管理層發言
Good day, and welcome to the Powell Industries Fiscal First Quarter 2026 Earnings Conference Call. This event is being recorded. I would now like to turn the conference over to Ryan Coleman of Investor Relations. Please go ahead.
Thank you, operator, and good morning, everyone. Thank you for joining us for Powell Industries conference call today to review fiscal year 2026 1st quarter results. With me on the call are Brett Cope, Powell's Chairman and CEO; and Mike Metcalf, Powell's CFO. There will be a replay of today's call, and it will be available via webcast by going to the company's website, powellind.com, or a telephonic replay will be available until February 11. The information on how to access the replay was provided in yesterday's earnings release. Please note that the information reported on this call speaks only as of today, February 4, 2026, and therefore, you are advised that any time-sensitive information may no longer be accurate at the time of replay listening or transcript reading. This conference call includes certain statements, including statements related to the company's expectations of its future operating results that may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and uncertainties and that actual results may differ materially from those projected in these forward-looking statements. These risks and uncertainties include, but are not limited to, competition and competitive pressures, sensitivity to general economic and industry conditions, international, political and economic risks, availability and price of raw materials and execution of business strategies. For more information, please refer to the company's filings with the Securities and Exchange Commission. With that, I'll now turn the call over to Brett.
Thank you, Ryan. Good morning. Thank you for joining us today to review Powell's fiscal 2026 1st quarter results. I will make a few comments and then turn the call over to Mike for more financial commentary before we take your questions. Our fiscal year is off to a strong start. As our first quarter results continue to demonstrate Powell's unique and advantaged position against a backdrop of what are secular and increasingly durable growth trends, the growing and broad investment in power generation and grid modernization to support data center and AI capacity growth, domestic manufacturing, electrification and the nationally important export of energy resources like LNG, are validating our now nearly decade-long strategic effort to transform Powell into a more diversified manufacturer of electrical distribution products and systems. During the first quarter, we saw revenue grow 4% compared to the prior year.
And as a reminder, our first fiscal quarter typically exhibits some level of seasonal disruptions associated with fewer working days. While ongoing high levels of project execution drove improved profitability compared to the prior year. Gross profit expanded 20% to drive a gross margin of 28.4%, an improvement of 380 basis points year-over-year. We recorded $439 million of new orders, the highest quarterly total in over 2 years, as activity was widespread across oil and gas, specifically LNG, data centers and the electric utilities markets. Within our total bookings number, we were awarded a contract for a large LNG project that exceeds $100 million to support gas liquefaction and export along the U.S. Gulf Coast. As the permitting process for LNG restarted a year ago, activity in support of new greenfield and brownfield trains resumed and Powell has and continues to support this strategic market.
We anticipate activity within the LNG market to continue in 2026 relative to the more modest activity levels throughout 2024 and most of 2025. Commercial dynamics within our commercial and other industrial markets have accelerated in recent quarters as we continue to see increased demand within the data center market. During the first quarter, our commercial and other industrial market accounted for nearly half of the order total and included our first mega project order for a single data center, which totaled roughly $75 million. Our commercial and other industrial market now comprises 22% of our backlog as of quarter end, with data centers accounting for roughly 15% of our total backlog, both of which are record levels for Powell. Over the past few quarters, we have continued to experience increasing levels of interest among a growing list of data center customers. The increasing power demand driving greater compute power and the desire to expedite construction timelines creates a value proposition that is well aligned to an increasing portfolio of Powell's electrical distribution products and automation solutions, including our first orders in the United States for our newest team members at Remsdaq Limited in the U.K. In response to the growing market demand, we continue to take measures to expand productive capacity, including adding additional leased facilities to support the expansion of production lines, increased inventory needs, broader collaboration with our supply base to ramp supply and improve cycle times as well as rebalancing and reallocating the manufacture of select products across our facilities in North America to further optimize capacity.
