QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Large accelerated filer | ☐ | ☒ | Non-accelerated filer | ☐ | Smaller reporting company | Emerging growth company |
Page | |||||
March 31, 2024 | September 30, 2023 | ||||||||||
ASSETS | |||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Short-term investments | |||||||||||
Accounts receivable, less allowance for credit losses of $ | |||||||||||
Contract assets | |||||||||||
Inventories | |||||||||||
Income taxes receivable | |||||||||||
Prepaid expenses | |||||||||||
Other current assets | |||||||||||
Total Current Assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Operating lease assets, net | |||||||||||
Goodwill and intangible assets, net | |||||||||||
Deferred income taxes | |||||||||||
Other assets | |||||||||||
Total Assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current Liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Contract liabilities | |||||||||||
Accrued compensation and benefits | |||||||||||
Accrued product warranty | |||||||||||
Current operating lease liabilities | |||||||||||
Income taxes payable | |||||||||||
Other current liabilities | |||||||||||
Total Current Liabilities | |||||||||||
Deferred compensation | |||||||||||
Long-term operating lease liabilities | |||||||||||
Other long-term liabilities | |||||||||||
Total Liabilities | |||||||||||
Commitments and Contingencies (Note F) | |||||||||||
Stockholders' Equity: | |||||||||||
Preferred stock, par value $ | |||||||||||
Common stock, par value $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Treasury stock, | ( | ( | |||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total Stockholders' Equity | |||||||||||
Total Liabilities and Stockholders' Equity | $ | $ |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Revenues | $ | $ | $ | $ | |||||||||||||||||||
Cost of goods sold | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
Research and development expenses | |||||||||||||||||||||||
Operating income | |||||||||||||||||||||||
Interest income, net | ( | ( | ( | ( | |||||||||||||||||||
Income before income taxes | |||||||||||||||||||||||
Income tax provision | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ | |||||||||||||||||||
Weighted average shares: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted | |||||||||||||||||||||||
Dividends per share | $ | $ | $ | $ |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Foreign currency translation adjustments | ( | ||||||||||||||||||||||
Gain on cash flow commodity hedge | |||||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||
Additional | Other | ||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Paid-in | Retained | Treasury Stock | Comprehensive | |||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Shares | Amount | Income/(Loss) | Totals | ||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2023 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Shares withheld in lieu of employee tax withholding | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Dividends | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Shares withheld in lieu of employee tax withholding | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Dividends | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2024 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||||||||||||||||||||||||
Additional | Other | ||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Paid-in | Retained | Treasury Stock | Comprehensive | |||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Shares | Amount | Income/(Loss) | Totals | ||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2022 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Shares withheld in lieu of employee tax withholding | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Dividends | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
Gain on cash flow commodity hedge | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Shares withheld in lieu of employee tax withholding | — | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Dividends | — | — | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
Gain on cash flow commodity hedge | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2023 | $ | $ | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||
Six months ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Operating Activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation | |||||||||||
Stock-based compensation | |||||||||||
Unrealized mark-to-market gain on derivative contracts | ( | ||||||||||
Bad debt expense, net | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable, net | ( | ||||||||||
Contract assets and liabilities, net | |||||||||||
Inventories | ( | ( | |||||||||
Income taxes | ( | ||||||||||
Prepaid expenses and other current assets | |||||||||||
Accounts payable | ( | ||||||||||
Accrued liabilities | ( | ( | |||||||||
Other, net | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
Investing Activities: | |||||||||||
Purchases of short-term investments | ( | ( | |||||||||
Maturities of short-term investments | |||||||||||
Purchases of property, plant and equipment | ( | ( | |||||||||
Purchase of intangible assets | ( | ||||||||||
Proceeds from sale of property, plant and equipment | |||||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
Financing Activities: | |||||||||||
Shares withheld in lieu of employee tax withholding | ( | ( | |||||||||
Dividends paid | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
Net increase in cash and cash equivalents | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | |||||||||||
Cash and cash equivalents at beginning of period | |||||||||||
Cash and cash equivalents at end of period | $ | $ |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average basic shares | |||||||||||||||||||||||
Dilutive effect of restricted stock and restricted stock units | |||||||||||||||||||||||
Weighted average diluted shares | |||||||||||||||||||||||
Earnings per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ |
March 31, 2024 | September 30, 2023 | ||||||||||
Raw materials, parts and sub-assemblies | $ | $ | |||||||||
Work-in-progress | |||||||||||
Provision for excess and obsolete inventories | ( | ( | |||||||||
Total inventories | $ | $ |
March 31, 2024 | September 30, 2023 | ||||||||||
Land | $ | $ | |||||||||
Buildings and improvements | |||||||||||
Machinery and equipment | |||||||||||
Furniture and fixtures | |||||||||||
Construction in process | |||||||||||
$ | $ | ||||||||||
Less: Accumulated depreciation | ( | ( | |||||||||
Total property, plant and equipment, net | $ | $ |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Balance at beginning of period | $ | $ | $ | $ | |||||||||||||||||||
Increase to warranty expense | |||||||||||||||||||||||
Deduction for warranty charges | ( | ( | ( | ( | |||||||||||||||||||
Change due to foreign currency translation | ( | ||||||||||||||||||||||
Balance at end of period | $ | $ | $ | $ |
March 31, 2024 | September 30, 2023 | ||||||||||
Contract assets | $ | $ | |||||||||
Contract liabilities | ( | ( | |||||||||
Net contract liability | $ | ( | $ | ( |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
United States | $ | $ | $ | $ | |||||||||||||||||||
Canada | |||||||||||||||||||||||
Europe | |||||||||||||||||||||||
Middle East and Africa | |||||||||||||||||||||||
Mexico, Central and South America | |||||||||||||||||||||||
Asia/Pacific | |||||||||||||||||||||||
Total revenues by geographic destination | $ | $ | $ | $ |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Oil and gas (excludes petrochemical) | $ | $ | $ | $ | |||||||||||||||||||
Petrochemical | |||||||||||||||||||||||
Electric utility | |||||||||||||||||||||||
Commercial and other industrial | |||||||||||||||||||||||
Light rail traction power | |||||||||||||||||||||||
All others | |||||||||||||||||||||||
Total revenues by market sector | $ | $ | $ | $ |
Number of Restricted Stock Units | Weighted Average Grant Value Per Share | ||||||||||
Outstanding at September 30, 2023 | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited/canceled | |||||||||||
Outstanding at March 31, 2024 | $ |
Fair Value Measurements at March 31, 2024 | |||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value at March 31, 2024 | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Short-term investments | |||||||||||||||||||||||
Rabbi trust assets | |||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Deferred compensation |
Fair Value Measurements at September 30, 2023 | |||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value at September 30, 2023 | ||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Short-term investments | |||||||||||||||||||||||
Rabbi trust assets | |||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Deferred compensation |
Three months ended March 31, | Six months ended March 31, | |||||||||||||||||||||||||
Lease Cost | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
Operating lease cost | $ | $ | $ | $ | ||||||||||||||||||||||
Less: sublease income | ( | ( | ||||||||||||||||||||||||
Variable lease cost(1) | ||||||||||||||||||||||||||
Short-term lease cost(2) | ||||||||||||||||||||||||||
Total lease cost | $ | $ | $ | $ |
Operating Leases | March 31, 2024 | September 30, 2023 | ||||||||||||
Assets: | ||||||||||||||
Operating lease assets, net | $ | $ | ||||||||||||
Liabilities: | ||||||||||||||
