0000080420-23-000007 | 10-Q | XBRL Viewer

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Cover Page - shares	3 Months Ended
Cover Page - shares	Dec. 31, 2022	Jan. 30, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Dec. 31, 2022
Document Transition Report	false
Entity File Number	001-12488
Entity Registrant Name	Powell Industries, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	88-0106100
Entity Address, Address Line One	8550 Mosley Road
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77075-1180
City Area Code	713
Local Phone Number	944-6900
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	POWL
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		11,834,683
Entity Central Index Key	0000080420
Amendment Flag	false
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--09-30

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Dec. 31, 2022	Sep. 30, 2022
Current Assets:
Cash and cash equivalents	$ 99,632	$ 101,954
Short-term investments	11,070	14,554
Accounts receivable, less allowance for credit losses of $348 and $344	151,375	106,111
Contract assets	63,911	88,351
Inventories	55,002	50,415
Income taxes receivable	84	105
Prepaid expenses	4,703	4,679
Other current assets	3,467	3,814
Total Current Assets	389,244	369,983
Property, plant and equipment, net	99,051	98,628
Operating lease assets, net	2,159	2,179
Goodwill and intangible assets, net	1,003	1,003
Deferred income taxes	10,056	9,161
Other assets	12,159	12,426
Total Assets	513,672	493,380
Current Liabilities:
Accounts payable	38,632	63,423
Contract liabilities	133,753	79,857
Accrued compensation and benefits	10,395	24,785
Accrued product warranty	2,380	2,345
Current operating lease liabilities	1,545	1,777
Income taxes payable	2,738	1,720
Other current liabilities	14,331	12,466
Total Current Liabilities	203,774	186,373
Deferred compensation	8,930	7,749
Long-term operating lease liabilities	713	545
Other long-term liabilities	1,783	1,507
Total Liabilities	215,200	196,174
Commitments and Contingencies (Note F)
Stockholders' Equity:
Preferred stock, par value $0.01; 5,000,000 shares authorized; none issued	0	0
Common stock, par value $0.01; 30,000,000 shares authorized; 12,640,701 and 12,588,011 shares issued, respectively	126	126
Additional paid-in capital	68,454	67,439
Retained earnings	281,493	283,638
Treasury stock, 806,018 shares at cost	(24,999)	(24,999)
Accumulated other comprehensive loss	(26,602)	(28,998)
Total Stockholders' Equity	298,472	297,206
Total Liabilities and Stockholders' Equity	$ 513,672	$ 493,380

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2022	Sep. 30, 2022
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 348	$ 344
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)	12,640,701	12,588,011
Treasury stock, shares (in shares)	806,018	806,018

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Statement [Abstract]
Revenues	$ 126,858	$ 106,569
Cost of goods sold	107,394	93,133
Gross profit	19,464	13,436
Selling, general and administrative expenses	16,873	15,902
Research and development expenses	1,501	1,824
Operating income (loss)	1,090	(4,290)
Interest income, net	(523)	(3)
Income (loss) before income taxes	1,613	(4,287)
Income tax provision (benefit)	451	(1,441)
Net income (loss)	$ 1,162	$ (2,846)
Earnings (loss) per share:
Basic (in dollars per share)	$ 0.10	$ (0.24)
Diluted (in dollars per share)	$ 0.10	$ (0.24)
Weighted average shares:
Basic (in shares)	11,859	11,765
Diluted (in shares)	12,077	11,765
Dividends per share (in dollars per share)	$ 0.26	$ 0.26

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 1,162	$ (2,846)
Foreign currency translation adjustments	2,178	54
Gain on cash flow commodity hedge	218	0
Comprehensive income (loss)	$ 3,558	$ (2,792)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Income/(Loss)
Balance (in shares) at Sep. 30, 2021		12,498,000
Balance Treasury Stock (in shares) at Sep. 30, 2021					(806,000)
Balance at Sep. 30, 2021	$ 301,223	$ 125	$ 63,948	$ 282,505	$ (24,999)	$ (20,356)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(2,846)			(2,846)
Foreign currency translation adjustments	54					54
Stock-based compensation (in shares)		72,000
Stock-based compensation	1,008	$ 1	1,007
Shares withheld in lieu of employee tax withholding	(660)		(660)
Dividends	(3,200)		69	(3,269)
Gain on cash flow commodity hedge	0
Balance (in shares) at Dec. 31, 2021		12,570,000
Balance Treasury Stock (in shares) at Dec. 31, 2021					(806,000)
Balance at Dec. 31, 2021	$ 295,579	$ 126	64,364	276,390	$ 24,999	(20,302)
Balance (in shares) at Sep. 30, 2022		12,588,000
Balance Treasury Stock (in shares) at Sep. 30, 2022	(806,018)				(806,000)
Balance at Sep. 30, 2022	$ 297,206	$ 126	67,439	283,638	$ (24,999)	(28,998)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	1,162			1,162
Foreign currency translation adjustments	2,178					2,178
Stock-based compensation (in shares)		53,000
Stock-based compensation	1,307	$ 0	1,307
Shares withheld in lieu of employee tax withholding	(423)		(423)
Dividends	(3,176)		131	(3,307)
Gain on cash flow commodity hedge	$ 218					218
Balance (in shares) at Dec. 31, 2022		12,641,000
Balance Treasury Stock (in shares) at Dec. 31, 2022	(806,018)				(806,000)
Balance at Dec. 31, 2022	$ 298,472	$ 126	$ 68,454	$ 281,493	$ (24,999)	$ (26,602)

