Powell Industries Inc (POWL) 2014 Q3 法說會逐字稿

Good morning, ladies and gentlemen, thank you for standing by and welcome to the Powell Industries' third quarter earnings call.

During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions and instructions will be given at that time. This conference is being recorded today, August 6, 2014.

I'd now like to turn the conference over to Ms. Karen Roan. Please go ahead, ma'am.

Thank you, Allan and good morning, everyone. We appreciate you're joining us for Powell Industries conference call today to review fiscal 2014 third quarter results. We would like to welcome our Internet participants listening to the call over the web.

Before I turn over the call to management, I have the normal details to cover. If you did not receive an e-mail of the news release issued yesterday afternoon and would like one, please call our offices and we will get one to you. That number is 713-529-6600. Also if you want to be on the permanent e-mail distribution list for Powell news releases, please relay that information to us.

There will be a replay of today's call and it will be available by webcast by going to the Company's website at powellind.com or a recorded replay will be available until August 13, 2014. And information on how to access that replay was provided in yesterday's earnings release.

Please note that information reported on this call speaks only as of today, August 6, 2014 and therefore, you are advised that time sensitive information may no longer be accurate as of the time of any replay listening.

As you know, this conference call includes certain statements, including statements relating to the Company's expectations of its future operating results that may deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties and that actual results may differ materially from those projected in the forward-looking statements. These risks and uncertainties include, but are not limited to, competition and competitive pressures, sensitivity to general economic and industry conditions, international political and economic risks, availability and price of raw materials and execution of business strategy. For further information, please refer to the Company's filings with the Securities and Exchange Commission.

Now with me this morning are Mike Lucas, President and Chief Executive Officer and Don Madison, Executive Vice President and Chief Financial Officer. I will now turn over the call to Mike.

Thank you, Karen. Good morning, everyone. Thank you for joining us again today for a review of our fiscal 2014 third quarter results. As usual, I'll make a few opening comments and then I'll turn the call over to Don to discuss the financial details.

Our results for the third quarter did not meet our expectations. The higher-than-anticipated demand in our Canadian facility continue to present challenges as we accelerate our production ramp plan. As you recall with the construction of our new facility in Canada, we also replicated our US integrated project execution model. Where before we only had a final assembly operation, we now have the full capability to design, fabricate, integrate and test complete power control rooms or E-Houses as we call them in Canada. This fully integrated E-House model has been very well received by the Canadian market. Order rates for our solutions are running about 18 to 24 months ahead of our original plan. By the end of this current fiscal quarter, the electrical systems portion of our Canadian business is expected to be at a quarterly revenue run rate of more than double what it was last fall when we moved into the new facility.

This high demand plus all the new production processes that we've now insourced, because of this integrated E-House model, has resulted in the tripling of the number of employees in this business over the past 12 months. These new production capabilities, along with new processes and a new workforce has caused our efficiencies to suffer. These constraints had delayed projects and we've had to revise schedules on many major active projects. This resulted in a revenue shortfall for the quarter, along with higher cost and extended project lead times. We estimate that this project rescheduling shifted about $40 million of revenue from this year into fiscal 2015.

We have many actions underway to ensure we hold these revised project schedules and meet our customer commitments. We relocated one of our most experienced operational leaders from Houston to Canada to take over and oversee operations. We dispatched additional resources to Canada to expedite the training of new employees and to accelerate the projects currently underway. We've rebalanced factory loading by outsourcing select fabrication work and moving some of the production work back here to our Houston, Mosley facility. There are efforts underway with our Canadian supply chain to streamline processes, reduce material lead times and expedite materials for current projects. Through these actions, we're working diligently to increase the output at the factory.

Although we have more work to do, we are seeing improvements in productivity, utilization and gross margin. Our goal is to return gross margins to historical levels and return project lead times to market-expected levels before the end of this calendar year. Over the next two to three quarters, we expect to recover the $40 million of revenue that's shifted due to the re-baselining of these project schedules.

While our US operations are performing as expected, a few US projects were also rescheduled primarily due to customer-driven changes. As we've mentioned many times before on these calls, these milestone changes are typical in a project-based business.

While our Q3 bookings were solid, two major projects we've been following totaling about a combined $80 million announced delays in the anticipated date of award. However, overall quotation activity remains strong and markets are still robust. We believe record level bookings for continuing operations are still possible for this fiscal year.

