Powell Industries Inc

NASDAQ:POWL

Earnings Call Analysis

Earnings Call Transcript 2023-Q3

[Operator]

Good day and welcome to the Powell Industries Fiscal Third Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Ryan Coleman, Investor Relations. Please go ahead.

[Ryan Coleman, Investor Relations]

Thank you, and good morning, everyone. Thank you for joining us for Powell Industries conference call today to review fiscal year 2023 third quarter results. With me on the call are Brett Cope, Powell's Chairman and CEO; and Mike Metcalf, Powell's CFO.

There will be a replay of today's call, and it will be available via webcast by going to the company's website powellind.com or a telephonic replay will be available until August 9th. The information on how to access the replay was provided in yesterday's earnings release.

Please note that the information reported on this call speaks only as of today, August 2nd, 2023, and therefore, you are advised that any time-sensitive information may no longer be accurate at the time of replay listening or transcript reading.

This conference call includes certain statements including statements related to the company's expectations of its future operating results that may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Investors are cautioned that such forward-looking statements involve risks and uncertainties and that actual future results may differ materially from those projected in these forward-looking statements. These risks and uncertainties include, but are not limited to, competition and competitive pressures, sensitivity to general economic and industry conditions, international, political and economic risks, availability and price of raw materials and execution of business strategies.

For more information, please refer to the company's filings with the Securities and Exchange Commission.

With that, I'll turn the call over to Brett.

[Brett Cope, President and Chief Executive Officer]

Thank you, Ryan, and good morning, everyone. Thank you for joining us today to review Powell's fiscal 2023 third quarter results. I will make a few comments and then turn the call over to Mike for more financial commentary before we take your questions.

Our third quarter marked another solid performance by the Powell team as we delivered financial results that were once again among the best in our history. Market dynamics in our core industrial end markets remain very favorable, particularly within LNG, while we also saw encouraging results in our utility and commercial and other industrial sectors.

Total revenue in the third quarter was $192 million, which is 42% higher than the prior year and marked sequential growth of about 12%. By market sector versus the same period a year ago, revenue from our oil and gas sector increased 25%. Petrochemical and utility revenue each grew by 45%, while revenue from our commercial and other industrial sector more than doubled.

Traction saw a slight revenue decline compared to the prior year largely a function of the conclusion of a large project in Canada as well as our more selective bidding approach towards the sector. Because the strength of our results in recent quarters has been led by the sharp recovery of our core oil and gas and petrochemical markets, it is easy to lose track of the encouraging performance of both the utility and commercial and other industrial sectors.

On a year-to-date basis, our utility revenue of $115 million is 40% higher than the comparable period last year, while our commercial and other industrial sector revenue more than doubled over the same time period. These results speak both to the success of our strategic actions as well as the mix of our current backlog.

Order activity in the third quarter was again very strong as new bookings exceeded $500 million for the second consecutive quarter. The $505 million of new orders compares to $202 million last year and $508 million last quarter. Our book-to-bill ratio in the quarter of 2.6 times also marked the seventh straight quarter with a book-to-bill over one and consecutive quarters above two times.

I'm pleased to note that Powell was awarded two large greenfield LNG projects both to be located along the US Gulf Coast that combined for roughly $200 million in awards in the quarter. This marks four straight quarters of significant project activity in this market sector as the near and long-term setup remains favorable.

Our bookings in the third quarter also speak to the breadth of new order activity as we recorded roughly $300 million of new orders, excluding these large LNG projects. Notable highlights include a sizable carbon capture and sequestration facility that will be located within North America, strong regional performance from our Canadian team and an uptick this quarter for new bookings from the Traction sector.

Gross margin in the third quarter was 22.2%, an increase of 810 basis points compared to the prior year. Strong project execution, volume leverage and positive closeouts are all helping to drive our margin growth. On a year-to-date basis, our gross margin of 19.5% is firmly within our unchanged target of the high teens.

Moving to the bottom line. Net income in the third quarter more than doubled to $18.5 million or $1.52 per diluted share compared to $9.1 million or $0.76 per diluted share in the prior year.

And lastly we ended the quarter with an order backlog of over $1.3 billion, an increase of 31% compared to the end of the prior quarter and more than doubled versus the prior year. As we've stated, we are very comfortable with the size, mix and quality of our order book.