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Operating Activities:
Net income (loss)	$ 1,162	$ (2,846)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation	2,136	2,414
Stock-based compensation	1,307	1,008
Bad debt expense, net	6	91
Deferred income taxes	(895)	(915)
Changes in operating assets and liabilities:
Accounts receivable, net	(44,547)	(1,189)
Contract assets and liabilities, net	78,298	(6,730)
Inventories	(4,406)	(6,312)
Income taxes	1,048	(578)
Prepaid expenses and other current assets	368	857
Accounts payable	(24,149)	(2,918)
Accrued liabilities	(12,741)	(11,035)
Other, net	1,864	320
Net cash used in operating activities	(549)	(27,833)
Investing Activities:
Purchases of short-term investments	0	(3,937)
Maturities of short-term investments	3,690	0
Purchases of property, plant and equipment	(2,726)	(436)
Proceeds from sale of property, plant and equipment	11	0
Net cash provided by (used in) investing activities	975	(4,373)
Financing Activities:
Payments on industrial development revenue bonds	0	(400)
Shares withheld in lieu of employee tax withholding	(423)	(660)
Dividends paid	(3,074)	(3,048)
Net cash used in financing activities	(3,497)	(4,108)
Net decrease in cash and cash equivalents	(3,071)	(36,314)
Effect of exchange rate changes on cash and cash equivalents	749	(95)
Cash and cash equivalents at beginning of period	101,954	114,314
Cash and cash equivalents at end of period	$ 99,632	$ 77,905

Overview and Summary of Significant Accounting Policies	3 Months Ended
Overview and Summary of Significant Accounting Policies	Dec. 31, 2022
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 incorporated in the state of Delaware. Powell's predecessor companies were founded 76 years ago 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, light rail traction power as well as mining and metals, pulp and paper and other municipal, commercial and other industrial markets. Basis of Presentation These 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. These 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. These 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, 2022, which was filed with the Securities and Exchange Commission (SEC) on December 6, 2022. References to Fiscal 2023 and Fiscal 2022 used throughout this report shall mean the current fiscal year ending September 30, 2023 and the prior fiscal year ended September 30, 2022, 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, the 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 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 the 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.

Earnings Per Share

3 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Earnings Per Share

We compute basic earnings per share by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per common and potential common share includes 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):


	Three months ended December 31,
	2022		2021
Numerator:
Net income (loss)	$	1,162	$	(2,846)
Denominator:
Weighted average basic shares	11,859		11,765
Dilutive effect of restricted stock units	218		—
Weighted average diluted shares	12,077		11,765
Earnings (loss) per share:
Basic	$	0.10	$	(0.24)
Diluted	$	0.10	$	(0.24)

For the three months ended December 31, 2021, we incurred a net loss and therefore all potential common shares were deemed to be anti-dilutive.

Detail of Selected Balance Sheet Accounts

3 Months Ended

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Detail of Selected Balance Sheet Accounts

Inventories

The components of inventories are summarized below (in thousands):


	December 31, 2022		September 30, 2022
Raw materials, parts and sub-assemblies, net	$	53,336	$	49,213
Work-in-progress	1,666		1,202
Total inventories	$	55,002	$	50,415

Accrued Product Warranty

Activity in our product warranty accrual consisted of the following (in thousands):


	Three months ended December 31,
	2022		2021
Balance at beginning of period	$	2,345	$	2,531
Increase to warranty expense	479		293
Deduction for warranty charges	(454)		(382)
Change due to foreign currency translation	10		1
Balance at end of period	$	2,380	$	2,443

Revenue

3 Months Ended

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

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 with which 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 93% of total revenues for the three months ended December 31, 2022 and 94% of total revenues for the three months ended December 31, 2021.

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 7% of total revenues for the three months ended December 31, 2022 and 6% of total revenues for the three months ended December 31, 2021.

