Northwest Pipe Company Aktie

Greetings, and welcome to the NWPX Infrastructure First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Scott Montross, President and CEO. Please go ahead, sir.

Good morning, and welcome to NWPX's First Quarter 2026 Earnings Conference Call. My name is Scott Montross, and I'm President and CEO of the company. I'm joined today by Aaron Wilkins, our Chief Financial Officer.

By now, all of you should have access to our earnings press release, which was issued yesterday, April 29, at approximately 4:00 p.m. Eastern Time. This call is being webcast, and it is available for replay.

As we begin, I'd like to remind everyone that statements made on this call regarding our expectations for the future are forward-looking statements, and actual results could differ materially. Please refer to our most recent Form 10-K for the year ended December 31, 2025, and in our other SEC filings for a discussion of such risk factors that could cause actual results to differ materially from our expectations. We undertake no obligation to update any forward-looking statements.

Thank you all for joining us today. I'll begin with a review of our first quarter performance and our outlook for the second quarter of 2026, and then Aaron will walk you through our financials in more detail.

We delivered a strong start to 2026. Net sales were up 19% year-over-year to $138.3 million, reflecting meaningful growth across both our Water Transmission systems and precast businesses. Our strategy delivered record first quarter consolidated gross profit of $26.7 million, up 38% from last year, with our gross margin expanding 260 basis points year-over-year to 19.3%. That strength carried through to the bottom line, highlighting the operating leverage in our model and continued execution across the organization.

We generated record first quarter profitability with earnings of $1.08 per share and produced strong free cash flow of $25.7 million or $2.62 per share, reinforcing the strength and consistency of our earnings profile and the resilience of our cash flows.

Turning to our WTS segment. Revenue reached a first quarter record of $93.5 million, up 19% year-over-year with strong margin improvement. Our performance reflected higher production volume with tons produced up 18%, supported by strong project execution. This growth came despite adverse weather that caused unscheduled downtime across 3 WTS facilities early in the quarter.

Selling prices were up 1% year-over-year, driven by changes in product mix, and we also benefited from favorable project timing across several large water transmission jobs. In addition, we saw one of our strongest booking quarters to date with robust bidding activity and the emergence of a significant previously unplanned project that is under NDA, which will contribute positively to our 2026 results, all of which contributed to a substantial increase in our backlog, reinforcing the strength of demand across our markets.

WTS backlog, including confirmed orders, ended the quarter at a record $430 million, up from $346 million at year-end and well above the $289 million level we reported this time last year. Looking ahead, we expect the 2026 bidding environment to be moderately stronger than 2025.

WTS gross profit increased 42% year-over-year to $17.3 million, resulting in a gross margin of 18.5%, up 300 basis points from last year. This improvement reflects higher volumes supported by strong customer demand and the related efficiency gains and higher overhead absorption that come with that level of production, favorable product mix and the overall solid operational execution across the segment.

Now turning to our Precast segment. Precast revenue increased 19% year-over-year to a new record first quarter level of $44.8 million. Our performance was driven by a 14% increase in selling prices from a favorable change in product mix and increased sales volume, reflecting continued growth in the nonresidential portion of our business.

At Park, production increased 30% year-over-year with strong growth in revenue per yard shipped despite borrowing costs that remain elevated as the Fed held interest rates steady in 2026. We are continuing to see signs of improvement in the nonresidential demand trajectory as we progress through 2026, specifically related to data center projects that have been instrumental in buoying the commercial construction demand.

At Geneva, production and shipments had a solid year-over-year gains of 7% and 8%, respectively, despite seeing a moderate slowdown in the residential construction market, which has more than been offset by growth in Geneva's nonresidential business.

Leading indicators remained solid early in 2026 with the Dodge Momentum Index up 26% in March of this year versus March of 2025. The commercial sector was up 29% and institutional was up 20%, indicating positive signals for nonresidential construction activity this year and into 2027.

Our Precast order book ended the quarter at $55 million, down modestly from the $57 million at year-end and below the $64 million level at March 31 of last year. The Precast order book has remained stable for the last several quarters and continues to keep pace with higher levels of production and customer shipments.

Stronger volumes and pricing contributed to a 30% year-over-year increase in Precast gross profit to $9.3 million, resulting in a gross margin of 20.9%, up from 19.1% last year. These results show that absorption rates are improving with higher throughput. We expect margins to continue recovering as nonresidential demand builds.

Now turning to our strategic growth initiatives. As previously discussed, we are making solid progress expanding Precast capabilities across our network. We're also looking at where it makes sense to bring Precast into additional WTS facilities through our product spread strategy, which remains an integral part of our long-term growth plan.

As part of that endeavor, we are seeing better capacity utilization at our Precast plants, strong momentum at our Geneva operations in Utah and steady progress as we introduce Park and other Precast-related products into more WTS locations. At the same time, we continue to evaluate M&A opportunities in the Precast-related space that can accelerate our strategy, expand our manufacturing capabilities and efficiencies and broaden our geographic reach and product portfolio.

Consistent with this approach, we are looking at both single plant acquisitions and larger opportunities that can support long-term growth and help us advance our Precast expansion as previously announced, we completed the acquisition of Boughton Precast, a single-site producer in the high-growth Colorado market during the first quarter of 2026. The integration is off to a strong start, and we're encouraged by the long-term growth potential we see in the Colorado market.

I'll now turn to our outlook for the second quarter of 2026. In our Water Transmission Systems segment, we expect higher revenue and margins compared to both the second quarter of 2025 and the prior quarter, driven by more favorable volume and product mix and the emergence of a significant previously unplanned project.

We entered 2026 with a robust WTS backlog and elevated bidding levels and both strengthened further in the first quarter, providing even greater visibility into near-term demand. Based on what we are seeing today, we expect full year bidding levels to be stronger than what we saw in 2025, and we expect backlog to stay elevated throughout 2026.

We remain encouraged by the level of activity across current and upcoming water transmission projects, which continue to come with improved economics and margins. For a more complete view of these projects, please refer to our investor presentation on our website.

Turning to Precast. We maintained a stable and healthy order book in the first quarter of 2026, and we expect a stronger year for the Precast business overall. Demand remains healthy in the nonresidential market, supporting continued momentum across our Park and Geneva platforms.

For the second quarter, we expect Precast revenue to be higher than the second quarter of last year and the prior quarter with stable margins driven by solid demand, higher production levels with improved absorption and a strengthening order book.

On a consolidated basis, we expect the second quarter to be stronger than we've seen in recent years. We believe 2026 is shaping up to be a historic year for NWPX. Continued momentum in our Precast business, combined with strong bidding activity in our WTS business is indicating the potential for another record year. In addition, the significant previously unplanned WTS project noted earlier is additive to what we already expected for a record year.

In closing, I'm very pleased with our results, which set new first quarter records across nearly every metric. Our teams delivered exceptional execution throughout the quarter, and I want to thank everyone at NWPX for their commitment to our strategy and to maintaining a strong safety culture.

With a WTS backlog that is stronger than ever, a healthy bidding environment and solid momentum in our Precast order book, we feel well positioned to carry this performance forward and continue building on the progress we've made across both segments.

As we look ahead, our near-term priorities remain: one, maintaining a safe and rewarding workplace; two, focusing on margin over volume; three, intensifying our pursuit of strategic acquisitions; four, implementing cost efficiencies across the organization; and five, returning value to our shareholders when M&A opportunities are limited. I will now turn the call over to Aaron, who will walk through our financials in greater detail.

Thank you, Scott, and good morning to everyone joining the call today. Before I begin, I'd like to mention that unless otherwise stated, all financial measures in my remarks refer to the first quarter of 2026, and all comparisons will be year-over-year comparisons versus the first quarter of 2025.

I'll begin with our profitability. We delivered record first quarter consolidated net income of $10.5 million or $1.08 per diluted share up from $4 million or $0.39 per diluted share, reflecting the improving operating leverage on higher revenues and the continued strength in execution across the business.

On the top line, consolidated net sales grew 19.1% to $138.3 million compared to $116.1 million last year. Our Water Transmission Systems segment also posted a record first quarter with sales rising 19.1% to $93.5 million versus $78.4 million. This growth was driven by an 18% increase in tons produced due largely to project timing and a 1% improvement in selling price per ton due to product mix.

Precast delivered a record first quarter as well, with sales up 18.9% to $44.8 million compared to $37.7 million. The results benefited from a 14% increase in selling prices due to product mix and a 4% increase in volume shipped. As a reminder, the products we manufacture are unique in the average sales prices for both of our operating segments as well as the Precast shipment volumes and WTS production volumes cannot always be relied upon as comparable metrics due to variations in the mix between periods.

We also achieved record first quarter consolidated gross profit supported by higher volume and favorable pricing and mix. Gross profit was $26.7 million, up 37.7%, representing 19.3% of sales, a 260 basis point improvement from $19.4 million or 16.7% of sales.

In Water Transmission Systems, gross profit increased 42.3% to $17.3 million or 18.5% of segment sales, a 300 basis point improvement from $12.2 million or 15.5% of sales. The increase reflects higher production volume and the associated operational efficiency gains as well as favorable changes in product mix.

Precast gross profit also reached a record first quarter, rising 30% to $9.3 million or 20.9% of segment sales compared to $7.2 million or 19.1% of sales. The 180 basis point improvement in gross margin was largely driven by higher selling prices tied to product mix.

Selling, general and administrative expenses were $14 million, up 1.5% and represented 10.1% of net sales, a 180 basis point improvement from 11.9% of net sales a year ago, even with modest increases in incentive compensation expense. For the full year 2026, we now expect consolidated SG&A to range between $53 million and $55 million.

Depreciation and amortization expense was $4.8 million compared to $4.4 million, and we continue to expect a full year expense of approximately $20 million to $22 million. Interest expense declined to $0.3 million from $0.6 million, reflecting lower average daily borrowings.

Income tax expense was $2 million, resulting in an effective income tax rate of 16% compared to $1 million or a rate of 19.8% last year. The effective rates for both quarters were primarily impacted by tax windfalls recognized upon the vesting of equity awards. Our tax rate can vary based on the level of total permanent differences relative to pretax income. And for the full year, we currently expect an effective tax rate of approximately 24% to 26%.

I'll now turn to our financial condition. At March 31, 2026, cash and cash equivalents improved to $14.3 million from $2.3 million at year-end. Our debt balance totaled $10.7 million, and there were no outstanding borrowings on our credit facility at March 31. This resulted in a net cash position of $3.5 million as we continue to drive cash to the balance sheet to support our growth and shareholder return priorities.

Our improved profitability, coupled with favorable changes in working capital drove strong net cash provided by operating activities of $29.2 million, reflecting a more than 500% increase from $4.8 million last year. Capital expenditures were $3.5 million compared to $3.7 million last year. For the full year 2026, we continue to expect CapEx in the $20 million to $24 million range, including approximately $6 million for investment projects to support our Precast product spread strategy and broader Precast growth initiatives.

As a result, we generated $25.7 million of free cash flow in the quarter compared to $1.2 million last year. For 2026, we are raising our full year free cash flow outlook to $50 million to $56 million, up from a prior range of $40 million to $46 million.

In terms of capital deployment for the quarter, we spent $8.9 million to complete the purchase of Boughton Precast, repurchased approximately 33,000 shares of our common stock at an average price of $67.17 for a total of $2.2 million and repaid $1 million in debt. These activities highlight our ability to continue to grow the company while concurrently returning value to our shareholders.

To close, we delivered a strong start to the year with first quarter records for revenue under the current configuration, gross profit and earnings. We also generated very strong free cash flow, further strengthened our balance sheet and remain disciplined in our capital deployment. Our record Water Transmission Systems backlog and our solid Precast order book, coupled with the commercial team's focus on pricing and our track record of superb operational execution, position us to achieve new heights in financial performance as we move through the remainder of 2026.

Thank you to our employees for their continued concentration on workplace safety and to our shareholders for their continued support. I'll now turn it over to the operator to begin the question-and-answer session.

[Operator Instructions] And our first question today will hear from Julio Romero with Sidoti & Company.

Scott, I appreciate the significant previously unplanned project is under NDA. So to the extent that you can, could you maybe help us understand at a high level, how additive the project is to your '26 outlook? Whether it goes beyond '26, potentially the '27? And then secondly, should we think of this as kind of a one-off? Or does it have the potential to lead to additional phases or repeat business with that customer?

So yes, and like I said, we're under NDA. It's a government-related project. It's being produced at multiple of our plants. What I would tell you is it looks like this piece of the project because there are, from what we understand, multiple other pieces of this project as we go forward into the future is right in the area of about $50 million, okay?

So the real question is it's a relatively short fuse job that is scheduled to be produced really in the late second quarter, third quarter going into about the mid-fourth quarter of this year. And that segment is expected to be done. I think one of the challenging things is right now is there's a little bit more of a question on how quickly you can get all the steel to do it. So there is a potential that some of it could leak into next year.

But the understanding we have of these projects is there's multiple phases of these things that are planned right now that go out into the future that could be additive to other years as we go into the future. And I think that's probably as clean of a look as I can give you on the thing.