Our project backlog is well balanced across our eight manufacturing facilities and project schedules are extending into fiscal 2025 providing us with a steady balanced cadence of future activity. We previously shared that our teams have identified capital improvement projects that will facilitate both incremental capacity as well as improved production efficiency in several of our facilities.

During the third quarter, we initiated an expansion of our Houston facility located along the Gulf Coast. The capital investment in our offshore yard will provide for additional capacity of electrical substations supporting the recent rise of our backlog while also helping us remain competitive on our schedules for future business.

The recovery of our end markets led predominantly by our oil and gas sector has been sharper and more pronounced than we had initially expected roughly one year ago. The complexity of LNG projects, combined with construction and start-up schedules that have a little room for error, speak to the strength and trust that our customers have placed in Powell.

We are very grateful for that confidence as we aspire to be the supplier of choice for critical electrical infrastructure. Although our end markets remain strong, we expect the pace at which our backlog has grown over the last nine months to stabilize at levels that are higher than average historically, but will be more measured relative to the growth of recent quarters.

That said quoting activity across all of our markets remains active. And we are in a very strong position and expect that our focused efforts on our strategic initiatives and the health of our end markets will support the positive momentum into fiscal 2024. Operationally, our teams across each of our facilities continues to perform well, driving our production volumes up over the last several quarters.

We remain disciplined to ensure we are meeting project milestones while working to maintain high standards of quality for our products and solutions while also eliminating inefficiencies throughout our manufacturing process. The investments that we have made in the tools, processes and our people over the last six-plus years have prepared the business to meet this record backlog.

Unfortunately, the price and availability of key engineered components continue to create challenges in the near term, including, in some cases, longer lead times. However, we continue to effectively manage through each of these headwinds and where possible factor contingencies and allowances for these components and our bidding activity and project schedules.

Labor availability remains a challenge and is very much top of mind across the company. While our ability to attract and retain quality team members has not had a significant impact on the business to-date, it has become an item of increased importance and urgency given the growth in our backlog. Our operational leadership, along with our human resources teams, continue to work extremely hard and remain closely aligned as we plan our future work and engage the market to attract the talent to meet our future goals.

Overall, project activity and our participation across the markets we serve remains robust. The LNG, gas pipeline and gas-to-chemical sector all continue to be very active and favorable markets for Powell. We've also been pleased with the quoting activity and our ability to win projects within the renewable markets, such as hydrogen, biodiesel and related biofuels, such as sustainable aviation fuel, as well as increasing activity within carbon capture and sequestration as previously noted.

Our near and medium-term priorities remain unchanged. We are focused on growing our electrical automation platform, expanding our existing services franchise and diversifying our product portfolio, be it through tangential applications that complement our existing offerings as well as expanding the scope of our product catalog into new electrical technologies.

Overall, we are pleased with our financial performance in both the third quarter and first nine months of the year. We have confidence that project activity across the markets we serve will continue to support healthy levels of order activity into fiscal 2024. While we do expect new booking totals to moderate, we anticipate that they will remain healthy and well balanced across market sectors.

We have also improved the quality of the backlog, which is currently at the highest level in the company's history. Altogether, these factors should support solid financial performance that extends into fiscal 2024.

With that, I'll turn the call over to Mike to provide more detail around our financial results.

[Michael Metcalf]

Thank you, Brett, and good morning, everyone. In the third quarter of fiscal 2023, we reported net revenue of $192 million compared to $136 million or 42% higher versus the same period in the prior year.

Commercial activity across most of our core markets remain strong, recording new orders booked in the third fiscal quarter of $505 million. This is the second consecutive quarter that we have recognized new orders booked in excess of $500 million, which has resulted in fiscal year-to-date new orders booked of $1.2 billion through the fiscal third quarter.

During the fiscal third quarter, we booked two large projects that totaled roughly $200 million of the reported $505 million of new bookings, both of which are large greenfield LNG projects being constructed on the US Gulf Coast.

The fiscal third quarter bookings results of $505 million is $304 million higher than the same period one year ago and roughly flat sequentially. It is worth mentioning that the demand that we are currently supporting carries with it longer lead times as a significant portion of these most recent large industrial orders will be executed well into our fiscal 2025.