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 December 31, 2022, we had backlog of $679.8 million, of which approximately $464.2 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 three months ended December 31, 2022 and 2021, our operating results were positively impacted by $3.6 million and $2.8 million, respectively, as a result of 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 and negotiations of variable consideration, discussed below, as well as revenue and reduced costs recognized from project cancellations and other changes in facts and circumstances during these periods.

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 December 31, 2022 and September 30, 2022 are summarized below (in thousands):


	December 31, 2022		September 30, 2022
Contract assets	$	63,911	$	88,351
Contract liabilities	(133,753)		(79,857)
Net contract asset (liability)	$	(69,842)	$	8,494

Our net contract billing position improved to a net liability at December 31, 2022 from a net asset position at September 30, 2022 primarily due to favorable contract billing milestones. 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 three months ended December 31, 2022, we recognized revenue of approximately $36.4 million that was related to contract liabilities outstanding at September 30, 2022.

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 December 31, 2022 and September 30, 2022, accounts receivable included retention amounts of $7.2 million and $6.9 million, respectively. Of the retained amount at December 31, 2022, $6.9 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 months ended December 31, 2022 and 2021 (in thousands):


	Three months ended December 31,
	2022		2021
United States	$	100,112	$	82,145
Canada	18,496		15,125
Europe, Middle East and Africa	6,559		7,830
Asia/Pacific	776		944
Mexico, Central and South America	915		525
Total revenues by geographic destination	$	126,858	$	106,569


	Three months ended December 31,
	2022		2021
Oil and gas (excludes petrochemical)	$	43,510	$	43,021
Petrochemical	22,490		17,228
Electric utility	28,407		21,533
Traction power	7,072		11,372
Commercial and other industrial	17,050		5,646
All others	8,329		7,769
Total revenues by market sector	$	126,858	$	106,569

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI https://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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-Section 50
-Paragraph 13
-Subparagraph (b)(2)
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 606
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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-Section 50
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-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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-Section 50
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-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

+ Details

Long-Term Debt	3 Months Ended
Long-Term Debt	Dec. 31, 2022
Debt Disclosure [Abstract]
Long-Term Debt	Long-Term Debt U.S. Revolver We have a credit agreement with Bank of America, N.A. (as amended, the U.S. Revolver), which is a $75.0 million revolving credit facility that is available for both borrowings and letters of credit and expires September 27, 2024. The U.S. Revolver states that up to $30 million may be deducted from the amount of letters of credit outstanding (not to be less than zero) when calculating the consolidated funded indebtedness, which is a component of the consolidated net leverage ratio. Additionally, 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 December 31, 2022, there were no amounts borrowed under the U.S. Revolver, and letters of credit outstanding were $33.8 million. There was $41.2 million available for the issuance of letters of credit and borrowings under the U.S. Revolver as of December 31, 2022. We are required to maintain certain financial covenants, the most significant of which are a consolidated net leverage ratio less than 3.0 to 1.0 and a consolidated interest coverage ratio of greater than 3.0 to 1.0. Our most restrictive covenant, the consolidated net leverage ratio, is the ratio of earnings before interest, taxes, depreciation, amortization and stock-based compensation (EBITDAS) to funded indebtedness. An increase in indebtedness, which includes letters of credit, or a decrease in EBITDAS could restrict our ability to issue letters of credit or borrow under the U.S. Revolver. Additionally, we must maintain a consolidated cash balance of $30 million at all times, which can be deducted from the letters of credit outstanding as noted above. The U.S. Revolver also contains a "material adverse effect" clause which is a material change in our operations, business, properties, liabilities or condition (financial or otherwise) or a material impairment of our ability to perform our obligations under our credit agreements. As of December 31, 2022, we were in compliance with all of the financial covenants of the U.S. Revolver. The U.S. Revolver allows the Company to elect that any borrowing under the facility bears an interest rate based on either the base rate or the eurocurrency rate, in each case, plus the applicable rate. The base rate is generally the highest of (a) the federal funds rate plus 0.50%, (b) the Bank of America prime rate or (c) the Bloomberg Short-Term Bank Yield Index (BSBY) rate plus 1.00%. The applicable rate is generally a range from (0.25)% to 1.75% depending on the type of loan and the Company's consolidated net leverage ratio. On November 10, 2022, the Company entered into a second LIBOR Transition Amendment with Bank of America that states that LIBOR for U.S. dollar loans will be replaced with the BSBY rate in accordance with the U.S. Revolver. The U.S. Revolver is collateralized by a pledge of 100% of the voting capital stock of each of our domestic subsidiaries and 65% of the voting capital stock of each non-domestic subsidiary. The U.S. Revolver provides for customary events of default and carries cross-default provisions with other existing debt agreements. If an event of default (as defined in the U.S. Revolver) occurs and is continuing, on the terms and subject to the conditions set forth in the U.S. Revolver, amounts and letters of credit outstanding under the U.S. Revolver may be accelerated and may become immediately due and payable. Industrial Development Revenue Bonds We borrowed $8.0 million in October 2001 through a loan agreement funded with proceeds from tax-exempt industrial development revenue bonds (Bonds) for the completion of our Northlake, Illinois facility. The Bonds matured on October 1, 2021 and our final payment of $0.4 million was made.

