To improve operational performance, we initiated efforts to improve efficiency across the organization. Many of these efforts were outward facing such as strengthening project management and project execution. Others were internally focused on productivity and cost savings, providing solid gross margin improvements year over year. 

Today, Powell’s cash flow remains strong. We finished this year at roughly the same cash levels as last year all while paying cash for the recent facility expansion projects. Our strong cash position also allowed us to institute a quarterly cash dividend for the first time in Company history, returning additional value to our shareholders. 

## Looking Ahead 

The U.S. oil and gas market is expected to remain strong with large capital investments in petrochemical facilities and pipelines. The abundant natural gas fields have made the U.S. an attractive source of low-cost energy. These markets have always been a focus and strength for Powell and we are fully engaged with our customers. 

Based on current developments in Canada, it is clear that our facility investment in Canada was well-timed. The opportunities in Canada today are better than they have been in decades. Significant oil and gas capital investments are planned over the next ten years and we are well positioned to be a significant player in this activity. Today we have the only facility in Canada with the capability to manufacture switchgear and motor control, fabricate e-Houses and integrate all the electrical equipment at a single site location — a model that has proved to be a Powell advantage for many years. 

We will continue our focus on operational efficiency including cost savings, productivity improvements and leverage of resources and best practices. Although we have made good progress and have solid traction in this area, there is more work to do. The addition of a Chief Operating Officer role will help maintain the momentum behind this effort and our gross margin expansion. 

As part of our recent infrastructure investments, our enlarged product development and testing capability in our new Houston facility provides the backbone for a key component of our future growth: accelerated product development and an expanded product portfolio. 

We believe our core markets of oil and gas in North America will remain robust through the planning horizon. With a strong foundation established in the domestic market, we expect to increase focus on opportunities outside North America. While our growth plan will include serving our current customers doing business internationally, we also look to establish relationships with new customers that have not yet engaged with Powell. 

These efforts, combined with the core values and strengths of the Company, will continue our trajectory of taking Powell successfully to the next level of growth and performance. Thank you for your continued interest, support and trust in Powell. 

Michael A. Lucas President and CEO 

