Manish Somaiya

Manish Somaiya raised concerns about the shortage of skilled labor in the country and whether it could become a constraint on Powell Industries' growth ambitions.

Answer

Brett Cope, Chairman, President, and CEO, acknowledged skilled labor as an ongoing concern, routinely discussed by management. He stated they are performing well on the variable labor side but face challenging needs on the fixed side, particularly in engineering for the commercial segment's growth. He expressed confidence in addressing these needs within the next 90 days.

Manish Somaiya inquired about the current pricing environment across Powell's end markets, the intensity of competition, and how the company manages raw material price volatility, particularly for commodities like copper and engineered components. He also asked about lead times for specific components like switchgear and potential component-side constraints that could impact future revenues, given the significant backlog.

Answer

Brett Cope, Chairman, President, and CEO, stated that the pricing environment remains steady across all verticals, with potential upside in data center jobs due to anticipated efficiencies from repetitive product builds. Mike Metcalf, EVP, CFO, Secretary, and Treasurer, explained that Powell hedges copper and incorporates drastic increases into pricing models, while engineered components are locked in at contract signing. Cope noted that Powell is well-positioned regarding component lead times, particularly for higher power levels (38 kV) in data centers, and still has good capacity for other designs (5 and 15 kV gear at 35-40 weeks lead time). He also provided the next 12 months convertible backlog figure.