidding activity today and what if is very active. A lot of this is right up our alley. All these industries, as they transition, require large amounts of energy to move fluids or large amounts of gases through the facility, which ultimately require a lot of medium voltage, especially in the 5-38 kV. And then, of course, low voltage will go with that. But these industries, as they transition, are perfect for Powell. And we're engaged in understanding their needs as they develop these future segments. And we're pretty excited about what this means for the future of Powell. How do we compete? Well, pretty much all the names you see on the left-hand side there, pretty much every engagement, no matter whether it's oil and gas, utility, data center, whatever, we'll see some segment of these folks. On the substation side, which is the integration side of our business where we build those buildings, typically, the big guys on the left will partner with the guys on the right. At Powell, we do it all under our model. We don't have a need to go buy the mechanical substation, as I noted earlier. We build that ourselves. We might buy pieces and parts for things we don't make from some of the guys on the left as an OEM, but largely aspire to build most of our own technology ourselves. And that's our product strategy as we look forward, how we're going to figure that out. And then next slide, I'll finish here on the strategy piece, just kind of reiterating. And I'll start from the bottom because I just the last slide touched on it. As we look forward, we are looking out 10, 15, 20+ years. How can Powell embrace the roots of solving tomorrow's problems for our customers, become programmatic and thoughtful looking forward to apply new technologies to solve distribution challenges for what now is a very rapidly changing grid, along with the need to maintain that grid, which is the top part of the electrical automation piece, and develop technologies that can better serve that part of the market? And then along with that, we've always aspired to install and commission our gear. But with all these assets that are out on the operating side, where can Powell play a bigger role on the operating side, which has not been our historical strength? But yet, given our knowledge about the installed base and our clients' operations, where can we become better value partners and develop solutions that benefit Powell but ultimately help our customers manage their installed base? With that, I'll turn over to Mike. Okay. Thank you. And good morning. This next slide just gives you a snapshot of how we think about capital allocation. And I'll get into the balance sheet in a few more slides. But very conservatively run company, always has been and still maintains that thoughtful and conservative approach. We talk about our capital allocation among ourselves quite frequently, as well as with the board. As Brett noted on automation and some of these new segments that we want to make some inroads in, clearly, there's inorganic and organic activity that is always moving around. And we're pretty proud of our consistent performance on quarterly dividends. As of this print, we're 41 consecutive quarters of dividend payers. Those are some of the elements we keep in the front of mind, as well as working capital. As we build out these large projects, working capital consumes a large portion of our cash reserves as well. Now, as we look at where we've been and our most recent reported quarter, clearly, you can see a positive trajectory, particularly in the profitability perspective. We were in the mid-teens from a gross profit perspective for some time, even going back into 2018, 2017. The most recent quarter, we generated just under 25%. It was a very, very strong quarter. We finished fiscal 2023 at 21%. As you look at the backlog and the quality of the backlog, we feel like low 20s to mid-20s from a gross profit percentage is what we're tracking to for fiscal 2024. From a capital spending perspective, Brett did note on the last call, we are embarking upon an expansion at one of our larger facilities. So we do expect some capital investment in the second half of fiscal 2024 and into the first half of 2025 as we complete that project. And then finally, cash from just an operating perspective, terrific year in fiscal 2023, really driven largely by the bookings of the large LNG and petrochemical projects in mid-fiscal 2023. Those require a lot of upfront payments as we get ready to execute those with all the buyout and the materials, the copper and the steel, etc. And we're off to a good start in fiscal 2024, generating just under $84 million of operating cash flow. Now, backlog, this is a headline number that gets a lot of attention, clearly. We've been holding about a 1.0 last couple quarters, last six months, 1.0 book-to-bill ratio. So what we're billing, we're bringing in with new orders, holding at $1.3 billion through the first quarter. You can see in the lower left-hand quadrant, Q2 of 2023 and 3Q of 2023, those were sequential, consecutive $500 million-plus orders, quarters, again, driven largely by LNG work that was let in the Gulf Coast here. And we won an outsize share of those projects. And those projects, really, the tail on those projects will extend into late 2025 and probably early fiscal 2026. And I would just close on this page from an orders perspective. We started out the year very strong, just under $200 million, and that generated a 1.0 book-to-bill ratio, as I mentioned. As Brett alluded to on his slides, the ANSI versus the IEC markets, this is really dictating where our revenues get generated. So as he said, we grew up an ANSI company. You can see the blue and that yellowy type of color. Those are where we play very strongly in the ANSI markets. And you can clearly see North