Current operating lease liabilities | ||||||||||||||
Long-term operating lease liabilities | ||||||||||||||
Total lease liabilities | $ | $ |
Operating Leases | ||||||||
Remainder of 2024 | $ | |||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
2028 | ||||||||
Thereafter | ||||||||
Total future minimum lease payments | $ | |||||||
Less: present value discount (imputed interest) | ( | |||||||
Present value of lease liabilities | $ |
Three months ended March 31, | Six months ended March 31, | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Income before income taxes | $ | $ | $ | $ | |||||||||||||||||||
Income tax provision | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Effective tax rate | % | % | % | % |
Number | Description of Exhibits | |||||||
3.1 | — | |||||||
3.2 | — | |||||||
3.3 | — | |||||||
*31.1 | — | |||||||
*31.2 | — | |||||||
**32.1 | — | |||||||
**32.2 | — | |||||||
*101 | — | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets (Unaudited); (ii) Condensed Consolidated Statements of Operations (Unaudited); (iii) Condensed Consolidated Statements of Comprehensive Income (Unaudited); (iv) Condensed Consolidated Statements of Stockholders' Equity (Unaudited); (v) Condensed Consolidated Statements of Cash Flows (Unaudited); and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited), tagged as blocks of text and including detailed tags. | ||||||
*104 | — | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL (included as Exhibit 101). | ||||||
* Filed herewith | ||||||||
** Furnished herewith |
POWELL INDUSTRIES, INC. | ||||||||
(Registrant) | ||||||||
Date: May 1, 2024 | By: | /s/ Brett A. Cope | ||||||
Brett A. Cope | ||||||||
President and Chief Executive Officer | ||||||||
(Principal Executive Officer) | ||||||||
Date: May 1, 2024 | By: | /s/ Michael W. Metcalf | ||||||
Michael W. Metcalf | ||||||||
Executive Vice President | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial Officer) |
/s/ Brett A. Cope Brett A. Cope President and Chief Executive Officer (Principal Executive Officer) |
/s/ Michael W. Metcalf Michael W. Metcalf Executive Vice President Chief Financial Officer (Principal Financial Officer) |
/s/ Brett A. Cope Brett A. Cope President and Chief Executive Officer |
/s/ Michael W. Metcalf Michael W. Metcalf Executive Vice President Chief Financial Officer |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Sep. 30, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 331 | $ 273 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, shares issued (in shares) | 12,793,856 | 12,668,001 |
Common stock, shares outstanding (in shares) | 11,987,838 | 11,861,983 |
Treasury stock, shares (in shares) | 806,018 | 806,018 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Income Statement [Abstract] | ||||
Revenues | $ 255,108 | $ 171,444 | $ 449,125 | $ 298,302 |
Cost of goods sold | 192,388 | 138,007 | 338,211 | 245,401 |
Gross profit | 62,720 | 33,437 | 110,914 | 52,901 |
Selling, general and administrative expenses | 20,947 | 21,820 | 41,294 | 38,693 |
Research and development expenses | 2,284 | 1,543 | 4,251 | 3,044 |
Operating income | 39,489 | 10,074 | 65,369 | 11,164 |
Interest income, net | (4,428) | (899) | (8,426) | (1,423) |
Income before income taxes | 43,917 | 10,973 | 73,795 | 12,587 |
Income tax provision | 10,429 | 2,500 | 16,222 | 2,951 |
Net income | $ 33,488 | $ 8,473 | $ 57,573 | $ 9,636 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 2.79 | $ 0.71 | $ 4.81 | $ 0.81 |
Diluted (in dollars per share) | $ 2.75 | $ 0.70 | $ 4.73 | $ 0.80 |
Weighted average shares: | ||||
Basic (in shares) | 11,992 | 11,878 | 11,966 | 11,869 |
Diluted (in shares) | 12,191 | 12,149 | 12,167 | 12,109 |
Dividends per share (in dollars per share) | $ 0.2650 | $ 0.2625 | $ 0.5275 | $ 0.5225 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 33,488 | $ 8,473 | $ 57,573 | $ 9,636 |
Foreign currency translation adjustments | (2,269) | 427 | 816 | 2,605 |
Gain on cash flow commodity hedge | 0 | 111 | 0 | 329 |
Comprehensive income | $ 31,219 | $ 9,011 | $ 58,389 | $ 12,570 |
Overview and Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Overview and Summary of Significant Accounting Policies | Overview and Summary of Significant Accounting Policies Overview Powell Industries, Inc. (we, us, our, Powell or the Company) is a Delaware corporation founded by William E. Powell in 1947. Our major subsidiaries, all of which are wholly owned, include Powell Electrical Systems, Inc.; Powell (UK) Limited; Powell Canada Inc.; and Powell Industries International, B.V. We develop, design, manufacture and service custom-engineered equipment and systems that (1) distribute, control and monitor the flow of electrical energy and (2) provide protection to motors, transformers and other electrically powered equipment. We are headquartered in Houston, Texas, and serve the oil and gas and petrochemical markets, which include onshore and offshore production, liquefied natural gas (LNG) facilities and terminals, pipelines, refineries and petrochemical plants. Additional markets include electric utility, data centers, renewable energy, mining and metals, light rail traction power, pulp and paper, and other municipal, commercial and industrial markets. Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of Powell and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP), have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with respect to the interim condensed consolidated financial statements have been included. The results of operations for the interim periods are not necessarily indicative of the results for the entire fiscal year. We believe that these financial statements contain all adjustments necessary so that they are not misleading. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Powell and its subsidiaries included in Powell’s Annual Report on Form 10-K for the year ended September 30, 2023, which was filed with the Securities and Exchange Commission (SEC) on December 6, 2023. References to Fiscal 2024 and Fiscal 2023 used throughout this report shall mean the current fiscal year ending September 30, 2024 and the prior fiscal year ended September 30, 2023, respectively. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying footnotes. The most significant estimates used in our condensed consolidated financial statements affect revenue recognition and estimated cost recognition on our customer contracts, allowance for credit losses, provision for excess and obsolete inventory, warranty accruals and income taxes. The amounts recorded for warranties, legal, income taxes, impairment of long-lived assets (when applicable), liquidated damages and other contingent liabilities require judgments regarding the amount of expenses that will ultimately be incurred. We base our estimates on historical experience, forecasts and various other assumptions, as well as the specific circumstances surrounding these contingent liabilities, in evaluating the amount of liability that should be recorded. Additionally, the basis for recognition of deferred tax assets requires estimates related to future income and other assumptions regarding timing and future profitability because the ultimate realization of net deferred tax assets is dependent on the generation of future taxable income during periods in which temporary differences become deductible. Estimates routinely change as new events occur, additional information becomes available or operating environments change. Actual results may differ from our prior estimates. Accounting Standards Updates and Disclosure Rules Issued but Not Yet Adopted In November 2023, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires that public entities disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) on an annual and interim basis. It also requires that public entities disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures in assessing segment performance and resource allocation. Additionally, it requires that all existing annual disclosures about segment profit or loss and assets must be provided on an interim basis and clarifies that single reportable segment entities are subject to the disclosure requirement under Topic 280 in its entirety. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years beginning after December 15, 2024. A public entity should apply ASU 2023-07 retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. We are currently evaluating the impacts of the new standard. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which enhances the transparency of income tax disclosures. It requires greater disaggregation of information in the tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU is effective for fiscal years beginning after December 15, 2024, and should be applied on a prospective basis. Retrospective application and early adoption are permitted. We are currently evaluating the impacts of the new standard. In March 2024, the SEC adopted final rules designed to enhance and standardize disclosures related to the risks and impacts of climate-related matters. The final rules require registrants to disclose certain climate-related information in registration statements and annual reports. Such information relates to climate-related risks and risk management processes for, and governance and oversight activities of such risks. The final rules also include requirements to disclose the financial effects of severe weather events and other natural conditions in the audited financial statements. In addition, larger registrants will be required to disclose information about greenhouse gas emissions, which will be subject to a phased-in assurance requirement. These disclosure requirements will be effective for the Company's fiscal year beginning October 1, 2025. In April 2024, the SEC voluntarily stayed the final rules as a result of pending legal challenges. We are currently evaluating the impacts of the final rules on our consolidated financial statements and related disclosures.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share We compute basic earnings per share by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common and potential common share include the weighted average of additional shares associated with the incremental effect of dilutive restricted stock and restricted stock units. The following table reconciles basic and diluted weighted average shares used in the computation of earnings per share (in thousands, except per share data):