On a fiscal year-to-date basis, our book-to-bill ratio is 2.5 times, resulting in backlog growing to $1.3 billion at the close of our fiscal third quarter. Yet again, this is a record high backlog level for the company and is $836 million higher versus one year ago and $318 million higher sequentially. Reflecting on the orders cadence over the last four quarters, we do anticipate that our backlog will begin to moderate as we expect the current pipeline of large projects to be awarded on a more measured basis going forward.

Moving onto revenue. Domestic revenues were higher by 49% versus the prior year to $153 million and international revenues were higher by 20% or $7 million compared to the prior year driven by a volume uptick in our European and Middle East markets versus the prior year. In total, international revenues were $39 million in the third fiscal quarter of 2023. From a market sector perspective, revenues across our petrochemical sector were higher by 45% and the oil and gas sector was 25% higher on a year-over-year basis.

Additionally, revenues across both utility and the commercial and other industrial sectors were also significantly stronger versus the same period one year ago, increasing 45% and 137%, respectively. The Traction sector was lower versus the third fiscal quarter of 2022 by 27% and lighter volume in the plants driven by softer commercial activity across this sector through the first half of fiscal 2023.

Gross profit reported in the period was $43 million, an increase of $24 million in the third fiscal quarter versus the same period one year ago. As a percentage of revenues, reported gross profit in the fiscal third quarter increased by 810 basis points to 22.2% versus the same period a year ago.

The favorable trend in the project margins is attributable to the continued balance across input costs and pricing dynamics in addition to volume leverage and associated productivity across all of the manufacturing facilities, which contributed to favorable project closeouts during the quarter. And finally, we had a onetime project cancellation that contributed 60 basis points of margin to the quarter.

Selling, general and administrative expenses were $19.7 million in the current quarter, higher by $3 million versus the same period a year ago and an increase in variable performance-based compensation based upon the expectation for higher levels of operating performance versus the prior year. SG&A as a percentage of revenue decreased by 190 basis points to 10.2% in the current quarter on the higher revenue base.

In the third quarter of fiscal 2023, we reported net income of $18.5 million, generating $1.52 per diluted share compared to net income of $9.1 million or $0.76 per diluted share in the third quarter of fiscal 2022. The prior year comparison period did include two nonrecurring items that, when combined, accounted for $7.5 million of net income or $0.63 per diluted share.

During the third quarter of fiscal 2023, cash flow from operating activities was a positive $50 million as we have reached a point in the cycle where we're experiencing an uptick in cash related to the advanced payments on the large projects. This precedes the eventual outlay of cash required for the working capital attributable to the new projects that have recently been booked into the backlog.

Investments in property, plant and equipment totaled $650,000 during the fiscal third quarter as we invest in capacity and productivity projects across the business. As part of this initiative, we recently committed to a critical project that will expand our capacity in one of our Houston locations.

This roughly $3 million investment will help to ensure that we can confidently fulfill our delivery commitments to our customers. At June 30th, 2023, we had cash and short-term investments of $210 million, $93 million higher than our fiscal '22 year-end position. The company holds no long-term debt.

Looking forward, we anticipate continued strength across most of our core end markets into fiscal 2024. We are encouraged by the progress that has been made on margin accretion through a variety of operational and commercial levers and will remain focused on our operational priorities as we execute the backlog.

We do recognize the typical project challenges of timing and mix. However, we continue to target margins in the upper teens on an annualized basis, including the normal seasonality impact that we regularly experience in our fiscal first quarter. We also recognize that we may deliver quarterly margin levels that are modestly higher than our target level as we navigate through the remainder of fiscal 2023 and into fiscal 2024.

Considering this, in addition to the sustained level of commercial activity across most of our end markets as well as the strength of our balance sheet, we anticipate that these variables will provide the foundation for continued momentum relative to our financial results as we close out fiscal 2023 and look forward to fiscal 2024.

At this point, we'll be happy to answer your questions.

[Operator]

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from John Franzreb with Sidoti & Company. Please go ahead.

[John Franzreb, Sidoti & Company]

Good morning, guys, and congratulations on a really solid quarter. I'd like to kick it off, Brett, with your perspective on the overall market outlook, how much big game hunting is there still out there for large projects, make it that in the coming year? Or have you gotten past maybe the midpoint of maybe those large projects hitting the order book?