America is very strong in ANSI. Thus, greater than three-quarters of our revenues are generated in the continental US. And then the remainder is between Canada and some of the IEC markets overseas and ANSI markets overseas. Now, if you look at our pool of revenues, clearly, 50%+ has been and remains what we would call core industrial. So oil and gas and petrochem, that includes LNG. It includes your traditional refining plants and pipelines, etc. But what we would note is that the commercial and other industrial segment, or sector, rather, this is a relatively new sector for us. We didn't traditionally break this out. But with the occurrence of the data center market, the upswing in 2021, that sector was about 6% of our share of the revenues. And as you can see, it's roughly 13%-15% over 2023 and the first quarter of 2024. So it's really generated the data centers have generated a nice uplift in that segment. And utilities, as the water level has risen from $533 million to almost $700 million, we feel really good about where we're positioned in the utility market. We've put a lot of thought and a lot of effort into growing that market, and we're maintaining it at roughly a quarter of our revenue segmentation. Now, from a profitability perspective, again, we feel as we exited 2023 and we navigate through 2024, we feel pretty comfortable with where we're positioned from a profitability perspective, a gross profit perspective. Had a very strong 1Q, and we're levering our SG&A, our core OPEX expenses. And we generated just under $2 of EPS in the first quarter of 2024 after exiting fiscal 2023 at about $4.50. One of the points of the company that we are very proud of is our balance sheet and some of the conservative we are a conservative company. We do manage cost and cash very, very closely. We finished December in a very strong cash position. A lot of that, as I mentioned a couple slides ago, is attributable to the advanced milestone payments from some of those large projects that I spoke about. So a lot of that, as we navigate through 2024 and into 2025, will get consumed by executing these large projects. Roughly, kind of a rule of thumb is roughly 13%-15% of the backlog that'll be allocated to working capital. So roughly half of that balance in December of 2024 will be allocated to working capital at some point in the future. Return on equity as we exited the year last year and our September fiscal end, almost 16%. So we were really happy with the performance that the business turned in from a profitability and just an execution standpoint, as well as maintaining our backlog. And through the first quarter of our fiscal 2024, just under 7%. So as I mentioned, from a profitability perspective, we feel pretty comfortable with where we are, given our backlog, the quality of the backlog, and the level of backlog. So with that, John, I'll turn it back over to you and take any questions. Okay. Thanks, Mike. Thanks, Brett. If you have a question, please put it in the Q&A section. I'll give it to management. Great question to kind of start us all off from one of the participants is, what's the investor disconnect compared to when the stock was trading below $25 to now above $160? Go ahead, guys. Fire away. Yeah. Well, I mean, clearly, the backlog level. When we were trading at $25, our backlog was probably $400-$500 million. And the quality of the backlog wasn't what it was then versus today. We've taken a lot of very thoughtful actions, both from a commercial perspective as well as a supply chain perspective, to get where we are today. So I mean, that's my view. Yeah. We've been planning. I mean, the post-pandemic era, I don't know if anybody could have predicted all the dynamics that have affected the electrical market globally, notwithstanding the ANSI market. But if you go back and follow the story, we're on a journey to become extremely productive. The strategies aren't new. We've been working on them for seven, eight years and transitioning Powell into this next mode of its growth. And as the pandemic came along, it allowed us to accelerate some things that we'd already been working on. And so as the market came in waves, residential and then the tech wave with data centers and eventually our core market recovered in summer 2022, the quality of the backlog, the step change in the backlog and the quality and ultimately the bottom line, it all stepped up, obviously, noticeably. And it's energized the company. It's great to see the new sector, but also we're really delivering for our core as well. And I think that's the difference. A couple questions on the data center market. You referenced it in your prepared remarks. Can you give us a sense of how big it is for you? And what are your expectations in the data segment business on a go-forward basis? Yeah. So we've always done data centers. I want to make that point first. It's not new. When you talk about power distribution, electrifying a data center, it could be an industrial facility for us. All we need to know is how many volts and amps, and we'll design it for you. The difference now is these data centers are getting very large. And it probably is not missed on the audience. The power consumption forecast, if you look out 10 or 15 years or believe whoever's right and whatever, and even when you engage the constructors and the end users, I mean, the forecasts are very large. These things are massive. We are seeing it. It's obviously a new segment for Powell. We are working very hard to understand how to make this sticky. We're finding good alignment with our early engagement last couple of years in a more thoughtful way. So it is a smaller portion of our overall revenue as we look forward. I think the potential for us is very big. It is a crowded field with a lot of the mega. But I think our model and the