Meanwhile, order trends in our Electric Utilities segment remained very encouraging as we experienced another solid quarter of award activity from this end market. Overall, the oil and gas and petrochemical business remains healthy. We are experiencing some degree of divergence across markets and geographies that we compete with some performing very well and others exhibiting softer activity levels in areas such as refineries and polyethylene and polypropylene facilities. We finished the quarter with a backlog of $1.6 billion which was sequential growth of 14% compared to the September quarter and is the highest in Powell's history. The growth in our backlog over the past year has been primarily driven by booking trends in the electric utility and commercial and other industrial markets as these two markets now account for the majority of our backlog for the first time ever. Overall, our backlog is well balanced across the markets we serve, and we continue to benefit from a healthy mix of large projects as well as small and medium-sized core projects that help maximize productivity across our manufacturing plants.
We also benefit from project visibility that now extends into our fiscal 2028. The expansion of our Jacintoport facility is progressing on schedule and remains on track to be completed during the second half of our fiscal 2026. This incremental capacity will be critical to ensuring our ability to support all of our end markets, but specifically, our oil and gas customers as we anticipate the wave of LNG project development work that is projected to come to market over the next 3 to 5 years, and this investment ensures that we continue to advance our industry-leading role in the fabrication of engineered to order power distribution solutions for critical applications. We continue to actively review and evaluate our total manufacturing capacity to ensure the delivery and execution of our project backlog. This includes the potential for future investments in plant and equipment, along with actions noted earlier in my comments, where we are now adding lease properties to support near and mid-term growth in our medium voltage distribution products.
As we look ahead through the remainder of 2026, the commercial environment for each of our major end markets remains positive. We continue to have robust activity in support of the North American gas market. The fundamentals of the U.S. natural gas market continue to support investments in LNG and the funnel of projects that we are tracking compares favorably to past cycles in terms of the total number of projects moving forward. The outlook for our electric utility market remains robust and balanced across the customers and geographies that we serve. The growing wave of investment in electrical infrastructure to meet growing demand levels is broad and durable, and we expect another strong year of activity in 2026. Lastly, we are increasingly encouraged by order trends and demand levels within our commercial and other industrial markets. The acceleration of order activity driven by data centers leaves us confident in our ability to continue to grow our presence in this dynamic market.
Overall, we are very pleased with our first quarter performance and our outlook for fiscal 2026. Demand trends remain robust, and we are well positioned to execute our backlog and grow within our targeted markets. With that, I'd like to turn the call over to Mike to walk us through our financial results in greater detail.
Thank you, Brett, and good morning, everyone. In the first quarter of fiscal 2026, we reported net revenue of $251 million compared to $241 million, or 4% higher versus the same period in fiscal 2025. New orders booked in the first fiscal quarter of 2026 were $439 million, which was 63% higher than the same period 1 year ago and included two mega orders. The first mega orders for a large domestic liquefied natural gas project valued at greater than $100 million, which is being constructed on the Gulf Coast. In addition to this LNG mega order, the business also secured a number of orders during the quarter, supporting the electrical infrastructure for various data center projects. Collectively, these data center orders totaled more than $100 million in the first quarter of fiscal 2026. These data center orders booked in our commercial and other industrial sector included a notable mega order for electrical distribution equipment and was valued at approximately $75 million that will be deployed at a single data center.
Notwithstanding these significant wins, the orders cadence across most of our reported market sectors continues to be active, particularly across our domestic end markets. As a result of this commercial activity, the book-to-bill ratio in the period was 1.7x. Reported backlog at the end of the first quarter of fiscal 2026 was $1.6 billion, $219 million higher than 1 year ago and $191 million higher sequentially and continued strength across the oil and gas, utility and commercial and other industrial sectors. As we exited the first fiscal quarter, backlog across our oil and gas and utility sectors each represent roughly 30% of the total backlog while the commercial and other industrial sector has grown to 22% of the backlog, increasing substantially on both a sequential and year-over-year basis. Compared to the first quarter of fiscal 2025, domestic revenues were slightly lower by 1% or $3 million to $195 million while international revenues were up 29% or $13 million to $44 million in the current fiscal quarter.
