What happened
Heavy equipment manufacturer Powell Industries (POWL 1.72%) easily beat expectations in its most recent quarter thanks to strong demand from energy customers. Investors are excited about the beat and the backlog of future business, sending Powell shares up as much as 40% on Wednesday.
So what
Powell designs and manufacturers electrical systems for a range of end markets, including utilities, oil and gas producers, refineries, and liquefied natural gas (LNG) facilities. The company earned $1.52 per share in its fiscal third quarter ending June 30 on revenue of $192 million, beating earnings expectations by $0.86 per share and revenue by $21 million.
The sales figure was up 42% year over year. Powell also improved profitability, reporting a gross margin up 810 basis points from last year to 22.2%.
"Powell delivered another quarter of financial results that were among the best in our history, as commercial activity across our end markets and our solid project execution are supporting our continued strong performance," CEO Brett A. Cope said in a statement.
Now what
The results were solid, and the outlook for the quarters to come was just as encouraging. New orders totaled $505 million in the quarter, an increase of $303 million, including two new LNG projects slated for the U.S. Gulf Coast.
Overall, Powell had a backlog of future business of $1.3 billion at quarter's end, an increase of 31% from the prior quarter and the highest in company history.
Cope did warn he expects the pace of the backlog would likely be "more measured" in the quarters to come, but the profitability improvements should be sustainable. Taken altogether, investors are excited about what Powell Industries can do from here.