We also remain very optimistic about the strength and growth opportunities in our core energy markets. Overall, market fundamentals have not changed since our previous outlook. Our core oil and gas markets continue to be strong. Our US petrochemical business remains solid. So far this fiscal year, we booked about $125 million in petrochemical projects and we remain confident about this segment through mid-2015.

Pipeline is a strong market for us. We've seen solid demand for these projects over the past few quarters and expect to continue to see these projects released over the next few years. We have good visibility into pipeline projects through 2018, indicating a solid three to four years of booking opportunities. In particular, as Canada comes online to full capacity, a significant portion of our Canadian business will be pipeline projects.

In our offshore segment, we're still expecting to see booking opportunities late in the fourth quarter or early 2015 with increasing activity throughout next year. These include projects in the Gulf of Mexico as well as Asia-Pacific and Africa. LNG export is still in very early stages. Numerous projects in both the US and Canada are in various stages of permitting and engineering design. Although we do not anticipate all these projects will receive the necessary regulatory approvals, nor will they all be funded, LNG export presents a significant opportunity for Powell beginning late 2015 and we're very optimistic about the long-term potential for the LNG export market.

I'll now turn the call over to Don to review the financial details.

Thank you, Mike.

Revenues decreased 12% or $21 million to $151 million in the third quarter, compared to the third quarter of fiscal 2013. Domestic revenues decreased by $16 million to $85 million, primarily due to the timing of projects. International revenues decreased by $5 million to $66 million. Revenues from both our Canadian and UK operations were higher in the third quarter of fiscal 2014 compared to the third quarter of fiscal 2013. However, the timing of revenues from US export projects more than offset revenue growth from our international operations.

Gross profit as a percentage of revenues decreased [to about 20%] in the third quarter of fiscal 2014, compared to 21% in the third quarter of fiscal 2013. The decrease in gross margin relative to revenues was primarily driven by factory overhead costs that are not fully absorbed as a result of lower revenues and utilization inefficiency challenges associated with the production ramp of Canadian operations.

Selling, general and administrative expenses as a percentage of revenues increased to 15% in the third quarter, compared to 12% in the third quarter of fiscal 2013 primarily due to lower revenues. SG&A expenses increased by $2.6 million to $23 million in the third quarter compared to the third quarter a year ago.

We recorded other income of $500,000 in the third quarter, which is the deferred gain from our amended GE supply agreement. Net income from continuing operations for the third quarter of fiscal 2014 was $2.9 million or $0.24 per share, compared to $9.1 million or $0.76 per share in the third quarter of fiscal 2013.

For the nine months ended June 30, 2014, revenues increased 4% or $20 million to $485 million compared to the same period a year ago. International revenues increased by 16% or $31 million to $219 million, primarily due to increased demand for our products and services from the Canadian market. Revenues from our Canadian operation are the primary source of year-over-year international growth. Domestic revenues decreased by $11 million to $266 million. Gross profit as a percentage of revenues decreased to 20.6%, compared to 21.2% in the first nine months of fiscal 2013.

Selling, general and administrative expenses increased by $5.6 million to $67 million compared to the first nine months of 2013. We recorded other income of $1 million in the first nine months of fiscal 2014, which is the deferred gain from our amended GE supply agreement. In the first nine months of fiscal 2013, we recorded a loss in settlement of $1.7 million.

Our provision for income taxes reflects an effective tax rate of 37.3% for the first nine months of fiscal 2014, which approximates the combined US federal and state statutory rates as the majority of our income was from US operation. For the nine months ended June 30, 2014, net income from continuing operations was $17.2 million or $1.43 per diluted share, compared to $22.8 million or $1.90 per diluted share a year ago.

New orders for the third quarter were $172 million, up 14% over prior year resulting in a backlog of $477 million, up from a backlog of $452 million as of March 31, 2014, and $417 million as of a year ago.

For the nine months ended June 30, 2014, cash used for operating activities totaled $14 million. Investments in property, plant and equipment totaled approximately $12 million. Dividends paid totaled $9 million through nine months. At June 30, 2014, we had cash of $88 million compared to $107 million at September 30, 2013. Long-term debt and capital lease obligations, including current maturities, totaled $3 million.