The increase in our international revenues during the quarter was driven in large part through the projects that we're currently executing in the Middle East and Africa, Asia Pacific and Europe regions. From a market sector perspective, revenues across our utility sector marked the most substantial increase during the quarter, higher by 35% compared to the same period 1 year ago, while revenues from the oil and gas sector increased by 2%, offset to some degree by the petrochemical sector, lower by 31% versus the first quarter of fiscal 2025. Lower revenue in the petrochemical sector was mainly driven by the completion of a large project booked in fiscal 2023, coupled with softer commercial activity in this market. In addition, the commercial and other industrial sector was 8% lower on project timing, while the light rail traction power sector was 5% higher on a relatively small revenue base.
Gross profit in the current period increased by $12 million to $71 million in the first fiscal quarter versus the same period 1 year ago. Gross profit as a percentage of revenue was higher by 380 basis points versus the same period 1 year ago at 28.4% of revenues, primarily driven by strong project execution, generating a higher level of project closeouts versus the prior year. Sequentially, gross profit was lower by 300 basis points on the predicted seasonal softness. As we noted in our fourth quarter release, we anticipated a challenging sequential comparison considering that our first fiscal quarter is historically the softest quarter across our fiscal year due to the holiday period. Selling, general and administrative expenses were $25.2 million in the current period and were higher by $3.7 million on increased compensation expenses across the business versus the same period a year ago.
SG&A as a percentage of revenue increased 110 basis points to 10% in the current fiscal quarter. In the first quarter of fiscal 2026, we reported net income of $41.4 million, generating $3.40 per diluted share, which is a 19% increase compared to a net income of $34.8 million or $2.86 per diluted share in the same period of fiscal 2025. During the first quarter of fiscal 2026, we generated $43.6 million of operating cash flow on favorable income generation through the period. Investments in property, plant and equipment totaled $2 million in the quarter, with the capital deployed primarily to address capacity and productivity initiatives. At December 31, 2025, we had cash and short-term investments of $501 million compared to $476 million at September 30, 2025, and the company does not hold any debt. As we look ahead to the remainder of fiscal 2026, we remain encouraged by the commercial tailwinds across all of our end markets.
Given the current market conditions, coupled with a stable pricing environment, we are optimistic that we can sustain the quantity and quality of our backlog throughout fiscal 2026. Combined with our ongoing focus on optimizing margin levels, increasing product throughput and the overall strength of our balance sheet, Powell is well positioned to deliver strong revenue and earnings throughout the rest of fiscal 2026. At this point, we'll be happy to answer your questions.
分析師問答
Our first question comes from John Franzreb with Sidoti & Company.
Congratulations on another great quarter. I'd like to start by discussing the gross margin. Based on your current backlog, do you believe you can sustain the 2025 gross margin profile? Does this take into account potential change orders or short-cycle business, or is it solely based on the backlog configuration?
John, this is Mike. I'll address that question. So we had a very strong quarter with respect to project closeouts, as I noted in my prepared comments, 380 basis points overall on reported margin versus prior year. Of that, $300 million was attributable to project closeouts, which was favorable to last year and that was really driven by strong execution and risk management and our ability to recover costs via change orders, etc., in the project environment. The remainder of that upside was just playing productivity and operating leverage across the business. As a barometer of level of margin levels over time, I would point to the trailing 12-month performance. If you took a look at the trailing 12 months in the business, our reported margins are running about 30% and of this, there's approximately 175 basis points of project closeout gains, again, which includes change orders and the like changes in estimates. So maintaining a base level margin in the upper 20s while continuing to drive for 150 to 200 basis point upside resulting from favorable closeouts is a reasonable assumption. And that reflects what we see that base assumption is what we see in our backlog.