Commitments and Contingencies	3 Months Ended
Commitments and Contingencies	Dec. 31, 2022
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 $33.8 million as of December 31, 2022. We also had surety bonds totaling $284.5 million that were outstanding, with additional bonding capacity of $315.5 million available, at December 31, 2022. 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 a $9.7 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 December 31, 2022, we had outstanding guarantees totaling $6.8 million. The Facility Agreement provides for customary events of default and carries cross-default provisions with our 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 December 31, 2022, 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 in 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.

Stock-Based Compensation

3 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Refer to our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 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 performance of the Company following the grant date. At December 31, 2022, there were 308,917 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 three months ended December 31, 2022 is summarized below:


	Number of Restricted Stock Units	Weighted Average Grant Value Per Share
Outstanding at September 30, 2022	239,862	$	26.11
Granted	147,100	21.26
Vested	(63,334)	30.78
Forfeited/canceled	(14,711)	38.58
Outstanding at December 31, 2022	308,917	$	22.86

During the three months ended December 31, 2022 and 2021, we recorded compensation expense of $1.3 million and $0.9 million, respectively, related to the RSUs.

Restricted Stock

Each non-employee director receives 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 vests immediately, while the remaining fifty-percent vests on the anniversary of the grant date. Compensation expense is recognized immediately for the first fifty-percent of the restricted stock granted, while compensation expense for the remaining fifty-percent is recognized over the remaining vesting period. During both the three months ended December 31, 2022 and 2021, there were no restricted shares granted. During the three months ended December 31, 2022 and 2021, we recorded compensation expense of less than $0.1 million and $0.1 million, respectively, related to restricted stock.

Fair Value Measurements

3 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

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 December 31, 2022 (in thousands):


	Fair Value Measurements at December 31, 2022
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at December 31, 2022
Assets:
Cash and cash equivalents	$	99,632	$	—	$	—	$	99,632
Short-term investments	11,070		—		—		11,070

Other assets	—		8,067		—		8,067
Liabilities:
Deferred compensation	—		8,905		—		8,905

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, 2022 (in thousands):


	Fair Value Measurements at September 30, 2022
	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, 2022
Assets:
Cash and cash equivalents	$	101,954	$	—	$	—	$	101,954
Short-term investments	14,554		—		—		14,554

Other assets	—		7,730		—		7,730
Liabilities:
Deferred compensation	—		7,714		—		7,714

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.

Other 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 December 31, 2022.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Leases

3 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Our leases consist primarily of office and manufacturing space and construction equipment. All of our future lease obligations are related to non-cancelable operating leases. The most significant portion of our lease portfolio relates to leases of office and manufacturing facilities in Canada that we no longer occupy. We currently sublease the majority of these Canadian facilities. The following table provides a summary of lease cost components for the three months ended December 31, 2022 and 2021, respectively (in thousands):


	Three months ended December 31,
Lease Cost	2022		2021
Operating lease cost	$	378	$	571
Less: sublease income	(162)		(174)
Variable lease cost(1)	108		141
Short-term lease cost(2)	387		273
Total lease cost	$	711	$	811

(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. As of both December 31, 2022 and September 30, 2022, our operating lease assets have been reduced by a lease accrual of $0.1 million related to certain unused facility leases in Canada. The following table provides a summary of the operating lease assets and operating lease liabilities included in our Condensed Consolidated Balance Sheets as of December 31, 2022 and September 30, 2022, respectively (in thousands):


Operating Leases	December 31, 2022		September 30, 2022
Assets:
Operating lease assets, net	$	2,159	$	2,179
Liabilities:
Current operating lease liabilities	1,545		1,777
Long-term operating lease liabilities	713		545
Total lease liabilities	$	2,258	$	2,322

The following table provides the maturities of our operating lease liabilities as of December 31, 2022 (in thousands):


	Operating Leases
Remainder of 2023	$	1,476
2024	455
2025	195
2026	102
2027	87
Thereafter	7
Total future minimum lease payments	$	2,322
Less: present value discount (imputed interest)	(64)
Present value of lease liabilities	$	2,258

The weighted average discount rate as of December 31, 2022 was 3.61%. The weighted average remaining lease term was 2.04 years at December 31, 2022.