[Brett Cope, President and Chief Executive Officer]

Well, good morning, John, and thanks for the comments. The team has done a fantastic job getting us to this point in the cycle. As we look out, I mean, clearly, the last four quarters with the rate of mega projects that we booked, it's unprecedented in our history and certainly grateful as I noted in my comments to our customers for the trust. As we look out, there are -- there is the potential projects that are wanting to push forward and those that are moving into their decisions in FID. So a little uncertainty there. Are we at midpoint? It depends how many get funded actually. I do think the pace of them is going to space out a little bit more looking forward. We're still working a number of what if scenarios on various projects that are out there, especially in the LNG space, again, as previously noted. So a little bit more uncertainty. They're not as many lined up as quickly as they were coming in the last four quarters, but midpoints up to them. If the spreads still look good, gas was at [indiscernible] yesterday. What happens internationally, it could run a while. So a lot of factors in there, but I do think it spaces out and construction resources and other things that may affect, just availability of resources for the constructors. So there's a lot of factors in how that will look over the next one to two years.

[John Franzreb, Sidoti & Company]

Okay. And in your prepared remarks, you highlighted an under appreciation of, maybe, the utility market, one. What's changed in the utility sector today versus maybe six months ago?

[Brett Cope, President and Chief Executive Officer]

I don't think that it has changed. In previous calls, I've highlighted that coming out of the pandemic, it was a sector that returned -- it also went through a period of not as robust activity for the company during late 2021. It did come back nicely. It's an area we've been focused on for the better part of a decade. In trying to add to the portfolio and expand our presence, especially within the North American and our home markets, including the UK. I think it's been a nice progression. The team -- our front-end marketing teams and project teams have done a great job, just staying methodic in our home countries. And I think that is really I like to point to it is one of our strategic goals to build a stronger presence in that market and we're just very focused on executing, so.

[John Franzreb, Sidoti & Company]

Great. And you've had a great gross margin in the quarter, but you said your target gross margin is still the high teens. What could weigh on the gross margin profile on a go-forward basis that wasn't evident in the June quarter results?

[Michael Metcalf]

Hey, John, this is Mike. I'll take that one. Yes, look, we're really pleased with our third quarter results as well as our year-to-date margin results through the first three quarters of fiscal 2023. We've reported 19.5% gross profit. And if you exclude the nonrecurring item that I mentioned in my prepared statements, we're at 19.2%. So we're still squarely in our targeted range of the high teens. And looking forward, as you consider the quality of our backlog, which we're very pleased with as well, the ongoing productivity and efficiency projects in the business, we're comfortable maintaining this margin target as we close out '23 and head into '24.

[John Franzreb, Sidoti & Company]

Okay. Fair enough. And one last question, I'll get back into queue. I mean cash is building. I know you're going to use it at some point in this process. But at the end of the day, you're still going to have a sizable cash position a year or so for now at least. Can you talk a little bit about priorities for the use of cash?

[Michael Metcalf]

Yes. I mean over the last six months, with the large projects entering our backlog, we've built a considerable cash balance, about $105 million over the last six months. Over the next six months, I think we would begin to consume some of that cash as we've been getting into the procurement and manufacturing cycle for these large projects. So we'll start to use some of that cash in those cycles as we build working capital.

[John Franzreb, Sidoti & Company]

Okay, guys. Thanks. I'll get back into queue.

[Michael Metcalf]

Thanks, John.

[Operator]

[Operator Instructions] Our next question comes from Jon Braatz with Kansas City Capital. Please go ahead.

[Jon Braatz, Kansas City Capital Associates]

Good morning, guys.

[Michael Metcalf]

Good morning, John.

[Brett Cope, President and Chief Executive Officer]

Good morning, John.

[Jon Braatz, Kansas City Capital Associates]

Congratulations on a wonderful quarter. One question I have is when you look out towards 2024 and you look at your backlog and the incoming orders and so on, how much of that production is already spoken for? How do you look at your '24 schedules and how complete -- production schedules and how complete is it as you see it right now?