Got it. Got it. That's very helpful, Mike. And I'm actually kind of curious about the record backlog, it's great to have. It's wonderful to see. But I'm wondering if there's any concerns that customers are just buying to get in line and that the backlog might not be firm in use past given maybe the new customer shift. And just any thoughts about that?
John, it's Brett. That's a good question. We've discussed this before regarding cancellations and their potential impact. I believe the 1.6% is quite stable. The growth we're seeing in the commercial market and others, considering the timing and our understanding of the project, makes me feel optimistic. Conversations about reservations and locking in capacity are indeed happening with us and others. Mike, the management team, and I are evaluating how to manage this demand risk in the upcoming quarters and fiscal years. While it is a concern for the future, we are addressing it on a quarterly basis, and currently, it’s not reflected in our backlog. Overall, I'm confident with our current situation.
Our next question comes from Chip Moore with ROTH MKM.
I wanted to ask for more details on the data center aspect. You're discussing larger and more numerous opportunities, and it's great to see that megaproject. Could you elaborate, Brett, on the delivery schedule for the data center? Additionally, I believe many of these facilities are being constructed in phases, so is there potential for follow-on orders at some of these locations? Also, regarding capacity, you mentioned the addition of some leased facilities—how quickly can you ramp up and increase the switchgear supply?
I could have done an entire discussion on the data centers while considering our position in the broader market because we are learning extensively as this sector rapidly expands. First, regarding the ongoing activities, there is an intriguing dynamic. Although it involves project work, a significant portion of our backlog still lies outside the data center, including the large mega project. This entails substantial work for a project to manage a lot of external tasks, with a focus on designing one product to build many. As we see it, this project supports a product strategy. This will lead to increased production flow as we believe there are numerous opportunities we are navigating now and will continue to explore in the coming quarters regarding efficiency, productivity, and delivery. We dedicated considerable time last quarter, and the one before, to improving our supply chain and refining production line processes.
We added a 50,000 square foot leased facility, which we are just starting to manage, to support the flow of this product line and to store the inventory that needs to increase to keep pace. This will involve a lot of repetitive product manufacturing down the line, and we expect to see more of that in the next few quarters. Currently, we are evaluating additional facilities and reconsidering if we should expand even further and invest more into our model. While we prefer to own our production equipment, leasing makes sense for now. As we gain more understanding and confidence, we will make more permanent investments to align with our ongoing efforts to drive growth across all three of our verticals.
Very helpful. I appreciate the color there, Brett. And if I could ask one more. Supply-demand environment, I guess, more broadly to the point on margins, a lot of announcements around capacity expansion from a number of equipment suppliers floating out there? Just maybe it sounds like things are quite stable right now, but just how you think about the future several years out, what might take place?
Every quarter, I'm getting more confident. Notwithstanding John Franzreb's question about the concern on this massive demand environment. I mean the number of customers were having more thoughtful strategic discussions with is increasing, and they're engaging Powell in a way that fits us well. And so I talked early on, maybe a year ago about finding alignment with clients that meet well with what we do culturally and how we do it, we'll learn from that and we'll grow. So we're not going to stay static as to who we were. We want to build a part of the company that is quicker on the cycle, can meet the need. There is a lot of demand. We understand the urgency and the return on their capital. But at the same time, we want to make sure we're hitting the dates for all 3 verticals that we're serving. So the number of customers is increasing. It is going out further in time and the programmatic approach about your comment about phasing, yes, we see the initial on the initial design and the potential train expansion, but the size of the data center potential that could be added on to it is definitely part of the conversation.
So that fits our model, right? If we execute and deliver for our client. We absolutely want these relationships to be sticky, just like there are other verticals, and we're very open with them in that approach. And so we use that as an early-on engagement sort of screening discussion of, hey, we'd like to help all of you, but we want to align with those that really match us well.
Next question comes from Manish Somaiya with Cantor.