In the third quarter, we completed the re-implementation of our business system. During a period of time immediately following implementation, processing of customer invoices was delayed due to early implementation inefficiencies. At the end of the third quarter, customer invoicing processing was current, but processing delays impacted cash collection. By the end of the fourth quarter, we anticipate cash on hand to return to previous levels.

Looking ahead, our revenue expectations for fiscal 2014 have been reduced by approximately $60 million, $40 million due to lower anticipated revenues from our Canadian operations and $20 million due to work on several US projects that have moved into fiscal 2015 based on customer directed changes. We now expect full year fiscal 2014 revenues from continuing operations to range between $650 million and $675 million compared to our previous guidance of $700 million to $750 million.

Our earnings expectations for fiscal 2014 have been reduced by approximately $0.80 per share, of which approximately 60% is attributable to lower revenues and the balance is due to lower-than-anticipated productivity at our Canadian facility. We now expect earnings from continuing operations to range between $2.15 and $2.40 compared to our previous guidance of $2.85 to $3.35 per share. Our guidance excludes discontinued operations.

At this point, Mike and I'll be happy to answer your questions.

(operator instructions) John Franzreb, Sidoti & Company.

[I once saw that] revenue deferral, how should we think about the timing of that coming in? Are we going to see a couple of quarters of significant revenue bumps or jumps and then will migrate down to more normal level or we -- should we think about this as kind of all the revenue recognitions just kind of moving to the right going forward?

From a practical perspective, looking at our ability and capabilities from a production standpoint, the big piece, the big move from our Canadian operations is more of a shift to the right. We will -- we expect to see a rebound in the fourth quarter and expect to see continued growth in revenues in the first quarter of fiscal 2015. But I don't expect to see that you're going to add the $40 million on top of everything else that we had previously expected to produce during that period of time.

Okay. And the $20 million of the deferred job.

The $20 million of the deferred is -- will be probably a little more incremental, mostly early in the year, some of it's moving over into early into the -- our second quarter of the January, February time period. But that will be a little bit more incremental because of capacity situations we have in the US.

Okay. And just on the capacity issue, do you have sufficient capacity right now? Do you need to add more? Are you still parking jobs in the parking lot? Give us some color on how much capacity you have relative to the incoming order book?

[From incoming order] book, the US capacities, the UK capacities are sufficient to manage the backlog, the order intake based on the timing if we currently see it. We did have a little dip year-over-year in our backlog timing in the US this year versus last year. The big challenge that we're having from the capacity standpoint near-term is really related to the ramping up of capabilities and capacities in the Canadian facility.

Jon Tanwanteng, CJS Securities.

Just in Canada, a couple of questions. Are the delays you are having there going to impact your relationship with customers and two, maybe is it worth to discuss pricing the future orders given the amount of demand that's out there?

We've got two parts to that. So obviously, we've communicated all these schedule changes to customers. Final delivery dates move kind of four to eight weeks depending on the projects and our task now is to make sure we deliver on those commitments. We've reminded those customers to keep good communications open. We've got some great relationships with those customers and we're still working on. At this point, we've seen no impact as far as lost or canceled orders from those changes.

Pricing, at this point, we still think generally, I don't think our outlook on pricing has changed. We think with the waves that are coming from these various markets [both at] -- all over North America, there will be capacity constraints industry-wide. So we still think there is some pricing opportunities.

Okay, great. And then when do you kind of expect to get a normalized margin in that business?

Jon, I'll just add to that pricing discussion too. Now some of these very large projects, kind of when you get north of that $50 million range, those are high profile and attracting a lot of attention. There is -- those are very competitive projects. Those will be very competitively bid. And, sorry, what was your last --.

I was just wondering when do you expect to get to a more normalized margin for the Canadian business?

We think we can return the gross margins to historical levels before the end of the calendar year.

Okay, great. And just in light of the share price this morning, can you discuss your priorities for cash including potential for share repurchases?

From a cash perspective, our cash is still focused on how do we grow the Company and that growth, it will be both organic, as well as potential acquisition. There has been no discussion with the share repurchase based on this morning's activity in the stock market.

Got it. And then finally just, if I heard it correctly, you pushed out $60 million of business to next year. I'm just wondering what the split was between Q3 and Q4?

