POWL Q2 Deep Dive: Margin Expansion and Strategic Acquisitions Offset Revenue Shortfall

Electrical energy control systems manufacturer Powell (NYSE:POWL) fell short of the market’s revenue expectations in Q2 CY2025, with sales flat year on year at $286.3 million. Its non-GAAP profit of $3.96 per share was 5% above analysts’ consensus estimates.

Is now the time to buy POWL? Find out in our full research report (it’s free).

StockStory’s Take

Powell’s second quarter results fell short of Wall Street’s revenue expectations, with flat year-over-year sales and a 5.1% miss compared to analyst estimates. The share price declined over 4% following the release, as investors reacted to the top-line shortfall. Management attributed the muted revenue to project timing, particularly lower activity in oil and gas and petrochemical markets, which was offset by strength in electric utility and international segments. CEO Brett Cope described the quarter’s order activity as “well balanced across the end markets we serve,” citing notable wins in electric utility and offshore oil and gas projects.

Looking ahead, Powell’s leadership emphasized continued growth opportunities across its end markets, especially in electric utilities, commercial, and data center projects. Management highlighted the recent Remsdaq acquisition as a key step to accelerate the company’s electrical automation platform, potentially broadening product offerings in North America. CFO Mike Metcalf noted that approximately 65% of the current backlog is expected to convert to revenue within the next twelve months, and Cope remains “very encouraged by the strong demand across the markets we serve,” pointing to robust pipelines in both traditional and emerging sectors.

Key Insights from Management’s Remarks

Management pointed to project mix, new orders, and operational execution as the primary contributors to the quarter’s margin expansion and overall financial results.

• Electric utility market gains: Powell secured its largest-ever electric utility order, representing a strategic win after years of investment in this sector. Management views this as validation of its approach to building long-term utility partnerships and expects continued momentum as electrification trends drive infrastructure demand.
• Offshore oil and gas resurgence: Two significant offshore oil and gas orders were booked, a notable development given the capital intensity and technical complexity of these projects. CEO Brett Cope highlighted the company’s deep expertise in offshore modules as a differentiator, stating these projects are “very strategic for us with great long-term clients.”
• Remsdaq acquisition: The purchase of Remsdaq Limited, a U.K.-based manufacturer of SCADA remote terminal units, was described as immediately strengthening Powell’s electrical automation platform. Management believes this acquisition allows Powell to offer a fully integrated solution to utility customers and expand into new product categories.
• Short-cycle product mix: CFO Mike Metcalf noted an increased cadence in short-cycle business, which tends to carry higher margins and supports overall profitability. The company’s strategy includes further shifting the revenue mix toward these higher-margin, shorter lead-time products.
• International growth: International revenues rose 39% year-over-year, driven by robust project activity in Canada, the Middle East, and Africa. Management credited this to successful execution of large projects and diversification of end markets beyond North America.

Drivers of Future Performance

Powell’s near-term outlook is shaped by strong end-market demand, new product expansion, and integration of recent acquisitions.

• Backlog conversion and visibility: Management expects about 65% of the $1.4 billion backlog to convert to revenue within twelve months, providing unusually high visibility for a project-driven business. Large projects in electric utility and oil and gas are expected to drive the bulk of this conversion.
• Automation and product innovation: The Remsdaq acquisition is positioned to accelerate Powell’s push into electrical automation, enabling the company to offer fully integrated solutions and target higher-margin opportunities in both utility and commercial markets. Management sees the next-generation SCADA platform as a lever for future growth, especially in North America.
• Market and pricing dynamics: While underlying market demand remains strong—particularly in electric utility, commercial, and data center sectors—management flagged that project pricing is not improving and remains “good but not getting better.” Risks include project timing variability and continued competition, while short-cycle and new product initiatives are viewed as margin accretive.

Catalysts in Upcoming Quarters

In the quarters ahead, the StockStory team will watch (1) the pace at which Powell converts its sizable backlog into revenue, (2) progress on integrating Remsdaq and scaling automation offerings in North America, and (3) whether new short-cycle product launches drive margin and revenue mix improvements. Continued wins in electric utility and data center markets will also be key indicators of sustainable growth.

Powell currently trades at $264.40, up from $237.42 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

Stocks That Trumped Tariffs

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.