Michael and Brett, it's Manish Somaiya. Just a couple of questions. One is on pricing. Perhaps if you can just give us some comment on what you're seeing as far as pricing in your end markets, the intensity of competition pertaining to that? And then related, how should we think about raw material prices and how they get passed along and what you absorbed? Perhaps if you can just give us a sense as to how you protect yourself in this advent of rising commodity prices.
Thank you for joining today. I'll address the first part of that question, and Mike can provide additional insight on input costs. Regarding the pricing environment, we've observed consistency over the past few quarters with no significant changes. Overall, things remain stable across all our sectors in terms of market competition. One aspect worth noting, which I also mentioned in my previous call with Chip, is related to data center projects and our pricing strategies. I believe that we might see some potential upside. Long cycle projects, which are larger and involve a comprehensive range of products, tend to have quicker cycles compared to others that follow a slower demand curve. As we ramp up production of these products consistently, the efficiency improvements we anticipate will be significant. Currently, this is not a major focus for Powell, but as we expand our product offerings, I believe there is potential for upside. I can't quantify this yet, but I do see the possibility emerging over the next couple of quarters as we gain a clearer understanding.
And following on that, Manish, this is Mike. Regarding the input costs, we closely monitor these. We categorize them into two areas. The first is raw materials like copper and steel, which are very volatile. The metals market is extremely unstable at the moment. We do hedge our copper to some extent, and any significant increases we observe are integrated into our internal pricing models. The second area involves the many engineered components we purchase, such as HVAC and fire systems, which we do not manufacture ourselves. Our projects typically last from one to three years, so we secure prices for these components when we sign the contract. This means we are committed to those engineered components while we keep a close eye on commodity prices and incorporate them into our pricing model. This is how we manage those aspects of the business to reduce risk.
And then just as a follow-up, how should we think about the lead times on specific components like switchgear, for example, obviously, you have a significant backlog at this moment. What are sort of the potential constraints on the component side that could impact revenues?
That's a discussion we have every day and along with per couple of comments on the capacity additions that we're working through. I think we're in a good spot. If you look at the mix of products that we make and if you just kind of go back to data centers, Manish, the power levels have increased coming off utility or if they're doing GTG self-generation on-site or any kind of multifuel, there's a lot going into the 38 kV line, and that is ramping quickly. That's a product that we're rarely adept at. It actually fits Powell really well. But when you look at the 5 and 15 different product levels, they're not as robust. We actually have capacity. And so some designs of data centers out there, if you look at how they're doing their data halls, not all of them are just massive 1 gigawatt or 3x 300 gigawatts. There's new designs coming out that are 90 or 100 or 150-megawatt data halls that we still have really good capacity running 35 to 40 weeks on gear, which is very competitive in the market for 15 kV.
So when you get into the mix of how they're doing their power design, we are driving future capacity for those higher levels that are really under demand, but then there are other designs that we still have opportunity to fill out that will benefit the back half of this year and into the early part of '27. So those are the really thoughtful conversations we're having with those clients that engage us that way. We can fate, we can build, we can invest to meet their needs, and then we can phase our deliveries to really make a win for both parties.
Our next question comes from John Braatz with Kansas City Capital.
Brett, you've mentioned various initiatives to enhance capacity and product flow. I have two questions. First, how much do you anticipate needing to increase your CapEx spending to achieve that? Second, considering your current capacity and future plans, if your top line growth were to reach a certain percentage, what additional capacity could contribute to revenue growth in the future? Are we potentially looking at mid-teens growth, or what new top line expectations could arise with this increased capacity?
That's a great question, John. Regarding CapEx, we have been assessing a new facility owned by Powell for most of the year. This initiative supports our investment in R&D and the products we aim to introduce to capture a larger share of spending in the utility sector. I have a strong belief in the long-term potential of the utility market for Powell, and we have seen significant success there. The team has been actively creating value for our utility clients. We want to maintain our focus on this area. Given the current market dynamics, we are contemplating a new facility, potentially around $100 million, although we have not finalized that decision yet. We are having ongoing discussions with the Board. At the same time, we identified opportunities on the leasing side that could drive revenue, and I believe double-digit growth is achievable. We need to launch a few more products organically, and I am somewhat cautious about the timing, especially with the growing engagement from data center companies.