Absolutely. I really appreciate the color you gave with that answer. I think you kind of hit the points I was looking for there. On your cash flow in the quarter, it was very strong, and it looks like your net contract asset position improved pretty meaningfully driven by contract liabilities. Can you give us any more color on what drove that increase? And is it tied to that one-off -- that project or any other larger WTS projects?

Yes. Julio, the cash flows for the business, obviously, can be a little bit challenging to forecast because they can at times be a little lumpy, which is normal. But really what happened and what continues to be a focus for our Water Transmission System commercial teams is to drive what I call special -- trying to get the steel billed in advance of the project, get MOH payments and progress payments throughout the job.

That is something that over the span of the last 3 years, we are seeing growing success at. It is still negotiated individually with the specific customers, but we're able to do that more often than we used to be able to do it. And really, what happened was we had a $20 million collection on one of those special billings come in, in the month -- I think it was the month of February or March.

You'll notice that our accounts receivable remains elevated, which means that we're still doing a great job of billing customers. That is because we have also on a completely separate job, billed another customer for $20 million, a little over $20 million and that has since been received. So the business model really has been driven to get the cash flows as a focus. And that's why, in part, at least, I had to raise our range, our guidance for free cash for 2026.

I think we're going to be more successful. I think there's more opportunities for the WTS team to do these special billings in the year compared to 2025 year, which was also a very successful year, by the way. And I think that the new job that Scott just talked to you about, those two elements were worthwhile for raising the range so quickly into the year.

I'll tell you, though, Julio, the thing that could still come depending on the success, and there's always timing, right? You could always be paid on January 1, right, for something that really was attributed this year, which is why I may be a little bit of gun-shy. But there's -- I mean, it is very possible that cash flows could go up another clip of $10 million or more in the ranges to be broadcast in the future, right? So not unheard of to think of $60 million or more for a free cash year for the company.

Understood. Very helpful there. And one more for me is you have record backlog of $430 million in WTS including confirmed orders. Can you maybe just help us think about where your capacity utilization stands for that segment? And would you be able to take on kind of additional work from here?

Yes. We don't have -- we can take on a lot more work than we have right now with capacity utilization -- with the capacity we have spread across the country in our plants. Now we would have to move stuff between plants, but we have plenty more room to take on additional work as we go forward because capacity utilization, if we're much over probably 70% or 72% in the Water Transmission Systems business, that's probably about a high point for us at this point.

And really, you can obviously add additional shifts, too, if we need to, which we do at certain plants at certain times when it's busy enough. So yes, we have a lot more room to produce a lot more, Julio, and are ready to do so.

[Operator Instructions] And at this time, there are no further questions. I would like to turn the call back over to Scott Montross for closing remarks.

So yes, I'd just like to wrap up by saying that thank you for everybody for joining the call like always. And obviously, we delivered a very strong start to 2026. I think we're at a point now we can say that the company is hitting on all cylinders now with the things that we are seeing.

The bidding outside of the -- that project, it's a special project. It's under NDA, and the first quarter on Water Transmission was probably the strongest we've seen and really probably the strongest booking quarter that we've ever had on the Water Transmission side of the business. So we've got significant momentum going forward on the Water Transmission side.

And on the Precast side, again, we are seeing a lot of work around data centers. Data centers are one of the things that's really buoying the commercial construction side of the business now. And the two states that we're in on the Precast side, primarily in Texas and in Utah are very strong data center centers. I think there's something like 140 projects going on in Texas that obviously we're taking part in and other projects going on in Utah, which is becoming more of a -- almost more of a giga-site for data centers where there's really, really large ones being built.

Even with a little bit of the slowdown that's been discussed in the press on the residential side of the business, we're still seeing very strong Precast business. And where we've seen slowdown on residential side, for example, in our Geneva businesses, where -- that's being picked right up on the nonresidential side and the Precast business continues to grow.

And I think the biggest thing is we continue to advance our strategy going forward with both organic growth and M&A, and we're going to continue to do that. Like I said, we expect a strong second quarter. When we looked at the projections for 2026, even before we looked at a year that we had this special project that came forward, we were projecting it was going to be another record year and stronger than 2025. And this big project is just additive to that.

And I think, again, we're hitting on all cylinders. We appreciate your support as shareholders and our analyst support. So thank you, and we'll see you in I think...

Late July.

Late July. So thank you very much.

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.

Greetings, and welcome to the NWPX Infrastructure Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Scott Montross, Chief Executive Officer. Thank you, sir. You may begin.

Good morning, and welcome to NWPX's Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Scott Montross, and I am President and CEO of the company. I'm joined today by Aaron Wilkins, our Chief Financial Officer.

By now, all of you should have access to our earnings press release, which was issued yesterday, February 25, 2026, at approximately 4:00 p.m. Eastern Time. This call is being webcast, and it is available for replay.

As we begin, I'd like to remind everyone that the statements made on this call regarding our expectations for the future are forward-looking statements, and actual results could differ materially. Please refer to our most recent Form 10-K for the year ended December 31, 2024, and in our other SEC filings for a discussion of such risk factors that could cause actual results to differ materially from our expectations. We undertake no obligation to update any forward-looking statements.

Thank you all for joining us today. I'll begin with a review of our 2025 performance and our outlook for the first quarter of 2026. Aaron will then walk you through our financials in greater detail.

2025 was another outstanding year for NWPX, marked by record financial performance, disciplined execution, operational improvements across our facilities and sustained demand across our end markets. First and foremost, we achieved record safety performance in 2025 with a 1.06 recordable incident rate, reflecting our culture and our belief that operational excellence begins with protecting the well-being of our employees.

Our annual net sales reached $526 million, up 6.8% from 2024 and the highest in our company's history. This performance was supported by continued strength in the WTS bidding environment with the fourth quarter marking our strongest bidding quarter of the year, signaling solid momentum ahead.

We also benefited from a better-than-normal fourth quarter. In Precast, our revenue was strong and margins continue to improve. WTS posted solid revenue and a robust margin as well.

Our strategy drove record consolidated gross profit dollars of $103.6 million, up 8.6% year-over-year, resulting in a gross margin of 19.7% compared to 19.4% in 2024. This translated into record profitability with earnings of $3.56 per share and free cash flow of $47.1 million or $4.74 per share, demonstrating the strength, consistency and quality of our earnings and the durability of our cash generation.

Revenue from our WTS segment totaled a record $350.9 million in 2025, up 3.8% year-over-year with increased margins. Our performance reflected higher selling prices per ton, up 14% year-over-year, driven by an improved product mix and a broader market dynamic in addition to favorable project timing across several large Water Transmission jobs and another very strong year of bookings associated with good project bidding volume.

These gains were partially offset by a 9% decline in the production volume associated with the content of various projects produced throughout the year as well as shifts in project timing. The fourth quarter was exceptionally strong with a 26% improvement in selling price per ton, a consistently healthy bidding environment and a strong project execution, all reinforcing the momentum we are carrying into 2026.

WTS gross profit reached a record $67.1 million, up 7.2% from 2024, resulting in a gross margin of 19.1%, up from 18.5% in 2024. This improvement was driven by higher selling prices and a more favorable product mix and supported by continued strong customer demand and solid operational execution.

Our WTS team continued to execute at a high level on both bids and project management throughout the year. Robust fourth quarter bidding activity increased our WTS backlog, including confirmed orders, to $346 million at year-end, up from $301 million at September 30 and well above the $310 million level at year-end 2024. We expect the 2026 bidding environment to be relatively consistent with 2025.

Precast revenue increased 13.3% year-over-year to a new annual record of $175.1 million. Our performance was driven by an 8% improvement in sales volume, reflecting continued growth in the non-residential portion of our park business with shipments and production increasing double digits year-over-year.

Despite only modest rate declines in 2025 that continue to limit commercial construction activity, this improvement reflects signs of stabilization and an improving trajectory heading into 2026. We also benefited from sustained growth in the residential portion of our business at Geneva in 2025.

Leading indicators strengthened as we've moved through the year with the Dodge Momentum Index up 50% in December of 2025 versus December of 2024. The commercial sector was up 45% and the institutional was up 60%, indicating positive signals for 2026 and into 2027 for non-residential construction activity. On pricing, we benefited from a 4% year-over-year increase in realized selling prices driven by price increase implementations and changes in product mix.

Stronger volumes and pricing contributed to an 11.3% year-over-year increase in Precast gross profit to $36.5 million, resulting in a gross margin of 20.8%, down modestly from 21.2% in 2024, primarily due to lower Park production volumes early in 2025 and product mix.

Most important is that the Precast margins improved each sequential quarter in 2025, specifically the non-residential business at Park. These results demonstrate that the absorption rates are beginning to improve with higher volume. We expect margins to continue recovering as non-residential demand builds.

Our Precast order book ended the year at $57 million, up slightly from $55 million at September 30, reflecting solid momentum heading into 2026 and modestly below the $61 million level at year-end 2024. As we continue to execute our long-term strategy, we are making targeted organic investments across our footprint to expand capacity, enhance efficiency and support the growth of our platform. These efforts are taking shape across several areas of the business.

First, by expanding Precast capabilities across our network and evaluating opportunities to introduce Precast into other WTS facilities through our Product Spread strategy, which remains a core component of our long-term growth plan.

In Product Spread, we bid on $66.1 million of projects and booked a total of $10.7 million in 2025, up from $9.1 million in 2024. This initiative has helped improve capacity utilization at our Precast plants and has continued to gain traction at our Geneva plants in Utah, where we booked approximately $2.1 million of Park-related projects in 2025. Currently, we are advancing efforts to expand Park and other Precast-related products to additional Water Transmission Systems locations.

Looking ahead to 2026, our goal is to book $11.7 million of Product Spread-related projects beyond the Product Spread. We are also investing directly in plant capabilities to support future growth, such as enhancing production capabilities at Geneva with the installation of a new catch basin machine at our Orem plant.

In addition, we are advancing efficiency initiatives at Park by evaluating additional Precast infrastructure capabilities at our Ferris plant to broaden the product offering and improve absorption. And we are investing in new forms and equipment at our WTS plants to support Precast production and further advance our Product Spread strategy.

In parallel with these organic investments, we continue to pursue disciplined M&A opportunities in the Precast-related space that would accelerate progress on our Precast strategy, expand our manufacturing capabilities and production efficiencies, and broaden our geographic reach and product portfolio.

To that end, we are pleased to announce that we have completed the acquisition of Boughton Precast, a single-site Precast producer in the high-growth Pueblo, Colorado market. This acquisition is directly in line with our strategy to establish a beachhead in markets where we have strong interest in expanding. We believe the Colorado market has significant long-term growth potential. And while this facility is relatively small today, we see meaningful opportunity to grow its capabilities and footprint over time.

Consistent with this approach, we are continuing to evaluate both single plant and larger acquisitions to accelerate Precast expansion and support long-term growth.

Our other capital priorities include paying down debt and returning value to shareholders. In 2025, we repaid $27.4 million of debt, ending the year with significant liquidity. At the end of 2025, we had $276,000 drawn against our credit facility. We also repurchased approximately 425,000 shares at an average price of $43.33, totaling $18.4 million for the full year 2025.

I will now turn to our outlook for the first quarter of 2026. In our WTS segment, we expect higher revenue compared to the first quarter of 2025, driven by a more favorable volume and product mix despite the adverse impact of normal weather-related seasonality, which has resulted in some unscheduled downtime across 3 WTS facilities earlier in this quarter. Even with these factors, we expect margins to be higher than the first quarter of 2025.

We entered 2026 with a robust WTS backlog and elevated bidding levels, providing strong visibility into the near-term demand. As such, we anticipate full year bidding levels to be relatively consistent with the strong levels seen in 2025. We remain encouraged by the level of activity across current and upcoming Water Transmission projects, which are coming with improved economics and margins. For a more complete view of these projects, please refer to our investor presentation on our website.

We entered 2026 with a stable and healthy order book, and we expect a stronger year for the Precast business. Both non-residential and residential demand remain healthy, supporting continued momentum across our Park and Geneva platforms.

For the first quarter of 2026, we expect Precast revenue to be higher than the first quarter of 2025 with improving margins driven by solid demand, higher production levels with improved absorption and a strengthening order book.

While weather can always affect the start of the year, we expect the first quarter on a consolidated basis to be stronger than in recent years and believe that we are well positioned to deliver a very strong year in 2026.

Before I conclude, I'd like to highlight the recent strategic leadership promotions we announced to position NWPX for continued growth and operational excellence. Michael Wray has been promoted to Executive Vice President, assuming operating and commercial oversight for both the WTS and Precast segments.

Mike has been instrumental in advancing our Precast strategy and supporting the acquisitions of NWPX Geneva and NWPX Park. Mike also has significant experience in operating multiple WTS facilities at NWPX. He has been with the company since 2007 and will succeed Miles Brittain, who will retire in April and is assisting with the transition priorities. We thank Miles for his many years of contributions and wish him well in his next chapter.

Next Eric Stokes has been promoted to Senior Vice President and WTS Group President. Since joining NWPX in 2008, Eric has played a critical role in strengthening performance across the WTS segment. Eric has been very instrumental in implementing many improvements that have propelled the WTS business to its current level of performance.

Jesus Tanguis has also been promoted to Senior Vice President and General Manager of Precast after joining the company in January of 2024. He will oversee operating and commercial activities for both NWPX Geneva and NWPX Park.