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Detail of Selected Balance Sheet Accounts |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Detail of Selected Balance Sheet Accounts | Detail of Selected Balance Sheet Accounts Inventories The components of inventories are summarized below (in thousands):
Property, Plant and Equipment Property, plant and equipment are summarized below (in thousands):
There were no assets under finance lease as of March 31, 2024 or September 30, 2023. Intangible Asset In December 2023, we acquired intellectual property for a total consideration of $0.5 million, of which $250 thousand was paid in cash at the acquisition date. Accrued Product Warranty Activity in our product warranty accrual consisted of the following (in thousands):
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Revenue Recognition Our revenues are primarily generated from the manufacturing of custom-engineered products and systems under long-term fixed-price contracts under which we agree to manufacture various products such as traditional and arc-resistant distribution switchgear and control gear, medium-voltage circuit breakers, monitoring and control communications systems, motor control centers, switches and bus duct systems. These products may be sold separately as an engineered solution but are typically integrated into custom-built enclosures which we also build. These enclosures are referred to as power control room substations (PCRs®), custom-engineered modules or electrical houses (E-Houses). Some contracts may also include the installation and the commissioning of these enclosures. Revenue from these contracts is generally recognized over time utilizing the cost-to-cost method. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. We believe that this method is the most accurate representation of our performance because it directly measures the value of the services transferred to the customer over time as we incur costs on our contracts. Contract costs include all direct materials, labor and indirect costs related to contract performance, which may include indirect labor, supplies, tools, repairs and depreciation costs. We also have contracts to provide field service inspection, installation, commissioning, modification, and repair services, as well as retrofit and retrofill components for existing systems. If the service contract terms give us the right to invoice the customer for an amount that corresponds directly with the value of our performance completed to date (i.e., a service contract in which we bill a fixed amount for each hour of service provided), then we recognize revenue over time in each reporting period corresponding to the amount that we have the right to invoice. Our performance obligations are satisfied as the work progresses. Revenues from our custom-engineered products and value-added services transferred to customers over time accounted for approximately 95% of revenues for the three months ended March 31, 2024, 94% of revenues for the six months ended March 31, 2024, and 93% of revenues for the three and six months ended March 31, 2023. We also have sales orders for spare parts and replacement circuit breakers for switchgear that are obsolete or that are no longer produced by the original manufacturer. Revenues from these sales orders are recognized at the time we fulfill our performance obligation to the customer, which is typically upon shipment and represented approximately 5% of revenues for the three months ended March 31, 2024, 6% of revenues for the six months ended March 31, 2024, and 7% of revenues for the three and six months ended March 31, 2023. Additionally, some contracts may contain a cancellation clause that could limit the amount of revenue we are able to recognize over time. In these instances, revenue and costs associated with these contracts are deferred and recognized at a point in time when the performance obligation is fulfilled. Selling and administrative costs incurred in relation to obtaining a contract are typically expensed as incurred. We periodically utilize a third-party sales agent to obtain a contract and will pay a commission to that agent. We record the full commission liability to the third-party sales agents at the order date, with a corresponding deferred asset. As the project progresses, we record commission expense based on percentage of completion rates that correlate to the project and reduce the deferred asset. Once we have been paid by the customer, we pay the commission and the deferred liability is reduced. Performance Obligations A performance obligation is a promise in a contract or with a customer to transfer a distinct good or service. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue as the performance obligations are satisfied. To determine the proper revenue recognition for contracts, we evaluate whether a contract should be accounted for as more than one performance obligation or, less commonly, whether two or more contracts should be combined and accounted for as one performance obligation. This evaluation of performance obligations requires significant judgment. The majority of our contracts have a single performance obligation where multiple engineered products and services are combined into a single custom-engineered solution. Our contracts include a standard one-year assurance warranty. Occasionally, we provide service-type warranties that will extend the warranty period. These extended warranties qualify as a separate performance obligation, and revenue is deferred and recognized over the warranty period. If we determine during the evaluation of the contract that there are multiple performance obligations, we allocate the transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Remaining unsatisfied performance obligations, which we refer to as backlog, represent the estimated transaction price for goods and services for which we have a material right, but work has not been performed. As of March 31, 2024, we had backlog of $1.3 billion, of which approximately $733 million is expected to be recognized as revenue within the next twelve months. Backlog may not be indicative of future operating results as orders may be cancelled or modified by our customers. Our backlog does not include service and maintenance-type contracts for which we have the right to invoice as services are performed. Contract Estimates Actual revenues and project costs may vary from previous estimates due to changes in a variety of factors. The cost estimation process is based upon the professional knowledge and experience of our engineers, project managers and financial professionals. Factors that are considered in estimating the work to be completed and ultimate contract recovery include the availability and productivity of labor, the nature and complexity of the work to be performed, the availability of materials, and the effect of any delays on our project performance. We periodically review our job performance, job conditions, estimated profitability and final contract settlements, including our estimate of total costs and make revisions to costs and income in the period in which the revisions are probable and reasonably estimable. We bear the risk of cost overruns in most of our contracts, which may result in reduced profits. Whenever revisions of estimated contract costs and contract values indicate that the contract costs will exceed estimated revenues, thus creating a loss, a provision for the total estimated loss is recorded in that period. For the six months ended March 31, 2024 and 2023, our operating results were positively impacted by $7.8 million and $7.4 million, respectively, as a result of net changes in contract estimates related to projects in progress at the beginning of the respective period. These changes in estimates resulted primarily from favorable project execution, reduced cost estimates and negotiations of variable consideration, discussed below, as well as revenue recognized from project cancellations and other changes in facts and circumstances during these periods. Gross unfavorable changes in contract estimates were immaterial for both the six months ended March 31, 2024 and 2023. Variable Consideration It is common for our long-term contracts to contain variable consideration that can either increase or decrease