[Brett Cope, President and Chief Executive Officer]

As we look out, as we end up the fiscal year, it's roughly half the backlog, is already planned into the next year. And so that's how we're heading into planning right now as we speak as we kind of conclude Q4. Most of the constraints with the build are hitting more of the Houston facilities than some of our other facilities, although all of our facilities have risen with the wave here. We're doing a lot more looking at each opportunity carefully to see where we can put it, especially on things that come in and have a need from our customers to execute a little quicker. So there are still slots. And then just in general capacity, we're doing an expansion in offshore for just capacity expansion but we're also doing things like we've gone to a third shift here at a couple other facilities. We're doing all the creative things on the production side to help address and expand capacity. So really more of a people-driven equation, trying to get our teams in and get our talent to lead us forward here. So we still have some capability there to kind of round out and handle that need. And I think we've got -- that's why we feel confident for the prepared remarks and feel good heading into the next year competitively.

[Jon Braatz, Kansas City Capital Associates]

Okay. Okay. Good. When you look at the big projects that you're being awarded, how might the margin on those projects be relative to some of the other projects, the one-off projects in the industrial area and so on. And how much those margins compared with the other projects you're earning? And maybe are the margins on the bigger projects a little bit higher than maybe where they were a couple of years ago, because maybe conditions are a little bit tighter?

[Brett Cope, President and Chief Executive Officer]

Well, certainly, coming out of the pandemic in general, if I take a couple of year snapshot to, say, the last 24 months, we've risen the profile out in the market. A little bit in price a lot on efficiency and execution through the team. In general, what I'd tell you, John, is the more complex project, that's really where Powell shines. We carry a lot of fixed costs on the engineering side because -- not just on the product development side and what we build and what we develop and what we aspire to do in the future, but these projects are very, very big. There's a lot of changes to the life of the project for the things that we make and build as well as the things that we buy and integrate into the overall solution. So, typically, the larger of the project, there's a life to it. And I think Powell gets a lot of credit for being able to respond to our customers and take care of their need and then be properly rewarded for our ability to hit our schedule to deliver that trust our customers.

[Jon Braatz, Kansas City Capital Associates]

Okay. One last question. With two large LNG awards this quarter, were those greenfield facilities or expansions?

[Brett Cope, President and Chief Executive Officer]

No, those are both greenfields.

[Jon Braatz, Kansas City Capital Associates]

Okay. All right. Thank you very much.

[Brett Cope, President and Chief Executive Officer]

All right, Jon. Thanks.

[Operator]

Our next question is a follow-up from John Franzreb with Sidoti & Company. Please go ahead.

[John Franzreb, Sidoti & Company]

Hi, guys. Just on the facility expansion. Does that change your CapEx budget? Just kind of remind us what you're going to spend as far as capital expenditures this year?

[Brett Cope, President and Chief Executive Officer]

Yes, John. It will bump the CapEx spend this year. It's roughly a $3 million project. A little of that will fall into fiscal '24, but the majority of it will hit fiscal '23. So it will be a little higher CapEx spend this year.

[John Franzreb, Sidoti & Company]

Okay. And I'm curious about the revenue mix in the June quarter. How much of revenue was derived from some of those shorter duration kind of equipment sales. Typically, I believe, it's like $25 million to $40 million a quarter. Has that fluctuated positively or negatively? And does that impact the profit profile one way or the other?

[Brett Cope, President and Chief Executive Officer]

Yes. I mean typically, the book-to-bill within the quarter runs $30 million to $40 million. That's kind of consistent. It hasn't changed much to speak of, John. So that's -- that's really kind of a constant running through the business.

[John Franzreb, Sidoti & Company]

Okay. And Brett, you mentioned that labor is a priority, I think, is how you phrased it as far as management is concerned. Can you talk a little bit about how challenging the labor markets are in the jurisdictions you operate and what we should think about as potential margin pressure from higher labor costs?