When you're looking at the -- from the US, the $20 million part of that, we had already kind of alluded to at the last call it's been drifting a little bit. When you're looking at the US, I would say about half the shortfall in the third quarter we tend to recover in the fourth and the other balance of it's going to be pushed out into -- incrementally into 2015. So another $5 million to $10 million in addition to what we've talked about in the past has clearly moved into next year.

Relative to the Canadian operation, over 50% of that occurred in the third quarter, but then it's kind of an accordion effect. We had to push some of that out of the fourth quarter and then what we're now going to be producing in the fourth quarter despite some additional work totaling to the $40 million we just talked about.

Noelle Dilts, Stifel.

First question I had was just given that you've added the additional shift up in Canada, and you're kind of pushing full capacity, I was hoping you could just update us on what you think the kind of run rate revenue out of Canada is at this point, if there's been any change to your thoughts on what the kind of functional production is -- functional capacity is at that operation?

I think that our functional practical capacity levels haven't really changed from what we calculated or based our projections on. It's a matter of getting to those productivity levels are just taking longer than anticipated. So we still expect to reach the practical capacity levels of that facility which we projected.

Okay. And then I guess when you're talking about hitting the -- improving productivity, getting gross margins back up to normal levels by the end of the year, to me that seems ambitious given that it's been a struggle for you to staff that facility, and obviously you have a young workforce. So can you just walk us through maybe some of the actions that you're taking and how do you think you can get there that quickly, if you think -- if you can talk about what you believe the issue is and if you're -- I guess what you're doing to address that?

Yes, so the product is starting to flow through the facility now, shipments are going. I won't get into the details on the gross margins in that facility, but they made a nice step change up in the third quarter, still not where we want, still not at historical levels, but we're seeing a month-over-month improvement in productivity, seeing month-over-month improvement in utilization, we see month-over-month improvement in gross margins, we see month-over-month improvement in on-time delivery for our internal milestones.

And then [just be a little redone with] some of the comments I made earlier, a lot of it is dispatching additional resources up there, we've made some management changes, we have some of our most experienced operations people now running that business, we've put in more engineering resources from Houston up there, re-balancing the factory load a little bit so to give them a little bit more breathing room. We've moved some of the electromechanical production back here to Houston to free up some of the load. There are some select things we're able to outsource, long-term intention would be to do those in-house but short-term to provide a little breathing room. We've outsourced some of that. And then just working the material issues on the supply chain, some extra focus on that.

So it's an ambitious target, but the teams are making great progress and we're starting to see it come together, but there is still a lot of work to do this quarter and next.

Okay. And then can you just give us some maybe early thoughts on 2015, when we have talked before, you talked about a goal of 10% to 15% annual revenue growth, 100 basis points to 150 basis points of margin expansion over the next three years, but maybe you could just give us some early thoughts on what you're seeing for 2015?

I think we'll probably wait on that, Noelle, to the next call. This $80 million, we had two projects, we expected to see those be awarded this past quarter in Q3. Those were obviously a big part of the plan. We think one of those could still booked this quarter, one of them likely slides to next year. $80 million is a big piece of the number. So we need to see where those lay out and see if we hit our targets in Canada. So I think I'll hold back till the next call.

Brent Thielman, D.A. Davidson.

Don, I guess were these schedule changes in the US some of the same projects you saw last quarter, I think, that you talked about?

The quarter -- last quarter was some larger projects. This particular quarter, they were -- to my knowledge, they were all different from the previous quarter and they were just of the smaller size, not big movement, but still a little bit drifting to, I'd call the more mid-sized projects. But I think that the movement that we saw in the second quarter that pushed out has held pretty steady through the previous -- through our June time period.

Okay. And then with the kind of schedule changes you're seeing in work you've already booked, are you seeing greater than usual changes or sort of volatility in kind of timing of bids for new projects?

I would say the volatility maybe moving north or a little bit greater today than maybe three to six months ago, but predominantly on the larger projects. We're seeing it on the bid side particularly and that's where you would normally see the greatest impact to changes, whether it's to our particular subsystem or to the overall project itself.

On the smaller projects, I would say it's more consistent with what we've seen historically. There is always some movement in and out today, meaning the last few months, may be a little more to the right and a little less coming in, so it's a little bit imbalanced. But nothing that gives us any alarm of a structural change in the marketplace.