the transaction price. Due to the nature of our contracts, estimating total cost and revenue can be complex and subject to variability due to change orders, back charges, spare parts, early completion bonuses, customer allowances and liquidated damages. We estimate the amount of variable consideration based on the expected value method, which is the sum of the probability-weighted amounts, or the most likely amount method which uses various factors including experience with similar transactions and assessment of our anticipated performance. Variable consideration is included in the transaction price if legally enforceable and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur once the uncertainty associated with the variable consideration is resolved. Contract Modifications Contracts may be modified for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the enforceable rights and obligations under the contract. Most of our contract modifications are for goods and services that are not distinct from the existing performance obligation. Contract modifications result in a cumulative catch-up adjustment to revenue based on our measure of progress for the performance obligation. Contract Balances The timing of revenue recognition, billings and cash collections affects accounts receivable, contract assets and contract liabilities in our Condensed Consolidated Balance Sheets. Contract assets are recorded when revenues are recognized in excess of amounts billed for fixed-price contracts as determined by the billing milestone schedule. Contract assets are transferred to accounts receivable when billing milestones have been met, or we have an unconditional right to payment. Contract liabilities typically represent advance payments from contractual billing milestones and billings in excess of revenue recognized. It is unusual to have advanced milestone payments with a term greater than one year, which could represent a financing component on the contract. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period and are generally classified as current. Contract assets and liabilities as of March 31, 2024 and September 30, 2023 are summarized below (in thousands):
Our net contract billing position remained a net liability at both March 31, 2024 and September 30, 2023, primarily due to favorable contract billing milestones. We typically allocate a significant percentage of the progress billing to the early stages of the contract. These favorable billing milestones are driving the increase in the net contract liability at March 31, 2024. To determine the amount of revenue recognized during the period from contract liabilities, we first allocate revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that balance. During the six months ended March 31, 2024, we recognized revenue of $185.4 million that was related to contract liabilities outstanding at September 30, 2023. The timing of our invoice process is typically dependent on the completion of certain milestones and contract terms and subject to agreement by our customer. Payment is typically expected within 30 days of invoice. Any uncollected invoiced amounts for our performance obligations recognized over time, including contract retentions, are recorded as accounts receivable in the Condensed Consolidated Balance Sheets. Certain contracts allow customers to withhold a small percentage of billings pursuant to retainage provisions, and such amounts are generally due upon completion of the contract and acceptance of the project by the customer. Based on our experience in recent years, the majority of these retainage balances are expected to be collected within approximately twelve months. As of both March 31, 2024 and September 30, 2023, we had retention amounts of $7.4 million. Of the retained amount at March 31, 2024, $7.1 million is expected to be collected in the next twelve months and is recorded in accounts receivable. The remaining $0.3 million is recorded in other assets. Disaggregation of Revenue The following tables present our disaggregated revenue by geographic destination and market sector for the three and six months ended March 31, 2024 and 2023 (in thousands):
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Long-Term Debt |
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Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt U.S. Revolver On October 4, 2023, we entered into a third amendment (the Third Amendment) to our credit agreement with Bank of America, N.A. (as amended, the U.S. Revolver). The Third Amendment added Texas Capital Bank as Syndication Agent and a lender, increased the amount of the revolving line of credit from $125.0 million to $150.0 million, and extended the expiry date to October 4, 2028. The aggregate commitment of $150.0 million consists of $100.0 million committed by Bank of America and $50.0 million committed by Texas Capital Bank. As amended by the Third Amendment, the lesser of (a) $60 million, (b) 60% of available cash, and (c) the aggregate face amount of the issued but undrawn letters of credit that are not cash-secured, shall be deducted from consolidated funded indebtedness, when calculating the consolidated net leverage ratio. We have the option to cash collateralize all or a portion of the letters of credit outstanding, which would favorably impact the consolidated funded indebtedness calculation and the consolidated net leverage ratio. As of March 31, 2024, there were no amounts borrowed under the U.S. Revolver, and letters of credit outstanding were $87.8 million. There was $62.2 million available for the issuance of letters of credit and borrowings under the U.S. Revolver as of March 31, 2024. As of March 31, 2024, we were in compliance with all of the financial covenants of the U.S. Revolver.
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Commitments and Contingencies |
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Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Letters of Credit, Bank Guarantees and Bonds Certain customers require us to post letters of credit, bank guarantees or surety bonds. These security instruments assure that we will perform under the terms of our contract. In the event of default, the counterparty may demand payment from the bank under a letter of credit or bank guarantee, or performance by the surety under a bond. To date, there have been no significant draws or claims related to security instruments for the periods reported. We were contingently liable for letters of credit of $87.8 million as of March 31, 2024. We also had surety bonds totaling $481.9 million that were outstanding, with additional bonding capacity of $718.1 million available, at March 31, 2024. We have strong surety relationships; however, a change in market conditions or the sureties' assessment of our financial position could cause the sureties to require cash collateralization for undischarged liabilities under the bonds. We have an $18.9 million facility agreement (Facility Agreement) between Powell (UK) Limited and a large international bank that provides Powell (UK) Limited the ability to enter into bank guarantees as well as forward exchange contracts and currency options. At March 31, 2024, we had outstanding guarantees totaling $7.4 million, with an additional capacity of $11.5 million available under this Facility Agreement. The Facility Agreement provides for customary events of default and carries cross-default provisions with the U.S. Revolver. If an event of default (as defined in the Facility Agreement) occurs and is continuing, per the terms and subject to the conditions set forth therein, obligations outstanding under the Facility Agreement may be accelerated and declared immediately due and payable. Additionally, we are required to maintain cash collateral for guarantees greater than two years. As of March 31, 2024, we were in compliance with all of the financial covenants of the Facility Agreement. Litigation We are involved in various legal proceedings, claims and other disputes arising from our commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and for which the outcomes are not predictable. Although we can give no assurances about the resolution of pending claims, litigation or other disputes, and the effect such outcomes may have on us, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on our consolidated financial position or results of operations or liquidity. Liquidated Damages Certain of our customer contracts have schedule and performance obligation clauses that, if we fail to meet them, could require us to pay liquidated damages. Each individual contract defines the conditions under which the customer may make a claim against us. As of March 31, 2024, certain contracts had a probable exposure to liquidated damages claims of $1.7 million, which could possibly increase to $2.1 million under certain circumstances. Based on our actual or projected failure to meet these various contractual commitments, $1.0 million has been recorded as a reduction to revenue. We will attempt to obtain change orders, contract extensions or accelerate project completion, which may resolve the potential for any unrecorded liquidated damages claims. Should we fail to achieve relief on some or all of these contractual obligations, we could be required to pay additional liquidated damages, which could negatively impact our future operating results.