This could result in a noteworthy increase. The advancements in low-voltage content, particularly in AC designs, are gaining momentum and there is ongoing discussion about future DC designs, which we are also involved in and which should represent a significant change. Our investment last year in the breaker plant in Houston has positioned us well for this growth, and we may quickly require additional facilities to manage inventory. We see several promising opportunities that could contribute to the company's growth.
Okay. And Brett, on the LNG market, obviously, it's a little bit different today than it was 3 years ago when sort of the initial construction rollout began. Is the competitive environment a little bit different today than 4 or 5 years ago?
It's different, but it's still intense. If you look back 4 or 5 years, there were a specific set of competitors we faced in the international market, as well as local builders and integrated partners. Today, five years later, we analyze who we compete against in the electrical sector regularly. What has changed is their strategy. Our core focus on industrial oil and gas utilities has been established for about twelve years, and we won't lose sight of that. We still enjoy tackling complex industrial projects. Competition remains fierce, but new players have emerged due to shifts in the market compared to five years ago, and their focus might be different now. We remain committed to our strategy and actively engaged in our business. Our investments in offshore capabilities are tailored for growth, and we are pursuing all potential opportunities arising from FID in the coming quarters.
Okay. So Brett, when you look at the margin you achieved a couple of years ago on the new LNG projects, do you think you can achieve similar margins going forward?
I believe so. Given the significant capital investment in these facilities, all segments are under scrutiny for their return. It's a positive situation, but we need to approach it thoughtfully and fairly. If there are unique opportunities or timing advantages we can leverage, such as utilizing our offshore facility for large single pieces that will help reduce onsite costs, we should recognize that value. However, we must remain reasonable in our expectations.
Our next question comes from John Franzreb from Sidoti & Company.
Brett, I'm just curious about the opportunity pipeline. It seems phenomenal. I wanted to kind of look at it and say, listen, we're going to have an exit book-to-bill ratio of above 1 point for the next coming 2 years. Is that something reasonable to expect?
I think that expectation is reasonable, John. There are no guarantees regarding future results. Considering the discussions we're having across all three verticals, it's a reasonable outlook, which is why we had conversations with the Board and adjusted some metrics that guide the company. The potential for volume exists, and as a team, we need to address that. I'm confident we have the right team and environment to achieve this for all our stakeholders.
Got it. And I was wondering, has the Board considered a stock split at this level? I mean, compared to historic levels, it's fairly impressive.
Yes, the discussion about our team and employee growth is critical to the success of all stakeholders. The use of equity within our structure has become a central topic among the Board, Mike, and our Chief Human Resources Officer. The stock split, from a mathematical perspective, is intended to be a tool to enhance team engagement in this process and is actively being pursued.
Got it. And I guess kind of just one last one. How should we think about the cash on the balance sheet, over $500 million when does that number start to get drawn down a little bit as you use more working capital as these larger projects come on board?
Let me share a few thoughts and then let Mike add his insights. As I mentioned earlier today, we are considering directing some of our resources towards new facilities, although I cannot specify a timeline at this point. The board meeting is in two weeks, and this will be part of our discussion. Additionally, we continue to pursue mergers and acquisitions, despite the one with Remsdaq last summer. There are still promising opportunities out there, and once we can engage in strategic initiatives, I believe there is significant potential ahead. Now, let's discuss the capital requirements, Mike.
Yes. As a follow-up on that, John. From a working capital perspective, roughly 40% to 50% of that balance will be deployed at some point in the future to that $1.6 billion backlog number. But that said, when you look at what's the free cash available for the capital deployment in some way, shape or form, it's probably $200 million to $225 million mentioned that we're thinking about capacity requirements across the business. So I'm sure some of it will get deployed in that fashion.