Okay and then just one, last one, could you provide what the prior record bookings for the Company was (multiple speakers)?

It was [$200 million and change], but I don't remember off the top of my head.

For the quarter?

If you're looking at it from continuing operations excluding the Transdyn business we sold, it was $197 million.

Wayne Archambo, Monarch Partners.

Just going back to the capital structure, as you continue to hoard cash earning effectively zero, we the shareholders just grow frustrated that your balance sheet, it seems to me to be in a place that doesn't exist today with no debt on your balance sheet, interest rates are at 60-year lows and your earning effectively zero on your cash, it seems like a balance sheet from many years ago when interest rates are significantly higher. Is it your philosophy to continue this capital structure into the foreseeable future?

I would say that based on the direction that we're working towards daily on a strategic plan, we would anticipate holding the cash at least through the balance of the coming year.

And you have no appetite to take on any debt at all?

It's not that we don't have appetite to take on debt. It's a matter of deploying that incremental cash effectively.

So at some point if you can find projects that are worthy for acquisition, I assume you're going to return that cash to shareholders at some point through a buyback or special dividend or something of that nature, you adverse to that or?

No, we are not adverse to that, the issue is timing.

And we would like to put that towards growth of the Company and acquisitions. We have refreshed our funnel. We've got four, five strategic areas we've identified. We've got a lot of ideas in the pipeline just nothing that's close right now, but that would be a good use of that cash and help us promote our growth initiatives right now.

Could we expect something of that nature in the next 12 months?

12 might be a push based on what we see right now in the funnel.

Okay. Thank you.

Before we take the next question, I want to correct myself from the -- Brent's comment earlier. The high mark from bookings from continuing operations was at previous quarter than I just quoted, it's $250 million.

Tom Spiro, Spiro Capital.

A couple of questions. One, I wondered how we're doing in replacing our GE arrangement, how is that progressing?

That's still progressing. As you know, we're trying to develop some alternative channels to continue to support that product line. There is a huge installed base of Power/Vac in the marketplace. So we are continuing to expand those channel opportunities and our direct business is going to be up a little bit this year in that channel.

That's great. Secondly, the $80 million of deferred projects, what was the nature of that work, was it the pipeline, was it offshore project, what was it?

Those were orders, we -- bookings we expected to get this quarter. It was two projects, one was pipeline, one was petrochemical.

I see. Thinking of petrochemical for a moment, Mike, I think in your commentary early on, you said you had fewer petrochemical out to mid 2015. I think maybe you said it was looking strong through mid 2015. I wasn't sure what the significance of mid 2015 was, is that just as far as your window looks or are you expecting something to happen then?

Based on what we see in the funnel and the project list, we think we're approaching mid-cycle on petrochem build-out. I think others see it a little more optimistically, maybe we're being too conservative on that. I think others see petrochem extending a lot farther than that but based on what we see in petrochem, probably next year we approach mid-cycle and then that starts to come down.

And lastly, Don, same question I asked on the last call, the quality control up in Canada given the difficulties, the new personnel and such, are we redoubling our efforts to maintain quality?

Can I -- let me take that one, Tom. That's another area where we're dispatching additional resources up as these first few units are leaving the factory. We're taking some of our most experienced quality, inspection and test people and they will be on the ground for those final inspection tests. So your point redoubling the efforts, I'd say absolutely redoubling the efforts on quality on these first units to go out the door.

(operator instructions) John Franzreb, Sidoti & Company.

Yes, I was just wondering about the ability to staff the Canadian facility, are there any issues in retention there?

Retention has actually been very good up there. So as we mentioned, we tripled our number of employees in our electrical systems business and the retention has been surprisingly good. I think it's that new modern well lit heated facility, cafeteria functions, we've been able to retain the people. It is a challenge to bring people in, but we've been able to bring them on as the plan called for. We think we probably still have another 50 people to go between now and the end of the year, 50 additional people to add (multiple speakers) -- yes, end of the calendar year. But we're still tracking that. We're able to find them and bring them in.

Okay. And just a little bit more on the $80 million in delayed awards, was there any reason given for the delays? Is there any skittishness on the customer base (inaudible)?

No, we don't detect that, both of them are still expected to be awarded. Both of them still have ongoing engineering work, both of them have ongoing meetings and discussions between all the parties involved and we've not seen any general skittishness or I'd say a trend change where people are starting to rethink projects. These have tended to be more just getting the engineering work done, getting the approvals done, getting them staffed up, but both the projects still -- we are still optimistic they will be awarded.