And finally, Justin Fraughton has been promoted to Vice President and General Manager of NWPX Geneva, providing commercial and operating oversight for our 3 Utah facilities. Justin began with NWPX Geneva in 1998 and has taken on roles of increasing responsibility, most recently serving as multisite operations manager.

We are proud of our ability to promote from within and continue building a leadership team capable of scaling our operations and positioning NWPX for our next phase of growth.

To close, I'm extremely proud of what we were able to achieve in 2025 across our financial, operational and safety metrics. Our teams delivered exceptional execution throughout the year, and I want to thank everyone at NWPX for their commitment to our strategy and to maintaining a strong safety culture.

With a strong WTS backlog, constructive bidding environment and a healthy Precast order book, we believe the foundation we built positions NWPX to deliver another very strong year and enhanced shareholder value.

As we look ahead, our near-term priorities remain: one, maintaining a safe and rewarding workplace; two, focusing on margin over volume; three, intensifying our pursuit of strategic acquisitions; four, implementing cost efficiencies across the organization; and five, returning value to shareholders when M&A opportunities are limited.

I will now turn the call over to Aaron to walk through our financials in greater detail.

Thank you, Scott, and good morning, everyone. I'd like to echo Scott's remarks as we recognize another consecutive year of record-setting safety performance. Safety remains central to our values and is believed to have a direct relationship to the record financial results I'll review today. Thank you to everyone for keeping safety priority again this year.

I'll now turn to our profitability. Consolidated net income for the fourth quarter was $8.9 million or $0.91 per diluted share compared to $10.1 million or $1 per diluted share in the fourth quarter of 2024. The year-over-year decline in reported results is driven primarily by nonrecurring items, most notably a $1.8 million pension termination settlement loss recorded in 2025, which was unique to the year.

Both periods also reflect benefits recorded in the tax provision from the lapse of statutes of limitations related to previously uncertain tax positions, although the 2025 benefit was less than half of what was recognized in 2024.

Excluding these items from both quarters, adjusted net income for the quarter increased to $9.1 million or $0.93 per diluted share compared to $7.8 million or $0.77 per diluted share in the fourth quarter of 2024, reflecting a year-over-year increase of 16.6%. I encourage you to refer to the corresponding reconciliation of these adjustments in our earnings release.

For the full year 2025, consolidated net income was a record $35.4 million or $3.56 per diluted share and included the unique items previously referenced for the fourth quarter. This compared to $34.2 million or $3.40 per diluted share in 2024.

Excluding those items from both years, the 2025 adjusted net income increased to $35.6 million or $3.59 per diluted share compared to $31.9 million or $3.17 per diluted share in 2024, a year-over-year increase of 11.7%.

Our fourth quarter consolidated net sales increased 5% to $125.6 million compared to $119.6 million in the year ago quarter. Water Transmission Systems segment sales in the quarter increased 1.8% to $84 million compared to $82.5 million in the fourth quarter of 2024. This growth was driven by a 26% increase in selling price per ton due to changes in product mix, which was partially offset by a 19% decrease in tons produced, resulting from changes in project timing.

Precast segment sales in the fourth quarter increased 12.2% to $41.7 million compared to $37.1 million a year ago. Our performance was driven by an 8% increase in selling prices due to changes in product mix and a 4% increase in volume shipped. The products we manufacture are unique and the average sales prices for both of our operating segments as well as the Precast shipment volumes and the Water Transmission systems production volumes cannot be relied upon as comparable metrics between periods due to variations in product mix.

Our fourth quarter consolidated gross profit increased 19.2% to $26.8 million or 21.3% of sales compared to $22.4 million or 18.8% of sales in the fourth quarter of 2024. Water Transmission Systems gross profit increased 20.6% to $17.8 million or 21.2% of segment sales compared to gross profit of $14.8 million or 17.9% of segment sales in the fourth quarter of 2024, primarily driven by higher pricing.

Precast gross profit increased 16.6% to $9 million or 21.5% of segment sales from $7.7 million or 20.7% of segment sales in the fourth quarter of 2024, primarily due to changes in product mix.

Selling, general and administrative expenses for the quarter increased 15% to $13.7 million compared to $11.9 million in the fourth quarter of 2024 due to higher incentive compensation and wage expense.

For the full year, SG&A expenses increased 11.9% to $52.8 million or 10% of consolidated net sales compared to $47.2 million or 9.6% of sales in 2024 due to higher performance-based incentive compensation, wages and benefits. For the full year 2026, we estimate our consolidated selling, general and administrative expenses to be in the range of $52 million to $54 million.

Depreciation and amortization expense in the fourth quarter of 2025 was $4.9 million compared to $4.8 million in the year ago quarter. For the full year, depreciation and amortization expense was $19.4 million compared to $19 million in 2024, and we expect depreciation and amortization expense to be approximately $20 million to $22 million for the full year 2026.

Interest expense decreased to $0.4 million from $0.9 million in the fourth quarter of 2024 due primarily to a decrease in average daily borrowings. For the full year, interest expense decreased to $2.6 million compared to $5.7 million in 2024. And for the full year of 2026, we expect interest expense to be approximately $1 million to $2 million.

Income tax expense for the full year 2025 was $11.1 million, resulting in an effective income tax rate of 23.8% compared to $8.2 million in the prior year or an effective income tax rate of 19.3%. Our effective tax rate for 2025 and 2024 was primarily impacted by the realization of uncertain income tax positions due to the lapse and statutes of limitations from the year the tax attribute originated. We do not expect to realize similar attributes in 2026 and therefore, expect our tax rate for the full year to be within the range of 26% to 27%.

Next, I will transition to our financial condition. As of December 31, 2025, we had $0.3 million of outstanding borrowings on our credit facility, leaving essentially the full borrowing capacity on our credit line. For the quarter, net cash provided by operating activities was $36 million and remained relatively consistent with the fourth quarter of 2024.

For the full year 2025, we generated net cash provided by operating activities of $67.3 million, a 22.2% increase from the $55.1 million in 2024, primarily due to a $13.4 million increase in cash provided by net income adjusted for noncash items.

Our capital expenditures for the fourth quarter were $5.2 million compared to $4.2 million in the fourth quarter of 2024. For the full year, our CapEx totaled $20.2 million compared to $20.8 million in 2024. For the full year 2026, we anticipate our total CapEx to be in the range of $20 million to $24 million, including approximately $6 million in various investment projects, most notably to support Precast Product Spread as well as other initiatives to grow our Precast segment businesses.

Accordingly, we generated positive fourth quarter free cash flow of $30.8 million compared to $31.9 million in the year ago quarter. For the full year, free cash flow totaled $47.1 million, which exceeded our expectations and compared to $34.3 million in 2024.

For the full year 2026, we anticipate free cash flow to range between $40 million and $46 million. As we've emphasized, consistent strong cash generation remains a top priority for our leadership team, supporting our ability to drive growth both organically and through disciplined M&A as appropriately valued opportunities arise.

We remain committed to enhancing shareholder returns through our capital allocation strategy, which includes continued investment in growth-related CapEx projects, M&A including our recent acquisition of Boughton Precast that Scott highlighted, and repurchasing shares under our 10b5-1 trading plan.

To close, we are extremely pleased with our fourth quarter performance, which capped another record year for the company. We entered 2026 with real momentum, supported by a strong WTS backlog, a stable bidding environment and improving trends across the Precast markets. With a strong balance sheet, ample liquidity and continued improvement in cash generation, we remain focused on driving sustainable long-term growth through disciplined capital allocation.

On behalf of the entire management team, I again want to thank our employees for their commitment to safety as well as their unwavering dedication to operational excellence, both of which were central to our record results in 2025. I'd also like to thank our shareholders for their ongoing support.

I will now turn it over to the operator to begin the question-and-answer session.

[Operator Instructions] Our first question comes from the line of Brent Thielman with D.A. Davidson.

Scott, I mean, good margin expansion in both segments here in the fourth quarter and it sounds like that will continue here into the first quarter. I don't know if you could offer any more color just in terms of where the bar is for margins as we think about the full year 2026 for either business group, but it doesn't really seem to me that they should be going backwards.

No, I don't think -- I think you see a relatively steady climb. It's obviously a slow climb over a period of time for both the Water Transmission stuff and the Precast stuff. Quite frankly, just looking at Water Transmission, we're starting to see a year in 2026 that probably appears a little bit bigger than we thought it was going to be. We originally thought the 140-some thousand ton range. It looks like it's going to be in the 150 or so range. At this point, we're seeing heavy bidding in the first quarter. And obviously, that translating into what we're projecting to be relatively strong backlog. In fact, I would say strong backlog as we carry our way through 2026 on the WTS side.

On the Precast side, I think the margins are certainly recovering on the non-residential stuff. We're seeing the momentum index going up, and we're seeing the business, specifically at Park, kind of follow after that. And the margins are starting to creep up to the point where they used to be before we saw a little bit of falloff in the non-residential market a couple of years ago. We just see -- I mean, we're -- in total, Brent, for both sides of the business, not only the Water Transmission piece, but the Precast piece, we're seeing what we consider to be a very strong 2026.

Okay. And then, Scott, just to follow up, or Aaron, I guess with the acquisition, is there going to be some additional capital that gets plugged into that maybe to scale it? I don't know if you can offer any color there, more to come on that front.

I think the thing about this print, it does a lot of the same stuff that Geneva does, right? Same kind of products. They do manholes, risers, RCP, vaults and things of that. There probably will be a little bit of capital as we go. And we're dealing with a business that's probably $8-or-so million of revenue as it sits right now. But we think with -- they've got good bones to the business. They've got, obviously, their own batch plant. There's a couple of batch plants that are there that are even still in boxes, which are nice. And we think with probably relatively limited capital, doubling the size of the business in the next 2 to 3 years is probably what we're going to see.

And ultimately, what our thought process is in this is to kind of roll this under the Geneva umbrella, Brent, and make -- really make it a fourth Geneva plant because of the similarity to the rest of the Geneva business. So -- and I will say the interesting thing about this is that -- it's about 8 or 9 acres, somewhere between 8 or 9 acres. It's actually the first property that we own on the Precast side of the business, which is obviously something we covet going forward to for expanding on various properties.

Our next question comes from the line of Julio Romero with Sidoti & Company.

This is Justin on for Julio. Yes. So congrats on the Boughton acquisition. Can you talk a bit about your interest in the Colorado area? And are there any roll-up opportunities in that market?

Yes. I think the Colorado area is interesting, Justin, because really, we're seeing quite a bit of expansion in Colorado. And normally, I think a lot of the expansion is been more toward the Denver County and Denver proper. But we're now seeing the El Paso County part of Colorado, which is just north adjacent to where the facility is that we bought with Boughton being really the biggest construction market over the next few years that we're seeing in the state of Colorado. So we think that there's a lot of growth opportunity from the perspective of expansion of the business just organically with the amount of stuff that's out there.

And as far as other potential roll-up opportunities, I mean, there are things out there, but it's the same thing that we always say. They've got to be practical and they've got to be willing to want to transact. And really, that's the thing we're going to face, Justin, is people that are willing to transact. But this whole thing with adding a plant in Colorado goes along with our strategy of creating a beachhead in some place we want to be through a single plant and continuing to grow that way. And while we're seeing a little bit of a dearth of availability of other Precast assets in the market, we will continue to do that to grow our business as we go forward.

Great. Shifting to WTS. Can you talk about any incremental demand you may be seeing from the private sector? There's been talk about data centers and other private sector jobs driving demand for water infrastructure. So just curious if NWPX can play any role in the private sector there.

Yes. I think you originally asked was the NW -- was it towards specifically NWPX or was it WTS?

WTS.

What I would say is when the data center boom really began, we saw a little bit of activity around the WTS piece. I mean there's constantly water resources under demand for different areas. So it's really hard to get a handle for the WTS piece, but we've seen a couple associated with that.

What I would tell you is that we have seen significantly more associated with data center-related stuff on the Precast side of our business. And in fact, I was kind of, oh my God, shocked because we cover this once a month with the different business units, Precast and Water Transmission. And right now, we have somewhere in the area of about 12 projects that are either things that we produced and shipped or are in the process of making or we're waiting for POs on that are data center-related projects that are out there that are really several million dollars worth of work that we see that's in the data center realm.

The only -- the issue is we can't really say that much about it because they're pretty secretive and they're having us sign NDAs. But I think this is kind of the theme that you can go with. Data centers have a water management problem, intrinsically. One, moving water, right, just moving water, which what we do is we allow them to move water by supplying pump lift stations from our various Precast plants. Water distribution, like measuring water in and out of buildings with meter vaults and things like that. Wastewater solutions where we might need to divert wastewater to different areas for treatment and so on and so forth. And then diverter valves with moving water to different segments of the facilities.

So -- this is what we do. We provide those kind of products to be able to do that at data centers. And this stuff is all prepackaged from us, right? This is what we do at Park USA because really Park has the biggest piece of what we're seeing on the data center side. And quite frankly, a lot of work we're doing, we have a product development group that's at Park USA. A lot of what they're doing is developing products and helping develop products that serve some of the needs of these data centers that are being constructed, a lot of which are around Texas.