Income Taxes

3 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

The calculation of the effective tax rate is as follows (in thousands):


	Three months ended December 31,
	2022			2021
Income (loss) before income taxes	$	1,613		$	(4,287)

Income tax provision (benefit)	451			(1,441)

Net income (loss)	$	1,162		$	(2,846)

Effective tax rate	28		%	34		%

Our income tax provision reflects an effective tax rate on pre-tax income of 28% for the first quarter of Fiscal 2023 compared to an income tax benefit that reflects an effective tax rate on pre-tax loss of 34% for the first quarter of Fiscal 2022. The effective tax rate for the first quarters of Fiscal 2023 and Fiscal 2022 were favorably impacted by the estimated Research and Development Tax Credit (R&D Tax Credit), partially offset by discrete items primarily related to the vesting of restricted stock units. In addition, the first quarter of Fiscal 2022 was also impacted by a valuation allowance that prohibited the recognition of certain non-U.S. tax losses

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
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+ Details

Subsequent Events	3 Months Ended
Subsequent Events	Dec. 31, 2022
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events Quarterly Dividend Declared On January 31, 2023, our Board of Directors approved a 1% increase to the quarterly cash dividend on our common stock to $0.2625 per share, equating to an annualized dividend of $1.05 per share from the current amount of $1.04 per share. The dividend is payable on March 15, 2023 to shareholders of record at the close of business on February 15, 2023.

Overview and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Dec. 31, 2022
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation These 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. These 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. These 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, 2022, which was filed with the Securities and Exchange Commission (SEC) on December 6, 2022. References to Fiscal 2023 and Fiscal 2022 used throughout this report shall mean the current fiscal year ending September 30, 2023 and the prior fiscal year ended September 30, 2022, respectively.
Use of Estimates	Use of EstimatesThe 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, the 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 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 the 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.
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 with which 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 93% of total revenues for the three months ended December 31, 2022 and 94% of total revenues for the three months ended December 31, 2021. 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 7% of total revenues for the three months ended December 31, 2022 and 6% of total revenues for the three months ended December 31, 2021. 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. 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.

- Definition

Disclosure of accounting policy for revenue from contract with customer.

+ References

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+ Details

Earnings Per Share (Tables)

3 Months Ended

Dec. 31, 2022

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):


	Three months ended December 31,
	2022		2021
Numerator:
Net income (loss)	$	1,162	$	(2,846)
Denominator:
Weighted average basic shares	11,859		11,765
Dilutive effect of restricted stock units	218		—
Weighted average diluted shares	12,077		11,765
Earnings (loss) per share:
Basic	$	0.10	$	(0.24)
Diluted	$	0.10	$	(0.24)

Detail of Selected Balance Sheet Accounts (Tables)

3 Months Ended

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Components of Inventories

The components of inventories are summarized below (in thousands):


	December 31, 2022		September 30, 2022
Raw materials, parts and sub-assemblies, net	$	53,336	$	49,213
Work-in-progress	1,666		1,202
Total inventories	$	55,002	$	50,415

Activity in Product Warranty Accrual

Activity in our product warranty accrual consisted of the following (in thousands):


	Three months ended December 31,
	2022		2021
Balance at beginning of period	$	2,345	$	2,531
Increase to warranty expense	479		293
Deduction for warranty charges	(454)		(382)
Change due to foreign currency translation	10		1
Balance at end of period	$	2,380	$	2,443

Revenue (Tables)

3 Months Ended

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

Summary of Contract Asset and Liabilities

Contract assets and liabilities as of December 31, 2022 and September 30, 2022 are summarized below (in thousands):


	December 31, 2022		September 30, 2022
Contract assets	$	63,911	$	88,351
Contract liabilities	(133,753)		(79,857)
Net contract asset (liability)	$	(69,842)	$	8,494

Disaggregation of Revenue

The following tables present our disaggregated revenue by geographic destination and market sector for the three months ended December 31, 2022 and 2021 (in thousands):


	Three months ended December 31,
	2022		2021
United States	$	100,112	$	82,145
Canada	18,496		15,125
Europe, Middle East and Africa	6,559		7,830
Asia/Pacific	776		944
Mexico, Central and South America	915		525
Total revenues by geographic destination	$	126,858	$	106,569


	Three months ended December 31,
	2022		2021
Oil and gas (excludes petrochemical)	$	43,510	$	43,021
Petrochemical	22,490		17,228
Electric utility	28,407		21,533
Traction power	7,072		11,372
Commercial and other industrial	17,050		5,646
All others	8,329		7,769
Total revenues by market sector	$	126,858	$	106,569

Stock-Based Compensation (Tables)

3 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Restricted Stock Units Activity