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Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Refer to our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 for a full description of our existing stock-based compensation plans. Restricted Stock Units We issue restricted stock units (RSUs) to certain officers and key employees of the Company. The fair value of the RSUs is based on the price of our common stock as reported on the NASDAQ Global Market on the grant dates. Typically, these grants vest over a three-year period from the date of issuance and are a blend of time-based and performance-based shares. The portion of the grant that is time-based typically vests over a three-year period on each anniversary of the grant date, based on continued employment. The performance-based shares vest based on the three-year earnings and safety performance of the Company following the grant date. At March 31, 2024, there were 193,346 RSUs outstanding. The RSUs do not have voting rights but do receive dividend equivalents upon vesting which are accrued quarterly. Additionally, the shares of common stock underlying the RSUs are not considered issued and outstanding until vested and common stock is issued. Total RSU activity (number of shares) for the six months ended March 31, 2024 is summarized below:
During the six months ended March 31, 2024 and 2023, we recorded compensation expense of $2.7 million and $2.5 million, respectively, related to the RSUs. Restricted Stock In December 2023, the Company's Compensation and Human Capital Committee revised the non-employee directors' annual restricted stock compensation from a fixed-shares arrangement to a fixed-value arrangement, retrospectively effective on October 1, 2023. Prior to October 1, 2023, each non-employee director received 2,400 restricted shares of the Company’s common stock annually. Fifty percent of the restricted stock granted to each of our non-employee directors vested immediately, while the remaining fifty percent vested on the anniversary of the grant date. Compensation expense was recognized immediately for the first fifty percent of the restricted stock granted, while compensation expense for the remaining fifty percent was recognized over the remaining vesting period. Subsequent to October 1, 2023, each non-employee director shall receive restricted shares of the Company's common stock valued at $0.1 million annually. The number of granted shares is calculated by dividing the $0.1 million by the average of high and low prices of our common stock on the grant date. The shares shall vest on the earlier of the grant anniversary date or the date of the next annual meeting of stockholders, whichever occurs first. In February 2024, 4,620 shares of restricted stock were issued to our non-employee directors at a price of $153.81 per share. During the six months ended March 31, 2024 and 2023, we recorded compensation expense of $0.2 million and $0.5 million, respectively, related to restricted stock.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements We measure certain financial assets and liabilities at fair value. Fair value is defined as an “exit price,” which represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in valuing an asset or liability. The accounting guidance requires the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. As a basis for considering such assumptions and inputs, a fair value hierarchy has been established which identifies and prioritizes three levels of inputs to be used in measuring fair value. The three levels of the fair value hierarchy are as follows: Level 1 — Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 — Inputs other than the quoted prices in active markets that are observable either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data. Level 3 — Unobservable inputs that are supported by little or no market data and require the reporting entity to develop its own assumptions. The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2024 (in thousands):
The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2023 (in thousands):
Fair value guidance requires certain fair value disclosures be presented in both interim and annual reports. The estimated fair value amounts of financial instruments have been determined using available market information and valuation methodologies described below. Cash and cash equivalents – Cash and cash equivalents, primarily funds held in money market savings instruments, are reported at their current carrying value, which approximates fair value due to the short-term nature of these instruments and are included in cash and cash equivalents in our Condensed Consolidated Balance Sheets. Short-term investments – Short-term investments include time deposits with original maturities of three months or more. Rabbi trust assets and deferred compensation – We hold investments in an irrevocable rabbi trust for our deferred compensation plan. The assets are primarily related to company-owned life insurance policies and are included in other assets in the accompanying Condensed Consolidated Balance Sheets. Because the mutual funds and company-owned life insurance policies are combined in the plan, they are categorized as Level 2 in the fair value measurement hierarchy. The deferred compensation liability represents the investment options that the plan participants have designated to serve as the basis for measurement of the notional value of their accounts. Because the deferred compensation liability is intended to offset the plan assets, it is also categorized as Level 2 in the fair value measurement hierarchy. There were no transfers between levels within the fair value measurement hierarchy during the quarter ended March 31, 2024.
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Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases Our leases consist primarily of office and construction equipment. All of our future lease obligations are related to non-cancelable operating leases. The following table provides a summary of lease cost components for the three and six months ended March 31, 2024 and 2023, respectively (in thousands):
(1) Variable lease cost represents common area maintenance charges related to our Canadian office space lease. (2) Short-term lease cost includes leases and rentals with initial terms of one year or less. We recognize operating lease assets and operating lease liabilities representing the present value of the remaining lease payments for leases with initial terms greater than twelve months. Leases with initial terms of twelve months or less are not recorded in our Condensed Consolidated Balance Sheets. The following table provides a summary of the operating lease assets and operating lease liabilities included in our Condensed Consolidated Balance Sheets as of March 31, 2024 and September 30, 2023, respectively (in thousands):
The following table provides the maturities of our operating lease liabilities as of March 31, 2024 (in thousands):
The weighted average discount rate as of March 31, 2024 was 3.81%. The weighted average remaining lease term was 2.57 years at March 31, 2024.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The calculation of the effective tax rate is as follows (in thousands):
Our income tax provision reflects an effective tax rate on pre-tax income of 24% and 22% for the three and six months ended March 31, 2024, respectively, compared to 23% for both the three and six months ended March 31, 2023. The effective tax rate for the three and six months ended March 31, 2024 was favorably impacted by the estimated Research and Development Tax Credit (R&D Tax Credit) as well as discrete items related to the vesting of RSUs and the release of a reserve for unrecognized tax benefits upon expiration of the statute of limitations. These items were offset by an inclusion related to U.S. global intangible income and the tax expense related to certain nondeductible expenses. The effective tax rate for the three and six months ended March 31, 2023 was favorably impacted by the estimated R&D Tax Credit and the projected utilization of net operating loss carryforwards in the U.K. that had been fully reserved with a valuation allowance. The favorable impacts were offset by state income tax expense, certain nondeductible expenses and an income inclusion related to U.S. global intangible income.