Our next question comes from Chip Moore with ROTH MKM.
Just one more for me on Remsdaq, I think you mentioned you’re gaining some traction here in the U.S. Could you provide an update now that you've had them for a bit longer? Also, can you discuss service opportunities, particularly around data centers?
Thank you for the question. Yes, Remsdaq is a great strategic addition with an excellent team in the U.K. During these dynamic market times, every sector has its own methods for integrating technology. Remsdaq's extensive experience in the utility space was one of the reasons we were initially attracted to them, along with their technology roadmap. The data center market and other industrial sectors have definitely accelerated our ability to introduce this technology into the U.S. market sooner than we expected. We've had technical meetings with several customers interested in applying this technology for powertrain speeds in data centers, focusing on protective and control logic. This has opened new avenues for us, even in high-voltage areas. We recently received our first order for a high-voltage control protection substation to facilitate the connection between high voltage and medium voltage, which represents a new domain for Powell.
This progress is significantly supported by Remsdaq and its enabling technology. It's an exciting time with high growth expectations for this business, which is also favorable for our margins, as Powell has a longstanding history of success in this area. Regarding services, there are clear opportunities emerging in the data center and commercial and industrial sectors. While we haven't secured any major contracts yet, I've personally participated in discussions that reveal potential service opportunities. Initially, we haven't engaged on the OpEx side, but I believe that will evolve. As these assets become operational, I anticipate seeing installation and long-term support work arise. We're currently brainstorming with clients about how our team can assist in constructability and timeliness, leveraging our expertise in skids and the integration of mechanical components with their expedited schedules. Our service team is actively involved, providing quotes based on our capabilities. Although we haven’t finalized any agreements yet, we recognize it as a significant opportunity moving forward.
Our next question comes from Manish Somaiya with Cantor.
Mike, I'm not sure if you mentioned the next 12 months backlog. Would you mind giving that to us?
Manish, you'll see that in the Q that we submit later today. Of the $1.6 billion backlog, roughly 60% of that is convertible over the next 12 months, I think in the Q, you'll see $933 million. And on top of that, we refresh what the book and bill rates have been on average over the last 12 months. And that's running $65 million to $70 million cadence every quarter. So those are two of the key metrics as you look forward.
Okay. Wonderful. And then, Brett, you talked about strong demand across the board, strong activity, strong backlog my big question is the shortage of skilled labor in this country. And is that going to be a constraint as far as your growth ambitions are concerned?
It’s always a concern, Manish. It has been for the entire 15 years I've been at Powell through any cycle. Is it a concern today? Absolutely. The management team discusses it routinely. On the variable side, there's always a time when there’s a skill set within the company that is needed. We're doing fairly well on the variable side. In fact, I’d say we’ve solved some problems in the last couple of quarters. As I sit here today, on the fixed side, we do face some challenges, especially on the commercial side. The growth in this segment is creating issues with our engineering needs today. This is a problem we are addressing, and I feel confident that in the next 90 days, we will find a solution. However, this is not unique or new for us. Because we historically operate as a long-cycle project company, we have encountered these situations before, and I am confident that the team will find a way to address the needs. Given the growth of our backlog, yes, we do have some current needs, and we are committed to resolving them.
Well, thank you again, and congrats on the quarter.
This concludes our question-and-answer session. I would like to turn the call back over to Brett Cope, CEO, for any closing remarks.
Thank you, Bailey. Our first quarter delivered solid performance with improvements in our top and bottom line. Powell's employees consistently embrace the challenge while keeping our core focus on executing the most complex of industrial electrical distribution projects. Our team is responding to meet new and growing market opportunities, which underscore our ability to secure future business and drive new strategies to improve productivity and profitability. I would like to thank our valued customers and our supplier partners for their continued trust and support Apollo. We're very pleased with our first quarter, and we expect another strong year for Powell. Mike and I look forward to updating you all next quarter.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.