Total RSU activity (number of shares) for the three months ended December 31, 2022 is summarized below:


	Number of Restricted Stock Units	Weighted Average Grant Value Per Share
Outstanding at September 30, 2022	239,862	$	26.11
Granted	147,100	21.26
Vested	(63,334)	30.78
Forfeited/canceled	(14,711)	38.58
Outstanding at December 31, 2022	308,917	$	22.86

Fair Value Measurements (Tables)

3 Months Ended

Dec. 31, 2022

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 December 31, 2022 (in thousands):


	Fair Value Measurements at December 31, 2022
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value at December 31, 2022
Assets:
Cash and cash equivalents	$	99,632	$	—	$	—	$	99,632
Short-term investments	11,070		—		—		11,070

Other assets	—		8,067		—		8,067
Liabilities:
Deferred compensation	—		8,905		—		8,905

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, 2022 (in thousands):


	Fair Value Measurements at September 30, 2022
	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, 2022
Assets:
Cash and cash equivalents	$	101,954	$	—	$	—	$	101,954
Short-term investments	14,554		—		—		14,554

Other assets	—		7,730		—		7,730
Liabilities:
Deferred compensation	—		7,714		—		7,714

Leases (Tables)

3 Months Ended

Dec. 31, 2022

Leases [Abstract]

Lease Cost

The following table provides a summary of lease cost components for the three months ended December 31, 2022 and 2021, respectively (in thousands):


	Three months ended December 31,
Lease Cost	2022		2021
Operating lease cost	$	378	$	571
Less: sublease income	(162)		(174)
Variable lease cost(1)	108		141
Short-term lease cost(2)	387		273
Total lease cost	$	711	$	811

(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.

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 December 31, 2022 and September 30, 2022, respectively (in thousands):


Operating Leases	December 31, 2022		September 30, 2022
Assets:
Operating lease assets, net	$	2,159	$	2,179
Liabilities:
Current operating lease liabilities	1,545		1,777
Long-term operating lease liabilities	713		545
Total lease liabilities	$	2,258	$	2,322

Maturities of Operating Lease Liabilities

The following table provides the maturities of our operating lease liabilities as of December 31, 2022 (in thousands):


	Operating Leases
Remainder of 2023	$	1,476
2024	455
2025	195
2026	102
2027	87
Thereafter	7
Total future minimum lease payments	$	2,322
Less: present value discount (imputed interest)	(64)
Present value of lease liabilities	$	2,258

Income Taxes (Tables)

3 Months Ended

Dec. 31, 2022

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):


	Three months ended December 31,
	2022			2021
Income (loss) before income taxes	$	1,613		$	(4,287)

Income tax provision (benefit)	451			(1,441)

Net income (loss)	$	1,162		$	(2,846)

Effective tax rate	28		%	34		%

Overview and Summary of Significant Accounting Policies (Details)	3 Months Ended
	Dec. 31, 2022
Accounting Policies [Abstract]
Predecessor companies founded	76 years

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Numerator:
Net income (loss)	$ 1,162	$ (2,846)
Denominator:
Weighted average basic shares (in shares)	11,859	11,765
Dilutive effect of restricted stock units (in shares)	218	0
Weighted average diluted shares (in shares)	12,077	11,765
Earnings (loss) per share:
Basic (in dollars per share)	$ 0.10	$ (0.24)
Diluted (in dollars per share)	$ 0.10	$ (0.24)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Detail of Selected Balance Sheet Accounts - Components of Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Sep. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials, parts and sub-assemblies, net	$ 53,336	$ 49,213
Work-in-progress	1,666	1,202
Total inventories	$ 55,002	$ 50,415

Detail of Selected Balance Sheet Accounts - Activity in Product Warranty Accrual (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at beginning of period	$ 2,345	$ 2,531
Increase to warranty expense	479	293
Deduction for warranty charges	(454)	(382)
Change due to foreign currency translation	10	1
Balance at end of period	$ 2,380	$ 2,443

Revenue - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
Revenue - Narrative (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021
Revenue from External Customer [Line Items]
Changes in contract estimates related to projects in progress	$ 3.6	$ 2.8
Transferred over Time \| Product Concentration Risk \| Revenue from Contract with Customer Benchmark
Revenue from External Customer [Line Items]
Concentration risk, percentage	93.00%	94.00%
Transferred at Point in Time \| Product Concentration Risk \| Revenue from Contract with Customer Benchmark
Revenue from External Customer [Line Items]
Concentration risk, percentage	7.00%	6.00%

Revenue - Performance Obligations (Details) $ in Millions	3 Months Ended
Revenue - Performance Obligations (Details) $ in Millions	Dec. 31, 2022 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Standard assurance warranty, period	1 year
Remaining performance obligation, amount	$ 679.8
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation, amount	$ 464.2
Remaining performance obligation, expected timing of satisfaction, period	12 months