And some of it is, I guess, it's kind of innovation on the fly because there's different needs for the different data centers. So we're working through developing this stuff. And I think the most interesting thing is that the pricing on these is not really an issue. It's really the speed of delivery that you can get it to them. So very good pricing on the data center work, too.

So that's probably a little bit more than you wanted on it, but that's kind of what's going on around this.

Yes, very exciting. I believe you just mentioned that there -- yes, I believe you had just mentioned that there were 12 projects. So just curious, were any of those projects included in the order book for the fourth quarter?

Yes. We've seen some of those in the fourth quarter order book, yes. The problem is we're under NDA. We can't really say a significant amount about these. They're pretty secretive.

Our next question comes from the line of Ted Jackson with Northland Securities.

Congratulations on another just fabulous quarter, guys. So going into things, I wanted to start with the acquisition and just kind of get a handle on how it will flow through the model. So you spent $9 million for it. I assume you're going to use your credit line and we'll see the debt on the credit line pop up to $9 million, and then we'll see, call it, another $9 million in the financing section of the cash flow statement.

Yes. We'll book the purchase price through the line of credit and hopefully pay that down relatively quickly. From the cash flow statement perspective, Ted, yes, the line financing itself will be in the financing section. Obviously, the investment in Boughton will be shown up in the investing section.

Okay. And then bringing that on board and as Scott said, making it for Geneva plant, it begs the questions with regards to tasks that you need to take to integrate the plant and the business into Northwest Pipe in WTS. And so can you talk a little bit about like the things you need to do, ERP systems, sales systems, synergies that you might have, CapEx that might need to be done around that and just kind of the things that you need to do to kind of bring this new business into the fold?

Yes. I mean a lot of it, Ted, is really even before you get to like the ERP and systems and things like that, you really kind of focus on culture and getting things that are most core to our culture, which, as we've talked about, has been safety. So I know we have some people that have been traveling already to start that process. You make that migration and then you start thinking about how fast you can kind of get them into the fold for reporting numbers and our process -- our thought process on that is really to try to integrate them pretty quickly into a developed system that we already have for the Geneva business.

So because of the familiarity with the Geneva team with that system. And like Scott said earlier, that team's responsibility for this integration and the eventual growth of this business, which we expect to be pretty dramatic. We getting them built in by about the middle of the second quarter will be a good pace to not over inundate the employees that we have on -- the new employees that we have in Colorado, but also to be mindful of the needs that we'll have as getting them to be able to report as a part of a public company. That will really kind of be the focus and a lot of the love calories will be expended to get them integrated in and part of the fold.

You don't see much of a heavy lift to bring these guys in. It's not going to be like the -- I mean honestly the kind of some of the rig and role you had with regards to Park and just...

No, I don't think it will be that sort of exercise, right? Like Park was certainly a -- they're like Park in some ways in the sense that they're not systems focused, right? They're not -- they don't have a big, developed ERP. They don't have things that we're valuing inventory on a day-to-day basis, right? So we will build that out.

But the difference between Park and Boughton will be that we have a developed system already that we use for the Geneva business that is not SAP. In this case, it's a system called Titan. And we will -- we already have that infrastructure built in for the Geneva business. So it's really just a matter of getting them familiar with the material numbers and kind of going up through the use of a system. And so a lot of it will be more of a train exercise rather than a buildup. Park was more like a build-out exercise and creating something within a system that this one just won't be quite as...

Yes, actually, I mean, to be honest, not having that probably makes it all easier for you just drop it and go. So that's actually good to hear.

Then here's the question, probably Scott will want to weigh in on this one. But given the guidance that you're getting for free cash flow and where your debt position is at this particular moment, I mean, there's a good chance you're going to exit 2026 and be debt free. What are you going to do with all that cash, Scott? I mean is there an opportunity for you as you go forward to maybe kind of accelerate on the organic side, the things that you're doing to grow the Precast business? I mean, are you just going to buy stock? Are you going to let it just accumulating on your balance sheet? What are you thinking with that given kind of the guidance and what your capital structure is right now?

Yes. I think the idea is that the organic growth piece of the business and expanding on the plant in Tracy, California, the one in Adelanto, California and some of these other plants into the Precast business is kind of top of mind with the expansion on the organic side. Because as we look at -- and we've talked about this. As we look at the potential for acquisitions and M&A stuff, I mean, it's kind of they're kind of few and far between right now. So without those there, we will look to step on the gas for our organic growth. And, Ted, we'll continue to look at areas where we can find single plant opportunities where we can create a beachhead and grow the company in areas where we want to grow. So I think that's going to be the main focus of what we're doing as we move forward.

And then ultimately, I think we always have a situation where we'll be looking to potentially buy stock back and continue to provide value to the shareholders when things are relatively slow on either the organic growth side or the M&A side. So we're going to continue to do that to create value. So that really, I think, is the plan and keep our debt low and our powder relatively dry. So that when we -- when something comes up and it eventually will come up, that's kind of a transformative situation that we're ready to be able to do it. So that's kind of the sequencing of how we're viewing things as we move forward.

It's a nice position to be in, Scott. So I mean just that simple. My last question, Aaron, is just the modeling, a little tweak for me. But can you give me a percentage of steel as it was for cost of goods for the fourth quarter?

Yes. I mean we're still -- let see here, I get pulled the number, Ted. We were about 28% for the year and a little less than that for the fourth quarter. Ted, we actually [Technical Difficulty] for the quarter.

You broke up. You said what for the quarter?

About 25% for the quarter.

Okay. Wow. Okay. That's great. So -- and I want to say one last thing is I rue the day that I stepped to the sidelines with regards to Northwest or NWPX. I mean you guys -- I think you're just executing on everything. I mean you have a great wind in your sails. And it's not just the macro backdrop, it's actually the execution as well. And I just want to tell you, I made a mistake with regards to what I did with my rating, and I'm just super impressed and I'm happy for you guys. Okay?

We have reached the end of our question-and-answer session. I'd like to turn the call back over to Mr. Montross for any closing remarks.

Okay. Just a couple of things is -- a couple of takeaways as we wrap up here. Obviously 2025 was a record year for NWPX. I think the thing besides the financial metrics and the operational performance, the thing and the strategic priorities that we continue to push, the thing that we're most proud of for the year is the continued improvement in the safety performance. And that is a big part of our culture of the company. It's going to continue to be.

Looking at the Water Transmission business, bidding is very healthy right now. We see a strong bidding environment in the first quarter and maybe a little bit larger demand in 2026 than we originally thought as we were heading into the year.

And we've got a Precast platform that really is continuing to grow. And now a non-residential piece that's performing well with the margins continuing to move up the way we thought they were going to move up. And we continue to make progress in our long-term strategy.

The acquisition of Boughton's Precast, adding to the Precast side of the business and continuing to grow there with organic growth potential there in different parts of the company, we're going to continue to push that forward and capture growth as we move forward.

I think the biggest thing is looking ahead into 2026, we have strong order books in both segments and really focusing on the first quarter, despite some of the weather-related impacts that we saw earlier in the year, which quite frankly, resulted in some downtime early in the first quarter for us. We are expecting to see a first quarter in both the WTS and the Precast side of the business is stronger than we saw in 2024 and probably stronger than we've seen in the last few years.

So -- and I think the leadership team, we've had some retirements. Miles Brittain, who I've worked with and around for 29 years, who we'll miss greatly, obviously is heading into his retirement years, and we congratulate him on that. And I think the people that are coming up and replacing him are strong and create even more strength as we move forward growing the company in the future. And we're confident in the opportunities ahead and remain focused disciplined on execution, safety and delivering long-term value to shareholders.

And I think in the final closing, with what we're seeing in front of us now for 2026 is what we would term as a very strong 2026. So thank you, and we will see you again in...

Late April.

Late April. So thank you very much.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Greetings, and welcome to the NWPX Infrastructure Third Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host today, Mr. Scott Montross, CEO. Thanks, sir. You may begin.

Good morning, and welcome to Northwest Pipe Company's Third Quarter 2025 Earnings Conference Call. My name is Scott Montross, and I am President and CEO of the company. I'm joined today by Aaron Wilkins, our Chief Financial Officer. By now, all of you should have access to our earnings press release, which was issued yesterday October 29, 2025, at approximately 4 p.m. Eastern time. This call is being webcast, and it is available for replay.

As we begin, I'd like to remind everyone that the statements made on this call regarding our expectations for the future are forward-looking statements, and actual results could differ materially. Please refer to our most recent Form 10-K for the year ended December 31, 2024, and in our other SEC filings for a discussion of such risk factors that could cause actual results to differ materially from our expectations. We undertake no obligation to update any forward-looking statements.

Thank you all for joining us today. I'll begin with a review of our third quarter performance and share our updated outlook for the remainder of 2025. Aaron will then walk through our financials in greater detail.

We're proud to report another quarter of record-setting results, delivering the highest quarterly revenue, gross profit and EPS in our company's history. Consolidated net sales reached $151.1 million, representing growth of 13.4% sequentially and 16% year-over-year. Gross margin expanded by 230 basis points sequentially to 21.3%. EPS grew to $1.38 per share, up 35% versus the prior year period, and we generated over $21 million in operating cash flow during the quarter. These strong results underscore our disciplined execution against our strategic priorities and the sustained demand across both our water transmission systems and precast segments.

Let's begin with our WTS segment, which delivered record net sales of $103.9 million, a 20.9% increase year-over-year. This performance was fueled by favorable market dynamics, including stronger-than-expected customer shipping requirements, project mix and timing. Tons produced rose 14% year-over-year, driven by sustained customer demand, while revenue per ton benefited modestly from trade policy dynamics and disciplined pricing strategies.

Importantly, while our strong cash flow generation in the third quarter can be attributed to the collective efforts of the entire company, the WTS business was a notable contributor. We saw this trajectory throughout 2025, with improving cash flow through the first nine months of this year versus 2024. This builds on the significant improvements we've achieved over the last few years. Bidding activity remained robust throughout the quarter, and we expect even greater momentum heading into the fourth quarter.

At quarter end, our WTS backlog, including confirmed orders stood at $301 million. While this reflects a sequential decline from the $348 million in June due to the elevated shipping activity, it marks an increase from the $282 million a year ago. We anticipate backlog levels will remain above $300 million through year-end, supported by what we expect to be the strongest bidding quarter of the year.

In addition, as part of our commitment to environmental stewardship, we recently published our first third-party verified Environmental Product Declaration, or EPD for cement-mortar line welded steel pipe. The EPD measures embodied carbon and overall product life cycle impacts and help us meet by clean and other state-level transparency requirements. It also helps differentiate us from competitors in sustainability-driven bids. This milestone underscores our dedication to transparency and sustainability and infrastructure development. For additional details on water transmission projects underway at NWPX, I encourage you to review our investor presentation available on our website.

Turning to Precast segment. Our net sales reached $47.2 million, marking a 6.6% year-over-year increase in landing just shy of the record set last quarter. While shipment volumes declined modestly, an 8% increase in average selling price reflects our pricing discipline. We saw notable strength in our park-related nonresidential business, which has navigated persistent macroeconomic headwinds, including trade policy uncertainty and elevated interest rates.

Third quarter results reflect early signs of stabilization and improving trajectory in this business. Residential activity at Geneva moderated slightly during the quarter, partially offsetting gains.

Our precast order book closed the quarter at $55 million, in line with recent levels and demonstrating consistent stability over the past several quarters. Looking ahead, we anticipate improved demand and accelerated project starts as interest rates ease.

On a consolidated basis, gross profit reached a record $32.2 million, representing a margin of 21.3%, up 50 basis points from 20.8% in the third quarter of 2024. Water Transmission Systems gross profit reached $22.1 million with a margin of 21.3%, up approximately 190 basis points year-over-year and 350 basis points sequentially. This margin expansion reflects strong customer demand, favorable project pricing and consistent operational execution, all while sustaining a healthy backlog.

Free cash gross profit totaled $10 million, down modestly from both second quarter and the third quarter of 2024, with gross margins that were flat with the prior quarter. Margins were temporarily impacted by mix shifts at Geneva and increased depreciation associated with new equipment investments.

Production volumes rose year-over-year with park up double digits and Geneva up high single digits. Absorption rates are beginning to improve, and we anticipate margin recovery as nonresidential demand continues to build. Momentum within the nonresidential portion of our Precast business is showing encouraging signs of recovery and is expected to contribute positively to our margins.

Let me now turn to our capital allocation strategy. Growth remains our top priority. In the third quarter, we continued to advance our Precast product spread strategy across multiple levels. First, optimizing capacity at our park plans by booking orders outside of Texas; second, producing and shipping park products from Geneva; third, producing and shipping Geneva products from park locations; and fourth, expanding precast related offerings to additional Northwest Pipe legacy locations, which includes water transmission systems plants.

We currently have two water transmission systems plants that are in the process of getting their national precast concrete association certification. We booked $3.3 million in precast product spread orders in the third quarter, and our full year goal remains to book over $12 million in product spread projects outside of Texas.

We also made targeted organic investments, including the installation of a catch basin machine at our Orem plant for Geneva, which will expand our production capabilities. Additionally, we are investing in new forms at our water transmission systems plants to support precast production and further advance our product spread strategy.