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Subsequent Events |
6 Months Ended |
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Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Quarterly Dividend Declared On April 30, 2024, our Board of Directors declared a quarterly cash dividend on our common stock in the amount of $0.2650 per share. The dividend is payable on June 12, 2024 to stockholders of record at the close of business on May 15, 2024.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
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Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2024 |
Mar. 31, 2023 |
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Pay vs Performance Disclosure | ||||||
Net loss | $ 33,488 | $ 24,085 | $ 8,473 | $ 1,162 | $ 57,573 | $ 9,636 |
Insider Trading Arrangements |
3 Months Ended | 6 Months Ended |
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Mar. 31, 2024
shares
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Mar. 31, 2024
shares
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Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | On February 23, 2024, Michael W. Metcalf, Executive Vice President and Chief Financial Officer, adopted a “Rule 10b5-1 trading arrangement,” as the term is defined in Item 408(a) of Regulation S-K, for the sale of up to 10,100 shares of the Company’s common stock, subject to certain conditions, from June 7, 2024 through February 14, 2025. On February 26, 2024, Brett A. Cope, President and Chief Executive Officer, adopted a “Rule 10b5-1 trading arrangement,” as the term is defined in Item 408(a) of Regulation S-K, for the sale of up to 11,000 shares of the Company’s common stock, subject to certain conditions, from June 14, 2024 through December 19, 2024.
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Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Michael W. Metcalf [Member] | ||
Trading Arrangements, by Individual | ||
Name | Michael W. Metcalf | |
Title | Executive Vice President and Chief Financial Officer | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | February 23, 2024 | |
Arrangement Duration | 252 days | |
Aggregate Available | 10,100 | 10,100 |
Brett A. Cope [Member] | ||
Trading Arrangements, by Individual | ||
Name | Brett A. Cope | |
Title | President and Chief Executive Officer | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | February 26, 2024 | |
Arrangement Duration | 188 days | |
Aggregate Available | 11,000 | 11,000 |
Overview and Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of Powell and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP), have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with respect to the interim condensed consolidated financial statements have been included. The results of operations for the interim periods are not necessarily indicative of the results for the entire fiscal year. We believe that these financial statements contain all adjustments necessary so that they are not misleading. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Powell and its subsidiaries included in Powell’s Annual Report on Form 10-K for the year ended September 30, 2023, which was filed with the Securities and Exchange Commission (SEC) on December 6, 2023. References to Fiscal 2024 and Fiscal 2023 used throughout this report shall mean the current fiscal year ending September 30, 2024 and the prior fiscal year ended September 30, 2023, respectively.
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Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying footnotes. The most significant estimates used in our condensed consolidated financial statements affect revenue recognition and estimated cost recognition on our customer contracts, allowance for credit losses, provision for excess and obsolete inventory, warranty accruals and income taxes. The amounts recorded for warranties, legal, income taxes, impairment of long-lived assets (when applicable), liquidated damages and other contingent liabilities require judgments regarding the amount of expenses that will ultimately be incurred. We base our estimates on historical experience, forecasts and various other assumptions, as well as the specific circumstances surrounding these contingent liabilities, in evaluating the amount of liability that should be recorded. Additionally, the basis for recognition of deferred tax assets requires estimates related to future income and other assumptions regarding timing and future profitability because the ultimate realization of net deferred tax assets is dependent on the generation of future taxable income during periods in which temporary differences become deductible. Estimates routinely change as new events occur, additional information becomes available or operating environments change. Actual results may differ from our prior estimates.
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Accounting Standards Updates Issued but Not Yet Adopted | Accounting Standards Updates and Disclosure Rules Issued but Not Yet Adopted In November 2023, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires that public entities disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) on an annual and interim basis. It also requires that public entities disclose the title and position of the CODM and an explanation of how the CODM uses the reported measures in assessing segment performance and resource allocation. Additionally, it requires that all existing annual disclosures about segment profit or loss and assets must be provided on an interim basis and clarifies that single reportable segment entities are subject to the disclosure requirement under Topic 280 in its entirety. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within those fiscal years beginning after December 15, 2024. A public entity should apply ASU 2023-07 retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. We are currently evaluating the impacts of the new standard. In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which enhances the transparency of income tax disclosures. It requires greater disaggregation of information in the tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU is effective for fiscal years beginning after December 15, 2024, and should be applied on a prospective basis. Retrospective application and early adoption are permitted. We are currently evaluating the impacts of the new standard. In March 2024, the SEC adopted final rules designed to enhance and standardize disclosures related to the risks and impacts of climate-related matters. The final rules require registrants to disclose certain climate-related information in registration statements and annual reports. Such information relates to climate-related risks and risk management processes for, and governance and oversight activities of such risks. The final rules also include requirements to disclose the financial effects of severe weather events and other natural conditions in the audited financial statements. In addition, larger registrants will be required to disclose information about greenhouse gas emissions, which will be subject to a phased-in assurance requirement. These disclosure requirements will be effective for the Company's fiscal year beginning October 1, 2025. In April 2024, the SEC voluntarily stayed the final rules as a result of pending legal challenges. We are currently evaluating the impacts of the final rules on our consolidated financial statements and related disclosures.