Revenue - Contract Balances (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Sep. 30, 2022
Revenue from Contract with Customer [Abstract]
Contract assets	$ 63,911	$ 88,351
Contract liabilities	(133,753)	(79,857)
Net contract asset (liability)	(69,842)	8,494
Revenue recognized related to contract liabilities	36,400
Retention amounts included in accounts receivable	7,200	$ 6,900
Retained amount expected to be collected in the next twelve months	6,900
Retained amount expected to be collected	$ 300

Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Revenues	$ 126,858	$ 106,569
Oil and gas (excludes petrochemical)
Disaggregation of Revenue [Line Items]
Revenues	43,510	43,021
Petrochemical
Disaggregation of Revenue [Line Items]
Revenues	22,490	17,228
Electric utility
Disaggregation of Revenue [Line Items]
Revenues	28,407	21,533
Traction power
Disaggregation of Revenue [Line Items]
Revenues	7,072	11,372
Commercial and other industrial
Disaggregation of Revenue [Line Items]
Revenues	17,050	5,646
All others
Disaggregation of Revenue [Line Items]
Revenues	8,329	7,769
United States
Disaggregation of Revenue [Line Items]
Revenues	100,112	82,145
Canada
Disaggregation of Revenue [Line Items]
Revenues	18,496	15,125
Europe, Middle East and Africa
Disaggregation of Revenue [Line Items]
Revenues	6,559	7,830
Asia/Pacific
Disaggregation of Revenue [Line Items]
Revenues	776	944
Mexico, Central and South America
Disaggregation of Revenue [Line Items]
Revenues	$ 915	$ 525

Long-Term Debt - Narrative (Details)	3 Months Ended
Long-Term Debt - Narrative (Details)	Dec. 31, 2022 USD ($)	Oct. 01, 2021 USD ($)	Oct. 31, 2001 USD ($)
U.S. Revolver
Line Of Credit Facility [Line Items]
Percentage of voting capital stock pledged as collateral	100.00%
Non-domestic subsidiaries of voting capital stock	65.00%
U.S. Revolver \| Amended and Restated Credit Agreement
Line Of Credit Facility [Line Items]
Revolving credit facility	$ 75,000,000
Cash collateral pledged balance	30,000,000
Letters of credit collateral amount, minimum outstanding	0
Revolving credit facility borrowings, outstanding amount	0
Amount available under the credit facility	$ 41,200,000
Debt covenant, consolidated leverage ratio (less than)	3.0
Debt covenant, consolidated interest coverage ratio (greater than)	3.0
U.S. Revolver \| Amended and Restated Credit Agreement \| Fed Funds Rate
Line Of Credit Facility [Line Items]
Basis spread on variable rate	0.50%
U.S. Revolver \| Amended and Restated Credit Agreement \| Bloomberg Short-Term Bank Yield Index (BSBY)
Line Of Credit Facility [Line Items]
Basis spread on variable rate	1.00%
U.S. Revolver \| Amended and Restated Credit Agreement \| Base Rate \| Minimum
Line Of Credit Facility [Line Items]
Basis spread on variable rate	(0.25%)
U.S. Revolver \| Amended and Restated Credit Agreement \| Base Rate \| Maximum
Line Of Credit Facility [Line Items]
Basis spread on variable rate	1.75%
U.S. Revolver \| Amended and Restated Credit Agreement \| Financial Standby Letter of Credit
Line Of Credit Facility [Line Items]
Guarantee liability	$ 33,800,000
Industrial Development Revenue Bonds
Line Of Credit Facility [Line Items]
Borrowings			$ 8,000,000
Final annual payment		$ 400,000

Commitments and Contingencies (Details)	3 Months Ended
Commitments and Contingencies (Details)	Dec. 31, 2022 USD ($)
Guarantee Obligations [Line Items]
Additional bonding capacity	$ 315,500,000
Cash collateral required for guarantees, period (greater than)	2 years
Surety Bonds
Guarantee Obligations [Line Items]
Guarantee liability	$ 284,500,000
Facility Agreement \| Powell (UK) Limited
Guarantee Obligations [Line Items]
Guarantee liability	6,800,000
Revolving credit facility	9,700,000
U.S. Revolver \| Amended and Restated Credit Agreement
Guarantee Obligations [Line Items]
Revolving credit facility	75,000,000
U.S. Revolver \| Amended and Restated Credit Agreement \| Financial Standby Letter of Credit
Guarantee Obligations [Line Items]
Guarantee liability	$ 33,800,000

Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Sep. 30, 2022
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	3 years
Unvested restricted stock outstanding (in shares)	308,917		239,862
Compensation expense	$ 1.3	$ 0.9
Granted (in shares)	147,100
Restricted Stock Units (RSUs) \| Time Based Restricted Stock Unit
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	3 years
Restricted Stock Units (RSUs) \| Performance Based Restricted Stock Unit
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period	3 years
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Compensation expense	$ 0.1	$ 0.1
Granted (in shares)	0	0
Restricted Stock \| Non-Employee Director Equity Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares issued under the plan (in shares)	2,400
Restricted Stock \| Non-Employee Director Equity Incentive Plan \| Immediate Vesting
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting, percentage	50.00%
Restricted Stock \| Non-Employee Director Equity Incentive Plan \| Anniversary of Grant Date
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting, percentage	50.00%

Stock-Based Compensation - Schedule of Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs)	3 Months Ended
	Dec. 31, 2022 $ / shares shares
Number of Restricted Stock Units
Outstanding at beginning of period (in shares) \| shares	239,862
Granted (in shares) \| shares	147,100
Vested (in shares) \| shares	(63,334)
Forfeited/canceled (in shares) \| shares	(14,711)
Outstanding at end of period (in shares) \| shares	308,917
Weighted Average Grant Value Per Share
Outstanding at beginning of period (in dollars per share) \| $ / shares	$ 26.11
Granted (in dollars per share) \| $ / shares	21.26
Vested (in dollars per share) \| $ / shares	30.78
Forfeited/canceled (in dollars per share) \| $ / shares	38.58
Outstanding at end of period (in dollars per share) \| $ / shares	$ 22.86

Fair Value Measurements (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Sep. 30, 2022
Assets:
Cash and cash equivalents	$ 99,632	$ 101,954
Short-term investments	11,070	14,554
Other assets	8,067	7,730
Liabilities:
Deferred compensation	8,905	7,714
Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Cash and cash equivalents	99,632	101,954
Short-term investments	11,070	14,554
Other assets	0	0
Liabilities:
Deferred compensation	0	0
Significant Other Observable Inputs (Level 2)
Assets:
Cash and cash equivalents	0	0
Short-term investments	0	0
Other assets	8,067	7,730
Liabilities:
Deferred compensation	8,905	7,714
Significant Unobservable Inputs (Level 3)
Assets:
Cash and cash equivalents	0	0
Short-term investments	0	0
Other assets	0	0
Liabilities:
Deferred compensation	$ 0	$ 0

Leases - Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended
Leases - Lease Costs (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Leases [Abstract]
Operating lease cost	$ 378	$ 571
Less: sublease income	(162)	(174)
Variable lease cost	108	141
Short-term lease cost	387	273
Total lease cost	$ 711	$ 811

Leases - Narrative (Details) - USD ($) $ in Millions	Dec. 31, 2022	Sep. 30, 2022
Leases [Abstract]
Lease accrual	$ 0.1	$ 0.1
Weighted average discount rate, percent	3.61%
Weighted average remaining lease term	2 years 14 days

Leases - Summary of Operating Lease Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Sep. 30, 2022
Assets:
Operating lease assets, net	$ 2,159	$ 2,179
Liabilities:
Current operating lease liabilities	1,545	1,777
Long-term operating lease liabilities	713	545
Total lease liabilities	$ 2,258	$ 2,322

Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Sep. 30, 2022
Leases [Abstract]
Remainder of 2023	$ 1,476
2024	455
2025	195
2026	102
2027	87
Thereafter	7
Total future minimum lease payments	2,322
Less: present value discount (imputed interest)	(64)
Present value of lease liabilities	$ 2,258	$ 2,322

Income Taxes - Schedule of Calculation of the Effective Tax Rate (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Income (loss) before income taxes	$ 1,613	$ (4,287)
Income tax provision (benefit)	451	(1,441)
Net income (loss)	$ 1,162	$ (2,846)
Effective tax rate	28.00%	34.00%

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

+ References

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+ Details

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Income Taxes - Narrative (Details)	3 Months Ended
Income Taxes - Narrative (Details)	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Effective tax rate	28.00%	34.00%

Subsequent Events (Details) - $ / shares		3 Months Ended
Subsequent Events (Details) - $ / shares	Jan. 31, 2023	Dec. 31, 2022	Dec. 31, 2021
Subsequent Event [Line Items]
Quarterly cash dividend (in dollars per share)		$ 0.26	$ 0.26
Dividends per share, annualized (in dollars per share)		$ 1.04
Subsequent Event
Subsequent Event [Line Items]
Authorized increase to quarterly cash dividends, percentage	1.00%
Quarterly cash dividend (in dollars per share)	$ 0.2625
Dividends per share, annualized (in dollars per share)	$ 1.05