Powell Industries Inc 17th Annual Midwest IDEAS Conference

Good morning. My name is William Shellmyer, and I am an account manager here at Three Part Advisors. I want to thank you all for joining us for our 17th Annual Midwest IDEAS Conference. To start things off today, we have Powell Industries, which trades on Nasdaq under the ticker symbol POWL. Representing the company today is their Executive Vice President and CFO, Michael Metcalf.

Thank you, William, and it is good to be back in Chicago again. We have not been doing this for 17 years, but I think this is our third or fourth year consecutively at the conference, and we really like the conference, so it is good to be back. Again, my name is Mike Metcalf, CFO at Powell Industries, and I will take you through where we came, where we grew up, where we come from, what we sell, and a little bit of the financial perspective. We are 80 years old, nearly 80 years old, 79 to be exact. We make low and medium voltage switchgear, predominantly based in the U.S. I will get into that in a few slides. Last year, we generated a little over $1 billion of revenue.

As we sit here today, we just reported our third quarter results, and we are at about $860 million, so we are well on our way to eclipse what we did in fiscal 2025. We have a global footprint. Most of our manufacturing facilities are in the United States, five in the U.S. We have a large Canadian operation and an operation in the U.K. as well. As I will go through in a little while, our balance sheet is pristine. No debt, great liquidity position. So what is it that we make and what is it that we do? Our intellectual property is that product you see on the left side. That is a circuit breaker. So in your house, your apartment, wherever your place of residence, you have a panel full of circuit breakers. That is a 500-pound version of what is in your house controlling your circuits.

That circuit breaker goes into what is called switchgear, and that is the metal enclosure. That is the middle picture. So we make the metal enclosure. We have the intellectual property, the circuit breaker. We actually have two medium voltage circuit breakers. We bought GE's circuit breaker in 2006, and Powell has its own medium voltage circuit breaker. So our wheelhouse is really in medium voltage, 1,000 volts up to 38,000 volts. In a fully integrated solution, we will put our switchgear and our breaker in what is called a power control room or a module. What you see on the right-hand side is this happens to be an offshore module, big, heavy, two-story blast-resistant module. This one looks probably like it is going to an offshore rig to distribute the power on a rig. So kind of the specifications on where we play in the electrical spectrum. I just mentioned voltages. We have low voltage switchgear, so we make the cabinets.

We do not have a low voltage breaker. We will typically buy our breaker from an Eaton, a Siemens. We do a lot of medium voltage where we build the switchgear, and we have two medium voltage breakers. So we have a full medium voltage line, really do not get into high voltage at all. Our sweet spot is really between 480 and 38,000 volts. From a product complexity standpoint, when I was here last year, I would tell you that we are almost entirely engineer-to-order, highly configured electrical applications. As you can see, with the onset of the data center volume, this is what we call configure-to-order. So it is highly engineered. You engineer the first configuration, but you just build a lot of it thereafter.

There is not an engineering thread throughout the entire project like there is on an LNG project or a utility project. So we are doing a lot of what is called configure-to-order, and that is a lot of what is in our backlog today, which I will go through. We have our traditional engineer-to-order. Customer relationships historically have really what has gotten us to the table and won the jobs. We are very well respected in the core industrial markets. So just when you hear the grid resiliency, what is the grid and where does Powell play? It is important to understand that Powell is really agnostic to how the power rather is generated and where the power is going. So whether it is coming off a solar field, whether it is coming off a gas plant, it does not matter. Once it goes from high voltage to medium voltage, we distribute the power.

From there, it goes to either a residential neighborhood, an industrial plant, a subway, CTA, we have a lot of gear on the CTA here. So really it is important to think about Powell as just really important in the supply chain of distributing the power irrespective of where the power is coming from or where it is going. The other important thing to understand in our business is the fact that there are two electrical standards around the globe. There is what is called ANSI, and that is where we grew up. Powell grew up in the Gulf Coast of the U.S., and we are very strong in ANSI and the ANSI market. So ANSI is electrical standards for all of North America, some parts of Latin America, some parts of the Middle East, like Saudi Arabia, is a lot of ANSI gear, and some parts of Southeast Asia.