Okay. And then the software system that impacted the cash collections in the quarter, did that have any impact on the SG&A line at all, Don? And then just maybe walk me through what happened there a little bit.

Basically we re-implemented our business system, I think we've talked about in the past. We went live the 1st of May, and during these first few weeks after the implementation, there were some inefficiencies, some process changes that impacted the business. We've recovered that for the most part by the end of June. Specifically on the invoicing is that the project management module where [invoicing comes out of], we just got a little behind during those first couple of weeks. And it took us into June to get caught up completely on the -- getting customer invoices out, which obviously delayed collections.

Okay. And was there any impact on the SG&A line in the quarter from them?

No impact on SG&A. SG&A, all expenses were properly recorded as of the end of the quarter.

Noelle Dilts, Stifel.

I just wanted to circle back on Wayne's question about cash usage, you talked about potentially 12 months being too soon to see some acquisitive activity. But what are your thoughts on maybe some additional greenfield expansions? Is that something you'd be considering within the next 12 months?

It's possible. We're looking at a lot of options right now, particularly in Canada as it pertains to what's that volume going to look like, how fast does it ramp up these three to four years of opportunities in the pipeline, that is a possibility. We're still evaluating that.

Okay. And then could you talk a little bit about what you're doing on the services side, I know that's an area you're looking to grow. Maybe just give us an update on where you stand and what you're doing to enhance those capabilities?

So there is kind of two parts to that. Some of the ideas in the acquisition funnel is, is there a way to expand the offering in our service business, so that's ongoing. We're also looking at geographic coverage. Is there areas we need to beef up our on-ground field service organizations. So both of those are ongoing activities right now.

Noelle, I'd also like to circle back to your last question, when you were asking about next year. I didn't really want to get into a discussion in 2015, but I also didn't want to leave you with a pessimistic view. I think your question was, do we still believe 10% to 15% growth and 100 basis points of gross margin improvement over the next three years, I think it's still solidly double-digit growth next year. I think we're still on track to deliver the gross margin improvements. We just got a lot of timing issues going along right now with some of the changes that have occurred this quarter. But I'm not pessimistic about double-digit growth next year.

(operator instructions) Tom Spiro, Spiro Capital.

Yes, Tom Spiro. Mike, as I recall from the last earnings call, at that time you thought there were two or three offshore jobs that might become available late this fiscal year or early next, what's the status of those jobs?

Both -- all still active. One is still possible to get this quarter. It's going to be days or weeks, does it fall into September or does it fall into October based on how we see it now. So, we still see them. They're still active. They're kind of right on that edge of week or two timing, one way or the other, which year they fall in, but they still are moving.

Are you still seeing some other offshore jobs that might hit later in 2015.

Yes we are, and we think that has bottomed out coming back early next year and accelerating through 2015.

And there are no further questions at this time. So I'd like to turn it back over to management for any additional or closing remarks.

Thank you.

Well, as you know, our third quarter was very challenging as we continue to ramp our Canadian production facility to meet this higher demand. Re-baselining these projects schedules in Canada and these other, I'd call them a more typical schedule changes in the US has shifted out revenue into next year. But this is a short-term challenge, and we will get through that. Our teams in Canada are making progress every day and improving productivity and meeting customer commitments. And, as I said, we expect to get that gross margin back up to historical levels before the end of the calendar year.

Our quotation activity remains healthy and our long-term outlook on these markets has not changed at all. Energy markets are going to be strong driven by petrochem, pipeline, offshore production, LNG export. And as we talked about before on these calls, we now have behind us some significant investments in two new production facilities, the re-implementation of our business systems and some new productivity tools there, all just helping us to ensure we're well positioned for the growth we see coming.

I'd just like to end and say thank you to all of our operational and functional teams across the business. This has been a challenging quarter for everyone. They've worked hard, they're making progress and I'm very proud of the accomplishments our teams have made over these last few months.

So with that, I'll wrap it up, and just again, thank you for your interest in Powell and we'll talk to you next quarter. Bye-bye.

Ladies and gentlemen, this concludes the Powell Industries third quarter earnings call. You may now disconnect. Thank you.