On the M&A front, we continue to evaluate acquisition opportunities in the precast space, including single-plant candidates that would expand our geographic reach and capabilities. Our acquisition criteria remains disciplined, and we are actively exploring several options.

Other capital priorities include paying down debt and returning value to shareholders. During the third quarter, we repurchased approximately 186,000 shares at an average price of $42.90 totaling $8 million. In summary, we remain on track to deliver a record year in 2025, and we are well positioned for continued momentum in 2026.

Looking ahead, we're expecting to see a normal fourth quarter due to seasonal factors such as two major holidays, but more importantly, severe weather-related events, which we have a lot of experience with over the last few years. In the fourth quarter, we anticipate modest year-over-year growth in both revenue and margins in our precast business, and revenue and margins for the Water Transmission Systems business to be similar to the year ago period.

Our record-setting performance throughout the year underscores the strength and resilience of our business model, the durability of our end markets and the exceptional commitment of our employees who continue to drive consistent execution across both segments. As always, our priorities remain clear. One, maintaining a safe and rewarding workplace; two, focusing on margin over volume; three, intensifying our pursuit of strategic acquisitions; four, implementing cost efficiencies across the organization; and five, returning value to our shareholders when M&A opportunities are limited.

Thank you to our entire team for your continued dedication and execution. I will now turn it over to Aaron, who will walk you through our financials in greater detail.

Thank you, Scott, and good morning, everyone. As Scott mentioned, we delivered record-setting results this quarter, achieving the highest quarterly revenue, gross profit and earnings per share in our company's history. In particular, the Water Transmission Systems segment's performance was exceptional, benefiting from several tailwinds, including higher-than-expected volume as well as cost efficiencies realized on improved plant utilization and favorable costing against our project estimates. We believe that shifts in the competitive landscape combined with a favorable demand environment have created conditions where strong quarterly results, such as those seen in the third quarter are occasionally achievable. However, we do not consider this level of performance to represent a new baseline for the WTS segment.

I'll now turn to our third quarter profitability. Consolidated net income was $13.5 million or $1.38 per diluted share compared to $10.3 million or $1.02 per diluted share in the third quarter of 2024. This is the highest earnings per share posted in the company's history outside of the third quarter of 2018, which was elevated by a onetime $22 million noncash gain on bargain purchase associated with our acquisition of Ameron Water Group. Our results since that acquisition, including the record results achieved in the third quarter of 2025 serve as continued validation of that acquisition's positive contributions to the organization.

Our third quarter consolidated net sales increased 16% to a record $151.1 million compared to $130.2 million in the year ago quarter. Sales for the Water Transmission Systems segment increased 20.9% to a record $103.9 million compared to $85.9 million in the third quarter of 2024. The increase was driven by a 14% increase in tons produced, resulting from changes in project timing and a 6% increase in selling price per ton due to changes in product mix.

Precast segment sales in the third quarter increased 6.6% to $47.2 million compared to $44.3 million a year ago. Our performance was driven by an 8% increase in selling prices due to changes in product mix, which was partially offset by a 2% decrease in volume shipped. As a reminder, the products we manufacture are unique. Shipment volumes in the case of precast and production volumes in the case of WTS and the corresponding average sales prices for both segments do not always provide comparable metrics between periods which are highly dependent on the composition of each segment's product mix.

Our third quarter consolidated gross profit increased 19% to $32.2 million or 21.3% of sales compared to $27 million or 20.8% of sales in the third quarter of 2024. Water Transmission Systems gross profit increased 33% to a record $22.1 million or 21.3% of segment sales compared to gross profit of $16.6 million or 19.4% of segment sales in the third quarter of 2024, primarily driven by higher pricing due largely to changes in product mix as well as higher production volumes and associated operational efficiency gains. Precast gross profit decreased 3.4% to $10 million or 21.3% of segment sales from $10.4 million or 23.5% of segment sales in the third quarter of 2024, primarily due to changes in product mix.

Selling, general and administrative expenses increased 13.2% to $13.1 million compared to $11.6 million in the third quarter of 2024 due to higher compensation and benefits expense. However, as a percentage of sales, SG&A improved to 8.7% from 8.9% in the prior year. For the full year 2025, we now estimate our consolidated selling, general and administrative expenses to be approximately $52 million.

Depreciation and amortization expense in the third quarter of 2025 was $4.2 million compared to $4.1 million in the year ago quarter. For the full year, we expect depreciation and amortization expense to be approximately $19 million.

Interest expense decreased to $0.8 million from $1.5 million in the third quarter of 2024 due primarily to a decrease in average daily borrowings. For the full year 2025, we expect interest expense of approximately $3 million.

Our third quarter income tax expense was $4.7 million, resulting in an effective income tax rate of 26%. This compares to $3.7 million in the year ago quarter or an effective income tax rate of 26.3%. Both quarters were primarily impacted by nondeductible permanent differences. We continue to expect our tax rate for the full year 2025 within the range of 24% and 26%.

Next, I'll transition to our financial condition. Our strong balance sheet and ample liquidity support the execution of our capital allocation strategy. As of September 30, 2025, we had $27.6 million of outstanding borrowings on our credit facility, leaving approximately $96 million in additional borrowing capacity on our credit line.

For the third quarter, net cash provided by operating activities was $21 million compared to $22.7 million in the third quarter of 2024. The modest decline was primarily due to changes in working capital, partially offset by our increased profitability.

Our capital expenditures for the third quarter were $7.8 million compared to $6 million in the third quarter of 2024. The full year 2025, we continue to expect CapEx in the range of $19 million to $22 million, including approximately $5 million for various investment projects, most notably to support precast product spread as well as initiatives to grow both our Park and Geneva businesses $100 million top line in the near term.

Accordingly, we generated positive third quarter free cash flow of $13.2 million compared to $16.7 million in the year ago quarter. For the full year 2025, we now anticipate free cash flow to range between $32 million and $37 million, up from our prior outlook. Consistent strong cash generation remains a top priority for our leadership team, which is focused on driving growth, both organically and through prospective M&A as appropriately valued opportunities arise.

We remain committed to enhancing shareholder returns. Consistent with our capital allocation strategy, including repurchasing shares. In the third quarter, we repurchased 186,000 shares for an average price of $42.90 per share.

To close, we are proud of our strong performance and sustained momentum this quarter, resulting in another period of record-setting results. We remain focused on driving long-term growth and positioning the company for sustained success through the remainder of 2025 and beyond. We want to thank our employees for their strong execution and for their commitment to safety, which remains the foundational value central to our culture. We also appreciate continued confidence and support of our shareholders as we execute our long-term strategy.

I'll now turn it over to the operator to begin the question-and-answer session.

[Operator Instructions] The first question comes from Julio Romero with Sidoti & Company.

I wanted to start on the Water Transmission Systems segment. Really impressive to see a [ two-handle ] in front of the segment margin there, obviously, strong execution in the quarter by you and your team. One item you called out was stronger-than-anticipated customer shipping requirements in the quarter. I was hoping you could dive into that a little bit and expand on that and how much of a driver that in particular, was in the quarter?

Yes, I think that was a really big driver of the quarter, Julio. The production levels were strong in the quarter. So we had good absorption levels in the quarter, and we had increased fab work. But the level of shipments that we saw throughout the quarter were pretty significant because just to give you an example, at our Adelanto, California plant, we shipped 421 loads in September alone. And then in Saginaw, our plant in Saginaw, we shipped 272 loads alone.

So it was really interesting because when we -- when the numbers came out and it was actually over $100 million at first blush, you start to look at, "Oh man. Maybe it's getting caught up in current assets". But if you look at what's happened to our current assets, really since last year at this time, our AR was up like almost $20 million versus where it was in the second quarter and about $19 million from where it was in the third quarter of '24, which means stuff is being shipped build to the customer.

And I think even more importantly, the contract assets, which is when we produce and recognize revenue on something before it's shipped, those numbers versus the second quarter were down $6 million and versus the third quarter of '24, they were down $24 million. So all that stuff moved in the right way, which shows production was good, really the shipments outpaced what the production level was in the quarter, which was really a driver for it. So it increased the revenue, and increased freight revenue that we got and the absorption numbers were fantastic. So that's really the story of the quarter for Water Transmission.

Very helpful there. And you mentioned you expect backlog levels will remain above $300 million through year-end, and that implies pretty significant order acceleration here in the fourth quarter. Can you maybe talk about the drivers of that implied order acceleration? And secondly, what kind of margin profile is anticipated for those orders?

Yes. What I would tell you is, right now, looking at the bidding schedule, we have somewhere in the area of about $200 million worth of work bidding in the fourth quarter.

And just to give you a little bit of a perspective on that, we have in the schedule right now, and this is on a tonnage perspective, 60,000 tons worth of projects that are scheduled to bid in the next six weeks. So those are projects like Red River, IPL, there's a reliner project in California. There's projects from Oklahoma City that are scheduled to bid in the next six weeks. So it's a very, very strong bidding quarter.

And what you'll really see, Julio, is those bids and those jobs is those are one and put into the backlog, which will keep the backlog above 300 and likely improve it as we go through the end of the quarter. Those projects will be done in 2026. So really, what it's doing is setting us up for a very strong entry into 2026 with those things bidding.

Yes, that's fascinating. I mean Red River is something you've talked about for a long time now for several years, if I'm not mistaken. So to see that bidding in the fourth, is that correct or?

Yes. There is apparently -- in each one of the states is a little bit different, but there's some spending that has to happen. There are actually three large segments of Red River bidding in that time frame, in the fourth quarter. I don't know if they're all within that 6-week period, but they're all bidding and scheduled to bid in the fourth quarter. There's also a segment of IPL that's scheduled to bid in the fourth quarter, which you heard us talking about 10 years ago, which is another extension of that program. So it -- the fourth quarter is going to be a pretty interesting bidding quarter for us. And like we said in the script, it should really work to enhance backlog as we travel through the quarter.

The next question comes from Ted Jackson with Northland Securities.

All I can say is, wow, what an amazing quarter, wow. I'm going back into water transmission or SPP. I mean you've got tonnage up 14%. I mean, you just had a blowout quarter with it. Can you just talk a bit about kind of the utilization rates that you had across your facilities and kind of like what -- where are you with that? And is there -- I mean, the fact that you could do something like this in the right environment, I mean, you could repeat this. I'm just kind of curious like what are some of the metrics you had...

Yes. For -- I think -- just before I talk about the metrics, I think that these kind of quarters are definitely more possible as we go forward, as Aaron said in his script, it's not a new level that we're getting to. But I think that when you look at a good water transmission quarterly revenue rate, you're looking at something that's between $80 million and $90 million. That's a good quarterly rate, probably more like $82 million to $85 million. But these kind of things can happen.

When you look at the utilization that we ran across our facilities in the third quarter, I would call it somewhere in the high 60s to about 70% utilization because we did have a couple of cases in the quarter where there was enough shipment requirement demands from our customers that we actually had to do a little bit of second shift work because normally, our water transmission systems plants are really run on one shift. So I would call it high 60s to low 70s when I looked at it over the last couple of days. And we have a lot more that we can do. And if demand follows it, we can staff up and continue to produce more and more because we're really doing this on one shift at each one of the plants.

With a 14% rise in tonnage, I mean -- and clearly, very robust bookings world. The businesses out there, the competitors that you have, you're not -- you don't have to fight on price for volume. How much of that -- like, is there an opportunity for you to see better than maybe -- let's take this quarter out, but better than historic margins, given kind of the macro environment you're in right now? Or how is the competition for the use of your facilities these days? I mean how does it compare to...

I think it's pretty stable with the competitive landscape. I think when you look at backlogs across the industry, it appears that everybody's backlog is up a bit. And that's always a recipe for better margins as you move forward.

So when you start looking at better than historical margins, we have a market right now that's a good market, right? And I don't want to get too much into the IIJA stuff in front of this. But we have a good market right now, and it's not a blowout market, but it's a good market. And right now, the competitive landscape fits the size of the market very well. Bids are competitive. You've got to continue to work on cost to drive your costs down in the plants, and we do that with lean manufacturing programs and things of that nature and setting metrics in each one of the plants. But I think the landscape is good. It's still very competitive on some bids. We have some bids in the fourth quarter that we expect to be very competitive bids.

When you start getting up over -- and we're right now still, Ted, in the demand level that's probably about 140,000 to 145,000 tonnes. It might inch up a little bit above that with what's going on in the fourth quarter, and that's just a pretty good quarter. If you get a quarter that -- or excuse me, demand that's for a year. If you get a year that's over 200,000 tons, I do think that's the point where you can start seeing those margins that are larger than what we've seen historically.

Now I started talking about the IIJA a little bit before that, and you probably have other questions on that. But the thought of the IIJA has originally been, "Hey, this is going to cause a substantial spike in the markets for the water transmission systems business as we move forward during some period". But I think that the funding is trickling out relatively slow. And of the $50 billion -- EPA has about $43 million or $44 million, The Bureau of Rec has probably about $8 million, only about $20 million of it has been obligated by the EPA and the Bureau of Rec has about $5 million, $6 million. So only about half of the funds have been obligated at this point.