Everywhere else, it is what is called IEC, so it is the international standard. We have one plant in the U.K. that is 100% IEC, but when you take a view of the entire TAM of IEC, very small. You can see that play out in where our geographic revenues lay out. I mentioned earlier, we have modules on the right-hand side, which I talked about, but more commonly is what we call a power control room. Some people call them e-houses, substations. These things can get up to 10,000 sq ft inside. So they can be very large, or they can be 500 sq ft. They can be small. They are engineered to the application that they are going to be suited for. This one happens to be on the left-hand side, looks like it is in a refinery or a petrochem facility.

If you can envision 2 dozen of these things sprinkled across the site of an LNG facility distributing power across that facility, that is kind of the solution that Powell brings to these large industrial applications. We are starting to see a lot of these in the data center world as well. We are today on the outside of the data center, so we do not do anything on the inside, but a lot of these data centers are requiring the higher-end voltages, so the 38 kV with PCRs to distribute the power into the data center. This is just another visual of the entire solution that we provide. We have the switchgear inside the PCR, and the PCR distributing power where it needs to distribute the power. Automation is a key component for us. It is a high-margin business. We are growing this arm of our business pretty rapidly.

Over the last 5 years it has grown quite rapidly. It is still not a reportable segment yet. We did do an acquisition, which I will talk about in a minute, in this space. When you think about automation, we think about it as predictive analytics, preventative maintenance. When you think about one of those PCRs with lineups of switchgear in it, and there are 2 dozen scattered across a plant, it is much easier to monitor your equipment with automation. If there is an abnormality, it is running hot, it is dirty, whatever the case may be, our sensors and our automation can pick that up as opposed to having operations teams manually check this gear once a week or once a month, whenever it needs to happen. This is a fast-growing space across our entire industry. Schneider is doubling down on it, Siemens as well.

This is an acquisition that we closed last year, and it is a controller. It was bespoke in the U.K. for utilities, and this was a small little company, didn't want to sell to PE. The principals had built it over 40 years and wanted it to go to a good home with a culture similar to theirs, and they agreed to sell it to us. It is small but mighty. We closed it in August of 2025, and in the first month that we had the business, we were able to apply it to one of these large data center orders that we won in the U.S. This acquisition has been a great success. Very well integrated and we are looking forward to more of these down the road.

The end markets that we play in predominantly, we grew up in the core industrial markets, so petrochemical, oil and gas. I would define oil and gas refineries, pipelines, heavy industrial applications. Over the last probably 5 to 7 years, LNG export terminals has really taken off as well, and it is still very active. Most recently, over the last couple of years, clearly the data center volume has really taken an exponential step up in our business. It is about a third of our backlog today as we sit here. Really the same product, it is not any different, it is just, as I said earlier, you design it once, but there is just a lot of it. They just need a lot of the gear. The utility space is also. There is clearly a second derivative in utilities with the data centers.

How much that is, I couldn't tell you, because when we sell a utility job, we don't ask them where the power's going, whether it's going to a residential application, infrastructure upgrade in that certain region, or a data center. Our utility commercial activity is very robust, continues to be very robust as well. We get a lot of questions, especially when we talk to some of the European investors, how do you compete with ABB, and Siemens, and Schneider, and Eaton? It's really an interesting relationship. We buy a lot of equipment and gear from particularly Eaton and Siemens, not so much ABB and Schneider. At every campaign, specifically in utility, we'll run up against all four of these guys. In the core industrial, we'll typically run up against an ABB.

What we bring to the table is we build our own build, we build our own PCR, we build our own modules, whereas the other four, ex Eaton, because Eaton just bought Fiberbound a couple of years ago, and we'll see how that goes. ABB, Schneider, Siemens, they don't build a building, so they have to go outsource to a building supplier, send their kit to the building supplier, integrate it there. If there's problems, there's a lot of engineering that happens. It's just not an integrated model, and that's our value add. That's what wins us business, specifically in the core industrial space. What's our strategy? Brett laid this out, our CEO laid this out probably four or five years ago, and we haven't deviated from it, irrespective of this data center craziness. I talked about the automation. We're doubling down on automation.