[Brett Cope, President and Chief Executive Officer]

So coming out of the calendar year, I think in previous calls, I noted, and we're still seeing the trend on -- we've had better success after the first year on the variable costs, the variable side of the equation where we're adding heads to address the increased volume. We're still methodically working through that fairly well. We're feeling a little bit more pressure on the fixed cost side, so bringing in bringing in the supervision and management as we expand out the labor force, whether it be on the professional side on our front-end project engineering resources are out in the production supervision. So that's been a little bit more of a challenge here as of late, making progress, just that looking at the ramp that's going to hit us as we hit into next year, a little bit more effort into that to prepare for it. So we've been through the ramp before at Powell. We know the challenges of the ramp. And so, it's just a little bit more of a urgency as we come out of the summer and get ready for that heading into the fall. So from a cost standpoint, look, through the pandemic, we maintained taking care of our people. We're planning well for that as we look forward to ensure that we're taking care of them as well as we look forward. So it has been a much bigger issue. It's relaxed a little bit with some of the other sectors that we don't participate, becoming a little softer. That certainly helped on the variable side with attracting talent and understanding what that price point is and cost is for the labor on direct costs and overhead. But I think we've got it pretty well factored into the model for the next two years, John.

[John Franzreb, Sidoti & Company]

Okay. That was a great call holding onto that personnel during the downturn. One other question, and I guess I haven't brought this up in quite some time, especially considering recovering the margin profile, but give us some of your thoughts on the competitive landscape. What's the pricing environment like with the competition out there? Just some thoughts in general.

[Brett Cope, President and Chief Executive Officer]

Yes. Well, again, on the mega projects, certainly, very grateful. And as I noted, it is unprecedented in our history to have four straight quarters of mega awards like this and so we're humbled by the awards. It isn't without competitive notice we know in the market, whether it be a mega or a bread and butter $1 million substation for the utility. So we're cognizant of that. We are very sensitive to the pricing in the market. We certainly like to be rewarded for that, that we do best. And keeping a note that we are a long-term relationship-based company. So we're always going to approach our customer relationships with that in mind and being very fair for the outlook. But competitively, I do think I noted last quarter on the pricing side, probably a little bit more competitive, nothing like we've seen in past down cycles, but it is certainly not as urgent on short-term needs. And so we're a little bit more thoughtful around that to adjust so we can ensure that we're taking care of as many of our customers as we can as they come in with their needs, so.

[John Franzreb, Sidoti & Company]

Okay. Fair enough. Congratulations again. Thank you.

[Brett Cope, President and Chief Executive Officer]

Thanks, John.

[Operator]

Next question is a follow-up from Jon Braatz with Kansas City Capital. Please go ahead.

[Jon Braatz, Kansas City Capital Associates]

One follow-up. I think you mentioned that international revenues were ticking up in the quarter. I think they were up 20% or something like that. Do you see some momentum building there or would you characterize it more as possibly sort of a one-off increase?

[Brett Cope, President and Chief Executive Officer]

I think it's generally momentum. I don't think there's any one thing as I think about the past couple of quarters. It's kind of more of -- also a multi-sector participation. In the UK, the dynamics there are interesting, given what they're going through in their break from the EU. We are certainly looking to capitalize where we can in the markets and expand in areas that we historically had not been as strong, aka, utility, like I noted earlier, Jon. That has been an area we've been hunting in and winning in the UK, not something that we did a lot years ago, but we are definitely doing it there today. The Middle East, another area where we see both electrical standards, IEC and ANSI. We have a big footprint there. A little bit more of an uptick here lately, not relative to the rest of the business, but for the region and our historical profile. It's been on a little bit of an upturn this summer. I was there first calendar quarter, making a visit in the region. I'm generally positive on the region when and our prospects. Again, nothing that would spike the profile relative to everything else, but it is a market we know very well. We love being there, and I think we'll be there for decades to come. So just generally kind of boat is floating up and having our right people in the right time and not losing sight of it amidst the gas wave that we're experiencing.

[Jon Braatz, Kansas City Capital Associates]

Yeah, okay. All right. Thanks so much.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to Brett Cope for any closing remarks.

[Brett Cope, President and Chief Executive Officer]

Thank you, Sarah. Our third quarter delivered solid performance with sequential improvements in our top and bottom line. The significant growth and improving quality of our backlog, combined with the strength of our balance sheet, provides solid momentum as we enter our final quarter of the fiscal year and plan for 2024 and beyond. I would like to thank our incredibly talented employees through their talent, leadership and tenacity, they have prepared Powell well for this growth cycle in our business. Thanks also to our valued customers and our supplier partners for their continued trust and support of Powell. With that, thank you for your participation on today's call. We appreciate your continued interest in Powell and look forward to speaking with you next quarter.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.