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Revenue Recognition | Revenue Recognition Our revenues are primarily generated from the manufacturing of custom-engineered products and systems under long-term fixed-price contracts under which we agree to manufacture various products such as traditional and arc-resistant distribution switchgear and control gear, medium-voltage circuit breakers, monitoring and control communications systems, motor control centers, switches and bus duct systems. These products may be sold separately as an engineered solution but are typically integrated into custom-built enclosures which we also build. These enclosures are referred to as power control room substations (PCRs®), custom-engineered modules or electrical houses (E-Houses). Some contracts may also include the installation and the commissioning of these enclosures. Revenue from these contracts is generally recognized over time utilizing the cost-to-cost method. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. We believe that this method is the most accurate representation of our performance because it directly measures the value of the services transferred to the customer over time as we incur costs on our contracts. Contract costs include all direct materials, labor and indirect costs related to contract performance, which may include indirect labor, supplies, tools, repairs and depreciation costs. We also have contracts to provide field service inspection, installation, commissioning, modification, and repair services, as well as retrofit and retrofill components for existing systems. If the service contract terms give us the right to invoice the customer for an amount that corresponds directly with the value of our performance completed to date (i.e., a service contract in which we bill a fixed amount for each hour of service provided), then we recognize revenue over time in each reporting period corresponding to the amount that we have the right to invoice. Our performance obligations are satisfied as the work progresses. Revenues from our custom-engineered products and value-added services transferred to customers over time accounted for approximately 95% of revenues for the three months ended March 31, 2024, 94% of revenues for the six months ended March 31, 2024, and 93% of revenues for the three and six months ended March 31, 2023. We also have sales orders for spare parts and replacement circuit breakers for switchgear that are obsolete or that are no longer produced by the original manufacturer. Revenues from these sales orders are recognized at the time we fulfill our performance obligation to the customer, which is typically upon shipment and represented approximately 5% of revenues for the three months ended March 31, 2024, 6% of revenues for the six months ended March 31, 2024, and 7% of revenues for the three and six months ended March 31, 2023. Additionally, some contracts may contain a cancellation clause that could limit the amount of revenue we are able to recognize over time. In these instances, revenue and costs associated with these contracts are deferred and recognized at a point in time when the performance obligation is fulfilled. Selling and administrative costs incurred in relation to obtaining a contract are typically expensed as incurred. We periodically utilize a third-party sales agent to obtain a contract and will pay a commission to that agent. We record the full commission liability to the third-party sales agents at the order date, with a corresponding deferred asset. As the project progresses, we record commission expense based on percentage of completion rates that correlate to the project and reduce the deferred asset. Once we have been paid by the customer, we pay the commission and the deferred liability is reducedPerformance Obligations A performance obligation is a promise in a contract or with a customer to transfer a distinct good or service. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue as the performance obligations are satisfied. To determine the proper revenue recognition for contracts, we evaluate whether a contract should be accounted for as more than one performance obligation or, less commonly, whether two or more contracts should be combined and accounted for as one performance obligation. This evaluation of performance obligations requires significant judgment. The majority of our contracts have a single performance obligation where multiple engineered products and services are combined into a single custom-engineered solution. Our contracts include a standard one-year assurance warranty. Occasionally, we provide service-type warranties that will extend the warranty period. These extended warranties qualify as a separate performance obligation, and revenue is deferred and recognized over the warranty period. If we determine during the evaluation of the contract that there are multiple performance obligations, we allocate the transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. Remaining unsatisfied performance obligations, which we refer to as backlog, represent the estimated transaction price for goods and services for which we have a material right, but work has not been performed.Contract Estimates Actual revenues and project costs may vary from previous estimates due to changes in a variety of factors. The cost estimation process is based upon the professional knowledge and experience of our engineers, project managers and financial professionals. Factors that are considered in estimating the work to be completed and ultimate contract recovery include the availability and productivity of labor, the nature and complexity of the work to be performed, the availability of materials, and the effect of any delays on our project performance. We periodically review our job performance, job conditions, estimated profitability and final contract settlements, including our estimate of total costs and make revisions to costs and income in the period in which the revisions are probable and reasonably estimable. We bear the risk of cost overruns in most of our contracts, which may result in reduced profits. Whenever revisions of estimated contract costs and contract values indicate that the contract costs will exceed estimated revenues, thus creating a loss, a provision for the total estimated loss is recorded in that period. Variable Consideration It is common for our long-term contracts to contain variable consideration that can either increase or decrease the transaction price. Due to the nature of our contracts, estimating total cost and revenue can be complex and subject to variability due to change orders, back charges, spare parts, early completion bonuses, customer allowances and liquidated damages. We estimate the amount of variable consideration based on the expected value method, which is the sum of the probability-weighted amounts, or the most likely amount method which uses various factors including experience with similar transactions and assessment of our anticipated performance. Variable consideration is included in the transaction price if legally enforceable and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur once the uncertainty associated with the variable consideration is resolved. Contract Modifications Contracts may be modified for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the enforceable rights and obligations under the contract. Most of our contract modifications are for goods and services that are not distinct from the existing performance obligation. Contract modifications result in a cumulative catch-up adjustment to revenue based on our measure of progress for the performance obligation. Contract Balances The timing of revenue recognition, billings and cash collections affects accounts receivable, contract assets and contract liabilities in our Condensed Consolidated Balance Sheets. Contract assets are recorded when revenues are recognized in excess of amounts billed for fixed-price contracts as determined by the billing milestone schedule. Contract assets are transferred to accounts receivable when billing milestones have been met, or we have an unconditional right to payment. Contract liabilities typically represent advance payments from contractual billing milestones and billings in excess of revenue recognized. It is unusual to have advanced milestone payments with a term greater than one year, which could represent a financing component on the contract. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period and are generally classified as current.The timing of our invoice process is typically dependent on the completion of certain milestones and contract terms and subject to agreement by our customer. Payment is typically expected within 30 days of invoice. Any uncollected invoiced amounts for our performance obligations recognized over time, including contract retentions, are recorded as accounts receivable in the Condensed Consolidated Balance Sheets. Certain contracts allow customers to withhold a small percentage of billings pursuant to retainage provisions, and such amounts are generally due upon completion of the contract and acceptance of the project by the customer. Based on our experience in recent years, the majority of these retainage balances are expected to be collected within approximately twelve months.
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Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Basic and Diluted Weighted Average Shares used in Computation of Earnings Per Share | The following table reconciles basic and diluted weighted average shares used in the computation of earnings per share (in thousands, except per share data):
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Detail of Selected Balance Sheet Accounts (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Inventories | The components of inventories are summarized below (in thousands):
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Property, Plant and Equipment | Property, plant and equipment are summarized below (in thousands):
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Activity in Product Warranty Accrual | Activity in our product warranty accrual consisted of the following (in thousands):
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Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Contract Asset and Liabilities | Contract assets and liabilities as of March 31, 2024 and September 30, 2023 are summarized below (in thousands):
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Disaggregation of Revenue | The following tables present our disaggregated revenue by geographic destination and market sector for the three and six months ended March 31, 2024 and 2023 (in thousands):
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Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Units Activity | Total RSU activity (number of shares) for the six months ended March 31, 2024 is summarized below:
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Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Assets and Liabilities Measured on Recurring Basis | The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2024 (in thousands):
The following table summarizes the fair value of our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2023 (in thousands):
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Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Cost | The following table provides a summary of lease cost components for the three and six months ended March 31, 2024 and 2023, respectively (in thousands):
(1) Variable lease cost represents common area maintenance charges related to our Canadian office space lease. (2) Short-term lease cost includes leases and rentals with initial terms of one year or less.