schedule needs and how we differentiate on the project delivery part. So if we can continue to solve and improve on the product side and then bring the model that we're really well known for for 75 years, I think the outlook for Powell is very bright in this market. Okay. Questions coming in fast and furious here. I'm going to combine a couple here. Given the recent actions of the Biden administration regarding LNG exports and the collapse of natural gas prices, what is the risk to your backlog and to your large projects? So there's a couple of questions on backlog risk, the cancellations. Maybe you could address that. In terms of the backlog, the permits look, I feel pretty good about it. I think the risk of you're never risk-free, but I think the risk of something canceling or delaying, probably pretty slim unless there's some other thing I can't see. It doesn't seem to be anything as we kind of did our analysis. On a go-forward basis, will it have an effect? It will probably slow things down. I'd quote or note it at that in second quarter comments. But I also made a comment, and I think as I try to triangulate where the future looks, it's a pause more so than a stop for I feel and the reasons why you think they did what they did. But I don't think it makes sense personally, but I think the industry will work their way through it. Okay. What's the primary drivers to the substantial gross margin expansion compared to prior years, that low- to mid-20s? Is that a sustainable number on a go-forward basis? Could it improve? Yeah. Well, number one is leverage. If you look back at any cycle coming out of any core market downturn in the past, I had two since I've been CEO. We always lever up as we build volume. It isn't linear. We inflect at some point from lower double-digit into the 20% margin anyway. So we were on our way there with the pandemic and some of the constraints and the intentional side of Powell. There's always a bit of price right now. But I also like to think that the leverage and the efficiency side, we're the most productive we've ever been in the history of the company on any measure. So I think that is certainly added into the story. Can you comment there? No. I think there's been a lot of work done on the, as I mentioned earlier, the commercial side as well as the operational side from supply chain right down through the business c ost management. Question about capacity. You said you're adding capacity. How much of an incremental revenue would that give you? And you talked a little bit about the labor market and if that's what's the situation there for you. Yeah. So two comments on capacity. We made big investments as a company back in 2014 to 2016 that never really got fully utilized. And then post-pandemic, we've noted a few additional capacities. Twice to one of our offshore yards. I just announced another. What seems not large dollars, but it is incremental capacity that is targeting a couple of subsectors. So we've never fully utilized that $100 million of two factories, one here in Houston, one in Canada, to their fullest potential. And those with some tweaks are definitely going to give us upside on the total capacity as we look forward. And what else can we do through the allocation of capital and the strategy? Those are also items that are in front of us. On the labor side, I really think the team did a great job top to bottom on all seven operating facilities. It's not been a challenge for us, whether it's been on the variable side in the factory and then it shifted to the professional side with project management engineering. There's been challenges, but the team largely has done very well. As we sit here today, we are thoughtfully adding variable and fixed costs, but carefully, making sure that we are squeezing every last drop of return out from those investments, making sure that we're using the tools effectively and working smartly. And so I don't feel I mean, it isn't like we aren't fighting some operational issues day to day, but largely, we've done pretty well, I think, compared to others in the market during this cycle. All right. I'm going to sneak one in in overtime here and combine a couple of questions. Should there be an increase in U.S. power generation supply over time, how does that impact Powell, and would you benefit, if at all? And also a question about maybe your utility gross margins versus your LNG and oil and gas gross margins. Is there a differential? Yeah. Well, anything on the power generation side, I mean, we're seeing it in Texas. We're based here. We're now at 85 gigs, give or take, in terms of total generation capacity. And every summer, we have brownout warnings. So it's almost like they can't build it quick enough. There's so much investment in onshoring and projects going on, everything from the core industrial market all the way through to the residential side. And I know there's a challenge in the housing market. It's not directly attributable to Powell, but we watch it because it eventually does turn into consumption. And we have a nice utility business on the distribution side. So anything that happens there in terms of policy or acts in any of the 50 states or in the provinces of Canada or throughout the U.K., absolutely accretive to Powell. Comment there? No. No. From the question on the margins, I think given where we are in the cycle and the capacity constraints across the entire landscape, I mean, the margins are floating up a little bit just given where all of our competitors as well as our capacity levels are. Yeah. All right, gentlemen. Thanks for your time. I know we went a little overboard, and you have a full schedule ahead of you. But thanks again for presenting at this Sidoti & Company conference. And I hope everybody has a great day. Thanks, John. Thanks, Mike. Thank you. Bye.