The other thing to note that the funds that have been dispersed is only about $8 billion. So it's not a high percentage of what's out there at this point. So the feeling is, instead of seeing a big spike in the water transmission systems market, what you're going to see is that, that market, like we're seeing right now, maybe a little bit of inch up in the market, extend further out into the future. And for -- as we look at that, we think that's better for the business because normally when you have a big spike, you have a big fall and then the business falls off for a period of time. This level of marketplace as we look out to '26, '27, 928 is a better scenario for the water transmission business over that period of time. And I think it will allow for a stable business, higher stabilized margins and improved performance as we go forward related to cost reductions that we're doing in the plants.

Okay. I got two more topics and I'll get out of line, too. Just quickly over on to the precast side of the house. I mean, a nice revenue number. I was a little surprised on the margin given that my understanding has been that if the Park business is turning around, then that's typically been a better margin -- set of products for you all. I mean, so maybe you could just unpack that a little bit for me. Is that just because you had some underutilization at Geneva or is my memory on that incorrect? Just kind of curious as to on the market side...

Yes. No, I think you're right, I think the Geneva business is still very strong. It's very strong. But we're now up and fully running the Exact 2500, which is the RCP Manhole machine. So we've got increased depreciation that started associated with that in the building. So that's had a little bit of an impact on the margin at the Geneva business in the quarter. We expect, as we get the exact 2,500 up to the production levels that we want that we'll be adding a second shift to that, that we're working on, which will further enhance the market or the margins. And the old transmatic that we have at Geneva, we'll be able to shut that down and not have to be running that. So that will reduce cost and enhance the margins. So we expect the Geneva margins to start coming back up in the fourth quarter to a more normalized rate.

On the Parks side, what I would tell you is the Park margins now are up probably a few hundred basis points from where they were from the beginning of the year. So that is definitely traveling in the right direction and really being driven by, I think, owners and developers are taking into account that the interest rate is going to fall over a period of time. So they're pushing projects into planning in design right now, which is going to continue to build that business over the next 12 months to 18 months. So we think we'll start to see the Park margins probably start to normalize in the next couple of quarters.

But the Park margins have really come up by about 300 or maybe even a little bit more than 300 basis points since the beginning of the year. It's really the Geneva fall off with the increased depreciation, the double running of the equipment in the quarter until we get it shut down and then getting the Exact 2,500 up and getting it on to a second shift that impacted the third quarter for Geneva, and we see that coming back in the fourth quarter and the margin starting to return to normal. So it's just a timing thing, Ted.

Okay. And then my last one is implicit in the guidance that Aaron put forth is that being said, fourth quarter SG&A would be about $13 million. And if you're going to hit your -- when you say $52 million for the year, how would we think about your that expense? I mean I know you're not talking '26, but would we expect a similar run rate for '26, $52 million, $53 million. I mean, just given kind of how those expenses have kind of scaled up during the last fiscal year?

Yes, I would tell you that we always think about it first maybe as kind of a normal sort of inflationary adjustment when we start to model our SG&A for our budgeting process. But the other thing I would tell you is that we internally are pretty devoted to looking at our costs, especially at some of the support centers and the sales cost centers to really try to drive in on the value creation that they're supporting, right? So we're looking at places where potentially some zero basis budgeting where we can potentially look at things that we can scale away. So I think we're going to be having some opportunities to kind of maybe cut modestly kind of from that level up for inflation starting point. I think that's kind of where we'll kind of go with things.

Now obviously, if you have things like any sort of M&A or anything like that, that kind of blows everything I just said out of the water. But the other thing that we've really been impacted by in this year has been the bonus expense, too. So that's obviously -- since that's incentive compensation, that's really subjective to the level of profitability of the company to achieve.

Yes. That's not a bad expense.

And that's what does have us elevated this quarter, particularly on what I expect to be something that elevates us in the fourth quarter as well.

Just a little bit of an add on to that. When you think about SG&A expense, my view when we look at that is that our operating margin should be 10% or above. And we're not quite there yet. So we've got some pretty hard looks going, like Aaron said, on SG&A. We've implemented some zero-based budgeting this year to really kind of hone in on that because the idea is to get those operating margins above 10% on an annual basis, not just for a quarterly basis, but to have that sustained 10% or better for the year.

The next question comes from Jean Veliz with D.A. Davidson.

Just looking at precast, can you talk about your ability to push pricing right now as some of the cost inputs begin to ease? And a second part of the question -- go ahead.

No. Let me answer the first one because, Jean, I won't remember the second part by the time I get to the end of the first.

Yes, we've been successful in pushing pricing increases at both sides of the precast business recently at the Park side, and that's really driven by, I think, the improvement that we're seeing in the nonresidential side of the business. We're seeing that in our revenue at Park. We're also seeing it in the volumes that we're getting. And it's really supported by what we're seeing in the Dodge Momentum Index. So that's moving in the right direction.

And on the Geneva side, for that business still is standing strong. It had a record year last year. It's very likely heading toward another record year this year and price increases are being pushed forward in that. So we are successfully pushing them forward. And we -- as you mentioned, we are seeing the material costs, the cement, the small rock, the large rock, the aggregate piece, all those to the sand, all those kind of flattening out and stabilizing a little bit versus what we've seen over the last couple of years.

So what was the second part? Sorry, I interrupted you during the first part.

No problem. Thanks for giving us that color. Yes. So just given what you said, I was wondering what the -- what kind of volume posing your expectations versus pricing?

Say that one more time? You cut out for a second.

No problem. I was just wondering about how does the volume play into the growth of both these businesses over the next 12 months. Does it make sense?

Yes. I think you'll see a growing volume in the Park side of the business. And that's simply is related to the nonresidential piece. I also think you'll see a volume in the Geneva business that is continuing to inch its way up, and we're starting to do a little bit more nonresidential work at the Geneva plant site. So that will improve the volume next few quarters. And really, I think that by the time we start getting into mid-next year beyond that the Geneva facility is probably going to be on close to $100 million annualized rate, and Park will be a little bit behind that. But running toward that probably maybe more toward the first quarter of 2027. But the -- both of those businesses are expected to improve throughout '26 based on the numbers that we're looking at preliminarily in the plan.

Between volume and pricing, what has been a better driver over the next 12 months?

I think probably the volume and the absorption, the higher levels of absorption and the volume will be a little bit more of an impact on what the pricing is.

And just one last one for me in the water transmission. Can you just talk about a little bit of more going into next year about your backlog, specifically, just trying to understand more about the sustainability? Or how should we think about what the high watermark is starting in Q1 and through the next year?

For backlog specifically?

Yes. And then just probably add a little bit about the revenue cadence as well.

Yes. And I think the backlog is based on the amount of bidding that we have going on in the fourth quarter, we have the expectation that there'll be some wins in that bidding for us and that our backlog is going to continue to inch up through year-end. That's what we anticipate at this point. So we're going to end up pretty strong with backlog going into the first quarter of 2026.

As far as revenue for the Water Transmission Systems business, you -- when you look at revenue numbers, for that business, good revenue numbers are somewhere between $80 million and $90 million. At the beginning of the year, generally, you're ending up with revenue numbers because you're coming through some quarters in the first quarter, that's also affected by weather. You're probably something closer in the low 80s in the first quarter. As you climb up to the second and third quarters like we've seen over the last couple of years, you end up something within -- that's more like $85 million up to close to $90 million. And then in the fourth quarter, you're getting down to something that's probably more like mid-80s to low 80s. That's how you can think the revenue on a normalized basis with the water transmission business as it sits right now.

But I will say, I think that there's potential now and again, to get a quarter. And when you look at the quarters over the last couple of years, last third quarter, I believe, was the record at that point before the second quarter of this year, which is what I think became the record quarter for us and obviously driven by both water transmission and precast until the first quarter of -- or the third quarter of this year, which became the record. So the second and the third quarters are generally the big ones for both sides of the business, Jean.

We have a follow-up from Julio Romero with Sidoti.

Thanks for taking a couple of follow-ups here. My first one is just on the state of Texas has Proposition 4 on the ballot next week and that dedicates I think, $20 billion towards water infrastructure over the next 20 years with dedicated state taxes. Would your company -- would NWPX benefit from that? And if so, which parts of the portfolio would benefit?

It's definitely on -- for water infrastructure, it's the water transmission systems side, right? The state of Texas, what I would say about the state of Texas is they're not waiting on IIJA funding, okay? They create their own funding. They had the Texas SWIFT program going 10 or 12 years ago, which is the State Water Implementation Fund for Texas. And now they're driving this Proposition 4 forward. So that will certainly have some funding for projects that are water transmission systems projects going forward.

In fact, I think the legislation in Texas, even before the vote on this because this has to be voted on here in November, by the citizens. I think the legislation has about $2.5 billion already teed up to go into the Texas Water Development funding to start funding some of these projects. So we will benefit on the water transmission side from these funding mechanisms in Texas, just like we have over the last probably 15 or 20 years, from the SWIFT program for -- you have Lake Texoma, you had IPL and all these different projects. And quite frankly, which is why the state of Texas is always one of the biggest markets for water transmission systems. So it's going to be a good thing.

Very helpful there. And then earlier, you touched on the cash flow benefit from water transmission systems in the quarter. Can you maybe just talk about the sustainability of those cash flow dynamics going into '26 and beyond?

Yes, I think that it's kind of a new way of approaching the business our -- the guys on the water transmission. I mean everybody on the precast side and the water transmission side has done a great job getting cash in. And obviously, the water transmission systems business years ago tied up a lot of cash in current assets, right? Well, what we've done is we put a focus by putting part of the senior level variable compensation based on cash flow, there's a big focus on that and getting progress payments for projects that we're doing, getting paid for steel upfront and things of that nature. So we think the sustainability of that is great as we go forward in the future.

We would like to have a target always that our cash flow is similar to what our EPS is, which I think is a good level to have that at. And we're always going to be doing that because really the water transmission systems business has kind of turned into a cash flow machine at this point, and it's really helping drive the growth platform for the company. So that's what's doing it. Material on hand or material on hand payments, prepayments, progress payments, all those things are now happening on the water transmission systems business, something that didn't happen 5 years ago.

Julio, I would say that for your benefit, the water transmission site, cash cycle was something that we had seen kind of usually getting pretty elevated during our busy quarters, see something like Q2, Q3 of those quarters, we'd see a spike because we were basically working the job as opposed to thinking and being very thoughtful of the related working capital management.

I would say over the last four quarters, we've been excellent now. We have not seen a spike at all. In fact, our -- we've seen exactly the opposite. We started basically the middle of last year, and what we thought was a very good level of working capital days for the WTS segment, just below 190. And since then, we've seen it decrease down to about 165 days. So on your sustainability part, I mean, I think it's something that is a mindset that Scott has mentioned earlier that has really changed something that he's really pushed through the business and something we talk about which I think it's very sustainable. And I'm actually excited to say that because if he asked me two or three years ago, it was probably more than quite a bane on my existence to be honest with you.

At this time, I would like to turn the call back over to Mr. Scott Montross for closing comments.

Yes. Again, I'd like to thank everybody for joining us today, and we're pretty pleased with the operational execution that we've had in what we consider to be a fairly dynamic environment in 2025. I think really affirms the strategic choices we've made over the last several years and starts to highlight the strength and the resilience of our evolving business model. And I think we just talked about a little bit with Julio. The execution continues to drive growth and free cash flow, particularly in the water transmission systems business, which for many years, tied up a bunch of cash. And like I just said, it's the water transmission systems business has really become a cash flow generating machine.

As we look ahead, as we talked about, the bidding activity for water transmission is really strong for the rest of 2026. We think we're going to have very strong backlog momentum building and positioning for positioning to us to go into 2026, very strong. In the precast business, nonresidential side is continuing to gain traction and the Geneva on the residential side remains strong.

In closing, we're still committed to, number one, workforce safety. That's the #1 thing that we do. Margin expansion and executing our strategic growth initiatives to create long-term value for our shareholders. I'd just like to thank everybody again for your time and continued support, and we look forward to speaking with you again on the fourth quarter call in the February time frame. So thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

Greetings, and welcome to the NWPX Infrastructure Second Quarter 2025 Earnings Call.

[Operator Instructions]

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Scott Montross, CEO. Thank you, sir. You may begin.

Good morning, and welcome to Northwest Pipe Company's Second Quarter 2025 Earnings Conference Call. My name is Scott Montross, and I am President and CEO of the company. I'm joined today by Aaron Wilkins, our Chief Financial Officer. By now, all of you should have access to our earnings press release, which was issued yesterday, August 7, 2025, at approximately 4:00 p.m. Eastern Time. This call is being webcast and is available for replay.

As we begin, I'd like to remind everyone that the statements made on this call regarding our expectations for the future are forward-looking statements, and actual results could differ materially. Please refer to our most recent Form 10-K for the year ended December 31, 2024, and in our other SEC filings for a discussion of such risk factors that could cause actual results to differ materially from our expectations.

We undertake no obligation to update any forward-looking statements. Thank you all for joining us today. I'll begin with a review of our second quarter performance and outlook for 2025. Aaron will then walk you through our financials in greater detail. We are pleased to report on the continued strong momentum in the second quarter in which we achieved record-setting performance. These results reaffirmed the strength of our strategic plan and disciplined execution. Before diving into the financials, I want to highlight a pivotal shift that reflects our strategic direction, our recent rebranding to NWPX Infrastructure. This new corporate identity reflects our growth in the water infrastructure sector, removing geographic and product constraints while positioning us as a national solutions-driven infrastructure provider.