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Operating Lease Assets and Liabilities | The following table provides a summary of the operating lease assets and operating lease liabilities included in our Condensed Consolidated Balance Sheets as of March 31, 2024 and September 30, 2023, respectively (in thousands):
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Maturities of Operating Lease Liabilities | The following table provides the maturities of our operating lease liabilities as of March 31, 2024 (in thousands):
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Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Calculation of the Effective Income Tax Rate | The calculation of the effective tax rate is as follows (in thousands):
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Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
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Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2024 |
Mar. 31, 2023 |
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Numerator: | ||||||
Net income | $ 33,488 | $ 24,085 | $ 8,473 | $ 1,162 | $ 57,573 | $ 9,636 |
Denominator: | ||||||
Weighted average basic shares (in shares) | 11,992 | 11,878 | 11,966 | 11,869 | ||
Dilutive effect of restricted stock and restricted stock units (in shares) | 199 | 271 | 201 | 240 | ||
Weighted average diluted shares (in shares) | 12,191 | 12,149 | 12,167 | 12,109 | ||
Earnings per share: | ||||||
Basic (in dollars per share) | $ 2.79 | $ 0.71 | $ 4.81 | $ 0.81 | ||
Diluted (in dollars per share) | $ 2.75 | $ 0.70 | $ 4.73 | $ 0.80 |
Detail of Selected Balance Sheet Accounts - Components of Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Sep. 30, 2023 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials, parts and sub-assemblies | $ 87,564 | $ 68,631 |
Work-in-progress | 1,204 | 1,379 |
Provision for excess and obsolete inventories | (6,693) | (6,145) |
Total inventories | $ 82,075 | $ 63,865 |
Detail of Selected Balance Sheet Accounts - Schedule of Property, Plant and Equipment (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Sep. 30, 2023 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 245,565 | $ 243,312 |
Less: Accumulated depreciation | (148,910) | (145,687) |
Total property, plant and equipment, net | 96,655 | 97,625 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 21,606 | 21,526 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 124,070 | 121,454 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 94,683 | 92,477 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 3,803 | 3,726 |
Construction in process | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 1,403 | $ 4,129 |
Detail of Selected Balance Sheet Accounts - Narrative (Details) - USD ($) |
1 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
Sep. 30, 2023 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Finance lease, assets | $ 0 | $ 0 | ||
Asset Acquisition [Line Items] | ||||
Payment to acquire intangible assets | $ 250,000 | $ 0 | ||
Intellectual Property | ||||
Asset Acquisition [Line Items] | ||||
Intangible asset acquisition, consideration | $ 500,000 | |||
Payment to acquire intangible assets | $ 250,000 |
Detail of Selected Balance Sheet Accounts - Activity in Product Warranty Accrual (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
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Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Balance at beginning of period | $ 3,680 | $ 2,380 | $ 3,305 | $ 2,345 |
Increase to warranty expense | 1,867 | 1,211 | 2,994 | 1,690 |
Deduction for warranty charges | (968) | (882) | (1,742) | (1,335) |
Change due to foreign currency translation | (11) | 2 | 11 | 11 |
Balance at end of period | $ 4,568 | $ 2,711 | $ 4,568 | $ 2,711 |
Revenue - Narrative (Details) - Product Concentration Risk - Revenue from Contract with Customer Benchmark |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Transferred over Time | ||||
Revenue from External Customer [Line Items] | ||||
Concentration risk, percentage | 95.00% | 93.00% | 94.00% | 93.00% |
Transferred at Point in Time | ||||
Revenue from External Customer [Line Items] | ||||
Concentration risk, percentage | 5.00% | 7.00% | 6.00% | 7.00% |
Revenue - Performance Obligations and Contract Estimates (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Standard assurance warranty, period | 1 year | |
Remaining performance obligation, amount | $ 1,300.0 | |
Changes in contract estimates related to projects in progress | 7.8 | $ 7.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||
Remaining performance obligation, amount | $ 733.0 | |
Remaining performance obligation, expected timing of satisfaction, period | 12 months |
Revenue - Contract Balances (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Sep. 30, 2023 |
|
Revenue from Contract with Customer [Abstract] | ||
Contract assets | $ 75,010 | $ 60,621 |
Contract liabilities | (315,699) | (279,796) |
Net contract liability | (240,689) | $ (219,175) |
Revenue recognized related to contract liabilities | 185,400 | |
Retention amounts included in accounts receivable | 7,400 | |
Retained amount expected to be collected in the next twelve months | 7,100 | |
Retained amount expected to be collected | $ 300 |
Stock-Based Compensation - Schedule of Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) |
6 Months Ended |
---|---|
Mar. 31, 2024
$ / shares
shares
| |
Number of Restricted Stock Units | |
Outstanding at beginning of period (in shares) | shares | 292,497 |
Granted (in shares) | shares | 42,110 |
Vested (in shares) | shares | (141,261) |
Forfeited/canceled (in shares) | shares | 0 |
Outstanding at end of period (in shares) | shares | 193,346 |
Weighted Average Grant Value Per Share | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 22.90 |
Granted (in dollars per share) | $ / shares | 85.86 |
Vested (in dollars per share) | $ / shares | 26.02 |
Forfeited/canceled (in dollars per share) | $ / shares | 0 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 34.34 |
Leases - Lease Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Leases [Abstract] | ||||
Operating lease cost | $ 249 | $ 378 | $ 505 | $ 755 |
Less: sublease income | 0 | (163) | 0 | (324) |
Variable lease cost | 23 | 88 | 53 | 195 |
Short-term lease cost | 644 | 430 | 1,044 | 817 |
Total lease cost | $ 916 | $ 733 | $ 1,602 | $ 1,443 |
Leases - Narrative (Details) |
Mar. 31, 2024 |
---|---|
Leases [Abstract] | |
Weighted average discount rate, percent | 3.81% |
Weighted average remaining lease term | 2 years 6 months 25 days |
Leases - Summary of Operating Lease Assets and Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Sep. 30, 2023 |
---|---|---|
Assets: | ||
Operating lease assets, net | $ 1,089 | $ 1,436 |
Liabilities: | ||
Current operating lease liabilities | 573 | 773 |
Long-term operating lease liabilities | 516 | 663 |
Total lease liabilities | $ 1,089 | $ 1,436 |
Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Sep. 30, 2023 |
---|---|---|
Leases [Abstract] | ||
Remainder of 2024 | $ 275 | |
2025 | 443 | |
2026 | 222 | |
2027 | 182 | |
2028 | 21 | |
Thereafter | 0 | |
Total future minimum lease payments | 1,143 | |
Less: present value discount (imputed interest) | (54) | |
Present value of lease liabilities | $ 1,089 | $ 1,436 |
Income Taxes - Schedule of Calculation of the Effective Tax Rate (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Mar. 31, 2024 |
Dec. 31, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Income Tax Disclosure [Abstract] | ||||||
Income before income taxes | $ 43,917 | $ 10,973 | $ 73,795 | $ 12,587 | ||
Income tax provision | 10,429 | 2,500 | 16,222 | 2,951 | ||
Net income | $ 33,488 | $ 24,085 | $ 8,473 | $ 1,162 | $ 57,573 | $ 9,636 |
Effective tax rate | 24.00% | 23.00% | 22.00% | 23.00% |
Income Taxes - Narrative (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 24.00% | 23.00% | 22.00% | 23.00% |
Subsequent Events (Details) - $ / shares |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Apr. 30, 2024 |
Mar. 31, 2024 |
Mar. 31, 2023 |
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Subsequent Event [Line Items] | |||||
Quarterly cash dividend (in dollars per share) | $ 0.2650 | $ 0.2625 | $ 0.5275 | $ 0.5225 | |
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Quarterly cash dividend (in dollars per share) | $ 0.2650 |
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