With an expanded portfolio that now goes beyond steel pressure pipe, we've defined our segment naming convention with Water Transmission Systems or WTS, replacing engineered steel pressure pipe, SPP, while retaining the Northwest Pipe branding for our suite of engineered water transmission system products to preserve our strong market recognition. Our precast infrastructure and Engineered Systems segment name remains unchanged. We are confident in our trajectory and our ability to scale our success under the NWPX infrastructure banner.

Now turning to our second quarter results. Net sales of $133.2 million reached a new quarterly high under our current configuration of the company, increasing 2.8% over the prior year in demonstrating strong operational execution and demand across both of our business segments. Our performance was driven by continued momentum in our water transmission business. and record performance from our precast segment. That translated into healthy margins, driving profitability of $0.91 per diluted share for the quarter. Through the disciplined working capital management, we delivered positive free cash flow of $3.1 million in the first half of 2025 versus negative $14.4 million the first half of 2024, a positive swing of $17.6 million, reinforcing our financial strength and positioning us for continued momentum through the remainder of the year.

To further break down our segment level results. Revenue from our WTS segment totaled $84.6 million down 5.5% year-over-year, primarily due to lower production volumes resulting from the mix of projects produced in the second quarter. The decline in WTS net sales was partially offset by higher realized selling prices also largely due to changes in product mix. Encouragingly, the impact of new trade policies that led to various customer-related shipping delays in the first quarter has largely subsided. Through this period of market uncertainty, our team has remained highly effective actively engaging with our customers, executing disciplined pricing strategies in securing increased volume of bids.

Our WTS backlog, including confirmed orders significantly improved by over 20% to $348 million as of June 30 from $289 million as of March 31 and was consistent with levels as of June 30 last year. We expect third quarter to be the largest bidding quarter of the year, and we continue to anticipate full year 2025 bidding levels to be in line with or modestly higher than 2024. Now turning to our precast segment. Precast revenue grew 21.5% year-over-year to a new quarterly record of $48.6 million. This growth was fueled by sustained momentum on the residential side of our Geneva business, where strong demand drove higher production and shipment levels, while overall volume remains solid. Gains were partially tempered by the slower to improve results in the nonresidential construction related portion of our precast business, as broader macroeconomic headwinds and including effects from the new trade policies and persistently high interest rates continue to impact commercial construction activity.

However, we are continuing to see some signs of improvement at a modest rate. The Dodge Momentum Index grew 6.8% in June due to steadily improving nonresidential construction activity expected weaker consumer spending and travel demand as well as funding uncertainty may still be muting projects going into the planning queue. However, the Dodge Momentum Index was 20% higher in June of 2025 versus last year, signaling year-over-year growth in nonresidential construction planning. The commercial sector was up 11% versus the prior year, while the institutional sector was up 46%, albeit compared to a weak June in 2024. On the pricing front, the residential portion of our precast business saw positive momentum related to continued strong demand at Geneva.

However, these pricing gains were partially offset by the slower to improve demand and pricing in our nonresidential business, reflecting the more cautious environment. As of June 30, our precast order book was $56 million, down from the near record levels of $64 million as of March 31 and $62 million as of June 30, 2024. On the residential side of our business, Geneva order activity remains strong with bookings coming in at an elevated rate in volume being fulfilled more quickly, which helps explain why the current order book appears lighter versus the prior year. Additionally, a notable portion of the order book stem from the nonresidential side of our precast business, signaling improving momentum and strengthening demand throughout the remainder of 2025.

Our consolidated gross profit in the second quarter was $25.4 million, down 1.7% year-over-year resulting in a gross margin of 19% compared to 19.9% in the prior year. Our WTS gross margin of 17.8% declined by approximately 120 basis points over last year due to lower production volumes and the associated decline in overhead absorption. This was largely driven by the mix of projects we produced during the quarter, though the impact was partially offset by improved selling prices. It is, however, important to note that our WTS margin is up 230 basis points sequentially over the first quarter of 2025, with positive momentum that is continuing to build.

Our precast gross margin of 21.2% decreased by approximately 90 basis points over last year, primarily due to changes in product mix. Margins in our residential construction business at Geneva improved year-over-year, supported by strong demand and operational efficiency. This strength was offset by the slower to improve portion of our nonresidential commercial construction side of our business, which has been more affected by the Fed stance on monetary policy and the uncertainty around trade policy. However, our precast gross margin did improve 220 basis points sequentially over the previous quarter. The improvement was modest on the nonresidential side, but more substantial on the residential portion.

Next, I'd like to discuss progress on our product spread strategy. In the second quarter, we bid on $14.9 million worth of projects outside of Texas and successfully booked $2.5 million in new orders, supporting our efforts to enhance capacity utilization, and maximize operational efficiencies at our precast plans. In addition, we booked approximately 632,000 of park-related projects at the Geneva plants in Utah. Our 2025 goal is to book $3 million of park-related products at Geneva. As part of our third component of our product spread strategy, we've also begun expanding park and other free cash related products to additional legacy locations positioning us to broaden our market reach and long-term growth.

Our goal for 2025 remains to book over $12 million in park related and other precast projects outside of Texas with further benefits to come in 2026 and beyond. With respect to our broader growth strategy, we remain focused on both organic growth and M&A, though we are currently prioritizing organic expansion due to lack of viable acquisition candidates. While our disciplined acquisition criteria remains unchanged, we would consider a single location precast facility if it strategically strengthens our presence in targeted geographies. That said, we remain well positioned to move quickly should a larger, more impactful acquisition opportunity arise.

Ideally, any such opportunity would enhance our manufacturing capacity in operational efficiency while also broadening our geographic footprint and expanding our product offerings. Next, I'd like to summarize our outlook for the third quarter of 2025. In our WTS business, we anticipate revenue and margins to remain in line with or exceed those of the second quarter of 2025. For production levels are expected to increase modestly, which should contribute to improved overhead absorption. We entered 2025 with a solid backlog in place and continue to expect strong bidding activity in the second half of the year. Full year bidding levels are currently projected to be modestly higher than those of 2024, reinforcing our confidence in another strong year of performance for WTS.

And our precast segment, our healthy and growing order book, coupled with anticipated higher production levels and better absorption supports our expectations for precast revenue to remain strong in the third quarter of 2025 with continued margin improvement versus the first 2 quarters of 2025. On a consolidated basis, we expect revenues for the third quarter of 2025 to modestly improve from the third quarter of 2024. For the second half of the year, we continue to expect WTS revenues and margins to be similar to 2024 levels precast revenue also being similar to 2024 levels, but with improved margins.

In closing, I want to thank our talented team at NWPX infrastructure for their strong execution of our strategy and unwavering commitment to safety. Looking ahead, we're optimistic about the improving bidding environment and the strengthening order book as we move through the remainder of 2025. Looking ahead, our priorities are to: one, maintain a safe workplace where our employees are proud to work; two focus on margin over volume; three, intensify our efforts on strategic acquisition opportunities to grow the company; four implement continued cost reductions and efficiencies at all levels of the company; and number five, in the absence of M&A opportunities to return value to our shareholders through share repurchases. I will now turn the call over to Aaron, who will walk through our financials in greater detail.

Thank you, Scott, and good morning, everyone. Before I begin, I'd like to highlight our continued focus on enhancing shareholder returns, consistent with our capital allocation strategy. Through July 31, the final trading day in our most recent Rule 10b5-1 trading plan we repurchased approximately 363,000 shares or approximately $15 million worth of our common stock for an average price of $41. 21 per share. This represents 3.6% of the ending shares outstanding at March 31, 2025. Given the health of our balance sheet, we believe it is prudent to continue to take advantage of market opportunities for future share repurchases and while also continuing to invest strategically to grow our business.

Next, I'll turn to our second quarter profitability. Consolidated net income was $9.1 million or $0.91 per diluted share compared to $8.6 million or $0.86 per diluted share in the second quarter of 2024. Our second quarter consolidated net sales increased 2.8% to $133.2 million compared to $129.5 million in the year ago quarter. Sales for the Water Transmission Systems segment decreased 5.5% to $84.6 million compared to $89.5 million in the second quarter of 2024. The decline was driven by a 10% reduction in tonnes produced, resulting from changes in project timing, partially offset by a 4% increase in selling price per ton due to changes in product mix. Precast segment sales in the second quarter increased 21.5% to a record $48.6 million compared to $40 million a year ago.

Performance was driven by a 13% increase in volume shipped as demand in our Geneva operations in Utah remain strong and a 7% increase in selling prices due to changes in product mix. As a reminder, the products we manufacture are unique, shipment volumes in the case of precast production volumes in the case of WTS and the corresponding average sales prices for both segments do not always provide comparable metrics between periods, which are highly dependent on the composition of each segment's product mix. Our second quarter consolidated gross profit decreased 1.7% to $25.4 million or 19% of sales compared to $25.8 million or 19.9% of sales in the second quarter of 2024. WTS gross profit decreased 11.3% to $15.1 million or 17.8% of segment sales compared to gross profit of $17 million or 19% of segment sales in the second quarter of 2024 primarily due to decreased production volume as well as changes in product mix.

Free cash gross profit increased 16.7% to $10.3 million or 21.2% of segment sales from $8.9 million or 22.1% of segment sales in the second quarter of 2024, primarily due to changes in product mix. Selling, general and administrative expenses declined by less than 1% to $12.1 million compared to $12.2 million in the second quarter of 2024 as lower professional fees and incentive compensation expense was partially offset by higher base compensation. As a percent of sales, our SG&A improved to 9.1% from 9.4% in the prior year. For the full year 2025, we now estimate our consolidated selling, general and administrative expenses to be in the range of $50 million to $51 million. Depreciation and amortization expense in the second quarter of 2025 was $4.9 million compared to $4.7 million in the year ago quarter.

For the full year, we continue to expect depreciation and amortization expense to be approximately $18 million to $20 million. Interest expense decreased to $0.8 million from $1.8 million in the second quarter of 2024 and due primarily to a decrease in average daily borrowings. The full year 2025, we continue to expect interest expense of approximately $3 million. Our second quarter income tax expense was $3.4 million resulting in an effective income tax rate of 27.5%, which was primarily impacted by nondeductible permanent differences. This compares to $2.9 million in the year ago quarter, or an effective income tax rate of 25.5%, which was also impacted by nondeductible permanent differences. We continue to expect our tax rate for full year 2025 within the range of 24% to 26%.

Next, I will transition to our financial condition. For the second quarter, net cash provided by operating activities was $5.4 million compared to $22.3 million in the second quarter of 2024. The $16.9 million decline was primarily due to changes in working capital. Our capital expenditures for the second quarter was $3.5 million compared to $6.1 million in the second quarter of 2024. For the full year 2025, we continue to expect CapEx in the range of $19 million to $22 million, including about $5 million for various investment projects. Most notably to support precast product spread as well as initiatives to grow both our park and Geneva businesses to $100 million top line in the near term. Accordingly, we produced positive second quarter free cash flow of $1.9 million compared to $16.2 million in the year ago quarter. For full year 2025, we continue to anticipate free cash flow to range between $23 million and $30 million. Strengthening consistent cash generation remains a top priority for our leadership team which is focused on driving growth both organically and through prospective M&A as appropriately valued opportunities arise.

As of June 30, 2025, we had $30.6 million of outstanding borrowings on our credit facility leaving approximately $93 million in additional borrowing capacity on our credit line. Our balance sheet remains healthy with ample liquidity to execute our capital allocation priorities. To close, we are very proud of our strong execution we delivered in the second quarter, resulting in record setting results. Our performance highlights the strength and adaptability of our business model and reinforces our confidence in our ability to drive continued momentum through the remainder of 2025 and beyond. We thank our employees for their unwavering focus on safety and operational excellence, which has been instrumental in achieving these results.

We also appreciate the continued confidence and support of our shareholders as we execute our long-term strategy. I will now turn it over to the operator to begin the question-and-answer session.

[Operator Instructions]

The first question comes from Brent Thielman with D.A. Davidson.

Scott, Aaron Yes. I guess the first question would just be on precast. It seems like somewhat kind of bifurcated market trends you're experiencing there. It sounds like residential fairly healthy for you, somewhat surprising in this climate, but nonres is working against you to some degree. So I don't know, Scott, if you can talk about whether you're seeing any inflection points on the weaker side of the precast business, whether there's some kind of pent-up optimism that maybe something turns there in the second half based on inquiries, customer conversations, be curious there.

Yes. I think, Brent, the -- obviously, the trade policy thing I think put a little bit of a dent into the nonresidential side of the precast business at the beginning of the year and it slowed things down, but we're now seeing an order rate that's picking up on the nonresidential side and gaining strength and kind of getting back to a relatively normal pace and level, which we haven't seen for some period of time.

And when you look at the Dodge Momentum Index, I mean, that kind of an indication of what the non-res thing is going to do over the next -- well, it's stuff that's going into planning now and usually gets into the production process about a year from now. But it looks like it's really starting to gain strength now. The revenue levels on the nonres are really starting to come up as we speak -- as we went into the July time frame, the revenue levels were at a normal level with improving margins. So we're pretty confident that nonres is going to be pretty strong through the rest of the year after the first half.

And just to speak to the Geneva piece, yes, the Geneva piece is really, really strong. It's been really strong. I think one of the interesting things about Geneva is, is it looks like the order book is a little bit down for all of precast. But Geneva is burning through the order book that they're getting much quicker than they normally have because of the amount of orders. I think right now, as far as yards produced and shipped were about 16 or so percent ahead of where we were last year at Geneva at this time. So that continues to have strength.

We expect the non-res based on what we're seeing right now for the increase in their order book and what's happening with the margins there strengthen as we get through the back half of the year. And I think the momentum index is just kind of an affirmation of that at this point.

And so Scott, to the degree that we see this sort of ramp up in the non-resi piece, which I think is more associated with Park. Would that be an accelerant for your margins here in the second half?

Yes, we expect the margins to improve in the second half, mainly due to the recovery and the growth of the nonresidential side business.

And then I appreciated the comments on WTS for the second half. bidding plan that third quarter sounds pretty strong. any indications or early indications on 2026, just as we try to think about the sustainability of WTS contributions into next year or even Scott growth potential for the business in the next year?

Yes. I think what we're seeing is a market that as we go forward to 2026 that is at least equal to what we've seen in 2024 and 2025 with the potential of some of the IIJA funding kicking in toward later in the year. I mean some of the IIJA-funded projects like sites reservoir in California starting to be more and more talked about. So that could give the end of the year a little bit of a boost and there's other projects going on right now, Brent that are IIJA funded the Eastern New Mexico Rural Water District is another one that continues to produce segments and jobs for us.

So what I think is you see a year that is similar to '24 and '25, although it looks like '25 is going to be a little bit bigger than what we saw in 2024 based on what we're seeing right now. But you see a year in '26 that starts out like that with the potential of getting stronger later in the year.

Sorry, last one just on some of the investments, it sounds like maybe more of a push for organic investments in the business here. You talked about some of that CapEx going to product spread initiatives, I guess anything else to call out that you're looking at internally in terms of focus and CapEx here in the next kind of 12, 18 months, Scott.

Besides, obviously, M&A opportunities that we continue to look at. I think the idea is what we call product spread. Obviously, that started with the idea of taking products from Park and being able to produce them at Geneva, which is happening all the time. Now with more along the lines of, okay, what kind of precast products can we do at what steel at the water transmission systems plants. And right now, we're in the process of doing projects out of the Tracy facility, which, obviously, when we bought them, had some precast structure there, but it was just very niche type stuff.

We're doing some projects out of there now with the idea of also starting to do some of the projects out of our Portland plant that kind of fit. And some of the initial investment, Brent, are more informs because it's going to be ready mix, port type stuff to begin with because, as you know, we make cement for cement mortar lining and coding at our steel pressure pipe plants, but we don't have aggregate adding capabilities to make the concrete -- so initially, it's going to start with ready mix and it starts with Tracy and with Portland, but also the idea of spreading that precast product to additional legacy water transmission systems plants.

So that's really going to be the focus of organic growth in acquire additional precast facilities, which we will eventually do here when something comes up that makes sense, we would also look at moving those products to those additional precast facilities that are in different geographies and that don't have a product like that in those geographies at this point. And that's part of the thing with our product spread, Brent. We have a group that works on just product spread. And they're focused on looking at bidding on park products in the Southeast, in California, in the central part of the country. And really, what that starts to do is it serves as a proxy for we're looking at acquiring a precast plant, right, because we can get a really 2 for 1 there, you get the precast product and then you can add the park product.

And ultimately, the product portfolio grows at that facility wherever it is. And that was a lot of words about a lot of things. So I don't know if I specifically answered your question, what you wanted it.

The next question comes from Julio Romero with Sidoti.

So I wanted to start on the Water Transmission Systems segment. Very nice performance there in the quarter. You mentioned strong execution and the trade policy is something that you seem to be managing through pretty well here. Can you maybe help us understand some of the trade and tariff impacts that you called out in the first quarter and help us kind of better understand how they've improved from the first quarter?

Right. So what we had in the first quarter where some of the administration's trade policies prevented us from being able to recognize some of the revenue and gross profit in the first quarter that we would have normally done. So what we -- obviously, when we talked about this in the first quarter call, we said we would get a little bit of a bit of that back in second quarter, which it looks like we got some of it back in the second quarter, maybe a little bit of it will come back in the third quarter. So it's kind of getting peanut buttered across those quarters.

The way it's being managed now and the place where it's most evident is in our SLRC Mexico facility. And the SLRC Mexico facility, where we have those tariffs in play, they're being passed on. And quite frankly, I think what's happened is everybody's got so used to doing these tariffs at this point that it's becoming more of a nonevent. At the same time, we are booking, as we talked about, work from our SLRC facility shipping into Canada to which there is no tariff. And as I mentioned during the last call, had a job that was $24 million, $25 million. And now we've booked another job that's a substantial size job into Canada from that same facility. So that's really where the only impact is. And I think longer term, the idea of you look at SLRC and go, well, God, if these trade policies are going to remain in place for a long period of time.

What does that mean for the SLRC facility. Well, the thing to note is that our fully burdened cost at our SLRC facilities action of what it is at other plants, and we could be competitive in either way. So that won't that won't affect us that much. The other thing is, is we still work on getting the inclusion from the government, which is I don't know why they use the word inclusion. It's really an exclusion. But to get us exempted from those tariffs because all of that product is from steel that's mine melted in the U.S. moved over into Mexico, formed into water transmission systems and shipped back. And what it does is give the customers and the consumers in the United States to lower the lowest cost of ownership right? So eventually, I think that's going to sink in. And ultimately, we probably get an inclusion from that. But in the meantime, we continue to ship into Canada.

We continue to get projects that are -- we're capable of doing and still producing solid margins. all it's done is -- I don't mean the use of a term that's being used a lot right now it's redistricting us a little bit on where we get jobs and where we're putting jobs. And because we have 6 main steel pressure pipe plants, we have such utility to do those things that ultimately is become kind of a moot point.

Great. Really helpful context there. And I wanted to talk a little bit about what you mentioned about markets seeming to accept the tariff situation, and that's kind of what it is. And just moving along anyway. Did additional maybe tariff announcements in the quarter cause any renewed delays or any changes in customer behavior? And if so, have they extended into July?

Well, it really didn't change much on customer behavior. I think it caused what I would say is a little bit of freight here internally for a little while, simply because a 25% to 50% thing, right? But the -- it was a change in what the tariffs were applied against right? So it was 25% against -- I can't remember, it was overhead. It was product. It was all those things. So that was on the 25% piece. When it went to 50%, it was just the cost of the steel. So it didn't really have a major impact on anything going forward that we were doing.

But until we got our heads wrapped around this. There was a little bit of confusion, which, quite frankly, there is always a little bit of confusion at the border with how things are being administered, and we had some details to work out. But again, we have such utility and ability to move things around that it really didn't have a major impact on us.

Really helpful there. And then last one, if I could, is just -- following up on Brent's question about precast and the bifurcated trends you're seeing there on the end markets. I think on nonresidential, you mentioned volume being fulfilled more quickly, I believe. Is that -- is that volume leverage, albeit at a lower blended rate in the segment kind of having an impact to what played out in the second quarter?

The volume being consumed more quickly is happening on the residential side at Geneva. They are -- I mean, they're 16% ahead, 16% or 20% ahead on invoicing versus where they were last year. So as far as -- what was the question on the nonresidential side then?

I understand. So residential side had better volume in the quarter. And I guess that offset kind of nonres at the moment. Is that?

Yes, at the moment, I think you're looking at it the right way because what we have is a very -- it looks to be a very stable situation at Geneva right now with revenue, production and margins. And we're coming into is a situation where the nonresidential is starting to turn up, not only from the perspective of production and revenue but also on the margin side. So we believe that the second half of the year on the precast business is going to be pretty strong.

[Operator Instructions]

Our next question comes from Ted Jackson with Northland Securities.

Congrats on the quarter. And Aaron, I wanted to call out and say thank you for putting a full cash flow statement in the press release. I know you did that for me.

We did do that for you.

It was a joke, but it was a joke of serious joke. I know you -- A lot of the questions I wanted to ask have been popped through. But I wanted to circle back on the precast -- so Suniva, the residential business, the ability to turn orders is faster than it is in the park business. So my question -- first question is, what is the time line that it takes from order intake to delivery on average engine and what is it in park? And has it always been -- the difference always been that way?

So on the Geneva side, Ted, you're dealing with the precast infrastructure products. So could be looking at stuff that's already in inventory because that's a little bit of an inventory business. So it could be as quick as, hey, we get an order today, and we're shipping it tomorrow. If you're looking at something that has to be produced at the Geneva facilities, it could be 3 or 4 weeks.

We're pretty careful about measuring and managing the order book and not letting it get too far out in front of us. Because if it gets too far out in front of us, we can't take advantage of increasing pricing when the demand is there. So we are usually managing it to 1.5 months or 2 months of orders about 2.5 months. On the parts side, you're dealing with kind of a completely different animal. Now you may have some of those park products that are more generic, say, meter vault or grease traps in stock.

But if you're getting stuff that's not in stock, what you're having to do is make sure that you're gathering the components, whether it's whether it's valves or meters or fit some kinds of fittings or backflow preventers, and you're installing them in the vault. So generally, Geneva, if it's not a stock item, it could probably be 5, 6 or 7 weeks. But one thing that's affecting the Geneva business is we've got the exact 2500 up and running there, fully commissioned and it's shipping product in the market and it produces product at a much higher rate than the old [indiscernible] did. So the orders are coming in and being fulfilled much more quickly. And that's what we're talking about on the -- really the velocity of orders and getting orders turned and shipped and invoiced. So was there add-on to that piece, Ted?

No, you said the new equipment that's in Park?

No. The new equipment is in Geneva but the exact 2500.

That's where I thought it was going be in Geneva. I just -- I was writing a note and then -- so I kind of just slip. All right.

My next question then is -- when you look at the SPP backlog, congratulations on the strength of that. I mean it seems like it's stronger. I mean you didn't expect it to get -- to fall out of bed or anything, but it's been a little stronger than expected.

But we've had -- the price of steel alone has gone up quite a bit, and we'll continue to kind of flow through your P&L as it does so. When you look at our backlog number, and is the increase there driven more by volume or more by price. Can you give us some kind of color in terms of how that -- those 2 metrics are impacting the strength, the continued strength that you're seeing within your backlog for resi?

What I would say about the steel price is it's kind of been languishing, right? So for -- it ran up a little bit at the beginning of the year and when the tariff announcements came out and it ran up to 900 910, 915 right in. What we're seeing is steel pricing about in the $875 range, so it's not really having a substantial impact on driving the price of projects. It's good for us when steel prices are higher, but I wouldn't say that the tariffs from the trade policy is driving the steel price up right now, it's pretty light.

So it's just the amount of orders and tons that we're getting into our backlog. And I think the -- the -- when you look at the number of tons that were put in backlog through -- it was this is more of a mid-July number. I think we had put since the beginning of the year, some 40 -- almost 40,000 tons or a little over 40,000 tonnes of projects in backlog. So I would say, in this case, Ted, based on what the steel price is doing in the marketplace right now and the velocity of orders that we have coming in on steel pressure pipe, it's more related to tons.

Okay. And then, Aaron, I always ask this question. I'm kind of curious as a percentage of your cost kind of what was steel during the quarter?

Yes, it's still hovering about 30%, Ted.

At this time, I would like to turn the call back over to Mr. Scott Montross for closing remarks.

Yes. I'd like to thank everybody again for joining us today and just leave you with a few takeaways. -- we're very, very pleased with the operational execution market that's been relatively dynamic so far as we've gone through this year. And ultimately, I think it confirms the strategic choices that we've made over the last several years in the results that we've been able to deliver and really the creation of a more resilient company.

And I think that our strong execution is driving revenue growth positive free cash flow. And I think a lot of that free cash flow, I have to say is related to the water transmission systems business because I think for a lot of years, that business tied up a great deal of cash in the company. And now the focus on cash flow has really turned that water transmission business into a cash flow generating machine. So I think the numbers that we're seeing, the backlogs, the order book is really a clear reflection of a healthy demand in performance across both business segments. And I think looking ahead for the remainder of 2025, we expect the bidding in the water transmission side of the business to remain robust and with elevated levels versus what we saw '24, we expect the order book and backlog to remain strong and build momentum through this first half into the second half of the year and going into 2026.

The residential side of our precast business continues to perform exceptionally well, driving record results in again, we're seeing signs of slow and steady growth on the nonresidential side. And we expect the results to come in for the precast side of the business in 2025. We expect those results to come in very strong. I think in summary, we continue to uphold our core priorities of ensuring the safety of our workforce and driving margin expansion and executing on the strategic growth initiatives and creating long-term value for our shareholders.

And I'd like to thank everybody again for your time and continued support, and we look forward to speaking with you again in the third quarter call in November. So thank you very much.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.